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Too much money. Too few real opportunities. Too many funds. Hence funds are weak.

It’s beginning to feel a whole lot like 2005/2006. Today, like then, venture funds, startups and real estate syndications are getting funded fast and furiously.

There’s big money flushing around in search of — what else — “The Perfect Investment.”

Those 2005/2006 years were my “big” years for my investing in other people’s ventures. The “logic?” We’d just come off a buoyant run. Prior results looked good, in fact great. I saw prior returns of over 30% a year. They were common. “Of course, the future will be different. But look what we just did..”

Now I look back. It’s appropriate to look back, since some of the funds have actually ended — after ten, eleven, twelve years of waiting, of frustration, of agony… And I now eye returns in these funds of 3% to 3.5%. Totally miserable. Any old stock index fund did 7% to 8% a year over the last ten years (more than double the returns on my managed funds from “brilliant” managers and eminent Wall Street firms — all the big names).

In contrast, Vanguard’s VUG — its called “Growth ETF” — did 8.81% a year over the last ten years. That’s more than twice what the “talented” funds did.

Which leads to a good idea: Buy index funds. Where have I heard that before?

There’s a madness out there among otherwise intelligent people that they can pick winners. What we otherwise intelligent  people don’t understand is that we simply don’t see the  opportunities others in the VC world see. We see the dregs.

In short, put most of your money into index funds like VUG and VTI, something in Berkshire Hathaway (BRKA), and a little in some of the “hot” tech stocks I’ve been writing about — FANG (FB, AMZ, NFLX, GOOGL), SQ etc. See my list in  the right hand column on the blog.

Now to someone who’s good at this

Ashton Kutcher is an actor, producer, writer and — of all things — an ultra-successful venture capitalist. His investments include Skype, Foursquare, Airbnb, Path and Fab.com.

220px-Ashton_Kutcher_by_David_Shankbone

Business Insider did a piece on how he does it. Click here.

Last night he was a fabulous guest on The Late Show with Stephen Colbert. Click here. He’s just invested in a company that makes “fitbits” for cows. Truly fascinating stuff.

Should we load up on banks?

Interest rates are rising. Profits are rising, viz JPM Morgan Chase and Citigroup today. I own JPM, BAC and KEY.

I do not own Wells Fargo, a bank I detest.

The Economist just reported:

Summer lull: America’s banks

Donald Trump’s victory last November put a rocket under banks’ share prices. They have stuttered since, but bankers can’t complain. President Trump is appointing friendlier supervisors, the Treasury proposes lighter regulation and the Federal Reserve has approved their plans to hand more cash to shareholders. That should make a dull second-quarter earnings season, which JPMorgan Chase, Wells Fargo and Citigroup kick off today, easier to bear. While the Fed’s rate increases should help interest income, lending to companies has been sluggish. Wall Street banks expect double-digit year-on-year declines in trading revenues. That partly reflects a strong quarter a year ago, but it is due chiefly to remarkably steady markets. The VIX, a volatility index, has been near record lows. With few opportunities to make money, trading has been light. Yet geopolitical uncertainty abounds: a “paradox of low volatility”, believes Jonathan Wills of Oliver Wyman, a consultancy. Choppier-and more lucrative-times ahead?

BankedTurn

Amazon Echo Dot is a huge success for Amazon.

How useful is it? It will tell the time and the weather, time a hardboiled egg, and turn your lights off and on. If you have your hands full with young children, it can be useful. It won’t dial your spouse, but it will get you an Uber. It’s not a Bluetooth phone. But as it integrates with more telephone “apps” it is becoming increasingly useful. I bought the cheapest Echo Dot to see what all the fuss is about. So far, it’s provided $40 of amusement.

My son Michael has an Echo and emails me his top three uses for Echo:

1. Playing music hands-free
2. Getting the weather forecast, getting info on our commute, etc.
3. Asking questions such as what is the time in Taiwan right now, how hot is x degrees Fahrenheit in Celsius, etc.
He says “I am starting to shop on it though because Amazon is giving deals if you shop with your voice. I haven’t actually bought anything yet but have done a bunch of price comparisons.”

