Home » Writings and Commentary » Onyx Report Playbook 2007


T S, I N C.


O O K, 2 0 0 7










812,937 MILES

999,812,937 MILES




Game Time



Friday – July 20, 2007, 6 p.m. at 111 West Jackson – Suite 1108










Let this be the Realist
Work that I have ever Written…










Refuse to Lose





Game Plan 1



Depth Chart 8



Scoreboard 24



Appendix 30



I N V E S T M E N T S, I N










I.       Game Plan

Invest as if you were to
Live Forever.

Live as if you were to Die






June 30, 2007






I am serving food for thought. Enjoy a plate of this
pre-game meal.


I recognized the fact that following the submission of my
first report, ‘Touring 06,’ that my life was due for change. Although I was
doubtful that my motivations, fears, and urges were to swing dramatically—I had
been bracing for a shift in regards to my immediate personal space.
Essentially, the time had arrived in which a perpetual grind has become
necessary for advancement. This is a slugfest. Of course, building brick by
brick; dollar by dollar within Life’s Game of Inches is a brutal enterprise.
The struggle is mandatory; we must earn every yard of success. Winners
recognize this. The defeated complain, point fingers, shut down, and fold.


The bar has been raised. I am not immune to the idea of
investors, casual onlookers, and various interested parties expecting a
satisfactory level of growth and sophistication year to year. The challenge
arises from the basic fact that prior to ‘Touring 06,’ assumptions may have
been formulated, but concrete ideas and statistics had yet to be presented.
Expectations up to this point remained scant at best. Following our
presentation, the general consensus appeared to exclaim the idea that a higher
level of success had been achieved than was deemed possible.


I highlight the word ‘appearance’ as persons that thought my
progress to be that of a misguided, flailing imbecile may have not stepped


This year has been a grind due to the interplay of these
dual components of growth: the competition and face-off with self and the
perpetual adjustments that are essential to cope with an evolving landscape.
Yes, when building, one must compete with his own self. Yes, when building,
one’s immediate sphere shifts.


During the start-up phase of any enterprise, survival is
paramount. The generation of external motivation is nearly unnecessary as one
must sell to eat. On the gridiron, the offense maintains four chances (downs)
to move the football ten yards in order to preserve the march towards the
ultimate goal of a six point touchdown. Yardage is marked by officials carrying
chains along the sidelines. Hence, ‘moving the chains’ represents survival and
advancement. My psyche throughout the beginnings remained focused on generating
the personal income simply to pay the bills—figuring that a surplus would be
achieved if I were to continue moving the chains.



The goal emerged to personally invest $1,000 monthly. This
was my touchdown. These were the relatively carefree days of ONYX INVESTMENTS
at $0 – $25,000; and liquid assets underneath Kofi Bofah – $0. At this time, an
investment of $100 was cause for celebration—$1,000 representing big money and
a meaningful alteration of capitalization. Of course, capital formation is all


At today’s levels, $1,000 will not move the needle: the
company will swing + / – $1,000 within hours simply riding the gyrations of the
stock market. We may blink and hundreds of dollars will disappear, emerge, and
evaporate again, only to return with another blink of the eye. In the
beginnings, $10,000 of investment capital represented a small fortune.


Months ago, at the tail end of February – $10,000 was lost
within hours.


This is the grind. Wealth moves in percentages and larger
numbers carry larger swings. 1% of $1,000 is $10; $1% of $1 Million is $10,000.
As stocks generally shift amongst a band of + / – 1% daily, there will come a
day where the company will swing through tens of thousands of dollars within
seconds without anybody flinching. This will not be due to excessive
volatility; these numbers represent the regular shifts of overwhelming amounts
of capital.


We must seek out increasingly larger Game in order to
compensate: More money; more problems. As the equities build, our chief goal of
survival is replaced with the fear of the onset of complacency; as ‘moving the
chains’ and executing payments has become automatic. Hence, we must constantly
manufacture suitable goals in order to remain hungry. We must never let down
our guard and remove our game faces.


This is not a game for the weak, nor is making money a task
for the frivolous.


I once had an individual dismiss me – indicating that my
personal story was worthless and inconsequential. This is sheer lunacy, as we
may each gleam nuggets of vital information from persons throughout the
spectrum of life. The narratives of Kings, kingmakers, soldiers, pawns, and
paupers are all special in their own right. Dismissing the background of
another is nothing short of absolute foolishness.


If you are to do business with me, you must appreciate my


I fashion myself contrary to anything or anybody that you
have ever met. I do not seek approval from anybody; observing life in real
terms –I shun rhetoric upon any fairy tale idealism. I am a scholar and a man.


This mindset of self reliance under girds every action that
is an output of my being.


I feel as if I am not of these times; as if I somehow
teleported out of The Great Depression into my mother’s womb at 1980. Society
has become rampant with consumerism and a general lack of honor and respect.
Lastly, many of us harbor these obscene, grandiose visions of success without
work; success without capital; capital without strife.


I may be a young man, running a young company, but my Soul
is old.


As a man, once I perceive any slight or lack of respect
towards my person, the misbehavior is checked immediately. Yes, I harbor a
terrible mean streak. As I always remain in control—rarely is this venom
exposed. I may appear frighteningly calm while thrashing an opponent. In all
matters, I operate with a channeled rage. That is not a chip that you have
spotted on my shoulder; that is a boulder.


This is an alarming idea to those outside of my inner
circle. If you have never observed me reprimand a person; tracking him down to
engage in a duel; you are not in my inner circle. This may be shocking as
corporate types in suits are often perceived as ‘soft’ by society. I will never
tolerate disrespect. One may never address me in a manner reserved for an
untouchable bottom feeder without having their doors blown off.


I do not need a gun for swagger—my intelligence is the only
weapon that is required to destroy an adversary. These words would have never
become imprinted onto this page without the iron will that accompanies the


I seek concentration, refusing to hedge. Hence, once the
line is crossed, and I dismiss a person as an impediment—I do not stop at
burning bridges; I drop hydrogen bombs on the crossing, dam up the river,
pillage any viaduct building resources in the area, and torch whatever
insignificant rubble remains.


This is what I must do. This is a game that the casual
onlooker will never grasp.


As this company grows, individuals will continue to emerge
that hold the sentiment that I must be obligated to them in some manner.
Following our initial report, parties have had little qualms encroaching upon
my time and space. Certain persons see nothing wrong with seeking
sponsorship—approaching my person with their hands out, demanding time and
money. These are people outside of my inner circle.


Nobody that truly knows me would dare do this.


Of course, I satisfy the role of the lazy, arrogant,
bourgeoisie, spoiled rich kid. I must sit on my duff all day, collecting
payments from a trust fund somewhere. Certainly, my parents taught me about
this stock market and I am in cahoots with elite businessmen and political
figures supplying inside information. My ideas can only have been ghostwritten,
or regurgitated from books. Obviously, I must be lucky and should embrace my
role as Central Banker to anybody that has been held down by The Machine.


Anybody addressing me in this manner satisfies the role of a
cupcake nincompoop.


There is no capital without strife. One will never begin to
grasp social class until he builds something from nothing. Until that
point—there is only fairy tale rhetoric on both sides of the aisle. The
American Caste system is more rigid than many are willing to accept.
Transcending levels is quite difficult—nearly impossible.


The elite balk at social programs benefiting the masses;
scoffing at the notion of financing lower rungs of society at the expense of
their production. The masses scoff at the enrichment of the elite at the
expense of their production. These opposite factions of society’s class warfare
point fingers—ridiculing the other as lazy and uninformed.


The elite often do not recognize that the transfer of wealth
between generations is a social program. The elite do not always appreciate
that certain behaviors are learned implicitly to the point where they become
instinct. Birth into the upper crust is a powerful form of welfare, rivaling
any government program.


The masses often do not recognize that many members of the
elite group rose from nothing. There are people that have ascended class with
little more than heart and gumption. Discounting another’s success as Fortune
is a quick fix, so one may shirk the gruesome image that may be in the mirror.
Hurling blame at the conspiring Machine is much less jarring than dealing with
one’s own personal shortcomings.


Read and react.


The diagram presented on the cover of this document
represents a counter – trap play. Upon the snap, the offensive action initially
flows to the right, baiting the defense to shift towards that direction. The
ball carrier receives the handoff from the quarterback, feints right and powers
left. This contrary movement represents the ‘counter.’


A defender on the left side is unblocked, allowed to roam
free into the backfield. The defender has the runner directly in his sights and
is poised to make a tackle. The defender is already planning his dance
footwork, revising his crowd pleasing shimmy following the big play. At this
very moment, a raging 6’5” 380 pound corn fed Big Ten country earth mover
disguised as an offensive lineman pulling (running behind the line of
scrimmage) from right to left at full speed pancakes the hapless defender. The
defensive man has gotten his clock cleaned and is lying prone on his backside,
embarrassed at being driven into the turf in front of thousands. The ball
carrier bolts through the wreckage of bodies and is instantly 30 yards


That is The Trap. This is Football.


