A few weeks ago (before the debt ceiling debate and stock market dip) I wrote a post that explained that you should invest your money with the purpose to “make more money” and not to promote personal convictions or causes. In other words, do not consider outside “positive” factors when deciding where to invest your money.
However, I do believe that “negative” factors, based on moral or ethical standards, should be considered when making investment decisions. This may sound contradictory, but it is my personal standard. You are not going to agree with everything in this post. We are entering an area that mixes economics and morals and that is a smoky, gray, world. Keep in mind I am not telling you what to do or what to believe. This is how I approach this issue and my purpose here is to make you think about how you invest and hopefully improve the process and results.
Many moral/ethical factors can impact investment decisions. Most can be divided into three categories:
Vices: Alcohol, tobacco, gambling, etc.
Environmental Conduct: Pollution, off-shore drilling, oil spills, destroying the Rain Forest and now, fracking, etc.
Corporate Conduct: Child labor, corporate scandals, corporate policies, CEO conduct, etc.
There are other factors in addition to these, but you get the idea.
So how do I navigate these issues when investing? Because the situations are different, I will look at mutual funds and stocks separately.
Mutual Funds
Because most mutual funds invest in hundreds of companies and because many consumer and entertainment companies have diversified into many products and services, it is difficult to find a mutual fund that does not have something in it that is objectionable to someone. My solution to this is what I call “Don’t Look, Don’t Know”.
That’s right; treat it like a blind trust. Do take the time to research the fund. Know what the strategy is. Know what the performance has been. Look at the summary categories provided in the prospectus (Manufacturing – 23%, Consumer goods -16% etc.), but don’t look at the individual investments. It is too time consuming and you will drive yourself crazy. Is a fund that has 0.2% of its money in a company that derives 4% of its profit from something objectionable, toxic? I don’t know and I don’t want to know. If this is unacceptable to you, then there are those “clean”, socially responsible (I call them “gadget”) mutual funds. But as I stated a few weeks ago, the primary objective of these funds is to be “clean” of something first and make money second. And that makes me nervous as an investor.
It is important to track the performance of your mutual funds and how they are managed. One time I held a substantial investment in a “value” fund that was supposed to provide moderate returns with limited risk. In the late ‘90’s this fund started to rack up yearly returns of over 20%. This delighted me. Great returns with no risk! (This reminds me of the Seinfeld episode where the frozen yogurt is delicious, and Jerry, it’s non- fat). When the internet bubble burst in the early aughts (00’s), my value fund lost much of its value. It lost more than most other funds that were supposed to be riskier. It turns out that the fund manager had totally abandoned the stated strategy of the fund and had put lots of junk (bonds) in the fund’s trunk.
You should also review your mutual fund when you get those notices telling you that the fund manager has changed. If the fund was doing well (compared to similar funds) and the manger left the firm, that is a red flag. This probably means that the manager wasn’t paid enough and that the firm did not value his or her ability. Now the new manager will probably be paid less and be told, “Just manage the fund like Bill did and things will be fine. (How difficult can that be?). If this is the case, it may be time to move your money to another fund. Conversely if the fund is underperforming, the fund manager was not doing a great job and you may as well see if the new person can turn it around. But please keep watching it. Too many people put their money in mutual funds and then never look at it until a big correction occurs.
Individual Stocks
These are much easier to make decisions about. When I was considering dividend stocks to add to the “George Fund”, several consumer product companies that have strong profits and high dividends looked attractive. However, these companies make significant profits selling cigarettes to third-world countries. Because I enjoy sleeping at night, I decided not to buy stock in these companies. But remember, these decisions are based on personal convictions. So I am not saying you should not invest here or are wrong if you already do, however it is not a good investment for me.
So invest wisely and carefully, my friends.
George Fund Update
I finally made changes to the George Fund a few weeks ago. Even though I only ended up changing 20% of the fund, it was actually very difficult to pull the trigger on the sale of the old stocks and the buying of the new ones. When it was finished, I realized why. By taking these actions I had taken total ownership of the fund and this caused some anxiety. I thought about renaming it the “Don Fund”, but that didn’t seem right since 80% of the fund remained the same. From now on I will refer to it as the “GeoDon” Fund. Sounds very 21st century, now doesn’t it?
Seinfeld Frozen Yogurt Clip
Sunday, August 28, 2011
Wednesday, August 17, 2011
Mrs. America Has Some Serious Junk in the Trunk
The completion of the ‘Why You Invest Series" will be delayed again due to all the commotion in the stock market. (You probably are not investing much right now anyway).
Did I really end the last blog with “No need to panic just yet.”?
Well I could argue that there is still no need to panic, but I won’t (until later in this post). Panic and volatility are the driving factors right now.
Back in April I did say we would be fortunate to make it through the year without a correction. But in the past, corrections usually happened over weeks. With computer programmed trading, corrections happen in hours. Computers do happen to trade like Vulcans, unfortunately it’s like Vulcans on meth.
This panic of course resulted from the U.S. credit rating being downgraded by Standard & Poors. (We have no standards and now we’re poor). The administration claimed the downgrade was a mistake because S&P used bad math (not bad meth). That’s sounds like an excuse a fifth-grader uses when he brings home a “D” in History (The teacher used bad math when adding up my grade!).
Of course this administration knows all about bad math. It put together the Obamacare budget so it appears to save us money when it really costs us money. Talk about the lemon calling the banana yellow! (Can’t use the pot-kettle thing without being accused of racism).
But there is really no need to panic. The stock market was getting way ahead of the economy. It was like a deep sea diver going too fast away from his oxygen source. He looked very skilled until he ran out of air and then had to retreat quickly coughing and wheezing until he could breath normally again.
A few months ago I compared the economy to a woman. We’ll what would happen if a man said to his lady: “Your ass is fatter than it used to be. It is not as tight and attractive as your friend Cindy’s.”
There would be some serious panic. There would be some massive volatility. There would be screaming. There would be crying. Objects would be thrown. Things would get broken. If she is an NRA member, shots may be fired. There would be an extreme, emotional, outburst.
However, the intensity and fierceness of the reaction would have absolutely no bearing on the fact that:
1. Her ass is bigger than it used to be.
2. Cindy’s ass is in better shape.
She may call her European cousin for support but her cousin is dealing with her own big, fat, Greek ass and will be of no solace. Yes, her ass has been downgraded. It is no longer considered AAA prime. But once she calms down and looks in the mirror, she will realize that she needs to go on a diet and exercise the glutes.
