In Search of the Perfect Investment

When in doubt, stay out. When in the slightest doubt, stay out. When it’s too hard, stay out.

This is the frustrating part of searching for “the perfect investment.”. You do all the work. You read and read. You finally find a great company with great products. You check the financials. They look unpromising, desultory. You listen to the conference call. Uninspiring.

Cash can burn a hole in your pocket. It hurts to know it’s earning nothing, even losing to inflation.

It’s a discipline. A friend who buys commercial real estate didn’t buy anything for three years. He thought everything was overpriced. The asking prices violated his inviolate rules of value. After the three years passed, and we had our 2008 downturn, he was able to pick up properties at half what they had been during the boom. The price you buy is the ONLY part of the equation you can control.

Cash makes agita. My friends call. They say: The stock has fallen so low, it’s got to be enticing.

Gold will pop back. Maybe it will. But who wants to catch a falling knife? Here’s gold over the past two years:

Some stocks are hard. Here’s Halliburton, a huge force in oil services. Is it ready to pop back, despite the fact that oil hasn’t?

I keep returning to the old adage: The ONLY part of an investment transaction we can affect is the price we paid.

Buy low, we’ve got leverage. Buy high. We’re gambling. The bank will take it away. .

You can become desperate with cash.

Valeant seems to reflect Wall Street desperation. Wall Street loves growth. So Valeant manufactured it big-time. It bought companies wily-nily, jacked up its drug prices, fired employees, cut expenses … and showed nice growth returns until the bubble burst — as they are are want to do. Look at this amazing chart from the Financial Times:

What intrigues me most about this story is that Valeant CEO and takeover deal architect  (an incredible 87 takeovers in the last few years) is that Wall Street — specifically Goldman Sachs – lent him $100 million, using his stock in Valeant as collateral.

When the stock cratered, Goldman called the loan (i.e. made a margin call) and sold his stock, causing the stock to fall further.

The full, fascinating story on Valeant is in yesterday’s Financial Times, “Pharmaceuticals: A harsh dose of reality.”

Read the story here. If that link doesn’t work (because the FT has a paywall), go in through a Google Search.

 One good reason to buy the new iPad Pro. The large one.

He’s a professional musician. On the left is the old, big iPad. On the right is the new, huge 12.9 inch  iPad Pro, which he loves. Great for tired old eyes, and for playing games.

Someone went to Costco, whose stock is actually doing great, though I’m not sure why.

 

The man who shot up the Planned Parenthood office in Colorado with an assault rifle. Amazing stuff:

CHARLESTON, S.C. – The man she had married professed to be deeply religious. But after more than seven years with Robert L. Dear Jr. (the shooter), Barbara Micheau had come to see life with him as a kind of hell on earth.

By January 1993, she had had enough. In a sworn affidavit as part of her divorce case, Ms. Micheau described Mr. Dear as a serial philanderer and a problem gambler, a man who kicked her, beat her head against the floor and fathered two children with other women while they were together. He found excuses for his transgressions, she said, in his idiosyncratic views on Christian eschatology and the nature of salvation.

“He claims to be a Christian and is extremely evangelistic, but does not follow the Bible in his actions,” Ms. Micheau said in the court document. “He says that as long as he believes he will be saved, he can do whatever he pleases. He is obsessed with the world coming to an end.”

He killed three people, including a policeman.

We let these people buy assault rifles!

Harry Newton, who finds getting things done is not difficult — if you finally do them. The Big Revelation! Real estate syndication material going out this morning, after tennis. I’m still in California, where they delayed golf this morning because of frost!