In Search of the Perfect Investment

This year “normal” industrial stocks are flat. But Nasdaq is up 12%. The blue is S&P 500. The pink is the Dow. Nasdaq is the green.

Here are some of our stocks (the ones we own) compared with the S&P 500 (the bottom blue line)

Here are tech stocks we don’t own (but should have) compared with the S&P 500 (the bottom pink line):

The tech stock we really should have owned is:

Today, tech stocks are down. Good day to pick up some tech bargains, e.g. AMZN, NFLX, and IQ.

In contrast look at how the banks have performed this year — all the big ones worse than the S&P (in pink).

I do not believe the banks are “bargains” — even at these depressed levels. I know banks are meant to do better when interest rates rise. But their overheads are too high. And their imaginations too limited. I prefer a simple stock like LADR.

A quick hit on understanding the trade war:

+ China is run by one party and, now, one man (for life). Good economics are key to staying in power. China is a BIG market. That attracts everyone. The party “manages” selectively. They love Nike and Apple because they bring jobs and buy stuff. But, for many others they have harsh rules:

+ They force partnerships with local companies.

+ IP (intellectual property) is not adequately protected. You’re forced to share your IP with local partners, who can (and do) steal it.

+ There’s huge uncertainty. The business environment can change in a nanosecond. Stories abound of companies having their licenses revoked with no notice, banks freezing accounts at the government’s behest, etc.

+ The Europeans run heavy tariffs on some American goods, like autos, while benefiting from the U.S.’s military umbrella. Germany spends a meager 1.3%  of its GDP on its military, while offering its citizens free universities and free health care.

All the above unfairnesses have been known for eons. No U.S. administration has dealt with them successfully.

For more, read this important piece in the New York Times, “What Trump Gets Right About Europe.” That article includes this:

When the door was opened, in 2001, many in the West believed that a growing Chinese middle class, enriched by and engaged with the world economy, would eventually claim voice and suffrage, thereby democratizing China. The opposite has happened. China, which has grown wealthy in part by stealing intellectual property from the West, is turning into an online-era dictatorship, while still denying reciprocity in investment and trade relations.

Is this how you behave as a privileged member of the world’s business club? China’s unchecked abuse of the global free-trade regime makes a mockery of the very idea that the world can operate according to a rules-based order. Again, while many in the West have talked the talk about taking on China, only Mr. Trump has actually done something about it.

For the full New York Times article, click here. 

Five Best Jewish Jokes

From the Huffington Post.

 + A Jewish father was very troubled by the way his son turned out and went to see his rabbi about it.

“Rabbi, I brought him up in the faith, gave him a very expensive Bar Mitzvah and it cost me a fortune to educate him. Then he tells me last week, he’s decided to be a Christian. Rabbi, where did I go wrong?”

The rabbi strokes his beard and says, “Funny you should come to me. I too, brought up my son as a boy of faith, sent him to university.  It cost me a fortune and then one day he comes to me and tells me he wants to be a Christian.”

“What did you do?” asked the man of the rabbi.

“I turned to God for the answer,” replied the rabbi.

“What did he say?” asked the man.

“Funny you should come to me…”

+ Marilyn Monroe was once served matzo-ball soup:

She asked “Is there any other part of the matzo you can eat?”

+ Two kids are in a hospital lying next to each other outside the operating room. The first kid leans over and asks, “What are you in here for?”

The second kid says, “I’m getting my tonsils out. I’m a little nervous.”

The first kid says, “You’ve got nothing to worry about. I had that done when I was four. They put you to sleep and when you wake up, they give you lots of jello and ice cream. It’s a breeze.”

The second kid then asked, “What are you in here for?”

The kid says, “A circumcision.”

The second kid replies, “Whoa, good luck buddy. I had that done when I was born and I couldn’t walk for a year.”

+ A Jewish man took his Passover lunch to eat outside in the park. He sat down on a bench and began eating.

A little while later a blind man came by and sat down next to him.

Feeling neighborly, the Jewish man passed a sheet of matzo to the blind man.

The blind man ran his fingers over the matzo for a few minutes, looked puzzled, and finally exclaimed, “Who wrote this crap?”

Harry Newton. Up and Down. I have friends who love this volatility. They day trade and do very very well. I have other friends who put in low limit orders and hope for a huge drop in the market, so they can buy their favorites cheaply. I have other friends who buy and sell options.

Every one of these strategies requires a “feel” and lots of study. My friend the day trader studies daily movements of a handful of stocks, then concentrates on those. I’m not smart enough for these strategies. I prefer holding tech stocks with great growth and few variable costs. Netflix is my perfect. I’m sure it costs something to get me as a subscriber and then stream me a great movie. But I bet it’s not very much. And that’s good.