Start with this one-year chart.
The dark blue line is the S&P 500. The bright blue line is the Dow Jones. The green line is Nasdaq. The bright pink top line is Vanguard’s VGT ETF. The VGT is called the Vanguard Information Technology ETF and it contains Apple, Microsoft, Nvidia, and Salesforce.
There are funds and ETFs which mirror any of the four lines (though I suspect VGT is somewhat unique).
Your job as an investor is to pick your own poison.
Clearly, our world is no longer as easy (or as unchanging) as simply picking an S&P 500 fund and living with it forever.
My preference is to own VGT and many individual stocks — especially of stocks I believe in. For example, Amazon or Facebook do not feature as a top ten stock in VGT.
Today our portfolio is doing spectacularly. It’s a hot day on Wall Street today.
To understand the heat, you need to understand that there are several things going on:
+ Interest rates are very low. This makes bonds, treasurys and other fixed interest securities unattractive compared to stocks.
+ Real estate is no longer the bargain it was. SALT has killed a lot of residential. And “work at home” also called being at Starbucks has hurt demand for commercial space. Video conferencing is playing a huge role. I extolled Zoom Video and RingCentral yesterday. Zoom Video (ZM) is up over 7% today. I don’t know why. I’m guessing the important investors are now reading this blog.
+ The world of buying has moved from things (clothes), to experience and entertainment (think Netflix or YouTube) — which can be enjoyed on your laptop or phone lying in bed. Watch healthcare. I hear Amazon is now selling healthcare in Seattle.
+ Companies that need factories and sell things are out of favor, while companies that make buying and selling things more profitable are in favor. Think AI, data analytics, search, robotics, the cloud… Some of this stuff is really hard. Go to Yahoo Finance and look up AYX and see if if you can tell me in simple terms what they do.
I see our portfolio as a blend of technology/software/cloud/data analytics and a few specialty manufacturers like GNRC and ENPH. I can’t put our portfolio into a simple box. It includes stocks that are working. It’s opportunistic given the trends I keep writing about. By the way, that doesn’t include energy. I just read that global oil demand will fall for the first quarter in over 10 years. My only short is XOM (Exxon Mobil). I’m making a little money on it. Enough to have a nice meal in a cheap restaurant.
This morning I eyed a treasure on my bookshelf and started reading. I heard the word euphoria on BubbleVision today for the first time in a long, long time.
In a foreword to the 1993 edition, Galbraith wrote the following words;
In the years since I wrote this short disquisition, the main players in the most recent speculative episode, that of the extravagant eighties, have met their all but inevitable fate, and the larger economic consequences have been made strongly and sadly evident. The list of those who have descended abruptly from the heights is long, and only a few need be mentioned. Mr. Michael Milken, perhaps the most spectacular figure of the last boom and certainly the best paid, is a recent resident in a minimum-security jail, which, if not wholly uncomfortable, could not have seemed personally rewarding. One supposes that he met each new day without enthusiasm. Mr. Donald Trump is said not to be broke; he was, however, described in recent news accounts as having a negative net worth. These distinctions are no doubt important in the world of finance. The Reichman brothers, with Robert Campeau the Canadian gift to financial excess, are indubitably broke with depressive effect on the banks that were captured by their euphoric mood. Perhaps it is to their credit that, like Donald Trump, they erected monuments that will long commemorate their adventure.
Chapter 1 — The Speculative Episode — was written three years earlier. Here’s how that chapter began:
That the free-enterprise economy is given to recurrent episodes of speculation will be agreed. These—great events and small, involving bank notes, securities, real estate, art, and other assets or objects—are, over the years and centuries, part of history. What have not been sufficiently analyzed are the features common to these episodes, the things that signal their certain return and have thus the considerable practical value of aiding understanding and prediction. Regulation and more orthodox economic knowledge are not what protect the individual and the financial institution when euphoria returns, leading on as it does to wonder at the increase in values and wealth, to the rush to participate that drives up prices, and to the eventual crash and its sullen and painful aftermath.
You can buy a copy of the book on Amazon (where else?) Click here.
As I write this blog, Amazon is up $26.50 and is in true nosebleed territory at $2,182. But, heh, Amazon is my second largest position after Apple. So it can’t be all bad.
When you dying, or not…
You need to find the nearest hospital ER (Emergency Room).
The app is called EMNet findERnow. It’s free.
Pick it up at the Apple App Store or Google Play. It may save your life.
The app gives you directions and other stuff. Listings are researched by Boston’s Massachusetts General Hospital.
Bloomberg ups Trump
I lost at tennis this morning, but I did hit a couple of great backhands. One down the line and one cross court.
See you tomorrow — Harry Newton
