Author: Scott Buchanan

“Final Notice” Traffic Ticket Smishing Scam

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Yesterday I got a scary-sounding text message, claiming that I have an outstanding traffic ticket in a certain state, and threatening me with the following if I did not pay within two days:

We will take the following actions:

1. Report to the DMV Breach Database

2. Suspend your vehicle registration starting June 2

3. Suspension of driving privileges for 30 days…

4. You may be sued and your credit score will suffer

Please pay immediately before execution to avoid license suspension and further legal disputes.

Oh, my!

A link (which I did NOT click on) was provided for “payment”.

I also got an almost (not quite) identical text a few days earlier. I was almost sure these were scams, but it was comforting to confirm that by going to the web and reading that, yes, these sorts of texts are the flavor of the month in remote rip-offs; as a rule, states do not send out threatening texts with payment links in them.

These texts are examples of “smishing”, which is phishing (to collect identity or bank/credit card information) via SMS text messaging. It must be a lucrative practice. According to spam blocker Robokiller, Americans received 19.2 billion spam robo texts in May 2025. That’s nearly 63 spam texts for every person in the U.S.

Beside these traffic ticket scams, I often get texts asking me to click to track delivery of some package, or to prevent the misuse of my credit card, etc. I have been spared text messages from the Nigerian prince who needs my help to claim his rightful inheritance; I did get an email from him some years back.

The FTC keeps a database called Sentinel on fraud complaints made to the FTC and to law enforcement agencies. People reported losing a total of $12 billion to fraud in 2024, an increase of $2 billion over the previous year. That is a LOT of money (and a commentary on how wealthy Americans are, if that much can get skimmed off with little net impact on society). The biggest single category for dollar loss was investment; the number of victims was smaller than for other categories, but the loss per victim ($9,200) was quite high. Other areas with high median losses per capita were Business and Job Opportunities ($2,250) and Mortgage Foreclosure Relief and Debt Management ($1,500).

Imposter scams like the texts I have gotten (sender pretending to be from state DMV, post office, bank, credit card company, etc.) were by far the largest category by number reported (845,806 in 2024). Of those imposter reports, 22% involved actual losses ($800 median loss), totaling a hefty $2,952 million. That is a juicy enough haul to keep those robo frauds coming.

How to not get scammed: Be suspicious of every email or text, especially ones that prey on emotions like fear or greed or curiosity and try to engage you to payments or for prying information out of you. If it purports to come from some known entity like Bank of America or your state DMV, contact said entity directly to check it out. If you don’t click on anything (or reply in any way to the text, like responding with Y or N), it can’t hurt you.

I’m not sure how much they can do, considering the bad guys tend to hijack legit phone numbers for their dirty work, but you can mark these texts as spam to help your phone carrier improve their spam detection algorithm. Also, reporting scam texts to the U.S. Federal Trade Commission and/or the FBI’s Internet Crime Complaint Center can help build their data set, and perhaps lead to law enforcement actions.

Later add: According to EZPass, here is how to report text scams:

You can report smishing messages to your cell carrier by following this FCC guidance.  This service is provided by most cell carriers.

  1. Hold down the spam TXT/SMS message with your finger
  2. Select the “Forward” option
  3. Enter 7726 as the recipient and press “Send”

Additionally, to report the message to the FBI, visit the FBI’s Internet Crime Complaint Center (ic3.gov) and select ‘File a Complaint’ to do so.  When completing the complaint, include the phone number where the smishing text originated, and the website link listed within the text.

Wild Pigs Are a Big Problem; You, Too, Can Thin the Herds from a Chopper with a Machine Gun

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Wild pigs kill more people worldwide than sharks do (I didn’t know that a week ago). They do much damage to agriculture and the environment, and transmit diseases:

According to the U.S. Department of Agriculture, feral hogs cause approximately $2.5 billion in agricultural damages each year…Nearly 300 native plant and animal species in the U.S. are in rapid decline because of feral swine, and many of the species are already at risk, according to Animal and Plant Health Inspection Service. The swine also carry at least 40 parasites, 30 bacterial and viral illnesses, and can infect humans, livestock and other animals with diseases like brucellosis and tuberculosis. 

Besides eating and injuring crops and livestock, hogs damage the environment:

…They will also feed on tree seeds and seedlings, causing significant damage in forests, groves and plantations… Rooting — digging for foods below the surface of the ground — destabilizes the soil surface, uprooting or weakening native vegetation, damaging lawns and causing erosion. Their wallowing behavior destroys small ponds and stream banks, which may affect water quality. They also prey upon ground-nesting wildlife, including sea turtles. Wild hogs compete for food with other game animals such as deer, turkeys and squirrels, and they may consume the nests and young of many reptiles, ground-nesting birds and mammals.

Pigs are smart (ahead of dogs and horses), tough, and adaptable, and they breed very quickly. The protected, overfed, calm hogs you see on farms quickly  turn lean and mean if they have to fend for themselves in the wild. You pretty much only see female pigs or castrated males on the farm, since whole males (boars) are intrinsically aggressive and destructive. But vigorous 200-pound boars, with their 3 inch-long, razor-sharp tusks, are well-represented in feral swine.

