In Search of the Perfect Investment

Here’s what I learned in 2013:

The village idiot could have made 20% in stocks in 2013. An index fund. An index ETF. Or several:

 

The Village Idiot. Stick with dumb.

Invest on January 2, 2013. Gloat on Christmas Day, 2013.

Don’t read all the gloom and doom advice. Don’t read all the stock picker lists. Turn off BubbleVision (CNBC). Stop trying to be super-smart.

Nothing could be finer, or easier.

Of course, not every year is 2013. And 2014 won’t be. So?

Diversification makes sense. But not in bonds, nor gold, nor commodities. Not yet.

Stick with index ETFs, some equities (see my list on the right) and tight stop losses.

Cash used to be King. No more.

This Christmas, be amazed:

Washington was totally dysfunctional. Obamacare bombed. They didn’t pass immigration reform. They didn’t pass a million laws they should have. They basically did nothing, except kvetch.

Yet, the stockmarket boomed, jobs came back, IPOs exploded, Kickstarter (and other crowdfunders) got a zillion new businesses started, and technology, the Internet and the Cloud made starting your own new business even easier and even cheaper.

America invented things, from 3D printing to frackings and horizontal drilling. America pulled through for all of us.

Don’t ever bet against this horse.

Blackstone (BX) is doing just nicely.

From today’s Bloomberg: “Blackstone-Backed La Quinta Files Confidentially for IPO.”

Writes Bloomberg:

With the Bloomberg Americas Lodging Index up 55 percent this year, two other Blackstone-owned lodging companies, Hilton Worldwide Holdings Inc. (HLT) and Extended Stay (STAY) America Inc., debuted with strong investor demand. Blackstone, which acquired La Quinta in January 2006 for about $3 billion, explored a sale of the company and opted instead for an IPO, people with knowledge of the matter said in November.

La Quinta operates more than 800 midprice, limited-service hotels with about 80,000 rooms in the U.S., Canada and Mexico, according to its website. Midscale hotels fared best during the credit crisis and subsequent recession, out of six lodging categories tracked by STR, a Hendersonville, Tennessee-based research firm.

BX has been in my favorite list for a while (see list in the right hand column). My own holding in Blackstone is up 37.2% for the year as of last night. Better than a slap in the belly with a cold fish. For the Bloomberg story, click here.

Holiday vacation warning.

+ Don’t post on Facebook you’re going to Hawaii (or wherever for a week or two). While you’re gone, someone will burglarize your house. It won’t be be a fun return.

To read over Christmas:

+ Jesse Willms, the Dark Lord of the Internet. How one of the most notorious alleged hustlers in the history of e-commerce made a fortune on the Web. From the Atlantic. Click here.

+ How to get the strongest Wi-Fi signal in your home. From B&H Photo. Click here.

+ Your Wireless Router Could Be Murdering Your Houseplants. An experiment by a handful of high school students in Denmark has sparked some serious international interest in the scientific community. Click here.

+ A tale of two rushes. There’s gold in them there wells. From the Economist.

WHEN his neighbour discovered gold in a Californian river in 1848, Sam Brannan could have kept quiet about it. Instead, he filled a jar with gold dust and rushed around the streets of San Francisco shouting “Gold! Gold! Gold!” He had good reason to incite a gold rush: he owned a shop nearby. He became California’s first millionaire by selling picks, shovels, beans and bacon to the horde of prospectors who heeded his call.

Gold fever spread fast. The lure of buried treasure “sucked nearly every free hand and available arm to the gold mines”, observes H.W. Brands in “The Age of Gold”, a brilliant history of the period. “They tore themselves from warm hearths and good homes, promising to return; they fled from cold hearts and bad debts, vowing never to return.” The Alta California, a local paper, reported that “The whole country.resounds to the sordid cry of gold! GOLD!! GOLD!!!” It added that this would be the last issue for a while, since all its staff were heading for the gold fields.

America’s current shale-energy boom has plenty in common with the gold rush, and might prove as momentous. It has created a gusher of wealth in remote places. It has lured young men to wild frontier towns, such as Williston, North Dakota. Jim Cramer, a television host, sounded just like Brannan when he reported from North Dakota in 2011. “This new black gold rush is just getting started!” he bellowed, against a backdrop of nodding donkeys. “Listen, people in this country who need a job, get up here!”

For the full story from the Economist, click here.

+ Exercise as potent medicine. From the New York Times. Click here.

Christmas in Australia. In case I forget my dear friend Rob Douglass reminds me that it’s summer down there. No snow. No ice. No cold. No market for down parkas.

My favorite Christmas story:

Three wise men approach the manger bearing gifts. As one enters he trips and, in anger, shouts, “Jesus Christ.”

Mary looks up with a glint in her eyes. Her prayers are answered, “And we were going to call him, Moishe Finkelstein.”

My favorite Christmas quotes:

“Santa Claus has the right idea. Visit people once a year.” – Victor Borge

“I once bought my kids a set of batteries for Christmas with a note on it saying, toys not included.” – Bernard Manning

“I stopped believing in Santa Claus when I was six. Mother took me to see him in a department store and he asked for my autograph.” – Shirley Temple

“You know you’re getting old, when Santa starts looking younger.” – Robert Paul

“Oh, for the good old days when people would stop Christmas shopping when they ran out of money.” – Unknown Author

“What I don’t like about office Christmas parties is looking for a job the next day.” – Phyllis Diller

“The one thing women don’t want to find in their stockings on Christmas morning is their husband.” – Joan Rivers

“Christmas at my house is always at least six or seven times more pleasant than anywhere else. We start drinking early. And while everyone else is seeing only one Santa Claus, we’ll be seeing six or seven.” – W.C. Fields

“Mail your packages early so the post office can lose them in time for Christmas.” – Johnny Carson

“The worst gift is a fruitcake. There is only one fruitcake in the entire world, and people keep sending it to each other.” – Johnny Carson

“Aren’t we forgetting the true meaning of Christmas? You know… the birth of Santa.” – Bart Simpson, The Simpsons

“The proper behaviour all through the holiday season is to be drunk. This drunkenness culminates on New Year’s Eve, when you get so drunk you kiss the person you’re married to.” – P.J. O’Rourke

Harry Newton who’s hosting much of his American and Australian family in the next few days. There’s daughter Claire and son-in-law Ted. There’s Georgia and Mark, Ted’s mother and father and Kit, his sister. There’s Mairav and Dan, my sister’s boy and their two kids, Romy and Jake all the way from Sydney, where it’s warm. We’ll be seeing Anne and Michael and their new Eleanor in the New Year’s week in Portland, Oregon, where they now live. Best of all, they’re all healthy.

Without the family there would be no mutual funds, no ETFs, no Berkshire Hathaway, no distress real estate, no real estate syndications and no private equity investments. This week is for the family.

Remember to back up your work.  Don’t tell Facebook, Twitter or any other social media, nosey-Parker (aka stickey-beak in Australia) that you’re leaving town.

I’ll be back next Monday,  December 30.