In Search of the Perfect Investment

Is the market overpriced?

My friend Ed taught me The Rule of 20. Add inflation to the P/E of the S&P 500. If it’s under 20, the market is not overpriced.

The P/E is about 17.5. Inflation is under 2.

Bingo, we’re under 20. In good shape.

Stocks I’m eyeing include Costco, Caterpillar and Visa — largely as a little diversification away from my heavy tech focus.

What about overseas investors

Europe is weird. It takes two weeks to open a simple bank account. Europeans don’t seem to understand business. They’d prefer to tax successful ones like Amazon, Google and Facebook and over-regulate everyone and his business endeavor.

Hence, European investors are pouring money into U.S. stock markets.

But Chinese investors aren’t.

From today’s New York Times:

WASHINGTON – Growing distrust between the United States and China has slowed the once steady flow of Chinese cash into America, with Chinese investment plummeting by nearly 90 percent since President Trump took office.

The falloff, which is being felt broadly across the economy, stems from tougher regulatory scrutiny in the United States and a less hospitable climate toward Chinese investment, as well as Beijing’s tightened limits on foreign spending. It is affecting a range of industries including Silicon Valley start-ups, the Manhattan real estate market and state governments that spent years wooing Chinese investment, underscoring how the world’s two largest economies are beginning to decouple after years of increasing integration.

The Great Crypto Heist
by Nouriel Roubini, July 16

Cryptocurrencies have given rise to an entire new criminal industry, comprising unregulated offshore exchanges, paid propagandists, and an army of scammers looking to fleece retail investors. Yet, despite the overwhelming evidence of rampant fraud and abuse, financial regulators and law-enforcement agencies remain asleep at the wheel.

For his full piece, click here.

The following “ah-ha” are from my weekend reading.

Leaving Jehovah’s Witness
Exiting a Religion and Finding a Life

From a review of the book by that name:

Though religious fundamentalism has surged globally in recent decades, the anti-intellectualism of these authoritarian movements, their staunch refusal to cede ground to reason and empiricism, often confounds nonbelievers. How can people devote the totality of their lives to the unseen, the unevidenced? How can faith subsume thinking?

But reason is a poor weapon against the believer whose very religious identity springs from an embrace of the unreasonable. Many fundamentalists are conscious of the seeming absurdity of their position, but it is precisely the stridency of their faith, their ability to withstand the irrational, that confirms for them their exceptionalism and salvation. They reject modernity’s demystification project and instead construct meaning in the supernatural. Their faith becomes very thick armor indeed, one that even the sharpest Enlightenment rationalism won’t penetrate.

For the full review of this fascinating escape from the Jehovah’s Witnesses, click here.

Why is Trump’s racism so popular?

From the Economist:

His supporters are unified by nothing so much as antipathy to America’s growing diversity, and an attendant feeling that whites were losing ground. Both were expressed in hostility to immigration, immigrants and welfare spending (which many wrongly believed was being slurped up by migrants).

In their book “Identity Crisis“, John Sides, Michael Tesler and Lynn Vavreck describe the rationalisation such Trump supporters made as “racialised economics”. Only a small minority of voters hold old-style racist views on questions like black-white marriage, but a very large number believe that “undeserving groups are getting ahead while [my] group is left behind.” An earlier study by the Voter Study Group found hostility to immigrants to be the best predictor of a Trump voter. One by the Public Religion Research Institute found much the same. There has been no serious counter-argument. Mr Trump’s race card was the winning one.

For the full piece, click here. 

From the New York Times’s weekend piece on The Joy of Hatred:

If Trump has an unbreakable bond with his supporters, it’s because he gives them permission to express their sense of siege. His rhetoric frees them from the mores and norms that keep their grievance in check. His rallies — his political carnivals — provide an opportunity to affirm their feelings in a community of like-minded individuals.

“He gets us. He’s not a politician, and he’s got a backbone,” a woman who attended a recent “Women for Trump” kickoff event in Pennsylvania told The Philadelphia Inquirer. “He’s not afraid to say what he thinks. And what he says is what the rest of us are thinking.”

You can read the full article here:

Here’s where you should be this summer

Oregon, with lavender fields and Mount Hood. Total paradise.

The power of computers

Wonderful cartoons

You don’t need to see pictures of me. Here are two grandkids. Sophie is pushing Zoe.

Remember when you last felt genuine ecstasy from something as simple as a swing?

Life is wonderful. I survived two hours of tennis singles this morning. My final cross-court backhand was a joy to behold.