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Tarzan and Gotchas

31 December 2014, 10:25 am

Tarzan had the right idea. Swing from vine to vine. Swing from one industry you know to another part of the same industry.

Swinging to an altogether new one industry brings Gotchas — bad things you didn’t know about because you’d never been there.

When I invest in a fantastic new field (one I know little about), I screw up. A Gotcha gets me.

Don’t rely on glowing company words and beautiful PowerPoints.

Stay close to home.

It’s the most important lesson of 2014.

Good vibes for 2015.

Everyone and their uncle is predicting good times for the U.S. — from the Economist to the New York Times. Maybe even some recovery in Europe. Commodities (oil, iron ore, copper, etc.) now way down are a great boost to the U.S. and Europe. But I’m not catching falling knives — like oil or European stocks. I can’t predict when the turnaround will happen. And there are far too Gotchas.

I think 2015 will see similar small gains in the indices. Volatility will stay with us. Marvel at 2014’s volatility.

spxFor2014

Oil’s historical price. Its dropped recently but It’s been lower.
Macrotrends.org_Crude_Oil_Price_History_Chart

Oil’s drop is devastating many economies, from Russia to Venezuela, whose economy is in recession and inflation reached 63.6 percent in November. Gross domestic product contracted 4.8 percent, 4.9 percent, and 2.3 percent in the last three quarters, the Central Bank said.

Try predicting oil: This morning we hear Saudi Arabia’s King Abdullah has been hospitalized.  in the capital Riyadh where he is undergoing medical tests. Saudi is the world’s last remaining real monarchy — where the King wields ALL  the power and makes ALL the decisions. He’s 91. He hasn’t cut back on production. But his successor?

Play around with these charts. Move your cursor around for different time frames:

New Year Resolutions:

+ Replace your cable modem / DSL modem with a newer one, which will be faster, more reliable and free.

+ Replace your wireless router with the NETGEAR Nighthawk AC1900 Dual Band Wi-Fi Gigabit Router (R7000). Worth every penny of its $176. Click here.

+ Call your Internet service provider and order up higher speed. It’s amazing what a difference high Internet speed makes. Like allowing you to send your family pictures and watch movies in real high def.

+ Stop giving web sites your phone number and your private email address.

+ Take ten minutes today and unsubscribe from all those sites that tempt you with stuff you don’t need.

+ Don’t go to New York’s Times Square this evening. Its too cold (and too boring) And don’t watch the ball fall on TV. Go to sleep early.

The 12 best in-depth tech stories of 2014. Including whatever happened to Motorola? Click here.

122 Things Everyone Should Know About Investing And The Economy. Interesting quotes, e.g.

6. As Erik Falkenstein says: “In expert tennis, 80% of the points are won, while in amateur tennis, 80% are lost. The same is true for wrestling, chess, and investing: Beginners should focus on avoiding mistakes, experts on making great moves.”

14. Investor Nick Murray once said, “Timing the market is a fool’s game, whereas time in the market is your greatest natural advantage.” Remember this the next time you’re compelled to cash out.

15. Bill Seidman once said, “You never know what the American public is going to do, but you know that they will do it all at once.” Change is as rapid as it is unpredictable.
17. Blogger Jesse Livermore writes,”Most people, whether bull or bear, when they are right, are right for the wrong reason, in my opinion.”
23. Several studies have shown that people prefer a pundit who is confident to one who is accurate. Pundits are happy to oblige.

42. John Maynard Keynes once wrote, “It is safer to be a speculator than an investor in the sense that a speculator is one who runs risks of which he is aware and an investor is one who runs risks of which he is unaware.”

43. “History doesn’t crawl; it leaps,” writes Nassim Taleb. Events that change the world — presidential assassinations, terrorist attacks, medical breakthroughs, bankruptcies — can happen overnight.

46. The most boring companies — toothpaste, food, bolts — can make some of the best long-term investments. The most innovative, some of the worst.

47. In a 2011 Gallup poll, 34% of Americans said gold was the best long-term investment, while 17% said stocks. Since then, stocks are up 87%, gold is down 35%.

59. “We’re all just guessing, but some of us have fancier math,” writes Josh Brown.

60. When you think you have a great idea, go out of your way to talk with someone who disagrees with it. At worst, you continue to disagree with them. More often, you’ll gain valuable perspective. Fight confirmation bias like the plague.

63. Bill Bonner says there are two ways to think about what money buys. There’s the standard of living, which can be measured in dollars, and there’s the quality of your life, which can’t be measured at all.

64. If you’re going to try to predict the future — whether it’s where the market is heading, or what the economy is going to do, or whether you’ll be promoted — think in terms of probabilities, not certainties. Death and taxes, as they say, are the only exceptions to this rule.

88. Success is a lousy teacher,” Bill Gates once said. “It seduces smart people into thinking they can’t lose.”

98. Remember what Buffett says about progress: “First come the innovators, then come the imitators, then come the idiots.”

