8:30 AM Monday, June 13, 2005: In
the old days, bonds with long maturity yielded more. Financial advisers intoned
on the virtues of "laddering" your bonds, i.e. having short-term, medium-term
and long-term bonds. These days this strategy makes no sense. Short-term bonds
are yielding, in some cases, more than long-term ones. And the world is
beginning to talk of an " inverted yield curve" -- when short-term rates
exceed long-term rates. Draw a chart: interest rates on the left. Time on the
bottom. The chart will slope downwards. In the old days, it sloped upwards.
There are two
theories as to why long-term rates are staying low, though short-term rates
-- bolstered by Mr. Greenspan -- are moving sharply upwards: Mine and everyone
1. Everyone else
believes that low long-term bond yields means we're going into a recession.
2. I believe it's too much money sloshing around in search of too few opportunities.
Compounding this effect is that the Chinese and the Japanese save much more
of their income (20% plus) than we do (1%). They and their governments are always
looking for somewhere to put their money -- U.S. Government treasuries and other
bonds are easy and safe. To confirm their logic: bonds have done better than
equities in the past year. And the dollar is strengthening.
For now, if you live in one of those states with hefty city and state taxes,
triple tax-free short-term floaters make enormous sense. I'm getting
just under 3% -- equivalent to around 5% pre-tax. And there's no principal risk.
Money is also
cheap for borrowing.
I don't know if it's a good time to invest in financial stocks. I suspect not,
except in special situations. Morgan Stanley (MS) is finally firing its
ingrate CEO Philip Purcell. That piece of great news should add a few dollars
to the stock.
Economist's latest Technology Survey: Really worth reading. Click
here. No tech stocks to buy. But lots of great technology to read about.
I upgraded to a new, faster laptop, the Toshiba Tecra
M3: It takes 11 hours of painful fiddling to upgrade from an old
laptop to a new one. This is fact. I've done it many times. To avoid the agony:
Buy yourself more memoryy, replace your keyboard, uninstall programs you don't
use, run anti-spyware. All this should speed up your machine. Save buying a
Amazing news from
today's Wall Street Journal: The price for an entry-level but fully loaded
PC (desktop) has fallen below $300. For that you get a 17-inch monitor, a 2.4
gigahertz Celeron processor, 256 megabytes of RAM and a 40-gigabyte hard drive.
That's about a 40% decline in price in one year. Another good reason to stay
away from tech stocks.
check for ticks -- Part 3: Lyme disease is epidemic and its consequences
gruesome. Writes Seth Wernick, reader:
When I met my
fiancé Kate one of out first weekends together was spent on the eastern
shore of Maryland. When we were packing to leave on Sunday I noticed this
itchy bump behind my knee with a big red circle around it. I thought I got
bit by something and jumped in the shower thinking the cool water would relieve
the itch. By the time I got out of the shower 15-20 minutes later, I had similar
red circles up and down my leg. We got in the car and about an two hours into
the drive I got real sluggish, we switched seats and I saw these circles were
now all over my body. We drove straight to the hospital where I met my father
and I tested positive for Lyme Disease. I was very lucky to have such a strong
reaction and was able to catch it before it became a life-long problem. After
a few shots and a month prescription of antibiotics I was good to go.
ALWAYS check for ticks whenever you come in from and outside, especially
during the hot summer months.
To which I add:
If you are bitten by tick, remove it with tweezers and keep the tick. Send the
tick to the lab, not your blood. My friend Roger Alcaly writes:
Chutzpah a whole new meaning: Chutzpah is a Jewish word that means
unmitigated gall. The word is typically explained by the story of the 15-year
old who goes into court having killed his father and mother and falls on the mercy
of the court because he's now an orphan. To the news:
Former WorldCom Inc.
Chief Executive Bernard Ebbers is asking a federal judge for a lighter sentence
than the "draconian life sentence" recommended by the government. Ebbers
made the request in a pre-sentencing report that followed his conviction in March
of nine counts of fraud, conspiracy and making false filings with regulators.
Attorneys for Mr. Ebbers, who is 63 years old (my age), cited his good character,
age, poor health and low risk of a repeat offense among the reasons they are asking
Judge Barbara Jones to give Mr. Ebbers a lighter sentence than the government
My wife just
learned that the latest protocol for treating a potential case of Lyme disease
is to take one day's dose of doxycycline immediately rather than waiting to
see whether the tick was a carrier or whether you've been infected. You need
a doctor's prescription.
WorldCom, now known as MCI Inc., was at the center of the biggest accounting fraud
in U.S. history -- $11 billion. Ebbers blames it all on CFO Scott Sullivan. But
the jurors said Ebbers was speaking garbage.
Watches as investments? No! Newspapers are
full of ads for watches for Father's Day. Even Donald Trump has a line (relatively
gaudy) with his name on the watch. From my own experience with watches:
1. Expensive manual
watches are far less accurate in telling the time than cheap electronic quartz
2. Cheap electronic digital ones have features expensive watches don't have
-- e.g. alarms and lights.
3. All digital watches are ugly.
4. Snobs will admire your expensive watch, just as they admire your expensive
cars. But it's not worth it.
From a Financial Times survey of watches:
have much in common with motor cars. Both are highly-engineered machines with
many revolving parts work together to create propulsion. Another thing they
have in common is that they usually depreciate rapidly as soon as they leave
Old Fishy Tale
An American businessman was at a pier in a small coastal Mexican
village when a small boat with just one fisherman docked. Inside the small boat
were several large yellow-fin tuna. The American complimented the Mexican on
the quality of his fish and asked how long it took to catch them.
The Mexican replied
only a little while.
The American then
asked why didn't he stay out longer and catch more fish?
The Mexican said
he had enough to support his family's immediate needs.
The American then
asked the Mexican how he spent the rest of his time.
The Mexican fisherman
said, "I sleep late, fish a little, play with my children, take siesta
with my wife, Maria, stroll into the village each evening where I sip wine and
play guitar with my amigos. I have a full and busy life, senor."
The American scoffed,
"I am a Harvard MBA and could help you. You should spend more time fishing
and, with the proceeds, buy a bigger boat. With the proceeds from the bigger
boat, you could buy several boats, eventually you would have a fleet of fishing
boats. Instead of selling your catch to a middleman you would sell directly
to the processor, eventually opening your own cannery. You would control the
product, processing and distribution.
need to leave this small coastal fishing village and move to Mexico City, then
LA and eventually NYC where you will run your expanding enterprise."
The Mexican fisherman
asked, "But senor, how long will this all take?"
To which the American
replied, "15-20 years."
then, senor?" asked the Mexican.
The American laughed,
and said, "That's the best part! When the time is right, you would announce
an IPO and sell your company stock to the public. You'll become very rich, you
would make millions!"
senor?" replied the Mexican. "Then what?"
The American said,
"Then you would retire. Move to a small coastal fishing village where you
would sleep late, fish a little, play with your kids, take siesta with your
wife, stroll to the village in the evenings where you could sip wine and play
your guitar with your amigos."
kids and the family are still the best investment. They
came to see me this weekend. It was nice, though the weather sucked. Whoever
invented humidity? I want to strangle them.
This column is about my personal search for the perfect investment. I don't
give investment advice. For that you have to be registered with regulatory authorities,
which I am not. I am a reporter and an investor. I make my daily column -- Monday
through Friday -- freely available for three reasons: Writing is good for sorting
things out in my brain. Second, the column is research for a book I'm writing
called "In Search of the Perfect Investment." Third, I encourage
my readers to send me their ideas, concerns and experiences. That way we can
all learn together. My email address is .
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