Risk/Reward Vol. 87
THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.
"I find it very, very easy to be true/I find myself alone when each day is through
Yes, I'll admit that I'm a fool for you/Because you're mine, I walk the line."---lyrics from "Walk the Line" by Johnny Cash
"Bells will ring ting-a-ling a-ling, ting-a-ling a ling/And you'll sing "Vita bella"
Hearts will play tippy tippy tay, tippy tippy tay/ Like a gay tarantella---lyrics from "That's Amore" by Dean Martin
"Hello, hello baby, you called, I can't hear a thing/I have got no service in the club you see, you see
Wha-wha what did you say, huh, you're breaking up on me/Sorry, I cannot hear you, I'm kinda busy"--"Telephone" by Lady Gaga and Beyonce
Buongiorno!
Wow, do I love Florence and Tuscany! Hats off to Lady Barbara for planning and executing a perfect eight day vacation/excursion. Great weather, great food, great wine---and I have not absorbed so much culture since I spilled a Petri dish on myself in 8th grade biology.
Talk about "walking the line"! Whew! The "floors" of 10,700 on the Dow and 1120 on the S&P were breached at the close on Monday and continued to fall throughout Tuesday--until a late rally brought them back above water. Truly, had I not been trekking through the Cinque Terre (can you say "amazing!") on Tuesday I would likely have sold many holdings that were at or above my 8% loss limit (but not CTQ and CTW discussed below). Remember, once trading range "floors" are breached, there can often be a precipitous fall if a saving rally does not materialize. One did this time, but keep your eyes on this the next time the markets fall to 10,700/1120---and they will, unless and until a resolution of the European debt situation is reached.
"Vita bella"---life truly is beautiful in Italy. But if anyone believes that Italy will be willing or able to repay its sovereign debt without substantial outside help---FAGGETABOUTIT!. I am more convinced than ever that we have just seen the tip of the iceberg known as the European sovereign debt crisis . The size of the Greek debt ($454 billion) is nothing--literally--compared to that of Italy ($2.1 trillion), not to mention Italy and Spain combined ($3 trillion).
Why do I believe this? Well, I follow the "open your eyes" theory of life. Take a look around, observe, reflect and draw your own conclusions.
Observation 1: If you visit the Uffizi Gallery in Florence, a state run museum, you will be told that the famous Visari Corridor is not open to the public. BUT, if you book the right "tour", you can arrange a private stroll through this amazing structure full of invaluable and rarely seen art. (Barb did so arrange, and I highly recommend it.)
Observation 2: Many galleries prohibit photographs. BUT, if you book the right "tour", you can snap away.
Observation 3: Many day trips advertise a return to the city by 5:30. Good luck with that! Make it more like 8:30 or 9. (By the way, this approach is very conducive to vacationing, but not for business.)
Observaton 4: Google the criminal allegations (the ones actually filed over the years, not the mere rumors) against Italy's long sitting Prime Minister Silvio Berlusconi who also happens to be its third wealthiest citizen. Talk about a guy who knows the meaning of "tarantella"! ( an up tempo folk dance; also translates to tarantulla)
When you ask about these things, once you are comfortable with a local (like the truly brilliant and passionate tour leaders and docents), the response is universal---"That's Italy!"
In sum, Italy can promise whatever it needs to get to the next day---but its ability to actually resolve its debt load remains in doubt--at least in this oberver's opinion.
As noted above, two of the securities I would not have dumped last Tuesday were CTQ and CTW, the exchange traded debt of CenturyLink, the acquisitive telecom services company which recenty swallowed Qwest. Paying over 7.25%, these "beauties" barely moved off of their issue price of $25 during last week's herky jerky trading. I really like holdings like these; ones that have a priority in payment over juicy common dividends and which have little if any connection to the financial or insurance industries. Now, that I am back in the saddle, I will be looking for more of these as I slowly slip back into the market.
Remember, past editions available at www.riskrewardblog.blogspot.com
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