P and All, Part 3. First, when I tried to print out the second note you sent, my E-mail system not only would not allow printing, it zapped your note. And I hadn't read it yet, so I can only reply to the first note.
1. I think 401 K plans are way over rated as to their market impact, as are mutual funds. They are players, but, one LTC, by using margin, was as big a player in the markets as all but a dozen mutual fund companies, which do not use margin. You will notice that when fund sales declined, the captive 401 K sales did little to stem that turn.
The very fact that few know about alternative investments is what makes some of them attractive. True, it is difficult for the average person to learn them. That is why the average person will never do better than average. And why it is silly for anyone, and you sure didn't suggest this, to believe that we can all buy market indices or index funds and get rich. It just cannot happen.
2. Marketing is probably the most important factor to a co.'s success. Ampex made zilch inventing the VCR. Microsoft has invented nothing, but what they have copied from others has been extremely well marketed and they now have a great team of lawyers to fend off all the legal actions from that theft. Motorola is nothing but marketing and when that has failed them the past couple of years, folks have begun to notice that there is a man behind the curtain. <G>
I certainly do not intend to give marketing's importance short shrift. Marketing, and stock price, of course, is the primary reason I recently bought DeBeers. And Midway, unfortunately, in retrospect, on that one, though I still like it. It is also a primary driving force behind my Asian play. Asia is in turmoil and Toyota's sales share in the US is at an all-time high.
But I do think there is a big difference between marketing a product and PR for the stock. All of Microsoft's marketing expertise would mean nothing if their products didn't work once in a while. And if there was a better, cheaper alternative. What I look for on the downside with marketing stories is where I think the marketing has carried the stock price over the cliff, but the poor old Wile E. Coyote of a stock is still running in the air without realizing it.
I guess the main thing I am guilty of is an unwillingness to follow the herd even if I think that may be profitable in the short run. I just can't think that way most of the time, in my cap gains and 90/10 portfolios. I do think that way often in my income portfolios. But it is one thing to lock in a worst case of +2% on a stock for a shot at 15% or more with options strategies and another to risk a ton of money hoping the stock doubles.
My problem is, I see no reason to follow the herd into a dangerous area when there are other ways to make profits. One woman posted a note here about 18 months ago where she said, "you have missed the greatest bull market in history." Of course, I had been net long during much of that bull market and still hold some long issues even at these lofty levels. But, at the time she wrote that note, I was loading up on platinum and palladium futures, which I noted on this thread. They greatly outperformed the general stock market. She has never posted to mention that she missed the greatest bull market ever for palladium and a danged good one for platinum. <G> Not to pick on her, though she deserves some picking, but her mindset simply couldn't take her to the more sophisticated investment path of buying low and selling high.
Using that metals story as an example, one poster said that I could have done better buying Dell calls. True enough. But, since I think Dell is overpriced now and was then, I wouldn't be comfortable holding Dell calls. Even if I thought the herd could take them up for another decade. But palladium and platinum were dirt cheap, selling for low prices while demand was high and supply was low, and I was very comfortable holding them. I would simply rather hold long what the herd is avoiding and pick out the weak sisters that the herd is buying for a predator's feast. It is certainly tougher work than buying Vanguard's Index funds, but it is much more rewarding and much less risky.
One last point. I am a safety first investor. I live off the money I make in the market, plus a few small fees from partners, too damned small <G>, and mere pittances for consulting or speaking. I cannot afford to buy the market at 9300 and have it fall to 4500, because that just doesn't hurt the asset side of my life, it hits my "take home" pay. Others with real jobs are obviously willing, or oblivious to the fact that they are taking much more risk with their money. The sad thing is, if the Big Kahuna hits after this bubble pops, many will be either unemployed or underemployed and all their investing will be for naught.
MB |
