I have just updated the Global Investing tables, to show my closed positions to all the world. We continue to sell all Thai and some Japanese stocks, using limit orders. The Thai stocks were always in the former Global Investing Pro-Minutewoman portfolio for sophisticated investors only but with the floods and upheaval in Bangkok they are even harder to cover now from the USA.
The Japanese stocks being sold are ones no longer supporting their American Depositary Receipts. I naturally suspect they are worried about Sarbanes-Oxley laws after the revelations of frauds at Olympus but I am still using limit orders to get out of ex-ADRs.
More for paid subscribers on currency advice: Read more »
The Glory That Was Greece
In place of the New Goldman Sachs, we now have signs of fraud against customers.
In place of investigative journalism, we now have the Murdoch Mafia family.
In place of the glory that was Greece, we now have fiddled national accounts by the old Goldman.
In place of the splendor that was Rome, we now have bunga-bunga statuatory rape.
And in place of a war to end all wars, remembered today, we have never-ending wars, against drugs, against terrorism, against pirates. Plus enemeies.
As you can read below if you are a paid subscriber, being the colonial power does not always pay. And the perquisites of investment bankers are not sacrosanct. And Veteran's Day is when you slip in bad news.
Several readers commented on my anti-broker tirade yesterday based on my memory of my father.
Here are two:
DC of Buffalo thinks I should read Gott ist Mein Broker by Bruder Ty, Christopher Buckley, and John Tierney. If it is the same Christopher Buckley who writes funny articles, maybe I will.
LD from Germany writes that the correct quotation is: “der lieber Gott steckt im Detail” meaning the good God is hidden in the details. Entschuldigen. I could not check with my late father. Another note about my father is for paid subscribers only along with news from Spain, Canada, Britain, Brazil, China, Greece, Australia, and Switzerland.
Her Father's Daughter
Italy's govt debt auction took place despite calls for a cancellation and interest rates remained (barely) over 6%. That's the bad news.
The good news is that the euros 5 bn on offer was more than twice oversubscribed. So market participants want to hold Italian paper and expect interest rates to fall going forward. Do not be over-simplistic forecasting the Euro-doom. Pasta can be nourishing and tasty.
Sometimes when I get frustrated with my grown children, I tell them they are not behaving like Julius Oppenheim's grandchildren. Julius, my late father, was a German-born Jewish businessman who had to start anew in New York when he fled from Hitler in 1937. This background led him to raise his only child (me) with a few important insights.
First, America is great. Not just a haven but a model for the world. It still is. Tomorrow is Veteran's Day, and I remember the war dead.
Second, be flexible. You cannot follow the rules you learned in a German gymnasium or in your father's business while working in the NYC Rag Trade. You must adapt in your lifestyle too. People in New York live in apartments not in houses. They have neighbors who are as exotic as they are but different. They can learn from each other in unexpected ways. Sicilian-American babies in our building, Rosalie and Clementina, were fed pastina by their mothers and so was this German-American baby.
Third, the stock market is how you make money or lose it. Read and learn but make up your own mind by doing careful research. In German, he would say: Der lieber Gott steckt im Detail (or sometimes, Der Teufel steckt im Detail.) He was utterly thrilled when my first journalistic job was with McGraw-Hill World News, which published his favorite magazine, Business Week. He buddied up with Mike Metrinko, a Uniate Catholic from the Ukraine via Pennsylvania, as they competed to find and share good stock ideas. They worked at it.
Finally, he also taught me to never trust what your broker tells you, once his Uncle Jack (of long-defunct Abraham & Co.) had died. He was deeply suspicious of brokers offering 'free' advice, on the theory that they were really looking after themselves, not the customer.
This recollection was stimulated by NY reader LM sending me a tip from his brokerage about a foreign bank preferred stock, precisely the kind of yield investment my dad liked to make. But the reader failed to spot the details passed on to me, a 30.5% (astronomic!) gap from the bid to the asked price of this thinly traded share he was sold. The levels on HBC.A preferred shares were $17.61 bid, $23.9 ask. That means the narrowly traded share will pay off for his broker, Mr. Work, before it pays off for LM.
In my father's case, thinking for yourself led him to buying instruments that we still favor at www.global-investing.com like: closed-end funds (but never at the IPO), preferred stocks, and above all, small cap shares not well-followed by Wall Street.
His father's daughter tells you more today, from Switzerland, Singapore, Bermuda, Britain, Israel, Belgium, China, Australia, and Canada about quirky stock picks among small caps that we dig up through detailed research, including a new pick. These are stocks nobody ever heard of. Mostly good news for a change despite the overall market malaise.
Pandora's Box and Kabuki Theater
Pandora opened her box and here are some consequences. Plus ça change, plus c'est la même chose.
Silvio Berlusconi will evade claims to pay Italian back taxes owed.
Greece will select a new premier from a multi-generational political clan.
Japanese audits will be questioned post-Olympus (as they were pre-Olympus).
The boards of Wall Street stars will fail to control them.
Iran will hide its nuclear facilities.
Binyamin Netanyahu will lie.
The waters will continue to rise in Bangkok.
