Skip to content

Up 25 basis points. Don’t invest in banks. Here’s why. A cheap spec: Allbirds. You never know.

The Fed will up a quarter point today. That’s 25 basis points.

It won’t be the end of the world — but simply an acknowledgement that inflation continues, and is above where the Feds would like it.

There are two reasons for bank panics — fear and ignorance.

Fear: Bank depositors — like you and me — suddenly fear that the money we have in the bank is no longer there and we won’t be able to pay our rent, pay our employees’ salaries, or — God forbid — have to go on a lobster-free diet.

Ignorance: None of us know how bad things really are at the banks — including our esteemed regulators — so we (and the financial press) imagine the worst. (It sells more newspapers.)

So we panic and try to get out from a unsafe bank (like the one in Silicon Valley) to a safe one, e.g. JPMorgan.

Here are things I understand about banks, also called reasons not to invest in banks:

+ Banks are the most leveraged animals in the world. Which means a small hiccup turns into a major throw-up.

There’s a short piece on bank leverage in the Financial Times:

Why I never invest in bank shares
Silicon Valley Bank and Credit Suisse collapses prove my point

For the FT article, click here.

+ There are 4,236 banks or so in the U.S. Some focus on farms. Some focus on houses. Some like downturn office buildings. Some like tech startups. And some…well, who knows. Certainly there ‘s no way anybody (or bodies) in Washington can figure which banks are “safe” and which aren’t. It’s been profitable lately to pick on a bank, broadcast scurrilous rumors about its safety and short the bank’s shares, e.g.

Washington is now making all deposits in banks whole (not just $250,000) and letting bank shares crash. There’s no need to panic any longer. Which has proven nice for stocks (outside banking) in the last few days:

While my main monies have been in treasuries lately, I have kept some in stocks I mentioned yesterday: Nvidia, Apple, AMD, Meta, Google and Tesla. All overpriced, but all going up. Go figure.

Allbirds is an interesting spec

They make nice, popular shoes. But they are horribly mismanaged:

They have $167 million in cash at the end of Q1. So they’re not going broke. Strikes me a hedge fund should swoop in, fix management, cut expenses and get the stock up. It’s a good bet. People like their shoes. They sold $298 million of them in 2022 which is better than a slap in the belly with a cold fish. I’m going to buy a few BIRD shares today.

This is their $105 Tree Runner. Nice looking comfy shoe:

They promote it thus:

+ Lightweight, breathable eucalyptus fiber provides next-level comfort

+ Cushioned midsole gives wear-all-day support

+ Machine-washable materials keep shoes looking like new

Useful, Important Stuff

+ Medical mistakes are a big cause of deaths. A reader claimed they’re the third biggest cause of deaths. I checked Dr. Google and couldn’t find anything. But I was wrongly diagnosed. I could have died. My reader writes, “13 years ago local docs in Honolulu didn’t diagnose my cancer for 6 months till I went to Houston for sinus surgery and they found it. Stage 3 by then. Could’ve killed me. The team at MD Anderson got me through it. Happened again 2 years ago but caught quickly and they took care of it again. Tough getting old. None of us will get out alive!”

+ A lot of friends still got covid. They have shunned paxlovid because of its reputation of giving “covid rebound.” I took it, tested negative, then tested positive for four days, then negative and have been negative ever since. Strikes me, if you’re old, better to take paxlovid.

+ Duracell Child Secure CR2032 batteries DO NOT WORK in those wonderfully useful Apple Airtags. They have a coating that upsets the battery’s conductivity. All other batteries from other makers work.

+ Everyone is getting cataract surgery and loving the results.  “I can see so much better now.” They all regret waiting. Cataracts rank right up there with implants and concierge doctoring. Don’t wait until you’re so old there’s nothing worth looking at any longer.

+ If you have to beg, borrow, bribe and steal to get fast Internet service — at least 500 megs — do it. Not as good as cataracts and implants but right up there.

+ Marketing. It’s what makes us great. Items; All the nurses at my Fresno hospital wore Apple watches. I asked them why? One looked quizzical, thought a bit and answered, “It tells the time.” And that it does. I could have kissed her.

The local radio was pushing girl scout cookies. The ad proudly announced that its cookies were “baked by actual girl scouts.” I wouldn’t expect anything less.

+ If you have a pain in your right hand upper quadrant, it’s your gallbladder telling you “Get me outta here before I make your life really difficult.” How difficult? I’ve been warned off the tennis court for another month because my gallbladder was so inflamed  that my brilliant Fresno surgeon Dr. Kelvin Higa had to make a bigger than normal hole in my tummy to get the thing out. Despite all the publicity that my gallbladder has received, it has not been made into an NFT.

According to Google, “NFT means non-fungible tokens (NFTs), which are generally created using the same type of programming used for cryptocurrencies. In simple terms these cryptographic assets are based on blockchain technology. They cannot be exchanged or traded equivalently like other cryptographic assets. Like Bitcoin or Ethereum.”

Several friends have been creating colorful “art” and selling it as digital NFTs. I’m told they’re making a handsome living. I have a rule to only envy people who make gobs of money selling stuff I don’t understand.

Meantime the price of bitcoin is up 70% YTD to over $28,000 — making it probably the strongest performer this year. Go figure.

And me? I just bought some more short-term treasuries, which will give me close to 5% for the year. Bitcoin is doing 14 times as well as I’m doing. And I study this stuff. I bet bitcoin doubles this year — without me.

Why I love Instagram

I follow animals, mountains, seascapes, beautiful cities, and crazies doing insane athletic tricks. I love elephants, especially baby ones.

Instagram is super for recovering from a gallbladder operation. I also see a lot of ads for things I don’t want. But yesterday I relented and bought an $18 wallet. Big spender me.

The Bottom Line

I’m in California’s Coachella Valley for the next few days. For a city boy like me, it’s incredible to visit shops and eye the amazing variety and amount of stuff on sale, and selling. It’s not easy to find a parking space. It makes me want to shout Buffett’s words , “Don’t ever bet against America.”

View from our Airbnb. There’s snow on the higher mountains:

Here’s a visitor — a roadrunner — we met on our walk yesterday afternoon:

The market has turned up. My energy is returning.

Life is good. I hope yours is, too. — Harry Newton