Today’s column will again touch on money — yea, verily, specific stocks! — even if it takes me a minute to get there.
Paul Jakubowski: ‘What goes around comes around. My trusty MYM came up this morning with the following quote: ‘Voters decide nothing; people who count votes decide everything. – Stalin.”
☞ I guess this highlights the need for ‘standards’ in counting the votes. How about we agree to count the vote if:
(1) at least two corners of the chad are detached; or
(2) light is visible through the hole; or
(3) an indentation on the chad from the stylus or other object is present and indicates a clearly ascertainable intent of the voter to vote; or
(4) the chad reflects by other means a clearly ascertainable intent of the voter to vote.
Why these standards? Because they come directly, verbatim, from the 1997 Texas statute signed by Governor Bush.
That statute also provides that if different people request different kinds of recounts – e.g., one wants a manual recount and another wants an electronic recount – the method chosen should follow a little hierarchy to decide which to use: ‘A manual recount shall be conducted in preference to an electronic recount and an electronic recount using a corrected program shall be conducted in preference to an electronic recount using the same program as the original count.’
Dana Dlott: ‘Trying to get your mind off the election . . . About 1 1/2 years ago I sent you this message:
Can you explain something to me? There are lots of very well run corporations everywhere in the world. Basically all of them have CEOs who work for a tiny fraction of the compensation packages many American CEOs get. Why don’t our US corporations replace their costly CEOs with foreign CEOs who will do the same job at a fraction the price?
‘Now it looks like it is happening. The big news in the NYTimes yesterday was Daimler replacing Chrysler’s CEO with a German. After all, there must be a cheaper guy who can lose $512 million in a single quarter. Hope everybody else catches on . . .’
☞ I hope so, too. The same boards of directors that expect a tough bargaining stance to be taken with labor often look forward to delighting their CEO. Partly this is because the directors and the CEO are frequently friends. Partly it is because the directors are frequently CEOs or ex-CEOs themselves – members of the club. Partly it is because the last thing a board wants to do is search for a new CEO.
Of course, it would be shortsighted to save a few dollars on the leader’s salary . . . lose him or her . . . and see the enterprise falter. So there is a balance here. But things have swung awfully far in favor of the CEO. Many boards, I think, could do better by their shareholders.
And speaking of shareholders, you guys have got me feeling incredibly guilty for writing about the election when I should be putting my shoulder to the task of making you some money.
As I think I’ve made plain over the past 1200 columns (this is #1201), I have no clue how to make you money. If I did, I would charge more. I tend to think – as I suggested Friday – almost everyone does best who goes the simple route: periodic investing in a couple of index funds.
Still — as intrigued by the game as anyone else (and eager to control my own tax consequences) — I do invest in individual stocks. In fact, when I’m feeling really self-destructive, I even short stocks. (I am almost always right about my shorts, but lose a lot of money anyway, because I’m right too soon. As famed retired short-seller Robert Wilson has said, ‘You need to decide whether you want to be right or you want to make money.’)
When I’m out to ruin you as well as myself, I even once in a while share my ideas.
On March 14, I ran a column entitled Five Stocks You Should Consider. It began by knocking Dell as seemingly overpriced at 51 (eight months later it is a lot more reasonable, if still not cheap, at half the price) . . . and then suggested five stocks to buy, that have since appreciated about 38%. This is particularly strong performance given how the rest of the market has fared, and far better than I could ever have done on my own. As I explained in that column, these five weren’t my ideas, they came from a guy who is really smart and who, equally important, really does his homework. I am, truth to tell, too lazy to do my homework.
I wouldn’t buy these stocks here, now that they’re 38% more expensive, but I wouldn’t rush to sell them, either. My friend tends to buy for the long-term. He looks for stocks that, over time, will rise even more than 38%.
On August 22, again feeling guilty for writing too much about cooking or guns or some other damn fool thing, I screwed up my courage and suggested another little batch of stocks.
If I were you [I wrote in response to a reader’s question], I would consider a steady program of periodic investments in a couple of index funds. Or, if you have a taste for it, the acquisition of a portfolio of your own, geared toward long-term, tax-deferred capital gains. Being one to go from the sublime to the ridiculous, I might include some Microsoft (MSFT), some McKesson (MCK), some Canada Southern Petroleum (CSPLF), some Criimi Mae (CMM), a little Calton (CN), and — from the ridiculous to the preposterous — 100 shares of Borealis (BOREF). And just wait five years and see where they are. If they’re much lower, you’ll hate me, but have the satisfaction of knowing that I lost even more than you did. If they’re much higher, you will have long since forgotten who suggested them. (Do not “pay up” for these stocks. They are currently selling for around $71, $25, $6.50, $1.56, $4.50 and $3.50, respectively.)
This little group was more of my own cobbling together, which may explain why it is down a bit since I held forth. Then again, we’re only a few months into that five years.
MSFT, as many of you know, dipped as low as $48, but has come back to $69. Obviously, it would have been a lot smarter to wait and buy it at $48 than to pay $71. MCK is up from $25 to $31. So on those two, as a pair, you’d be a little bit ahead. Not surprisingly, perhaps, those two were the only ‘adult’ stocks in my basket – the kind of stocks a bank trust department might be willing to hold on your behalf.
CSPLF, down from $6.50 to under $4, owns a lot of natural gas in Canada, and one giant lawsuit. If it ever won that lawsuit, I’d be able to retire from writing this column. Even without winning the lawsuit, this is the kind of stock I like. No one has ever heard of it, people are doubtless selling in disgust for a tax loss – and who knows? One day, natural gas could be worth something.
CMM is down from $1.56 to $1.12 or so – but not really, because it also just issued 6 shares of a preferred stock for each 100 of the common that you owned, so if you do all the math, it’s more or less where it was. It seems to be emerging from bankruptcy. My hope is that I might triple my money over the next few years in CSPLF and CMM. (Of course, I am keenly aware that I may lose it, also.)
CN is down from $4.50 to $3.50. This is the stock on which we originally made several times our money, culminating in a column I entitled The Lunatics Take Over – Yippee! But then the dot-com fever it had improbably got caught up in broke, and before you knew it the lunatics were gone and it was back to being unwanted at any price. I don’t mind paying $3.50 a share for $7 a share in cash (and no debt). I know bad management could squander all the cash and leave us with nothing. But management owns so much of the stock, I’m willing to gamble that it won’t.
BOREF, meanwhile, has become ever more weird. It seems to be trading about where it was before, but in tiny amounts in obscure places — not every brokerage firm or quote service will be able even to furnish you with a quote. But talk about investor relations! You can find out all sorts of things about what the company claims at www.borealis.com. This is a stock that is surely going to zero, as I have written before. But I have bought vast quantities of it over the last year or two, because what is life without a dream?
And now can I say one last thing about politics? Our economy may give us cause to worry – it’s been a long time since our last recession — as may the expanding hole in the ozone layer. But our Constitution? All that’s going to work out fine. And if it’s Bush who wins, even though I hope it’s not, we will all rally round and wish him well.
Quote of the Day
Selling a soybean contract short is worth two years at the Harvard Business School.~Robert Stovall
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