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The story of intermittency and Soros’ gut feel

Some days it’s hard. Some days there are a zillion competing pressures. Like grandchildren and tax forms. That’s my way of saying that this 15-year old daily blog has become intermittent — not every day. Some days — like today — stocks look awful.

Maybe there are buying opportunities with depressed stocks like AAPL, UNH and BRKA. But I feel it’s a little early to pounce in and buy the depressed.

Not enough blood flowing inthe street.

Better to go for a walk, check out the new Spring flowers. Think nof an App you can launch on the App Store and make a few shekels.

If you’d like to read my column when I  post it, your best bet is to get it by email. Put your email address in the little box at the top of the left hand column. Your name is private. I don’t give it to anyone. (And no one has asked.)

Motif Investing posted this interesting piece:

6 INVESTMENT PRINCIPLES FROM GEORGE SOROS (whose net worth is allegedly $24.2 billion)

++ Collaborate. Then sleep on it. Soros is known for collaborating with his advisors before initiating large trading decisions. He doesn’t insist on everyone agreeing in order to take action. However, Soros has a thorough habit of analyzing at least one opposing viewpoint. This helps balance out the decision process. After gathering everyone’s thoughts, he likes to take time to process everything, gather his own thoughts, and “to read and reflect” before making a final investment decision.3

Think bigger and apply a scientific approach. Start researching and studying current market data and trends. Then, come up with investment ideas like Soros by making investments based on where you think the markets are likely headed. Rising Interest Rates, Rising Food Prices and Wearable Tech are just a few of the trends making news right now.

Next, apply a scientific approach, testing each hypothesis on a small scale. Take your investment strategies, based on trends and market data, and make small trades as tests to analyze if they perform how you hypothesized. If a test is successful the next step you can take is to trade the same hypothesis again but on a much larger scale just like Soros.

You can use all the information at your disposal from the news, research reports, or perhaps a financial advisor.

Harry’s take: Sometimes too much “research” takes too much time and you miss the opportunity. Sometimes it’s best to get in small. Keep a tight stop. And watch carefully.

++ Look for disequilibrium in the markets. Do you frequently wonder if market bubbles or opportunities are emerging? Reflexivity is an investing principle that Soros has referenced repeatedly. The basic idea is that markets have a tendency to move toward disequilibrium. The actions of market participants can be exaggerated because of misinterpretations, misunderstandings, and biases. Then the loop can repeat when the market’s valuations react to those misconceptions causing further misinterpretations and repeated boom/bust cycles.

“Stock market bubbles don’t grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception. Every bubble consists of a trend that can be observed in the real world and a misconception relating to that trend. The two elements interact with each other in a reflexive manner.” – George Soros

Blend politics and investing. One of the primary reasons Soros was able to make such a successful trade on the British Pound in 1992 was his awareness of the political issues surrounding the UK government and the European Exchange Rate Mechanism. Soros was able to act on that investment opportunity based on those political issues and it paid off immensely.

You can formulate your own investment ideas just like Soros by analyzing political issues that affect the economy. For example, the US healthcare system continues to be a highly debated political topic that has a significant effect on our economy.

++ Observe physical cues. Have you ever noticed an increase in physical ailments and discomforts such as back pain when you’re anxious about something or stressed out? It may sound a bit hard to believe, but George Soros has interpreted pain triggers such as headaches and backaches as signals he may need to drop an investment.

Throwing your back out after lifting something heavy, or a throbbing headache after a late night out aren’t applicable warning signs of a troubled investment when it comes to this philosophy. But if you find yourself worrying day and night about an investment and getting physical pains in the process, it could a sign that it’s time to get out.

Investing becomes counterproductive if you can’t sleep at night.

Harry’s take: Amen.

Look at what Soros is buying. Curious what Soros is buying lately? Some of his recent purchases include LYB, ENDP, LC, DOW, AGN, EQT, HFL, UAL, SLXP, and RLGY.6 If Soros’s trading activity intrigues you, you can research and find his stock positions through online searches and public filings,

An investment gone bust.