So Mrs. America has some serious junk in the trunk. America’s ass has been downgraded. It is now fat and flabby and not as prime as say, Canada’s ass. Nice cheeks on me, eh?
We have appointed a 12-member committee to save America’s ass. In my opinion, the committee is too large. In my business career, I have never been on a committee that had more than six members that accomplished anything significant. I think if they put Senators Rob Portman and Max Baucus in a room with Beavis and Butthead they would accomplish more than they will with a big committee. Of course you would have to give Beavis and Butthead some nachos and music videos to keep them occupied while a solution is formulated or you could get the following:
“Hey Beavis, stick some more taxes in the bill. We’re almost out of nachos and we need to buy another bag.”
“I am the great Taxholio. I need nachos for my piehole.”
Let's hope the big, fat, committee does better than this! But it could be just as entertaining to watch.
We will need to make some serious lifestyle changes to get our ass firm, hard, and back into shape. We need the world to once again leer at our booty and proclaim “baby got (green) back”. This needs to be resolved by the end of the year because we don’t want our buns hanging out of our running shoes when things start moving faster in 2012.
Did I really end the last blog with “No need to panic just yet.”?
Well I could argue that there is still no need to panic, but I won’t (until later in this post). Panic and volatility are the driving factors right now.
Back in April I did say we would be fortunate to make it through the year without a correction. But in the past, corrections usually happened over weeks. With computer programmed trading, corrections happen in hours. Computers do happen to trade like Vulcans, unfortunately it’s like Vulcans on meth.
This panic of course resulted from the U.S. credit rating being downgraded by Standard & Poors. (We have no standards and now we’re poor). The administration claimed the downgrade was a mistake because S&P used bad math (not bad meth). That’s sounds like an excuse a fifth-grader uses when he brings home a “D” in History (The teacher used bad math when adding up my grade!).
Of course this administration knows all about bad math. It put together the Obamacare budget so it appears to save us money when it really costs us money. Talk about the lemon calling the banana yellow! (Can’t use the pot-kettle thing without being accused of racism).
But there is really no need to panic. The stock market was getting way ahead of the economy. It was like a deep sea diver going too fast away from his oxygen source. He looked very skilled until he ran out of air and then had to retreat quickly coughing and wheezing until he could breath normally again.
A few months ago I compared the economy to a woman. We’ll what would happen if a man said to his lady: “Your ass is fatter than it used to be. It is not as tight and attractive as your friend Cindy’s.”
There would be some serious panic. There would be some massive volatility. There would be screaming. There would be crying. Objects would be thrown. Things would get broken. If she is an NRA member, shots may be fired. There would be an extreme, emotional, outburst.
However, the intensity and fierceness of the reaction would have absolutely no bearing on the fact that:
1. Her ass is bigger than it used to be.
2. Cindy’s ass is in better shape.
She may call her European cousin for support but her cousin is dealing with her own big, fat, Greek ass and will be of no solace. Yes, her ass has been downgraded. It is no longer considered AAA prime. But once she calms down and looks in the mirror, she will realize that she needs to go on a diet and exercise the glutes.
So Mrs. America has some serious junk in the trunk. America’s ass has been downgraded. It is now fat and flabby and not as prime as say, Canada’s ass. Nice cheeks on me, eh?
We have appointed a 12-member committee to save America’s ass. In my opinion, the committee is too large. In my business career, I have never been on a committee that had more than six members that accomplished anything significant. I think if they put Senators Rob Portman and Max Baucus in a room with Beavis and Butthead they would accomplish more than they will with a big committee. Of course you would have to give Beavis and Butthead some nachos and music videos to keep them occupied while a solution is formulated or you could get the following:
“Hey Beavis, stick some more taxes in the bill. We’re almost out of nachos and we need to buy another bag.”
“I am the great Taxholio. I need nachos for my piehole.”
Let's hope the big, fat, committee does better than this! But it could be just as entertaining to watch.
We will need to make some serious lifestyle changes to get our ass firm, hard, and back into shape. We need the world to once again leer at our booty and proclaim “baby got (green) back”. This needs to be resolved by the end of the year because we don’t want our buns hanging out of our running shoes when things start moving faster in 2012.
Monday, August 1, 2011
Lead, Follow Or Do What!!!!!
We will take a break from the “investing” series for some random Economic/Political thoughts....
Lee Iacocca used to say “Lead, Follow, or Get Out of the Way”. Who would have thought that during this important debt ceiling crisis the President of the United States would choose number three? Okay maybe Jimmy Carter, but who else? A new phrase should be: “Lead, Follow, or Make Another Eloquent Speech”.
Say What?
The speech was delivered brilliantly as always, but there were a few missteps. After the President explained that the government was spending too much money during good economic times, he then said the recession came and we had less money coming in so we had to spend more. Of the millions of Americans who lost their jobs during the recession, I don’t think anybody increased their personal spending. So the government spends too much when times are good and it spends too much when times are bad. And now politicians are surprised and alarmed that people believe government spending is out of control. Spend less. Spend less. Spend less.
He also said that our budget surplus was depleted because of tax cuts. The budget surplus was depleted because of out-of-control spending. But you can’t cut taxes and increase spending at the same time. Is anybody in either party a math major?
No Sugar in the Tea
The Tea Party movement started as a reaction to big government getting bigger. Bigger government means bigger spending, which means bigger taxes. You don’t need to be a math major to figure that one out. Under this principle people from any political party (including independents) could be a supporter. And any politician embracing that principle would be viewed positively. The Tea Party went off course when it added other issues to the agenda and became too partisan. Still, are Tea Party members “crazy” (maybe terrorists?) or just the people who are the most informed?
One Out of Three is Bad
We are fighting three wars and only having significant success in one. In Afghanistan you either declare victory because you achieved your main objectives or you declare a tie. I know in this case a tie is like kissing a camel, but either way it’s time to go home. We have seriously done all we can in Iraq, now it up to the Iraqis. And we are fighting a war in Libya. Were you fooled when we announced that we were turning the war over to NATO? Hey, guess what? We are still paying 75% of the costs. And it is a “war”. If you are dropping bombs from the sky to kill people, that’s a war. Recently Libya was described as a huge stalemate. You know what they say: If you have a stalemate, it’s time to get a new spouse. It’s time for us to get a new strategy. Oh but we never had a strategy, that’s right.
You can’t count the savings from ending these wars in any budget plans because that would assume that you will not be involved in any other wars for the next ten years. By the way, North Korea and Iran both like that budget gimmick.
