Traveling: Impressions From Key West, Florida

 (Drivebycuriosity) - My wife were traveling in Florida. After staying some days in Miami we went to Key West. To get there we had to drive more than five hours. But the drive was very scenic. After leaving the sheer endless sprawl of the metropolis we drove through the Everglades (a small part of) and the street was sandwiched by mostly green swamp land. Then the street, the famous U.S. Route 1 along the east coast, went through a row of tiny islands, the Florida Keys, which are connected by bridges & dams. Key West is the most southern and western place of these islands and also the most southern point of the USA (except Hawaii). 

 

The island is just about 4 miles (6 km) long and 1 mile (2 km) wide. Key West has a tropical climate and lays just 70 miles north of the tropics of cancer and 106 miles north of Havana (keywest ). The weather is very stable, typical for tropical islands. Temperature swings around 80F (26 C). Lots of UV light and warm humid air reduce the Covid-19 infection risk outdoors significantly.

 

The Island is a lovely place thanks to the lush tropical vegetation, almost a paradise. It`s very green. The streets are flanked by coconut palms and lots of other exotic trees, often very big. 

 Many houses are surrounded by wonderful gardens with coconut palms, mango trees and blossoming bushes. The air is humid and has rich and sweet scent thanks to the lush vegetation.

 

Above the image of a fan palm, a plant which is very popular in Thailand. I read once an article in a Thai paper which explained that people spend a lot of money to have this plant in their garden but they were often disappointed because the sensitive plant didn`t survive very long.

 

 

I also enjoyed the myriads of blossoming trees and bushes.

 

and I the orchids as well.

 

Key West has many flamboyant little wood houses, often with patios and balconies. Some parts of the city reminded me of New Orleans.

 

 

We stayed in the historical district district where we rented an Airbnb flat in Truman Annex Vacation Rentals. The complex area had many two-story houses, old but renovated. The buildings were surrounded by palms, bushes and other plants. The complex looked like a museum, neat by tiny. Unfortunately the pool was too small for track swimming and it wasn`t permitted to turn the almost medieval air condition below 74 F.

 

  

 

Almost everywhere we saw free running chicken & roosters. To whom do they belong? The crane above seemed to rule the street and there were geckos everwhere - the army against mosquitoes.

 

Key West is not a beach town. The surrounding waters are very shallow and coral reefs prevent the building of sandy beaches. The closest beach to our flat was 20 minutes away, tiny & stony. The largest beach, Smasher Beach, was in about 20 minute driving distance and the water was partly black and smelly. But the drive along the beach had a parade of coconut palms.

 

The shallow waters around the island are just some feet deep, but filled with fish. This attracts lots of dolphins, the main attraction of a tour we took one day. We were lucky to observe some of these mammalia. They usually dive, of course, to devour on the rich diet of fish.   

 

 

To be continued

 

Economics: The Case Against Short Sellers

  (Drivebycuriosity) - There is a controversy about short sellers, speculators who are betting on falling prices of stocks or other assets. They borrow stocks and sell them immediately in the hope to buy them back later for a much lower prices. Short sellers are popular in the media. "Every stock market party needs a short seller", claimed Bloomberg (bloomberg). The Washington Post defends short sellers and claims that they "link stock prices to fair value" (washingtonpost ) and "The New Yorker", also on the left side of the political spectrum, headlined "In Praise of Short Sellers" (newyorker.com ). Famous short sellers like Jim Chanos, Bill Ackman, Whitney Tilson & Carson Block are celebrated in the New Yorker, Bloomberg, Business Insider and other media (bloomberg). Some are treated like rock stars (features).

I doubt that short sellers deserve the praise. They don`t invest, they don´t support economic growth and rising standards of living. They are not interested in the success of companies, quite the opposite, their business model is based on - real or alleged - failure of others.  

Hedge funds like Muddy Waters and Citron Research usually short certain stocks and then they you use social media to spread rumors & fake news. Short sellers often appear on CBNC & Bloomberg TV and they use Twitter and the portal "Seeking Alpha" to talk prices down. These shortsellers intend to be a "catalyst" and to start a negative stock price moves which picks up momentum on its on and becomes a snowball ( institutionalinvestor). 

All short sellers benefit from falling stock prices. Thus they have a natural interest that the business of the shorted company fails. Short sellers are scavengers who want to benefit from the misfortune of others or even cause it. Even if short sellers do nothing illegal they can inflict a lot of harm by spreading rumors & allegations about the shorted company- a practice dubbed “short and distort”. This way they can ruin their reputation and irritate customers, creditors, investors and employees and so inflict harm onto the company.  Often short sellers appear on TV or they give interviews after shorting to "explain" their case. Sometimes they conspire to torpedo share prices in “bear raids.” With false allegations they can  destroy good companies and cause people to lose their jobs. In 2018 a short seller, named Rota Fortunae, attacked the real estate investment trust Farmland Partners Inc. (FPI ) and claimed the stock was “uninvestible”, which drove the stock price close to zero ( reuters). The stock needed around 2 years to recover from the attack (chart below).

(cnbc )

The tactics of short sellers inspired the producers of the James Bond movie "Casino Royale": There the villain, named "Le Chiffre", shorted stocks of an airline and then ordered an assassin to bomb a valuable new plane in order to destroy the whole company. Just fiction? Not really. In 2017 in Germany a man was arrested for a bomb attack (reuters). He had purchased put options on shares of the soccer club Borrussia Dortmund, which gave him the right to sell these shares to a certain price. Then he detonated three bombs that targeted the club`s team bus in the hope of forcing down the club's share price and making a profit. "If the shares of Borussia Dortmund had fallen massively, the profit would have been several times the initial investment," the prosecutor's office said, adding that such a slump could have resulted if any players had been killed or seriously injured. And a short seller of Tesla stocks caused crashes with Teslas to send the stock price south (ccn ).

Feral Hogs

In the recession of 2008  short selling was a viable business model. Hedge funds and other speculators were betting on a meltdown of the stock market and were shorting it. Massive shorting accelerated the fall of the stock market which intensified the pessimistic sentiment and inspired so more short selling, creating a snowball effect. The negative bets worked temporarily as self-fulfilling prophecy.

After the bankruptcy of Lehman Brothers, which brought huge gains for short sellers, groups of short sellers tried to repeat their success. They attacked everyone who seemed vulnerable, especially the banks, by massive selling and spreading gloomy rumors.  Dallas Fed President Richard Fisher, member of Federal Reserve, described these groups as " big money" that "does organize itself somewhat like feral hogs. If they detect a weakness or a bad scent, they go after it" ( marketwatch).

Late 2008 the massive bets against banks and many other companies - supported by spreading gloomy rumors all over the media - destroyed not only the trust into the attacked firms, the negative bets destroyed the trust into the whole economy. Bankruptcies and tumbling stock prices seemed to confirm those attacks. Thus the stock market got into a downward spiral which paralyzed the whole economy. Companies ceased investing & hiring, the recession was on the brink to turn into a disaster like the great depression of the 1930s. The destruction of trust - partly caused by short sellers - lead to a spiral of pessimism that almost sucked the whole economy into the vortex of a depression. In spring 2009 massive stimulus programs (QE) and a zero interest policy stopped finally the downward spiral. 

Similar collective bear reads repeated in the following years. During the correction in early 2016 hedge fund manager George Soros and others inspired speculators to short the US stock market (driveby). As a consequence the short sellers aggravated this dip. But they had to buy back as stocks recovered later in 2016 and amplified the stock market fluctuation instead of smoothing it. Short sellers also made the march 2020 stock plunge worse.