We all are familiar with individuals that just don’t get
‘it.’ We all have had experiences where tranquility and achievement appeared
certain to be within our grasp, yet we are blindsided by circumstance. Nobody
gets ‘it’ all of the time. Professionals pick themselves up, dust off the
uniform and recalibrate. Amateurs remain wedged in the turf falling victim to
the same trap play—discarded by Fate time and time again. The defeated want no
parts of this Game; intimidated by the violence and organized chaos of Western
Thought. If you wish to play it safe and remain cowering on the sidelines; do
not seek sympathy from a Player when society reduces you to a water boy.


If one refuses to accept the risk of Chance, one has already


The uninitiated remain mesmerized by the irrelevant. Casual
football fans may only observe brutes crashing into each other, whistles, the
pigskin, chalk, and a pile of bodies kicking up dust and grass. The uninformed
may recognize that the Dow is up 100 points, yet possess little appreciation
concerning the mechanics of business. On every football field there are players
that miss assignments, bark at coaches, and mince words with fans in a
maddening spectacle of underachievement.


We cannot afford to loaf, nor take plays or days off at the
office. I will always prepare as if I were a young rookie from a no-name
program whose sole intent is simply to make the cut—remaining on the ball club
through grit and hustle.


What can be worse than potential untapped? We must toil
until there is nothing left. I must work until exhaustion, albeit at the office
or at the gymnasium. I do not lie in bed, counting sheep until slumber – I
collapse every night with my inner tank on empty.


‘Block until the whistle.’


Coaches instruct players to continue the execution of
assignments until the whistle marks the play dead. Although the action may be
yards away on the other side of the field, one must be prepared to engage the
opposition under the condition that the play moves towards his area. We must
remain on guard, continuing to work in spite of the fact that the Wheel may not
always spin our way.


I will never be satisfied. I will always seek to accumulate
knowledge, success, and capital until the ‘whistle’ blows at my death. I will
invest as if I were to live forever. I live as if I were to die tomorrow. This
is the only way that I may unlock my potential.


The uninitiated may view my track as reckless: save and
invest everything into the stock market, move 1,000 miles away from all things
familiar, shun the corporate game for self-employment, and continue to dismiss
diversification for concentration. The uninitiated do not comprehend risk.
There are two parts to the risk equation: the risk of loss and the opportunity
cost risk – foregoing gains due to fear, ignorance, or chance.


Missing the opportunity represents the greater risk, as the
boundaries of personal human growth are limitless. Life is a Gamble and we must
make calculated bets, continuing to roll the dice, avoiding the most wretched
of outcomes: To Die Broke and Alone. Picture the fear monger laying on his
deathbed picturing what could have been.


I dismiss those that perceive the life of an independent,
young stock-jobber to be risky. The gentleman living his life for others,
diversifying out of fear, and grinding as an employee for cash payments merely
to purchase items for consumption is the real risk taker. He has played
it close to the vest, yet may be held captive beneath the glass ceiling of
office politics. In spite of playing the role of good soldier and model
corporate citizen, he may be shown the door at any moment. Even Thomas Jones,
the glue of the Chicago Bears offense, was dismissed due to business and
politics. Stability is an illusion on the gridiron, in the boardroom, and the
cubicle. Plan accordingly.


These are lessons that are not taught in school. These are
lessons that are synonymous to the uber successful. We are taught never to put
all of our eggs in one basket. I would rather place all of my eggs in one
basket and stand guard over that basket with a cache chock full of
intellectual and monetary firepower. There is little time to operate as a jack
of all trades. My preference is to become a master by focusing all energies
upon one endeavor. Imagine the unlikelihood of Gates, Rockefeller, Buffett, Walton,
or even Jordan being pushed and pulled in opposing directions from the goal. We
skirt the irrelevant skirmishes of the battleground. We remain focused on the


I expect to win. I do not seek out high fives, celebrations,
and pats on the behind. I am supposed to be doing this. Anything less
would characterize failure.


Readers may not be familiar with Baltimore Raven Ed Reed.
Reed is not strikingly fast, nor incredibly massive. This is a defender known
for his intelligence, instincts, and absolute intensity. This is a player that
will scope out a play before the action develops, fearlessly launch his body in
the direction of the ball carrier and completely punish the man—breaking the
will of his opponent to the point where the opposition cannot even muster the
gumption to compete.


There is little celebration from Ed Reed after a successful
tackle. He simply leaves the man lifeless on the turf and walks off towards the
defensive huddle. This is cold blood; strictly business; nothing personal.


I do not see myself being Blessed with otherworldly talents
and circumstances. I cannot sing. I cannot dance. I have no jump shot, nor am I
tackling anybody. I do not look like Denzel Washington and am not from a line
of spectacular wealth. I do not even see myself as naturally, exceptionally


I must work for every inch of success and every penny that
comes into my possession. This is why I may remain in the office working
throughout the night. This is why I read the Wall Street Journal from front to
back every day. This is why I have passed out 1,000 business cards daily. This
is why I am hot.


One may not easily diminish my success to luck. One may not
argue that I demonstrate misplaced compassion, offering up the idea that I was
born into wealth, or am a genetic freak, cashing million dollar checks in the
arena of professional sports. I am here because I work tirelessly, demand
respect, and avoid foolishness. The following section summarizes the output of
this mentality.


Let’s Go. There is no time to waste.


II. Depth Chart









Kofi Bofah


Kofi Bofah

of Personnel

Kofi Bofah


Kofi Bofah


Kofi Bofah


Kofi Bofah


Kofi Bofah

Teams Coach

Kofi Bofah

and Conditioning

Kofi Bofah


Kofi Bofah



/ TE





BRK.B, MO, DHR, Cash








‘Men lie. Women
lie. The numbers don’t.’ —Shawn Carter


The capitalization of ONYX INVESTMENTS, INCORPORATED at June
29, 2007:






ExxonMobil Corporation



Berkshire Hathaway Class B



Best Buy Company,
Incorporated (BBY)



United Technologies
Corporation (UTX)



Federal National Mortgage
Association (FNM)



Nike Incorporated Class B



Burlington Northern Santa
Fe Corporation (BNI)



Altria Group (MO)



Coca Cola Company (KO)



Danaher Corporation (DHR)



Electronic Arts (ERTS)



Starbucks Corporation






Total Equities



Cash, Cash Equivalents
Available for Withdrawal






I will proceed to present the holdings within my personal
portfolio. Interested parties may note the similarities amongst positions
titled ‘Kofi Bofah’ and those headed by ONYX INVESTMENTS, INC. Although assets
classified as the property ‘Kofi Bofah’ fall outside of the corporate umbrella,
capital may be directed towards the company if necessary. I do not report these
personal statistics as a braggart – I present these numbers as an indication
that I am able to operate from a position of strength. Business contacts may
remain confident that the liquidity of the enterprise is far from being
compromised as I will continue to save diligently on both sides; within ONYX
and underneath ‘Kofi Bofah.’ I list these items in order of
importance—estimating valuation in the aggregate as falling within a range of
$100,000 – $1,000,000. Personal holdings within ONYX have not been itemized so
as to avoid a ‘double count’ in capitalization between myself and the business:




Relative Value





ExxonMobil Corporation

Increasingly Adequate


5— S. Drexel Blvd.

Increasingly Adequate


Furnishings and Equipment



Cash and Cash Equivalents



2002 BMW 325i, 5 Speed,
80,000 miles

Depreciating Towards Nil







Presenting a wide range ($100,000-$1,000,000) is typical of
executive reporting. Readers may note the general state of the finances of your
Chairman, but tracking the exact numbers and particular movements headlined by
‘Kofi Bofah’ is a worthless exercise. Exxon is the only stock comprising my
personal portfolio; these shares being bought through a dividend reinvestment
plan (DRIP). I am oblivious to real estate investment—the only equity
categorized as real property being my own residence. Lastly, cash is worthless
within this group. At minimum, cash reserves would be better served paying down
mortgage debt than earning today’s meager savings rates. Also, with core
inflation being on the up-tick and the prices of food and energy surging
dramatically; Cash is Death. One must recognize the risk of carrying cash on
the books: purchasing power will be halved within twenty years.


There is no room for any quirky life insurance / annuity
contract, fixed income investment, multi-level marketing outfit, or Trader Geek
hedging / derivative / arbitrage program trading in my personal portfolio.


Do not try this at home. Do not attempt to compete with a
twenty-seven year old young man with no wife and no children. This personal
allocation of one stock, home equity, and minimal cash would represent nothing
short of sheer lunacy to 99% of the general population. Trust, I respect risk;
both to the downside and to the upside in the form of opportunity costs. I am
able to personally withstand thousands of dollars in short term paper losses in
the name of long term growth. Diversification may be a hindrance to my person,
but diversification is all-important to others.


