In Search of the Perfect Investment

Yesterday I trumpeted “The new euphoria for stocks”  The Dow promptly fell 190 points  before closing the day down only 122 points.

So today I start with a quote from Vince Lombardi, “If you are not making mistakes, you are not trying hard enough.”

That, of course, is a feeble excuse for being less than brilliant.

No one can predict the market from one day to the next.

I do not see this market as generally undervalued. There’s not one stock the Dow Jones 30 that’s got a single digit PE.

The economy is recovering. The stockmarket has already.t

When in doubt, stay out. Cash remains King.

So who says you can’t open a new bank in a recession? First Commons Bank is one of 20  new banks which opened (or rebranded) their doors in 2009. It’s also one of the fastest-growing. It opened its doors in July 2009 with $18.3 million of equity it raised from individual shareholders. It now has assets of $63 million. The difference between the $63 and the $18.3 are deposits from customers, some of whom are customers and some of whom are shareholders.

I asked First Commons Bank’s boss, Tony Nuzzo, for the reasons more new banks hadn’t been formed. After all with all the big banks in trouble, forming a new bank is one of the greatest opportunities ever. He said there were three reasons for so few new banks: 1. Difficulty in raising capital. 2. The poor economic environment. 3. The new bank’s failure to define a competitive edge — i.e. why use the new bank instead of an existing bank?

Tony Nuzzo

What’s Nuzzo looking for? “More deposits and more loans.”

What sort of loans, I asked. He answered, “Business loans, business mortgages and residential mortgages. Commercial mortgages will cost you is approx 6% to 7%. Residential mortgages are about 5.25% to 5.75%.”

Says Tony, “We have money to lend. We can lend nationally. We prefer local markets — New England. We’re based in Newton, Mass, a suburb of Boston.”

As for deposits, he’s looking for CDs, money markets, checking and saving.

What’s the best deal today, I asked? The 1.5% breakable 13-month FDIC-insured CD.

What does “breakable” mean? It means no penalty for one-time withdrawal — full or part.

Best person to contact is Mark Jurilla 617-243-4422 or MGJurilla at FirstCommonsBank.com. The “at” is really an @. (It’s an easy way to keep him off spam lists.)

Full disclosure: I’m a shareholder in First Commons Bank.

Please borrow from, or deposit into the bank. Make me rich.

My friend is borrowing at 2 3/4%. It’s a home equity loan. He gets his incredible rate at 2 3/4% over fed funds rates, which is currently zero. He gets his rate because he has collateral and is “a good credit risk.” He says his rate is low. But the banks “are dying to lend money at 3% and 4%. Meantime my friend  used his money to buy stocks, but is now selling them to pay back his “margin borrowings.” He feels the market has become squirrelly and he’s talking about “selling discipline.” He means getting out when it falls 15% — our inviolate rule  and getting out when the stock “rolls over.”  He sees Google as having rolled over.

It’s broken its trend line. Its trading pattern has changed. It’s not bouncing back. The buyers “have stepped away.” I sold most of my Google yesterday.

AT&T sucks — Part 2: Reader Ronald Hettich writes:

Harry,
Your readers may be interested in AT&T’s Boston suburbs coverage.

I’m in love with PrimaLoft. When I was in Portland, Oregon over Thanksgiving, it was so miserably  cold I had to buy clothes. I choose two wonderful items:

The $125 Patagtonia MicroPuff vest. For more, here. And

the $149 North  Face Redpoint jacket. For more click here.

Both items are as light as a feather and insulated with a magic product called PrimaLoft. The product was developed for the Army who wanted an insulation fabric that was as warm as down, but stayed warm when wet — the critical condition. PrimaLoft does. I have tested my new thin jackets against my old puffy down jackets. The PrimaLoft delivers. It is as warm as down. A jacket made with PrimaLoft is much easier to handle — less bulky, much lighter, etc.  PrimaLoft is made by Albany International (AIN), which, for reasons I don’t understand, is losing money hand over fist. I suspect they make too many disparate things — including  big metal doors. (I don’t make this up.)

The Chinese government is nuts, and getting nuttier on censorship. But on economic growth, they’re doing just fine. Good for miners like BHP and Rio Tinto (RTP). First, from Bloomberg:

Jan. 21 (Bloomberg) — China’s growth accelerated to the fastest pace since 2007 in the fourth quarter, capping Premier Wen Jiabao’s success in shielding the nation from the global recession and adding pressure to rein in a surge in credit.