Short sellers are often very powerful and exert a large influence on the stock market.  Bill Ackman,  a hedge fund billionaire and CEO of the hedge fund Pershing Square Capital Management, had a big against Herbalife, a producer and seller of nutritional supplements, for years. In December 2012 Ackman revealed that had massively shorted stocks of Herbalife and then started bad-mouthing the company.  "To bring the stock down Ackman did not just use his huge reputation as a billionaire hedge fund manager and media star. Ackman´s team has organized protests, news conferences and letter-writing campaigns in California, Nevada, Connecticut, New York and Illinois, against his victim " wrote the New York Times (nytimes). He also pulled the political puppet strings and got support from leading politicians including a senator. 

Stock sellers harm the whole economy and slow down economic growth because they punish companies who´s management thinks long term and invests into the future (which often reduces gains in the short term or even causes losses). Short seller can discourage CEOs to invest and to create new jobs because the implied costs could provoke attacks by short sellers. Short sellers could slow down economic growth  - and they make any crisis worse. 

Unfortunately short sellers are not regulated the way Wall Street analysts or fund mangers are, so they aren’t as accountable (bloomberg ). The Security and Exchange Commission (SEC) has a blind eye for short sellers and has been ignoring their manipulations over decades. No wonder, that Tesla CEO Elon Musk calls them Short-Seller-Enrichment-Commission. Short-sellers in the U.S. are protected by the First Amendment, which gives them broad discretion to offer their view on a company as long as it is stated as an opinion they believe to be true (institutionalinvestor ). Freedom to manipulate, to harass and to ruin others?

 

Photography: The Gardens Of Key West

 (Drivebycuriosity) - My wife and I are back from our Florida trip. We spend some days in  Key West, the most southern place in the USA, except Hawaii. The little island has a tropical climate, even though the place lays 70 mile north of the tropics of cancer. The surrounding ocean, partly Gulf of Mexico, partly Atlantic, stabilizes temperatures around 80 F (26 C). This is the perfect climate for a lush tropical vegetation.

Being a fan of the tropics and their vegetation I took the ocassion to collect some images. The streets are flanked by trees and bushes and almost every house is surrounded by a wonderful garden. Some of the gardens look like tropical rain forests. Many plants, like the ubiquitous coconut palms and the mango trees, are imported from Southeast Asia & Latin America. They fit well.

 

 

I really envied the people who can live in such amazing gardens.

 

Enjoy!

 

Traveling: A Short Hike Through A Mangrove Swamp @ Florida Keys

 (Drivebycuriosity) - Yesterday my wife and I drove back from Key West to Florida´s mainland. On the long drive through the Keys, a chain of islands, we had a short stop at a little park, called Anne`s Beach Park, belonging to Islamaroda, a village on the Keys. There is a boardwalk through a mangrove swamp, which stretches along the beach.

 

 

 

The mangrove trees mix with other plants to a kind of jungle and there are a lot of ponds filled with a brown soup.

The swamp meddles with the beach.

The quiet place attracted some people who seemed to enjoy the quiet

 

The beach there is extremely shallow, like the whole area around the Keys. Apparently people could walk almost to the horizon. The water, which has tones of yellow & brown did not look inviting for me, but apparently attracted some people who were frolicking there.

To be continued

Traveling: Dolphin Watching Near Key West, Florida

(Drivebycuriosity) - My wife and I are continuing our vacation in Florida. We are staying now in Key West, the most southern point of continental USA (without Hawaii). Yesterday we took a four hours boat tour to Marquesas Key north-west of the island.

The water there is very shallow, just some feet deep, and filled with fish. This attracts lots of dolphins, the main attraction of this tour. We were lucky to observe some of these mammalia. They usually dive, of course, to devour on the rich diet of fish. 

 

We were lucky to see some of them jumping and at least one of them seemed to follow our boat for a minute or so.

The tour also contained some minutes snorkeling. This part was a bit disappointing because the water was very shallow, maybe just 6 or 7 feet deep. The sandy ground looked spooky, like a swamp covered with ugly white plants. There were plenty of fish, but most were grey or black. But watching the dolphins compensated and made the tour a nice experience.