In Search of the Perfect Investment

What it looks like Friday and today. I show the S&P 500 in blue, the Dow in red and Nasdaq in green. Nasdaq is taking it on the chin today.

Five days ago, the New York Times ran a glorious article:

The American economy has picked up speed and is now on course to expand this year at the fastest rate in more than a decade. That acceleration gives President Trump a stronger hand as he contemplates more tariffs and takes an increasingly confrontational approach with China, Canada, Mexico and other trading partners.

Economists have raised their growth estimates for the second quarter to an annualized rate of nearly 5 percent, more than double the pace of the previous period. Some economists say the figure could hit 3 percent for the full year, a level last reached in 2005.

As growth slows in Europe, China, Japan and elsewhere, the United States finds itself at the top of the global economy. The United States is also less exposed to the fallout from an escalating trade war since it does not rely on exports as much as other countries. It all gives Mr. Trump leverage with world leaders, potentially forcing them to make concessions.

But then the article continued:

But his threats could also backfire. Economists warn that the president’s clout is limited and that his attacks on the trading system could dampen the outlook not just in other countries but also domestically.

And guess what then happened? The escalating Trade War spooked the markets. And so we have today’s plummet.

Several of my friends think the plummet is overdone. They’re buying tech stocks, like NVDA, NFLX, ADBE, MA, SHOP, and GPN. Other friends think this downdraft will continue for a few more days and stocks will be even cheaper then.

Meantime, the only stock I’m interested in buying is Amazon (AMZN)– not because it’s gotten cheaper (which it has).But because of new things I’ve learned about Amazon. Awesome things:

Here’s a simple hit: Amazon is a search engine and a fulfillment engine. It often gets paid twice.

Google is only a search engine. It gets paid only once.

There are companies which can move your search up on Google. There are companies which can do that on Amazon and manage your fulfillment, shipping, etc.

Try this: Amazon is now home to more than 2 million Marketplace Sellers. These are third-party vendors selling on Amazon whose wares are available alongside Amazon’s own merchandise. They routinely sell more than a billion units worldwide, with sales totaling tens of billions of dollars each year.

Amazon presently sells in more than 200 countries  (and has a bunch more awaiting signup). Amazon keeps more than 300 million credit cards on file. This is some magnificent behemoth.

I have no idea where Amazon will be in coming months. But I suspect it will be well over $2,000 share. It’s presently $1661.

The latest Atlantic:

The Birth of a New Aristocracy is a long article. I hesitate to summarize it. But my summary would be “Inequality leads to revolutions” — and a major reason for Trump’s election. You should read the article. Click here.  If you don’t, here are some paragraph excerpts that caught my eye, along with my own bolding:

Here’s the key chart from the article:

Here are some paragraphs I excerpted (wait till you see the big below about slaves):

From 1980 to 2016, home values in Boston multiplied 7.6 times. When you take account of inflation, they generated a return of 157 percent to their owners. San Francisco returned 162 percent in real terms over the same period; New York, 115 percent; and Los Angeles, 114 percent. If you happen to live in a neighborhood like mine, you are surrounded by people who consider themselves to be real-estate geniuses. (That’s one reason we can afford to make so many mistakes in the home-renovation department.) If you live in St. Louis (3 percent) or Detroit (minus 16 percent), on the other hand, you weren’t so smart. In 1980, a house in St. Louis would trade for a decent studio apartment in Manhattan. Today that house will buy an 80-square-foot bathroom in the Big Apple. .

The historian Richard Hofstadter drew attention to Anti-intellectualism in American Life in 1963; Susan Jacoby warned in 2008 about The Age of American Unreason; and Tom Nichols announced The Death of Expertise in 2017. In Trump, the age of unreason has at last found its hero. The “self-made man” is always the idol of those who aren’t quite making it. He is the sacred embodiment of the American dream, the guy who answers to nobody, the poor man’s idea of a rich man. It’s the educated phonies this group can’t stand. With his utter lack of policy knowledge and belligerent commitment to maintaining his ignorance, Trump is the perfect representative for a population whose idea of good governance is just to scramble the eggheads. When reason becomes the enemy of the common man, the common man becomes the enemy of reason.

According to a survey by the political scientist Brian Schaffner, Trump crushed it among voters who “strongly disagree” that “white people have advantages because of the color of their skin,” as well as among those who “strongly agree” that “women seek to gain power over men.” It’s worth adding that these responses measure not racism or sexism directly, but rather resentment. They’re good for picking out the kind of people who will vehemently insist that they are the least racist or sexist person you have ever met, even as they vote for a flagrant racist and an accused sexual predator. .

No one is born resentful. As mass phenomena, racism, xenophobia, anti-intellectualism, narcissism, irrationalism, and all other variants of resentment are as expensive to produce as they are deadly to democratic politics. Only long hours of television programming, intelligently manipulated social-media feeds, and expensively sustained information bubbles can actualize the unhappy dispositions of humanity to the point where they may be fruitfully manipulated for political gain. Racism in particular is not just a legacy of the past, as many Americans would like to believe; it also must be constantly reinvented for the present. Mass incarceration, fearmongering, and segregation are not just the results of prejudice, but also the means of reproducing it.

The raging polarization of American political life is not the consequence of bad manners or a lack of mutual understanding. It is just the loud aftermath of escalating inequality. It could not have happened without the 0.1 percent (or, rather, an aggressive subset of its members). Wealth always preserves itself by dividing the opposition. The Gatsby Curve does not merely cause barriers to be built on the ground; it mandates the construction of walls that run through other people’s minds.

