March 28, 2020

Almost breaking even again

As always, I am not recommending anyone purchase any particular stock. However, interest rates at banks are far below the rate of inflation. Keeping large amounts of money in your local bank causes the value to decline dramatically, even though the numbers grow ever so slowly. Therefore, I am recommending downloading Robinhood and investing in your favorite company, or perhaps companies. As a small incentive, if you use my link to download Robinhood, open an account, and deposit some money, you and I will both receive one free share of stock worth about $4. Here's my link:

By now everyone knows that President Donald J. Trump signed into law a precedent-setting stimulus bill. I won't go into all the things I like or dislike about this bill, nor will I go into how I expect it to impact our economy. The justification for this unprecedented citizen and small business relief fund was to counter the economic damage created by forcing bars and restaurants all across the United States of America to shut down in an effort to prevent COVID-19 patients from overloading our fragile healthcare system. Many different states, including my home state of Ohio, have either requested or ordered their citizens to remain home until mid-April. The general theory being that keeping everyone isolated at this time will stretch out the contagion curve over time allowing the healthcare system to ramp up for and serve the huge number of cases that COVID-19 is expected to create. Part of the reason the stock market (and my meager portfolio) has collapsed this year is an expectation that forcing people to stay home and forcing businesses to temporarily close will cause extensive damage to the profit margins of any business large enough to be publicly traded on the exchanges. People cannot work, therefore people cannot earn money, therefore people cannot consume, therefore corporations cannot sell. Naturally if corporations cannot sell they cannot earn profits. To counter this, the federal government will pour two trillion dollars of non-existent money into the American economy.

By close of business Tuesday everyone who buys and sells stocks was certain the bill would pass and be signed into law. This had a very predictable impact on my meager portfolio:

After bouncing around throughout the remainder of the week, often rising above my breakeven point of $2100, the market finally closed on Friday just a whisper below my breakeven point. This current portfolio began on December 19th with $600 in stocks and an expectation of receiving another $40 in dividends by the end of January. Dividend payments and further cash deposits have brought it to it's current breakeven point of $2100. Along the way I doubled the number of stocks owned in every company, reduced my average cost per share in every company, and added a couple more companies including General Moly (GMO), a mining company based in the United States of America that produces the highest quality molybdenum in the world. Here is my current portfolio:

And here is the current value of my portfolio:

As you can see, this week has been a huge boost for the value of my meager portfolio. After spending two months deep in loss territory, my portfolio has risen almost to the breakeven point. About two-thirds of my stocks are now in profit positions, even if only slightly. The final third are either in loss positions or at the new, lower average cost per share achieved by doubling my portfolio a couple weeks ago. This is an historic moment in the history of the stock market. I hope everyone who had any extra cash laying around was able to get into the market before Wednesday. From here on out I expect to see a strong, steady climb upward for the next two months followed by an explosion upward as more and more people realize the importance of this moment in history. Granted, no one can predict the future, so everything could easily drop through the floor.

One of the factors making the future paradoxically both more and less predictable than in the past is that 90% of the transactions in the contemporary market are actually handled by computers. No human ever intervenes. This innovation was supposed to "rationalize" the market, making it safer for the 10% who, like me, manage their own transactions. However, the AI algorithms that control these transactions follow predictable curves in response to everyday news headlines. They are programmed this way to protect the assets of large investing firms such as Vanguard and Wisdom Tree, firms that specialize in creating and marketing ETFs (exchange traded funds) which are bought and sold just like ordinary stocks. ETFs are "baskets" of different companies. The actual buying and selling of individual stocks is performed by the marketing company. This provides investors a layer of safety, but also exposes investors to enormous tax complications. For many investors this is a fair trade and they are happy to hold ETFs rather than individual stocks. If you have a company-managed retirement account of some kind, it is probably primarily invested in ETFs.