The Japanese yen will rise against the Greenback.
The survival of the euro will depend on Angela Merkel.
Stock markets will fluctuate. Read more »
The first victims of the Eurozone crisis north of the Alps were named today: shareholders of French bank Société Générale, who will get no dividend because the bank is rebuilding its capitalization to meet new too-big-to-fail regulations. The share is actually up despite this development.
Given this development, dividend dangers at one of my US stocks (Frontier Telecom, in case you were wondering), and reader tax planning questions, I am considering removing some more holdings in our portfolio today and the rest of this week. This is for paid subscribers only and is in part a matter of tax planning.
My accountant seems to think tax losses will be more valuable in the future (when taxes go up) than they are today. But of course as an investor I always do manage to stumble a few times and there will be future losses too.
It is another busy day in reporting land with news form Greece, Germany, Canada, Britain, Hong Kong, France, Israel, Belgium, and Denmark.
Warren Buffett and Me: II
At the start of October, with trepidation, I wrote in several public forums that the time had come to get back into stocks because they were well valued. I wrote my view on the covestor.com site, telling copycat investors why they were increasing their margin to buy more shares; I was quoted on seekingalpha.com. And of course everyone who gets my newsletter knew that this lady had gone seriously bullish.
Of course I worried that I might be the last share buyer left standing. But now there are some reports that make me think others came around to my view too.
In the last quarter, the Oracle of Omaha bought more stock, using cash reserves at Berkshire Hathaway to invest $23.9 bn, of which some $6.9bn was spent on common stocks. Warren Buffett bought “comnmercial, industrial, and other” shares, which accounted for far more than his purchases of financial and consumer stocks. That is a switch; in the past Buffett tended to favor banking shares and those of makers consumer products like Coca Cola. Read more »
I am off to cheer on the marathon racers but of course I did my tables first, helped by how early I got up today, the first day of return to standard time. All can see the closed positions table showing two new goodies this week, notably my sale of Tadano (JP: 6395) at last. I stubbornly used a limit order in yen to sell.
There is also a lot of news on closed-end funds for my paid subscribers as well as updated positions in our stock and bond portfolio. All the world can see our profitable exit from Canada's Third Canadian Fund, a closed-end fund which bought out all its US shareholders. THD-Toronto has a message for other operators in our neighbor to the north.
In Nicaragua you can get materials to rebuild your roof from Daniel Ortega, running for re-election.
In Cuba from next Thursday you can buy and sell houses, banned since Fidel Castro came to power in 1959. You get to deal in cash for up to two homes, a city home and one on the beach, under a new law pushed by younger brother Raul Castro. Until now the only way to switch to a home meeting changing family needs was by barter. The Castros and Ortega were trying to get a reform in before newly-listed Groupon started offering Managua home repairs or Havana real estate brokerage.
On other Communist news, our webmaster has blocked the barrage of Chinese fake sign-ups for the free version of this newsletter. Our website now will require that you confirm your email address to get our free or paid blog. A huge volume of sign-ups from China after I reported on the risks of an EU bailout by Beijing attempted to block others' access to www.global-investing.com, our website, with a “denial of service attack.”
With Euro-euphoria stale today and markets back in risk-off mode, “Warren Buffett should come to Europe to tap regional champions at knock-down valuations, including in his favored sectors," Cheuvreux analysts said in an open 'letter' to the billionaire U.S. investor detailing 7 top picks (reported by Reuters). The bulk of Berkshire Hathaway investments are in U.S. firms, with just 4% allocated to Europe, but Cheuvreux said European companies may be worth a look.
"European equities have recently bottomed out, reaching very attractive valuation levels. When we compare the European champions we have selected to deals made by Berkshire Hathaway in the U.S., we see that these European stocks offer higher growth potential and more attractive valuations," the French brokerage wrote. After a turbulent summer, with the FTSEurofirst 300 falling 10% in August alone, the market has stabilized on hopes politicians were getting to grips with the euro zone debt crisis, but remains down 12% on the year.
"By contrast, the Dow Jones industrial average is up just over 3% YTD.
"Buffett's stated aim is to buy firms he can understand, with long-term prospects, operated by honest and competent people and at an attractive price, the broker said, which leaves lots to choose from on this side of the Atlantic. His track record reveals a preference for insurance, clothes and consumer staples. Picking stocks in those sectors, the broker also suggests targets" for the Oracle of Omaha. More for paid subscribers on the Cheuvreux list and news from Britain, Australia, Finland, Spain, France, Switzerland, Israel, and Canada follows:
Israel Won't Bomb Iran
Newly-named European Central Bank President “Super Mario” Draghi slashed interest rates by a quarter percent to 1.25%. This shows that the ECB is moving away from the Trichet doctrine of his predecessor who was more worried about inflation than about slow growth or even financial crisis. Draghi, who assumed office on Tuesday, moved to deal with indicators of a renewed Euro-zone recession and the crisis over southern European debt and deficits.
The immediate impact will be to reduce interest rates which troubled economies like Greece and Italy have to pay as well as credit default swaps. These rates are based on the ECB rate.