On Monday, I bought Toyota. The stock had been hurt by its pedal problems. It had fallen from $92 in January to $79. I figured it had been overhurt.
I picked up a grand 200 shares at $79.50. On cue, Toyota skyrocketed to $80.60. I was a certified genius.
But then the bad publicity ramped up. The stock rolled over. And I sold out at $79.83. For all that effort, I made the grand profit of $54.33.
Of course, I could not have held on — i.e. not panicked. And now I’d be staring at a loss. Toyota closed last night at $78.19.
Of course, it could have been even worse, here’s a chart from the last time I wrote about Toyota.
Fortunately, I’m not a “buy and hold” kind of guy.
I draw my inspiration from something called Stein’s Law, named for named for Herbert Stein, chairman of the Council of Economic Advisers under Presidents Richard M. Nixon and Gerald R. Ford.
Stein’s Law says that If a trend cannot continue, it will stop.
I think that ranks right up with Todd’s first law, “If in doubt, get (or stay) out.”
But, wait, I have another idea. Brazil’s government bonds are presently paying over a little over 11%. That’s a lot more than U.S. government bonds are paying. Do I hear “nothing?”
Should I buy some Brazil bonds? The country is booming. It’s had more positive publicity than Toyota has had bad publicity.
Good idea? Bad idea.
The last time I played this game, I stuck a chunk of money into a time deposit into an ultra-solid bank in Australia, called Westpac. It was paying 8%. And I was a genius. Six months later the Australian dollar which had been on a tear fell from 96 cents U.S. to 55 cents U.S. And my interest rate dropped to around 4%. I now looked like (and felt like) a total moron.
There is a slightly happy ending. The Australian dollar has rallied. It’s now around 89 cents U.S. And my interest rate is 6%. When you do the maths, I’ve earned 1.40% on my Australian brilliance. By the way, that’s not per year. That’s total.
The good news I could have invested the Australian money in over-priced, leveraged commercial real estate and lost everything. Wait, I did that too.
1.40% over several years looks pretty good. I’ve still got my principal.
That’s the point these days — don’t be stampeded into risky, high-yield investments just because our insane government insists on screwing people who save money for their old age (or in my case, my present age).
God bless cell phones. As I left the bedroom this morning, the door handle fell off.
I took it away, figuring I’d fix it later.
Five minutes later, my phone rings, “I’m locked in the bedroom.”
I returned with the handle and let Susan out.
She said, “These handles are a piece of shit.”
So goes our morning.
The stupidest story. Travelers lose more than 12,000 laptops per week in U.S. airports. Laptops are lost, in order, LAX, Miami, JFK, Ord, Newark, and La Guardia. Only 33% of laptops lost and found in airports are reclaimed. The other 67% remain in the airport until they are disposed of. Major reasons fo the loss: feeling rushed, carrying too many items and worrying about flight delays.
There are some “solutions.” These came in a press release last night.
+ Label your laptop. Provide your full contact information so that if the device is found, airport personnel will be able to reach you or your company quickly.
+ Allow enough time. Airline travel is a hassle that only gets worse when you don’t allow enough time. Stupid mistakes can be avoided if you slow down your pace.
+ Carry less and think ahead. Have a mental strategy when removing laptops and other possessions prior to screening at a security checkpoint.
+ Take appropriate security measures to protect your information. Consider the use of encryption technologies and always backup your system.
+ Think twice about the information you carry on your laptop. Is it really necessary to have so much information accessible on your computer?
My life is on my laptop. On one trip, some else picked up my laptop. It was like his. I grabbed it back. He didn’t apologize.
Forecasts:
+ Nouriel Roubini, the New York University professor who anticipated the financial crisis, said the U.S. growth outlook remains “very dismal.”
+ White House economic adviser Lawrence Summers said the economy is still mired in a “human recession.”
+ Mohamed A. El-Erian, whose firm runs the world’s biggest mutual fund, wrote a couple of days ago that the largest stock market decline in 11 months may worsen amid persistent U.S. joblessness and economic growth that trails analysts’ forecasts. Investors have wrongly priced in an “orderly” withdrawal of stimulus measures, a rebound in bank lending and coordinated government policy to restore growth, the chief executive officer of Pacific Investment Management Co. wrote in a Bloomberg News column. That means Wall Street projections for gains in 2010 may prove incorrect and prices will slump, he said.
“Investors may well find that January’s global equity sell-off was just a precursor to a disappointing year for several asset classes,” El-Erian, 51, wrote. “The global financial crisis has undermined growth and job creation; it has clogged many of the pipes that allocate funds to productive uses; and it has rapidly taken public debt and the budget deficit to worrisome levels.”
The benchmark index for U.S. equities traded for more than 24 times annual income at the end of 2009, the most since 2002, according to data compiled by Bloomberg. The ratio slipped to 19 times profits as 77 percent of S&P 500 companies earned more in the fourth quarter than analysts predicted.
“Judging from market valuations, I sense quite a gap between consensus market expectations and key political and economic realities, especially in the U.S.,” he wrote.
My Jewish mother:
Q: Define “genius.”
A: An average student with a Jewish mother.
Q: If Tarzan and Jane were Jewish, what would Cheetah be?
A: A fur coat.
Jewish proverb: “A Jewish wife will forgive and forget, but she’ll never forget what she forgave.”
One of life’s mysteries is how a 2 Ib. box of chocolates can make a Jewish woman gain 5 lbs.
Another of life’s mysteries is when a Jewish woman hangs something in her wardrobe for a while and it shrinks two sizes.
The trouble with some Jewish women is that they get all excited about nothing; then they marry him.
Harry Newton, who now believes his tennis abilities are improving faster than his investment abilities.
Stop Press: Someone’s hacked into my Facebook — again. I have not been mugged. I am not being held hostage in London, or wherever. I don’t need you to send my kidnappers money. If you want to send money, send it directly to me. But I don’t need your money this morning. I made all that profit on Toyota.
Harry,
Re Toyota, what happened to your cockroach theory?
Well, I was thinking about getting back in after reading todday's post out I stay.Better to have it and stalled then out and losing.
Be careful of emerging markets, especially Brazil. When the US dollar starts to strengthen the carry trade will be unwound. Most emerging markets will be clobbered, since they will fall much faster then when they rose.