I strongly suspect that never again in my lifetime will stocks fall as low as they did at the end of February and beginning of March. This period in time will be studied by economics and finance students for generations to come. It has been very exciting to be an active participant in the turmoil of the past three months. Annoying, heart-stopping, and stressful beyond belief, but then, all good adventures stop your heart at least momentarily, that is why we call them, "adventures". From here on out there will be more peaks and valleys, until sooner or later we experience another one of those explosive upswings that predicate a huge collapse, but never again will stocks fall to the levels we have seen these past three months. Anyone who bought stocks during this collapse is guaranteed to make at least a small profit in the years ahead. There will be individual companies whose stock price falls into loss territory as a result of bad management, changing technology, or changes in consumer priorities, but the possibility of the entire market falling to these levels is almost impossible to envision.

March 25, 2020

Homebrew Mulligan Stew

I posted a couple pictures of the meals I've been cooking during the Ohio, "Shelter in place" order to Facebook. To my great surprise, the response was overwhelming. Everyone wanted to know more. A few people even asked, only half in jest, if I could bring them a portion! The most popular was a pot of soup that I literally threw together from things grabbed out of the pantry.

"Mulligan Stew" is a style of cooking older than any civilization on Earth. In a very real sense, the very first food anyone ever cooked more complicated than meat on a stick would have been some form of Mulligan Stew. The name comes from the railroad camps of the 19th Century. Irish railroad workers would throw whatever they could find into a large pot and boil it up. If they had any wild game or dried meat, they would add it to the pot. Flour was not common, nor was starch, so thickening agents were not common. As a result, sometimes Mulligan Stew was very watery and sometimes it was very thick. The taste was always a gamble.

Homebrew Mulligan Stew

1 – 32 ounce package broth
1 – 12 ounce package noodles
1 – 12 ounce can smoked ham
3 carrots
1 celery heart
¼ teaspoon coriander
¼ teaspoon cardamom
¼ teaspoon paprika
½ teaspoon garlic-pepper (saltless)

Pour broth into a large cooking pot or Dutch oven. Fill broth package with water and add to pot. Heat on high.

While the broth/water is heating up, chop vegetables and ham. When broth/water begins to steam (just before boiling), add chopped ingredients and spices. Bring to a full boil while stirring.

Once mixture is at a full boil, reduce heat to about half or until hard boiling stops. Rinse noodles thoroughly in clean water. Add noodles to the pot. Stir continuously for about fifteen minutes or until noodles are soft. Vegetables will still be firm.

If you prefer softer vegetables, cook until they are soft, then add noodles and cook for another fifteen minutes.

March 22, 2020

Bargain shopping the equity fire sale

As always, I am not recommending anyone purchase any particular stock. However, interest rates at banks are far below the rate of inflation. Keeping large amounts of money in your local bank causes the value to decline dramatically, even though the numbers grow ever so slowly. Therefore, I am recommending downloading Robinhood and investing in your favorite company, or perhaps companies. As a small incentive, if you use my link to download Robinhood, open an account, and deposit some money, you and I will both receive one free share of stock worth about $4. Here's my link:

My current break-even point is $2040. Last week I sold my truck and added $1000 to my Robinhood account. I doubled up on all of my current holdings. I added Marathon Oil (MPC), Energy Transfer (ET) and Veon (VEON). Energy Transfer is an interesting company. It used to be two different companies but they merged together back in the fall of 2018. I know this because I bought stock in each of the two without realizing the merger was already in the process of taking place. After they merged, the stock price jumped by almost 20%, so I sold it and haven't looked at it since. After I doubled all of my current holdings I had some cash left over and I was looking around for something to buy. I was shocked to discover that ET, which I had sold for $14.28 a share in November of 2018 was now under $6 a share! I snatched up ten shares at $5.25 a share. No one can predict the future, of course, but I feel like a Black Friday shopper who snagged a 60" television for $99.

I subscribe to The Oxford Communique, a weekly newsletter about the stock market. It dumps a lot of junk mail in my inbox, but it also alerts me to many important developments long before the news gets reported in print or on television. One of the "junk mail" it drops almost daily is a sales pitch for another newsletter called, "The Oxford Income Letter". I was greatly surprised one day last week to find their latest sales pitch for this publication included a link to the March issue, for free! Information is the most valuable commodity on Earth, worth far more than precious metals or fuels. When one of the most important financial researchers in the world wants to give me a free newsletter I'm certainly going to open it and read it!

