Optimism October 4, 2007January 6, 2017 DON’T SELL YOUR TXCO I’ve been disappointed this one has barely doubled in the three-and-a-half years since we first looked at it. Ordinarily, that would be pretty good – but this is an oil stock! Not that I have even a little expertise evaluating press releases like yesterday’s – but the market seemed to like it. If you bought this with money you can afford to lose – hang on. DON’T SELL YOUR CBH Well, except you may have to. The company seems likely to be acquired by a Canadian bank for $8.5 billion in stock and cash, which doesn’t seem to have thrilled the market – the stock bumped up modestly in advance of Tuesday’s news (did someone has an inkling?) and closed yesterday down a bit at $38.84. That’s up from $30.68 two years ago when we first looked at it, and I don’t want to be cavalier about a 26% gain in two years; every 26% helps. But the idea here was to hold it for a decade and watch it grow. I don’t know enough about the acquiring bank or the deal to know whether we should take the cash or the stock (if given a choice) or hold the stock (if everyone gets some of each), but we’ll have time to decide. DON’T SELL YOUR FMD Nothing new to report, but one of you asked. DRIP TAX ACCOUNTING Kevin McCormally: ‘Michael Young suggests a solution to the DRIP tax-accounting nightmare: To use average basis of shares when you sell. Great idea…if you’re investing in mutual funds…bad idea with stocks…since it’s not legal. The average-basis method only works for funds. With stocks, you’re stuck with either specifically identifying the tax lots you want to sell or [going with the simpler, default method:] FIFO [first shares bought are assumed to be the first sold]. I still think DRIPs can be a great way to invest, despite the bookkeeping hassle.’ JACK BOGLE Michael C [who used his full name, but I don’t want to get him fired]: ‘Thanks for the link to Moyers’ interview. I work for a financial services company and I see things every day that leave me shaking my head. From the creation of esoteric investment vehicles to the efforts put into labyrinthine and opaque corporate structures – if the creativity and labors of the financial industry were to be harnessed and directed to useful purposes, what a fine world we might have. After the Moyers program I ordered the book – there’s a four week delay at Amazon but it will be well worth the wait.’ OPTIMIST! George Hamlett: ‘You wrote Monday: ‘But we are an ingenious and talented people. We’ll figure it out.’ But you also wrote, September 17, 2004: ‘In short: we are going to find those 537 votes. We are going to win.’ And August 10, 2004: ‘At least we’ll likely catch or kill Osama bin Laden sometime within the next 84 days.’ Your boundless optimism baffles me. I don’t know how you do it. Or are you living in some parallel universe like GWB? It’s ugly. It’s going to get uglier. Economics, politics, social strife. You really think we’re going to muddle through with minimal damage? Probably not.’ ☞ Well, in the first place, that third example was boundless cynicism, not optimism, which is quite a different thing. Give me a little credit. And in the second place, we are an ingenious and talented people, and I am hopeful we’ll figure it out. But, yes, it’s hard to see a way to get from here to there without some pain in between. Jeff: ‘Housing, oil, global competition taking our good jobs – what about the deficit (or deficits)? Not a big problem?’ ☞ I knew I forgot something. Jon Frater: ‘Or, you could do what I did a few years ago . . . put a few thousand dollars together to buy a Class B share (or two or three) of Berkshire Hathaway, and then you can own Coca-Cola – and See’s Chocolate. Life can be sweet.’ ☞ As I said when BRK was $300 a share, and then again at $3,000, $30,000 and $70,000 (last night the Class A shares closed at $119,290), ‘it’s a great company, but I think the stock may have gotten a little ahead of itself . . . I’ll wait to buy until it falls back a little.’ The great tragedy of my otherwise ridiculously blessed life. Richard Reiss: ‘Monday‘s piece was sobering, and I’m not sure I can stand being any more sober than I already am. Meanwhile, I thought you might like this quote from Tuesday’s Times Business Section: ‘‘Today, a megayacht is indispensable,’ said Olivier Milliex, head of yacht finance at the Dutch bank ING. ‘It’s not like 15 years ago, when a yacht was a luxury item.’‘ Sometimes I get The Times and The Onion mixed up.’ ☞ Say what you will about the Republican philosophy of slashing taxes for the very, very rich (like cutting the estate rate from 55% to 0% for billionheirs), but it’s been a grand time to be rich and powerful in America. Tomorrow: Maybe not. The dog is eyeing my homework. But either way, I’ll hope to see you Monday.