This is a growing problem. The population of wild pigs in the southern third of the U.S. has increased significantly in the past few decades. There have historically been some wild pigs in spots like Florida and Texas, escapees from Spanish settlers long ago. But they seem to be spreading northward, largely because hunters transplant them:

From 1982 to 2016, the wild pig population in the United States increased from 2.4 million to an estimated 6.9 million, with 2.6 million estimated to be residing in Texas alone. The population in the United States continues to grow rapidly due to their high reproduction rate, generalist diet, and lack of natural predators. Wild pigs have expanded their range in the United States from 18 States in 1982 to 35 States in 2016. It was recently estimated that the rate of northward range expansion by wild pigs accelerated from approximately 4 miles to 7.8 miles per year from 1982 to 2012 (12). This rapid range expansion can be attributed to an estimated 18-21% annual population growth and an ability to thrive across various environments, however, one of the leading causes is the human-mediated transportation of wild pigs for hunting purposes.

As for pigs attacking and killing humans, a definitive study was recently made in 2023 by Mayer, et al., covering 2000-2019. This report includes informative tables and charts, such as:

and

Comparison of mean annual number of human fatalities from attacks by various wild animals for time periods ranging between 2000 and 2019. From Mayer, et al.

About half of these fatalities occurred in rural regions of India. Government policies there prohibit farmers from killing marauding pigs, so farmers try to chase them away from their fields with rakes and stones. Sometimes that provokes the pig to attack, slashing at thigh level and often lacerating the femoral artery. But a disturbing 39% of deadly attacks were unprovoked, including a horrific case with an elderly woman in Texas. So danger to humans is an issue, though for perspective, far more people are killed each year by snakes (100,000), rabid dogs (30,000), and crocodiles (1000). In the U.S., over 100 people are killed a year, and 30,000 injured, by collisions with deer (see here for a market-based solution for this problem).

What to do? Hunters in many states are free to blast away at feral pigs year-round, since they are considered a harmful, invasive (non-native) species. Paradoxically, however, allowing hunting of pigs can be counterproductive: amateur hunting does not eliminate enough pigs to stop their spread, and it incentivizes hunters to transport pigs to new regions to make for more targets. For instance, Arkansas allows hunting and even transport of pigs, and has seen swine populations skyrocket. The state of Missouri, next door, took the enlightened approach of banning hunting and transport, leaving population control to wildlife professionals. By removing the sport-hunting incentive, Missouri removed the incentive to transport them, which stymied their spread.

To control pig populations, the pros mainly set up baited large corrals, and monitor them remotely with webcams. After several weeks, the local pigs get comfortable coming there to feed. When the cameras show that every single pig in the herd is in the corral, the gate is sprung shut remotely. Then the pros drive out to, er, euthanize the pigs. The goal is to wipe out the entire herd, and leave no sadder-but-wiser survivors who will be harder to catch next time. Once a hog population has become established in an area, it typically takes ongoing eradication efforts to keep the numbers down.

If you want to do your own part to reduce the surplus swine population, the following notable opportunity came to my attention: for a largish fee the Helibacon company will train you in firing automatic weapons and take you up in a chopper where you can mow down a marauding herd in the low Texas scrubland. It sounds like a guy thing, but Helibacon reminds us that full auto is for ladies, too.  See also PorkChoppersAviation for similar service.

This is actually a fine example of a free market solution to a problem: wild hogs were such a problem for landowners that they were paying expensive professional helo hunters to take out herds, but in Texas, “All that changed in 2011, when the state legislature passed the so-called pork chopper law, which allowed hunters to pay to shoot feral hogs out of helicopters – and a new business model was born.” Hunters are happy to pay to hunt, helo companies are happy to take their money, and landowners are happy to have pigs reduced for free. Voila, voluntary exchange creates value…

United Health Care Stock Implodes After Withdrawing Guidance, CEO Suddenly Resigns, and WSJ Alleges DOJ Fraud Probe

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The United Healthcare Group (UNH) is a gigantic ($260 B market cap, even after recent dip) health plan provider, which until recently seemed to be the bluest of blue-chip companies. It is a purveyor of essential medical services with a wide moat, largely unaffected by tariff posturing, and considered too big to fail. The ten-year stock price chart shows it steadily grinding up and up, shrugging off market tantrums like 2020 and 2022, and even the tragic gunning down of one of its division presidents in December.

But things really unraveled in the past month. Let’s look at the charts, and then get into the underlying causes.

The year-to-date chart above shows the price hanging around $500, then rising to nearly $600 as the April 17 quarterly earnings report approached. Presumably the market was licking its chops in anticipation of the usual UNH earnings beat. The actual report was OK by most corporate standards, but it failed to match expectations. Revenue growth was a hearty +9.8% Y/Y, but this was $2.02B “miss”. Earnings were up 4% over year-ago Q1, but they missed expectation (by a mere 1%). What was probably much more disturbing was guidance on 2025 total adjusted earnings down to $26 to $26.50 per share, compared to $29.74 consensus.

