So Patrick has enhanced the scorecard that tracks the suggestions made here over the years to include a column that shows how much actual cash you would have had to take out of your mattress, beginning with the first suggestion in 1996, to have amassed the theoretical $383,027 it would have grown to last night. If you had tossed $1,000 at each of the 196 suggestions made here over the years, selling when the suggestion was sold (or when the options expired or the company got acquired), or else holding on to this day . . . how much would you have had actually to remove from your mattress to place all those bets?
The answer is to be found in the scorecard’s newly added Column A: Cumulative Cash Invested.
It starts out $1,000, $2,000, $3,000, $4,000, $5,000 0– then jumps to $11,509 because Patrick assumes you would have shorted Amazon and lost way more than the $1,000 you had intended to bet — but, funny thing, peaks at $53,837, around the end of September 2005, and ends at around $32,301, as of the last suggestion Patrick recorded.*
It’s as if your mattress scolded you, as you rolled out of bed this morning: “You owe me $32,301!” And you said, “Oh, Mattress, at the moment that’s true — and if I place more of these $1,000 bets , I could owe you even more — but I didn’t burn the money, you know. It’s turned into $378,673 in a brokerage account! So stop hocking me!”
As it happens, I’m going to make two changes today, one of which will make the mattress happy: I suggest you consider taking your profit on GLD (the gold shares) and buying CISG (a Chinese auto insurance company). Because GLD was suggested twice, at $92.29 and at $102.53, and closed last night at $117.61, your mattress will recoup $2,421 (hardly a rousing gain), and because Patrick always assumes you bet just $1,000 on any column’s suggestion, your mattress will give back just $1,000 of that to buy CISG, reducing the cumulative cash outlay in column A by $1,421. See how this works?
I’m suggesting you switch from GLD to CISG because someone much smarter than me thinks gold is headed back to $800 an ounce and that CISG — which sells for $5.40 yet has, he says, $8.50 a share in cash — could one day this decade be valued at more like $20 or $25.
I will likely keep some of my GLD shares anyway anyway, because it always serves as a chaos hedge and might someday once again serve as an inflation hedge.
In hindsight, it would have been a lot smarter to sell a few months ago at more like $150. But at least for the purposes of this scorecard (are you listening, Patrick?), we’re out at $117 — and into CISG at $5.40.
Ho, ho, ho. Have a great weekend.
*All this ignoring the effect of taxes. And taking a shortcut with dividends. Patrick explains: “For the purposes of this exercise, I only count dividends received when you sell the stock in question. It would just be a nightmare to track each quarterly dividend individually. This means that any stock that you didn’t sell, you aren’t getting credit for the dividends that accrued from that stock. Consequently, the chart slightly overestimates how much cumulative cash is invested. If you like, think of those dividends as offsetting the commissions.”
Quote of the Day
Every debt is ultimately paid, if not by the debtor, then eventually by the creditor.~Jim Grant
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