On the ONYX side, there is a level of diversification, but
these numbers are a function of circumstance, rather than the textbook. Our
statistics demonstrate that we will not out think ourselves into going away
from the hot hand. Picture Emmitt Smith, Walter Payton, or Jim Brown being
benched leading into the fourth quarter after gouging the opposing defense for
yardage throughout the ball game. Intelligent coaches continue to execute one
particular strategy with particular personnel until the opposition adjusts. We
must think likewise.


We buy and hold. We build cash positions in order to add to
these positions at suitable levels. We refuse to sell simply to book profits.
We liquidate an investment only under the condition that an alternative move
proves superior.


This is a company that is in the image of your Chairman:
substance over style; concentration and mastery before diversification.
Although the businesses held within the portfolio vary in size from $15 Billion
worth of capitalization to $480 Billion; every stock position dominates its
respective industry. These companies operate with an efficiency that may be
described as ruthless; and an operational style bordering upon arrogance.


There is no time here for guesswork. There is no time for
reform—scouring the landscape for ‘the next big thing.’ Personally, I wish to
align myself with those that already exhibit leadership and character. I strive
to always be the Top Gun; blazing trails, rarely being compelled to follow
orders. These are the types of business that I seek to locate.


This is not a portfolio that will garner adulation from
Green Peace. This is not a portfolio that will earn anybody’s do-gooder badge
of corporate citizenship. Exxon, United Technologies, and Altria represent
industries that are tailor made for attack by their very nature. Nike and Coca
Cola have both dealt with the negative attention that is a byproduct of
questionable labor practices. Fannie Mae has been targeted by over zealous
lawmakers as a mismanaged, reckless ogre that will only torpedo the housing market.


Yes, even the venerable Warren Buffett’s Berkshire Hathaway
has been linked to the tricky gamesmanship of particular insurance products.
Berkshire’s General Re was on the other side of the very same transactions
which brought embarrassment to insurer American International Group and the
ouster of its visionary Chairman Maurice ‘Hank’ Greenberg. Of course, an
investment directed towards Berkshire also features alignment with the Evil
Empire of Wal*Mart. There will always be a Dark Side to capitalism.


Ironically, Starbucks that beacon of excellent corporate
stewardship maintains the dubious distinction of remaining our worst


I am not a politician. My only obligation is to maximize
returns while mitigating risk. Allowing personal politics to influence company
decision making and consequently shareholder returns may only be labeled as
irresponsible. Dissenters may contemplate my Fate of piling up losses with
socially conscious firms such as Starbucks in comparison to generating outsize
returns featuring the Altria / Exxon / United Technologies corporate
ragamuffins before remarking otherwise.


‘Socially conscious’ investing may be a one way ticket to
the poorhouse for the young firm. Perhaps ‘socially conscious’ investing is
contradictory—a contrary Utopia. The ultimate responsibility of any corporation
rests with protecting the interests of the shareholder. The shareholder seeks a
competitive return in exchange for the risk of capital. The corporation must
become mechanical in its operation and can only remain functional by laying
aside propaganda for the benefit of the company at large.


Fundamentally, all publicly traded issues satisfy a specific
demand and must seek the maximum amount of compensation that the market will


Politics and ethics aside, we have demonstrated the ability
to gauge significant near term peaks and troughs of independent market cycles.
We went heavy into oil until the peak of Katrina, shifting into transportation
and consumer electronics at the energy market top; we began buying Fannie Mae
amidst the depths of the mortgage facilitator’s accounting debacle; we sought
out the all world footwear purveyor Nike in order to exploit the strength of
emerging markets and the weakness of the dollar; and we exposed today’s real
estate collapse years ago. We have consistently exhibited the courage to step
up into disintegrating markets and buy through junctions of fear.


This is buying low.


There is no crystal ball in our possession. There are no
insider connections supplying exploitable information to this company. We apply
maximum effort to prepare so that we may execute with conviction. We make
strides daily with little more than a strong dose of moxie and gumption. The
only mindset with which to attack this Game is to follow Kipling: ‘If you can
keep your head while all about you are losing theirs.’


My most critical job function remains the allocation of
capital. Essentially, the placement of the proper amounts of monies directed
towards the correct investment at the correct time is all important. General
Managers equip professional football teams with personnel; coaches craft
specific game plans geared towards match ups; and players execute. The precise
Quarterback delivers the football to the proper personnel unit in position for
him to make a football move. Of course, GMs constantly seek to upgrade the
program via free agency, trades, or the draft; coaches adjust game plans; and
quarterbacks audible (change) plays at the line of scrimmage—intelligent
offenses take what the defense allows. Dominant programs impose their will on
the opponent.


Although there may be a basic framework to this business, we
must preserve the flexibility to recalibrate to prevailing conditions. Football
is the most demanding of sports in terms of strategic gamesmanship. Likewise,
capital formation, specifically stock market investing is the most demanding of
occupations in terms of strategy. Markets shift by the second, and the
psychology of participants is prone to reverse by the hour. Indeed the stock
market is manic depressive.


We must plan accordingly. The plan is to ditch the plan. Our
business plan was discarded before the ink dried. We may be set on purchasing
oil only to be derailed by a hurricane which knocks one third of U.S. refinery
capacity off line and drives energy prices through unsustainable, speculative
levels. We may be reserved to stockpiling cash only to be presented with
compelling entry points into footwear, consumer electronics, and mortgage
backers. Our portfolio is a function of circumstance, rather than the outcome
of any elaborate, premeditated scheme. Our positioning is the synthesis of
interest rates, equity blow-ups, investor inflows, investor redemptions, and a
small dose of Fortune.


We are not in the business of providing stock tips. Equities
presented within the portfolio do not signal the endorsement of the position as
a legitimate option for the individual investor. We strongly advise against the
purchase of these securities for one’s individual account. Inevitable downturns
in the particular stock will present an alarming quagmire as both the separate
portfolio of the investor and his ONYX stake may plunge into the red.


Although the company promotes the long term ownership of
businesses, the firm has and will engage in shorter term trading
activities as conditions merit. The portfolio is constantly in flux, running
the gamut from a zero equity policy, shunning stocks; to embracing markets with
full investment. We will not telegraph any specific investment program.


We will now undertake the task of presenting brief summaries
concerning our respective equities. Statistics are not to be mistaken for
indicators of performance; rather we present gauges of value.


XOM—ExxonMobil Corporation—Irving, Texas


$58,716 (700 Shares @ $83.88)

Price to Earnings: 12.20

Earnings Yield: 8.20%

Dividend Yield: 1.67%


Arguably the most efficiently run operation in the business
world. The English language is unable to heap adequate amounts of praise upon
the operational execution of this behemoth. We may only imagine the breadth of
this company as the numbers are impossible to grasp. This has emerged as the
favored equity of your Chairman. Exxon is the only stock held within my
personal portfolio as I am unable to present another stock that combines
sentimental value with economic value in such a magnitude. As I am enamored
with the roadway, Exxon represents a constant fixture throughout my travels,
particularly along the East Coast and Deep South. The precept is comical that
investors scour markets for the quick buck, dueling amongst themselves to game
real estate, commodities, puts, calls, swaps, and currencies; while I remain
oblivious—adding to my personal stake in this business at any time at any


The punch line of this parody is my confidence of generating
exceptional wealth merely by feigning ignorance to the externalities of money
making and systematically buying this stock personally through a dividend
reinvestment plan (DRIP) account. The agenda is wildly simple as if to be
preposterously unfair. Others may scout real estate, screen tenants, repair
properties, analyze stock and trade francs—merely churning capital to be
frittered away between commissions, taxes, and middlemen; I select my favorite
enterprise and invest for the long haul as if I were a drone.


Of course, ExxonMobil has fulfilled the role of workhorse
running back for ONYX INVESTMENTS. This has been our go-to player, moving the
chains—earning yardage as if running downhill. Our heavy concentration within
XOM has been vindicated by the relentless march of oil prices and the
extraordinary appreciation of these shares. This stock has been a freak of
nature. Picture 5-11, 255lbs Jerome Bettis, shaking defenders as if he were the
sprightly Barry Sanders. This is the largest business on Earth. The existence
of an entity this massive, yet so nimble and agile is unheard of.


The basic laws of supply and demand stipulate the inevitable
upward pricing premium that was to manifest itself within energy markets.
Limited supply, coupled with increasing demand lifts prices as consumers must
compete to attain resources and suppliers deliver product to the highest
bidder. Supply has been hindered by the confluence of geology, politics, and
the forces of nature. Demand remains elevated due to the essential utility of
this fuel for all developed and emerging nations. China and India will stand as
insatiable buyers of commodities as these subcontinents industrialize.


