In Search of the Perfect Investment

Cramer reiterated his Rules on Investing last night. They’re worth discussing (and amending):

1. Don’t ever buy on margin. That’s fair. You’ll get called at precisely the wrong time and lose everything. Borrowing to juice your return is nuts. The last boom-bust cycle was all about too much borrowing and too many people losing all their equity as prices declined.

2. Never place market orders. Always place limit orders. This rule applied in the old days when you placed orders through a broker and they took advantage of you — like front-running you. With instant electronic trading, you can happily place market orders. My market orders on Fidelity get filled in seconds. To be truthful, I will place limit orders when the stock is bouncing around and I think I may have a shot at picking it up at a good price. Sometimes this works. Sometimes it doesn’t, and the stock runs away.

3. Never own a stock you can’t explain  in three sentences. That also means — never own a stock your friend recommends without first checking it out. There are lots of reasons friends recommend stocks to you — few of which have to do with making you rich, or, God Forbid,  being right.

4. Dividends are good. Cramer has a statistic that says 40% of the S&P rewards for the last zillion years have come from dividends reinvested in the companies paying the dividends. I agree with him. There’s something charming about big dividend payers like NLY, ANH and AGNC.

5. Stay diversified. It’s the only free lunch. The list on the right is pretty diversified. We have technology, finance, gold, silver, and manufacturing.

6. Cramer has a rule that says you ought to spend an hour a week on each of the stocks you own. He’s probably right. But who’s got the time? The big issue is staying up to date on what your stocks are doing, and, most importantly, what the press and the blogs are saying about them. Fidelity’s Active Trader Pro lists the news through the day on each stock I own. My latest trick — actually let’s call it a work in progress — is to set Alerts on Google on my volatile, high-flying stocks. I’m presently being bombarded by Google. I’m hitting the Delete button. But I’m also seeing things I need to know — like the latest rumors on Apple:

The Japanese earthquake and tsunami will probably weigh on Apple Inc. (AAPL)’s forecasts for third-quarter profit, sales and gross margin because of higher component prices and disrupted manufacturing, analysts said.

At least seven analysts expect the disaster to affect the company’s outlook later today. Japan is a hub for several Apple components, including flash memory, batteries, touch-screen glass and resin used to attach chips. The company, which makes the iPhone, iPad and Macintosh computer, hasn’t yet discussed the effects of the 9-magnitude quake on March 11.

I’m largely out of Apple. I’m keen to pick some Apple stock up if it drops lower. Today’s the day. See below.

BIDU and SINA are the two hottest China stocks. They’ll crash to earth at one point. They’re way overvalued. Bidu’s P/E is nearly 100. Sina’s latest quarter was a loss. So it has no P/E.

When will they drop? Maybe my Google Alerts will tell me?

Apple FY 11 Second Quarter Results Conference Call today;

WHERE: Via conference call. The dial-in number for press is (888) 215-6982 (toll-free) or (913) 312-0672

WHEN: Wednesday, April 20, 2011, 2:00 p.m. PDT/5:00 p.m. EDT

REBROADCAST: The conference call will be available as a continuous rebroadcast beginning Wednesday, April 20 at 5:00 p.m. PDT/8:00 p.m. EDT through Wednesday, May 4 at 5:00 p.m. PDT/8:00 p.m. EDT. The dial-in number for the rebroadcast is (888) 203-1112 (toll-free) or (719) 457-0820. Please enter confirmation code 8218881.

WEBCAST: Apple will provide live audio streaming of its FY 11 Second Quarter Results Conference Call using QuickTime® multimedia software. The live webcast will begin at 2:00 p.m. PDT on April 20, 2011 at www.apple.com/quicktime/qtv/earningsq211 and will also be available for replay for approximately two weeks thereafter.

Want to buy several things online? Buy one. Wait for the delivery It will include discount coupon on next purchase. Use it to.

Confusing serious with solemn. When I left Australia in 1966 to come to Harvard, my boss there said I would love and hate the Americans.  I’d love them because, just like me, they substituted enthusiasm for intelligence. That was good. Rather than think too hard of why it can’t be done, the Americans  “Just do it.”

I’d hate them, he said,  because they confused solemnity with seriousness. They got too solemn. Worse, in recent years solemnity has been translated into PC.  You can’t poke fun at anyone. Personally, I prefer serious. I’m serious about my humor. I search for humor, for entertainment. Life is too short to tip toe on eggshells. (I suspect that’s why I have few friends. Too many think I’m rude, when I’m looking for fun.)

