Staggering, but...

...I'm glad they're getting this done before the markets open. And I think it's good news. Yahoo reports that:

JP Morgan to buy Bear at $2 a share

Talk about a bargain. It was trading around $30, and its all-time peak was over $150.

Still, this will do a lot to prop up the financial system worldwide. I expect a rough week in the market, but not as rough as it could have been. Still, I'm kind of amazed SO many people didn't see this coming. I didn't, but I don't work in finance for major investment banks, making the decisions that got us all in this mess in the first place.

Thanks, idiots. Next time, major in phys. ed., not finance. Then your gambling only wipes you out in the NCAA tournament pool.

Flat Tire Stocks

I met some friends last night for dinner, to welcome them back to town. Somehow-- I swear I didn't start it-- we got to talking about investing.

I know I'm no guru-- I've read a few books and hold a few positions-- but they're completely innocent. They had an account with one of the big brokerages but canceled it when their broker did nothing with it (um... I'm pretty sure you need to TELL the broker what to do!). They also have a lot of stock with the company he works for. But they don't know if they're long or short (i.e., if it's stock or options), and have no idea how to judge stock, determine whether it's under- or overpriced, or even the tax structures for buying & selling stock.

Anyway, I had a tipple and they got a two-hour lecture. Wonder if I'll be invited out again anytime soon!

Karmic retribution: One the way home I had a flat tire. Dangit! Mr MacMuffin must have snuck over late at night and clawed it up to punish me for the negative online attention. We, Mr MacMuffin, here is MORE negative attention: you suck!

BUT-- as I was changing the tire, thinking of the hassle of buying a new one, and hoping the donut would hold for the miles I had to go-- I couldn't help but feel good. The markets were up yesterday, and so were my stocks (one jumped 11 bucks a share). The Fed did some good in the world, promising to take on $200 billion of bad mortgage debt. Single largest point climb since 2002. Today we've opened mixed, but we'll see how it turns around later. I'm optimistic.

Now, the one thing I've learned about markets so far is that investors are like preteens. THEY'RE IDIOTS. They run around like chickens with their heads cut off at the slightest titter, and they invest in things based on rumor, speculation, and the dream they had last night after the mutton plate. So ANYTHING-- anything that makes you just a little more level-headed and objective, especially if you can weather out the storm, gives you an advantage. Like not being in New York, not competing with the Jonses, and having to change your own flat tire.

Index Funds Put the Fun in Fundamental Stock Investing

Next to Cat Fancy, I think The Economist is the best magazine on the stands. (Or "newspaper," as "Sir" would have it-- read the letters page sometime!) It's better-researched than anything, well-written, and even funny. And I think my mail carrier is reading my copy!

Usually I get it on Saturday, but this week's didn't arrive until Monday. The carrier had a mischievious grin on, too. I think he must have been jonesing on the Special Report all about asset management in this week's issue. It describes the radical changes in the mutual fund industry, explains hedge funds, demystifies some of the arcane jargon ("alpha" versus "beta"). Smart, smart, smart.

It also confirms what Bogleheads, those oddly-named devotees of John Bogle & Vanguard's indexing options, already know. Mutual funds are a loser's game, because you're paying for a fund manager who gets paid based on last year's performance, which may not be replicable. Even if the manager does well, taxes & fees will each up your profits. It's kind of scam, really.

Index funds just try to replicate the market. I have a core of my investments in Vanguard index funds, and then a (smaller) discretionary fund which I use for individual investing. Not at all sexy-- not at all something to boast about down at the club (if I were in the club!). But long term, it works.

And I feel smarter having read The Economist. Seriously, a couple of hours with this magazine is better than a week's worth of people yelling at you on CNBC.

