In Search of the Perfect Investment

You get an email. The phone rings. You come back from a meeting. You’re ecstatic. In Cloud Nine. You’ve just  found your Perfect Investment.

You know two things:

First, recommendations from your brokers, your investment advisers, your friends usually suck. In fact, they’re usually your worst investment ideas. Often worse than your own.

Second, you need to do lots of CHECK. CHECK. CHECK. 99.9% of the time your checking will turn up stuff you don’t like. They’re ll be huge holes in the story — big enough to drive a cement truck through.

Your psyche is now in the dumps. Instead of all that research and checking, you could have been doing something useful — like playing tennis.

You say “Thank you” and move on.

It all started this week with a nice email:

Harry,

I found something you might like.

I am keeping some cash in a checking account. Pays me 0.05% per year. Big deal, right?

But Wait There’s More!

I also get 10,000 American Airline miles for every $100,000 on deposit. Deposited every month into my AA account. No maximum. And the miles are tax-free!

Right now I am earning 50,000 miles per month or 600,000 miles per year on a $500k deposit. FDIC insured, of course.

The URL is http://www.bankdirect.com/products/checkingmileage.aspx

You can get a round trip ticket to Australia in First Class for 150k miles, what is that worth, $10k per roundtrip? At $10k that would be 4 tickets on my $500k deposit or a value of $40,000 in tickets per year, about 8% interest, tax-free, not bad!

The bank is BankDirect. Their website is emblazoned with the FDIC insurance logo. . But these days, I don’t trust nobody. CHECK. CHECK. CHECK.

From the BankDirect web site,

BankDirect is the national Internet banking division of FDIC – insured Texas Capital Bank, a nationally chartered bank. Texas Capital Bank, is the principal subsidiary of Texas Capital Bancshares, Inc. (Nasdaq: TCBI), which was founded in December 1998 with the largest start up capitalization in U.S. banking history.

Now to the FDIC’s web site;

http://www2.fdic.gov/idasp/main_bankfind.asp

I can’t find the word “BankDirect” on the FDIC’s web site.

I can’t find Texas Capital Bank.

I can’t find Texas Capital Bancshares. (At least the one I’m looking for.)

When I go to Texas Capital Bancshares’ own web site (http://www.texascapitalbank.com/), I can find no mention of BankDirect.

I also can’t find anything about BankDirect on the Wall Street Journal’s analysis of TCBI.

I also can’t  find any mention of BankDirect on finance.yahoo.com.

I smell a rat.

This morning I’ll ask BankDirect to email me written proof of their FDIC insurance. And I’ll try to speak to someone at the FDIC in Washington. (Good luck on that one.)

VectorVest seems to have real potential. I had lunch yesterday with my successful covered call seller. He ran me through nine months of one stock’s covered calls transactions — on which he showed a 37.3% return. One transaction doesn’t make a record. But he tells me  he’s made a nice living with these things for over 15 years. Today he likes to pick and buy solid companies paying dividends and sell covered calls against them. If the stock rises, he might let it be taken away from him, or he might buy the call option back for much less than what he sold it for.  If he keeps the stock, he keeps the dividend. He tells me that integral to his strategy is a stockpicking service called VectorVest.

I did some cursory checking on VectorVest yesterday. I’m impressed. Sufficiently impressed to take a trial subscription and to play with it in the next few weeks.  If you want to stay up with me, sign up for VectorVest’s 5-wek, $9.95 trial. Go here.

Good news for the recovering economy. From today’s Wall Street  Journal:

FedEx Corp.’s fiscal third-quarter earnings more than doubled, topping the company’s own estimates, as the shipper saw a big increase in profit at its express-shipping business.

The package-shipping giant also forecast fourth-quarter earnings of $1.17 to $1.37 a share. Analysts surveyed by Thomson Reuters expected $1.26 on average. The company also raised its target to the year to $3.60 to $3.80 from $3.45 to $3.75. …

Parcel-shipping companies, which are often viewed as a barometer of economic activity, have seen volumes stabilize after dropping sharply amid the recession. Last month, Moody’s raised its outlook on FedEx, saying it expects volumes and yields will continue to fuel improved results as the economy heals.