Today, the discovery of vast new oil fields comes with less
frequency. Of course, large amounts of crude oil critical to the world’s supply
are located within the borders of unstable regimes. Iran, Iraq, Venezuela,
Libya, Nigeria and Russia represent troubling flashpoints along the world’s
supply chain of oil. Iran, Venezuela, and Russia have taken little pains to
disguise a disdain, if not utter hostility towards the West. These nations have
demonstrated a propensity for geopolitical hardball—demanding exorbitant
concessions, shutting down energy supply for export, or merely the outright
seizure of property in order to bully a way into a seat at the table of world
powers. Iraq and Nigeria are war zones in which the efficient production of
crude oil at full capacity is secondary.


Due to the enormous capital investment along with the
labyrinth of legislation and environmental concerns, 1976 marks the last year
in which a refinery has been built upon United States soil. The oil industry
respects the boom and bust pattern of Black Gold and has shunned the idea of
committing shareholder capital towards a new refinery project, only for the new
unit to generate scant levels of profits at the point in which prices fall.
Refiners have preferred to increase capacity at existing plants rather than
initiate new construction. Hence, the conversion of crude oil into gasoline,
diesel, asphalt, and jet fuel; represents yet another choke point along the
supply chain.


Of course, XOM has stood ready to capitalize. The oil giant
has outdone itself, shattering every earnings record in existence. Exxon set a
new precedent, tallying $39.5 billion in profits for 2006. This is a higher
level of income generation than the gross domestic product of 114 nations. 2006
Exxon profits are larger than the value of all goods and services
produced within the borders of more than 100 countries.


This is a firm that has been identified with unfathomable
power, ruthless execution, and awe inspiring efficiency since the days of
Rockefeller. This company kowtows to nobody – evidenced recently by Exxon
preferring to withdraw from oil rich Venezuela than to accept the concessions
of El Presidente Hugo Chavez. From its beginnings of Standard Oil, the only
institution that has proven itself as a capable adversary to this outfit has
been the United States Government.


Exxon has accepted the baton from Wal*Mart and Microsoft as
the poster child corporate villain. The company is under attack on all fronts:
Greenpeace, critics of excessive executive pay, and pension managers.
ExxonMobil has been assailed as an irresponsible Agent of Destruction to all
things wholesome. Management fuels the ire of these activist groups by
satisfying the caricature of the swashbuckling Texas oil man.


Ironically, Senator Jay Rockefeller of West Virginia
represents the largest critic of ExxonMobil Corporation. This heir to the
Rockefeller kerosene, oil and gas, Standard Oil, and Exxon fortune has authored
open letters berating the company for price gouging, executive pay, and global
warming. This is a spectacle, culminating in talks of a windfall profits tax
which would only become a disastrous absurdity.


ExxonMobil shall only be held accountable to its


The company has refused to fall in line with competitors
that have been browbeaten into diversification. British Petroleum has attempted
to market itself as the Green Energy Company with its Beyond Petroleum
campaign—highlighting efforts to locate additional alternative energy


Exxon remains unapologetic, adhering to its chief function
of discovering, producing, and marketing petroleum products. The corporation’s
primary responsibility is to reward shareholders. In the words of Chief
Executive Officer Rex Tillerson:


‘We will only invest shareholder’s money where we think they
can get the types of returns they expected upon their initial investment with


Solar power, bio fuels, and wind investment cannot match the
returns of producing, refining, and marketing crude oil. Ethanol, Washington’s
pet project, is unable to match the energy efficiencies of oil. Due to the
intensive requirements of land and fuel to manufacture ethanol; the resource
has exhibited little, if any environmental advantages over oil. Subtracting
government subsidies from the equation, the ultimate production of ethanol is
comparable to $6 per gallon gasoline.


These outside, alternative ventures simply are not
profitable for the conservatively managed oil company.


Although today’s events mark the perfect storm of oil
commodity profitability, Big Oil remains mindful of the inverse of the
supply-demand function; the boom and bust cycles that have plagued oil markets
from Drake’s Well at Oil City. High prices induce competition, competition
increases supply, and increased supply applies downward pressure to prices.
Simultaneously, demand falls in response to high prices. At this point, prices
may capitulate—weaker players are shaken out and we begin another cycle.


Picture Norway, Saudi Arabia, Exxon, Royal Dutch, Apache,
independent wildcatters, and the Alberta oil sands rapidly increasing
capacity—bringing oil to market in order to capitalize during these boom times.
Eventually, motorists switch to mass transportation, refuse to purchase sport
utility vehicles, and cancel summer vacations—balking at $3 gasoline.
Simultaneously as demand falls, an oil glut emerges, pressuring prices. This is
the commodity conundrum. The oil market often sabotages its own self.


Alternative energy ventures that are slightly profitable at
$60 – $70 oil would be disastrous at $40. Hence, ExxonMobil will continue to
plow cash into dividends and share buybacks—further angering activists seeking
higher levels of alternative energy investment, commodity exploration, or
government tax receipts. With XOM shares doubling in three years, we cannot


Do not Hate Exxon merely for doing its job.








BRK.B—Berkshire Hathaway, Incorporated Class B—Omaha,


$14,420 (4 Shares @ $3,605)

Price to Earnings: 14.77

Earnings Yield: 6.77%

Dividend Yield: Nil


Arguably, Berkshire Hathaway may also be classified as the
most efficient business in existence.


We figured at the point last year, at which Warren Buffett
announced that ‘it was time for some action,’ that the stock market was due for
a lift.


Berkshire Hathaway is the investment vehicle of the
legendary investor, Warren Buffett. Mr. Buffett at one point held the title of
the world’s richest man. He was to eventually be overtaken by Microsoft’s
William Gates. Due to charitable giving and the emergence of Mexican oligarch,
Carlos Slim—The Oracle of Omaha may have already slipped to third.


Regardless of his ranking, Buffett has amassed billions of
dollars in wealth, courtesy of the stock market. The super rich dismiss the
case for diversification in both practice and circumstance. Super wealth is the
product of concentration—the outcome of becoming a Master of one’s particular
section of The Universe. Bill Gate’s wealth has been driven by the singular
mission of Microsoft to mass market the personal computer. Warren Buffett’s
fortune is the result of an absolute focus on the stock market. The pattern
transcends the financials of the Walton family, Carnegie, Rockefeller, Soros,
Carlos Slim, and Mellon. Pick one thing and do it.


This is the way of the uber-successful.


Beginning as an enthusiastic twenty-six year old with
$105,000 in seed capital, Buffett has built a masterpiece of an enterprise.
Berkshire Hathaway is a financial powerhouse, and with Buffett at the helm the
sum total of the overall conglomerate is intrinsically greater than its parts.
The Oracle has demonstrated a legendary ability to create value through the
synthesis of stock market transactions, hedging techniques, currency bets,
commodities, and private equity.


Berkshire executes stock transactions for its own account,
purchases businesses outright, and specializes in risk management. Berkshire
Hathaway may be described as an investment fund / industrial conglomerate /
insurer. Capital is shuttled amongst units, directed towards the areas that are
thought to garner higher levels of future earnings.


BRK is Main Street U.S.A. The balance sheet of the holding
company is comprised of marquee names such as American Express, Coca Cola, The
Washington Post, Wells Fargo, and Proctor and Gamble. Wholly owned subsidiaries
include See’s Candy, Fruit of the Loom, GEICO, and Dairy Queen.


Returns are magnified by the leverage of insurance
operations. Insurers receive premium payments in exchange for satisfying the
catastrophic claims of the insured. Monies held by the insurer flowing from
premium inflows to claim outflows are referred to as float. The typical
insurance company invests this float in fixed income securities (bonds). The
insurer is able to collect interest before capital may be paid out to
policyholders in the form of claims.


This is not your typical insurance company. Although
property and casualty insurer GEICO is a Unit of Berkshire, the company is
primarily a re-insurer. Re-insurers serve as the insurance companies to the
insurance companies. Of course, the ultimate insurer is the United States


Berkshire is one of the few companies with the credit,
expertise, and capital to write these exotic insurance policies. The company is
compensated handsomely for this function. Due to the underwriting discipline of
Berkshire Hathaway, the conglomerate is able to access capital at rates more
favorable than the U.S. government.


Float money, carried at lower rates than government bonds is
invested into stocks, bonds, commodities by a man that shares the Pantheon with
Benjamin Graham, Philip Fisher, Peter Lynch, and George Soros. The business
model is almost unfair.


With Exxon representing the featured, franchise running back
of this squad—Berkshire, along with Danaher and any cash positions may only
symbolize the defensive unit. Although we have ridden Exxon for steady yardage,
courtesy of strong energy prices, the stock still remains susceptible to the
overall world economy. The specter of a global slowdown may pressure oil prices
and consequently XOM stock. Obviously, demand for commodities will be
compromised amongst recessionary periods.


Berkshire Hathaway demonstrates little correlation to
prevailing market conditions and the stock market at large. In fact, BRK stock
often trades with an inverse relationship to the overall market. BRK was
bloodied, yet remained unbowed throughout 1999—the peak of stock market mania.
The stock sank through fresh, near term lows as the value investment maxims of
Warren Buffett were dismissed as the ramblings of some old fogie—in favor of
‘New Economy’ growth.


