Dave Canal's blog

Frank Thoughts: Tesla, Still Cheap?

With half the stock market’s total capitalization represented in index and ETF funds, it could almost be called a “passive” stock market. But that will never happen. The impact of an individual stock on a portfolio’s performance is too great. Peter Lynch expressed this reality best when he said, “It is not the number of times you are right, but the magnitude of when you are right.” I had learned that lesson years ago working for Merrill Lynch as a young order clerk.

Frank Thoughts: The Force Be With You

If you’ve ever watched a TV quiz show called “Jeopardy,” your reaction might have been similar to mine.  “Wow, how do they know that?  They’re really bright!” Endless facts.  Endless “knowledge” about things that I, for one, know nothing about.  But it is not knowledge; it’s about an ability to retain information.  That’s very different from having knowledge of a subject.  With knowledge, one has the ability to use information.  It is the essence of the quote, “May the force be with you” from the Star Wars epic film saga.

Frank Thoughts: The Old Burial Ground

It was a dreary fall day as I climbed the stone steps to Marblehead’s cemetery, known as “The Old Burial Ground.”  The weather was appropriate.   The cemetery, dated 1638, is situated on a hill overlooking the ocean.  I was curious what historic names might appear on the tombstones.  After all, I live a block from General John Glover’s house.  He is the man in the famous painting ferrying George Washington across the Delaware.  And then of course there is Salem, famed for the witch trials, in an adjacent town.  Two “witches” are buried in the cemetery.

Frank Thoughts: The Illusionists

In theory, a magician and an illusionist are the same.  But an illusionist performs on a much larger scale.  He’s the one who uses sleight of hand to distort the senses.  Especially the brain.  In effect, he makes perception overtake reality.   Such a technique is used today in bringing a “new” company public.

Frank Thoughts: The Unimaginable

The word, unimaginable, has a fearful connotation.   It describes something we cannot comprehend because we have not experienced it before.  This is the reality of a subzero interest rate environment.  There is now 17 trillion dollars in sovereign debt paying a negative interest rate.  Why would anyone want to purchase a bond guaranteeing them a loss?  There is no reason, other than a fear of everything else that pays a positive interest rate. 

Frank Thoughts: The Trojan Horse

The current unicorn IPO market is reminiscent of the psychology used in the Trojan War.  Today the hidden “soldiers” are venture capitalists, investment bankers and corporate employees.  According to mythology, the “gift” to the Trojans was an 80’ wooden horse that seemingly marked the end of a ten year war.  We are now ten years into a bull market.  A market that has not been believed, nor participated in, by individual investors.  However, they are now being offered “gifts” of unicorn IPOs.  These companies are immense in size and … unprofitable.   

Frank Thoughts: The Book of Misery

With deference to Stephen King and his horror novel Misery,” it seemed the only appropriate name for my scrapbook.  The “book” started 10 years ago when a famous hedge fund manager massively underperformed the S&P 500.  Then it happened again with a well-known mutual fund manager.  I sensed there was more to come.  Over two, three, five years, the list grew rapidly.  As time went by, active underperformance became a “gift” to passive investment firms.  One that kept on giving.

Frank Thoughts: The Next Retail Wave

When I was quite young, my father and I would go into Boston on Saturday afternoons to see my grandmother.  She lived in a brownstone in the south-end across from the Greek Cathedral.  As we settled in, she would give me a dollar and ask me to “go down to ‘Sam’s” and get a pound of hamburger for dinner.  Sam was the butcher at the end of the street.  Every time I walked in the store an overhead bell on the door would ring and I would become instantly mesmerized by all the sawdust on the floor and the smell of meat.

Frank Thoughts: The Internal Structure

Most of us think of the stock market as a monolithic entity.  I don’t.  I believe it has an internal structure of three categories each based on the size and history of the companies.   Or sometimes, it’s just the nature of the business.   Each segment has its own investment advocates.  

Pages

Learn how to take losses quickly and cleanly. Don’t expect to be right all the time. If you have made a mistake, cut your losses as quickly as possible.

– Bernard Baruch