Please Don’t Scare Granny
It was disgusting, unethical, and cruel to frighten older people during the debt ceiling debate. If you have to resort to this tactic, how strong is your argument? If you are the primary caregiver to an elderly person, you know how damaging this can be. Senior citizens are easily frightened and can worry constantly about things that impact their simpler life. I will have no respect for any politician or group that uses this tactic.
The Free Market Wins Again
Home foreclosures are down 29% from last year. While some experts are claiming this is due to paperwork delays, a new trend is emerging. Banks are realizing it is best to help troubled homeowners work through their problems rather than to foreclose. There are already too many distressed homes on the market and the banks will not benefit from adding more. Underwater homeowners are realizing that they still need a place to live and that defaulting will have future credit and legal implications, so they are more willing to work with the banks.
This is a significant trend. All the dire housing projections were based on larger foreclosure percentages and more foreclosed homes flooding the market. If this continues, the housing market, including housing prices, could recover stronger and faster than expected. This is another example of the free market being able to accomplish what the costly government mortgage relief program failed miserably to do. The free market is superior to government programs almost every time.
Move That Freight!
The freight market is back baby! The American Trucking Association Freight Index is up in June. The Diesel Fuel Freight Index is up in June. FTR (Freight Transportation Research) is expecting continued moderate truck freight growth the rest of the year. Rail Freight and port freight are improving. That’s why my panel of economic experts is forecasting Q3 and Q4 GDP of 3.0%. However, the preliminary July indicators are coming in weak due to the uncertainty caused by the debt ceiling debacle. Thank you Washington D.C.! The Model T is still predicting good things in 2012. No need for all this panic just yet!
Lee Iacocca used to say “Lead, Follow, or Get Out of the Way”. Who would have thought that during this important debt ceiling crisis the President of the United States would choose number three? Okay maybe Jimmy Carter, but who else? A new phrase should be: “Lead, Follow, or Make Another Eloquent Speech”.
Say What?
The speech was delivered brilliantly as always, but there were a few missteps. After the President explained that the government was spending too much money during good economic times, he then said the recession came and we had less money coming in so we had to spend more. Of the millions of Americans who lost their jobs during the recession, I don’t think anybody increased their personal spending. So the government spends too much when times are good and it spends too much when times are bad. And now politicians are surprised and alarmed that people believe government spending is out of control. Spend less. Spend less. Spend less.
He also said that our budget surplus was depleted because of tax cuts. The budget surplus was depleted because of out-of-control spending. But you can’t cut taxes and increase spending at the same time. Is anybody in either party a math major?
No Sugar in the Tea
The Tea Party movement started as a reaction to big government getting bigger. Bigger government means bigger spending, which means bigger taxes. You don’t need to be a math major to figure that one out. Under this principle people from any political party (including independents) could be a supporter. And any politician embracing that principle would be viewed positively. The Tea Party went off course when it added other issues to the agenda and became too partisan. Still, are Tea Party members “crazy” (maybe terrorists?) or just the people who are the most informed?
One Out of Three is Bad
We are fighting three wars and only having significant success in one. In Afghanistan you either declare victory because you achieved your main objectives or you declare a tie. I know in this case a tie is like kissing a camel, but either way it’s time to go home. We have seriously done all we can in Iraq, now it up to the Iraqis. And we are fighting a war in Libya. Were you fooled when we announced that we were turning the war over to NATO? Hey, guess what? We are still paying 75% of the costs. And it is a “war”. If you are dropping bombs from the sky to kill people, that’s a war. Recently Libya was described as a huge stalemate. You know what they say: If you have a stalemate, it’s time to get a new spouse. It’s time for us to get a new strategy. Oh but we never had a strategy, that’s right.
You can’t count the savings from ending these wars in any budget plans because that would assume that you will not be involved in any other wars for the next ten years. By the way, North Korea and Iran both like that budget gimmick.
Please Don’t Scare Granny
It was disgusting, unethical, and cruel to frighten older people during the debt ceiling debate. If you have to resort to this tactic, how strong is your argument? If you are the primary caregiver to an elderly person, you know how damaging this can be. Senior citizens are easily frightened and can worry constantly about things that impact their simpler life. I will have no respect for any politician or group that uses this tactic.
The Free Market Wins Again
Home foreclosures are down 29% from last year. While some experts are claiming this is due to paperwork delays, a new trend is emerging. Banks are realizing it is best to help troubled homeowners work through their problems rather than to foreclose. There are already too many distressed homes on the market and the banks will not benefit from adding more. Underwater homeowners are realizing that they still need a place to live and that defaulting will have future credit and legal implications, so they are more willing to work with the banks.
This is a significant trend. All the dire housing projections were based on larger foreclosure percentages and more foreclosed homes flooding the market. If this continues, the housing market, including housing prices, could recover stronger and faster than expected. This is another example of the free market being able to accomplish what the costly government mortgage relief program failed miserably to do. The free market is superior to government programs almost every time.
Move That Freight!
The freight market is back baby! The American Trucking Association Freight Index is up in June. The Diesel Fuel Freight Index is up in June. FTR (Freight Transportation Research) is expecting continued moderate truck freight growth the rest of the year. Rail Freight and port freight are improving. That’s why my panel of economic experts is forecasting Q3 and Q4 GDP of 3.0%. However, the preliminary July indicators are coming in weak due to the uncertainty caused by the debt ceiling debacle. Thank you Washington D.C.! The Model T is still predicting good things in 2012. No need for all this panic just yet!
Monday, July 18, 2011
Invest Like a Vulcan
In recent posts I analyzed the “George Fund” and reported on things that George did right. But I also mentioned that the George Fund included a few “dogs” that needed to be sold. Can we learn anything by looking at the losers? Yes, we can.
Four of the stocks (most of the dogs) were in local (in or near Akron, Ohio) companies. I believe George bought these stocks for one of three reasons:
1. George was a businessman in the community and wanted to support other community businesses.
2. Many of his friends and acquaintances worked at these companies, so it gave George something to talk about. As mentioned previously, George was a huge “people person” and loved talking to people.
3. Many of George’s customers worked at these companies and it would be good for George’s business if people knew he was investing in their companies.
Of course it is impossible for me to know why George bought these stocks, but it was probably a combination of all three reasons. But that reveals a flaw in George’s decisions. The only one of the reasons that is legitimate is number three and only because you may be getting an indirect return on your investment.