The March edition of "The Oxford Income Letter" introduced three different companies that have solid financial reports and a history of consistent dividend payments. One of the companies they presented was a Russian telecommunications company headquartered in Amsterdam. I was surprised to learn that Veon has deep market penetration into Central Asia, especially Uzbekistan and Kazakhstan, two countries routinely overlooked by most of the world. Both countries have nascent capitalist economies, fairly corrupt governments, a population that is getting younger demographically while the rest of the world is getting older, and a profound hunger for everything modern. No matter what happens over the next few months as COVID-19 kills thousands before eventually burning itself out, both of these countries are poised to explode economically once the crisis passes. I snatched up 20 shares at $1.28 each.

I still had some cash leftover. Not a whole lot, but enough that letting it sit idle at 1.25% annualized rate did not appeal to me. After doing more hours of hard research than I care to admit to, I threw my hands up in the air and bought another 10 shares of Ford Motor Company at $4.26 per share, bringing my new average price down to $6.10 per share. Ford Motor Company at $6.10 a share is another bargain comparable to snatching up a big screen television for $99.

My current portfolio now looks like this:

In the background, while I was shopping around for bargains, the market actually began recovering from the deep dive of the past two months. When I resurfaced enough to check my overall value, I was surprised to find that instead of hovering around $1450, my portfolio had risen to over $1700! Remember, my break even point is $2040. The low point before I added $1000 was around $430, just under as I recall. Most of my stocks are still far below the average purchase price. However, 4 or 5 of them have recovered quite well. GoPro, for example. My average purchase price is $2.04, partly because the first share I received free when a friend used my link to join Robinhood. The current price is $2.48, putting me in a rather comfortable profit position even though the strong recovery stages haven't even begun yet. Veon, which I picked up at an average price of $1.28 per share is now worth $1.40 per share, putting me in a small, but very pleasant profit position for a stock I bought only a couple days ago in the midst of a market sell-off! Marathon Petroleum is another stock I bought because the market price has fallen so far I just could not let it pass. My average cost is $17.57, but the current market value is $18.51, that's an $18.72 total profit should I choose to sell (which I won't).

Remember, I'm not suggesting you copy my portfolio. I am simply relating my experience as 2020 unfolds. This current experiment began on December 19th with $600 and about $20 of expected dividends due to arrive in a few weeks. Between further deposits and dividend payments, my break-even point is now $2039.97, or $2040, as I usually say. After opening strong in January, COVID-19 sent my portfolio into a tailspin (along with the rest of the market). Nonetheless, at every possible moment I kept adding cash and buying stocks. I still believe 2020 is going to see gigantic gains in the market. However, realistically, the COVID-19 crash might have delayed the most explosive growth until 2021. No one knows, of course, because no one can predict the future, but I am trying to stay optimistic!

March 17, 2020

The buying opportunity of a lifetime

As always, I am not recommending anyone purchase any particular stock. However, interest rates at banks are far below the rate of inflation. Keeping large amounts of money in your local bank causes the value to decline dramatically, even though the numbers grow ever so slowly. Therefore, I am recommending downloading Robinhood and investing in your favorite company, or perhaps companies. As a small incentive, if you use my link to download Robinhood, open an account, and deposit some money, you and I will both receive one free share of stock worth about $4. Here's my link:

It has been a tumultuous couple of weeks. My last post was ten days ago. Since then, a strain of coronavirus called, "COVID-19" has spread around the globe causing sickness and death in dozens of countries. Some are faring worse than others, and some are faring better, but clearly this is the opening stages of a genuine global pandemic. So here I sit, unemployed, broke, and considering the very real possibility that very soon all movement will be forcibly stopped and everyone in the United States will be effectively on house arrest. My most immediate need was cash. My easiest asset to transform into cash was my truck. I hate selling things. The phone calls, the inquiries, the endless low-ball offers from people looking to resell your treasures, I hate all of it. So I decided to experiment with Facebook Marketplace.

