In Search of the Perfect Investment

I bought some BID and AINV. But the big news is the huge dividends I received from APO and some smaller ones from COST and PG. One understimates the value of dividends, because they don’t show up in the value of my securities, for example  on my “Positions” list with Fidelity.

Should I buy some BIDU, Workday and/or Salesforce (CRM)? Or is it too late? Maybe not. Look at Priceline (PCLN).

LADR is still an excellent non-fire buy. Strong analysts reports will be out early next week.

Check out Airlease (AL).

Look at some of the marijuana stocks. But reject most of them. My PHOT is doing well.

Play with a little fire, Harry. It adds to the spice of life. (Over the weekend, I’ll think of more ways to mix metaphors.)

Interest rates are going up. That’s the mantra I hear from friends to justify a dumb action, like sitting on cash, not getting into equities, etc.

Hence I was pleased to read a piece by Mark Hulbert in today’s MarketWatch. I love the chart. He writes:

Bonds have been in a major bull market for nearly 33 years – ever since the 30-year Treasury yield hit its all-time a high of 15.20% on Sept. 29, 1981. The 10-year’s yield record high came the next day, at 15.84%.

Today, in contrast, the 30-year yield is 3.7% and the 10-year’s is 2.74%.

Anyone whose investment careers began after 1981 has therefore never experienced a bond bear market. Assuming the typical investor doesn’t seriously start thinking about investing until he is 25 or 30 years old, especially about investing in bonds, that means that anyone today not in, or very close to, retirement has only known a bond bull market.

That’s an amazing historical and psychological fact, the significance of which cannot be overstated. It means that very few investors today have the long-term perspective with which to properly assess whether bonds are likely to suffer major declines in coming years.

What about the last year, you say? Haven’t interest rates risen since their all-time low in late 2012?

Your question only betrays how your thinking has been affected by living exclusively in a bull market. Bonds’ losses over the last 12-15 months have been so modest that they can’t even be considered a minor correction, much less a bear market. Vanguard’s Total Bond Market Index fund VBMFX +0.19%  , for example, lost just 2.3% in 2013, and has erased the bulk of that minor loss so far this year.

I know, I know. A few doom and gloomers have been predicting a bond bear market for many months now, and their pessimism – in retrospect – looks absurd.

But, once again, a long-term perspective can be helpful. Consider what bond market timers were saying in September 1981, the month that Treasury yields hit their all-time high.

Richard Russell, editor of Dow Theory Letters, was scathing that month in his attack on all those bond timers who – for many months prior – had been predicting that a bond bull market would soon begin. He wrote that “if it wasn’t so pathetic, so insane, it would be comical… You’d think the forecaster would show some sense of embarrassment, some shame” over his repeated failures.

Russell, in contrast, was forecasting that interest rates would continue even higher than they already were that month-and, correspondingly, that bond prices would fall even further. He had been right up until that point, but was spectacularly wrong then.

T. J. Holt, editor of the Holt Investment Advisory, was also dismissive of those predicting lower interest rates in September 1981. (Martin Weiss succeeded Holt as editor of that service; Weiss now is publisher and contributing editor of a service entitled Safe Money Report.) That month, as he had been in prior and successive months as well, Holt was forecasting that a phenomenal liquidity squeeze would cause interest rates to rise markedly further.

This historical perspective doesn’t mean the bond bears currently are right in predicting a major bond decline, of course. But it should give us all a big dose of humility.

The Shoot Yourself in the Foot Syndrome. My bank is about to lose a customer (me) because they can’t organize to stop charging me $13 when I receive an incoming wire — no matter how small. I have a seven balance with those idiots at Santander (nee Sovereign, nee Independence). And they’re going to lose me for $91 of charges. Said one of their assistant managers, “We lose customers for stupid reasons. Then we have meetings to figure why. By then it’s too late. It’s stupid.”

Why are you still there? I asked.

“I resigned yesterday. I gave them two weeks notice.”

Good boy.

Try CREE LEDs. From Glenn, reader:

Harry, RE: Lightbulbs.
Try the Cree soft white LED ( I use the 60 w, uses 9.5 w). It answers all your objections. Home Depot recently had an approx. 50% price drop to $8. Instant on, fit in fixtures, dimmable, good color, etc.