It leads to the question: Why do you invest? The correct answer is: To end up with more money that what you started with.
You should invest your money to make more money, period. This is a totally acceptable concept and in its pure form does not involve greed. Wise investing has been endorsed at the highest level. In the “Parable of the Talents”, Jesus Christ uses the example of financial investment to make a point about spiritual matters. But the context is that financial investing to acquire more money is indeed good. Experienced investors know that greed is indeed bad (been there, done that, lost some coin.) Jesus didn’t care much for greed either.
So investing is good, but the purpose of investing is to make money. It is not to support your community, it is not to support your friends, and it is not for derived benefits. And most importantly, it is not to be done to make you feel good. We are emotional and rational beings. We make our investment mistakes when we become less rational and more emotional.
If you want to support “green” energy initiatives, buy the products, donate to the causes, but don’t invest in the companies unless you do the research and determine it is a good investment. It feels good to invest in a “religious” mutual fund where all the companies claim to adhere to certain principles, but the companies are chosen based on principles first and then results. You are investing for results. Give money to your church, give money to the poor, but invest your money based on your risk/return tolerance. If you love the food at a large restaurant chain, eat there as often as you wish. However, this is not a valid reason to invest in the stock (I have made this mistake). The only time I want to feel good about my investments is when I review my statements at the end of the month.
For a personal application, I will use the Smucker’s Corporation as an example. Here are the factors that influence my personal opinion of the company:
1. I love Smucker’s products. They make some of the best tasting products around.
2. Smucker’s is a local company with a great reputation and it supports the community.
3. I have friends that work at Smucker’s.
4. I have relatives that get paid to serve on Smucker’s food tasting panels.
5. Smucker’s is a strong supporter of my college alma mater.
Therefore, I would feel great if I purchased Smucker’s stock. It would be fun to own stock in this company. It would be enjoyable to tell people I am a Smucker’s stockholder. It would even make my peanut butter sandwich and cup of coffee taste better.
But none of these factors are valid reasons to buy the stock. It may be a great investment, but that is determined by research based on data, not emotions.
Conversely, I was seriously considering investing in a “green” energy company based on its growth potential and dividend even though I am not hot on the idea of wind and solar power. However, I have backed off the stock based on experts reporting that some subsidies will get cut in the next budget.
We are humans, not Vulcans, but I think Vulcans probably make better investors. This is not to say that moral and ethical factors are irrelevant when making investment decisions. These often come into play when deciding where “not” to invest. These will be discussed next time.
Four of the stocks (most of the dogs) were in local (in or near Akron, Ohio) companies. I believe George bought these stocks for one of three reasons:
1. George was a businessman in the community and wanted to support other community businesses.
2. Many of his friends and acquaintances worked at these companies, so it gave George something to talk about. As mentioned previously, George was a huge “people person” and loved talking to people.
3. Many of George’s customers worked at these companies and it would be good for George’s business if people knew he was investing in their companies.
Of course it is impossible for me to know why George bought these stocks, but it was probably a combination of all three reasons. But that reveals a flaw in George’s decisions. The only one of the reasons that is legitimate is number three and only because you may be getting an indirect return on your investment.
It leads to the question: Why do you invest? The correct answer is: To end up with more money that what you started with.
You should invest your money to make more money, period. This is a totally acceptable concept and in its pure form does not involve greed. Wise investing has been endorsed at the highest level. In the “Parable of the Talents”, Jesus Christ uses the example of financial investment to make a point about spiritual matters. But the context is that financial investing to acquire more money is indeed good. Experienced investors know that greed is indeed bad (been there, done that, lost some coin.) Jesus didn’t care much for greed either.
So investing is good, but the purpose of investing is to make money. It is not to support your community, it is not to support your friends, and it is not for derived benefits. And most importantly, it is not to be done to make you feel good. We are emotional and rational beings. We make our investment mistakes when we become less rational and more emotional.
If you want to support “green” energy initiatives, buy the products, donate to the causes, but don’t invest in the companies unless you do the research and determine it is a good investment. It feels good to invest in a “religious” mutual fund where all the companies claim to adhere to certain principles, but the companies are chosen based on principles first and then results. You are investing for results. Give money to your church, give money to the poor, but invest your money based on your risk/return tolerance. If you love the food at a large restaurant chain, eat there as often as you wish. However, this is not a valid reason to invest in the stock (I have made this mistake). The only time I want to feel good about my investments is when I review my statements at the end of the month.
For a personal application, I will use the Smucker’s Corporation as an example. Here are the factors that influence my personal opinion of the company:
1. I love Smucker’s products. They make some of the best tasting products around.
2. Smucker’s is a local company with a great reputation and it supports the community.
3. I have friends that work at Smucker’s.
4. I have relatives that get paid to serve on Smucker’s food tasting panels.
5. Smucker’s is a strong supporter of my college alma mater.
Therefore, I would feel great if I purchased Smucker’s stock. It would be fun to own stock in this company. It would be enjoyable to tell people I am a Smucker’s stockholder. It would even make my peanut butter sandwich and cup of coffee taste better.
But none of these factors are valid reasons to buy the stock. It may be a great investment, but that is determined by research based on data, not emotions.
Conversely, I was seriously considering investing in a “green” energy company based on its growth potential and dividend even though I am not hot on the idea of wind and solar power. However, I have backed off the stock based on experts reporting that some subsidies will get cut in the next budget.
We are humans, not Vulcans, but I think Vulcans probably make better investors. This is not to say that moral and ethical factors are irrelevant when making investment decisions. These often come into play when deciding where “not” to invest. These will be discussed next time.
Monday, July 4, 2011
The “Grocery Cart” Recovery
The night was black, the roads were icy
Snow was fallin', drifts were high
And I was weary from my drivin'
And I stopped to rest for a while
I sat down at a truck stop
I was thinking about my past
I've had a long streak of that bad luck
But I'm praying it's gone at last
When you push a shopping cart in the grocery store it rolls very easily on the smooth, level, floor. However when you push the same cart on the store parking lot, it moves much more slowly and any bump, crack, imperfection or even a pebble can impede its progress.
Well, our economy is the shopping cart and after moving fairly well on the smooth surface, it has been struggling to overcome the obstacles in the parking lot in the first half of the year.
What were the obstacles?
1. Bad Weather – Snow storms, ice storms, tornados, floods. And weather statistics are usually useless when determining economic impact. It doesn’t matter if total snowfall for the season is “average”. It depends where it falls, when it falls, how much falls at one time and how icy it makes the roads and runways.
