The “Can You Shop There?” test
Also called the Peter Lynch test: If you like shopping there, buy the stock.
But he forgot: If you don’t like shopping there, sell the stock short.
I like shopping at Home Depot. they have friendly, helpful people and a always what I want. I hate shopping at Lowe’s because they have unfriendly, unhelpful people and a miserable inventory. They are always “about to get in” what I want. But never seem to. (At least, that’s my Manhattan experience.)
I own HD. But not Lowe’s. But I didn’t sell Loews short. Drat. I did sell Macys short. I just received a Memorial Day Sale brochure from them — with 30% to 70% discounts — but there’s nothing in the catalog I have a remote interest in buying.
Retailing of other people’s stuff is dead. Who wants to shop for stuff I can find easier and faster on Amazon?
Telling one-year chart: HD versus Lowe’s, which is in RED.
The problem with shorting is your timing has to be perfect.
Everyone is getting queasy. We’re overdue for a recession. But what will cause it? Moodys just downgraded China because of possible banking problems. I wrote about recession “issues” two days ago. My headline was “Overdue for a financial crisis. But not in the pet business.” Click here.
The Economist has a piece:
Ten years on: How safe are banks?
Another crisis one day cannot be ruled out
But recent changes have made it less likely
IN 1992 SWEDEN nationalised (and subsequently merged) two banks: Gota Bank and Nordbanken, which was already mostly owned by the state. As in America 15 years later, property prices had first boomed and then plunged, bringing banks down with them. In 2001 Nordbanken was combined with Danish, Norwegian and Finnish lenders to create Nordea, the region’s biggest bank. It was not until September 2013 that the Swedish government sold its last shares in Nordea, finally drawing a line under a crisis by then 20 years in the past.
Banking crises leave deep and lasting scars on economies and societies. The one of 2007-08 was the biggest and worst since the 1930s, so the recovery was bound to take time. In a study published in 2014 of 100 financial crises going back to the 1890s, Carmen Reinhart and Kenneth Rogoff, two Harvard economists, found that real income per person took an average of eight years to return to pre-crisis levels. They identified 12 countries where systemic crises began in 2007-08, of which seven have so far clambered back at least to their starting-point.
Economic growth in America restarted in 2009 and has continued ever since, in one of the longest periods of expansion since the second world war. Unemployment has dropped to 4.7%. But growth has been unusually slow, averaging just 2.1% a year. The economy recovered its pre-crisis level of GDP per person only in 2013. Many Americans feel that prosperity is something that happens to other people-such as those who work on Wall Street.
Banking crises also have a habit of turning private debts into public ones: when banks are overwhelmed by foolish borrowing and lending, governments step in. America’s ratio of debt to GDP rose by about half between 2007 and 2011, though it has since steadied. Greece’s, Ireland’s and Spain’s went up even more. Although some have declined in the past couple of years, the countries’ ratios are still far above pre-crisis levels (see chart).
Central banks’ balance-sheets and interest rates also still bear the imprint of the crisis, not least because monetary rather than fiscal policy has been the principal, even sole, means of post-crisis macroeconomic support. Even if the Fed raises its main interest rate by another three-quarters of a percentage point this year, as most forecasters expect, that will still leave it lower than it was when Lehman collapsed. The European Central Bank, which cut its benchmark rate to zero just over a year ago, is still accumulating bonds, albeit more slowly.
The effects of the crisis are not just seen in the dry economic data; they are felt in the gut as well. Among the many and complex causes of the populism that carried Mr Trump to the White House and will take Britain out of the European Union is resentment of ill-defined “elites”: well-off, educated, at ease with globalisation and doing nicely from it, while ordinary folk struggle to make ends meet. Related to that is anger at the crisis, its consequences, the bail-outs of the banks-and the knowledge that bankers still earn bucketloads.
There is nothing new in that. Economic crises always have political consequences, which loop back into economic policy for decades to come. Germany’s twin fears of inflation and fiscal fecklessness, which arguably have held back recovery in the euro zone after the 2007-08 crisis, have roots in a series of 20th-century economic calamities, dating back to the hyperinflation of the 1920s. America’s Fed was founded in 1913 in response to a severe crisis in 1907; the country’s perennial arguments over the proper role of a central bank, and indeed the need for one at all, started when the First Bank of the United States was set up in 1791.
