In Search of the Perfect Investment

Yesterday I listed every conceivable “yuch” I could think of. Then the Chinese devalue. That was one I didn’t think of. And that crashed today’s market.

Markets don’t go straight up or straight down. Down markets have days like yesterday, which gapped open high and stayed high. Smelled like short covering.

Today, China devalued, which is what you do when you need to boost exports — your exports get cheaper. But with commodities dropping, this little devaluation brings up more talk of deflation — which everyone (except consumers) hate, because it makes to harder to pay loans down. A pricier dollar is not good for our exporters.

I sold a little Berkshire Hathaway. Its latest earnings are awful. And the market didn’t seem to like its huge $37.2 billion acquisition of Precise Castparts at a huge premium. The deal was announced yesterday. And its shares fell yesterday and they’re falling today. I don’t like selling Berkshire. But it’s seriously bad to be overbalanced in any one stock — like now, I’m still overbalanced in Apple, which shot up yesterday and shot down today.

If you didn’t read yesterday’s column — Wrestling With Selling All My Stocks — you should. It sort of says we’re in a pretty severe bear market. For yesterday, click here.

There are strategies — and I”m still wrestling.

+ Balance my portfolio. Ignore the summer and my gloom and doom from yesterday. Go play tennis.

+ Look for bargains. Is Disney a bargain at $109.70?

+ Play the option game. Sell some puts. Buy some LEAPs.

My major problem this morning is awful Internet access. Amtrak was slow. Verizon HotSpot is slow. My friend’s boardroom I just borrowed is painful. But I can’t complain. It’s free.

Is Cramer an expert or an entertainer? Joe Nocera took a swing at answering that question in an amusing article in a recent New York Times.

When Jon Stewart Took Down CNBC’s Jim Cramer

It began, you’ll perhaps recall, with the Santelli rant.

It was Feb. 19, 2009, and on CNBC’s “Squawk Box,” the discussion was about an Obama administration plan to help underwater homeowners. Becky Quick, one of the anchors, asked Rick Santelli, the network’s commodities reporter, who was at the Chicago Mercantile Exchange, for his reaction. Santelli responded with an angry diatribe, describing homeowners who couldn’t afford their mortgages as “losers.” Turning to the traders in the commodities pit, he asked loudly, “How many of you people want to pay for your neighbor’s mortgage?” The traders began booing. Santelli looked back at the camera. “President Obama, are you listening?” he shouted.

The Santelli rant caught Jon Stewart’s attention. He and his writers began paying closer attention to CNBC, and by early March they had prepared a show that was less about Santelli than about the inherent problem of producing a steady stream of “entertaining” business news, which was CNBC’s mission. Santelli had even agreed to be the guest.

Days before the show was scheduled to air, however, Santelli canceled. “The Daily Show’s” bookers quickly needed to find a replacement guest. They found, gulp, me.

In all the encomiums tossed at Stewart this week, as he ended his magnificent 16-year run at “The Daily Show,” almost everyone has made reference to “the Cramer takedown” – his famous 2009 interview with the CNBC personality Jim Cramer. Having played a small role in the show that led to the Cramer takedown, I got to thinking about Stewart’s approach to the financial crisis and its aftermath.

Stewart had no special Wall Street knowledge, as he was the first to admit. What he had was a nose for a scam, and an uncanny ability to articulate what the rest of us were feeling.

He mocked the way Wall Street firms paid ungodly sums to settle government charges without ever admitting guilt (a subject later championed, less humorously, by Federal Judge Jed Rakoff). He lampooned the way dubious deals – particularly the notorious Goldman Sachs Abacus deal – were legal, even as they oozed with sleaze. After J.P. Morgan’s big London Whale losses, he showed a Senate hearing where senators cravenly solicited regulatory advice from the company’s chief executive, Jamie Dimon – and then noted that J.P. Morgan was often their biggest campaign contributor. And so on.

I hadn’t realized that I was expected to talk about CNBC that night in early March of 2009; I had expected the topic to be A.I.G. But as I watched Stewart’s devastating dissection of CNBC in the green room, I knew what was coming. He had clips of Cramer on his “Mad Money” show encouraging viewers to buy stock in Bear Stearns just days before it collapsed. He showed Carl Quintanilla asking embarrassingly softball questions of Allen Stanford, who later went to prison for running a Ponzi scheme. (“Before we let you go, is it fun being a billionaire?”)

He questioned why the network, with all its savvy business reporters, hadn’t done a better job anticipating the financial crisis. His underlying question was whether CNBC was in the news business or the entertainment business. And if it was the latter, didn’t that mean that a lot of people were getting hurt by taking it seriously?

