Wednesday, February 7, 2018

WHAT DO YOU CALL IT WHEN THE SHOESHINE GUY IS GIVING INVESTMENT ADVICE TO HIS BROKER?


There is an old saw that when markets are greatly overvalued, the “little guy” wants to get in on it. The Author Rob is a hundred percent behind the “little guy.” In fact, he is a little guy. And he has made a few speculative moves with Bitcoin. Made a little. Not much. The swings are so massive it is a tough speculative market.

 Bitcoin has made lots of initial investors money. Some an awful lot. But was it their prescient investing skills, or dumb luck. Likely somewhere in between.

We hear analysts telling us that bitcoin will hit $300,000 very soon. Others call it a speculative bubble. The Author believes both analyses are incorrect.

Bitcoin, although it is a ether money and exists only on a lot of servers, know has some transparency. There are some vehicles for investing in the product and not having them kick around in your wallet.  It was anticipated that funds would be launched in early 2018, but the SEC still has reservations.

Below is a link to a story about a 22-yo Kentucky man who made $770,000 on bitcoin. He bought a house and some other stuff, and started a consulting business to help others invest in cryptocurrencies.

It will stand without further comment.  

"He had invested in bitcoin almost two years earlier, so now Jacob Melin had a new house, a new truck, a new consulting business and a line of people coming into his office, trying to become wealthy as quickly as he had. One person said he expected to use a modest investment to “retire in 12 to 18 months.” Another said he wanted to use the proceeds to start a business. And a father of two talked about paying off his own student loans and buying several acres of land — all the things he did not see a chance to do with his income as a software salesman.'

“Us little guys working our butts off, we can’t get ahead,” Cedric Knight, 35, told Melin. “This is a once-in-a-lifetime opportunity to change my life.

"Knight and others visiting Melin were pinning their hopes on a new form of currency whose potential value the world was only beginning to recognize. Millions of people around the world are chasing after fortune by investing in bitcoin — which has soared by more than 2,500 percent in value in the past two years — and other digital instruments known as cryptocurrencies.'

 THERE ARE NO DEALS OF A LIFETIME IN THE DESERT OF THE REAL!

Saturday, February 3, 2018

FEBRUARY 2018 DESERT OF THE REAL ECONOMICS INVESMENT NEWSLETTER


FEBRUARY 2018 DESERT OF THE REAL ECONOMICS INVESTMENT NEWSLETTER

First off, here are links to one of the posts we have made since the January 2018 Newsletter and some brief quotes:
  
            In 2015 the Federal Communications Commission (FCC) defined the Internet as a “common carrier.” This treated the Internet as a “common carrier,” and effectively requires that Internet Service Providers (ISP) treat all content them same. They cannot block content nor charge more for certain content. 

The 2015 rule defining the Internet as a common carrier provided Net Neutrality. But in December of last year, the FCC voted, by a 3-2, party line vote, to end Net Neutrality.  They did this by changing the legal definition of the Internet from a common carrier to that of an “Information Service” and weakening content protection. … Little will change in the near term. But unless Net Neutrality is reinstated, the Internet may soon resemble Cable TV. 400 Channels and nothing worth watching.”

DRIPS ARE NOT JUST FOR WORN-OUT FAUCETS

There are numerous heuristic investment formula's. “Buy and Hold.” “Dividend Reinvestment.” “Index Funds.” “Diversified Portfolios.” “Annual Rebalancing.” All have their strengths and weaknesses. More weakness than strength for many of them.

Dividend reinvestment is a very good strategy for beginners and anyone that does not live off of the dividend streams for their income and decadent lifestyles. (Hint-The Idle Rich and their progeny [1]) Dividend reinvestment is effectively compound interest for your stocks.

Dividend reinvestment plans, or DRIPS, are the single best way for a beginning investor or a small investor to build a portfolio. Many stocks have DRIPS. You can open the account by purchasing as little as a single share of stock. Each quarterly dividend is not paid directly to you, but is reinvested in more shares of the stock. And you can make more investments into the plans, often as little as $25 or $50 dollars. If you buy DRIPS in four or five companies and make monthly investments of $50, you will have $2-3,000 before you know it.

