In Search of the Perfect Investment

This is the Dow this year:

This is the S&P this year — similar.

They show stocks are down this year. I’m up. For four reasons:

1. Gold.

2. Mortgage REITs, like NLY and AGNC and their high cash dividends.

3. Tight stops. I kicked out of non-diividend, or small dividend industrials, like Caterpillar when they started falling.

4. Avoiding financials, though I should have shorted all of them.

Now that stocks are cheaper, it’s time to re-consider them. Of all the reading I did on my trip, one research report stood out — US Equity Strategy FLASH from J.P.Morgan. It contained one chart which caught my eye:

It showed that of all the times the market has fallen by 9.5% or more in 10 days, the following months were always up. Here’s what J.P.Morgan wrote about the chart:

You can read the entire J.P.Morgan report, click here.

Now I’m back, I’ll look at some fallen favorites — Apple, Google, Caterpillar,  etc. Maybe there’s a bounce there? I know that things aren’t brilliant. 70% of companies providing guidance have recently been to downside. Gotta be careful.

Australia is still paying over 6% on bank CDs. The good news is the Aussie dollar has fallen from its high of $1.10 a few weeks ago to its present $1.03. It’s cheaper to stick some money there. You get more Aussie dollars. Australia is triple-AAA rated, like the U.S. used to be.

It’s the Economy, Dummkopf! Michael Lewis strikes again:

With Greece and Ireland in economic shreds, while Portugal, Spain, and perhaps even Italy head south, only one nation can save Europe from financial Armageddon: a highly reluctant Germany. The ironies—like the fact that bankers from Düsseldorf were the ultimate patsies in Wall Street’s con game—pile up quickly as Michael Lewis investigates German attitudes toward money, excrement, and the country’s Nazi past, all of which help explain its peculiar new status.

The article begins:

By the time I arrived in Hamburg the fate of the financial universe seemed to turn on which way the German people jumped. Moody’s was set to downgrade the Portuguese government’s debt to junk-bond status, and Standard & Poor’s had hinted darkly that Italy might be next. Ireland was about to be downgraded to junk status, too, and there was a very real possibility that the newly elected Spanish government might seize the moment to announce that the old Spanish government had miscalculated, and owed foreigners a lot more money than they previously imagined. Then there was Greece. Of the 126 countries with rated debt, Greece now ranked 126th: the Greeks were officially regarded as the least likely people on the planet to repay their debts. As the Germans were not only the biggest creditor of the various deadbeat European nations but their only serious hope for future funding, it was left to Germans to act as moral arbiter, to decide which financial behaviors would be tolerated and which would not. As a senior official at the Bundesbank put it to me, “If we say ‘no,’ it’s ‘no.’ Nothing happens without Germany. This is where the losses come to live.” Just a year ago, when German public figures called Greeks cheaters, and German magazines ran headlines like why don’t you sell your islands, you bankrupt greeks?, ordinary Greeks took it as an outrageous insult. In June of this year the Greek government started selling islands or at any rate created a fire-sale list of a thousand properties—golf courses, beaches, airports, farmlands, roads—that they hoped to sell, to help repay their debts. It was safe to say that the idea for doing this had not come from the Greeks.

Michael Lewis’ “It’s the Economy, Dummkopf!” article is in Vanity Fair. Read it. It’s great.

Latest travel tips: Just went back and forth New York to Perth — about the farthest you can go. Coming back was 31 hours. Yuch. “Airplane travel is nature’s way of making you look like your passport photo.” –  allegedly said by Al Gore, who invented the Internet. Tips from the trip:

+ Pack light. They actually have laundries overseas. Most hotels even have sinks. Take Travelon laundry soap, from Amazon.

+ American Express Platinum is amazing. Lots of benefits. Biggest is two-for-on in business class.

+ Never fill your suitcase. You’ll need the space on the way back. Dirty clothes use more room.

+ Don’t check luggage. Business class is remarkably permissive. You can carry on 25″ bags. I love Eagle Creek.

It’s available from — surprise, surprise — Amazon.

+ Never buy anything at an airport. Here’s a sampling of what I found “duty-free” in the Hong Kong airport: A hardcover Tom Clancy novel for $41. A Swatch watch for $65 which sells in New York for $35. A partly gold Baume & Mercier quartz watch for $3,000 that sells in New york for $1,000. A $180 Ferragamo tie that even sells for a little less in Bergdorf Goodman in New York.

+ Assume delays. On-time flights are rare. Try to avoid being booked on the last flight of the night. Or, if you are, arrive in time for the second last. If yours is late, you can still be switched.

+ Take showers. This is the ceiling shower head in the Cathay Pacific business lounge in Hong Kong.

It’s pretty impressive. So is the shower room. You can also buy showers in many airports. Take a change of clean clothes.

+ Excerise. Do something on plane. Run around the airport. Do jumping jacks in the terminal. Whatever it takes. You have to move. You have to drink water.

+ Nothing cures jet lag. Maybe sun. Maybe melatonin. Only cure is to get on the local time asap.

+ Flightstats.com tracks flights. Useful for figuring where you inbound aircraft is — the one that will be taking you.

+ Go only for flat seats. In business class, there are “flat seats” and there are recliners. You don’t want recliners for long trips. SeatGuru is often out of date, but still useful. Sometimes the airline you’re flying actually knows what it’s flying.

+ Take your own pillow. Pillows everywhere are plastic. I love the Duxiana.

To get one, call (214)739-8133.

+ Pack a shoehorn,  a small flashlight and an unlocked GSM phone. Pre-paid calling SIM cards overseas are cheap. Using US phones is not.

+ Airline miles still work. You get them by putting BIG purchases on your credit card. Many vendors will take them for business expenses (inlcuding cpaital items)  and still give you a discount for paying quickly.  When trying to cash in, don’t tolerate a stupid agent. hang up and call back. You may get an intelligent one.

+ Test everything before you leave. We took two GSM phones for Australia. One didn’t work. My laptop battery died. Fortunatley, I had a spare along.

+ Unsuscribe before you leave. WiFi is ubiquitous overseas. But not always fast. Which means you don’t want junk email. tell your friends to lay off the 10 meg videos of their kids doing stupid tricks.

Harry Newton who’s written a great report on his trip to Australia. I’ll have it up on Monday. I need to edit the photos. Have a great weekend.