In Search of the Perfect Investment

Why is the stock market going up when the economy is clearly going down?

I’ve pondering this. Here are my simple reasons for being bullish:

The primary one is that there’s nowhere else to invest. Fixed interest — bonds, CDs, etc — pays nothing. When rates rise (as they will), you’ll lose your principal.

Overseas investing is a disaster. I spent much of the weekend reading disaster stories on  countries in Europe, to Brazil, China, Venezuela, Iran, India…. The list is long and boring.

What’s amazing (at least to me)  is the craziness of many of the regimes. It was only a few months ago, that Saudi Arabia invited rich investors to come to Saudi to to invest in their Vision 2030, which Wikipedia defined:

+ Saudi Vision 2030 is a strategic framework to reduce Saudi Arabia’s dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation, and tourism.

Now I read that

Saudi Arabia has plowed billions into US stocks including Boeing, Disney, and Facebook last quarter. The kingdom’s sovereign-wealth fund revealed almost $10 billion in US holdings, up from about $2.2 billion at the end of December.

My favorite mess is Venezuela which has the world’s largest proven oil reserves. In little more than a decade, it has  has gone from Latin America’s richest nation to its poorest. A true accomplishment.

Right behind Venezuela lies Brazil, run by a nut case. Here’s advice on investing in Brazil I found in my weekend reading:

“My investment advice would be not to run into a burning building,” Armando Castelar, an economist at the Gavekal Research consultancy wrote in a paper outlining Brazil’s challenges. “Right now, Brazil is best left to the specialists, crazies, long-term opportunists and those without other options.”

There are several more reasons for my bullishness.

Figure that everything we can gamble on has been closed by this nasty virus — from horse racing to sporting events, from casinos to you name it.

What’s left? Well, of course the stock market which now, fortuitously, has free trading. Think of that. No bookies, no brokers, no commissions. Gambling at its purest. Writes John Cassidy in his wonderful New Yorker, piece, Have the Record Number of Investors in the Stock Market Lost Their Minds? In his May 15 story story, he writes:

+ Since the Dow plunged more than ten thousand points in February and March, individual traders have been buying and selling stocks at record rates. On Thursday, E-Trade, the discount brokerage, reported that its daily trading volume in April was more than three times as large as it was in April, 2019. Other discount brokers have reported similar figures. TD Ameritrade said that it did more than three million trades a day in April, compared with eight hundred and seventeen thousand a year earlier.

This trading frenzy is taking place in the context of a price war that has prompted firms such as E-Trade, TD Ameritrade, and Charles Schwab to eliminate commissions for stock purchases and sales, exchange-traded funds, and index options. Since the shutdowns began, many investors have taken advantage of this era of free trades, which began last fall, well before the coronavirus pandemic hit, to exploit what they seem to view as a good money-making opportunity. In March alone, TD Ameritrade added more than four hundred thousand accounts, CNBC’s Maggie Fitzgerald reported earlier this week. Charles Schwab added nearly three hundred thousand accounts.

You can read Cassidy’s piece here.

And finally there’s Jerome Powell, Reserve Bank head. He was on 60 Minutes last night. I found him reassuring. He says there is “the risk of longer run damage to the economy.” He continued “The good news is that we have the tools to handle this crisis.” 

Powell said “We have the ability to borrow at low rates. We have the ability to repay the money.” Congress is putting together another aid package. The house passed three trillion. The Senate will cut it back.

He closed with Buffet-words, “In the long-term and in the medium there,, you wouldn’t want to bet against the American economy.”

And finally in the good news department: This is a crisis. In all crises, some segments get hurt and some thrive. Retailers are going broke. Australia’s second largest airline just went broke. Cruise lines are hanging in.

Stay at home stocks, like Zoom, Amazon, Netflix, etc. have done well. I was pleased to see that my small holding in Moderna bounced today on positive news for a covid-19 vaccine.

How quarantine leads to idiocy

+ Your urgent emails are going to your recipient’s spam folder. Always end your emails with “Please confirm receiving my email.” If you don’t get a confirm, call.

+ You’re mis-typing your email’s address. Then you keep re-sending to the wrong address. I’ve been there, done that.

Meet.Google.com is now free

Sign of the times

How to live to 100

The oldest living Maryland resident just died at 112.

From her obituary: Mrs. Kay attributed her longevity to her habit of drinking the juice of half a lemon each morning, mixed with hot water.

She stopped in 2007, she told The Baltimore Sun, because: “I lived to be 100, and I thought that was long enough.” She died at 112.

The wonderful American language

Funeral home companies are now called deathcare providers. The largest is SCI, which has done well until recently:

The moral of this story is that it’s better to be an investor than a client. You’d think they’d have more business today than ever.

See you  tomorrow, I hope. Harry Newton