In Search of the Perfect Investment

Over the weekend , I received financial results from ancient funds I’d invested in before 2008. Most results were miserable and painful.

Everyone who reads this column knows how much I hate funds — of all ilk — venture funds, startup up funds, distressed equity funds, etc.

I dislike them for several reasons:

+ The world changes. We have a new economic cycle. Funds often never recover from downturns, like 2008. Want proof? I have plenty.

+ You can’t sell them. Well, you can. But there’s no public market. There are only vultures who’ll offer you less than half what you paid.

+ Management leaves or retires. The greedy, incompetent children are now in charge. Never assume the child has the talent or politeness of his father.

+ The investor (i.e. you and I) get the increasing feeling that the management is only keeping the fund open for the management fees. “it’s not the right time to sell.” I’ve heard that nonsense a million times.

+ The new management starts to get dishonest, taking fees from even the companies it owns in the fund. Want proof?

Listed securities can go down. But you can sell them, take your losses and move on with your life. You can’tdo that with funds. They can become festering sores, when the quarterly reorts make you sick. But sometimes the stockmarket goes up and we think we’re geniuses. Like today. Thank God, we own listed securities.

How high will Amazon go? Who knows? A recent report showed these these days more people are going to Amazon for product searches than to Google. Think about. More going to Amazon to find their favored product than going to Google!

A simple explanation of trade wars

I don’t see Trump’s metals trade war bringing down the world economy. I believe world leaders are aware of the huge benefits of open and free trade. Protecting aluminium and steel in the U.S. could cost us ten times as many jobs as it will protect. A new study shows those numbers.

In a trade war, the local makers win. But the consumers lose. But some makers also lose. I think of a Whirlpool now forced to buy more expensive steel and aluminum while competing against overseas makers like LG, Samsung, etc.

Here’s a nice piece on the history of tariffs and why they’ve come down and down in recent years. Click here. 

From an investing point of view: I would not try to trade this by picking winners and losers. This is moving too fast to predict the on-again, off-again inanities of Washington. Read the piece above.

What brings down the world economy?

From a recent Economist:

Financial crises tend to involve one or more of these three ingredients: excessive borrowing, concentrated bets and a mismatch between assets and liabilities. The crisis of 2008 was so serious because it involved all three-big bets on structured products linked to the housing market, and bank-balance sheets that were both overstretched and dependent on short-term funding. The Asian crisis of the late 1990s was the result of companies borrowing too much in dollars when their revenues were in local currency. The dotcom bubble had less serious consequences than either of these because the concentrated bets were in equities; debt did not play a significant part.

Scott Pruitt is making our air dirtier

He has hugely strong ties to the coal industry. It’s his legacy the we’re passing on to our children. Click here.

Eventually we all get gum disease

This is ghoulish. Food gets between your teeth, gets into your gums, starts decaying. Then it’s then all downhill.

Brushing and flossing isn’t enough. You need implements of destruction (especially if you have joined implants):

Amazon sells these things. But your local pharmacy has a bigger assortment. I wish I had discovered these things 30 years ago.

Someone just spent $59.06 million on the penthouse

It’s three stories and is in downtown New York, on West 24th and Tenth Avenue, not exactly the most fashionable area.

This is hysterical

Colorado legalized marijuana. Now it’s a major illegal exporter, giving Mexico and others a run for their money. Let’s hear it for “free” trade.

Legal issues

A police officer pulled over a lawyer who had failed to come to a complete stop at a stop sign. The lawyer argued his case that the spirit of the law was simply that the manoeuvre be safe and since he hadn’t caused an accident his actions complied with the law.

The officer disagreed and informed the lawyer he would issue him a ticket.

“I will accept that ticket if you can explain the legal difference between stopping and slowing down to a crawl, officer.”

“Sure,” said the officer, “please step out of the car.”

The lawyer stepped out of his car and the officer withdrew his baton and hit the lawyer repeatedly with it.

“Now,” said the officer, “Do you want me to stop or just slow down.”

Fauda shines

My friends are raving about Fauda, the foreign-language Israeli-Palestinian conflict drama.

A talented lady performer

My friend’s wife and his mother each spent $450 for a ticket to Taylor Swift this weekend in Chicago. That’s more expensive than most Broadway shows. She’s packing stadiums all over the country.  The mother and daughter said Taylor Swift’s show was even better they imagined…and they had really high hopes to begin with!

