A culture of stocks

When I was about ten yrs old, I began cutting grass to earn extra money..and yes i kept the change in several old piggy banks...but when I got about 13, my dad took the hundred dollars I had saved, and asked if I wanted to buy some stock in a new company called Control Data..It cost about $5 per share, and he said that he would add $25 to my savings and get 25 shares for me. So for the next 7 years or so, you can guess which section of the paper i began reading diligently. Control Data stock rose, split, rose and split over and over...and finally in 1967 in a time of financial distress, he sold it for me, and i took the check, for $3600 down to Minnesota Federal in St. Paul to cash. The cashier told me that it was too large a check for them to cash, and to cash something that large, I needed to call them in advance...I asked to speak to the manager...and got the cash.. From that moment on, it was stocks for me...it was a key moment...

A Bit on the "January Effect"

Well it used to be that in January, after all the tax selling of the previous December, the month was a "bounce" and...everybody looked forward to it. It seems though, that this year, 2013, the "bounce" lasted all of 48 hours. I guess I understand..with the sale of the NYSE, and the layoffs of the investment pros on Wall Street, probably caused by lower earnings due to errors of judgement of the higher ups...it certainly might be a lean year...and also, it was not pretty dealing with the aftermath of Hurricane Sandy, which has tested the old rule never to rebuild in a flood plain, or at least never rebuild with your own money...asking for full federal help is the exception...and of course it is OK to borrow for foreign wars, but that is verboten for any social need.... It has also gotten ugly for the Wall Street pundits, who are trying to make sense of it all...and in reviewing the retail sales numbers last week. trashed higher end TIF, Tiffanys, for selling too high end, and not realizing that the rich do not have the money any more...and trashing JCP, J.C. Penney and the middle class market... for their efforts to the forget the constant sales, and go with the "Straight Deal" which is a transformation that takes time..which Wall Street pundits do not have...and then of course the lower end, "Dollar Store" which was trashed because even they did not have the traffic Wall Street Pundits wanted...so the question remains where all the traffic and sales went...and ya...retail theft was up...so some were doin the best they could to move some merchandise.... The first quarter of 2013 could be pretty ugly...stay tuned.

The Hockey Stick

One of the patterns that is noticable at the opening each morning of Wall Street is the "Hockey Stick" Pattern...where news pundits will dramatically announce some news that is negative, and the stock plunges on the opening of trade, but...upon further review and thoughtful analysis, there really is no or little reason for panic, and the stock recovers over the course of the day---I call this the "Hockey Stick"---but the question is each morning on the plunges that happen due to news stories....Is this a hockey stick or not? You make the call.

Make a Wish

Remember the Make a Wish Foundation? This was a foundation that provided a dream come true for a deserving person who faced a terrible disease etc....There is a difference between "Make a Wish" and investment....And that difference is important it seems to me. When one is young, one thinks as a child, but then later, when one is an adult, one learns. And a child relies on "Daddy" or "Mommy" to make the decisions, or in business matters, an "investment professional." One assumes that the professional knows best, as in the tv show "Father Knows Best." However...the current ethical requirements for investment professionals requires that they not be guilty of negligence, and not that they in fact have followed the objectives specifically or have acted in the best interest of the client...Thus...eventually, the investor comes to the realization that knowledge is important, and that each person, man and woman, young and old investor alike, must become knowledgeable about investing. Objectives must be thrashed out, and the investments must be made that match these goals, and when a firm is used to make the investments, one must make sure that each transaction is done correctly. As a young man, my mom and dad were bond investors, and I remember on the kitchen refrig was a list of the bonds, and when the dividends paid, and what the amount was. My mom used to check off the dividend checks as they were received..and I also remember the effort that she made when a check was not received..letters etc...she made sure..Nobody made sure for her. And so, some fifty years later, i also am checking off the dividend checks, even if they are electronically deposited...and I think of how my mom's checklist showed me the way..thanks, mom.

Who do you blame for your losses---that is the question:

Let's imagine that you have created a product...and after the first introduction of the product, the first consumers are able to give feedback on how the product worked for them....imagine that the original designers and creators of the product can observe...through a glass viewing area...i think you can imagine the result...any feedback on any little improvement of the product seems very similar to what would happen if a mother presented her child to her relatives and they had a few corrections as to how to make the child better...in short.... If you buy a stock, and it does not go up...cut your losses quickly...whatever you thought must have been wrong...and those who do not recognize this fact quickly face huge losses..in stock selection and life...the ability to recognize when a wave is not going to be the best to ride...but the wise course is to quickly cut off the ride and find another wave...be a surfer..not stubborn and fighting to be right...but being flexible...and ready..for the new...

Are you a Transaction or a Relationship Investor? Knowing counts

Back in the 1980's when I was in training to be a broker for E.F. Hutton, ah yes the days when everybody listened to what E.F. Hutton said, in the very last hour of instruction a psychologist came into the lecture hall, and had us answer 20 questions, and then scored our answers. On the basis of our answers, a total score indicated whether we were the type of person that loved "transactions" or loved "relationship investing better." As he strolled up and down the isle...he stopped by me and smiled: "Yup he said, you are a transaction guy". A transaction guy loves interacting with the public, selling things, and whether it is a large sale for small sale, loves the thrill of closing the sale. I remember Phil Laut, the author of "Money is My Friend" asking the small business owners to try just selling a pencil or pen to someone...just anything small...just to get practice in the process...the total dollar amount of the sale was not important.. You might wonder why it mattered...yes I did love stocks and trading....and on some wild and crazy days, four hours was long term....I just got impatient to take profits.... On the other hand, one of my friends in the class, when asked what his marketing plan was, he responded that he planned to sit on a beach near his home, and just chat with the millionaires that lived nearby...I was stunned. No analysis, No detail or anything...and then he mentioned that one of his neighbors had already penciled in two million for him to start his book with...nice... The reason that half hour of instruction mattered for me, ---- I now knew what my button was, and knew that I needed to work on my relationship skills since they were a weakness...and now when I am looking for a full service broker, when I do look for one, I look for somebody to trust, and also for someone who has the ability to and capacity to develop a relationship long term...with a firm that likewise is interested in more than "churn and burn." Make a note of it.