From my friend who knows these things:
Oil is breaking to new lows. Probably headed to $40. And copper too!
The Ruble is back in free fall again. Here’s my Ruble forecast: Parity with the Yen!
It all screams: Buy (long-term) Bonds!
In another email, he writes:
Bearishness has reached 100%! Yields (on American treasuries) look low to Americans, but to everyone else in the world they look very high.
Today’s bond report from Bloomberg:
“Benchmark German 10-year (GDBR10) bund yields dropped to as low as 0.541 percent, the least since Bloomberg began collecting the data in 1989. The nation’s two-year yield reached minus 0.099 percent, also an all-time low.
Austria’s 10-year yield fell to as low as 0.704 percent, Finland’s reached 0.652 percent and the equivalent Dutch (GNTH10YR) rate touched 0.681 percent. French 10-year yields dropped to 0.828 percent.
Italy’s 10-year yield rose four basis points to 1.98 percent. The rate on similar-maturity Spanish debt was little changed at 1.67 percent.
Japan’s 10-year yield traded to a new cycle low of 0.32%.”
Avoid the short end of the yield curve. Short rates will rise as the Fed lifts rates.
Harry’s take: Think long-term treasuries (like 30-years) for some of your cash.
Look at this morning’s Bloomberg. Wow!
How should I manage my investments? My young (26-year old) tennis partner asked the question last night. Here’s a simple approach:
Think five portfolios:
+ Index funds. Mostly Vanguard. But also index look-alikes, like BRKA.
+ Companies which make products and services I use and like, e.g. Apple, GoPro, Google, HAIN, HD, NKE.
+ Dividend payers, like MLPs and Mortgage REITs, e.g. Annaly, AGNC,
+ Outright speculations, like biotechs. Also called momentum stocks.
+ Situational situations. Like shorting Radio Shack or Petrobras.
My concept: Growth and fun.
Start with an allocation. The younger you are, the less in index funds. Then add in a time frame for each portfolio. Look at your index fund portfolio once every six months. Look at outright specs every day.
Sign up for Fidelity Active Trader Pro — the best platform I’ve found for managing several portfolios. It’s also free. And they keep improving it.
Tomorrow we’ll look at some of the best tools.
A bad omen? Oil continues to slide. From Business Insider this morning:
US Oil Services Firm Civeo Got Smashed After Weak Guidance. In after-hours trade Monday, shares of Civeo were down 28% to about $5.95 per share after the company announced it would suspend its quarterly dividend and slash capital expenses.
Things I learned:
+ Canon camera software is much better than Nikon’s. Easier to use and understand. Turns out better images.
+ Rebooting our Wolf oven fixed the error message and got it running again. Rebooting fixes everything.
+ Get pictures out of your camera and off your CD card that evening. CD cards are notoriously unreliable. Sending them out for repair and picture recovery costs a small fortune.
+ You need to have three email address — one for your friends, one to give to companies you buy from, and one to sign up to services (that may or may not be useful). You need to close the latter two down once a year. And get new ones.
+ Hurrah for AmazonBasics. Amazon sells fine cables, headphones (with microphone) and other useful gadetry at wonderfully low prices.
+ Never put more than one request in an email.
+ Send you bank manager today a nice letter suggesting he institute two factor passwords on your bank account. Item: I can still get into my JPMorgan Chase online account with only one password. Yet, to get into this column I need two passwords and two userIDs. Hardly seems logical. Hack this column. Please don’t hack my bank account, with its ability to wire money anywhere in the world with a few keystrokes.
Fascinating piece on Marissa Mayer and her management of Yahoo! From Sunday’s New York Times Magazine:
What Happened When Marissa Mayer Tried to Be Steve Jobs
Eric Jackson was sitting in his hotel room on Sea Island, Ga., watching his kids splash around in the pool, when he clicked “publish” on his latest blog post for Forbes.com. Jackson, an influential hedge-fund manager, had become fixated on Yahoo and the efforts of its chief executive, Marissa Mayer, to turn around the enormous yet floundering Internet company. It was July 21, 2014, almost exactly two years to the day since Mayer took over, arriving at Yahoo’s headquarters to an unfurled purple carpet and Shepard Fairey-style “HOPE” posters bearing her face. During those 24 months, Mayer eliminated dozens of products and rebooted others. She acquired 41 start-ups and even hired Katie Couric. But just one week earlier, Mayer announced the company’s lowest quarterly earnings in a decade. Jackson argued in his post that Yahoo no longer made sense as an independent entity. Instead, it might be a nice takeover target for one of the tech industry’s Big Four: Apple, Facebook, Amazon or Google.
Jackson’s conclusion wasn’t based simply on a discouraging quarter. It was a result of an eye-opening calculation he had performed – what’s known on Wall Street as a sum-of-the-parts valuation. Yahoo had a market value of $33 billion at the time, but that figure owed largely to its stake in Alibaba, the Chinese Internet conglomerate. According to Jackson’s valuation, Yahoo’s stake in Alibaba was worth roughly $37 billion. But if you subtracted that position, the entirety of Yahoo’s core business, all its web products and content sites, actually had a market valuation of negative $4 billion. A conquering company could theoretically buy Yahoo, sell off its Asian assets and absorb its business units free. This sort of sale would make a lot of money for Yahoo’s shareholders, Jackson wrote, even if it meant gutting the company and losing Mayer as C.E.O. after only two years.
Read the entire fascinating piece here.
From the first New Yorker issue of 2015
Tasteless morning humor
A lady walks into Harrods. She looks around, spots a beautiful diamond bracelet and walks over to inspect it. As she bends over to look more closely, she unexpectedly farts.
Very embarrassed, she looks around nervously to see if anyone noticed her little woops.
As she turns around, her worst nightmare materializes in the form of a good-looking salesman right behind her.
Cool as a cucumber, he displays all of the qualities one would expect of a professional in a store like Harrods.
He politely greets the lady with, ‘Good day, Madam. How may we help You today?”
Blushing and uncomfortable, but still hoping that the salesman somehow missed her little ‘incident’, she asks, ‘What is the price of this Lovely bracelet?’
“Madam,” he answers, “If you farted just looking at it – you’re going to sh*t yourself when I tell you the price!”
Harry Newton who is convinced we all eat too much. Hence, when dining out, eat only two appetizers. Skip the main course. Alternatively, order the main course, cut it in half. Take half home for lunch tomorrow.
Harry
Oil could get very interesting very quickly if there is some major international incident….now what’s the chance of that happening?