Inevitably, the ‘next big thing’ imploded upon itself.
Go.com, pets.com, Sun Microsystems, AOL, JDS Uniphase, and Henry Blodget became
names synonymous with hype, excess, and greed. The manic depressive market had
driven these pipe dream stocks to new heights during yet another period of
euphoria. Of course, the ensuing fallout was the depressingly brutal 2000-2002
bear market—punctuated by September 11th.


Investors fled to safety and embraced the dowdy ways of
Warren Buffett yet again. Berkshire emerged and began to climb through the
rubble—appreciating in spite of a global recession and stock market meltdown.
These movements indicate that Berkshire is the anchor of our defense; shielding
the company from losses against the backdrop of disintegrating economic


BBY—Best Buy Company—Richfield, Minnesota


$13,300.95 (285 Shares @

Price to Earnings: 17.16

Earnings Yield: 5.83%

Dividend Yield: .86%


This stock may be in trouble.


This is a company that peddles consumer electronics to the
masses. The market for personal computers, flat screen televisions, stereos,
and accompanying peripherals may be described as brutal at best. Consumers will
feel the squeeze of surging energy prices and interest rates. Real estate has
become a wreck in many sections of the country. The real property slowdown
eliminates job growth and cancels the wealth effect which was a product of the
past real estate boom. There is little to no equity available for homeowners to
refinance, arrive at the Big Box retailer, and shop until dropping. Obviously,
the real estate debacle and subsequent sub-prime loan fiasco do not bode well
for the consumer.


BBY may be downshifting into the awkward area separating
growth story from mature company. Microsoft and Wal*Mart are examples of former
Wall Street darlings whose financials remained formidable, yet the stocks moved
sideways, or stagnant for years. At this junction, shareholders begin clamoring
for increased dividends and share buybacks rather than the retaining of
earnings into the business to promote growth. Dividends return capital to
investors and generate stable streams of income; share buybacks bolster
earnings per share as the fixed pie of profits is divided amongst fewer
parties. Theoretically, buybacks boost share prices, as earnings drive stocks.


Recently, the stock missed earnings and shares were to shed
more than 5% of value in one day. In typical ONYX fashion we refused to cut and
run; we maintained poise and exploited the opportunity to ante up on the
investment. We were vindicated within days as Best Buy management announced an
increased dividend and share buy back program. BBY shares surged on the news
and the stock has continued to appreciate out of this dip.


BBY positions are a product of circumstance. Although we
respect the company, this is not a stock that has necessarily remained on the
radar for acquisition. We remain mindful of the stock action falling victim to
the external happenings of interest rates, housing, and GDP—diverging from the
true fundamentals of the business.


In other words, we are nearly oblivious to share price. Our
chief concern is business execution and we are baffled by the idea of any
business that may fall prey to the destruction of 5-15% of value within
moments; at the whim of Wall Street. These sharp drops represent buying
opportunities for the intelligent investor.


BBY is a good company. Although the shares will remain
volatile, driven by interest rates, oil prices, earnings expectations, and the
consumer outlook—there is value in a business whose chief Big Box consumer
electronics competitor is the faltering Circuit City. With Circuit City
descending into shambles over the years, Best Buy faces more competition from
Wal*Mart, Costco, and the gasoline pump for the electronics buyer.


This is a stock that rises and falls with the emergence of
‘must have’ electronics items. The consumer must have the I-Pod, flat screen
television, and laptop. The consumer must upgrade. This is a stock that may be
gamed with the technology cycle.


We will continue to hold the stock, keeping BBY on the field
as a player that may add a measure of explosiveness to the offense. BBY may
have come into the League as a flashy game breaker, but the company has matured
and has become a heady player, relying on savvy to achieve separation, similar
to the veteran wide receiver.


UTX—United Technologies Corporation—Hartford, Connecticut


$13,263.91 (187 Shares @

Price to Earnings: 18.81

Earnings Yield: 5.32%

Dividend Yield: 1.80%


Repeat. Arguably, the most efficiently organized business in
operation. Similar to Exxon, this is a stock that may be the cornerstone of any
portfolio. This stock is a good change of pace from XOM and could very well
carry the load for this company as our top stock. The strength of the energy
markets and spectacular appreciation of XOM leaves United Technologies as our
second candidate at the vital tailback position. If Exxon shares were to
literally run out of gas, we may look to UTX to step up production.


Characterized by stable cash flow, healthy dividends, and
adequate growth, the strong industrial is essential. Economically sensitive,
these stocks may move in tandem with the general outlook. Superior enterprises
continue to generate growth amongst periods of economic contraction and


Comparable industrial conglomerates include Minnesota Mining
and Manufacturing (MMM) and General Electric (GE). As MMM and GE have proven
formidable long term generators of shareholder wealth, our choice upon a
suitable equity to represent the sector presented intense difficulty. Our
initial pick from this group had been 3M, the hardscrabble organization from
the uncompromising Northern Minnesota Iron Ranges. 3M was a stock which moved
in fits and starts. Performance would accelerate, only to stall for long
periods. Although 3M shares are often a leading performer within the Dow Jones
Industrials—we must remain vigilant; always seeking to upgrade.


Short term share price is inconsequential. The business
gaffes of the MMM organization were the ultimate drivers behind our
frustrations. 3M became something of a problem child—an organization with
strong potential, yet held back by its own self. The company had miscalculated
production requirements for the manufacture of crystal displays within flat
screen televisions on several occasions. Management would report the miss at
the last instant, causing the stock to tank. George Buckley, former chief executive
of Brunswick Corporation must adjust to the communication demands of heading a
large cap enterprise.


Our intention is not to mislead. 3M is a solid, innovative
collection of businesses with stable cash flow, and robust dividends. The stock
often trades at a discount to General Electric and has performed well during
recessionary periods. I have traded positions in this stock personally, or
through ONYX for a time period that nearly spans one decade. The first buy
orders for ONYX INVESTMENTS were Berkshire Hathaway, Exxon, and 3M. Yes,
Minnesota Mining and Manufacturing is an old friend.


Of course, sentiment cannot cloud financial decision making
with shareholder capital on the line. United Technologies has proven to be the
superior industrial conglomerate, generating long term investment out
performance for stakeholders. In big time general manager-speak, we traded 3M
‘straight up’ for United Technologies by liquidating MMM shares and directing
the proceeds towards the purchase of UTX.


This Hartford, CT manufacturer seamlessly integrates its six
industrial units into a conglomerate that has grown earnings by double digits
each year but two since 1994. These units are listed as Otis, Carrier, Pratt
and Whitney, UTX Fire and Security, Hamilton Sundstrand, and Sikorsky. These
divisions are giants in their own right:


Carrier is the leading manufacturer of heating, ventilating,
and air conditioning systems; Otis is the world’s top supplier of elevators and
escalators; and Pratt and Whitney shares notoriety as a member of the ‘Big
Three’ jet engine makers also comprised of rivals General Electric and Rolls
Royce. Sikorsky is a global provider of commercial and military helicopters
including the famed Black Hawk. Presidents and dignitaries have made entrances
onto the South Lawn of The White House on lifts from Sikorsky Marine 1
helicopters since the Eisenhower administration.


The aerospace and defense units account for 40% of UTX
sales. 60% of total sales are made internationally, with Carrier and Otis
profiting from the build out of emerging market infrastructure. This is a
company that is clicking on all cylinders. The stock will benefit from the
necessary upgrades of the current aerospace cycle, international sales, and
robust defense spending.


FNM—Federal National Mortgage Association—Washington,


$12,412.70 (190 Shares @

Price to Earnings: Earnings

Earnings Yield: Earnings

Dividend Yield: 2.45%


We offered these words on the stock at this same point last


‘The Federal National
Mortgage Association, better known as Fannie Mae represents another equity
which has been dumped and scorned by investors. The government sponsored entity
responsible for facilitating liquidity within the mortgage market has been the
victim of a deteriorating real estate sector, daunting interest rate
environment, and self-imposed accounting shenanigans. At best, the future
direction of the enterprise may be described as murky; its recent history may
be described as nothing short of disastrous.


Earnings per share, price to
earnings ratios, and all other estimates of value remain useless. The question
being, what exactly are earnings?


We feel that by any measure,
the stock is cheap. With a price to earnings ratio (p-e) of 6, and an earnings
yield of 16%, the stock trumps all comers—stocks, bonds, and real estate in
terms of value. Entertaining a wild scenario of former executives overstating
earnings by double the actual, FNM would still trade at a multiple of less than
fifteen. We feel that a p-e ranging from six to fifteen is more than adequate
compensation for the risks.


