In Search of the Perfect Investment

Nice pop yesterday for our portfolio — see right hand column. thank you Janet Yellen. I did buy a little more FMILX. Easy buy. Would show you a chart this morning except that Fidelity Active Trader Pro is messing up. Fidelity doesn’t know why. I wish companies like Fidelity would stop screwing with their software and wasting their users’ time. I wish they’d train their support people to offer more than “Let’s reboot your machine.“

Lesson: Always subscribe to several brokerage services. One has got to work.

Still good idea to mortgage and invest in the market. An S&P index ETF (or FMILX) will earn at least twice what a mortgage costs these days. Make sure your mortgage comes with a no pre-payment penalty.

GoPro is going IPO next week. This one will be hot. Scrounge whatever you can. Buy yourself a GoPro camera today and be blown away. Your kids will thank you. For more, click here.

I didn’t finish my analysis on my birthday presents. I did spend a lot of time yesterday saying NO.  There are a huge number of techie startups. they all have great ideas, but are often years away from a working beta version. They’re looking for money to fund development of the product — the riskiest investment. They all have no budget for marketing or sales. Which may be OK if you’re tomorrow’s Google. But you’re not.

Amazon’s new Fire cellphone. It has a bigger screen, a faster processor, a bigger camera — 13 million pixels. And it has, says Amazon “a sensor system that responds to the way you hold, view, and move your phone. It opens up a new class of immersive apps and games not possible on other smartphones, as well as one-handed navigation and gestures like auto-scroll-read long web pages and books without ever touching the screen.”

Reports today’s New York Times, whose reporter obviously attended Amazon’s event:

Though the device is called the Fire phone, Amazon’s new gadget is less a phone than a pocketable cash register hooked directly into the retailer’s intelligent warehouses. And it’s not cheap. The Fire phone sells for $199 with a two-year AT&T contract. Although it also comes with a free one-year subscription to Amazon’s Prime membership, the Fire phone is essentially the same price as high-end phones made by Apple and Samsung.

But instead of a cheap phone, Amazon delivered a device packed with many high-end, whiz-bang features. Some of those features may be attractive to people who already love Amazon, but for people who aren’t looking to be hooked so intimately into Amazon’s brain, it’s hard to see what this phone offers over the iPhone, the Samsung Galaxy or any other top-of-the-line smartphone on the market today. …

It’s true that the Fire phone has several novel features. Among them is an image-recognition system, Firefly, that will let you identify any book, movie, phone number or other object you point at your phone. Firefly is the heart of the phone’s connection to Amazon’s shopping engine. Aim the device at anything around your house, like a bag of cat litter or a tube of toothpaste, and the phone instantly recognizes it and gives you an option to buy the item and have it delivered immediately. During a short demonstration of the phone, which is available for order now and will ship on July 25, I found that feature to be eerily accurate. It flawlessly recognized pretty much everything I pointed to, offering me a way to buy something on the fly – from Amazon. ..

Amazon has included two features that are unusual and useful. One is Mayday, Amazon’s live video customer service, which it began offering on its Kindle Fire tablets last year. The feature lets you call up an instant, on-screen video chat with a customer service representative at the push of a button. …

The other fantastic Fire phone feature: Every photo you snap on the phone is backed up on Amazon’s servers free. There’s no limit to how many photos are stored there. It’s a simple, headache-free backup system that I wish every other phone manufacturer offered – Apple most urgently. …

The phone and its cellphone service is not cheap. It runs on Android, which means it will not be easy to learn — especially if you’re using an iPhone. It also comes only with AT&T service, which is a bit sad for people (like me) living in the north-east.

Harry’s take so far: Fire cellphone doesn’t entice me. But then I haven’t seen one yet. I certainly won’t pre-order one. It’s not a reason to load up on Amazon’s stock.

There are two articles on it in today’s New York Times. Click here and here.

A Vow to End Hollow Nods and Salutes. Gretchen Morgenson of the New York Times wrote on the “Problems at G.M.” This is an important piece (from last Sunday). It highlights what an awful business G.M. runs and why I don’t drive an GM car or own shares in that miserable company. Read and be sick.

After the release last Thursday of the internal report on General Motors’ failure to recall thousands of defective cars for more than a decade, Mary T. Barra, the chief executive, addressed the company’s employees. In her remarks, Ms. Barra projected an earnest and urgent desire to reform the company’s culture, which she said was permeated by “bureaucratic processes that avoided accountability.” That culture meant no one took responsibility for faulty ignition switches in Chevrolet Cobalts and other cars that were ultimately responsible for at least 13 deaths.

Ms. Barra told her audience that she wanted to make sure this sort of thing never happened again at G.M. I believe her. But the depth of the dysfunction at this company, as detailed in the report, makes it hard to see how she can keep that pledge.

The report, which was the result of an investigation by Anton R. Valukas, a partner at Jenner & Block, says G.M. officials showed a “pattern of incompetence” that led to inaction on the defects, Ms. Barra said.

