In Search of the Perfect Investment

Here’s what I know this morning:

+ Local contractors are booming and would be booming more — if they could find workers.

+ The Trade War of Escalating Tariffs continues to baffle — but hasn’t thrown the economy into recession, yet. Business is doing fine.

+ Unpredictable is a President who seems to believe he can manage the global economy as his day-to-day whims dictate. Something like he managed his private businesses — knowing, if the business failed, he could always put  it into Chapter 11 and move onto something else. Not exactly the way you can run the world economy, where things are a little more complex.

+ Stockmarkets will react to the daily theatrics of what we all see and hear on BubbleVision and  read from the enemy of the people — namely the press. (Whoops. That includes me.)

My tech investments have been taking it on the chin in recent days. here’s NASDAQ last week:

I don’t like this volatility. But my day trading friends are in ecstasy. Buy on the dips. Sell on the upticks. Make 25 cents a share. Maybe 50 cents if they guessed right. And they often do.

I’m hanging in. I remain optimistic and diversified. And 15% in cash.

Some of my real estate syndications are doing brilliantly. The syndicators are selling those that have reached a valuation they didn’t think they’d reach in years. I suspect this is because there too much money around, treasurys are still not paying much (despite rising Fed rates) and investment opportunities are in short supply which makes their valuation  sky high.

The good news is that I  have stayed away from bitcoin and blockchain. This morning a friend asked my  thoughts. I emailed back

I pray you’re not getting involved in any of this. In simple terms, there are two pieces to this:

1. Blockchain. A new, safer way of keeping track of assets and transactions. Multiple databases versus today’s single database. The technology is young, immature, open to hacking and hence to fraud. Not especially reliable, yet.

2. Cryptocurrencies. Like bitcoin. Designed for crooks, money launderers, and speculators. That’s not you or me.

We should stick with what we know. This isn’t what we know.

The most over-hyped stock in the world

The stock is Amazon. Goldman Sachs has weighed in, saying AMZN will hit $2,000 in the next 12 months. Here’s Goldman’s report. Click Amazon Goldman Sachs.

Here’s Amazon this year:

Amazon is my biggest position. If I ever stop buying stuff from them that I don’t need, I’ll sell my Amazon stock.

Useful Stuff

+ Apple Macs are far better (and far more reliable) laptops than Windows machines. If I were starting from scratch, I’d go 100% with Apple.

+ Cable companies and cell phone companies are ALL over-charging you. Call your providers. Tell them you’re paying too much. Figure a 20% reduction is minimum. Seek unlimited calling and unlimited data.

+ The sun is not your friend.  I hear too many stories about skin cancer. Stay out of the sun. Lather up. See your dermatologist. Get stuff removed.

+ FlexSeal repair glues and repair tapes really work. Much better than duct tape or even Gorilla Tape. FlexSeal stuff is not easy to remove. It’s seriously permanent. They advertise the stuff on CNBC. But most hardware stores now carry it also.

Mired in North-East Depression

My friends are depressed by their visceral dislike of Trump. To provide a different perspective (at least for me), I read the Ross Rant. This weekend’s Rant included:

+ For all the drama and angst, the S&P ended the quarter up, and up 1.67% for the YTD. If you think about all that occurred that the press and talking heads said would tank the markets, it did not happen. For all the constant stories in the media that Trump is the most unpopular president ever, his approval is higher than Obama at the same point, and almost at 50%. My point is one I often raise- be careful what you believe, and rarely believe the mainstream media or pundits forecasting this or that disaster, or financial downdraft. A lot of talking heads just do that to get on TV, or because it is their job to pontificate, and they hope if they are right about one big thing, it will enhance their career and earnings. Wall St is filled with one trick ponies. However, the US economy is as good as it has been for decades, or maybe as good as ever, and will stay that way for the rest of the year, and maybe still be good into next year despite tariffs, etc.

+ Now with the recent decisions of the Court and the Kennedy replacement, reporters and talking heads in the media make it sound as though America is about to end democracy, gays are going back in the closet, and life as we knew it is ended. The left and many in the media have literally lost their minds. If you listen to CNN, NBC, ABC or read some of the papers, you will think you need to leave the planet. Unfortunately this is going to lead to violence from the nuts who believe this crap. The secret service must be working overtime to try to protect the cabinet and Trump. This is the result of what has been the norm on campuses for several years, and the false left wing reporting in much of the media that stirs this frenzy. Now it is dangerous.