Troubleshooting hints on Alexa:

+ It responds to Alexa, not Alexis. It’s very picky. I kept mispronouncing her name.

+ To re-set it, unplug it. Wait two minutes. That probably will fix it if it stops working.

+ Amazon Echo Customer Tech support: 1-877-375-9365

It will tell you local time and temperature, but not humidity. But it will play music from Amazon Music, Spotify and Pandora. The new second generation Echo is $50. I think it may dial phone numbers. You can buy one here.

A real joy

We vacuumed the insides of my ThinkPad X230 laptop. It’s running faster, quieter and cooler. It  longer burns my lap.

Wimbledon continues.

Wimbledon

Querrey is playing Cilic right now. At the end of this match, Federer will play Berdych. The men’s finals are on Sunday. The women’s finals are on Saturday.

The Chinese Wedding Night

A Chinese couple gets married – and she’s a virgin. Truth be told, he is none too experienced either. On the wedding night, she cowers naked under the bed sheets as her husband undresses.

He climbs in next to her and tries to be reassuring, “My darring” he says, “I know dis yo firs time and you berry frighten. I pomise you, I give you anyting you want, I do anyting – jus anyting you want, you say.

Whatchou want?” he says, trying to sound experienced, which he hopes will impress his virgin bride.

A thoughtful silence follows and he waits patiently (and eagerly) for her request.

She eventually replies shyly and unsure, “I want………..numba 69.”

More thoughtful silence, this time from him. Eventually, in a puzzled tone he queries, “You want….. Beef wif Broccori?”

HarryNewton
Harry Newton, who always wondered why none of the bankers who caused the 2008 Great Recession and almost tanked the world’s economy got put in jail. A fellow called Jesse Eisinger hs written a book called “The Chickensh*t Club — Why the Justice Department Fails to prosecute executives.” There’s a review of the book here. Here are the last two paragraphs of the review (written by a professor of law). Please read them (my bolding):

After decades in which Wall Street masters of the universe were lionized in the media and popular culture, star investment bankers – rich, usually white men in nice suits – just don’t match the popular image of criminals. Democrats as well as Republicans cozied up to big business, outsourcing the Treasury Department to Wall Street and the Justice Department to corporate law firms. Even after the financial system collapsed, the Obama administration’s priority was to bail out the megabanks – to “foam the runway,” in Treasury Secretary Tim Geithner’s words. The Justice Department became increasingly staffed by intelligent, status-seeking, conformist graduates of the nation’s top law schools – all of whom had friends on Wall Street and in the defense bar. In that environment, the easy choice was to play along, strike a deal with an impressive-sounding fine (to be absorbed by shareholders) that held no one responsible, and avoid risking an acquittal or a hung jury. (The book’s title comes from then-U.S. Attorney James Comey’s name for prosecutors who had never lost a trial.) Corruption can take many forms – not just bags of cash under the table, but a creeping rot that saps our collective motivation to pursue the cause of justice. As Upton Sinclair might have written were he alive today: It is difficult to get a man to understand something, when his résumé depends upon his not understanding it.

There’s just one problem. While the “unelected permanent governing class” may have been willing to look the other way when highly paid bankers wrecked the economy, many of the workers who lost their jobs and families who lost their homes were not. Outside the Beltway, the fact that the Wall Street titans who blew up the financial system suffered little more than slight reductions in their bonuses only reinforced the perception that the “system” is “rigged” – with the consequences we know only too well. Many people simply want to live in a world that is fair. As Eisinger shows, this one isn’t.

  • TomFromVa

    The reason that no one went to prison is that no one broke any actual laws. The crash was caused by the confluence of too-risky loans (encouraged by the Government) with extreme leverage in the form of CDOs and the inexperience of the rating agencies that made for a perfect storm. Sure, lots of brokers knew that they were putting lipstick on pigs, just like in the dotcom crash – but that isnt illegal. The onus is on the buyers unless there is actual misrepresentation.

    I lost a bundle in the recession, and I’d love to see someone pay – but until you can cite the specific guy and the specific law that was broken, no one should be in jail.