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Why I hate funds

The market went up today, though Netflix dropped a little, as investors of little faith dropped out. That did not include me.

Berkshire Hathaway bounced up nicely. Ditto for UNH, SHAK, and CRM.

I watch the “trade war” with China and others. I don’t see a strategy or an end goal. But, for now, stocks are buoyant. And the weather right now is perfect for a bike ride. So I’m fiddling while Rome burns… Maybe not the right analogy. Read the Thomas Friedman piece below.

All about funds

Just before the Great Recession, about 11 or 12 years ago when the world was simple and glowing, I invested in several funds run by big, reputable investment banks. They floated the funds — venture, leveraged buyout, distress real estate, distress hedge funds — because people were flush with money and the world was simple and glowing.

As things turned out, they didn’t shoot the lights out, as we thought they would. But they bumbled along, shuffled from one investment bank to another, from one set of managers to another. Along the way a few went broke, but the majority hung around, occasionally dribbling back a few thousands bucks to the investors. The management typically doesn’t do the fair thing — sell all the assets, give the monies back and allow the investors to move along with their lives. They preferred to stretch out the misery. And why? Because of the fees. And who could blame them?

Here’s one from that era. As of December 31, 2017 — I just got their annual report — it had $91 million of investments left in 13 companies. That was the fund’s cost. That $91 million is now worth $70.7 million “in fair value.” So the investors are suffering a 22% loss on their money — but not the managers. Look what they earned:

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That’s $2.45 million to “manage” companies you don’t really manage. The companies have their own management. The fund management typically has no say in company management. The fund management’s major say is making up numbers for management fees, administration fees, “other”expenses and professional fees. There’s only a minimal explanation of what these fees are. It’s sort of funny (or sad?) that the smallest fees are for “professional” services — I guess people who actually know what they’re doing. The rest of the management, based on their performance, clearly doesn’t.

I’m guessing there are people out there touting these sort of funds today — though not to me.

If they are touting them to you, run the other way. As fast as possible.

Favorite broker letter

Sell In May and Go Away did not work this year (and we didn’t suggest it would), but we are now advising to Sell in July and Say Goodbye.

An email from Apple (?)

“Your account has been compromised. We can fix it. Send iTunes cards.” (More fungible than bitcoin).

Don’t do stupid

+ Don’t invest in marijuana. The stuff is easy and cheap to grow. Everybody and their uncle is raising investor money to build huge marijuana-growing factories. I know of one factory that will be a million square feet. What’s worse is that demand is not growing like a weed. I hear marijuana price has dropped by over 50% in the last year or so. The world is less interested in dope and more interested in binge-watching movies. Thank you Netflix.

+ A Hawaiian tour boat was hit by a lava bomb — lava. bomb — on Monday morning, and at least 22 passengers were injured after at least one hunk of lava smashed a hole in the vessel’s roof. Most passengers had minor burns and one woman suffered a broken leg.  Named ‘Hot Spot,’ the boat was operated by Lava Ocean Tours, which leads daily three-hour lava-spotting tours on small vessels that hold up to 49 people.

This stuff is magic

Clorox
I
t makes pillow cases (and other things your water dirtied up) white. Ultra-white.

Story: I forgot to change the filters on the well water system. They rusted up the pillow cases. This stuff worked better than Rust-Off. Susan will be pleased. Buy it here at Jet.com, which I believe Walmart bought for megabucks and forgot to merge into Walmart. They’re running separately.  Have you been to Walmart’s online store? It’s awful. I mean, really awful.

You’ll die laughing at three late night TV hosts

Stephen Colbert, Jimmy Kimmel and Seth Meyers lambasted president Trump’s joint press conference with Russian president.

colbert-trump-putin-meeting-watch-reaction-2018

Click here.

I like Thomas Friedman of the New York Times.

His latest piece is called “A president with no shame and a party with no guts.” It’s worth reading — whichever political color you are. Click here.

In case you missed this Irish Wedding. It’s hysterical.

And you thought they were rich. 

+ Trump Turnberry golf resort in Scotland apparently hasn’t turned a profit since Donald Trump assumed ownership.

+ Pence family’s failed gas stations cost taxpayers $20M+. Click here. 

HarryNewton
Harry Newton, who has a sister called Barbara, who’s in the travel biz. She wants everybody to know that Singapore Airlines is the world’s best airline. And now it flies non-stop from New York to Singapore. Only more hours that I have left.