That took the stock down from $600 to around $450 immediately, and then it drifted below $400 in the following month as investors looked for and failed to find better news on the company. But then two things happened last week. The effects are seen in the 1-month chart below:

On May 13 (blue arrow) the company came out with a stunning dual announcement. It noted that the recently-appointed CEO, Andrew Witty, had suddenly resigned “for personal reasons.” The blogosphere speculated (perhaps unfairly) that you don’t suddenly resign from a $25 million/year job unless your “personal reasons” involve things like not going to prison for corporate fraud. The other stunner was that the company completely yanked 2025 financial guidance, due to an unexpected rise in health care costs (i.e., what they must pay out to their participants). Over the next day or two, the stock fell to about 50% of its value in early April.

Then on May 14 the Wall Street Journal came out with an article claiming that the U.S. Department of Justice is carrying out a criminal investigation into UNH for possible Medicare fraud, focusing on the company’s Medicare Advantage business practices. The WSJ said that while the exact nature of the allegations is unclear, it has been an active probe since at least last summer.

UNH promptly fired back a curt response to the “deeply irresponsible” reporting of the WSJ:

We have not been notified by the Department of Justice of the supposed criminal investigation reported, without official attribution, in the Wall Street Journal today.

The WSJ’s reporting is deeply irresponsible, as even it admits that the “exact nature of the potential criminal allegations is unclear.”   We stand by the integrity of our Medicare Advantage program.

The stock nose-dived again (red arrow, above), touching 251, as investors completely panicked over “Medicare fraud.”  Cooler heads promptly started buying back in, leading to substantial recovery. That includes the new CEO, Steven Hemsley, who was the highly-paid CEO from 2009 to 2017, and since then has been the highly-compensated “executive chairman of the board”, a role created just for him. Pundits were impressed that he stepped in to buy some $25 million of UNH stock near its lows, saying wow, he is really putting some skin in the game. Well, not really: the dude is worth over $1 billion (did I mention high compensation of health care execs?), so $25 mill is hardly heroic. He is already up some 12% or a cool $3 million on this purchase, a tidy little example of how the rich become richer.

Learnings From Trading Short Volatility Funds, 2. Use Leveraged Stock Funds Instead

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In last week’s post, I described how short volatility funds work. They are short (as opposed to long) near-term VIX futures. This means that when a market panic hits and VIX (as measure of volatility) spikes, the prices of these short vol funds plunge, along with stock prices. But as optimism returns to the markets, prices of short vol funds start to recover, as do stocks.

Thus, both short vol funds and general stock funds are reasonable ways to play a market panic. If (!!!) you manage to call the bottom and buy there, you can hold for maybe a couple of weeks until prices recover, and then sell at a profit.  I tried to do just that with the market meltdown last month in the wake of the president’s tariff ultimatums: I bought some short vol funds (SVXY, which is a moderate -0.5X VIX fund, and the more aggressive -1X fund SVIX), and also some leveraged stock funds. I discussed leveraged funds here.

I chose to buy into SSO, a 2X leveraged S&P 500 stock fund, whose daily price moves up (or down) by twice the percentage as does the S&P. Obviously, if you think stocks will go up say 10% in the next month, you will make more money by buying a fund that will go up 20% instead, which is why I bought a 2X fund rather than a plain vanilla (1X) stock fund. A related fund, which I did not buy this time, is UPRO, which is a 3X stock fund.

Things are always clear in hindsight. After the smoke of battle clears, you can see right where the bottom was. But it is not clear when you are in the thick of it. I erred by committing much of my dry powder trading funds too early, maybe halfway through the big drop. C’est la vie. It’s hard to improve on that for next time. But a significant learning, that I will act on during the next panic, was how differently short vol versus leveraged stocks recovered from the crash. They both plunged and recovered, but leveraged stocks recovered much better.

It turns out that much of the time, the price movements over say a six-month period of SVXY and SSO largely match each other, so these are useful for comparisons for trading short vol versus leveraged stocks. For instance, below is a chart of SVXY (orange line) and SSO (green line) over the past six months or so. The blue arrow notes the April crash, which bottomed roughly April 8. For November through early April, the price movements of the two funds roughly matched. By April 8, both had plunged to a level some 35% lower than their starting prices. However, by May 12, SSO had recovered to -10% (relative to starting), which is about where it was in late March (green level line drawn in). SVXY, however, remained 21% below its start.

Chart of SVXY ( -0.5X VIX ETF, Orange line) and SSO (2X Stock fund, green line), Nov 2024-May 2024. Blue arrow marks April 2025 volatility spike/stock crash. Chart from Seeking Alpha.

Thus, from its nadir (-35%) to its recovery as of Tuesday, May 12, SSO gained by 38% (i.e., ratioing 0.90/0.65), whereas SVXY gained only 21% (from ratioing 0.79/0.65). Also, it looks like SVXY will not regain its earlier price levels any time soon. So SSO looks like the winner here.

We can do a similar comparison between the -1X VIX fund SVIX and the 3X stock fund UPRO. These two funds are plotted below, along with a plain (1X) S&P 500 stock fund, SPY (in blue). SVIX (orange) and UPRO (green) trend pretty closely for October through March. When the April crash came, SVIX dropped much harder, down to a heart-stopping -59%, compared to -44% for UPRO. SPY dropped only to -15%.  SPY comes to a full recovery (0%) by May 12, while UPRO recovers only to -13% [1].    SVIX has recovered only to -21%. If you managed to buy each of these funds on April 8, and sold them today, you would have made the following gains:

SPY 17% ; UPRO 55%;  SVIX  43%.    Clearly the winner here in short term trading of the April crash is the 3X stock fund UPRO.