2. Bad Karma – The Middle East has been in political and social turmoil for several months. Do you think that people might get concerned as they watch the possible start of World War 3 on their big screens? And it’s alarming for the U.S. to enter its third war when we are having problems ending the first two.
3. Bad Gas – The Middle East turmoil only generated a “fear impact” until things in Libya heated up. The disruption in crude supply caused gas prices to spike. This sucks huge amounts of money out of our economy and severely limits consumer discretionary spending.
4. Bad Supply Chain – Who knew the impact of the Japanese tsunami would eventually be felt
here? This slowed the growth of several industries, especially the auto industry. The decrease in supply of autos resulted in higher prices for most brands. This of course led to lower industry sales.
After making it through the tough first half of 2011, let’s take a look at some key economic indicators:
Housing
I believe the housing market hit bottom in February and has been dragging across the bottom ever since. We have seen this in various industries during the downturn. The reason housing is the last to bottom out is that it had the furthest to drop and the government’s misguided attempt to prop of the sector. If the government had stayed out of the way, housing hits the bottom much earlier and would be recovering right now. Regardless, the housing market should start its recovery soon. It will not be strong enough to significantly help the economy this year; however it will cease to be a drag and that is a very good thing.
Inventory / Freight
Companies currently have a good read on inventory levels and cut stocks as soon as consumer spending slowed. As a result, all trucking freight indexes have gone negative the last couple months. Rail freight has slowed, but not as much. The good news here is inventories are very lean and any increase in consumer sales will immediately result in more production and more freight (which probably happened in June). In addition, activity at the commercial ports shows that import and export activity was not significantly impacted by the slowdown.
Manufacturing
The ISM (Purchasing Manager’s) Index says manufacturing activity increased unexpectedly in June. Orders were up, employment was up and production was up. Imports and Exports also increased (conformation of the port data above).
Unemployment
Unemployment remains high, but don’t believe the rule that GDP has to be greater than 3% for the unemployment rate to decrease. This is one of the old rules that don’t apply to conditions right now. Remember, many traditional indicators (and rules) are not relevant right now due to the unusual circumstances. Many companies cut employment too deep during the recession and are starting to “right size”. A profession recruiter told me that his business in March was stronger than it had ever been. Of course the “bad” factors have tempered this some. Job growth should resume increasing very soon.
Auto Sales
Auto sales should jump in the second half of the year. Supply will increase, prices (through incentives) decrease and there is significant pent-up demand in the market. Showroom traffic has already started to increase.
Restaurant Index
The Restaurant Index was down in May as a result of the high gas prices, but the index had shown solid gains prior to that. Almost all the restaurants near my house that closed during the recession have reopened (under new names) and Friday night waiting lines are back to normal levels. The Hotel Occupancy Index was up 2.8% in May, another sign that consumer discretionary spending is starting to roll.
What Happens Now?
It looks like the shopping cart has just reentered the store. But it is still a shopping cart. Not a Lamborghini. Not a Ford. Not even one of those motorized scooters (that blatantly and publically rip off Medicare) that you see advertised on television. This recovery is everything we expected it to be (or not to be) at this point: slow and bumpy.
My panel of experts is forecasting GDP growth of 3.3% in Q3 and 3.2% in Q4. The Model T is more positive so I would add 0.5% on to both estimates. The Model T is still indicating a much stronger 2012.
Good Times?
The weather is improving, the Middle East appears controllable and Japan should be back ramping up production soon. This just leaves gas prices as an obstacle and that brings us to the Libyan situation.
The Chicago thug tactics, lean on the guy until he leaves, are not working. Khadafy is tougher than we thought. But I have an idea. Instead of using bombs, I would use a bombshell. All we need to do is find him asylum in some country, then pay his blonde, voluptuous, nurse (now in Norway) to go there. Next she tells Moammar where she is and that she misses him badly. Game over, gas prices fall.
Once in a while from out of nowhere
When you don't expect it and you're unprepared
Somebody will come and lift you higher
And your burdens will be shared
Yes I do believe, if I hadn't met you
I might still be sinking fast
I've had a long streak of bad luck
But I pray it's gone at last
Gone at last, gone at last
Gone at last, gone at last
I had a long streak of bad luck
But I pray it's gone at last
Gone at Last - Paul Simon
Snow was fallin', drifts were high
And I was weary from my drivin'
And I stopped to rest for a while
I sat down at a truck stop
I was thinking about my past
I've had a long streak of that bad luck
But I'm praying it's gone at last
When you push a shopping cart in the grocery store it rolls very easily on the smooth, level, floor. However when you push the same cart on the store parking lot, it moves much more slowly and any bump, crack, imperfection or even a pebble can impede its progress.
Well, our economy is the shopping cart and after moving fairly well on the smooth surface, it has been struggling to overcome the obstacles in the parking lot in the first half of the year.
What were the obstacles?
1. Bad Weather – Snow storms, ice storms, tornados, floods. And weather statistics are usually useless when determining economic impact. It doesn’t matter if total snowfall for the season is “average”. It depends where it falls, when it falls, how much falls at one time and how icy it makes the roads and runways.
2. Bad Karma – The Middle East has been in political and social turmoil for several months. Do you think that people might get concerned as they watch the possible start of World War 3 on their big screens? And it’s alarming for the U.S. to enter its third war when we are having problems ending the first two.
3. Bad Gas – The Middle East turmoil only generated a “fear impact” until things in Libya heated up. The disruption in crude supply caused gas prices to spike. This sucks huge amounts of money out of our economy and severely limits consumer discretionary spending.
4. Bad Supply Chain – Who knew the impact of the Japanese tsunami would eventually be felt
here? This slowed the growth of several industries, especially the auto industry. The decrease in supply of autos resulted in higher prices for most brands. This of course led to lower industry sales.
After making it through the tough first half of 2011, let’s take a look at some key economic indicators:
Housing
I believe the housing market hit bottom in February and has been dragging across the bottom ever since. We have seen this in various industries during the downturn. The reason housing is the last to bottom out is that it had the furthest to drop and the government’s misguided attempt to prop of the sector. If the government had stayed out of the way, housing hits the bottom much earlier and would be recovering right now. Regardless, the housing market should start its recovery soon. It will not be strong enough to significantly help the economy this year; however it will cease to be a drag and that is a very good thing.
