Risk/Reward Vol. 79
TO: 2 recipients
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THIS IS NOT INVESTMENT ADVICE. THIS IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN
"Luck is what happens when preparation meets opportunity."--Seneca (100 AD)
"Whoa, Nelly!"---Pat Brady
"If I had known what I was unleashing, I'd have become a watchmaker."---Albert Einstein on the unintended consequence of his atomic theory
"Keep your faith in God, but keep your powder dry."---Oliver Cromwell
The presence or absence of investor confidence is the single greatest influence on whether bulls or bears reign. What has anyone seen in the conduct of those running our country or the Eurozone that instills confidence? Did no one realize the consequences of dithering on the debt ceiling extension? That half hearted effort happened just in time for the sovereign debt crisis in Italy to reach a boil. More importantly, there is no good news from China (no bad news, just nothing to serve as a counter balance). No confidence---no conviction. Once people like me began to exit, last week's stampede ensued. Whoa, Nelly!
I see little that inspires my "animal spirit" desire to invest. Certainly our president does not inspire investment, and I see no credible candidate from the Republicans capable of inspiring me or anyone else. To make matters worse, many politicos are impeding growth. For example, the Wall Street Journal recently reported how drilling for oil and gas in the Marcellus shale formation has resulted in tens of thousands of high paying jobs in Pennsylvania. Directly across the border, in New York, the governor has refused to allow such drilling even though the formation lies in large part in that state. Environmentalist have caused him to dither while unemployment runs rampant. What is wrong with this picture? Why not employ people in this worthy effort to free our country from foreign energy dependence?
I admit. I was lucky to liquidate when I did (see Vol. 78), and even luckier when I promised Barb not to re-enter the market for the entirety of last week. Obviously, I have plenty of dry powder and may re-enter next week considering how "cheap" many of my favorite dividend/interest paying plays (e.g. TEF, AVF, VZ, NLY, MO, etc.) have become. I am furiously studying the best re-entry vehicles and price points.
By the way, are you not tiring of the pundits who kept advising us this past Friday that "now" is an excellent time to buy into the market "on the cheap". With what?, most are asking. Where were these pundits two weeks ago when they should have been advising us to sell at the highs? No one (with the possible exception of Cramer and he only rarely) spends ANY time talking about profit taking. I promise--- in the future I will share my "selling" thoughts just as freely as my "buying" ones.
Last week I encountered a retired state court judge, a man who worked his entire career for the State of Wisconsin and whose entire retirement benefit comes from a state pension. I asked as to his well being and was told that he, like countless other Cheeseheads, spends 7 months a year in Florida to evade the Wisconsin income tax-----the very source of his pension! I cite this irony not as a criticism, but to emphasize that people (and organizations) operate in their own economic self interest. So who are we to criticize GE, run by President Obama's chief business adviser Jeffrey Immelt, when it announce last week that it was moving its Xray division headquarters from Milwaukee to China? Wake up America, if you make it uncomfortable for business to operate here, it will go elsewhere, especially when you consider that 15% of the Fortune 100 CEO's are foreign born.
I apologize for the lack of any concrete advice in this edition. Suffice it to say that as Monday approaches, cash still looks good.
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