Chart of SVIX ( -1X VIX ETF, Orange line), UPRO ( 3X Stock fund, green line), and SPY (1X Stock fund, blue line), Oct 2024-May 2024. Chart from Seeking Alpha.

As a cross check, below is a plot of SVXY (orange) and SSO (green) covering the August, 2024 volatility spike. This was a peculiar event, discussed here, where volatility went crazy for a couple of days, while stock prices experienced only a moderate drop. If (!!!) you timed it just right, and bought at the bottom and sold a week or so later, you could have made good money on SVXY. But zooming out to the larger picture, SVXY never came close to recovering its old highs, whereas SSO just kept going up and up (green arrow). So SSO seems like a safer trading vehicle: it is a reasonable buy-and-hold, whereas SVXY may be hazardous to your portfolio’s health if you don’t get the timing perfect.

Chart of SVXY ( -0.5X VIX ETF, Orange line) and SSO ( 2X Stock fund, green line), Oct 2023-Oct 2024. Blue arrow marks early August 2024 volatility spike. Chart from Seeking Alpha.

Over certain longer (say one-year) periods, there are regimes where short vol could out-perform leveraged stocks (discussed earlier), but that is the exception, rather than the rule.

Disclaimer: Nothing here should be considered advice to buy or sell any security.

ENDNOTE

 [1] While UPRO changes X3 the change of SPY on a daily basis, for reasons discussed earlier, the longer-term performance of UPRO diverges from a simple X3 relationship with SPY. In volatile times, UPRO tends to fall well below a 3X performance over say a six-month period.

Learnings From Trading Short Volatility Funds, 1. The Tantalizing Promise of Quick Riches

Scott Buchanan1 Comment

The VIX is a calculated measure of stock market volatility, based on the prices of stock options. It spikes up when there is a market upset, then seemingly always settles back down again after a few days or weeks. So, it seems simple to make a quick profit from this behavior: short the VIX when it spikes, and then close your trade when it comes back down. What could possibly go wrong?

VIX Index, May 2024-April 2025. From Seeking Alpha.

It’s a bit more nuanced than that, since you can’t directly buy or sell the VIX. It is just a calculated number, not a “thing.” However, there is a market for VIX futures. The value of these futures is based on expectations for what VIX will be on some specific date. The values of these futures go up and down as the VIX goes up and down, though there is not an exact 1:1 relationship. There are funds that short VIX futures, which are a proxy for shorting the VIX futures yourself.  So, the individual investor could buy them after the VIX spikes (which would drive down the short VIX fund price), then sell them when VIX declines (and the short VIX fund goes back up).

The chart below shows the VIX (% change, orange curve) in the past twelve months prior to May 1.   There were three episodes (Aug 2024, Dec 2024, Apr 2025) where VIX spiked up. These episodes are marked with green arrows. As expected, when VIX spikes up, the short volatility fund SVIX (purple line) drops down. In August and December, if you were clever enough to buy SVIX at its low, you could turn around and sell in a week later for a good profit. The movements of SVIX are dwarfed this plot by the gyrations of VIX in this chart, but a couple of short red horizontal lines are drawn at the bottoming values for SVIX, to show the subsequent rise. A 3x leveraged S&P 500 fund, UPRO, is shown in blue.

There are important nuances with these funds. One is that a long or short VIX futures fund, at the end of the trading day, must buy and sell some futures shares to meet their performance mandate. As of say May 1, the -1X VIX fund SVIX was short 14,311 May VIX futures contracts (expiring 5/20/2025), and short 10,222 June futures (exp. 6/17/2025). To keep its exposure centered at on one month out from the present date, the fund must buy back some near month (here, May) contracts each day, and short some additional next month (June), at the close of every trading day. If the market value of the near month VIX futures contract is lower than the next month contract (being in “contango”), as it generally is during periods of low volatility, this rolling process makes money every day, to the tune of maybe 5% per month. That compounds big time over time, to over a 60% gain in twelve months. That’s the good side. The VIXcentral site shows current and historical VIX futures prices for the next several months out.

A bad side of these short funds is that the day-to-day inverse movements can rachet the fund value down and down, as VIX goes up and down. So even if the VIX ends up in six months at the same value as it is today, it is possible for a short VIX fund to be lower or higher. This can lead to a more or less permanent step down in fund value. Also, in volatile times, the near futures price is higher than the next month out, and so the daily roll works against you.

There is a term that trading pros use for amateurs who jump into volatility funds without really knowing what they are doing: “volatility tourists”. These hapless investors sometimes hear of big profits that have been made recently in vol, and then buy in, often at what turns out to be the wrong time. Then market storms arise, things don’t go the way they expected, and they get shipwrecked.

Such was the case in 2018. SVXY at that time was a fund that moved inversely to volatility futures, on a -1X daily basis. This short vol trade made insane profits in 2H 2016 and in 2017, far outpacing stocks. Someone who bought into SVXY at the start of 2017 would have quintupled their money by the end of the year. (See chart below, orange line).

