Three charts tell the story:
Everything has bounced back. But not to where it was. Yesterday was a good day. Not because the Dow went up bigtime. But because I received handsome cash dividends from NLY, AGNC , ANH, MTGE and MITT.
Talk to my friends and the two areas that get them most upset — gold and mortgage REITs. Both will come home to bite my ass, bury my portfolio and give me the worst headache ever. Yada. Yada. Yada.
Suffice: gold is faith. it goes up because the world is going to hell and a hand basket, which includes sovereign bond defaults, lousy banks and endless fiat paper money printing.
Mortgage REITs are faith. The mortgages they own will default — despite being issued by an agency of the Federal Government. The cheap money they borrow will no longer be available, despite Bernanke’s promises to keep interest rates low. Their margins will fall; their share prices will fall, but their yields will still stay high. Which means buy more when they dip. Sadly, they’ve bounced a bit come back. They’re not as cheap as they were.
As to the rest of the market (like the vast rest), here’s my “strategy.”
+ Pick a bunch of stocks you like. I like BHP, AMZN, THS and SWZ.
+ Put in orders to buy below where they’re selling, i.e. buy on dips.
+ When you make a little, sell them.
My logic is impeccable. I have no idea where this market is going. If I see some “trading profits,” I’ll take them. I’ll also protect myself on the downside by keeping my stop losses tight.
Not very brilliant. But better than a slap in the belly with a cold fish.
One prediction you can make with certainty. Years ago Steve Jobs said:
“Live each day as if it was your last, because one day you’ll be right.”
He was the classic entrepreneur. Pig-headed, convinced he was always right and obsessed. Said Steve:
“I’m convinced that about half of what separates the successful entrepreneurs from the nonsuccessful ones is pure perseverance.
It’s pretty much an 18-hour-day job, seven days a week for a while. Unless you have a lot of passion about this, you’re not going to survive. You’re going to give it up. So you’ve got to have an idea, or a problem or a wrong that you want to right that you’re passionate about, otherwise you’re not going to have the perseverance to stick it through.”
I was no Steve Jobs. But that’s how I worked when I ran my own business. Those days were the most exciting days of my life. Tennis is fun. Writing this column is fun. Investing can be fun. But nothing is more fun that running your own business.
Harry Newton who wonders about his own immortality. Friends are sick. Friends are dying. I believe you can shift the odds by eating right, exercising right, resting right, and stressing right. But when the Grim Reaper comes for you, you’re gone.
Hence, do something nice for your spouse and kids and grandkids today. I’m taking the kids and their spouses — all six of us — to Africa on safari in 2012. You can blow money on a vacation. But the fastest way to blow money is Africa, especially Botswana, which is a total jewel. I’m looking forward.
Have a great weekend. Stay away from things you can’t control. The stress is not worth it — at our age.
Neat 1995 75-minute video interview with Steve Jobs. Click here.
Instead of limit orders why not sell puts?
Disagree, a slap in the belly with a cold fish is better than your investing acumen and the advice offered here. Yes the world is going to hell in a hand basket, just like it has on a regular basis since shortly after the Pilgrims settled. We're a boom and bust nation, but the general direction, OVER TIME, has always been up. Warren Buffett says so. I say so. Harry Newton, whoever that is, sounds much more pessimistic.
But, I saw something even dumber than what's written here. Under an article posted on Yahoo Finance someone wrote (regarding the stock market) “What goes up, must come down” apparently not getting the memo about the Dow Jones being at 400 in the 1930s.
Harry,
You're absolutely right, there is nothing more fun than running your own business. Oh, the good ol' days. As a VAR that used to attend your CTI conferences (I still think the “flying pigs” were the coolest of your promotions even though I didn't win the Mazda Miata) I do miss the rush of dealing with the unexpected challenges on a daily basis and solving problems without a template because there was no one who dealt with these problems before.
Why is it that it becomes more difficult to have a second act? Is it fear, because all of a sudden, we now have something to lose (after cashing out) when we didn't have much to lose before, except a bruised ego? Or, is it because we think we know it all based on our first success? Regardless, as someone in my mid 40s, I have never seen a better time since the 80's to start a business and succeed. There are so many opportunities in just about every industry where service is really crappy and people act like they are doing you a favor by taking your money when they should be realizing that they wouldn't be there if it weren't for you and others who are their customers/clients. The icing on that cake is that most – not all – barriers to entry have been significantly reduced, if not eliminated!
Screw stocks! Set enough of your nest egg aside for your family and invest the rest in your own viable business. The less money you invest, the better you will feel when you succeed. Bootstrap, even if you can afford not to! That will put a nice price tag on your sweat! Trust me, there is no better financial reward.
When you say make a little and sell them, do you mean 3-5%, 10%…? Did you end up buying Goldman – I was eying that myself at 95 a couple of weeks ago and I didn't bite. Too late now?
Fullfilling is how I would like to describe running my own business. Sometimes it good, sometimes it bad. Being a orchardist the last 40 years has been a great experience. I'll do it until they drag me away. Thanks for your column it's the first thing I read at 6am here on the west coast.