Take Donald Trump. Too many people are annoyed at what he says. That’s a downer. Better, I try to teach my friends, accept him as entertainment. On that, he’s truly wonderful. I was pleased to read this piece in Monday’s New York Times:

Why Trump Soars

By DAVID BROOKS

Very few people have the luxury of being freely obnoxious. Most people have to watch what they say for fear of offending their bosses and colleagues. Others resist saying anything that might make them unpopular.

But, in every society, there are a few rare souls who rise above subservience, insecurity and concern. Each morning they take their own abrasive urges out for parade. They are so impressed by their achievements, so often reminded of their own obvious rightness, that every stray thought and synaptic ripple comes bursting out of their mouth fortified by impregnable certitude. When they have achieved this status they have entered the realm of Upper Blowhardia.

These supremely accomplished blowhards offend some but also arouse intense loyalty in others. Their followers enjoy the brassiness of it all. They live vicariously through their hero’s assertiveness. They delight in hearing those obnoxious things that others are only permitted to think.

Thus, there has always been a fan base for the abrasive rich man. There has always been a market for books by people like George Steinbrenner, Ross Perot, Bill O’Reilly, Rush Limbaugh, Bobby Knight, Howard Stern and George Soros. There has always been a large clump of voters who believe that America could reverse its decline if only a straight-talking, obnoxious blowhard would take control.

And today, apparently, Donald Trump is that man. Trump, currently most famous for telling people that they are fired, has surged toward the top of the presidential primary polls. In one poll, he was in (remote) striking distance in a head-to-head against President Obama. Many people regard Trump as a joke and his popularity a disgrace. But he is actually riding a deep public fantasy: The hunger for the ultimate blowhard who can lead us through dark times.

He is riding something else: The strongest and most subversive ideology in America today. Donald Trump is the living, walking personification of the Gospel of Success.

It is obligatory these days in a polite society to have a complicated attitude toward success. If you attend a prestigious college or professional school, you are supposed to struggle tirelessly for success while denying that you have much interest in it. If you do achieve it, you are expected to shroud your wealth in locally grown produce, understated luxury cars and nubby fabrics.

Trump, on the other hand, is utterly oblivious to such conventions. When it comes to success, as in so many other things, he is the perpetual boy. He is the enthusiastic adventurer thrilled to have acquired a gleaming new bike, and doubly thrilled to be showing it off.

He labors under the belief — unacceptable in polite society — that two is better than one and that four is better than two. If he can afford a car, a flashy one is better than a boring one. In private jets, lavish is better than dull. In skyscrapers, brass is better than brick, and gold is better than brass.

This boyish enthusiasm for glory has propelled him to enormous accomplishment. He has literally changed the landscape of New York City, Chicago, Las Vegas and many places in between. He has survived a ruinous crash and come back stronger than ever.

Moreover, he shares this unambivalent attitude toward success with millions around the country. Though he cannot possibly need the money, he spends his days proselytizing the Gospel of Success through Trump University, his motivational speeches, his TV shows and relentlessly flowing books.

A child of wealth, he is more at home with the immigrants and the lower-middle-class strivers, who share his straightforward belief in the Gospel of Success, than he is among members of the haute bourgeoisie, who are above it. Like many swashbuckler capitalists, he is essentially anti-elitist.

Now, I don’t mean to say that Donald Trump is going to be president or get close. There is, for example, his hyper-hyperbolism and opportunism standing in the way.

In 2009, Trump published a book with a very Trumpian title: “Think Like a Champion.” In that book, he praised Obama’s “amazing” and “phenomenal” accomplishments. “Barack Obama proved that determination combined with opportunity and intelligence can make things happen — and in an exceptional way,” Trump gushed.

Now he spouts birther nonsense and calls Obama the worst president in American history. Now he leads rallies that make Michele Bachmann events look like the League of Women Voters. Even angry American voters want some level of seriousness, prudence and self-control.

But I do insist that Trump is no joke. He emerges from deep currents in our culture, and he is tapping into powerful sections of the national fantasy life. I would never vote for him, but I would never want to live in a country without people like him.

A wonderful billboard over Times Square.

Read the words. The ad is pushing a video game. Fatality lives. Good to have your camera around.

In January this year, 2011, the weather stayed so cold in St. Louis, Missouri and Alton, Illinois that the bald eagles were cruising over houses looking for a quick meal. They could not catch the  fish in the frozen river. Some kind souls decided to feed the eagles. They gathered fish and started feeding the group of eagles huddled on the shore. A retired teacher took this in front of his home.

Favorite recent New Yorker cartoons:

Harry Newton who wonders why he agreed to play tennis this morning at 7:00 AM. Claire and hubbie Ted are coming this weekend. We will celebrate Daddy’s healthy new diet — no salt, no sugar, no meat. What will I look forward to in my old age? More old age?

Guys, have a great day. Don’t worry about the U.S. ridiculous debt load. We’ll just print more of those green things.