In Search of the Perfect Investment

Eventually it all comes down to earnings and expectations about higher earnings. Along the way, we have “momentum” stocks that become stockmarket darlings because of their growth of customers, or eyeballs, or visits or… something. Their day in the sun can be profitable and exciting. But eventually the laws of compounding play out. And there aren’t enough customers or (much worse), the competition gets wind.

Sad to see Netflix lose 20% last night. Its growth has lagged and suddenly everybody and their uncle thinks that streaming video over the Internet is a really neat business — Amazon, HBO, CBS, Roku, Hulu — and a zillion others. I had cancelled my $8/month subscription to it some time ago. It never seemed to have the movie I wanted to see. I personally use Slingbox and Roku a lot.

Google’s growth in search is also reaching the limits of compounding. You can’t keep growing at 30% forever. Yesterday I eyed Google’s last six months:

I noticed it had fallen 11% from its mid-September peak, and, as per my inviolate Stop Loss Rule,  I dumped it. It was not prescient. It was a rule. It turned out I was right. Last night’s earnings report was not exciting. And the stock is around $530 in early morning trading. (But may bounce if today’s market is positive.)

Amazon has fallen 16% since its mid-July high.

I haven’t owned it for a while. These days I (and I’m guessing everyone else) is eyeing price earning ratios (and dividend yields) more carefully. Amazon’s price earnings ratio is an eye-popping 776.6, and its dividend yield is zero. I know Amazon is investing for the future. But, pray God, isn’t the future here already?

My second rule (after Stop Loss) is Bid and Buy ‘Em Cheap.My real estate magnate friend tells me the ONLY part of a real estate investment you can affect is the price you pay for it. You can’t affect the price you sell it at, nor what it will cost to fix the place up. But you can affect the price you pay by bidding low, not falling in love with the joint. You need to be willing to walk.

Good idea for the stockmarket also. Want to own something, put in a ridiculous limit buy. Maybe one 10% to 15% lower than where it’s selling at.

Dumb me. I should have put an order in a t $10.8 on NLY, which I like:

It would have worked with DAL, which I also like.

I did put in a low bid to Cyberark software (CYBR) and snagged it at $28.255. I’m up $1,792. A broken clock is right twice a day.

 Whatever happened to Harry’s “free” life insurance?
If I pay for an insurance policy on your life, I have an incentive to off you. Hence there are laws, rules and regulations about having someone else pay the premiums on the insurance policy on my life.

The rules define something called “Insurable interest.” My man tells me his “free” life insurance follows all the rules. But lining up financing for the premiums takes time.

Now why he didn’t tell me all this in the beginning when I first wrote about it (click here), I don’t know. Suffice, when I hear more I’ll let everyone know.

Meantime, I apologize for getting everyone excited.

Good lessons to remember: First, there aren’t many free lunches. Second, when it’s too good to be true, maybe it isn’t?

Cloning is good. One fine morning, your hard drive will go south. It will get hit by a virus. It will get hit by an electricity spike. It’s not “if”, but “when.” You’ll want to pop out your old busted hard drive and slip in a “new” drive — a clone of your hard drive when it was still working.

The best and easiest tool for making clones is called a Aluratek External SATA Portable External Hard Drive Duplicator AHDDUB100. You pop the hard drive you want to copy in one slot and a new hard drive in the other slot, hit the Start button and sit back.

The re are two fantastic features of this thing: First it doesn’t need software. Cloning software is a real pain. It never works easily. Second, this thing costs the bargain price of $52. Click here. Remember the cost of SSD drives have fallen through the floor. Using the Aluratek device you can easily upgrade your spinning hard drive to a solid state one in minutes. Put in the new SSD and bingo, your computer will suddenly speed up dramatically. You’ll save buying a new computer. Trust me.

The Robin Hood Investors Conference starts Monday, October 20 at the Grand Hyatt Hotel in New York City. It features some of the world’s best hedge fund managers’ giving their Best Ideas. It’s the best investment conference of the year. I’ll be there. I was there last year. I believe you can still register. Click here.

The speakers include Larry Fink, BlackRock CEO, Glenn Hutchins, co-founder Silver Lake, David Tepper, president Appaloosa Management, Walter Robb, CEO, Whole Foods, Jim Chanos, president, Kynikos Associates, Eric Schmidt, executive chairman, Google, Carl Icahn, Icahn Enterprises, Dean Kamen, president, DEKA Research & Development, Seth Klarman, President and CEO, The Baupost Group, Stan Druckenmiller, Chairman and CEO, Duquesne Family office, Dan Loeb, Founder and CEO, Third Point, Harvey Weinstein, the Weinstein Company, Fred Wilson, Managing Partners, Union Square Ventures, Barry Sternlicht, Chairman and CEO, Starwood Capital Group, John Griffin, Founder and president, Blue Ridge Capital and David Einhorn, co-founder and president Greenlight Capital. A total of 48 speakers — not all of whom I’ve listed.

For the full list of 48 speakers, click here. The agenda is here.

The best male birthday/thank you present. It’s called The Truman Set, and consists of a shaver, a couple of spare blades, some shaving cream and — my favorite — a travel cap (see bottom right), which protects your bathroom travel bag’s contents and your fingers.

Buy it here.

Ultra-Sick humor
I’ve torn out my alarm system. I’ve de-registered from Neighbourhood Watch.

NOW, I’ve got two Pakistani flags raised in my front garden, one at each corner, and the black flag of ISIS in the  center.

The local police, the CIA, the FBI and other intelligence services are all watching my house 24/7.

I’ve never felt safer.

Harry Newton who notes that interest rates have fallen. Refinancing your mortgage has become cheaper.  If you’re in the midst of negotiating a mortgage, now is a good time to try some Jewish Foreplay.*

In late April, Willie Nelson celebrated his 81st birthday. He is one of our national treasures, a great singer, a great song writer and a great poet:

 “I have outlived my Pecker.”
A Poem  –  by Willie  Nelson

My nookie days are over,
My pilot light is out.
What used to be my pride and joy,
Is now my water spout.

Time was when, on its own accord,
From my trousers it would spring.
But now I’ve got a full time job,
To find the “friggin” thing.

It used to be embarrassing,
The way it would behave.
For every single morning,
It would stand and watch me shave.

Now as old age approaches,
It sure gives me the blues.
To see it hang its little head,
And watch me tie my shoes!

* 20 minutes of begging.

Have a great weekend. Looks like the market will be up today. Please come to the Robin Hood Conference on Monday. Look me up.