Late night market musings

The fact that safety-first advice is flooding the nets seems made to order for a contrarian point of view, that the volatility phase is coming to an end and growth will start again — and I am starting to see that. For example, Barry Ritholtz, who called the March 2009 bottom pretty much to the day, is sounding much the same again. Recent market action has been good.

I wish I could believe it. But the problems in Europe that everyone knows about are ongoing, and not close to being solved. What would the effect be, over here, of a 2008-style credit crunch over there? Meanwhile, over here, people wonder about a double-dip recession. To my mind, there won’t be a double-dip, because the recession here is still going on. There is an “official definition” that says no, that recessions are measured by corporate health, without having to look at unemployment. And in the past the two went up and down together, so it didn’t much matter. But now, after 30 years of class warfare, it is no longer so. Now, our economy is run by people who want to cut workers and add customers, without realizing that those are the same people, and that this contradiction creates the headwinds beating against our economy and our markets.

On the other hand, even bear market rallies can be traded. I must not lose sight of that.

UPDATE 2016 August 28

A 5-year graph of S&P 500 index.

Well, I should have believed it. Soon after this post, we were off the the races again, at least in the markets. In the broader economy, the recovery was slow, but it stayed a recovery, and not another recession.

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Preferred Stocks

When times are good, investing is all about capital gains. Then there are the times like the present day. Investing advice is all about safety and income. Too often it boils down to — buy this dog that has been beaten down so far it looks like up to me, and hope you can remain solvent longer than the market remains irrational about it.

But sometimes there is a different story.

At a time when the Federal Reserve’s policies have decimated savings accounts, savvy preferred stock investors continue to earn 7% yields from the highest quality preferred stocks at what many agree is acceptable risk.

The idea is that a preferred stock is not particularly correlated with the common, and so is not subject to the fluctuations of a volatile but basically sideways market, but exists to provide a healthy income for the buyer. After filtering for safety and return, Le Du finds

we are left with about 150 extremely high quality preferred stocks to pick from….

More details will follow tomorrow: it’s a two-part article. But a commenter mentions Quantum Online, a site that specializes in preferred stocks in particular, and income investments in general.

As is so often the case, this article addresses what to buy, but not when, or when to sell. ASAP is the implicit answer, and sell when you need the money for something else. Fair enough — for me an income investment is not the goal, merely a parking lot along the way.

UPDATE: part 2 of 2.

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Google+

After I closed my Google+ account, they asked my why. Here is my response.

I rely on Gmail. I barely use Google+. I understand that breaking some obscure rule on Google+ can endanger my Gmail account. So, out goes Google+.

That whole “don’t be evil” thing? You should bring it back.

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Pity the poor banksters

http://seekingalpha.com/article/299343-jpmorgan-s-earnings-were-so-so-but-the-commentary-is-fascinating

In which Jamie Dimon, who cluelessly ran his bank into the ground, abandons the guy who saved his bacon.

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Jack ‘O’ DeathStar

Carve it yourself.

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RIP Steve Jobs

Excerpts from Steve Jobs’ Commencement Speech at Stanford

When I was 17, I read a quote that went something like: “If you live each day as if it was your last, someday you’ll most certainly be right.” It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: “If today were the last day of my life, would I want to do what I am about to do today?” And whenever the answer has been “No” for too many days in a row, I know I need to change something.

Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

No one wants to die. Even people who want to go to heaven don’t want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life’s change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.

Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

When I was young, there was an amazing publication called The Whole Earth Catalog, which was one of the bibles of my generation. It was created by a fellow named Stewart Brand not far from here in Menlo Park, and he brought it to life with his poetic touch. This was in the late 1960’s, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and polaroid cameras. It was sort of like Google in paperback form, 35 years before Google came along: it was idealistic, and overflowing with neat tools and great notions.

Stewart and his team put out several issues of The Whole Earth Catalog, and then when it had run its course, they put out a final issue. It was the mid-1970s, and I was your age. On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: “Stay Hungry. Stay Foolish.” It was their farewell message as they signed off. Stay Hungry. Stay Foolish. And I have always wished that for myself. And now, as you graduate to begin anew, I wish that for you.

Stay Hungry. Stay Foolish.

Thank you all very much.

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How to get your QR code onto Google Maps

Put it on your roof.
QR on a roof

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The Collatz | hailstone | 3n+1 problem

Inverted. Thanks to Jason Davies.Inverse Collatz Map by Jason Davies

A shout-out too to Mike Bostock for his d3.js, a library for Data-driven documents.

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Bohemian Rhapsody on a flatbed scanner

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Stock market order types

… and how to use them in a volatile market, when we may have another flash crash. Beware And Prepare For Mini Market Flash Crash. Avoid sell-stop orders because in a flash crash, prices drop to (some approximation of) zero, and bounce back within minutes. Your stop order becomes a market order at the stop price, and then you can be sold out at the bottom, only to see the price snap back to normal a few minutes later. Sucks to be you. Use a stop-limit sell order instead.

Then use a limit-buy order to be on the other side of that disastrous trade above.

The author uses “mini-flash crash” to describe the ~10% sell-off and recovery of early summer 2010 — a process that took several weeks. To me there is a fundamental difference between a decline and recovery that continues over more than one day, and a flash crash that is a glitch from high-frequency trading that rights itself within minutes.

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