Crises often prompt an overhaul of regulations, in the hope of avoiding a repeat performance. Much of the complicated apparatus of American financial regulation today-the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, Fannie Mae-was erected after the catastrophic banking collapse of 1933. The Office of the Comptroller of the Currency was a product of the civil war. No one knows whether the Dodd-Frank act will survive Mr Trump’s promised assault or whether the latest version of the Basel capital-adequacy standards will be completed. But whatever the outcome, the arguments arising from the 2007-08 crisis are likely to carry on for years yet.
Wait for it.
No one knows, either, when or where the next crisis will strike, but it seems certain that another one will come along some time, somewhere. In “This Time Is Different”, a book published in 2009, Ms Reinhart and Mr Rogoff wrote that banking crises are “an equal-opportunity menace”-as common, over the long sweep of history, in rich countries as in emerging markets. Giddy build-ups of debt are a warning sign. In the past couple of years, China, scene of another credit-fuelled property boom, has looked like the most vulnerable big economy.
Are the West’s banks safe for now? Bankers’ recent grumbles about capital requirements and the burden of supervision have caused some to worry that bad old habits may be returning. Those grumbles have different causes on either side of the Atlantic. America’s banks think they are strong enough to have their harnesses loosened, whereas some European ones moan that regulation is slowing down their recovery. But for both those groups the memory of ten years ago is still fresh enough to instil great caution.
Banks are never wholly safe, but they probably shouldn’t be. Capitalism, after all, thrives on risk. The best preparation for catastrophe is a thick equity cushion, and banks are certainly better upholstered than they were a decade ago. Still, with hindsight it is hard to imagine how they could have done much worse.
Roger Moore 007 dies at 89.
This is him with Jacqui Chan in “The Saint,” a wildly popular British series about a smooth-talking thief.
Mr. Moore had definite opinions about playing heroic adventurers.
“I would say your average hero has a super ego, an invincible attitude and an overall death wish,” he told The New York Times in 1970. “He’s slightly around the twist, isn’t he?”
“In theatrical terms, I’ve never had a part that demands much of me,” he added. “The only way I’ve had to extend myself has been to carry on charming.”
Come visit New York for two great art exhibits.
+ Robert Rauschenberg at MoMA.
+ Irving Penn at the Met.
Don’t go to the museum when it’s raining. Everyone and their uncle will have the same idea. The museum will be mobbed.
Harry Newton, who eyes Syria with great sadness. I’ve visited countries around Syria, but never made it to Syria. Their problems started with many years of drought in the countryside — an early global warming. The farmers appealed for help from the central government. It was not forthcoming. In desperation, many moved to the cities, looking for work and food. They gathered in the streets to complain. The Assad regime responded with violence no one predicted.
Next month a book called “We Crossed a Bridge and It Trembled” will be published. It contains interviews with Syrian refugees.
Here are some of those interviews:
Iliyas, dentist, rural Hama
Syria looked like a stable country. But it wasn’t real stability. It was a state of terror. Every citizen in Syria was terrified. The regime and the authorities were also terrified. The more responsibility anyone had in the state, the more terrified he was. Brother didn’t trust brother. Children didn’t trust their fathers. If anyone said anything out of the ordinary, others would suspect that he was a government informant trying to test people’s reactions.
Every state institution re-created the same kind of power. The president had absolute power in the country. The principal of a school had absolute power in the school. At the same time, the principal was terrified. Of whom? Of the janitors sweeping the floor, because they were all government informants.
Adam, media organizer, Latakia
Tunisians had mass demonstrations and Syrians were like, “Hmm, interesting.” And then Egypt started. People were like, “Resign already!” And then Mubarak resigned. We thought, “Holy sh*t. We have power.”
Then Libya got in line, and that’s when Syrians really got interested. Because Qaddafi was going to let the Army loose on his people straightaway. We knew that and the Libyans knew that. The Libyans started calling for help, and we thought, “Exactly. This is us.” The international community intervened, saying, “We’ll protect the Libyans.” And everybody in Syria got the message: If sh*t hits the fan, people will back us up.