Inventory / Freight
Companies currently have a good read on inventory levels and cut stocks as soon as consumer spending slowed. As a result, all trucking freight indexes have gone negative the last couple months. Rail freight has slowed, but not as much. The good news here is inventories are very lean and any increase in consumer sales will immediately result in more production and more freight (which probably happened in June). In addition, activity at the commercial ports shows that import and export activity was not significantly impacted by the slowdown.
Manufacturing
The ISM (Purchasing Manager’s) Index says manufacturing activity increased unexpectedly in June. Orders were up, employment was up and production was up. Imports and Exports also increased (conformation of the port data above).
Unemployment
Unemployment remains high, but don’t believe the rule that GDP has to be greater than 3% for the unemployment rate to decrease. This is one of the old rules that don’t apply to conditions right now. Remember, many traditional indicators (and rules) are not relevant right now due to the unusual circumstances. Many companies cut employment too deep during the recession and are starting to “right size”. A profession recruiter told me that his business in March was stronger than it had ever been. Of course the “bad” factors have tempered this some. Job growth should resume increasing very soon.
Auto Sales
Auto sales should jump in the second half of the year. Supply will increase, prices (through incentives) decrease and there is significant pent-up demand in the market. Showroom traffic has already started to increase.
Restaurant Index
The Restaurant Index was down in May as a result of the high gas prices, but the index had shown solid gains prior to that. Almost all the restaurants near my house that closed during the recession have reopened (under new names) and Friday night waiting lines are back to normal levels. The Hotel Occupancy Index was up 2.8% in May, another sign that consumer discretionary spending is starting to roll.
What Happens Now?
It looks like the shopping cart has just reentered the store. But it is still a shopping cart. Not a Lamborghini. Not a Ford. Not even one of those motorized scooters (that blatantly and publically rip off Medicare) that you see advertised on television. This recovery is everything we expected it to be (or not to be) at this point: slow and bumpy.
My panel of experts is forecasting GDP growth of 3.3% in Q3 and 3.2% in Q4. The Model T is more positive so I would add 0.5% on to both estimates. The Model T is still indicating a much stronger 2012.
Good Times?
The weather is improving, the Middle East appears controllable and Japan should be back ramping up production soon. This just leaves gas prices as an obstacle and that brings us to the Libyan situation.
The Chicago thug tactics, lean on the guy until he leaves, are not working. Khadafy is tougher than we thought. But I have an idea. Instead of using bombs, I would use a bombshell. All we need to do is find him asylum in some country, then pay his blonde, voluptuous, nurse (now in Norway) to go there. Next she tells Moammar where she is and that she misses him badly. Game over, gas prices fall.
Once in a while from out of nowhere
When you don't expect it and you're unprepared
Somebody will come and lift you higher
And your burdens will be shared
Yes I do believe, if I hadn't met you
I might still be sinking fast
I've had a long streak of bad luck
But I pray it's gone at last
Gone at last, gone at last
Gone at last, gone at last
I had a long streak of bad luck
But I pray it's gone at last
Gone at Last - Paul Simon
Sunday, June 26, 2011
George Is Still The Boss!
(Part 2 of the series, please read By George I Think He Got It Right, the previous post, before reading this one)
What to do with the George Fund? My first inclination is to make no changes, to treat it as a treasured heirloom. It was my grandfather’s, and then my mother’s and now mine. What right do I have to change it? Then the light went on, actually the whole room lit up. Last time I wrote that I never could figure out why my mother never sold the stocks in 30 years of ownership, now I know why. If I was having these feelings now because this was my grandfather’s, her feelings were even more intense. I think she viewed the portfolio as sacred. This reverence was no doubt expressed to me by voice tone and facial expression when she talked about the stocks. (I’m amazed by how you suddenly understand your parents’ difficult decisions when you unexpectedly have to make those same decisions in your life. Also, we communicate values to our children not by what we say, but what we do, including “how” we say it).
The decision about what to do still remained tough. It was almost if the stocks were “alive”. They grew some days, shrank some others and sent gifts (dividend checks) almost every month. Was I going to just sell assets, or was I going to perform surgery?
I needed guidance. Who to go to? I decided to ask the person who knew the fund better than anyone. I decided to ask George. The moment I asked two questions: “What would George think?” And “What would George do now?” I started to make progress. Yes, I tied to “channel” George. This is ironic because I am an investor because of George. As I wrote about a year ago, I have owned stocks literally my entire life because George gave me three stocks when I was born. Also, I had a great uncle who was a day-trader in the 1920’s. How did you day trade then? You caught the trolley every day to the brokerage house downtown. You negotiated a bulk trading rate (wonder how close it was in real terms to $7 trades today) and you watched the “stock ticker” and traded away. He made a good living doing this until the 1929 stock market crash.
What Would George Think?
George would be proud that the fund has done so well over the past 40 years. But I think George would then say, ”Yes, this is good, but somebody needs to do something about these “dog” stocks. Why are they still here? Boy, you’ve got some work to do!”
What would George Do Now?
To answer this one, I had to study the George Fund in careful detail. It is similar to an archeologist studying a find that had been well preserved for a long time period.
You always hear that you should invest what you know. What George knew was food products and retailing. The portfolio does not include any company in these sectors. I think George had seen many companies in these sectors come and go and thought they were not solid investments.
The companies in the George Fund are all (except one) industrial manufactures. There are several “heavy” manufacturing firms. It is also diversified among industrial sectors. There are oil companies, pharmaceutical companies and chemical companies as well. I determined that all of the companies paid dividends when George originally bought the stocks. The only service firm was a railroad company (you have to transport all that heavy stuff).
The Goal
Before making any changes it is important to establish the purpose for me of this investment. The George Fund will be for me the classic “basket of dividend stocks” that you often read about. The dividends will help pay living expenses in retirement (along with my IRA and 401-K) and the stock portfolio value can then be passed on to my decedents.
What Gets Dumped?
The first part of this is easy. Any company that no longer pays dividends will no longer be in the fund. Of course if the company had to eliminate its dividend, it has had some financial problems and is a weak performer anyway.
The second part of the divesture strategy is brutally tough. Because the top stocks have performed so well, the fund is out of balance. The top stock (a pharmaceutical firm), now makes up over 25% of the portfolio. To maintain diversification and balance, holdings in the top performers must be reduced. This is very difficult to actually do. In addition, some holdings in stocks where the dividends were low will be reduced also.
What to Add?