However, February 5, 2018 is a day that will live in volatility infamy. Because of the roaring success of short VIX in the previous two years, investors had piled into short VIX ETFs. The VIX suddenly doubled that day, and the short vol funds could not do the daily futures trades they needed, and so their value was decimated. This event is known as Volmageddon. The chart below shows the rise (and fall) of the -1X VIX fund SVXY in orange, compared to a stodgy S&P 500 fund SPY (in green).

Folks who bought SVXY looked like geniuses, until Feb 5. Then they lost it all, more or less. The tourists licked their wounds and moved on, and short vol went clean out of fashion for a while. One short VIX fund, XIV, actually an exchange traded note (ETN), went to zero and closed. SVXY itself lost over 90% of its value. After this near-death experience in 2018, SVXY contritely modified its charter from being -1X VIX futures to being -0.5X. That reduces its exposure to vol shocks. That modification served it well in March, 2020 when the world shut down and VIX shot to the moon and stayed there for some time. SVXY lost something like 70% of its value then, but it lived to trade another day, and slowly clawed its way back.

However, short vol has made a comeback in recent years. The -0.5X SVXY was joined in mid-2022 with a new -1X VIX fund, SVIX (for investors who don’t remember what happened to -1X funds in 2018! ). Short vol actually had a very good run in 2022, 2023, and first half of 2024:

The chart above shows SVIX ( -1X, purple) and SVXY (-0.5X, blue), along with the S&P500 (stodgy orange line) over the past three years. The two inverse vol funds totally smoked the S&P through July, 2024. Investors in SVIX were up over 300%, compared to 35% in stocks. Even the more conservative vol fund SVXY was up 165%. Yee-haw!

The volatility tourists poured in, and then came August 5, 2024, with a short, sharp, unexpected spike in volatility. As we noted earlier, it was not so much that stocks cratered, but there was a hiccup in the global financial system, mainly around unwinding of the yen carry trade. The values of the short vol funds got decimated. Then the recent brouhaha over tariffs in April 2025 whacked them again. This drove the value of SVIX below the three-year rise in stocks, although SVXY still outpaces stocks (57% vs 35% rise).

There were dips in SVIX and SVXY in March 2023 (Silicon Valley Bank blowup), October 2023 (Yom Kippur attacks on Israel by Hamas), and April, 2024, corresponding to spikes in VIX. In those cases, it worked great to buy the dip, since within a few months SVIX and SVXY churned to new highs. Many were the articles in the investing world on the wonderful virtues of the daily VIX futures roll. But then August 2024 and April 2025 hit, where there was no complete, rapid recovery from the huge price drops.

What to take away from all this? What comes to my mind are well-worn truisms like:

If it looks too good to be true, it’s probably not true; There is no free lunch on Wall Street; It’s not different this time.

The reason I know this much about these trading products is that I got sucked in a bit by the lure of monster returns. Fortunately, I kept my positions small, and backstopped some trades by using options, so all in all I have probably roughly broken even. That is not great, considering how much attention and nail-biting I have put into short vol trading in the past twelve months.

In an upcoming post, I will report on an alternative way to trade volatility spikes, which has worked out much better.

Disclaimer: Nothing here should be considered advice to buy or sell any security.

Why Chicken Is So Affordable: The Revolutionary Cornish Cross Broiler

Scott Buchanan1 Comment

Chickens were apparently domesticated from the red jungle fowl (Gallus gallus), a native of southeast Asia, thousands of years ago. Humans have been selectively breeding them ever since. Traditionally, chickens were valued mainly for their eggs. Surplus roosters would get eaten, of course, and tough overage laying hens would end up in the stewpot. But your typical chicken was a stringy, hardy bird whose job was to stay alive and to lay eggs.

Raising chickens en masse just for eating started in 1923 with Celia Steele of southern Delaware, somewhat by accident. She wanted to set up a small flock of egg-laying chickens to supplement her husband Wilmer’s Coast Guard salary. She placed an order for 50 chicks, but it was mistakenly heard as 500. When she got this huge shipment, she thought fast and decided to raise them to eating size (“broilers”) and then immediately sell them. She built a coop designed for grow-out, rather than for egg-laying. This enterprise was profitable, so she expanded operations. She doubled production the next year, and by 1926 she had 10,000 chickens. Her neighbors saw her success, and also went into the broiler biz. Thus was spawned the modern broiler industry. All this was aided by the general prosperity in the 1920s, together with technical progress in refrigeration and transportation. Her first broiler house is now on the U.S. Registry of Historic Places.

Source   Chicken Pioneer Celia Steele

However, chickens themselves were still scrawny by today’s standards. As of 1948, chicken meat was still an expensive luxury. With the broiler (meat chicken) market established, breeders naturally tried to develop strains that would grow big and fast. That not only allows more meat to be grown in a given flock, but fast growth means less feed is consumed to get to market weight.

For several years around 1950, A&P Supermarkets sponsored a “Chicken of Tomorrow” program, overseen by the USDA, to promote improved broiler breeding. As examples of chickendom as of 1948, here are plucked carcasses of contestants for the Chicken of Tomorrow contest of that year. Note how stringy they are, compared to the plump, meaty bird you buy at the grocery store today:

Judges evaluating 1948 Chicken of Tomorrow entries at the University of Delaware Agricultural Experiment Station. Photo courtesy the National Archives.