My role, it turned out, was to pile on. Which I did, even though I knew many CNBC personalities – especially Cramer, who was a friend. But I couldn’t disagree with Stewart’s analysis; indeed, I had long thought investors were better served shutting out the white noise that emanated from CNBC and other financial shows that offered stock tips.

Jon Stewart never really “broke” these stories of corruption – he picked them up from left news sources or dug up and added context to the…

Most people at CNBC knew better than to react publicly to Stewart’s spanking. But that wasn’t Cramer’s style. He complained loudly that he had been treated unfairly, and practically demanded to go on the show to defend himself and his network. Eight days later, he got his wish.

Watching Stewart’s takedown of him again the other day – complete with clips of an interview Cramer gave in which he talked about fooling the S.E.C. while he ran his hedge fund – made me cringe, just as it had at the time. Instead of defending himself, Cramer sheepishly agreed with most of Stewart’s criticism. And Stewart was unrelenting, essentially accusing Cramer and his network of being in bed with the people it covered. “He got at the intimacy between the network and its subjects,” said Jason Ross, one of “The Daily Show” writers, the other day.

“I’m a guy trying to do an entertaining show about business for people to watch,” Cramer finally said.

“So maybe we could remove the `financial expert’ and [the slogan] `In Cramer We Trust,'” replied Stewart. “And start getting back to fundamentals on the reporting.”

In all the criticism of the role of the press in the financial crisis, nobody has ever put it better. Nobody ever will.

7 surprising benefits of an afternoon nap, from TreeHugger.com. Napping is hugely important.

1. Provides a memory boost

2. Lowers blood pressure

A study published in the Journal of Applied Physiology found that the “siesta habit” is associated with a 37 percent reduction in coronary mortality, possibly because of reduced cardiovascular stress associated with daytime sleep. While they admit that they don’t know whether the benefit came from the nap itself, a reclined position, or merely just the expectation of a nap, they concluded that this decrease in blood pressure may be why lower coronary mortality has been found in those who take naps.

3. Calms your nerves

A University of Berkeley study found that a 90-minute nap can potentially keep you calm. When study participants were shown faces that expressed anger, fear and happiness at noon, and then again at 6:00 p.m. They found that the subjects were significantly more upset by angry and fearful faces later in the day; but not if they had a 90-minute lunchtime nap in which they experienced REM sleep.

4. Improves alertness

Well it’s not much of a surprise here, but nonetheless, the National Sleep Foundation reports that a NASA study on sleepy military pilots and astronauts found that a 40-minute nap improved performance by 34 percent and alertness 100 percent. While you may not be driving a rocket ship, the foundation recommends a quick nap before driving your car to reduce the risk of a drowsy driving car crash.

5. Enhances creativity

The mind loves a nap. Daytime sleep can, “enhance creative thinking, boost cognitive processing, improve memory recall and generally clear out the cobwebs,” James Maas and Rebecca Robbins, co-founders of Sleep for Success, wrote in The New York Times.

6. Boosts willpower

Things can be tough when you’re tired, especially when it comes to matters of willpower which is often highest in the morning when the brain is fresh. As Psychology Today reports, when you’re sleep deprived, your brain has an especially hard time ignoring distractions and controlling impulses. Their advice? “A mid-day “power nap” can reverse the usual willpower drain from morning to night,” adding that a nap can reduce stress, improve mood, and restore focus.

7. It’s better than coffee

Researchers have found that while longer naps may cause grogginess, they also get in some good REM sleep which is where complex learning and perceptual skills are benefited. In one experiment, sleep scientist Sara Mednick and her team directly compared caffeine intake (200mg) with napping (60-90 minutes) and placebo on three distinct memory processes: declarative verbal memory, procedural motor skills, and perceptual learning. Overall, the nap improved performance across all three different learning areas, while caffeine impaired (or at least did not benefit) performance.
If you can’t nap

Although the benefits of naps are many, not everyone has an easy time of falling asleep in the middle of the day. For those, even just quiet rest or meditation can do wonders. Simple breathing exercises – like breathing slowly and counting your breaths or inhale for a count of three and exhale to a count of six, repeat – can help slow down your brain and can potentially be restorative.

And if you come across resistance from Type-A friends, family or colleagues, repeat the wise words of Tony Schwartz: “In a world of rising demand, rest should no longer be demonized, but celebrated for its intimate connection to sustainable high performance.” And on that note … it’s time for a nap. Zzz.

Harry Newton, who has no idea who Tony Schwarz is. I’ve got to get this column out. My sleepy Internet connection is giving me agita. See you tomorrow.