In Search of the Perfect Investment

You can’t beat a weekend in Maine, canoodling Casco Bay.

And eating delicious wild Maine blueberries, sold along every road by enterprising Maine entrepreneurs.

Five days ago I headlined “Why I keep buying tech stocks.” And then I went to Maine to be with the grandkids, Zoe and Sophie:

Now I’m back.

Buying overpriced tech stocks remains the only way to go.

Thinking of the old-standby muni bonds which pay tax-free income?

Think no more. Read today’s cover story  on Barron’s, “MUNICIPAL BONDS.  The Trillion-Dollar Budget Hole.” 

Here’s how that piece starts:

When it comes to city and state financial messes, Richard Ravitch has seen it all.

In 1975, he helped pull New York City from the brink of bankruptcy as the middle class fled to the suburbs. In 1980, he led the city’s transit authority through a strike so brutal that he needed a bulletproof vest. As lieutenant governor of New York state in 2009, he showed how to save its budget from the ravages of the global financial crisis and years of fiscal denial.

But none of that, he says, compares with the toll that Covid-19 is inflicting on municipal finance. This time is much worse.

“It’s worse because the revenue shortfall is uncertain and horrific,” says Ravitch, now a director of the Volcker Alliance, a nonprofit group that advises on effective government. “There’s an enormous loss of revenue going on, and we don’t know how long it will last.”

You can read the full depressing piece here.

Now back to tech stocks.

Joe Ross of the Ross Rant newsletter echoes my sentiments:

Optimism is starting to turn to euphoria in the stock market, especially for the tech sector. Several people have said to me “I can’t believe how much money I am making in the market”. While there is beginning to be some broadening out of the stocks being bought, it is still tech that is driving the averages to records. The Fed has made it clear it is maintaining near zero rates for at least another two year or possibly three, and that means there is almost no place to make substantial money other than stocks, and US stocks still remain the best place to be. It seems a lot of cash from individuals is now being invested, and the professional investors appear to be crowding into the big tech companies. The question is how long can this continue until something turns it around. Almost everyone thinks the end is coming, but few want to get off the money train. I am still on board. The answer is nobody knows, and the risk grows daily as these stocks continue to hit all time highs. However, as the virus declines, and as reopenings become more widespread, and business and employment pick up, it is likely that other sectors of the market will also see increased interest, if for no other reason than some investors want to spread their risk.

The important thing to understand about tech is that it’s not only driven by euphoria, it’s also driven by solid technology, software, telecom, business, marketing and customer gains. Take the six months since the real beginning of the pandemic. No other period in the history of technology has seen such gains in such a short period of time. Trust me. I’ve been watching technology since the FCC opened long distance to competition in August 1969. The previous August, they’d opened equipment to competition. The old AT&T (not the present one) used to dominate long distance, local and telecom equipment. Funnily, at the time, they declined to pursue cellular, believing what a bunch of dumb consultants told them was a very limited market.

Most exciting now is the recent explosion of new tech and cloud software companies — from Zoom Video on. In coming weeks, a bunch of new ones will come public. Now that I’m back at my desk, I’m trying to keep up and plan on reporting what I find. For now, I bet Amazon will split shortly. No one can afford to buy even 100 shares of it — $350,000 for 100. Wow!

Readers know how much I “love” Intel

A reader sent me a Seeking Alpha piece “Intel reminds me of Apple in 2016.” i.e. Apple was a good buy then. So Intel is now. Yes!

My favorite comment in the long bullish article:

Intel doesn’t have any significant catalysts ahead. This makes all those short-term noise investors sell the stock, which causes a price drop because if the stock will not go up, it will most likely go down.

For more such profundity, click here.

Tips:

+ Any subscription to anything, like DirecTV, Bloomberg, Motley Fool, YouTubeTV, or  Verizon FiOS will morph to auto-renew, which sneaks up on you and zaps your bank account (or credit card) for more than last year. My boring solution: An Excel spreadsheet with the email address and phone number for cancelling.

+ There’s no reason to subscribe to cable TV or DirecTV. Using Roku or Apple TV, YouTubeTV and Amazon Prime for HBO, you can happily take your TV watching to wherever you are — in the house or in the country. You are not limited by where you have an overpriced, un-moving cable or satellite box. I love watching tennis on my laptop in bed. It’s clearer than on a 65 inch TV on some remote wall.

+ Some of the online brokerage services like Fidelity lock up, mess up, get slow,  are illogical. They need rebooting.

I don’t know how long this covid will go on for.

But I do know what it means. I went to LLBean in Freeport, Maine to figure my latest misshape.

Turns out I’ve become wider and shorter. Which is summed up neatly here:

I need to do more work on Snowflake, which I’m attracted to. I’m not attracted to Palantir. It’s growing. Good. But losing more and more. Bad. For my taste it’s too reliant on winning government contracts. Which take too long to win.

Today I’m playing my 172nd day of tennis this covid quarantine. You’d think, by now, I’d be getting better.

If you have friends, who might be interested in my blog, please direct them to my web site, where they can also feast upon a list of our favorite stocks. Not just tech stocks. Looks like we’re moving into a housing boom. Good for HD, LOWE and my favorite (in that area) GNRC.

See you tomorrow. — Harry Newton

 

 

 

 

Click here.