Without going into much detail, the ultimate product was a cross (hybrid) between the Cornish chicken and other breeds. Cornish cross chickens were initially bred for size and growth rate. By say the 1990s, that led to birds that were so heavy that they sometimes could not support their own weight. More recent breeding programs promote leg strength and other health factors, as well as sheer growth.

Example of modern Cornish cross broiler

To produce today’s optimized broiler is a complex process. Breeders must maintain something like four purebred strains, and then carefully cross-breed them, and then cross-breed some more, to get the final hybrid chick to send out for farmers to raise. Only these hybrids have the optimized characteristics; you can’t just take a bunch of these crossed chickens and breed a good flock from them:

Multiplication from pure lines to commercial crossbreeds in broiler breeding

Only a few large outfits can afford to do this, so most hatcheries are supplied by a handful of big breeders. However, there seems to be enough competition to keep the prices down for the consumer. Some folks will always find something to complain about (reduced genetic diversity or hardiness, etc.), but they are welcome to breed and grow less efficient chickens, if it pleases them.

In terms of dollars: “The inflation-adjusted cost of producing a pound of live chicken dropped from US$2.32 in 1934 to US$1.08 in 1960. In 2004, the per-pound cost had dropped to 45 cents, according to the USDA Poultry Yearbook (2006).”

According to the National Chicken Council, in 1925 it took a broiler chicken an average of 112 days to reach a market weight of 2.5 pounds. As of 2024, the market weight has soared to 6.5 pounds, and chickens reach that weight much faster, in 47 days (about the time it takes leafy green vegetables). The net result is that now it only takes about 1.7 pounds of feed to grow one pound of chicken, compared to 4.7 lb/lb in 1925. This nearly three-fold reduction in resource consumption translates into lower consumer costs, lower load on the environment and agricultural resources, and even lower CO2 generation. The largest jump feed conversion efficiency (from 4 to 2.5 lb/lb) occurred between 1945 and 1960, thanks to the development of the Cornish cross.

How Scott Bessent Outfoxed Peter Navarro to Get the 90 Day Tariff Pause

Scott Buchanan1 Comment

Despite the nearly universal outcry, President Trump was standing firm on his massive tariffs. “No backing down”, etc., despite the evaporation of trillions of dollars in stock values. On Tuesday, April 8, White House spokesperson Karoline Leavitt affirmed: “The President was asked and answered this yesterday. He said he’s not considering an extension or delay. I spoke to him before this briefing. That was not his mindset. He expects that these tariffs are going to go into effect.” However, the next day, Wednesday, April 9, Trump announced on his social media platform, Truth Social, that for all countries but China, there would be a 90-day pause in reciprocal tariffs.

What happened here? The common explanations are that (1) the chaos and losses in the markets had finally grown intolerable, or that (2) the president had planned all along to pause the tariff hikes on April 9. I suspect there is some merit to both of these factors – -despite all the prior warnings, I think (1) Trump did not expect such market devastation (he sincerely believes that he is making the American economy great, so why should markets crash?), and also (2) that he had indeed planned to play around with tariff implementations in pursuit of deals.

But what some analysts pointed out as a further factor was the drop in the market value of U.S. Treasury bonds, which correlates directly to a rise in interest rates. The actions of the Administration have seemingly caused market participants, especially abroad, to question the risk-free status of U.S. debt. If the government has to pay higher interest on its debt, it is game over, as interest payments will spiral up and consume an ever-higher share of the federal budget. The chart below shows in orange the price movement of the TLT fund, which holds long-term T-bonds, plummeting on April 7, 8, and 9 (red arrow), as an indicator of rising rates. TLT price then shot upwards, along with stocks (the green line is S&P 500 fund SPY) late on April 9, in the relief following the tariff announcement:

As Treasury Secretary, Scott Bessent would be particularly sensitized to the interest rate issue, and able to communicate that to the boss. He has been a successful hedge fund trader and manager, so he understands the plumbing of the system, unlike some other presidential advisors. Up till then, however, economist Peter Navarro, who is ultra-hawkish on tariffs, had had the ear of the president.

So, what did Bessent do? (This is the part that only came to my attention a few days ago, even though technically this is old news). It seems he enlisted the support of Commerce Secretary Lutnick, and adroitly chose a time when Navarro was tied up in a meeting, and barged in on the president in an unscheduled meeting so they could get him alone. And it worked! Evidently, they persuaded him that now was the time to do the clever deal-making thing and issue a pause. It’s a mark of how readily the president can change his mind that his own press spokespeople were unaware of this volte-face, and had to scramble to make sense of it. It is also interesting that cabinet members are resorting to cloak-and-dagger tactics to get policy done.

Bessent naturally gave all the credit to the president for the decision, but he and Lutnick had photos taken to show who saved the financial world – for now:

Scott Bessent (standing, left) and Howard Lutnick (right) with President Trump as he signs 90-day pause in reciprocal tariffs.  Source: Daily Mail.

The president’s recent musings about trying to fire the supposedly independent Fed chairman have since contributed to interest rates going back up again, but that is another story.