I was taken completely by surprise. Within 15 minutes of listing my truck on Facebook Marketplace yesterday I had an instant message asking for more photos. I assured the person I would put up more photos in the morning. He immediately replied he had cash, was ready to buy, and would like to look at it today if the other photos were consistent with the one I had already posted. I had an appointment today about an hour out of town, so I got up early, took some more photos, posted them, and messaged him to let him know. By the time I returned from my appointment he was overflowing with enthusiasm and pleading to see the truck today. We set an appointment to meet at my house at 3pm. It took him less than five minutes to agree to pay full price. We went to the bank, got the title notarized, and I deposited the cash in my checking account. Naturally, there were other offers, but he was the first and most enthusiastic.

When I returned home the very first thing I did was transfer $1000 to my Robinhood account. Unfortunately, I missed market close by about three minutes, so I won't be able to buy more stocks until tomorrow. This moment in time is the opportunity of a lifetime. Not only has COVID-19 sent prices sliding to an unexpected, depression-level low, despite the economic disruption by the virus, in all likelihood America will be back on track and growing by the end of June, and possibly the end of May. The bull market we are still in the middle of is still anticipating a massive explosion in growth sometimes called a "melt-up". We cannot have a true market crash without a preceding melt-up dramatically distorting values to the top side. It would be historically unprecedented. This "crash" related to the COVID-19 economic disruption is a much deeper correction than anyone anticipated, but the core values of American industry are still intact. Every major corporation has been sitting on cash reserves waiting for the inevitable melt-up and collapse.

Naturally, any anticipation of market movement is speculative. Clearly, no one expected the spread of COVID-19, the damage it would do, and the temporary market collapse it would inspire. Myself, I had hoped that by the end of March my meager $1040 portfolio would double in value with an explosion to the upside in late July. I was anticipating an almost exponential arc beginning in March and peaking in August. It is obvious to everyone now, including myself, how completely wrong I was. That's okay. This unexpected collapse has presented me with a golden opportunity to dramatically reduce my average cost per share. Just look how far I have fallen over the past three months:

This arc is the mirror image of my expectation. I was anticipating an almost identical shape, except to the upside, not the downside. Instead of doubling, my portfolio has been cut in half. However, this is not a bad thing. Rather, this is a golden opportunity, one that I never would have guessed would be offered to me. Most of the drop has taken place in the last month:

We are in the very early stages of the impact of COVID-19 on the American economy. However, today President Donald J. Trump and his staff announced a wide-ranging economic stimulus package including direct payments to American workers temporarily displaced by COVID-19 related restrictions on travel and assembly. I am not going to go into all the things I find politically disturbing about the imposition of these restrictions. However, it would be dishonest for me to imply I agree with everything the government is doing. I do not. I do think this stimulus package will be very helpful, provided it is a one-time use of government largess to alleviate temporary suffering. I would oppose permanent or even annual government interventions in movement, freedom of assembly, economic independence, and so on. For better or for worse, most people disagree with me. Most people seem to believe the government should in fact, regularly impose these restrictions right alongside passing out massive amounts of cash to anyone and everyone. As a result, in the last hour of trading and into the aftermarket period my meager portfolio experienced a massive leap upward:

I am not at all happy about this. First thing tomorrow I will be purchasing additional shares in the companies I already own. I will still get them at prices far below what I would have paid in the opening weeks of January. This is a good thing, of course. However, already, just today, that discount has been halved. Granted, no one knows what will happen in the morning. It is entirely possible an hour after the market opens share prices will be far below where they closed today. Unfortunately for me, and very fortunately for people who have already retired, it is equally possible an hour after the market opens values will be right back where they were the second week of January. Either way, I am still convinced there will be explosive growth in the market just before or just after the presidential election in November. Therefore, it does not matter what happens to prices tomorrow, my plan is to double my share totals in every company I currently own. Even if it does not pay off before year-end, five years from now it will definitely make a huge difference in the value of my portfolio. Even better, it will double the dividend payouts in the four or five stocks I own simply for their dividends.

In closing, instead of posting my current portfolio today I will post it tomorrow or the next day after I have made my purchases. I will also try to offer some thoughts about what happens in the market tomorrow. Good or bad, tomorrow is destined to be one of the most memorable days in the history of the New York Stock Exchange. I feel privileged to be in this place, at this time, participating in this market.