Of course we would make sacrifices. Some people would die. But we never thought that we’d have the Army attacking us, because the world would protect us. We believed that the minute international forces set foot in Syria, the whole Army would defect.
Abu Thair, engineer, Daraa
The first protest was on a Friday. Then there were funerals and demonstrations. On Tuesday night, a sit-in began at al-Omari Mosque. Around three in the morning, regime forces stormed the mosque from all sides. They killed dozens and injured more. They burned holy books and wrote things on the wall like “Do not kneel for god. kneel for Assad.”
People in the surrounding villages heard about the massacre in al-Omari Mosque and started coming to Daraa. They entered, calling, “Peaceful, peaceful, peaceful.” Security forces opened fire on them.
This is how the revolution exploded in the entire province. The government sent the bodies of dead civilians to every village. The funerals began. Each funeral became a demonstration.
Mahmoud, actor, Homs
I was too scared to protest. I went only once, because my girlfriend wanted to go. In the taxi and then at the demonstration, I thought that everyone was a security agent about to arrest me.
A guy I know got arrested that way. They brought him in for interrogation, but he wouldn’t confess that he’d gone to a protest. Then they showed him a video and asked, “If you didn’t go, who is this?” He turned yellow. In the video, he was in the middle of a demonstration, sitting on someone’s shoulders. It turned out to be the interrogator.
Sana, graphic designer, Damascus
I was very scared on my way to the demonstration. It was night. We put scarves over our faces so the security forces couldn’t recognize us and walked through narrow streets to the square. The square was lit and people were playing music, with drums and flute. I don’t know who grabbed my hands, but we started singing and dancing and jumping. It was a party to overthrow the regime. At that moment I didn’t care about anything else. I was so happy. It was a moment that I will never forget for the rest of my life: standing together with strangers, shouting to overthrow Bashar al-Assad.
My husband and I agreed that only one of us would go protest at a time. The other would stay home, just in case something happened. He went before I did, and came home crying: “Anyone who doesn’t live this moment cannot consider himself alive.” When I came back from my first demonstration, he asked me how it was. I told him that he was right.
Ayham, web developer, Damascus
There was a systematic effort to give the movement a bad image. Every time a demonstration passed by a street, the police would run after it and break windows and lights or sometimes spray-paint graffiti. On YouTube you can find a lot of videos of them doing this. The regime would show these images of destroyed property on TV and say, “This is the freedom they want. The freedom to destroy the country, the freedom to disrespect religions, etc.”
Ashraf, artist, Qamishli
The problem is not that the world did nothing. It’s that everyone told us, “Rise up! We are with you. Revolt!” The Turkish president, Recep Tayyip Erdo gan, declared that the bombing of Homs was a red line, and President Obama said that the use of chemical weapons was a red line. And when the regime crossed these lines and no one intervened, the population was left in a state of desperation. It understood that it could count only on itself.
Khalil, defected officer, Deir al-zor
I was a colonel serving in the 4th Brigade. We were sent to put down demonstrations in Darayya and Moadamiyeh, in the suburbs of Damascus. The commanders told us that we were fighting armed gangs. I knew this was false, but these were military orders, and you don’t debate military orders.
For the first two weeks, we used batons, and Air Force Intelligence officers and snipers would shoot from behind us. By the third week, they gave us orders to open fire at demonstrators’ legs. If they approached within two hundred meters, we were supposed to shoot to kill.
The first time I saw a demonstration was like ecstasy. My heart was with the people from the beginning, but if the Army knew you were going to defect, they’d kill you. Before I could defect, I needed to ensure the safety of my wife and children. Once I did that, I fabricated a scenario to make it seem as though I’d been kidnapped, and then I disappeared. For a while, it wasn’t clear to the Army whether I’d been captured or had defected. Then the regime came to my house in Damascus. They stole what they could and burned the rest. They did the same thing to my family home in Deir al-Zor. I’m not crying over the loss of the houses. The point is that I have nowhere to go back to.
You can buy the book here. You can read more interviews in the latest issue of Harper’s Magazine. I wish we could solve all the world’s problems.