Obviously no consumer goods or retail stocks will be added. I will add at least one utility and maybe two (Exelon and First Energy look good). Utilities weren’t publically traded when George was buying stock, so that’s why there are none currently in the fund. Utilities make stuff (energy) and pay nice dividends. I probably need a high-tech company to bring the portfolio into the 21st century. It’s difficult to find dividend stocks in this sector. I’m thinking maybe Intel. I also need some healthcare product companies to modernize the group. I’m looking at Baxter and Johnson and Johnson. I may even add a service provider. Both AT&T and Verizon are possibilities. They pay good dividends and should be around for a long time. The other candidates are a natural gas company and a mineral mining (stuff to make stuff with) firm.
The New George Fund
The New George Fund should have around 20 stocks (like the original) that pay decent dividends. I will have changed about 25% of the fund, which means the “base” 75% remains solid. The portfolio will be more diversified, balanced and stronger with less risk than when I began the process. I think George would approve of the changes and that’s far good enough for me. Now it’s time to get some lemonade and enjoy the summer!
What to do with the George Fund? My first inclination is to make no changes, to treat it as a treasured heirloom. It was my grandfather’s, and then my mother’s and now mine. What right do I have to change it? Then the light went on, actually the whole room lit up. Last time I wrote that I never could figure out why my mother never sold the stocks in 30 years of ownership, now I know why. If I was having these feelings now because this was my grandfather’s, her feelings were even more intense. I think she viewed the portfolio as sacred. This reverence was no doubt expressed to me by voice tone and facial expression when she talked about the stocks. (I’m amazed by how you suddenly understand your parents’ difficult decisions when you unexpectedly have to make those same decisions in your life. Also, we communicate values to our children not by what we say, but what we do, including “how” we say it).
The decision about what to do still remained tough. It was almost if the stocks were “alive”. They grew some days, shrank some others and sent gifts (dividend checks) almost every month. Was I going to just sell assets, or was I going to perform surgery?
I needed guidance. Who to go to? I decided to ask the person who knew the fund better than anyone. I decided to ask George. The moment I asked two questions: “What would George think?” And “What would George do now?” I started to make progress. Yes, I tied to “channel” George. This is ironic because I am an investor because of George. As I wrote about a year ago, I have owned stocks literally my entire life because George gave me three stocks when I was born. Also, I had a great uncle who was a day-trader in the 1920’s. How did you day trade then? You caught the trolley every day to the brokerage house downtown. You negotiated a bulk trading rate (wonder how close it was in real terms to $7 trades today) and you watched the “stock ticker” and traded away. He made a good living doing this until the 1929 stock market crash.
What Would George Think?
George would be proud that the fund has done so well over the past 40 years. But I think George would then say, ”Yes, this is good, but somebody needs to do something about these “dog” stocks. Why are they still here? Boy, you’ve got some work to do!”
What would George Do Now?
To answer this one, I had to study the George Fund in careful detail. It is similar to an archeologist studying a find that had been well preserved for a long time period.
You always hear that you should invest what you know. What George knew was food products and retailing. The portfolio does not include any company in these sectors. I think George had seen many companies in these sectors come and go and thought they were not solid investments.
The companies in the George Fund are all (except one) industrial manufactures. There are several “heavy” manufacturing firms. It is also diversified among industrial sectors. There are oil companies, pharmaceutical companies and chemical companies as well. I determined that all of the companies paid dividends when George originally bought the stocks. The only service firm was a railroad company (you have to transport all that heavy stuff).
The Goal
Before making any changes it is important to establish the purpose for me of this investment. The George Fund will be for me the classic “basket of dividend stocks” that you often read about. The dividends will help pay living expenses in retirement (along with my IRA and 401-K) and the stock portfolio value can then be passed on to my decedents.
What Gets Dumped?
The first part of this is easy. Any company that no longer pays dividends will no longer be in the fund. Of course if the company had to eliminate its dividend, it has had some financial problems and is a weak performer anyway.
The second part of the divesture strategy is brutally tough. Because the top stocks have performed so well, the fund is out of balance. The top stock (a pharmaceutical firm), now makes up over 25% of the portfolio. To maintain diversification and balance, holdings in the top performers must be reduced. This is very difficult to actually do. In addition, some holdings in stocks where the dividends were low will be reduced also.
What to Add?
Obviously no consumer goods or retail stocks will be added. I will add at least one utility and maybe two (Exelon and First Energy look good). Utilities weren’t publically traded when George was buying stock, so that’s why there are none currently in the fund. Utilities make stuff (energy) and pay nice dividends. I probably need a high-tech company to bring the portfolio into the 21st century. It’s difficult to find dividend stocks in this sector. I’m thinking maybe Intel. I also need some healthcare product companies to modernize the group. I’m looking at Baxter and Johnson and Johnson. I may even add a service provider. Both AT&T and Verizon are possibilities. They pay good dividends and should be around for a long time. The other candidates are a natural gas company and a mineral mining (stuff to make stuff with) firm.
The New George Fund
The New George Fund should have around 20 stocks (like the original) that pay decent dividends. I will have changed about 25% of the fund, which means the “base” 75% remains solid. The portfolio will be more diversified, balanced and stronger with less risk than when I began the process. I think George would approve of the changes and that’s far good enough for me. Now it’s time to get some lemonade and enjoy the summer!
Tuesday, June 14, 2011
By George, I Think He Got It Right
The subject of today’s post is the By George Mutual Fund (BGMF). You have never heard of it because it is one of the most exclusive funds in the world, yet it is a part of my portfolio. How was I able to get into this elite investment? Well it just turns out that I am the only investor and thus own all the money remaining in the fund.
The BGMF was created by my grandfather George around 40 years ago. It consists of shares in 20 common stocks. When he died 30 years ago, the fund was inherited by his children. While I assume that the other shares of the fund have long been sold off, the portion inherited by my mother remains largely intact. My mother owned the BGMF for 30 years, the only decisions she made was to redeem shares for cash when offered due to buybacks or transfers. Other than that, the BGMF was not “managed” or intentionally varied in 40 some years. I always wondered why my mother didn’t sell it all due to the work involved handing dividend checks and all the paperwork and tax issues that come with direct stock ownership.
The Man Behind the BGMF
George the Businessman
George obtained his wealth through hard work. He started off as a teacher (I teach part-time and several cousins are teacher/educators, funny how that works), but soon found his passion and opened a small grocery store. George was an excellent store owner. His outstanding people skills combined with natural business acumen resulted in continuous success.
