In Search of the Perfect Investment

“Do only what you know.”

We were having dinner.  He’d been buying multi-family residential for 30 years. He told me he could drive into a apartment complex and know within 5% what the price was. It was an instinct born of those 30 years. He was able to smell the “gotchas.” Great skill. Stick with what you know.

Too many of use fantasize that the grass is greener on the other side. This is because:

+ The financial press loves fantastical returns.

+ There’s more willingness to pay up for fantasies. Interest rates are zip. Stocks are 20 P/E, i.e. fully priced.

+ There’s more (and less) information on the fantasies. There are more financial web sites. There ‘s more “stuff” around.

+ Everything is faster. No one can afford to mull, to research, to do due diligence. You’ll lose the “opportunity” to invest and become stinking rich.The deal is closing on Friday. There are a million people who want in. We’re holding a space for you, because you’re special. (Or whatever.)

 The reality is that much of the time there’s less useful information. I’m constantly aghast at how much “opportunity information” (I call it that) is presented to me via skimpy PowerPoints. They usually do a great job of telling me the hugeness of the potential. But little else — like the company’s business strategy, the risks or the company’s financials.

I’ve been mulling on why I’ve been saying “NO” so often lately.

In the early days just after I’d sold the business, I’d search for great opportunities. There were oodles of enthusiastic salespeople and I fell for them. In fact, I mostly convinced myself. I wanted it to happen. I wasn’t the only one who fell for BS story.

From the Economist:

Iraq’s grim lessons.

The official inquiry into the war delivers a scathing verdict on its planning, execution and aftermath

THERE has been no shortage of reports and inquiries into the Iraq war, which broke out in 2003. But after nearly seven years of toil, Sir John Chilcot and his fellow commissioners have published what future historians will regard as the definitive account of what happened and why. The lessons the Iraq Inquiry draws from 2.6 million words of painstakingly accumulated evidence have almost as much relevance to American policymakers as they do to their British counterparts. The picture it paints, for all the familiarity of its main elements, is a devastating one of individual and institutional failure. The verdict on Tony Blair, Britain’s prime minister at the time, is not that he is a liar and a war criminal (as many contend), but a man steered by a fatal combination of hubris, wishful thinking and moral fervour into an ultimately disastrous course of action.

The most damning of the inquiry’s conclusions is the overarching one that, based on Britain’s professed goal of disarming Saddam Hussein (it was never explicitly regime change), military action in March 2003 was not, as Mr Blair claimed, a last resort. The attempt to deal with Iraq’s putative weapons of mass destruction (WMD) without going to war was not yet over: the UN inspection team lead by Hans Blix was getting better co-operation from the Iraqis and was pleading for more time; there was no imminent threat from Saddam; there was strong UN Security Council backing for continued inspections. In short, the inquiry judges, although military intervention might have been required in the future, an adaptive strategy of containment had plenty of life left in it.

But Mr Blair was in thrall to the military timetable set by George W. Bush, and the promise the prime minister had made him in July the previous year to “be with you, whatever”. If Britain had decided on the eve of the invasion to withdraw its forces, the damage to the relationship with America would have been far greater than if Mr Blair had earlier exercised more caution in his commitment to the enterprise.

That lack of caution, combined with a disregard for process that bordered on the feckless, was a recurring theme in the run-up to the war. Mr Blair never had any doubts that the intelligence assessments of Iraq’s WMD and missile programmes were accurate. The belief that the Iraqi regime had chemical and biological weapons, was determined to preserve and enhance them, and had developed sophisticated methods of concealment was deeply ingrained. The intelligence was not fabricated, but nor was it questioned or challenged in the way it should have been, given how much was resting on it.

 Read the full article here.

I messed around with our tiny portfolio – see right hand column.

I removed Home Depot because it’s stalled. I took out LMT. What’s left is a small core portfolio, a bunch of ETFs and a handful of super-speculative holdings, which aren’t doing well — with the exception of SQ.

Airlines are the cheapest stocks.