March 08, 2020

And I thought 2019 was bad

As always, I am not recommending anyone purchase any particular stock. However, interest rates at banks are far below the rate of inflation. Keeping large amounts of money in your local bank causes the value to decline dramatically, even though the numbers grow ever so slowly. Therefore, I am recommending downloading Robinhood and investing in your favorite company, or perhaps companies. As a small incentive, if you use my link to download Robinhood, open an account, and deposit some money, you and I will both receive one free share of stock worth about $4. Here's my link:

The winter of 2018 to 2019 nearly destroyed me. I lost a ton of money through bad business decisions and poor habits. But life goes on and I try hard to learn from my mistakes. In the March of 2019, desperate for income, I took a job at Lowe's Home Improvement store. It nearly killed me. The physical demands of the job would not have been a problem back in my youth, but I will be 59 years old next month. So far, my back is strong and I have no chronic health problems. I would very much like to keep it that way. For the first time in my life, I suffered a back injury at work. Fortunately, it was minor and within a few days I was back to normal. But I immediately started looking for a different line of work.

Through the passionate recommendations of a couple friends (seriously, I thank-you both!), I landed a job at a local addiction recovery center. I learned a lot about recovery and 12-Step programs, as well as about the neurophysiology of both addiction and faith. The money was awful, I continued sliding further into debt, but I held onto my house and my car. My credit is ruined, probably for the rest of my life, and my only savings is my Robinhood brokerage account. Last Monday, March 2nd, I came down sick with a terrible head cold. I took some cold medicine and made it into work anyway. Tuesday I woke up even worse, but I knew I had Wednesday and Thursday off, so I went through the complicated multi-step process required to notify my company I would not make it into work. At 4:15 they called me and said, "we've decided to let you go."

If I had not been so sick, I probably would have been furious. Instead, I was merely in a state of shock that lasted the rest of the week while my body fought off the head cold. Not surprisingly, my meager portfolio has also suffered another downturn:

2020 opened quite optimistically. I was honestly beginning to think I was through the worst of it. Now, again in March, I find myself unemployed and penniless. I haven't even had time to file my taxes yet! Working 50 hours a week for five months straight makes it rather difficult to find time to do anything beyond sleep and keep the laundry from piling up. For five months I haven't opened my mail, I haven't gone out for karaoke night, I haven't spent time with friends or family. For five months I have dedicated everything to learning about recovery and overseeing the second shift at the local men's residential facility. I have not taken a day off. I have not called in sick. But apparently none of that was good enough. The first time I called in sick they layed me off over the phone. Unfortunately, Ohio is an "at will" state, which means employers can fire anyone at any time for any reason without notice. Honestly, I like this law and I would oppose any effort to overturn it. I just hate being on the receiving end of it.

This current portfolio began on December 19th. My current cash deposits total $1000. Dividends received since December 19th total $39.90. Therefore, my break-even point is $1040 give or take a few pennies. My current value is $896.30. Despite Friday's brief, but very welcome rally, I am still considerably in the red.

As always, here is my current portfolio:

So, after a brutal year of hard work, hard study, selling off everything except the house itself, three failed businesses, and one of the most volatile periods in the history of the stock market, I am right back where I started from in spring of 2019. I have my house, my 2019 Ford Fusion, and my beat-up 2006 Ford F150 that I bought for winter driving. Half my furniture is gone. A third of my library is gone. Most of my guns are gone. My membership at the gun range is gone. In twelve months I have sold one shirt and zero books.

The past twelve months have taught me a terrible lesson. I have learned that generosity and kindness is never rewarded. I have learned that sacrifice is meaningless. I have learned the cynics were right all along: most people are untrustworthy and self-absorbed (including me!). I have also learned that I do have a few true friends who offer me as much help as they are capable of, and those friends are not the ones I expected. I have learned that women are far more cruel and ruthless than men, a lesson that surprised me to my very core.

I guess this coming week will be spent job-hunting, sorting mail, reconnecting with friends and family, selling my truck, and hoping beyond hope some miracle causes my shirts and books to start selling! I have no idea how I'm going to pay the property tax...

A few of my Shirts: