The last remaining in the world

check out this story about some big bugs thought extinct - except they found some under one bush on an otherwise deserted rocky island. fun story - and the bugs are huge.

selling a bit into market strength

It's been an exciting few months in the stock market recently as long positions have done well. Following the run-up and run of buying I've decided to take a little bit off of the table given some uneven economic data along with international concerns like Isreal/Iran, and the always present Greece and significant economic slowing across Europe that I've heard discussed in several conference calls.

In addition I was just running out of interesting buy opportunities so I changed approach and raised some cash. (Most of my funds are in retirement accts so tax impacts don't come into play very often for me).

These are my first sells of 2012.

NEU - Newmarket was my largest position and it has continued to act weak following the conference call, so I liquidated. I actually expect to re-establish the position as mgmt characterized the slowdown they saw in Q4 as inventory drawdown, especially in Europe, and said it was not due to lost customers. They sell petroleum additives and there's only so long folks can go without re-ordering. But the stock currently is just short of buyers so I'll step aside for a while.

TEO - I took about half of my Telecom Argentina off the table. Again, I'll be glad to re-establish the position at lower prices, but it's just too weak in this market. The conference call for the company sounded excellent to me, so I gotta think the market is concerned more with international issues (seems like it reacts particularly negatively to bad news in Europe), and concern over Argentine regulatory issues the company may have to deal with. Sounds like alot of analysts are concerned the dividend may be in question due to Argentine govt influence. (TEO is traditionally a big dividend payer). This is still a long term hold for me, it's just smaller now than it was. Will re-buy more on pull-backs. All the metrics tell me this is still cheap.

CHL - China Mobile. Sold my full stake after watching it bounce around in a trading range for several years. It pays a very nice dividend also. I expect to repurchase should it fall back to the 47 range. The metrics look very good on this one. They may be getting the AAPL i-phone soon so might see upcoming bump, but it's near the top of it's range and I promised myself the next time it got here...

WFR - a small position betting on rebound of semi-equips/solar. while those areas in general have done well for me - WFR was the dog of the bunch and it may be too wounded and not the best vehicle to invest in this theme.

In selling I normally try to pair losers and there's a couple of recent buys in the material area I'm keeping an eye on (CLF and BBL in particular), but here are my larger position by size now.

LHCG - LHC Group - home health
SNDK - Sandisk - digital storage - flash drives
AFAM - Almost FAmily - home health
EBAY - eBay
TEF - Telefonica SA -
CLF - Cliffs Natural Resources - mining - iron ore in particular
DAR - Darling Intl - grease recycling
ASML - ASML HOlding - semi equips
HITK - Hi-TEch Pharmacal
VECO - Veeco Instruments - semi equips
TEO - Telecom ARgentina
BBL - BHP Billiton - diversified mining
.... and I'll stop there. the rest tend to be smallish positions, many more speculative small caps so I'll stop here.

Happy investing all

Dichotomy of Small Jobs

Here's an important observation I was unaware of. I'd always seen statistics showing that almost all the job creation in the country is via small business - footing the idea of creative destruction, that as part of economic growth the old companies die and are replaced by the new.

Interestingly, it's easy to slide into an overly broad generalization that that small business creates jobs -which is true - but the deeper truth is that NEW STARTUP small business creates jobs, not existing longer-term small business.

This AP article gets a little politicky - but if you just ignore that part and read the economic references inside an interesting fresh observation is in there regarding new startups that I hadn't heard before:

"Haltiwanger and two other economists showed, in a study of millions of companies over 30 years, that small businesses no more than five years old — that's about 40 percent of them — are the only ones that create more jobs each year than they cut.

In 2005, for instance, more than 99 percent of the 2.5 million net new private-sector jobs in the United States came from these startups, according to the U.S. Census Bureau.

But the 60 percent of small businesses that have been around more than five years act as a slight drag on the number of jobs available in the United States. They have cut about 0.5 percent more staff than they have added in a typical year, according to Haltiwanger.

By contrast, big businesses, the ones that get all the headlines for layoffs, have hired more than they have cut — about 0.1 percent in a typical year."

Summary/Key Takeway: If we want job creation create incentives targeted not to small business broadly, but to NEW small business formation specifically.

Anyhow - I found that portion very interesting and not often discussed.

Have been adding funds back to equities

Over the past few weeks I've been a net buyer of stocks. I don't trust the feeling that the market wants to go up, but this just feels different than the long grind of most of last year. I had raised my portfolio to a fairly high level of cash - well over 50% - so it'll take me a while to move back in, but here's some of my main stock holdings as of the end of today

NEU Newmarket corp - petroleum additives
TEO Telecom Argentina - Telecom
LHCG LHC Group - home health
CLF Cliff's Natural Resources - iron ore / coal
CHL China Mobile - wireless
EBAY Ebay - retail / paypal
ASML ASML Holding - semiconductor equip
DAR Darling Int'l - grease recycling / biofuel
HITK HiTech Pharmacal - generic drugs
BBL BHP Billiton - oil / gas / mining

along with some smaller positions in much more speculative
GTAT GT Advanced Tech - solar
WFR MEMC Electronics - solar
ESIC Easylink services
ARCI Appliance Recylcing

still a lot of cash on the sidelines, but less than 2 months ago.

Good article on Apple iPhone manufacturing and supply chain

Here's a really good article detailing several key drivers pushing electronics manufacturing to Asia - with the specific example of Apple's iPhone used to illustrate. Here's the article: Apple, America and a Squeezed Middle Class
quote:

For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said.

Restatement of Existing Home Sales by NAR

The National Association of Realtors just "restated" their existing homes sales from 2007 to present. While it was in their interest to keep the boom going and make the market seem better than it is, this should be enough of a datapoint to make you never trust their announcements regarding home sales going forward.

Here's the chart showing the initially reported homesales over the past 4 yrs. vs. restated figures. The decline was much worse and more rapid than initially reported.

Solar "gardens"

New models for solar - solar gardens
from Forbes. Pretty cool idea.

"The first such project in the country is currently underway in Colorado Springs, Colo., where an old landfill is being given a second life as a community solar garden. Three-and-a-half acres of the 40-acre site will soon host 500 kw of solar panels, all owned by local residents who will be seeing an average 10-percent reduction on their energy bills (the panels cost $550, with a minimum purchase of two panels)."

Drama vs. real life

Derek Sivers wrote this of Kurt Vonnegut talking of Drama vs. real life... thought it was interesting perspective.

How Doctors Die

I saw this article claiming doctors tend to be far less aggressive on themselves than on the average patient when treating terminal situations. I don't know if this claim is substantiated by a study, but the article claims:

"It’s not a frequent topic of discussion, but doctors die, too. And they don’t die like the rest of us. What’s unusual about them is not how much treatment they get compared to most Americans, but how little. For all the time they spend fending off the deaths of others, they tend to be fairly serene when faced with death themselves. They know exactly what is going to happen, they know the choices, and they generally have access to any sort of medical care they could want. But they go gently."

This is a really good article that's worth a read.

Making a mess

My wife tells me sometimes you have to make a mess to clean up a mess... Well I'm making a mess. I really need to clear some some stuff out of the house. Putting some things up on ebay.

and sometimes things just need to be thrown away.

government, democracy, and the will of the people

which is the higher goal of democratic government?
- to reflect the will of the people, or
- to protect from the will of the people?

Democracy - in my mind at least - has little meaning absent a bill of rights. As new democracies form around the world I wish more emphasis was given to the later.

Interesting observation from Jeff Bezos of Amazon

"If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue."

Here's the Forbes interview - good stuff.

Jinx

I think the post about trying to pay off the house caused the universe to reassert its primacy. Found out the main heating/cooling unit for the house needs replacement. ;-)

Pay off house by end of next year

My wife and I were talking and assuming all goes well (meaning my job holds out that long - vehicles hold out - no other unexpected runs on the bank acct ) we're going to try to pay off the house by the end of next year. We just sent in another payment against principle and I'm really OK with diverting cashflow there.

At this point, there's really only a couple key concerns in my mind:
- maintain sufficient liquidity in event of emergency (emergency fund). This is my top concern by a far stretch, esp. given job uncertainty.
- I used to have a concern about alternative stock market returns I'd be missing out on, but I'm really 50/50 on the market right now anyhow, so using extra cash to remove a certain mortgage debt seems a reasonable way to go. While a surge in the markets could happen, I don't expect it, and even if it did I'd still be holding alot of cash, so going ahead and paying down the house makes sense in this context also given a guaranteed return of whatever our mortgage rate is vs. almost 0% for holding cash right now.

I still plan to fund the 401k, maintain investing accts, and fund other retirement accts, but just be willing to send in extra payments against principle as liquidity permits.

I like the flexibility that having cash-on-hand brings - but think it's time to spend it down some to get rid of this debt overhang of the home mortgage. As much as anything I think the mortgage weighs on my mind, pre-occupies my thinking and decision-making, and strangles my perspective.

Yeah, I'm 40 and it's mid-life crisis time - if such a thing exists - but debt is an insidious little thing that creeps in and has a way of taking over. It has kept me on the hampster wheel - that much is for sure. But I'm not built to handle debt very well, so getting rid of it will hopefully free my soul a bit to do better and more interesting things with my life.