In Search of the Perfect Investment

Whatever you had yesterday turned to gold. Blind Freddie made money as the market soared after the Fiscal Cliff got “solved” by Congress. It was cathartic. It won’t last. It never does. The world economies are improving. That’s good. But pundits wonder where corporations are going to squeeze future earnings growth from, since they have fired most everyone they could, already.

I’m aware I promised my Grand Portfolio for 2013. Right now I’m increasingly uncomfortable with the permanence of the idea. Still, I have, in recent days, bought AF (a bank awaiting takeover), BMO (Bank of Montreal), BRKA, COST (Costco), FSLR (First Solar), FXI (the China index), HON (Honeywell), NRF, PPG, RWT, SITO (I’ve mentioned this spec before), STWD, V (Visa), WEN (Wendy’s) and WFC (Wells Fargo). I will probably buy a little WFM (Whole Foods) today, since I have faith in that operation and the family shops there every day. I owned it once before but go kicked out by my “inviolate” stop loss rule. Sometimes that rule doesn’t work too good.

I don’t swear by these picks. They’re working now. Should they go awry, my Stop Loss Rule would kick in and I’d be out. Several readers have suggested in ultra-strong words that my stock picks suck and they do the precise opposite. Whatever works. Predicting equities is an immensely difficult, and not especially satisfying business. Frankly, I”d rather be in muni bonds, but those things are being called and I’m stuck with dead cash. Hence an increasing interest in equities…

Yesterday I caught up on paperwork for some of my ultra-risky private company deals… More work today… For example, I was looking at RIO last night. It’s much better managed than BHP. And iron ore prices are high at present. We’ll see.

Stevie Cohen link yesterday was wrong. This is the right one. Click here.

Bryon Wien makes his annual predictions. He’s usually pretty good on guessing the stockmarket. This year he figures the S&P 500 will drop below 1300. It closed last night at 1462. His logic:

“A profit margin squeeze and limited revenue growth cause 2013 earnings for the Standard & Poor’s 500 to decline below $100, disappointing investors. The S&P 500 trades below 1300. Companies complain of limited pricing power in a slow, highly competitive world economic environment.”

You can read the rest of his predictions here or here.

America in 2012, as Told in Charts. You’ll learn about sharply declining real median incomes, and sharply rising health costs in the economy. You’ll also learn the astonishing fact: 

The rise in income inequality has exacerbated the decline in median incomes. In 2010, a stunning 93 percent of all income gains went to the top 1 percent of Americans. Also astonishing: just 15,000 households received 37 percent of all of those income gains. In no other period in recent American history have economic gains been concentrated so disproportionately in an elite sliver.

For the fascinating charts, click here.

Harry Newton, whose son Michael and daughter-in-law Anne are in Japan playing tourist. They couldn’t resist this shop window: