March 1, 2014
Comment on Model Portfolio activity
During the week we added Chico Fas to accounts, traded First
Solar for a $3 one day gain, took a loss on GM common since we had replaced our
exposure with GM B warrants, sold Citrix and Abercrombie for nice gains and
added to our Urban Outfitters position.
We expect market to continue to move higher into May and are
February 21, 2014
Comment on Model Portfolio activity
Facebook acquiring WhatsApp for $19 billion was the big news
of the week. This time around the metric is users. Back in the dotcom era of
the late 1990s the metric was page views. History doesn’t repeat itself but is
During the week we purchased Whole Foods, repurchased KB homes,
and added to GE and Urban Outfitters.
This year the S&P dropped 6% reversed to flat and is
meandering trying to decide what to do. Our crystal ball suggests a grind
higher into May.
Four years ago, Brian Acton was looking for a job.
His job at Yahoo, where he’d filled many engineering roles over 11
years, had come to an end.
He was networking with recruiters:
He met with Twitter. Twitter said no:
He met with Facebook. Facebook said no:
So he and Jan Koum, a colleague from Yahoo, set out to do their
that thing to Facebook for 19 billion dollars.
Life is crazy.
should be bought following recent pullback, says Jefferies
recommends investors buy shares of Verizon following the recent sell-off. The
firm attributes the recent weakness in part to technical pressures into the
Vodafone/Verizon Wireless transaction and says negative sentiment on the name
is overdone. Jefferies believes Verizon's business update on Monday could serve
as a near-term catalyst and keeps a Buy rating on the stock with a $55 price
Valentine Day February 14, 2014
Comment on Model Portfolio activity
rallied this week. We sold Aéropostale at a hurting loss and invested the money
by adding to American Eagle. AEO’s Chairman just bought
500,000 shares and we are worried that Aéropostale may become another Talbots.
Our other issues are doing fine so we are taking our loss and moving on and
improving quality with the switch. We added Urban Outfitters and repurchased
Cisco when both dropped on disappointing results. We still have plenty of cash
and are content to take position in value stocks that disappoint with the
thought that most will recover at least enough to make the risk worthwhile.
Saut on markets and investing:
43 years in this business, I have seen a number of cycles and developed a
long-term perspective, much like Richard Russell wrote about in "Rich Man,
Poor Man." I like this story:
the investment world wealthy investors have one major advantage over the little
guy, the stock market amateur and the neophyte speculator. The advantage
wealthy investors possess is they don't need the markets. I can't begin to tell
you what a huge difference that makes, both in one's mental attitude and in the
actual handling of one's account. The wealthy investor doesn't need the market
because he already has all the income he needs. He has money coming in via
bonds, T-bills, money market funds, real estate, and stocks. In other words,
the wealthy investor never feels pressured to "make money" in the
wealthy investor tends to be an expert on values. When bonds are cheap and bond
yields are irresistibly high, he buys bonds. When stocks are on the bargain
table and stock yields are attractive, he buys stocks. When real estate is a
great value, he buys real estate. When great art or fine jewelry is on the
"giveaway table," he buys them. In other words, the wealthy investor
puts his money where the values are. And if there are no outstanding values,
the wealthy investor waits. He can afford to wait. He has money coming in
daily, weekly, monthly. In other words, he doesn't need the market. He knows
what he is looking for, and he doesn't mind waiting weeks, months, or years
(they call it patience).
about the little guy? This fellow always feels pressured to "make
money," to "force the market to do something for him." When this
fellow isn't buying stocks at 3% yields, he's off to Vegas or Atlantic City
trying to win at craps or he's spending ten bucks a week on lottery tickets or
he's "investing" in some crackpot real estate scheme with an outfit
that his bowling buddy told him about. And because the little guy is forcing
the market to do something for him, he's a consistent and constant loser. The
little guy doesn't understand values so he always overpays. He loves to gamble,
so he always has the odds against him. He doesn't understand compounding and he
doesn't understand money. He's the typical American and he's perpetually in
little guy is in hock and he's always sweating -- sweating to make payments on
his house, his refrigerator, his car, or his lawnmower. He's impatient, and he
constantly feels pressured. He tells himself he has to make money fast. And he
dreams of "big bucks." In the end the little guy wastes his money on
the market, he loses his money on gambling, and he dribbles it away on
senseless schemes. In brief, this "money nerd" spends his life
running up the down escalator. Now here's the ironic part of it. If, from the beginning,
the little guy had adopted a strict policy of never spending more than his
income, if he had taken that extra income and compounded it in safe,
income-producing securities, in due time he'd have money coming in daily,
weekly, and monthly â€“ just like the rich guy. Then in due time he'd start
acting and thinking like the rich guy. In short, the little guy would become a
financial winner instead of a loser.
more than 50 years of writing "Dow Theory Letters," Richard Russell
says the most popular piece he's ever published is the above essay. In this day
and age of constant advertisements, infomercials, junk mail, cold callers
haranguing all about how to make a killing in the stock market, real estate,
commodities, and so forth, it's refreshing to read some advice from an honest
old pro that makes sense. Moreover, almost every magazine you see tells you
what mutual fund you should buy, how to invest to retire, how you can make it big in whatever. Indeed, I
would bet that those writers, advisors, and testimonial seers who concoct those
pieces make more money selling their "pitch" than following their own
advice. Putting that pitch on paper or through the TV, radio, or phone is a lot
easier than actually putting up their own money. I know many stock brokers, advisors, writers, etc. who never invest themselves. Yet
they make their money telling others how to do it. A case in point is a story
in a widely read financial magazine. It chronicles a now successful promoter
who earlier on tried the get-rich-quick schemes, which didn't work for him. So
that led him to "why not trade commodities and get rich," which again
did not work for him; and then later, "why not write a book about how to
trade commodities and get rich." To make a long story short, he made mucho
moola selling the book!
February 7, 2014
Comment on Model Portfolio activity
Markets have been in correction mode for a few weeks now and
may have more to go. We have added Verizon, Abercrombie, and GM B warrants this
week and will continue to add to other positions as the markets move lower.
Markets dipped then rose then dipped on the Friday
Employment report and our guess is that there is more to go on the downside.
The DJIA was off 10% at its lowest this week with the S&P 500 down 6%. How
low they will go is the $64,000 questions for those old enough to remember the
Financial Fox guarding the hen house
JPMorgan’s Blythe Masters to Join Swaps Regulator
By Hugh Son and Silla
Brush Feb 6, 2014 11:00 PM CT
Blythe Masters, head of JPMorgan (JPM) Chase & Co.’s commodities division, joined an
advisory committee of the U.S. Commodity Futures Trading Commission.
Masters, 44, is a member of the CFTC’s Global Markets
Advisory Committee, the Washington-based regulator of futures and swaps
said on its website. She was invited by acting Chairman Mark Wetjen to
sit on the panel and is scheduled to participate in a CFTC meeting on Feb. 12 to discuss cross-border guidance on rules,
a person with knowledge of the matter said. …
The CFTC has been enacting rules required by the 2010
Dodd-Frank Act designed to reduce risk and increase transparency in the global
swaps market, after some firms’ bets on the derivatives helped fuel the 2008
credit crisis. The agency put in place more than 60 rules seeking to have most
swaps guaranteed at central clearinghouses, which accept collateral from buyers
and sellers, and traded on execution facilities or other exchanges. …
The global markets committee is made up of industry
executives and includes representatives from firms including Goldman Sachs
Group Inc., Citigroup Inc. (C) , Morgan Stanley and Bloomberg LP, the parent company
of Bloomberg News.
Masters joined JPMorgan in 1991 after internships at
the firm and became known that decade for helping develop credit-default swaps,
which help investors hedge risks on bonds. She was named to run the commodities
business in late 2006, and she also heads regulatory affairs within JPMorgan’s
corporate and investment bank.
JPMorgan agreed in July to pay $410 million to settle
Federal Energy Regulatory Commission claims the New York-based firm manipulated power
markets. The settlement released the company and its employees from any future
enforcement actions by the agency. Masters, whose division includes the unit
involved in that case, wasn’t named as a defendant.
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