This old bull stood on the hill and watched the herd mindlessly careen first in one direction and than another—spooked once again by some irrational fear. It was a sight to behold! And the dust they raised will probably take a good while to settle.

As things were going, it was beginning to take a little effort for intelligent investors to find worthy buying opportunities, what with the herd commencing to trust the recovery (without a clue why) and beginning to again overvalue some of the good companies.

But, thanks to their skittishness (and cluelessness), we’ve got another fire sale going on and part-ownership of those good companies is once again affordable for the educated, business owner-aspirant.

For rational investors, whether Greece hits the skids or the Dow tanks, the value of your portfolio is what it is—which is no different from what it was. And it is still not as valuable as it will likely be in the future, assuming you used the appropriate care in picking the companies to own whose operations generate solid earnings growth for their owners. What counts is not the herd’s perception of its value; it’s your recognition of its real value: its rational value.

If you use Investor’s Toolkit 6, the Rational Value can be found on each portfolio’s “Overview” page. If you don’t have the software, you can easily calculate it. For each company, simply multiply the trailing 12 months’ earnings per share by the company’s “signature PE” and that result by the number of shares. The sum of each holding’s rational value is the value of your portfolio, based on what investors will pay when they’ve come to their senses.

You’ll never lose any money—ever—if you can hold onto your shares until the market comes back to its senses, which it always will. Even if you can’t for some reason, if you take out only the minimum you must, it’s likely that the limited loss on those withdrawals will be more than compensated for by the return on what remains.

Watching and listening to the Congressional inquisitions this past week, I had to believe that the Academy Awards needs to add a new category called Best Congressional Performances. Of course it would be difficult to decide whether the performances should be considered under Comedy or the Drama categories.

The righteous indignation and wrath displayed by the key players was great theater, of course, and played well to those political populists who still don’t understand that it was this very same Congress that forced these institutions go into the sub-prime mortgage business against their wills in the first place! Read more…

Here’s just a quick note to let you know that the political campaign I’ve entered is going surprisingly well, considering I’m not much of a politician.

I’m running against corruption and cronyism in my town and county. Someone “up there” must be watching because my opponent and his supporters just made an incredibly imprudent blunder and left themselves wide open. The newspapers are full of it; and, even though I started with no name recognition (and a refusal to clutter up the landscape with signs), we’re starting to make some headway.

The campaign is short—election’s on March 9th—and then, if all goes well, the fun really begins.

Thanks to so many of you for sending your good wishes. I’m looking forward to getting back into harness after that, with this blog and the radio shows, and trying to make a difference here again.

Occasionally I run into some comment that makes too much sense to keep to myself. Such a comment is this one I read on WorldNetDaily.com.

I don’t mean to be any more of an alarmist than necessary; but it’s getting pretty dicey; and, the huge gulps of money we’re needing to borrow in the short term, just to pay the expense of running the government look to be the last gasps of healthy capitalism in this country.

I know I said  I was going to take a break…and I am. But you need to read this and find a way to run our politicians out of Washington and back to fiscal kindergarten!

As you’ve noticed, occasionally I drift off topic (investing, lest you forget) and indulge myself in writing about things that may touch on my core interest but are only indirectly related to it: current events, the economy, politics, etc.—things about which I have strong feelings and which current events compel me to comment.

As you know, I’m disgusted with the obvious absence of financial literacy, responsibility, and just plain common sense that’s displayed by so many in elected office, from the top of our government institutions to the bottom. And I’ve railed about it time and again, wishing that some able folks would get off their duffs, take the bull by the horns, and give up their comfortable complacency to act instead of just talk.  Read more…

The Herald, South Florida’s major newspaper, headlined the unthinkable this past week: Jackson Halts Dialysis of Poor Patients .  One of the nation’s top-rated hospitals, Miami’s Jackson Health System had to adopt a policy that would deprive some 175 indigent patients of critical, life-saving care because it could no longer afford to provide it.