+ Oil has risen a lot the past week or so due mainly to Iran sanctions. Just wait. The whole premise of the Saudi inspired production increase was because many countries could not afford oil at these levels with the dollar so high, and the high prices were sparking unrest in some countries. It is my contention that the Saudis and Russia, combined with the US, will start to pump much more oil very quickly to alleviate this critical issue. The Saudis have just agreed to add 2 million barrels a day, well beyond what they agreed to with OPEC, and it would not be surprising if they add even more if they can pump more. If I were an oil trader, I am not, I would short oil at this level. Oil prices will decline from here. Also keep in mind, the US cost to produce is still far lower (depending on the producer and location of the well it is somewhere in the range of $40) than the WTI prices, so as prices rise, so will US production and exports. The producers can, and will, pay up for workers, and new pipelines will be rushed to completion. Luckily, Trump is not Obama, and the government will do whatever it can to help increase US production, pipelines and export. It just takes time to get online. The world simply cannot bear the higher prices with the high US dollar. Prices will decline

+ The trade battle will heat up to fever pitch in July. We will see who blinks. It will not be Trump. The entire EU political system and ability to remain a unified bloc is on the line over refugees according to Merkel’s latest comments. She actually said that. She is very stable and careful, so this was not an idle Trump type throwaway line. The next week or so will determine if Merkel stays, and if the EU starts to disintegrate into warring factions. The EU is sinking further into trouble politically and economically, and quickly. US tariffs will not be bearable for them right now, especially on German autos. I am sure the Trump administration knows exactly where the pressure points are, and German cars is huge. While Merkel is trying to save her government, Trump is threatening to crush her main industry. Germany cannot withstand the pressure which will come. Mexico and NAFTA will have to wait for the new president of Mexico to sit with Trump and cut a deal. Canada can announce whatever tariffs or trade restrictions it wishes, but they lose in the end. Meantime, the US GDP number may be over 4% and rising. Unemployment may be headed to 3.6% during the summer. Or lower. It might hit an all-time historic low this year.

+ Tax reform and deregulation are working exactly as predicted by Cohn and Trump, or better. GDP growth is maybe over 4% in Q2, and unemployment is near an all-time low. Tax revenue is far surpassing CBO forecasts. If GDP growth stays over 4%, the deficit flat lines or reduces. If that happens before November, the Dems are cooked. Every reason they gave for voting no on taxes will have proven to be lies, and their platform is to raise taxes. CBO projections are again way off base. Only 40% of tax savings by companies goes to higher dividends and buybacks. The rest is going to higher wages, benefits and capital expenditure. Most importantly, it is being spent, which gives a huge boost to the economy no matter where it goes. The one real issue is China, and how that progresses. China’s economy is starting to hurt now, and there are no major tariffs in place yet other than metals. China just released over $100 billion of funds to the banks to keep them solvent. China has real problems right now. A trade war will really hurt them. I have a feeling Xi is pushing Kim to slow walk denuke so he can try to use N Korea as a bargaining chip on trade and IP. I don’t think Trump will fall for that.

I don’t endorse every word of The Ross Rant. I simply read it to get a different perspective. To subscribe to the Ross Rant, click here.

Thoughts for the week

+ Maybe oxygen is slowly killing us? It just takes 75-100 years to fully work.

+ Intentionally losing a game of rock, paper, and scissors is just as hard as trying to win.

+ Many animals probably need glasses, but nobody knows it.

The pastor’s wife

A pastor’s wife was expecting a baby, so he stood before the congregation and asked for a raise.

After much discussion, they passed a rule that whenever the pastor’s family expanded; so would his paycheck.

After 6 children, this started to get expensive and the congregation decided to hold another meeting to discuss the pastor’s expanding salary.

A great deal of yelling and inner bickering ensued, as to how much the pastor’s additional children were costing the church, and how much more it could potentially cost.

After listening to them for about an hour, the pastor rose from his chair and spoke, “Children are a gift from God, and we will take as many gifts as He gives us.”

Silence fell over the congregation.

In the back pew, a little old lady struggled to stand, and finally said in her frail voice, “Rain is also a gift from God, but when we get too much of it, we wear rubbers.”

The entire congregation said, “Amen.”

Harry Newton, who spent his weekend with granddaughter Sophie in a local pond:

This is how beautiful the scene looked before The  Big White Blob (i.e. me) got into the water.

How can I not be optimistic? I am preparing for Grandparents Day at school, then Sophie’s many graduations, then her marriage, then my great grandchildren, then their marriages and my great, great grandchildren. I’ll be 132 when all this happens. But by then, my down-the-line backhand should finally work.