Long-Short Funds Can Mitigate Your Portfolio Gyrations

Scott BuchananLeave a comment

Here we discuss some stock funds that go down less than stocks in general; the flip-side is that they go up less than plain stocks, as well. Some investors may appreciate the reduction in gyrations, especially after a week like the previous one.

Long-short funds come in two main flavors. When you buy a stock, that is considered being “long”. If you short-sell a stock (borrow shares from some broker, that you plan to pay market price for later, such that you make roughly one dollar for every dollar the stock goes down), that is being short.

 “Equity-neutral” funds are short as much value of stocks as they are long. So, they are net 0% long. Obviously, you would expect the value of such a fund to not decline much in a market crash. But conversely, it would not go up much in a bull market, either. So how is this better than just holding cash in your account? The magic is if the active fund managers can manage to be long a set of stocks which go up more than the stocks that they short. They often try to pair longs and shorts in the same sector. For instance, in 2024 if a fund was long Nvidia and short Intel (another stock in the semiconductor sector), that would have been a big net win. Sometimes this works, and sometimes it doesn’t.

The actual performance of such a fund is very dependent on the active managers’ skill and luck. For instance, here is a ten-year total return plot of two market-neutral funds, one from AQR and the other from Vanguard. The Vanguard fund (VMNIX) muddled along pretty flat from 2015 through 2021, then had a slow rise 2021-2023, then went flat again. The performance of the AQR fund (QMNNX) has been more erratic. It went up 2015-2017, then down a lot (this would have been hard to bear at the time, when the S&P was roaring upward) for 2018-2020. It then roughly matched the Vanguard fund for a couple of years, then pulled way ahead 2023-2025, as it made some great long/short choices:

However, the ten-year performance of these funds fell far short of a simple S&P500 holding (blue line above). Since stocks go up the vast majority of the time, a long-short fund which is net long seems to make more sense.

A plain vanilla net-long long-short fund is FTLS. It seems to be among the best of the long-short ETFs. It is usually about 60% net long. I modeled its performance against a portfolio of 60% S&P 500 stocks and 40% cash (rebalanced periodically), and it performed about the same. That is, FTLS went up and down with moves about 60% of what the S&P did. That is OK, but one might wonder why one would hold such a fund instead of just holding a 60/40 stocks/cash allocation for the same amount of investment. If we look at time periods with appreciable down periods, such as the past three years (see chart below), FTLS does look comforting; its muted dips in 2022 and 2025 compensate for its slower rise in 2023-2024, so it presents as a slow, fairly steady rise with a 3-year total return slightly higher than S&P. It is certainly easier psychologically to hold such a fund, and it might help small investors avoid the deadly mistake of panic-selling during a market downturn.

CLSE is a long-short fund that is often about 70% long. Management there takes a more swashbuckling, risk-taking approach. It went down less than S&P in the bear market of 2022 (as expected), and then it soared high above S&P in the first half of 2024, as it made skillful/lucky picks to go very long tech growth stocks like NVDA. That tech-heavy approach has backfired so far in 2025, since CLSE has fallen as much as S&P in the past several months (NOT what one hopes for a long-short fund). Despite that glitch, however, CLSE still weighs in with a 3-year return far ahead of the broader S&P (39% vs. 23%):

Another strategy to mitigate market ups and downs is for a stock fund to buy and sell put and call options, to create a “collar” effect. Buying puts limits the downward movements; the puts are financed by selling calls, which limits the upward swings. The fund ACIO, for instance, seeks to capture 65% of the S&P’s upside, while limiting loss to 50% of the downside.  In my stock charting, I found it ended up performing about like FTLS.  As of a week ago (Tue, Apr 8), the S&P was down 15% year to date (i.e., since Jan 1), while FTLS and ACIO were only down 8.3 % and 9.6%, respectively.

Standard Disclaimer: This is for information only. Nothing here is advice to buy or sell any security.

If Tariffs Are So Bad, Why Are They So Common?

Scott Buchanan4 Comments

Upfront disclaimer: This post is NOT about the most recent salvo of U.S. tariffs – enough apoplectic digital ink is gushing there already. It is about is an underlying question that these tariffs raised in my mind, which is the title of this article.

If there is one thing that nearly all economists, left, right, and center, can agree on, it is that free trade is good (see, for instance, a classic exposition of gains from trade on EcoNomNomNomics) and thus tariffs are bad. The main reason the local producers would need “protection” is because their goods (and services) are more expensive than the imports, and so by definition the consumers will pay more for their stuff. Thus, as is always noted, tariffs are a kind of tax on consumers. And yet…as far as I can tell all or nearly all nations impose tariffs on imported goods. So, what’s up with that?

This is not an area of expertise for me, so I went roaming the web to get some various opinions. The main reason given is to “protect local industry/agriculture”, and by extension, local jobs. We have to drill down deeper to see the reasoning involved.

In some cases, it is a simple, unsavory matter of a local industry having a powerful enough clout either at the business level or the labor level to lobby for special treatment (which costs the rest of the consumers more). But there are other cases where it is argued that it is important for national security to maintain a certain level of domestic production. For instance, historically nations like Japan and Switzerland maintained high tariffs on certain agricultural imports, in order to retain some domestic food production so they would not starve if something happened to interrupt international trade. Ditto for defense-related or other “strategic” production, and so on.

