In Search of the Perfect Investment

One money manager got completely stopped out yesterday.

I didn’t sell anything yesterday.  I don’t believe it’s intelligent to sell into a mass panic, which we had yesterday.

But I do believe:

1. The markets are breaking down. this chart shows that vividly.

2. We are having a 5% to 7% pullback.

3. This is not the time to own shares you feel uncomfortable with.

4. This is the time to watch for fallen angels — stocks you want to own that have suddenly become cheap.

5. This is time to play awful stocks to the downside. See AOL below.

The iPad2 goes on sale at 5 PM today at our local Apple store. I’m hoping there will be heavy demand. Apple’s stock has flagged recently:

This is not the time to buy Apple, yet. It will probably fall more. Look at the selling pressure since mid-January. It feels like a bunch of institutions are grabbing their gains.

David Pogue, technology editor of the New York Times, did a wonderfully loving piece on the iPad2 yesterday. Read it here.

Richard Russell likes a fund called the Permanent Portfolio, PRPFX. This is what it does:

The investment seeks to preserve and increase the purchasing power value of its shares over the long term. The fund invests a fixed target percentage of net assets in the following investment categories: gold, silver, Swiss franc assets such as Swiss franc denominated deposits and bonds of the federal government of Switzerland, stocks of U.S. and foreign real estate and natural resource companies, aggressive growth stocks and dollar assets such as U.S. Treasury securities and short-term corporate bonds.

This is what it looks like:

I did a bigger piece on PRPFX on February 10. Click here.

AOL keeps doing dumb things and its stock keeps falling. AOL has become the classic Cockroach Stock. Remember about Cockroaches? You see one. You kill it. Three days later its brother appears. You kill it. But they just keep on coming. It’s your little disaster. AOL’s biggest cockroach was buying the Huffington Post for $315 million. The latest cockroach from AOL is a memo which Tim Armstrong, their new, misguided CEO wrote to his hapless employees  (most of whom are progressively being fired).  It began:

AOLers –

Today is the next critical step on the comeback trail for AOL. We are creating a next generation hyper-local, national and global media company, and every action we’ve taken since AOL became an independent company has taken us further down that path. Our strategy remains clear: create high quality content experiences for consumers, at scale. As the digital landscape quickly evolves, so must our business, and we must continue to transform our organizational structure to one that works for today’s Internet.

Today, we are announcing an organizational structure that will significantly improve AOL’s ability to focus on growth. The structure will also impact areas of our team — making the decision to reduce staff levels is a necessary part of rebalancing our workforce to be competitive in our industry. Affected employees will be notified today and AOL will offer assistance programs — including workspace, counseling, and technology. We ask all of our employees to help impacted employees find career opportunities within our industry.

Read  the entire Tim Armstrong nonsense here. Here’s what Mr. Armstrong has wrought:

God’s Seven Days.

God was missing for six days. On the seventh day, Michael, the archangel, found him – resting. He inquired, “Where have you been?”

God smiled deeply and proudly pointed downwards through the clouds. “Look, Michael. Look what I have made.”

Archangel Michael looked puzzled, and said, “What is it?”

“It’s a planet” replied God, “I’ve put life on it. I’m going to call it Earth, and it’s going to be a place to test Balance.”

“Balance?” inquired Michael, “I’m confused.”

God explained, pointing to different parts of Earth. “For example,” he said, ”Northern Europe will be a place of great opportunity and wealth, while Southern Europe is going to be poor. Over here I’ve placed a continent of white people, and over there is a continent of black people. Balance in all things.”

God continued pointing to different countries. “This one will be extremely hot, while this one will be very cold and covered in ice.”

The Archangel, impressed by God’s work, then pointed to a land area and asked, “What’s that one?”

“That’s Virginia, the most glorious place on earth. There are beautiful mountains, ocean, rivers and streams, lakes, forests, hills and plains. The people from Virginia are going to be handsome, modest, intelligent and humorous, and they are going to travel the world. They will be sociable, hardworking, high achieving, carriers of peace and producers of good things.”

Michael gasped in wonder and admiration but then asked, “But what about balance, God? You said there would be balance.”

God smiled, “Right next to Virginia I’m putting Washington, DC. Wait till you see the idiots I put there.”

The Mezuzah

Opening his front door, the Rabbi found himself face to face with the local priest. “Rabbi, may I have a few words with you?” asked the priest.

“Of course, Father,” replied the Rabbi somewhat nervously.

“Rabbi,” began the priest, “It must be evident to you that in this town we are plagued by thieves. Scarcely a day passes without one of my flock coming to me bemoaning the fact that his house has been broken into.. On the other hand, I have noticed that thieves do not bother you Jews nearly as much.”

“Father, you are correct.”

“Yes, but why is that?” inquired the priest.

“Look at this little box here on the side of my door post,” said the Rabbi. “It’s called a mezuzah. We Jews believe that when we put a mezuzah on the entrances to our houses, the Holy One, may His Name be blessed, protects both us and our property.”

“In that case”, replied the priest, “I must have one!”

Not wishing to be the cause of an incipient pogrom, the Rabbi reluctantly handed over a mezuzah to the priest.

Some two weeks later the Rabbi was awakened by the sound of someone pounding violently on his door. Dressing himself hastily, he made his way down the stairs. “Who’s there?” the Rabbi asked tremulously.

“Open the door! Open the door!” screamed a voice on the other side. Leaving the door on the chain, the Rabbi racked the door wide enough to see the priest standing in front of him, his eyes wild with great distraught.

“What happened?” asked the terrified Rabbi. “Were you not protected from robbers?”

“I was! But these people were worse than robbers!” screamed the priest.

“Who?” asked the rabbi.

“Fundraisers!!”

Harry Newton who thanks Dr. Kirk Ryskamp, endodontist  of Rancho Mirage, California for the sterling, professional work he did on my mouth this week. It’s nice to find real people with genuine pride in their work. Thank you.

There is no more beautiful place to spend the month of March than the CoachellaValley.

A view of the flowers, the tennis court, the golf course and the mountains yesterday. No clouds, as usual:

Photograph, courtesy my iPhone 4.