This is an entity that
possesses the power to tap credit markets, borrowing at favorable rates given
its ties to the Federal government. The proper use of leverage creates a profit
machine, as Fannie was crowned a Wall Street darling throughout the eighties
and nineties. However, a return to the Fannie of old remains in doubt with
lawmakers encircling the beleaguered firm calling for heightened regulation,
larger capital requirements, and a restricted mortgage portfolio. We will
continue to exercise patience with the investment, collecting dividends while
purchasing strategically.’


Last year’s commentary may be all that is needed. The stock
has risen spectacularly out of these lows. Our FNM positions have been an
absolute coup—demonstrating the prototypical stock purchase:


First, the shares of a good company are dismissed by
hysterical sellers due to a one time event, or the rare confluence of numerous
damaging items. Shares continue to plunge and the stock becomes wildly cheap,
while the manic-depressive market behaves as if the corporation were headed for
bankruptcy. Lastly, the situation clears and investors begin to realize the
true fundamentals of the underlying business—rocketing shares upward. The best
time to buy is when the story could not seem to be any worse. Fannie Mae was a
stock suffocated by an enormous accounting imbroglio. This was a company that
was abandoned by Wall Street—a firm that only a loon would consider.


Keeping Exxon on the books while energy prices remain
elevated is easy. Keeping Fannie on the books while the stock has degenerated
into a fiasco, complete with scavenging lawmakers encircling the company is
what Champions are made of. This is pocket presence. This is Quarterback Tom
Brady staring down the pressure, taking a hit, and delivering a perfect strike
to the open receiver.




We itemize the smaller, complimentary selections of our
capitalization. These bit players may be described as our bench, as some are
interchangeable with larger positions, yet remain back-ups due to the superior
talent already on the field. Of course, the day will come for these issues to
be ready for Prime Time:







Div. Yld.












Beaverton, OR







Fort Worth, TX







New York, NY






Coca Cola

Atlanta, GA







Washington, D.C.






Electronic Arts

Redwood City, CA







Seattle, WA




The difficulty in managing this ball club is that several of
these positions already seem poised to receive Starter minutes and cash. Nike,
Burlington Northern Santa Fe, Altria, Coca Cola, and Danaher have all answered
the call—performing exceptionally over the past year. These stocks have all
dominated the averages in terms of performance. In fact, the Rales brothers of
Danaher, playing behind Berkshire Hathaway have out gained the Oracle
throughout our short existence.


Nike has ridden the wave of emerging market sales powering
profits at this iconic brand. With All-Star Yao Ming and recent draft pick Yi
Jianlian becoming household names in The National Basketball Association, the
popularity of basketball is ramping upwards in the all-important Chinese
market. Nike will benefit from this trend more than any other
company—international sales being magnified by a plunging dollar upon
repatriation. In the words of ex pitchman Deion Sanders, this stock is already
‘Prime Time.’


Burlington Northern Santa Fe has arrived on the balance
sheet courtesy of a ‘straight up’ trade with United Parcel Service. UPS was
originally purchased as a hedge to Exxon— the transporter countering any
significant drop in oil prices. UPS is an excellent business, but high energy
costs will always hinder the advancement of the stock. Energy prices have
remained elevated and appear unlikely to collapse within the near future.
Brazil, India, and China have exhibited an insatiable appetite for growth and
therefore voracious markets for all commodities.


Railroad Burlington Northern will capitalize upon this
trend. The concern represents the most acceptable means of transportation of
American coal, iron ore, timber, and agricultural products from the interior to
port side. Businesses that have been able to exploit the commodity boom or the
strength of emerging markets find themselves in the sweet spot of American
commerce. BNI stands poised to reap the benefits of both.


Coca Cola and Altria are consumer staple stocks pushing
products of nearly perfect price inelasticity. Altria has been highlighted due
to its exceptional dividend. These dividends will be critical to returns
amongst listless markets.


ERTS and SBUX are comparable to those slight Wide Receivers
with world class speed. These companies remain capable of the big play at any
moment: potentially tripling in value within 18 months as a speedy receiver
makes a catch on the quick slant eight yards from the line of scrimmage and
sprints by defenders for an eighty yard touchdown; or these stocks can collapse
in value by 10% in one week, 50% in one month similar to that very same light
weight receiver that is mauled by the defense, intimidated, and taken out of
the game on a stretcher.


Although video game company Electronic Arts has shown
flashes of brilliance, Starbucks has been an absolute shipwreck of a stock. It
is a small victory that we directed a meager pittance towards SBUX—the coffee
maker has provided us every reason to leave the firm languishing at the end of
the bench with splinters lodged into its behind. SBUX simply did not fit in
with this group at the acquisition point last year.


At 55x earnings, shares were wildly overpriced. Starbucks
was the $10 million free agent pickup that degenerated into a bust. Obviously,
SBUX has not been one of the guys.


This is a group of gritty stocks representing heavy industry
and economic muscle: Exxon, Altria, United Technologies, Burlington Northern,
Danaher, Berkshire Hathaway. We are Big Oil, Big Tobacco, aerospace, defense,
railroads, tools, and insurance. Of course, Coca Cola, Best Buy, and Electronic
Arts aren’t exactly built for sugar and spice bake sales, either. One may
purchase EA Sports’ ‘Madden Football’ at Best Buy, demoralizing and
obliterating the opponent on the flat screen; while guzzling a Coke.


And then we have Starbucks—baristas, lattes, and assorted
cream puffs.


Starbucks has been the example as what I refer to as a
‘pretty boy’ stock: all flash and no substance. Fly by night enterprises, hyper
technology stocks, dot-coms, satellite radio, and our latest ‘next big thing’
initial public offering (IPO) fit the bill. Wall Street offers up this trash
and investors salivate over smoke and mirrors cosmetics only to be heartbroken.
Pretty boy stocks are GIGO: Garbage in, Garbage out.


This stock is soft. This stock has been ‘on the block,’ an
ideal candidate for a straight up trade, or an outright cut—dismissal from the
portfolio via sell order. SBUX has remained on the roster as I recognize the
idea that the coffeemaker’s shares provide an element of intrigue and spark
that is missing from a portfolio of stodgy goliaths. Of course, Google would
have been a more suitable alternative for this spot. GOOG has spiked from $100
to $530 during our harrowing times with Starbucks.


Perhaps the stock must be called out in order to man-up and
turn things around. This is the one investment in which we have lost
significant percentages. The shares have been brutalized as the company falls
short of earnings expectations—leaving investors to question its growth model.
SBUX may be cannibalizing itself with a propensity to locate stores at every
corner at every block. The outlook may have never been worse for the shares of
Seattle’s coffee maker.


Ironically, this may be the best time to step up and buy.


The stock has been bludgeoned from an expensive 55x earnings
to an acceptable 35x profits. With the shares still remaining on the books, we
have yet to concede defeat. We will continue to hold the stock, monitoring
financials. The shares represent a small slice of our capitalization, and any
absolute capitulation may barely scratch our armor.


Of course, any absolute capitulation would mark the ideal
timing to ante up on SBUX shares. Starbucks may hawk fruitcakes and lattes, but
the company would have never risen to such prominence without a fighter’s


We have yet to throw in the towel.







III. Scoreboard




Team 63



Opposition 0





The scoreboard numbers may be wishful thinking, but the
quest for total domination is the only route that I know to follow. I am
unwilling to let up, regardless of the score; I will maintain the proper
intensity and aggressiveness. In order to command respect, the opposition shall
not complain of poor sportsmanship or seek excuses for losses; the formidable
competitor will seek a more efficient strategy with which to compete.


My foot will always remain on the gas, flooring the
accelerator, and pushing the envelope similar to Florida’s ‘Ol Ball Coach,
Steve Spurrier; or Nebraska’s Tom Osborne.


It may be human nature for the individual to reign in the
game plan and coast upon arriving at each peak along his particular life chain.
These urges must be neutralized, as acting as if one is ‘happy to be here’ is a
recipe for underachievement, if not disaster. We all may present infinite
examples of personal development where one plateaus or regresses after
surpassing a benchmark: the struggling graduate student, the insubordinate
subordinate, the incompetent middle manager, the marriage that disintegrates
after the couple ceases to court each other, or the troubled professional


The cases of Michael Vick, Tank Johnson, and Adam ‘Pacman’
Jones have been magnified due to the amount of money that is on the line. Fan
bases are outraged that these ‘pampered’ millionaire athletes could squander
the outrageous opportunities by anybody that has been fortunate enough to play
professional sports. As Americans in 2007, we may all squander outrageous
opportunities every day. I will not waiver from my belief that today’s United
States of America offers the highest potential for advancement of any nation
ever to be in existence.


I cannot express my gratitude enough.


Do my doubters appreciate the infinite examples throughout
the world’s history where individuals have been killed due to the circumstances
of being born into a particular nation, ethnicity, or religion?


Had I have been born fifty years prior to 1980, I would have
never arrived here—able to build a business structured around stock market
quotations. Had I have been born fifty years prior to that, I would have never
been able to even open my mouth without punishment.


‘I feel as if I am not of these times; as if I somehow
teleported out of The Great Depression into my mother’s womb at 1980.’