Gross domestic product rose 10.7 percent from a year before, more than the median forecast of 10.5 percent in a Bloomberg News survey, a statistics bureau report showed in Beijing today. Asset-price gains, particularly in property, are creating problems for the government to guide the economy, Ma Jiantang, who heads the bureau, told reporters after the release.

The government limits which web sites its citizens can get to, limits individuals securing a domain (like this one), and now this insanity:

China to Scan Text Messages to Spot `Unhealthy Content‘

By SHARON LaFRANIERE of the New York Times

BEIJING – As the Chinese government expands what it calls a campaign against pornography, cellular companies in Beijing and Shanghai have been told to suspend text services to cellphone users who are found to have sent messages with “illegal or unhealthy content,” state-run news media reported Tuesday.

China Mobile, one of the nation’s largest cellular providers, reported that text messages would automatically be scanned for “key words” provided by the police, according to China Daily, a state-controlled English-language newspaper. Messages will be deemed “unhealthy” if they violate undisclosed criteria established by the central government, the newspaper said.

The increased surveillance of text messages is the latest in a series of government efforts to severely tighten control of the Internet and other forms of communication.

Since late last year, China has closed hundreds of Web sites, including popular file-sharing sites, and limited its citizens’ ability to set up personal Web sites.

Citing cyberattacks originating from China, Google last week threatened to pull out of China unless the government lifted censorship of its search results.

“It really is quite a program to seize control of all the new forms of media, one by one,” said Jeremy Goldkorn, editor and publisher of Danwei.org, an English-language Web site about the Chinese media and Internet that is currently blocked in China. “It has been a bad half year for censorship.”

Chinese authorities say the new restrictions are necessary to root out pornography, piracy and other law-breaking activity on the Internet and in electronic communications. Some analysts suggest that ministries are competing to fulfill the government’s demands for stricter controls.

Although China has quietly monitored cellphone text messages for some time, Kan Kaili, a professor of telecommunications at Beijing University of Posts and Telecommunication, said the new measures appeared broader and more intrusive and punitive.

“They are doing wide-ranging checks, checking anything and everything, even if it is between a husband and wife,” he said. “I don’t think people will be very happy about this.”

He said the government had established no clear legal definition of unhealthy content. He also said commercial authorities like phone companies, even though government-owned, should not be involved in checking the contents of private messages. “This is totally wrong,” he said. “This violates citizens’ basic rights.”

In Beijing, some cellphone users were indignant about the reports. Sun Li, a businesswoman, said: “This is against the law. You can block Web sites for pornography or violence, but texts are from person to person. It has nothing to do with the public.

“If this is really so, I can’t text anyone anymore, or call anyone,” she said.

According to China Daily, the police will evaluate the text messages of users suspected of transmitting unhealthy content, and during that time, China Mobile will suspend the text-messaging function for those phone numbers. If the authorities clear a user of any violation, they will issue a certificate allowing text-messaging services to be resumed, the newspaper said.

A thought: If we had the censorship here in the U.S, would we have10% per year economic growth?

Favorite comment on new technology.

So wonderfully stupid.

A single guy decided life would be more fun if he had a pet. He goes to the pet store and tells the owner he wanted to buy an unusual pet.

After some discussion, he finally bought a talking centipede (a 100-legged bug), which came in a little

white box to use for his house.

He took the box back home, found a good spot for the box, and decided he would start off by taking his new pet to church with him.

So he asked the centipede in the box, “Would you like to go to church with me today? We will have a good time.”

But there was no answer from his new pet.

This bothered him a bit, but he waited a few minutes and then asked again, “How about going to church with me and joining in the fellowship?”

But again, there was no answer from his new friend and pet. So he waited a few minutes more, thinking about the situation.

The guy decided to invite the centipede one last time. This time he put his face up against the centipede’s house and shouted, “Hey, in there! Would you like to go to the church with me and learn about God?!”

This time, a little voice came out of the box,

“I heard you the first time! I’m putting on my shoes!”

Harry Newton, who’s been enjoying tennis from Australia more than watching the stockmarket.