In Search of the Perfect Investment

I’ve always wanted to teach a course on deductive reasoning. You have a problem. Go at solving it logically. Eliminate one potential cause. Then try another. Always this or that. Until you find out the exact problem. Then fix it. The two keys are this or that, and being creative about finding potential causes.

Great idea, Harry. But did it help you and Rob fix your busted boiler on Sunday?

No, it didn’t. And why not? Here’s the rub. Every manufacturer is adding computers to their products. This gives their products an “edge.” Except when things go wrong. The fault codes are poorly documented. And no one — no technician and no manufacturer rep — can keep up with the changes.

I don’t have a solution, except to cherish your old stuff that worked with relays and not computers.

This is our Viessmann boiler. It pumps out hot water and distributes it to five places — from left – a hot water tank, two sets of radiators (upstairs and downstairs) and two sets of underfloor (also called radiant) heating.

Here’s the fault code. Really useful!

The whole kludge is controlled by multiple computers, with hideously lousy fault codes. The fault code we were getting (which shut down the boiler) was bA. The service manual said it was the first of the two grey boxes (on the left) that controlled the mixing valves for the radiant heating. We disconnected one, then the other, then both. We pulled them both part — see glorious photo below. The fault code came back on. But the boiler wouldn’t. Now what?

This morning we have our fourth phone call to the factory. Such joy. Moreover it’s bloody cold in the house.

We have central air conditioning for cooling the summer. It’s a totally separate system. This week we’re installing electric coils in the AC ducts. This way, we simply say “heat” and the AC units now make heat. Had we had this forced hot air system,  we wouldn’t have frozen our tushies off… and, most importantly, we would have had a backup to the boiler. Thinking of this solution is the weekend’s silver lining. Why didn’t our contractor put it in? Why didn’t we think of it. Dumb. Dumb.

Backups are good. Little space heaters — like this one — are only semi-useful.

Manufacturers are getting crazier and crazier. This is a new Vornado heater. It now has a computer.

It took 20 minutes of reading the manual and fiddling before it produced an ounce of hot air.

The solution. The stupid thing had a cut-off switch underneath it. The idea being that it shut off if you lifted it but worked if you put it down. Except the cut-off didn’t work reliably. You had to aggressively push it up… No mention of it in the instruction manual. Remember the old ones that had a simple on-off switch? Cherish them.

Don’t get too carried away. Dan Greenhaus of BTG writes:

It was a pretty good thanksgiving week for investors with the S&P up by 3.6% and the Nasdaq and Russell by 4%. For the S&P, the day after thanksgiving was the index’s best such day since 2007 underscoring the sense of optimism that seems to be invading investor’s minds. That sense of optimism should get a bit of a boost this week when, after not reaching an agreement this past week, the Eurogroup and IMF should be able to work out their differences which should release at least the next two if not three tranches of Greek support, totaling ?44 billion. That of course doesn’t change our long held belief that the math used to project a 120% debt/GDP ratio by either 2020 or 2022 is ambitious and the agreement will do nothing to change the forecast for barely any growth across Europe and yet another year of Depressionary conditions in Greece. Once this is agreed upon, attention can turn once again towards Spain.

Here’s the last ebullient week in perspective:

A Debt World Turned Upside-Down. From Barrons by Lawrence C. Strauss,

Emrging-market bonds, once a minefield for investors, have produced big returns recently, and the outlook remains good for many of the issuers.”

I don’t know that I buy their conclusion. But it’s true that when things are rough and blood is flowing, out of favor securities often represent great buys — if you have the stomach.

For the full article, click here.

12 Insights From The Always Charming Commodities Guru Jim Rogers.

Jim Rogers started on Wall Street back in the 60s and went on to co-found the Quantum Fund with George Soros. Then he packed up and moved to Singapore, essentially shorting the west. Now he’s heavily invested in agriculture, gold, and silver, and he is training his children to speak Mandarin because he thinks the balance of power is shifting to Asia.

There’s no useful investment advice here. But Rogers is, if nothing, amusing. For the full piece, courtesy Business Insider, click here.

What is wrong with this picture? I took this picture on Thanksgiving Day in Chatham, NY, an over-banked hamlet 120 miles north of New York City.

Look carefully at the sign above the front door. This bank has to advertize that it actually lends money!

Pray tell, what else are banks meant to do?

An inspiring TED talk. TED conferences are typically sold out. TED talks are often fun. I like this one by Stephen Ritz. It’s called “A teacher growing green in the South Bronx.” Click here.

I find another boom business. This gives new meaning to pounding sand.  Here’s a sign. It’s held up by two bags.

They’re bags of sand. They each weigh 60 to 70lbs and each cost $6.49 a bag.

What a wonderful business.

 

Harry Newton who begs a little patience. If you signed up for an emailed subscription,  you’ll get today’s column. But it may look weird. I’m trying to fix that. Meantime my RSS feed (on the top right) actually works perfectly.

I own some V, some WEN, and some SITO. I’ve also bought back into some of the mortgage REITs, including NLY, AGNC, MITT, ARR, RWT and NRF. They’ve also bounced back a little. Buy stocks when they’re out of favor. I’m short RSH, BBY and HPQ.

A record 247 million people shopped online and in stores at this year’s Black Friday weekend. according to the National Retail Federation. Online sales reached over $1 billion for the first time. Amazon is bouncing back.

Apple (AAPL) is was started as a BUYat Citigroup with price target of $675. It closed at $571.50 on Friday. My feeling: Apple was a great buy at $350, but not at $571.50. Too much negative emotion.  Too many unknowns. And worse, Steve is not there. The new guy, Tim Cook, is no Steve.