112. Apple increased more than 6,000% from 2002 to 2012, but declined on 48% of all trading days. It is never a straight path up.

120. A money manager’s amount of experience doesn’t tell you much. You can underperform the market for an entire career. Many have.

122. Take two investors. One is an MIT rocket scientist who aced his SATs and can recite pi out to 50 decimal places. He trades several times a week, tapping his intellect in an attempt to outsmart the market by jumping in and out when he’s determined it’s right. The other is a country bumpkin who didn’t attend college. He saves and invests every month in a low-cost index fund come hell or high water. He doesn’t care about beating the market. He just wants it to be his faithful companion. Who’s going to do better in the long run? I’d bet on the latter all day long. “Investing is not a game where the guy with the 160 IQ beats the guy with a 130 IQ,” Warren Buffett says. Successful investors know their limitations, keep cool, and act with discipline. You can’t measure that.

You can read all 122 here.

New Year’s Eve and the Irish

An Irish daughter had not been home for five years. Upon her return, her Father cussed her. “Where have ye been all this time? Why did ye not write to us, not even a line? Why didn’t ye call? Can ye not understand what ye put yer old Mother thru?”

The girl, crying, replied, “Sniff, sniff….Dad. …I became a prostitute…”

“Ye what!!? Out of here, ye shameless harlot! Sinner! You’re a disgrace to this Catholic family.”

“OK, Dad– as ye wish. I just came back to give mum this luxurious fur coat, title deed to a ten bedroom mansion plus a $5 million savings certificate. For me little brother, this gold Rolex. And for ye Daddy, the sparkling new Mercedes limited edition convertible that’s parked outside plus a membership to the country club…….. ……… ……. (takes a breath)………….and an invitation for ye all to spend New Years Eve on board my new yacht in the Riviera and… …”

“Now what was it ye said ye had become?” says Dad.

Girl, crying again, “Sniff, sniff….a prostitute Daddy! Sniff, sniff.”

“Oh! Be Jesus! Ye scared me half to death, girl! I thought ye said a Protestant. Come here and give yer old Dad a hug.”

HarryNewton
Harry Newton, who reminds himself that today is the last day to harvest losses and profits.

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8 Comments

  1. Lucky says:
    January 1, 2015 at 11:31 AM

    Internet speed problems? I have been fighting COX Cable Co. for the past 2 months over my speed…I have been getting about half what I pay for, some days about a quarter. Switched out modems twice. No improvement. They finally sent a tech out who found that when my cable was initially installed it was run above ground at the back of my house…we have wild rabbits here…they had chewed about 5″ of insulation off the cable leaving bare copper exposed. At my suggestion it is now run near the roof line. My second tier speed is now over 60 mps down and 6.9 mps up. The technician jokingly suggest they should now charge me more as I am getting way above what I pay for…maybe it will make up for lost time!

  2. Bill says:
    December 31, 2014 at 9:25 PM

    Harry, I used to get your daily comments via an RSS feed. In the last week or two that is no longer working. Have you discontinued that?

  3. Smokey Leo says:
    December 31, 2014 at 6:34 PM

    “the indices will see similar small gains.” What on God’s great earth are you talking about, Harry? 14% is not a small gain, this was a very good year. Please do a little research if you’re going to write a blog and newsletter about investing.

    • Harry Newton says:
      December 31, 2014 at 6:45 PM

      In 2014, the S&P 500 rose 12.32%, not 14%. In 2013 it rose 25.89%.To me, 2014’s gain was smaller than that in 2013.

      • Smokey Leo says:
        December 31, 2014 at 7:13 PM

        The Vanguard S&P Index is up just under 14%., I think 13.8%. (Vanguard.com) Don’t go by what it says on the news, Harry, that S&P performance never includes dividends. You should know that by now. THe financial news is extraordinarily dumb, and can’t get anything right. If you were in the Vanguard S&P 500 fund all year you have a hare under 14% return. IN 2013 the Vanguard S&P 500 Index fund was up, I believe 29 or 30% total, including dividends.

      • Smokey Leo says:
        December 31, 2014 at 7:17 PM

        The Vanguard S&P 500 Index fund, according to Vanguard.com, rose 13.7 percent in 2014. That is NOT a small gain, Harry, it’s 5 percent above the historical norm. In 2013 the Vanguard S&P 500 index rose 29%, just a hair under 30%, including dividends. GET YOUR FACTS STRAIGHT.

  4. Cliff says:
    December 31, 2014 at 4:34 PM

    Harry, take what few profits you have and get as far away from this market as humanly possible. I have never seen a market so ripe for absolute destruction. What happened in 2008 is nothing compared to what we’re set up for. And remember, I’m a bull.

  5. KC Chuck says:
    December 31, 2014 at 12:51 PM

    Happy New Year to you and yours! I enjoy your dedication to trying to make all us a little wiser and kinder-Repubs too!!

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