The first important thing to know about these consequences is the most obvious: Resentment is a solution to nothing. It isn’t a program of reform. It isn’t “populism.” It is an affliction of democracy, not an instance of it. The politics of resentment is a means of increasing inequality, not reducing it. Every policy change that has waded out of the Trump administration’s baffling morass of incompetence makes this clear. The new tax law; the executive actions on the environment and telecommunications, and on financial-services regulation; the judicial appointments of conservative ideologues-all will have the effect of keeping the 90 percent toiling in the foothills of merit for many years to come.

The second thing to know is that we are next in line for the chopping block. As the population of the resentful expands, the circle of joy near the top gets smaller. The people riding popular rage to glory eventually realize that we are less useful to them as servants of the economic machine than we are as model enemies of the people. The anti-blue-state provisions of the recent tax law have miffed some members of the 9.9 percent, but they’re just a taste of the bad things that happen to people like us as the politics of resentment unfolds.

In the first half of the 19th century, the largest single industry in the United States, measured in terms of both market capital and employment, was the enslavement (and the breeding for enslavement) of human beings. Over the course of the period, the industry became concentrated to the point where fewer than 4,000 families (roughly 0.1 percent of the households in the nation) owned about a quarter of this “human capital,” and another 390,000 (call it the 9.9 percent, give or take a few points) owned all of the rest.

The slaveholding elite were vastly more educated, healthier, and had much better table manners than the overwhelming majority of their fellow white people, never mind the people they enslaved. They dominated not only the government of the nation, but also its media, culture, and religion. Their votaries in the pulpits and the news networks were so successful in demonstrating the sanctity and beneficence of the slave system that millions of impoverished white people with no enslaved people to call their own conceived of it as an honor to lay down their life in the system’s defense.

That wave ended with 620,000 military deaths, and a lot of property damage. It did level the playing field in the American South for a time-though the process began to reverse itself all too swiftly.

In The Great Leveler, the historian Walter Scheidel makes a disturbingly good case that inequality has reliably ended only in catastrophic violence: wars, revolutions, the collapse of states, or plagues and other disasters. It’s a depressing theory. Now that a third wave of American inequality appears to be cresting, how much do we want to bet that it’s not true?

The defining challenge of our time is to renew the promise of American democracy by reversing the calcifying effects of accelerating inequality. As long as inequality rules, reason will be absent from our politics; without reason, none of our other issues can be solved. It’s a world-historical problem. But the solutions that have been put forward so far are, for the most part, shoebox in size.

Well-meaning meritocrats have proposed new and better tests for admitting people into their jewel-encrusted classrooms. Fine-but we aren’t going to beat back the Gatsby Curve by tweaking the formulas for excluding people from fancy universities. Policy wonks have taken aim at the more-egregious tax-code handouts, such as the mortgage-interest deduction and college-savings plans. Good-and then what? Conservatives continue to recycle the characterological solutions, like celebrating traditional marriage or bringing back that old-time religion. Sure-reforging familial and community bonds is a worthy goal. But talking up those virtues won’t save any families from the withering pressures of a rigged economy. Meanwhile, coffee-shop radicals say they want a revolution. They don’t seem to appreciate that the only simple solutions are the incredibly violent and destructive ones.

The American idea has always been a guide star, not a policy program, much less a reality. The rights of human beings never have been and never could be permanently established in a handful of phrases or old declarations. They are always rushing to catch up to the world that we inhabit. In our world, now, we need to understand that access to the means of sustaining good health, the opportunity to learn from the wisdom accumulated in our culture, and the expectation that one may do so in a decent home and neighborhood are not privileges to be reserved for the few who have learned to game the system. They are rights that follow from the same source as those that an earlier generation called life, liberty, and the pursuit of happiness.

Yes, the kind of change that really matters is going to require action from the federal government. That which creates monopoly power can also destroy it; that which allows money into politics can also take it out; that which has transferred power from labor to capital can transfer it back. Change also needs to happen at the state and local levels. How else are we going to open up our neighborhoods and restore the public character of education?

It’s going to take something from each of us, too, and perhaps especially from those who happen to be the momentary winners of this cycle in the game. We need to peel our eyes away from the mirror of our own success and think about what we can do in our everyday lives for the people who aren’t our neighbors. We should be fighting for opportunities for other people’s children as if the future of our own children depended on it. It probably does.

Sign of the times

+ My Windows 7 Lenovo X-1 Carbon laptop locked up this morning and wouldn’t unlock no matter how many times I rebooted it. It’s apparently a Windows problem (not virus–I checked) , since I took the hard drive out and I’m now moving all the good files to backup machine. This mess cost me a tennis game. Thank you Microsoft.

+ Don’t trust the first doctor you go to. Your ailment is far too complicated for one doctor to understand. I had to visit four eye doctors before they finally figured out the simple solution — prisms. A dumb internist told my friend he shouldn’t be worried about the mole on this back. Three months later my friend died because the mole was a melanoma — apparently the most aggressive form of cancer.

+ Delta has banned pit bulls as service and emotional support animals. I believe they banned llamas and snakes a while back. Go figure.

+ I’ve had three requests for money for startups — just in the past week. Marketing is the big Achilles Heel in all these startups. I’m beginning to think Amazon is the solution. See above.

The big funny from the weekend.

We had a dinner party at our castle.  My friend’s wife wanted a tour. I showed her The Master Bedroom. Susan, my wife, wasn’t pleased. The bed was not made. My friend got crazy that I took his wife into our bedroom. I sent him a picture of our made bed this morning. He didn’t think it was funny.

Harry Newton, who wishes computers were reliable! Fat chance.