My “sure thing’ investment is about to go bust. 100% capital loss for all the investors, including me. The product was a game. Customers loved the product. The board gave an exclusive distributorship to the wrong people. The distributor went bust and never paid for the inventory that my company had delivered to them.

No lawyer would take on the job of suing the distributor because, by then, the management had emptied the company of all its assets.

Lessons:

– + All legal paperwork in the world won’t do you one bit of good if your exclusive distributor is a crook.

– + It’s impossible to do sufficient due diligence to figure out if your distributor is a crook. For more on crooks, read “A Trail of Ventures and Debts” in today’s New York Times business section — click here.

– + What moron would give an exclusive distributorship to anyone — without a huge up front payment — is beyond my tiny brain.

– + Boards are often made of financial types — those that raised the money — but they often fail to put on wizened old men who’ve had real business experience.

– + Most CEOs don’t listen. Try this: Meet with someone trying to raise money and see if the CEO takes notes.

– + Two things do work: Diversification and saying NO.

Most of my friends have sworn off startups — unless they’re their own startups.

This is the Apple Watch I’m buying:

AppleSportWatch
It’s the 42 mm (i.e. bigger) Sport Watch in space grey with the black plastic band. It costs $399. The big plus for me is its lightness. With its aluminum case, it weighs almost nothing. I spent half an hour perusing the various Apple Watches at our local Apple store.

Every reviewer says the watch is for busy people who sit in meetings all day and get oodles of texts and emails. The watch vibrates when messages come in. Checking the watch is more subtle (and less rude) than checking your phone. I’m not that person. But I loved some of the time faces and the fact that you can build your own. Endless fiddling pleasures.

MouseWatch WatchFace watchface2

The New York Times wrote: “Indeed, to a degree unusual for a new Apple device, the Watch is not suited for tech novices. It is designed for people who are inundated with notifications coming in through their phones, and for those who care to think about, and want to try to manage, the way the digital world intrudes on their lives.”

This morning Apple shares got an outperform investment rating from FBR Capital, which gave a $185 price target. The stock is weak at around $126.

Watch preorders are allegedly 2.3 million — about a billion dollars by my calculations. The watch is a success and Apple will go higher.

Apple once said the Apple Watch would be available April 23. Now you can’t buy it in an Apple Store. Place your order today, you won’t get it now until June.

Things I’ve learned:

– + It’s easy to change the screen or keyboard on your laptop if it’s getting old and sleepy. Google what you want. You’ll great parts and useful videos on how to install the replacement stuff.

– + Don’t buy Apple cables from anyone, except Apple. They simply don’t work.

– + If you’re getting blog by email know that the emailing software doesn’t indent my emails, so I’ve started to put in this ugly stuff –+ as a way to indent.

– + Hot spots work better if you plug your iPhone directly into your laptop with a cable. Skip using WiFi.

– + Text messages to your happy customers offering a “deal” work spectacularly. Ditto emails. A vendor emailed me, “Harry, you left something in your online shopping cart.” I ignored the email. Three days later, they tried again, but they offered free shipping. This time I bit and bought.

Three favorite New Yorker cartoons:

WhattheFedsmightdo

whomImnot

ImpossibleToClean

Politically incorrect “humor”

– + I was reading in the paper today about this dwarf that got pick – pocketed.

How could anyone stoop so low.

– + I was walking down the road when I saw an Arabian fellow standing on a fifth floor balcony shaking a carpet.

I shouted up to him, “What’s up Mohammed, won’t it start?”

HarryNewton
Harry Newton, who wonders what the heck is wrong with Berkshire Hathaway? It’s down by nearly 8% from its recent high. Most depressing.

BRKAONeYearAgain

Speculative stocks I own include BOX, CYBR, and FEYE.