How Your Business Can Help You Grow Your Cat

This article got me thinking. Hmmm. Does the door swing both ways? How to Grow Your Cat:

1. Providing delicious vittles for her gaping maw.
2. Reducing the need to keep in trim by outsourcing those laborious tasks.
3. Changing the lifestyle to one more sedentary, in keeping with those issues of girth & mirth so bothering our nation's health policy-makers
   

Oh no! I suppose there's a reason the phrase "Fat Cat" has always been associated with business. Let's unpack it:

• Given feline druthers, eating and sleeping top the to-do list. But when necessary, cats can be ruthless businessanimals, using high mark-ups and keeping margins down.
• So on any given plot of land, a cat can quickly rise to the top of the local economy. After a low-key IPO (Initial Public [H]owling-- a UK term) all the forest creatures know who's the brand new boss in town. But once the competition's downed, it's easy to get lazy...
  
• Worst of all, having a successful model has the danger of not developing further (notice I didn't say "growing"). Zooey might stop learning new skills and seeking new challenges-- at that point, as is sadly too often the case, feline diabetes can set in and wreck the health. And business health-- you cease to like your job, people work less hard, profits slowly decline. Then some Silicon Valley punk shows up with a new model and rips you to shred (it's happening in the newspaper business as we speak).
  

***

Meanwhile, the door seems to be swinging the wrong way in the economy. Ugh! Warren Buffet's one of the fattest of cats, portfolio-wise, so when he speaks we should all listen. I have been optimistic about the market, but perhaps I've been wrong (hard to admit, I'll admit).

Still, my hope is to stay the course somewhat. Half my portfolio's in index funds, so I have little to concern me there. They're long-term investments that seek to replicate the market; I just hope the market doesn't seek to replicate a busted toilet.

The other half, though, is individual stock investing. I have just a handful of positions-- less than ten-- and only one of my stocks got absolutely killed. But I believe in the company and their model, and want to hold on to it long-term. I'm waiting for even more of a pullback, in fact, before I act, though. We could have even more shrinkage...

Most importantly, on economic days like today, sit on the back porch and drink a mimosa. Really-- it's why we invest & save, right?

Secret Investment Opportunities...

...I have an old free junk email account I use for my personal messages, like sending pictures of my cat, rather than pictures of my monetized cat, which are reserved for this blog:

It always has these ads at the top, right? They crack me up. 25% back accounts, the lost investment opportunities of Alaska's unknown wilderness, the royal Saudi mythic money machine, blah blah blah. Today's was a corker. My interpretation:

Now, this could be real. I doubt it, but it could be. I haven't clicked on it to find out because I don't want cookies and spyware infesting my machine. Certainly, the outlandish claim and the graphic design (faux-sophisticated) lead me to think otherwise. Yes, Virginia, sometimes slick marketing can make you seem like a con artist.

But most of all, it promises a secret no one's talking about. Except in BANNER ADS ON THE TOP OF FREE EMAIL ACCOUNTS EVERYONE USES!!! For pity's sake!

The only secrets I want to know are:

1. Whether or not this girl is telling the truth when she says she's into me
2. Whether or not the butler did it
3. What my boss thinks of Maury
   

And usually, the best way to find out is just to ask.

Inclement Markets

Winter storms and housing crises. Looking for a safe place for your earnings is a lot like trying to find the stray cat you've adopted during a rampaging snowstorm.

Zooey usually hangs out around her house, my one extravagance (fortunately not foreclosed). In storms like today, though, she's not in her reliable places. Today I went all through the woods and down by the stream to see if I could find her. Nothing. Just some deer tracks & scat, and some beautiful steam rising off the stream as it cut through the snow.

Meanwhile, inside my nest egg has been taking a hit. I don't have a whole lot-- some index funds, a few stocks I bought on a hunch, an IRA. The housing crisis caught me off-guard, before I could move anything out into bonds, my MMA, or even hide it under the mattress. (I understand better now why my great-grandfather, he of the Depression, didn't trust banks.)

But then I saw some nice clues:


Namely, the Fed's recent aggressive cuts, their plans to forestall foreclosures, and Congress' thankfully fast action on this anti-recession drug. I was never convinced that the housing crisis was going to be that cataclysmic, anyway. We're a lot more intertwined with the rest of the world now than we were in 2001, even, so the way our economy goes does not necessarily mean gloom for the earth. Also, markets usually do better in election years. I'm trying to wait this one out, and hoping to find a few bargains out in the financial woods.

But I am no economist. I am but a humble cat owner, thankful to have a roof over his cat in her timeshare.