And in many cases, there just seems to be a gut feel that it is more patriotic or economically healthy to promote in-country production. Also, if a certain inefficient industry employs a lot of workers, the medium-term pain of letting that industry fail while resources shift elsewhere may be unacceptable. Economists promise us that the sooner or later those unemployed workers and empty factories will be put to some other, more worthy use, but it can be hard to believe in the “invisible hand” when suddenly you cannot pay your rent and no other jobs are available.

Two other factors came up. One is that for less developed counties without sophisticated internal revenue services, tariffs are a convenient way to collect revenue, and in fact may provide a significant share of government support. If I recall my high school history correctly, the fledgling United States government supported itself largely by tariffs, back in the day.

Another motive is what I would call “smart” tariffs, aimed not at indefinitely protecting inefficient producers, but at promoting improved production. What I have in mind is something I read some years ago, in an article I cannot now lay hands on, describing Korea’s path to industrialization. Protectionism was very much a part of that. The nation’s consumers did forgo short-term cheap consumption, in exchange for the development of domestic production which would in the long-term benefit everyone. I think one example was cigarettes. The government decided that cigarette production was a reasonable place to start industrializing, so they taxed imports to drive the price high enough to justify putting in cigarette-making equipment. After some years, they were happily making cigarettes, employing Koreans and building institutional muscle for the next phases of industrialization.

China has maintained a high degree of protectionism, including capital controls, and has grown and prospered mightily. So, I think that in assessing tariffs, it is essential to look past the immediate effects (which economists can always argue are “bad”, i.e., reduced consumption) to the longer-term impacts. Smart tariffs of the kind that East Asian countries have employed seem to have parlayed short-term consumer pain into long-term societal gains. Non-smart tariffs – -maybe not so much.

My Visit to a Maple Syrup Producer in Vermont

Scott Buchanan2 Comments

While I was in southern Vermont last month, I visited a maple syrup production operation. The actual shed is called a “sugar house”, and the operation is called sugaring, even though the main product is the syrup.

When I was a boy, my dad hung some buckets on taps into the two maple sugar trees in our yard to collect the sap. He boiled the sap in a big old copper tub/kettle set on cinder blocks over a wood fire. You do have to boil and boil, since it takes about 45 gallons of sap to make one gallon of syrup. The other 44 gallons is boiled off by the heat of the burning firewood.

David Franklin’s operation in Guilford, VT (near Brattleboro) is much more efficient than that. The sugar house is set at the base of a long slope. The sap from the taps in the trees goes into tubing that connects into more tubing which goes downhill, so hundreds of trees feed into the long blue tubing shown here, which goes into collection tankage:

The tanks and pumps are arranged to optimize storage and then allow gravity flow into the equipment in the sugar house:


There is a big vat in the shed, around 4 ft wide x 12 ft long, where the sap is boiled by a wood fire kept going in a lower chamber.

The men have been cutting and splitting wood for months, to get ready for the sugaring season.  Running this operation takes two or three people. Typically, there is one man keeping his eye fixed on the temperature and other properties of the sap that is being boiled, to make sure that the syrup is drawn off at the right consistency and is not overcooked. The syrup should be drawn off when the temperature reaches 219 degrees F (104 C). Another man keeps a timer set, and every six minutes he opens the door to the fire box and throws in half a dozen pieces of wood to keep the fire burning hot:

There is also filtering and handling of the drawn-off syrup, and checking the tankage outside.
As a (retired) chemical engineer, I appreciated an improvement that was added to the boiling operation. Originally, all the steam from the boiling just went into the air of the shed, making it clammy and causing condensation from the roof to drip down onto workers’ heads. The heat of this steam was basically wasted. But they added a fairly high-tech “Steamaway” heat exchanger that sits on top of most of the boiling vat. The steam rises up through channels of incoming sap from the outside. The cool sap is warmed by the rising steam to around 194 F before entering the boiling vat. This preheating means less firewood is needed to make the syrup. Also, much of the steam is condensed into hot water which can be used for washing operations. A bonus is that much less steam ends up in the atmosphere of the shed, so no more dripping onto heads.


The owner, David Franklin, and his family had the vision for this operation. They built the large shed that houses the operation themselves, and invested in the expensive equipment. David is an old-school farmer, of the type skilled in every aspect of workmanship so they can do their own welding and building and equipment repair instead of paying others to do it. Keeping a large farm running smoothly is a complex task that takes more energy and practical know-how than most suburbanites or city dwellers can imagine. The other men running the sugaring operation are all smart and efficient and hard-working, and all retired from responsible, skilled professions. It seems they do the sugaring largely out of the enjoyment of doing a job well alongside worthy companions.

However, they are all over sixty years old. They can’t keep it up indefinitely since there is a lot of physical labor involved, yet the operation can’t afford to hire young people who would do the work just for money.

It is not clear to me, therefore, what the future of operations like this will be in 15 years, as this current generation of workers ages out. Unlike a lot of production, maple syrup making cannot be simply outsourced to Asia.

Anyway, David Franklin’s syrup is delicious. You can buy some on-line here.  Or if you swing by the Franklin Family Farm in Guilford, you can also get some farm fresh eggs and certified organic hamburger, and stew meat.