Delta’s P/E is 5.99. American is 3.55. Southwest is 9.71. United is 2.86.

I haven’t been on an empty plane in eons.

Something must be going right with the economy.

UPS just announced a whopping 4.9%  price increase for 2017.

BloombergBusiness did a fascinating story on “Donald Trump the Mortgage Broker Was in Trouble from Start.” Click here.

Meanwhile I’ve lost track of how much Mr. Trump is paying himself in rent, golf course fees, buying his own books (click here) and his children.

My favorite headline: “Trump Took $7.7 Million From His Supporters’ Donations and Gave It to His Companies & Children.” Click here.

Apple has urgent software updates for the iPhone and the Mac.

Get all software updates. They’re critical.

Get them today, if not sooner.

“Check Engine” light is ultra-irritating.

The “Check Engine” light light up in all its majestic glory on both cars this week — our Subaru and our Mercedes.

If you read the car’s instruction manuals, you’ll find it’s the end of the world. But, clean your gas cap and screw it on tightly.

The light will eventually go away. Your life will be peaceful.

Another solution: Buy a new gas cap from Amazon.

Dropbox got hacked.

70 million customer passwords were stolen.

Dropbox stores your stuff in the “cloud.” If you have to use it to “collaborate” with your team, you’re stuck with it.

If you’re using it to keep backups of your work, I prefer this little $55 gadget:

No one can hack this flash drive, because it’s in your pocket. It holds 256 gigabytes — enough for 200 movies and zillions of photos. Buy it here.

The US Tennis Open is on ESPN. Andy Murray has a great two-handed backhand. I wish I could do a two-handed backhand.

Weekend reading:

A Kindle version is $14.38. Buy it here.

Senior Computer Skills…

Tech support: What kind of computer do you have?
Customer: A white one…
Tech: Click on the ‘my computer’ icon on the left of the screen.
Caller; Your left or my left?

Customer: Hi, good afternoon, this is Martha. I can’t print. Every time I try, it says ‘can’t find printer’. I’ve even lifted the printer and placed it in front of the monitor, but the computer still says it can’t find it..

Caller;My keyboard is not working anymore.
Tech: Are you sure it’s plugged into the computer?
Caller; No. I can’t get behind the computer.
Tech: Pick up your keyboard and walk 10 paces back.
Caller; OK
Tech: Did the keyboard come with you?
Caller; Yes
Tech:That means the keyboard is not plugged in.

Caller; I can’t get on the Internet.
Tech: Are you sure you used the right password?
Caller; Yes, I’m sure. I saw my colleague do it.
Tech support: Can you tell me what the password was?
Caller; Five asterisks.

Tech support: What anti-virus program do you use?
Caller: Netscape.
Tech: That’s not an anti-virus program.
Caller: Oh, sorry… Internet Explorer..

Tech: How may I help you?
Caller: I’m writing my first email.
Tech: OK, and what seems to be the problem?
Caller: I have the letter ‘a’ in the address, but how do I get the little circle around it?

A woman customer called the Canon help desk with a problem with her printer.
Tech:Are you running it under windows?
Caller: No, my desk is next to the door, but that is a good point. The man sitting in the cubicle next to me is under a window, and his printer is working fine.’

Tech: ‘Okay Bob, let’s press the control and escape keys at the same time. That brings up a task list in the middle of the screen. Now type the letter ‘P’ to bring up the Program Manager.’
Customer: I don’t have a P.
Tech support: On your keyboard, Bob.
Customer: What do you mean?
Tech:’P’…..on your keyboard, Bob.
Customer: I’M NOT GOING TO DO THAT.

Harry Newton, who’s been playing tennis every morning at 7:15 AM for 1 1/2 hours. I think I’m getting better. It’s exhausting, but exhilarating — especially if I win a point. Everyone has to exercise. Tennis is good because you exercise, without thinking it’s exercise. If you ever win a set or two, you’re “high” all day. Better then eking out a shekel or two on the market.