Hardly a decision taken lightly by the hospital administration, the financially strapped institution finally had to draw the line on life. Fortunately for those patients , some of the other area hospitals volunteered to take up the slack for all but about 4o. These would have to seek care in the city’s emergency rooms, where the law requires the hospitals to provide critical care regardless of the financial condition of the patient—or the hospital!

This, to me, is a tragic and stunning case in point that illustrates a simple fact: no matter how humane and compassionate the issue, the ultimate truth is that there simply ain’t no free lunch. As much as we would like to characterize medical care as a right rather than a privilege, without the funds to provide it, it vanishes.

I just wanted to take quick note of a comment that I heard on a talk show as I was surfing the stations while driving. Unfortunately I don’t even remember the fellow’s name or the position he held—not even the station I was listening to.

The purpose of my doing so is not to suggest that this is the position of our government. It’s only to take issue with the remark and suggest that anyone who thinks this way is wrong-headed.

In any case, the offending phrase was that the financial industry is the backbone of our economy!

There are far too many people who don’t really understand what the “backbone of our economy” really is. This parallels the notion that investing in diamonds, bonds, art, etc. is productive when it’s not. The “backbone of our economy” is truly anything that adds value or creates something of value out of something that had less value before. Read more…

Did you ever watch a school of dolphin or porpoise as they follow closely beside a boat? Of course, no single one can stay two feet in the air all the time; but, each rises from the water, arches gracefully above it for as far as he can propel himself, and then knifes back into the sea. Shortly after the first emerges, another does the same, and then another. And so on. The effect is that, at any one moment, a number of the graceful animals are above the surface, glistening in the sun, and there is a constant presence there.

We buy shares of quality companies to hold until we want or need the money. The “rule of five” tells us that, of every five companies we select, we can expect four to do as well or better than expected, but one is likely to disappoint us. And, occasionally, the herd will bid up the price of one or another of our companies to a point where we can no longer expect as healthy a return going forward as we did because we have already enjoyed much of the appreciation. In any of those cases, we will need to replace our companies with others that will better meet our requirements.

A couple of posts back, I made some comments that ignited a challenge to me to come up with some kind of measurable evidence that our system really works.

The beauty of this investment methodology is that it’s not one that’s so doctrinaire that, given the same set of circumstances, everyone could be relied upon to do exactly the same thing. The variables are simply too many and too subjective. Therefore, you can’t put together a control group whose performance you can empirically measure against a benchmark.

Believe me, if I could make my point without seeming to brag, I would. What I buy, when, and for how much, and how my portfolio performs is my own business. So, I’ve tried to avoid talking about my own case and relied on the logic and common sense of this approach to impress people with its validity.

Read more…

Yep, it’s the time of year to set some goals and to figure out how to reach them.

As I mentioned Tuesday, I’m looking for answers to the question: why have we not made more headway in convincing the world they can invest successfully. That’s my sole goal, at the moment—other than heeding the best advice I’ve ever received: “Keep breathin’.”

And my sole resolution is to pursue this course, find out the real reasons why no one is interested in investing, and then do something to correct it.

I realize that this nation has had a series of setbacks during the past year—the past decade, actually. But the good news is that, as a nation, we’re still breathin’.

Sure, we’ve seen some grossly ignorant, political giants smash gaping holes in the hull of our ship of state. And, even as the water swirls around their hips, keep swinging to widen those holes in hopes the water will flow out instead of in.

Our democracy is under siege from within because the average voter believes in magic! Healthcare, all the entitlements—social security, Medicare—all of the admirable, altruistic, do-good projects, from the earmarks that benefit a small town (and buy another term for some Congressman), to the rights-nee-privileges and necessities-nee-luxuries that we all hound our legislators to get for us—will be paid for by a bunny rabbit that pops out of someone’s hat! (No one’s come up with a more plausible scenario to date!)

So, let’s all resolve, in the coming year, to respect those who think differently from us and vow to help them realize their goals. Let’s retreat from the personal castigation and try to help our president be a better president instead of trying to take him down.

We’re way out on a limb. Let’s quit hacking it off the tree!

And if this wasn’t enough of a collection of metaphors for you, I’ll try to come up with some more!