In Search of the Perfect Investment

Wednesday, March 13. Apologies. I slept in. The three-hour time difference is difficult. I’m in California.. I’ll be back tomorrow. Apologies. Meantime, here’s yesterday’s column, in case you missed it.

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I have a degree in economics —  “the dismal science.”I don’t brag. I’m not proud of my erstwhile profession — especially what they’re doing in Europe  in the name of economic austerity. It makes absolutely no sense to me and, I fear, their idiocy will ultimately hurt us in the U.S.

Europe is our biggest trading partner. As it stagnates — and, in some cases, contracts — it will not provide the oomph to our corporate earnings. And that will affect share prices in the U.S.

Am I calling a “top” to the present bull market? Not yet.

But we must recognize that share prices are being stretched and the underlying  fundamentals are not as strong as we need to maintain this present raging bull market. Shortly interest rates will rise.

“On The Brink” is a piece in today’s New York Times which details the depressing times in Italy. Excerpts:

+ Since a government austerity plan designed to shield Italy from  Europe’s debt crisis took hold last year, the economy has tumbled  into one of worst recessions of any euro zone country. …

… among Italy’s estimated six  million companies, businesses of all  sizes have been going belly up at the rate of 1,000 a day over the  last year, especially among the small and midsize companies that  represent the backbone of Italy’s 1.5 trillion euro, or $2 trillion, economy.

+ The afflictions of Italy’s economy, one of Europe’s largest, are not  necessarily new, of course: a lumbering bureaucracy, stifling labor  regulations and a heavy reliance on companies with 50 or fewer employees that are struggling to compete in the global marketplace.

As  the 17-nation euro currency union’s economy was expanding  an  average of 1 percent for much of the last decade, Italy grew at only half that  rate, according to the International Monetary Fund.

But Italy’s longstanding problems have grown worse in the last year as tax increases and spending cuts were pressed by Mr. Monti, who took over as prime minister in November 2011 after the euro crisis forced out Silvio Berlusconi. Last year the economy shrank 2.4 percent.

One in two small companies cannot pay its employees on time, according to CGIA di Mestre, a research institute. With layoffs surging, unemployment rose to 11.7 percent in January. Youth unemployment has jumped to 38.7 percent.

The austerity program was intended to reduce the risk of a debt crisis and ensure the backing of the European Central Bank, but instead it left the country with no growth. And without growth, Italy will have a harder time paying down its 2 trillion euros ($2.6 trillion) in debt, one of the largest debt burdens in the euro zone.

To read the full article, click here.

Side note; Italy should be a cheap place to visit as a tourist this summer.

Nice earnings news from Costco. Earnings were up 39 percent in the second quarter, and same store sales were up 5 percent. The retailer reported earnings of $1.24 per share, on revenue of $24.86 billion.

Teach your children to invest now. Your children need to learn business skills and acquire the monies they’ll need for retirement and their kids’ education. They can no longer rely on their corporation’s 401(k) plan or our government’s social security, etc.

I increasingly like the idea of rental residential property. I like a four or six unit building. Managing it teaches business skills, brings in a modicum of profits and may ultimately — many years from now — be worth more than what we paid for it. God willing.

I remember when Michael was in college, we bought the apartment he lived four years in. We made a few shekels on the roommate. When Michael graduated he sold the apartment at more than what we paid for it. We earned enough to make his college stay free.

31 Steps to a Financial Tuneup. From the New York Times:

Taking time out to put your personal finances in gear can reap both immediate and long-term benefits, from cashing gift cards to reallocating investments. This checklist can help you formulate a strategy, providing tips, the time needed to achieve them, and links to additional resources. For each category, Ron Lieber, the Your Money columnist, offers his insights on video. You can customize your list by removing items to suit your strategy, and then print a personalized list of the items you plan on tackling today.

Click here.

A most remarkable camera: The big benefit is the HUGE optical zoom — from 28 mm to 600 mm. That means it’s great for every use — from birding to sports.

Here’s the zoom in action. First, a wide angle view of the Indian Wells tennis stadium, from our seats a couple of days ago.

Then a long-distance zoom across the court to the people in the front row, one of whom is eating something disgusting:

This is amazing.

The camera has an electronic viewfinder. You look through it, rather than hold it away from you, as you do with all point-and-shoot cameras. This feature is great for bright sunlight. The camera has no shutter lag. Hit the button. The photo is taken instantly. The camera also has amazing intelligence. When it perceives a difficult scene (like a backlit one),  it will take multiple  pictures, process them together and make the best combination one. The result is amazingly good.

 One feature I like: Hold the shutter button down and get multiple quick shots. Great for kids and sports. This is John Isner serving:

Remarkable?

Available from Amazon for $498. Click here. But check other places like abt and abes of Maine. Their phone salespeople can be bargained with, on price, tax and shipping.

Favorite latest New Yorker cartoons:

Harry Newton who is in love with Mochi from the company  Mikawaya and sold through Trader Joes. Mochi is ice cream surrounded by a soft pastry. It sounds disgusting. But it’s delicious. And since each Mochi is small, the calorie hit isn’t bad. About 100 calories per mochi. If you do nothing today, go to Trader Joes and buy yourself a box. Thank you to Michael and Anne for encouraging my expanding waist. Get the chocolate mochi. The best.