Everything that I own, every opportunity that I have been
afforded is courtesy of the struggles, triumphs, and humiliations that my
ancestors have endured. I know of times when men were not allowed to be men,
when the dignified were not granted the proper dignity. In football speak this
is ‘time and score.’ In real terms this is, ‘knowing your history.’


I demonstrate my appreciation by minimizing the amounts of
time and money that is wasted. Peoples have not always enjoyed the chance to
have time and money to waste.


Opportunity is relative. The drone that does not maximize
his potential may indeed be just as guilty as the star athlete that blows a
million dollar contract by associating with a ruffian entourage, drinking, or
smoking marijuana. I wonder what a true visitor of the past or even the
modern day areas of Darfur, Gaza, or Iraq would think of this waste. If one
were to truly appreciate the fact that there are particular sections throughout
this world where one may be tortured, maimed, or annihilated by military
gunfire simply for being born into turmoil—we would all behave much
differently. Wasted time, money, energy, and opportunity can only be an


There is little to complain about for The American that is
not born into debilitating poverty. The defeated must come to terms with the
shattering hypothesis that the primary impediment of his own growth may be
himself. The victor must come to terms with the inspiring image that the
primary impediment of his own growth is his own self.


The greatest risk to our own freedom and welfare is to not
engage in risk. It is human nature to eliminate risk because of fear and cling
to the routine.


This is football’s ‘prevent’ defense. In the ‘prevent,’ the
defense drop back deep into coverage so that the offense remains in front of a
wall of defenders. The function of the ‘prevent’ is to prevent the offense from
scoring a quick touchdown courtesy of a big play. The tradeoff of this
conservative defense is the lack of defensive aggressiveness and the ease with
which the opposing offense can move the chains and gain steady chunks of
yardage. The ‘prevent’ often incites the very same disaster that it was created
to prevent.


The prevent defense is a chief factor behind many come from
behind victories / imploding losses. One team may demonstrate total control
through three quarters, relax the game plan, and allow the opposition to wrest
victory from the jaws of defeat in the final stanza. Players that have been
programmed to attack become floundering zombies in the ‘prevent;’ and the
opposition gains confidence, beginning to execute riskier strategy; refusing to


Jim Valvano, the late North Carolina State University
basketball coach pronounces, ‘don’t ever give up.’ I wish to offer: Do not ever
let up.


The only way to play this Game is to be relentless.


This Game that I speak of is personalized, custom to the
genetic and environmental makeup of each individual. The common denominator of
the end goal of this Game is freedom—the ability to build one’s own life in his
own image without creating strife within greater society.


As with any game, there are counterparties, opposition, and
enemies. The enemy can be identified as any unit which may abhor one’s personal
quest for freedom. The enemy has been targeted as any entity which stands as a
threat to this progression—Progress being defined as the maximum fulfillment of


The enemy may come in many forms. We must remain vigilant in
regards to any threat towards the accomplishment of The Goal, as life is
guerilla war. The uninitiated remain clueless as to the direction of the actual
threat—similar to the properly executed Trap Play.


I must seek excellence and remain uncompromising with my own
person as I fear derailment. This is why I am able to sidestep obstacles and
high step to daylight as a running back powering through The Trap. One must
muster more talent than g.o.a.t. Jim Brown to cut this thing back and into the
Big House for six.


Elders cannot begin to grasp the differing challenges
confronting the typical eighties baby—where survival represents achievement.
With the deterioration of the 80’s U.S. city into urban wastelands,
single-parent homes, AIDS, and the heavy drug trafficking and usage culture of
this earlier period; success is merely a byproduct of survival. Large swaths of
territories within the nation began to appear where remaining alive and outside
of the penitentiary represented small victories. I hail from the suburbs, and
several of my high school classmates were so enraptured by an inner city thug
culture that they were to end up jailed, killed, or drugged-up to the point of


There is a difference between those that instigate an act
out of necessity and those that change faces simply to align themselves with
the prevailing trend. I never cared much for being ‘cool’ or making friends. I
continue to snicker at those that lose themselves seeking to ingratiate,
referring to them as ‘simps,’ one part stupid; one part chimpanzee; all parts
simpleton. Simps play the thug role although they may be of middle class
origin. Simps sponsor others—potentially financing the lifestyle of a love
interest that does not reciprocate this interest. Simps live for others. Men
live for themselves.


But I digress…


For the echo boomer survivor, entry into elite institutions
became a hypercompetitive undertaking, as sterling high school grades simply
were not enough. One must take honors, complete rigorous assignments to earn
A’s, volunteer, secure internships, lead the band, and make the team simply to
be a viable candidate at a top institution. The demands continue at The
University in order to secure sufficient job placement, or the acceptance into
graduate school.


Never mind the fact that many of us were to graduate during
the depths of the 2000-2002 economic meltdown. Wages have been unable to keep
pace with energy, education, and real property inflation. Homeownership and the
capacity to build savings are only pipe dreams for numerous debt laden, urban
eighties babies.


Contemplate these words, review my numbers, and consider the
intangibles before you address my person: I am one Tough Cookie.


It is a small wonder why many members of my generation reach
a point of exhaustion and implode. I cope by behaving with a nearly militant
obsession with the preservation of time and capital. I cope simply by
eliminating distractions and avoiding sensory overload. I cannot be every where
every time and can only address the most pressing of matters. I am unapologetic
with the allocation of my time as the individual that strives to be all things
to all people at all times will only self-destruct.


Hence, I don’t particularly think of myself as
overpoweringly intelligent. I simply avoid mistakes by prohibiting myself from
participating in foolish activities. I seek to move ahead by grinding out small
gains of yardage on this gridiron every day.


I have been informed at every major junction of my life of
that which I could not accomplish. My typical response is only to fasten my
pads, grab a helmet, affix the chin strap, shut up, and play. We can settle the
score on the field. If one wishes to taunt my person, we may both point to the
scoreboard and list our achievements. Although my numbers may be lesser in
scale—I cannot be ashamed of any outcome in which the maximum effort has been


I also recognize the time value of money and success.
Whatever opinions and projections that have been formed thus far as to my
progression must be extrapolated exponentially from this point. Financials and
achievements do not grow in a linear fashion, only textbook analysis moves
thusly. The happenings of real life inevitably draw an irregular path of fits
and starts.


This company may flat line for several years before
instantaneously becoming a raging success—allocating extraordinary amounts of
capital. The company may start quickly, experience periods of contraction, and
then resume its original upward trajectory. Perhaps the company will continue a
trend of slow and steady growth, emerging over time as an imposing financial
powerhouse. We are unable to predict the future course of events.


Frankly, I would prefer to battle and grind for every inch
of advancement. Victory is sweeter this way. The sheer fortitude that has been
required to make it to this point ensures that I may not fall victim to any
misplaced diversion, goal, or sideline. One may not dismiss these
accomplishments as a one time spin of The Wheel.


I have arrived in a city 1,000 miles away from home and set
up shop without the familiarity of a single acquaintance. I choose to remain at
this location, although the business is possible to operate from any phone
booth. Hence, Chicago has very well become my city as much as it is
anybody else’s.


We could not have found a more suitable location to do
business our way. Chicago has emerged as a sophisticated oasis, towering over
the Midwest prairie. The city has risen from its blue collar roots of shipping,
meat packing, and manufacturing to become a leading metropolis. This is a place
where fortitude is a requirement. This is the City that Works.


The city continues to savor the championship run of the 1985
Chicago Bears. In this Bears Town the Super Bowl overshadows the six
championships of Michael Jordan’s Bulls and the World Series of the South Side
White Sox in the hearts of many. Da Bears represent one of the few unifying
forces of this divided city. Chicago is less of a cohesive melting pot, than it
is a stratified mix of ingredients that may not always mesh: Chex Mix, if you


Demographics aside, this is a city of winners—the fixtures
of Bears’ lore are the epitome of toughness: Dick Butkus, Mike Singletary,
Buddy Ryan, Mike Ditka, Jim McMahon, Brian Urlacher, Walter Payton, Gale
Sayers, and Papa Bear George Halas. There may be no sports venue that is more
intimidating than a blustery, winter night underneath the lights at Soldier
Field. The swirling winds, cascading snowfall, and deafening noise of 60,000
rabid fans have decimated the will to compete of many a foe. Chicago ain’t a
place to get cute.


Bear football is not about trickery, or gimmick plays. This
is about lining up, outsmarting, outworking, and overpowering your man.


This is the Game of Life. This is The American Dream. Read
and React. Block until the Whistle; or fall victim to ‘The Trap.’
















IV. Appendix










Set, Hut…

















Exhibit A – Corrections


In last year’s report,
Touring 06 we documented 4 shares of Berkshire Hathaway worth $9,129.00. The
actual position was 3 shares of Berkshire Hathaway worth the same $9,129.00.
The statistics for BRK were indeed correct on subsequent pages.


Exhibit B – Performance


We present our performance in
comparison to the broader market Standard and Poors 500 Index. Energy remains
the key component. Of course past returns are no indicator of the future and we
may not telegraph future movements. Perhaps the only information which truly




S&P 500 Index

















Exhibit C – Sources / Inspirations


Onlookers often pass
inquiries regarding the source of my ideas. I do not rely on ghostwriters or
editors. My roots are in Ghana and The Deep South – I appreciate the
desperation and the diligence of the immigrant and those that have been
discriminated against to capitalize upon any opportunity. I am thankful for the
fact that the importance education and freedom were the concepts that were
stressed to me from birth. I learned to reject excessive materialism and
consumption through osmosis. It is child like to lack self control – children
are captivated by trinkets and contrary emotions. Leaders show discipline.


I study Western Thought so
that I may undertake the means necessary for survival in this system. I have
made acquaintances ranging the gamut of success. I compare the traits of the
successful to those that flounder along miserably. I know of people that may
not always receive the accolades, yet exhibit the heart of a Champion by
continuing to toil without immediate reward. I reject the idea of retracing the
footsteps of any direct predecessor. Although one may be given the tools, man
must make his own way.


Source – Inspiration





Education is all-important.
The strength to be an individual.

‘Tough Cookies’

Perseverance. Battling
through all roadblocks.

A. Hamilton / Ben Franklin

Revolutionaries risked
death for Freedom.

Frederick Douglass

Built a Legacy from

John D. Rockefeller

The Greatest businessman.
The Greatest philanthropist.

Martin Luther King

Revolutionary that died for

Warren Buffett

The Greatest investor.

Transformers / G.I. Joe /

Good prevailing over Evil.
Leadership—particularly Optimus Prime.

Michael Jordan

Fierce competitor demanded
respect. The Will to Win.

John Madden

The ability and enthusiasm
to present complex ideas to the novice.

The Road

Confluence of man, machine,
infrastructure, and energy: (Touring06)

Lyrical Wordplay

Versions of rap, r&b,
and poetic lyrics often appear in my works.


Live in the Fantasy, rather
than Watching the Fantasy.

Wall Street Journal

Commentary must be read
with cynicism.

Exhibit D – 2006
‘Ghost’ Stocks Revisited


The following items were
presented at this point last year. As stock pickers, we must acknowledge the
errors of commission and omission. ‘Ghost’ Stocks have been bought and sold, or
represent shares which we have seriously contemplated purchasing. Our top
gaffes were our dismissals of General Motors and Google. G.M. has been the top
stock in The Dow Jones Industrial Average. Google stock has spiked from $85
towards $600. Either of these stocks would have trumped our decision to take a
flyer on Starbucks. We were also blindsided by the merger talks of The Chicago
Board of Trade and The Chicago Mercantile Exchange. These happenings literally
occurred in our back yard: ONYX is located at 111 W. Jackson. The Board of
Trade is located next door at 141 W. Jackson.


Was I asleep?


Investors may note that even
my secondary ideas have provided exceptional returns. Oil shares have
outperformed, financials have exhibited strong appreciation, and AIG has
emerged strongly from its prior troubles. The only questionable name on this
list is Whole Foods. Whole Foods stock was to enjoy spectacular appreciation,
inevitably to fall victim to a missed earnings target and downward pressure on
the shares. Let us hope that these ‘ghost’ stocks do not continue to haunt us:






Accounting shenanigans and
ouster of Greenberg were buying opportunity.


Top independent oil
exploration dealmaker.


CAT nirvana: stock rides
commodity, construction boom.


Luxury leather goods maker,
shares bought and sold.


Financials inevitable
necessity, but daunting interest rate environment prevails.

General Motors

Terrible business.
Excellent price.


Excellent business.
Terrible price.

K-Mart / Sears

K-Mart merged into Sears
Holdings, shares bought and sold.


Golden Arches an ideal stop
along toll road.

Valero Energy

Top oil refiner

Whole Foods

Excellent business.
Terrible price.


Exhibit E – 2007 Ghost Stocks


We place trades at the moment
that we discover the superior investment risk-reward merits of another issue. Starbucks
stock has been thought to be a potential source of capital for the purchase of
both Pepsi and Wrigley. Coke would also be sold, as we would not wish to
duplicate positions of mature, consumer staple stocks. Coke remains on the
books as a relative value play in comparison to Pepsi. Starbucks stock is a
growth story, and along with ERTS and BBY carries the potential to add a
measure of explosiveness to this portfolio that is missing from the typical
industrial stalwart. We are lacking a Chicago presence—vital if for no other
reason than to hob-nob with The Windy City investor class at shareholder






Kraft Foods

Altria spin off dumped for
cash. Food is a low margin business.

MMM – ‘3M’

Traded for United
Technologies. UTX deemed to be a superior industrial.


Contemplated packaging SBUX
and Coca Cola (KO) for PEP.

United Parcel Service

UPS traded ‘straight up’
for Burlington Northern – the victim of high fuel costs.


Contemplated trading SBUX
for WWY; or KO/SBUX for WWY. See ‘Chicago.’


Boeing, IL Tool Works, CAT,
Sears, CBOT, and The ‘Merc’ remain on watch.

Exhibit D – Favorite Footballers


Almost every little boy’s
Dream is to play in the National Football League. As I was born in 1980, the
performances that I am able to recollect began in the mid to late eighties. I
will always admire toughness, desire, and awe inspiring natural talent. Any
individual that has risen to the pinnacle of his respective profession should
be lauded. There are names on this list of individuals that may have never
received the Glory of the unequivocal superstar, yet continued to battle in the
trenches, nonetheless. There are certain players that have dealt with the
pressures of being hailed as saviors of entire organizations and cities
flawlessly; without crumbling beneath the pressure. Lastly, we have listed
several players that have come into The League with little fanfare, but have
built Hall of Fame careers through a relentless dedication towards the craft.
There are infinite amounts of life lessons that may be gleamed from this Game.






The Greatest Sports casting
duo of all Time.

Joe Montana

Simply a Winner.

Jerry Rice

The Greatest Receiver of All
Time. Tireless Work Ethic: 5 Hour Workouts – 6 Days per Week.

Bill Walsh

Offensive Genius. Won 3
Super Bowls. Disciples: Seifert, Wyche, Holmgren, Shanahan, Dennis Green,

Darrell Green

The NFL’s Fastest Man.
Refusal to Quit on Tony Dorsett Play.

The Hogs

Washington Redskin Offensive
Line. The most cohesive of units.

‘Moose’ Johnston

Lead Blocker for top
statistical rusher Emmitt Smith.

Jim Kelly

The heart and toughness of a
linebacker; at the Quarterback position. Lost 4 Super Bowls.

Thurman Thomas

Underrated all around back
in the shadows of Barry Sanders and Emmitt Smith. Lost 4 Super Bowls.

Bruce Smith

Unstoppable end rusher. Lost
4 Super Bowls as a member of The Buffalo Bills.

SEC Football

Ann Arbor, Columbus, and
Madison may disagree; but the Big 10 cannot match Football in the Deep South.

Steve Spurrier

Florida’s Ol’ Ball Coach
would comically run up the score on the hapless opposition.

John Elway

Golden Boy Quarterback lost
3 Super Bowls before claiming two Championships to finish his career.

Deion Sanders

Shut Down Corner. Prime Time

NE Patriots

The former laughing stock of
a franchise has become the most efficiently run operation in all of sports.

Tom Brady

Unheralded 6th
round pick. Backup QB inserted into game due to injury. Proceeded to win 3
Super Bowls.

Bill Belichick

Defensive genius has proven
his mettle as a winner of 5 Super Bowls with NY Giants and NE Patriots.

Giants / Eagles Fans

Knowledgeable NY and
Philadelphia ‘Iggles’ fans will not tolerate incompetence from the home team.

Thomas Jones

The Heart of the Bears’
Offense. Jones being dealt to the NY Jets is an absolute tragedy.

’85 Bears

Buddy Ryan vs. Mike Ditka,
Super Bowl Shuffle, Refrigerator Perry, Jim McMahon, Danimal

Michael Vick

The most naturally talented,
electrifying athlete to play Quarterback.

Julius Peppers

Recruited to play varsity
basketball at UNC from pick-up games at Woollen Gym.





















Exhibit E – June 30, 2006 Positions







ExxonMobil Corporation



Best Buy Company,
Incorporated (BBY)



Minnesota Mining and
Manufacturing (MMM)



Berkshire Hathaway Class B



United Parcel Service, Inc.
Class B (UPS)



Federal National Mortgage
Assn. (FNM)



Coca Cola Company (KO)



Nike Incorporated Class B



Electronic Arts (ERTS)



Danaher Corporation (DHR)



Starbucks Corporation






Total Equities



Cash, Cash Equivalents
Available for Withdrawal





*Reflects a 2:1 NKE split.







Kofi Bofah, Chairman


June 2007