The Too Hard Basket.How can Best Buy possibly succeed? There was nothing to buy in the stores you couldn’t buy elsewhere cheaper. There usually isn’t what you wanted. They look like they were headed for the trash can of history. Then they got religion (or something). The market believed.

And now they’ve declared a dividend! I felt so strongly about their lack of prospects I should have shorted them at $40.  But I felt uncomfortable shorting them now.

Feeling uncomfortable leads to Todd’s favorite mantra, “When in doubt, stay out.” And don’t rue the money you could have made — and your friends definitely made.

We underestimate the amount of time we spend saying NO.

I get befuddled by stuff I don’t understand — but which all my friends are making a killing on, e.g. Bitcoin.

Today I read:

Mt. Gox files for bankruptcy. The Bitcoin exchange’s chief executive Mark Karpeles blamed “a weakness in our system” at a press conference in Japan, where the company was based. Mt. Gox froze withdrawals earlier this month after weeks of glitches and issues, and now many in the Bitcoin world are worried they lost their holdings in what was once the world’s largest Bitcoin exchange.

Which leads me to “When God closes a door, he always opens a window.” In short, something better always comes along.

I could list all “The Too Hard ” investments I’ve missed — from banks to solar companies, from Tesla to Priceline. Too hard, too weird, too high.

One needs to adjust one’s investment madness to one’s willingness to sleep at night.

Favorite New York immigrant: I found her on the subway reading this gigantic book. I was horrified:

Turns out she’s learning English and punctuation is not taking a vacation. It’s a cute way to teach English. Why didn’t I write the book?

I used to teach gramma and punctuation to editors I hired when I owned the big publishing company:

+ No Ands, Buts, Howevers, Althoughs and Thoughs.

+ No commas, parenthesis and  idle thoughts inside sentences. Start with one thought and finish. Don’t meander. That’s for novels, not for us.

+ Short sentences are good.

+ People read headlines and photo captions. If that excites them, they’ll read your first sentence — which better sum up everything you know.

+ Don’t ever use PowerPoint in documents, in presentations. Your audience will focus on the slides, not you, nor what you’re saying.

The Cowboy & the Lesbian.
An old cowboy, dressed in a cowboy shirt, hat, jeans, spurs, and chaps went to a bar, sat down, and ordered a drink.

As he was sipping his whiskey, a young lady sat down next to him. After she ordered her drink she turned to the cowboy and asked him, “Are you a real cowboy?”

To which he replied, “Well, I’ve spent my whole life on the ranch herding cows, breaking horses, and mending fences . . . so I reckon I am.”

After a short while, he asked her what she was. She replied, “I’ve never been on a ranch so I’m not a cowboy, but I am a lesbian. I spend my whole day thinking about women. As soon as I get up in the morning, I think of women. When I eat, shower, watch TV. Everything seems to make me think of women.”

A short while later she left, and the cowboy ordered another drink. A couple sat down next to him and asked, “Are you a real cowboy?”

To which he replied, “I always thought I was, but I just found out that I’m a lesbian.”

Harry Newton, whose spam this morning included “Local Singles Near You,” A $75 an hour job where I can “Take a day off when I want or even sleep in until 10am”, “RayBan sunglasses on sale, and “Burial Insurance. Have Peace of Mind.” Those cover all the bases. I’m set for life.

I love my ear doctor. He scoops out my wax. I can hear again. It takes two minutes. Best medical procedure ever invented. Try it. It could save you $6,000 in hearing aids you won’t need. Best yet: Medicare pays. And pays about three times what I used to pay in cash before I got old and grumpy. Go figure!

It’s 13 degrees this morning in New York, and windy. It’s horrendously unpleasant. Susan and I are getting on a plane tomorrow for California’s Coachella Valley where we’ve rented a house for March in a place called La Quinta. It’s about two miles from the Indian Wells Tennis Tournament which starts this weekend, runs for two weeks and is on The Tennis Channel.

La Quinta really looks like this. March is paradise in the Valley.

Now, if only I played golf.