In Search of the Perfect Investment

40% of your performance comes from the dividends your stocks pay you. Make sure to reinvest the dividends.

I bought a little AT&T (T) yesterday. It’s yielding 5.78% and finally doing some intelligent things — pumping up the speed of its network, improving its voice phone calling and buying some new bandwidth and not focusing on buying T-Mobile. All this is garnering it some favorable press.

I put a little more money in VWALX. It’s doing OK for now. It will tumble when interest rates rise. But, for now, it’s paying just under 4% federal tax-free. Last year total return was 11.07%. Good place to park money.

I’m still mulling a return to gold. See below.

Are the forecasters ever right? Rarely is the answer. Here’s a chart comparing Wall Street strategists’ predictions for the S&P 500 versus the actual closing values. They’re Bloomberg numbers. To my mind, the negatives should be positive and vice versa. Read the numbers. You’ll get the message quickly. Often the predictions are wrong by a huge margin, like by 81% in 2008.

Best Ideas 2012 from Baird Equity Research. 81 pages of growth and value stocks. Interesting report. Click here.

Good time to refinance your mortgage. Continuing yesterday’s column, in which I pointed out that rates were at a 60-year low (click here), read Gene Muchnick emails:

Hi Harry,

Just locked in a 4.0 rate with Wells Fargo to refi my house.  This is the 2nd time in 2 years.  Purchased 5 years ago with a 6% mortgage they refied it 2 years ago for 4.625%.  Cost to me then $1000.  This time no cost.  Totally free. Original and both refi’s with Wells. Although they keep resetting the term to 30 years, it matters little to me at 66 years of age and planning to be here at the outside for 10 years.  Love your blog, read it faithfully.

Sad day for me. Eastman Kodak is about to go bankrupt with Chapter 11. When I was young I made a handsome living taking photos, using superb Kodak products Tri-X and Kodachrome.  haven’t bought anything Kodak in many, many years.  Why didn’t I short EK years ago? Gotta get my head around failing companies. Kodak was the picture postcard for failing companies:

To me Best Buy is another disaster waiting to happen. The only reason to buy anything at Best Buy is insane urgency. The only reason to visit Best Buy is to check stuff and then buy it cheaper online.

Here’s another one that we should have sold short a long time ago.

Printer toner cartridges. Buy only the OEM — original manufacturer toner. Though typically five times more expensive than the clones, the real stuff is worth the money, in my opinion. Shop around. Amazon was 25% cheaper than Staples for the same HP toner I needed yesterday. Anyone found a quality maker of toner cartridges?

Send stuff overseas cheap. My sister and her kids and their kids live in Australia. The grandkids grow out of  clothes and  shoes daily. The  stuff is pricey in Australia — small market, limited competition.

Better idea. Buy online from the US (e.g. Gap) and have it all shipped to a firm called myUS.com. They’ll consolidate all your packages and ship your stuff overseas. My family loves myUS.com. Shopping in the U.S. saves them a bundle, especially with the strength of the Aussie dollar — now around $.103.

Predictions on gold, continued.

This chart is from The Gartman Letter. Accompanying words are:

Gold and the precious metals have everyone’s interest this morning and last week we thought we noted clearly that we were turning bullish again of gold. Indeed, our comments mid-week last week caught the attention of the wire services and we were “blamed” for gold’s bounce from the lows. We were flattered by that “blame,” but we had nothing whatsoever to do with gold’s strength, for gold is strong simply because gold had been so tremendously weak in the days and weeks previous. Note the chart of Gold in EUR terms at the immediate left and note that since early November gold fell from ?1320/oz at its very best to ?1180 at its very worst.a fall of 10.6%, or note that from the August highs in US dollar terms when gold traded very briefly to $1910/oz to last week’s lows at $1525/oz it had fallen 20.1%. No prisoners were taken during this assault, unless you count those who’d invested rather large sums of money with Mr. Paulson.

Which countries will do well and which won’t, in 2012? A war (e.g. Sudan and Libya) drops your GDP. But when the war stops. your economy surges. From the Economist:

Anyone for Uzbekistan?

Old jews telling jokes. These three are the best:

Click here.

Click here.

Click here.

Sage Advice
A man about to be electrocuted phoned his lawyer from the death chamber. “They are about to put me in the electric chair,” he said. “You are my lawyer – what do I do now?” The lawyer answered helpfully, “Don’t sit down.”

Safety First (I can’t stop laughing at this one.)
A lady invited several friends to a mushroom steak dinner. When Nora, her maid, opened the can of mushrooms, preparatory to making the sauce, there was a slight scum on top. The time being short, the lady suggested, “Give the dog a little and if he eats it, it’s probably all right.”

Since the dog liked it and begged for more, the dinner was finished. After the guests had enjoyed their dinner, Nora came in, white-faced, with the dessert and whispered tragically to her employer, “Ma’am, the dog’s dead.”

There was only one thing to do and the lady did it. Some time later when eight people were lying around in various stages of recovery and the doctor had departed with his stomach pump, the lady wearily asked, “Nora, where’s the poor dog?”

“Out on the fron steps, Ma’am, where he fell after the car hit him.

Harry Newton who’s being bombarded with resumes from  out-of-work friends and acquaintances. My favorite resume contains:

I am a charismatic and motivated college graduate seeking an opportunity to enter the finance industry and combine my leadership and communication skills with my knowledge of business finance and economics with the goal of ascending to an executive position within a reputable finance firm.

I wish I could help. I like charisma.  I don’t have a growing firm any more and none of my friends seem to be aggressively hiring. What I recommend is threefold:

1. Take your present free time to learn some computer programming. There’s neat new web site called Code Academy that will teach you software with regular lessons. To sign up, click here.

2. Do some serious research to find the fastest-growing businesses in your community. Find them. Sign on for some free consulting.I like “apprenticeships.” Germany uses them extensively.

3. Visit local business brokers. See what they have for sale.  You’ll see 99% drek. But the education will be worthwhile. You might luck onto something.