Don’t Worry, Be Happy; Better: Worry, Work and Study, Be Happy

Timothy Geithner: "Well, I think ..."

Timothy Geithner made me money.  He was on the Charlie Rose show in March of 2009 and mentioned that he thought the government was going to support in some way the Auto Industry.  The market in March 2009 was hovering around 6500.  I thought that night that ‘this is it’, the bottom.  I guessed right.  But it was a guess.

So I bought Ford, GE, GM, GSX (this only 25 shares), and Citi.  A month ago Ford was up 5 times, GE up 2 times, GM gone bust, Citi basically no change (and I expect it to go back to its old yahoo days but they will need new management).  So I sold Ford, GSX and bought Sirius.  Then I bought more Citi and a few days later Ford dropped $2 and I bought it back.  I realize now that I was trading, not investing.  Gambling, not investing. 

I’m still up a fair amount, but very unsure.  This is the first time I’ve invested (really gambling) in stocks.  For the last twenty years all my money went into Kaffe Magnum Opus, and it is the only investment that has positive returns over the twenty year period.  Steady growth, profits after many years of management support and re-investment, and good prospects, although there are challenges in the coffee industry.

So what to do?  I’m reading Ben Stein, yes, that Ben Stein,  “Bulletproof Investing” and it is pretty good, pushing broad investments, not picking stocks, and diversity.  He believes that you will be well off is you get an 5 to 8% annual growth, basically a doubling over 8 to 10 years.  That would be really good for twenty years.  Invest $1 today and in 2030 you have $4 (1 becomes 2 in 10 years, and 2 then becomes 4 in the second 10 year period).  There is a lot more to his strategy, and it is appealing.  The only question: Will I live for 20 years?  I’d be 85.  Maybe. 

So what about real estate?  Commodities (I’m in the commodity business, roasting and selling coffee)?  IPO’s?  I don’t know.  And this is my dilemma.  And then there is Ricky.  Ricky worked with me for a few years while in High School.  After getting a degree in Engineering he now works as a trainer at Best Buy.  He is quite successful and I am happy for his success.  So what does this have to do with making money.  Yesterday he comes to my home to install a bit of electronics and he tells me he realizes that if he is to become a millionaire he must: Pick the Right Stocks and with luck, get rich; pick the right commodities (his friend has farm connections and made some big money); or own a business.  Ricky is about 23 or so.  Wise beyond his years.  Stocks and commodities are pure bets.  But owning your own business is a pretty sure bet if you work really hard, study, and look ahead.  Look around the corner you are approaching.  So …

What to do?  Sell the stocks.  Invest in my business.  It is my livelihood, and I influence directly the actions it takes.  Who knows what it will be worth when I’m 85.  It doesn’t matter too much because it makes me happy.  I worry, sure.  But it makes me happy.

I am a nail biter.  I worry, and even when I worry, I’m happy.  Sometimes a bit jumpy and sometimes a bit biting.  Overall, I’m happy.

If you don’t own a business, I’d suggest you start one.  Or be lucky.  Maybe you can pick the next Microsoft or Google, or for that matter, GM.  GM fifty years ago (1960) was a solid buy.  And my Uncle Mike Buckley made over a million in GM Stock before he died and left it all to charity.  In a funny way he was lucky he died before the management of GM became incompetent.  And let us remember the truth about long-term investing.  GM had a great run for many years, but in the long run?  GM went bust and is now worth nothing.  So much for the long run investor.  I wonder if this is a mortal sin?  Hey Ben, will I go to Hell in a Handbag?

Bob

Staying the Course

Lance Stays The Course Despite Two Crashes

Sticking with your plan can sometimes bring surprises out of the blue.  Some are helpful, some cause problems.

Who would expect to see Lance Armstrong on the ground, twice, both crashes caused by other riders. 

In our business the price of coffee spiked this summer.  Not exactly out of the blue, but a surprise none-the-less.  All of us who own and operate and lead our own business must have the courage to just put our heads down and keep going forward.  You and I must be able to absorb disappointments, even when physically hurt, and keep going.  We are the energy that keeps the business healthy.

The news is reporting that Lance tweeted his intention to continue in the race and help his team-mates.  Good for him.  While winning is out of the question this year, he could still win some stages. 

So let us leaders learn the easy way.  Watch another person handle adversity and thrive.

May your summer be happy, and your Gazpacho cold.

Bob

Inflation in Britain

Follow this link to the New York Times article in today’s on-line newspaper: http://www.nytimes.com/2010/07/07/business/global/07pound.html.

It is a good follow on to my thoughts about inflation in the US.

Bob

Coffee Prices on the Rise – Your Business Must Keep Pace

The coffee C has increased substantially this year.  It is due to the rising C contract – the base price for most coffees, and, it is also due to the rapid rise in ‘differentials’ – the component of coffee prices that represent the quality of the coffee. 

To keep it short and to the point.  Managing your business in times like these is not easy but you must keep pace with price increases.  I was born in 1945 and so have experience with several periods of rapid inflation.  You may not remember or know, but the prime rate was over 20% in the seventies.  Nixon, Ford and Carter were Presidents.  Ford wore buttons with the initials WIP – Whip Inflation Now.  Nixon slapped price controls on the American Economy.   The inflation was caused by the huge increase in Government spending for The Great Society and other stuff, and the Vietnam War.

Today we have the Iraq and Afghanistan Wars and Government gone wild.  This is not a political statement for either Democrats or Republicans.  Both share in the economic carnage caused by incredible increases in the debt load.  Bush increased it by 3 Trillion and more and Obama at least that much, some inherited, but none-the-less, on his watch.

My concern is that interest rates are as low as they can go with nowhere to go but …. up.  Inflation may lead the way, or it may follow rates up, but I think we are in for many increases in prices.

So keep watch and keep moving your own price.  You have to maintain margins.

Bob Johnson