Some of the most generous DRIP stocks are those that are common consumer names. Kellogg, Clorox and Proctor and Gamble are some leaders in this category. 

DRIPS are also great ways to start children in investing. If you buy a DRIP in a familiar company, a kid can take a real sense of identity and interest in the stock and investing. So rather than asking your friends and families to send toys for your toddler’s birthday, ask them to help you set up DRIPs. (Kids at this age would rather kick screen doors or look for colorful bottles of cleaning supplies in the utility room cabinets than play with toys, so the kids are not missing out on anything.) Here is a link to a website that has access to many DRIPS.

BAYING AT THE MOON FOR MORE MONEY

One interesting investment strategy that often has above-market returns is investing is the “Dogs of the DOW. This strategy involves buying the past year’s ten highest dividend-yielding stocks at the beginning of the year. [2] The next year you rebuild the portfolio with the prior year’s ten highest dividend strategy. 

“The thesis of the trade is that these 10 stocks are quality companies with stable business and healthy, consistent dividend payment. They are temporarily unloved or have experience short-term declines due to various market factors but are likely to bounce back at some point soon.’

“Companies in the Dow have historically been very stable companies that have been able to weather economic storms. It is unlikely they are going to go out of business any time soon.”
THESE DOGS HAVE SOMETHING TO BARK ABOUT

Historically, the Dogs have beaten the Dow. According to Investopedia, between 1957 and 2003, the Dogs outperformed the Dow Industrials by about 3% returning 14.3% annually versus the Dow’s 11%. From 1973 to 1996, the outperformance was even more impressive returning 20.3% annually versus 15.8%. 

The 2018 Dog list is led by APPL, IBM and Exxon Mobile.

GENERAL ELECTRIC (GE) MAY BE KICKED OUT OF THE KENNEL

It is widely predicted that GE will be removed from the Dow. Some notable stocks removed from the Dow over the years are GM (2009), Citigroup (2009) and Sears (1999.)

MORE DESERT OF THE REAL STRATEGIC INVESTMENT PRODUCTS

Last month was an auspicious day for the Desert of the Real Economics. We launched two in a series of market defying investment products.  They were the “New LifeLotto,” and “Bitchcoin” ETPs.

This month, Desert of the Real Strategic Investments announces the following product launches:

Dogs of the Ciao. This fund will build upon the Dogs of the Dow strategy by investing in the stocks 
that have already gotten the long big kiss goodbye from the Dow.  Arriverderci  would be a better 
term for the stocks that got booted from the Dow, but “Ciao” rhymes with “Dow.” We are working
 with some thin material here, so as, Grouch Marks said in the film “Animal Crackers,” “ [A]ll the
 jokes can't be good.  You've got to expect that once in a while.”

The ETF will invest in all of these curb-kicked stocks and will rebalance the portfolio annually.  It will go long and short the stocks, so you choose between earning a little and losing a lot.  This may not be the best ETF out there, but we assure you that the SEC filings and the Prospectus will be the funniest.

Junk BONDO* Fund. This Fund is a bond fund that will package promissory notes, and retail installment payment agreements from “Buy-Here, Pay-Here,” “You Drive, You Ride,” and “We Finance” car lots, into an ETF product.  The Fund anticipates several tranches, to be based upon the strength of the underlying instruments. At this point, the tranches (classes of bond strength) will be “Extremely Doubtful,” “No F*ing Way,” and “Refer to Vito.”

AUTOMOBILES AND TRUCKS RUST MORE SLOWLY IN THE DESERT OF THE REAL!




1.   [1]  Preconception, the Author Rob applied for one of these slots as an Idle Rich progeny. He was passed over, however.  Great work if you can get it.

2.    [2]  Another take on the “Dogs of the Dow” strategy is to buy the prior year’s ten poorest returning DOW stocks.

* “BONDO” is a generic term for auto body filler compound. BONDO is used to repair scratches, dents and rust holes.  Many vehicles sold by these car lots are held together by BONDO.  BONDO is also a brand name under which the 3M company markets its auto body filler compound. If any 3M intellectual property attorneys are reading this, we are in no way attempting to disparage or genericize your product name. (Our lawyers made us say this.) And just to suck up a little to 3M, 3M, of MMM, is part of the Dow Jones average.