A pleasant week in the market last week, but it’s time to do some culling of the bad and replacement with the new.
I’m recommending (again, without much enthusiasm) three different stocks this week–but only because they showed up on my “screen”, and I’m not finding much in the way of “new stuff” during the last couple of runs of the screen. The three are Administradora de Fondos de Pensiones Provida SA (PVD), of which I still haven’t quite figured out what business it’s in but I do know that it’s located in Chile, NewMarket Corp. (NEU), which makes petroleum additives, and AmTrust Financial Services, Inc. (AFSI), which is in the property and casualty insurance business. Again, due to a lack of enthusiasm, I’m taking smaller positions in all three rather than a large position in a single stock.
I’m taking a beating of late (I suspect most people are), and, indeed, my last 7 picks are “underwater” (I haven’t had the heart to look further back)–including PRSC down 24% since recommended here and TAST down, gulp, 43%. (Past performance is no guarantee of future self-destructive behavior).
Yesterday (Tuesday) was particularly awful as I lost money on almost everything, whilst the market itself was actually up. (Oh, dear–have I “lost it”? I hasten to add I’m still up, as of Tuesday, 27% over the last 12 months vs. the S&P gain of only 17%. But this last 6 months…)
I bought this book a couple of months ago when I saw it mentioned a couple of times by Conservatives (including Paul Ryan, of whom I wrote semi-favorably here recently). It seems to be part of their “Canon” along with ATLAS SHRUGGED, which I have very much enjoyed.
I haven’t read it yet, a little jaded after having bought and read several other Conservative screeds that I had found boring and repetitive and, frankly, unintelligent. (I did tolerate Bill O’Reilly’s A BOLD FRESH PIECE OF HUMANITY that a friend loaned me, as it was more autobiographical than polemic).
So I’m noticing that it is in the Top Ten bestseller list at Amazon, and figured it must be in the news lately, but a GOOGLE didn’t find anything. One thing I have to give Conservatives credit for, they do read: Glen Beck’s latest apocalyptic novel is currently #1 at Amazon. It is ghostwritten, I’m sure–maybe the same guy that did Palin’s book? I said Conservatives read, not write.
Anyway, GOOGLE led me to this old cartoon below which should give us all a flavor for the SERFDOM book. I do intend to read it.
I actually have a little enthusiasm for these first two picks today: Industrial Services of America, Inc. (IDSA), which does waste management and scrap metal recycling, and Enstar Group Limited (ESGR), an insurance conglomerate based in the Bahamas (maybe I can get on the Board of Directors).
I’m also going to take a small position in another stock that caught my eye (pun intended), which is NovaMed, Inc. (NOVAD), formerly NovaMed Eyecare, Inc.
This volatility has to be taking months off of my life, but instead of whining about the market per usual let’s just get on with the picks: I’m going to take “half positions” in two different stocks again, rather than all of my eggs in one. The two stocks are FirstCity Financial Corp. (FCFC) (in the financial sector, so “Be Careful!”), and Providence Service Corp. (PRSC), which, as far as I can tell, is in the social work business. I haven’t quite figured the company out, but it showed up on my screen and would certainly represent a diversification in my investments, so…what the heck! Why not?!
U.S. households lost on average nearly $5,800 in income due to reduced economic growth during the acute stage of the financial crisis from September 2008 through the end of 2009.[1] Costs to the federal government due to its interventions to mitigate the financial crisis amounted to $2,050, on average, for each U.S. household. Also, the combined peak loss from declining stock and home values totaled nearly $100,000, on average per U.S. household, during the July 2008 to March 2009 period. This analysis highlights the importance of reducing the onset and severity of future financial crises, and the value of market reforms to achieve this goal….[Rest of article]
I wrote approvingly before about the controversial concept of aggressively allocating more than 100% of your retirement savings–while you are young–to the stock market. I’m glad that I did so myself…
I bring it up again after having read the following article:
….In Lifecycle Investing, Barry Nalebuff and I are agnostic about the viability of using the CAPE to time your exposure to stock market risk. On the one hand, theory (including the capital asset pricing model) suggests that you shouldn’t be able to profitably predict future stock price movements from the current PE ratio. On the other hand, Shiller and others have brought forward some persuasive evidence that the PE10 has been correlated with future returns.
But, in some ways, we’re even more attracted to adjusting your exposure to the stock market based on volatility. The CBOE’s volatility index, VIX, provides a readily available quantitative measure of just this – the market’s expectation of the future standard deviation in stock prices. (I wrote about the VIX before at the end of 2008, shortly after it had reached an apocalyptic 80 percent.)….[Rest of article]
You really need to read the entire article to understand the concept (and better yet, reread my original blog entry linked to above). It is especially important for my younger readers to try and give this a read. You are likely to find some of the terminology and concepts “tough going”. That’s terrific! It will illustrate how much you have yet to learn in order to actually take some intelligent control of your finances. I attribute my own success in investing to having subscribed to MONEY magazine since my early 20’s and then having read dozens of books on economics, investing, and finance. For me, that was easy because I enjoy the subject matter. For you, maybe not so much–but at least subscribe to MONEY, and maybe pick up one of the DUMMIES books on personal finance.
As for me, I’m going to pick up the LIFECYCLE INVESTING book referenced in the article, and then pass it on to my kids.
Good luck! (Another blog post to reread: this one).
A pleasant week in the market last week, but it’s time to do some culling of the bad and replacement with the new.