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Saturday, October 17, 2009

 

No World for Old Men

The other day, a customer came to our office with a complaint, an infrequent but not rare occurrence, and it's one of my jobs to help folks in that situation. After hearing him out and giving him advice regarding the next steps, it was time for him to leave but you have to realize, this gentlemen was 86 years old, pretty alert but yet not quite all there, and he needed some help. He had taken the subway from Queens, got out at 6th avenue and walked to our office at 3rd and 42nd. This is quite a hike for a senior citizen. I was not about to let him walk back across to
6th avenue, so I suggested he go downstairs, take the 6 train up to 63rd and change to the E or F train there. He was up for that, but it's easier said than done. So I walked with him all the way to the turnstile, from which you could see the entrance to the stairway to the 6 train.

He took out his metrocard and ran it through the reader, and it showed an insufficient amount for his fare. He took out all kinds of papers, including a second metrocard, ran that through with the same result. At that point, and with papers threatening to fly everywhere (not to mention a zillion people also trying to use the turnstiles), I quickly reached into my back pocket, yanked out my metrocard and ran it through, pointing at the same time to the stairwell for the 6 train, and off he went. I watched until he was out of sight, still carrying all his papers and metrocards and just hoped he would safely arrive where his car was parked in Queens (the thought of him driving is a bit scary).

This is not to make fun of our senior citizens. Quite the contrary, it is to simply observe that in our world that is so heavily reliant on electronics, on things that happen quickly, soundlessly, in small print, often using remote instruments, etc., that it must be such a difficult environment for older people whose senses are not nearly as acute as they had been, and who are thinking, seeing, hearing etc at a slower pace, if at all. And this is occurring when there are more people than ever achieving octogenarian and nonagenarian status than ever before.

When my father was 80, he was still in almost complete control of his environment. He could still drive, perform on stage in amateur productions, pay his bills, and earn some commissions as a financial planner. Over the course of the next seven years until he passed away, he gradually lost the ability to do all those things. It was difficult for him to experience and difficult for us to watch, but my observation is that the world is getting away from older people who aren't even sick. It's just getting too complicated, too fast, and too small. As the baby boomers massively move from middle age to senior citizen status, the world will have to find a way to make accommodations. There's an investment theme here somewhere, and if you can find companies making products to ease this transition, those are stocks to consider.

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For once I agree with David Tice. Not only is gold going much higher, but the Obama administration is way off base on its solutions oriented toward reviving spending, including consumer spending. The correct long run solution to our economic problems is reorientation to more savings and investment, less credit formation and less spending. This is true both in the public and private sectors.

“We need to get away from a consumption-based economy," Tice says. "Yes, it's going to be tough [and] accompanied by very bad economic statistics and a lot of unemployment. Yes it's going to be painful [but] we cannot simply continue to have foreigners or the Fed buy our Treasuries, agencies and mortgage-backed securities, etc. We have no real choice."

But with policymakers and politicians seemingly unwilling to make the hard choices, Tice is sticking with dollar alternatives like gold, gold miners (he declined to specify) and foreign currencies, including the euro, Swiss franc, Norwegian krona and Canadian dollar. – Aaron Task, Tech Ticker

I am not sure I agree about the Krona and the Canadian dollar, but I sure like the Swiss frank and am also doing some research concerning the Aussie dollar. In addition to the investment options posed by Tice, I am wondering about stocks and bonds denominated in the acceptable currencies.

All of this is right in line with my last post. Though the health bill still has major obstacles, it is the straw breaking the camel’s back for dollar denominated instruments, including US stocks. If the only problem were inflation, stocks can reflect that in their prices. But when the public sector makes it impossible for the private sector to earn its cost of capital, then it’s time to look for the exits.
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I am heading to Chicago tomorrow, the US city most like NY and a personal favorite. I can't wait to blog about the places I will go to hear jazz, eat, etc. Believe me, there are worse things than working the weekend.
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On Wednesday, we bought 200 shares of Pulte Homes (PHM) at 10.91. Today, we sold 300 shares of Marine Max (HZO) at 8.22 that were purchased on 10/22/08 at 3.01. I know, these would have been long term gains if we waited a week but I follow the formula and purposely minimize the tax influence. It's not looking like I am going to have a lot of taxable net gains this year, so I made the decision to go ahead. The stock was clobbered today anyway, so I don't look so bad - 8.22 looks like a good price right now. I love to more than double in a year at any tax rate. It took guts to buy this stock when we did, but the reality is that formula decision making, removing the emotion, leads to some very good results like this one.

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