They rose 1% in the U.S. express business on an average daily basis in the latest quarter while rising 5% in the ground segment and 26% at the less-than-truckload operation.

For the quarter ended Feb. 28, FedEx reported a profit of $239 million, or 76 cents a share, up from $97 million, or 31 cents, a year earlier. The company in December forecast earnings of 50 cents to 70 cents a share, below analysts’ views at the time.

Revenue jumped 6.9% to $8.7 billion, above analysts’ latest projection of $8.37 billion.

Operating margin rose to 4.8% from 2.2%.

Washington continues to disgust. From today’s Bloomberg:

March 18 (Bloomberg) — Senate Banking Committee Chairman Christopher Dodd’s chief counsel in 2008 traded stock in Morgan Stanley, Wells Fargo & Co., American International Group Inc. and other rescued companies as the panel considered legislation to address the credit crisis, according to her financial disclosure form filed with the Senate.

Amy Friend, 51, who is now leading the panel’s effort to write a bill overhauling Wall Street regulations, bought $1,000- to-$15,000 stakes in four banks, weeks after Dodd hired her in January 2008, the form shows. She also owned shares of  Fannie Mae, Freddie Mac, AIG and other insurance firms, according to the disclosure document, which she signed on June 5, 2009.

The transactions, permissible under Senate rules, included buying $1,000 to $15,000 of Federal Home Loan Bank bonds and Fannie Mae debt in June and July, 2008. On July 30 of that year, then-President George W. Bush signed into law a Dodd-sponsored bill setting out new regulations for the housing finance agencies and allowing the Treasury Department to give them cash injections.

From my quickk reading of the Bloomberg article, it seems Amy Friend lost money on her buys.

The little hole in the back. My Verizon MiFi (see right column) stopped working yesterday. It seemed to be telling me it had no battery charge. Yet when I plugged it in, it still didn’t work. Something was wrong. I called the manufacturer — Novatel Wireless. It’s hard to find a more useless company. They have no customer support. They have nobody to answer customers’ questions. I was eventually referrred to the VP in charge of technology, a man called Wayne Kushneryk (phone 403-295-4877). But he lives behind voice mail and doesn’t return phone calls.

I did manage to “fix” the thing temporarily by removing the battery and sticking a small paper clip into the tiny “reset” hole at the back of the device. So far, it’s still one of my favorite toys — see on right. It seems to work better when it’s plugged in and it gets pricked with a paper clip.

Couldn’t happen to a dumber company. Novatel Wireless:

Which brings to me…

The awful level of customer service in American corporations. All you need is one person answering the phone and emails. Just one person. Most corporate web sites don’t even have a Customer Service email address. If you run a business, please don’t isolate yourself from your poor suffering customers. Please.

Michael Lewis’ PR machines moves into high gear. His new book — The Big Short: Inside the Doomsday Machine — is out this week. Michael is America’s favorite business writer. He wrote Liar’s Poker, The New New Thing, Moneyball, The Blind Side, Panic, Home Game. His new book explains how some of Wall Street’s finest minds managed to destroy $1.75 trillion of wealth in the subprime mortgage markets. He was on last weekend’s 60 Minutes and this week’s Charlie Rose.

Michael Lewis.

The book.

It’s not available for the Kindle or for BN Reader (Barnes and Noble reader). It’s a little cheaper at Amazon. You can read a free excerpt at Vanity Fair.

Children and Grandchildren Easter presents. My extensive research shows the most appreciated Easter present is Peeps.

It turns out most 30-year plus children prefer their Peeps stale. Daughter Claire loves her Peeps stale. She pierces the packaging and waits several weeks. Then she is happiness incarnate:

You can even buy Peeps  in pink and chocolate-covered — dark and milk chocolate. Claire prefers classic yellow. You can buy Peeps online here.

Harry Newton, who seems more signs of recovery than signs of gloom and doom. But “gloom and doom” has one huge benefit. It feeds a burgeoning industry of newsletters and doomsayers.