That’s the mild version. The report exposes a mind-set throughout the company that was so self-absorbed, so bent on self-preservation and self-protection that it routinely put its customers last.

The issue of the Cobalt ignition switch “passed through an astonishing number of committees,” the report states. “We repeatedly heard from witnesses that they flagged the issue, proposed a solution, and the solution died in a committee or with some other ad hoc group exploring the issue.”

That’s troubling enough. But the report also concludes that it was impossible to determine the “identity of any actual decision-maker” involved in these discussions. Even identifying who attended these meetings or discovering what topics they discussed was difficult. Why? Because minutes of the meetings, showing who attended and what was said, were rarely taken.

Such a practice seems intended to avoid accountability.

No minutes were taken, for example, at a December 2013 meeting about the potential recall. Such a record would have outlined the discussion by the three G.M. executives who attended, all of whom had to agree that a recall should be issued.

Some employees told Jenner & Block investigators they did not take notes at safety meetings “because they believed G.M. lawyers did not want such notes taken.”

Shifting responsibility for problems to others was deep in the company’s DNA, the report shows. Avoiding accountability was so automatic that it even had a name, like a yoga pose. “The G.M. salute” involved “a crossing of the arms and pointing outwards toward others, indicating that the responsibility belongs to someone else, not me,” the report said.

Along these lines was the “G.M. nod”- when everyone agrees to a plan of action after a meeting “but then leaves the room with no intention to follow through,” the report said.

Another disturbing aspect of the culture at G.M. was the “formal training” the company gave to employees writing about safety issues. A 2008 presentation, for example, warned employees to write “smart.”

What did writing smart mean? Words such as “problem” and “defect” were banned. Employees should instead use softer words – “issue,” “condition” or “matter.” Rather than write about a “defect,” employees should note that the car “does not perform to design.”

Sometimes entire sentences were forbidden, according to the report. “Dangerous … almost caused accident,” was off limits, for example, as was, “This is a safety and security issue. …” Finally, employees were advised not to use phrases such as “tomblike” and “rolling sarcophagus.”

This manipulation of language reminded me of George Orwell’s incisive 1946 essay, “Politics and the English Language.” Although the focus of his essay is the bankrupt verbiage favored by politicians, Orwell could just as easily have been describing corporate-speak at G.M.

“Political language – and with variations this is true of all political parties, from Conservatives to Anarchists – is designed to make lies sound truthful and murder respectable,” Orwell wrote.

Reading the report and knowing that innocent people died because of G.M. employees’ me-first practices is stomach-turning.

But while this report exposes severe shortcomings in one company’s culture, the practices it details are not anomalous. In fact, they seem to have become commonplace elsewhere in corporate America: an indifference to misconduct, a drive to avoid personal responsibility and scorched-earth retaliation against critics or adversaries.

A similar failure of accountability permeated the financial industry and most of its high-powered federal regulators for the last decade. No executive or regulator of any significance has been held responsible for actions – or inactions – that led to the financial crisis of 2008.

Big bank shareholders have paid billions of dollars in fines, legal fees and settlement costs arising from their companies’ dubious practices, and the banks’ customers, who received high-cost and predatory loans, also paid a price.

But the people who made those loans or sold them to investors are, for the most part, living large.

Although G.M. fired 15 employees as a result of the report’s findings, its customers and shareholders will wind up shouldering the heaviest costs of this debacle.

Ms. Barra says she wants a new culture of integrity. But simply telling employees that they must change won’t do the job.

Here’s an idea for her: Why not force every one of the people who ignored the ignition switch problem, every member of all those committees that met and did nothing over the years, to meet with the families of the G.M. customers who died driving the faulty cars. Each one of these executives should experience, if only for a few moments, the trauma their indifference unleashed on these families.

Pressure on Obama to Quickly Resolve Centuries-Old Sunni-Shiite Conflict.

WASHINGTON (The Borowitz Report)-Congressional leaders left the White House on Wednesday “deeply frustrated” that President Obama had not found a swift resolution to the conflict between Sunnis and Shiites that began in the seventh century A.D.

After meeting for more than an hour with the President in the Oval Office, Senate Minority Leader Mitch McConnell expressed disappointment that Mr. Obama “came up empty” when asked for a plan to heal the rift between the two religious groups, which began in the year 632.

“All we ask of this President is that he do one thing: settle a religious conflict that has been going on for a millennium and a half,” McConnell said. “What did he offer today? Nothing.”

Speaker of the House John Boehner acknowledged that there was a possibility that Obama might find a way to resolve the centuries-old Sunni-Shiite conflict, but the Ohio Republican was not optimistic.

“This struggle between Sunnis and Shiites has been going on for almost fifteen hundred years,” he said. “That means President Obama has had ample time to fix it.”

Harry Newton’s son Michael has arrived in town, now sleeping like a baby after a JetBlue RedEye. He’s a good boy. We’ve scheduled a 6 PM walk to discuss Life, Liberty and the Pursuit of Happiness. All of which will be solved in one hour. Ha.