Harry Newton

The following piece is very critical of President Trump. It’s among the better analyses of the man I’ve ever read. It’s written by John Brennan who served as director of the Central Intelligence Agency from March 2013 to January 2017. It was published in The Washington Post, June 1, 2018

I will speak out until integrity returns to the White House

My first visit to the Oval Office came in October 1990, when I was a 35-year-old CIA officer. Iraqi President Saddam Hussein had invaded Kuwait two months before, and President George H.W. Bush wanted to discuss the implications of a U.S.-led military coalition that would ultimately push the Iraqis out.

I remember the nervousness I felt when I entered that room and met a president of the United States for the first time. By the time the meeting ended, his intellectual curiosity, wisdom, affability and intense interest in finding the best policy course to protect and promote U.S. interests were abundantly evident.

Over the next quarter-century, I returned to the Oval Office several hundred times during the administrations of Presidents Bill Clinton, George W. Bush and Barack Obama. The jitters that accompanied my first Oval Office visit dissipated over time, but the respect, awe and admiration I held for the office of the presidency and the incumbents never waned. The presidents I directly served were not perfect, and I didn’t agree with all of their policy choices. But I never doubted that each treated their solemn responsibility to lead our nation with anything less than the seriousness, intellectual rigor and principles that it deserved. Many times, I heard them dismiss the political concerns of their advisers, saying, “I don’t care about my politics, it’s the right thing to do.”

The esteem with which I held the presidency was dealt a serious blow when Donald Trump took office. Almost immediately, I began to see a startling aberration from the remarkable, though human, presidents I had served. Mr. Trump’s lifelong preoccupation with aggrandizing himself seemed to intensify in office, and he quickly leveraged his 1600 Pennsylvania Ave. address and his Twitter handle to burnish his brand and misrepresent reality.

Presidents throughout the years have differed in their approaches to policy, based on political platforms, ideologies and individual beliefs. Mr. Trump, however, has shown highly abnormal behavior by lying routinely to the American people without compunction, intentionally fueling divisions in our country and actively working to degrade the imperfect but critical institutions that serve us.

Although appalling, those actions shouldn’t be surprising. As was the case throughout his business and entertainment careers, Mr. Trump charts his every move according to a calculus of how it will personally help or hurt him. His strategy is to undercut real, potential and perceived opponents; his focus is to win at all costs, irrespective of truth, ethics, decency and – many would argue – the law. His disparagement of institutions is designed to short-circuit legitimate law enforcement investigations, intelligence assessments and media challenges that threaten his interests. His fear of the special counsel’s work is especially palpable, as is his growing interest in destroying its mandate.

For more than three decades, I observed and analyzed the traits and tactics of corrupt, incompetent and narcissistic foreign officials who did whatever they thought was necessary to retain power. Exploiting the fears and concerns of their citizenry, these demagogues routinely relied on lies, deceit and suppression of political opposition to cast themselves as populist heroes and to mask self-serving priorities. By gaining control of intelligence and security services, stifling the independence of the judiciary and discrediting a free press, these authoritarian rulers followed a time-tested recipe for how to inhibit democracy’s development, retard individual freedoms and liberties, and reserve the spoils of corrupt governance for themselves and their ilk. It never dawned on me that we could face such a development in the United States.

On the international front, Mr. Trump pursues policies that are rooted in uninformed campaign promises, a determination to upend actions of his predecessors and an aversion to multilateral engagements. His ad hoc and frequently impulsive approach to national security is short-sighted and dangerous, as allies and partners are left uncertain about U.S. strategy and objectives.

The impact of the Trump presidency will be felt for many years to come. Most worrisome is that his use of falsehoods, his mean-spirited and malicious behavior, and his self-absorption will be emulated by many young Americans – indeed, young people globally – who look to the president of the United States as a role model.

The damage also will be felt by the millions of Americans who believe in Mr. Trump because of their concern about being left behind in a rapidly changing globalized world. These Americans have a legitimate gripe that politicians and political parties of all stripes have failed to deliver on the promise that America is the land of opportunity for all, irrespective of race, creed or place of residence. At a time when deep-seated fears of socioeconomic and cultural change need to be addressed honestly and without prejudice, Mr. Trump grandstands like a snake-oil salesman, squandering his formidable charisma and communication skills in favor of ego, selfishness and false promises.

Many have condemned my public criticism of Mr. Trump, arguing that as a former CIA director, I should bite my tongue. My criticisms, however, are not political; I have never been and will never be a partisan. I speak out for the simple reason that Mr. Trump is failing to live up to the standards that we should all expect of a president.

As someone who had the rare privilege of directly serving four presidents, I will continue to speak out loudly and critically until integrity, decency, wisdom – and maybe even some humility – return to the White House.