His store grew in size throughout the years and George had some money in the bank. At this point most people would have opened more grocery stores in order to gain more wealth, but not George. I think that George loved what he was doing, which was personally connecting with his customers, personally connecting with his employees and cutting meat. More stores would mean that he would be managing store, and not doing what he truly loved. This brings us to:
Life Lesson #1: Find out what you love doing and then do it well as you possibly can.
George the Person
I have to say something about George the person. George was very generous. My mother told me stories about how he let his customers run up credit during The Great Depression when they didn’t have jobs and he had no assurance he would ever be paid. He also would give away soup bones to others who were hungry.
Life Lesson #2: Having the money isn’t as important as helping others with your money. (If you don’t agree with this one, I suggest you give a try and see what happens)
George’s people skills were extraordinary. I watched him interact with customers in the store, but was too young at the time to realize just what was really happening. But I now see the impact based on what people said about my mother’s people skills and my interactions with my uncles (one still living). The most important person in the world to my uncle(s) is the person he is talking to at the time. You just feel after having a conversation (about anything) with these guys. That’s a special gift and they got it from George.
Life Lesson #3: Treat everyone (no matter income, race, religion, appearance, etc.) with the utmost respect. Everyone you interact with should be important to you.
George the Investor
So instead of investing in more stores, George invested in the stock market. That way George got to continue doing what he loved and to increase his wealth by doing what he liked (investing in the stock market). And he was good at it.
The incredible thing about the BGMF is how solid it is after 40 years. This is the mother of all “buy and hold” strategies. As far as I can tell, the portfolio when George stopped managing it had stock in 20 companies. It has 20 companies today. Only one company went out of business and one company spun off a new company, so there are still stocks of 20 companies in the fund today.
Many of the companies in the fund are strong blue-chip stocks. There are a few “weak sisters”, but that is to be expected. George believed in diversification. Of course if he had bought only the five best stocks, the fund would be worth much more today. But if he had bought the five worst, it would not be worth very much at all. George knew he would make mistakes so he spread the risk.
Life Lesson #4: You are not going to be right all the time, so make sure you prepare for those times when you will be wrong. In investing, that means diversify, diversify, and diversify some more.
The bottom line is that George was one great stock picker. To put together a portfolio that has withstood the changes and crises over the past 40 years and is so solid today is remarkable. When I told my broker (who now services the account) the history of the BGMF, he was speechless. I have even more respect for George because in doing the research for this post I discovered that the worst performing stock in the fund is not a stock that he bought, but the spinoff mentioned earlier.
What Now?
So upon the death of my mother a year ago, I became sole owner and now manager of the BGMF. What to do, what to do? Me. The person who bought into Braniff Airlines (bankrupt), Storage Technologies (bankrupt), Home Centers (bankrupt) and Gliatech (bankrupt). It would seem that the BGMF could be in grave danger.
To Be Continued ………..
The BGMF was created by my grandfather George around 40 years ago. It consists of shares in 20 common stocks. When he died 30 years ago, the fund was inherited by his children. While I assume that the other shares of the fund have long been sold off, the portion inherited by my mother remains largely intact. My mother owned the BGMF for 30 years, the only decisions she made was to redeem shares for cash when offered due to buybacks or transfers. Other than that, the BGMF was not “managed” or intentionally varied in 40 some years. I always wondered why my mother didn’t sell it all due to the work involved handing dividend checks and all the paperwork and tax issues that come with direct stock ownership.
The Man Behind the BGMF
George the Businessman
George obtained his wealth through hard work. He started off as a teacher (I teach part-time and several cousins are teacher/educators, funny how that works), but soon found his passion and opened a small grocery store. George was an excellent store owner. His outstanding people skills combined with natural business acumen resulted in continuous success.
His store grew in size throughout the years and George had some money in the bank. At this point most people would have opened more grocery stores in order to gain more wealth, but not George. I think that George loved what he was doing, which was personally connecting with his customers, personally connecting with his employees and cutting meat. More stores would mean that he would be managing store, and not doing what he truly loved. This brings us to:
Life Lesson #1: Find out what you love doing and then do it well as you possibly can.
George the Person
I have to say something about George the person. George was very generous. My mother told me stories about how he let his customers run up credit during The Great Depression when they didn’t have jobs and he had no assurance he would ever be paid. He also would give away soup bones to others who were hungry.
Life Lesson #2: Having the money isn’t as important as helping others with your money. (If you don’t agree with this one, I suggest you give a try and see what happens)
George’s people skills were extraordinary. I watched him interact with customers in the store, but was too young at the time to realize just what was really happening. But I now see the impact based on what people said about my mother’s people skills and my interactions with my uncles (one still living). The most important person in the world to my uncle(s) is the person he is talking to at the time. You just feel after having a conversation (about anything) with these guys. That’s a special gift and they got it from George.
Life Lesson #3: Treat everyone (no matter income, race, religion, appearance, etc.) with the utmost respect. Everyone you interact with should be important to you.
George the Investor
So instead of investing in more stores, George invested in the stock market. That way George got to continue doing what he loved and to increase his wealth by doing what he liked (investing in the stock market). And he was good at it.
The incredible thing about the BGMF is how solid it is after 40 years. This is the mother of all “buy and hold” strategies. As far as I can tell, the portfolio when George stopped managing it had stock in 20 companies. It has 20 companies today. Only one company went out of business and one company spun off a new company, so there are still stocks of 20 companies in the fund today.
Many of the companies in the fund are strong blue-chip stocks. There are a few “weak sisters”, but that is to be expected. George believed in diversification. Of course if he had bought only the five best stocks, the fund would be worth much more today. But if he had bought the five worst, it would not be worth very much at all. George knew he would make mistakes so he spread the risk.
Life Lesson #4: You are not going to be right all the time, so make sure you prepare for those times when you will be wrong. In investing, that means diversify, diversify, and diversify some more.
The bottom line is that George was one great stock picker. To put together a portfolio that has withstood the changes and crises over the past 40 years and is so solid today is remarkable. When I told my broker (who now services the account) the history of the BGMF, he was speechless. I have even more respect for George because in doing the research for this post I discovered that the worst performing stock in the fund is not a stock that he bought, but the spinoff mentioned earlier.
What Now?
So upon the death of my mother a year ago, I became sole owner and now manager of the BGMF. What to do, what to do? Me. The person who bought into Braniff Airlines (bankrupt), Storage Technologies (bankrupt), Home Centers (bankrupt) and Gliatech (bankrupt). It would seem that the BGMF could be in grave danger.
To Be Continued ………..
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