The race is on, and it looks like heartache

GOOG today: 574.29 up 15.82


GOOG, the Heartbreak Kid, is coming from behind. AAPL, RIMM, BIDU and the other horses in the race all fell back, today. That's the news from Track Wobegon.

And good news it is. But what a strange race. There's no finish line. It's never over. Just a lot of relative moving ahead and falling back. You switch from horse to horse, hoping to stay ahead; or you pick one nag to leave the rest in his dust. And you can stay at the track until you have to go home.

Helpless, Helpless, Helpless

Misinformation followed us
Like a plague

Going to cash, last year, felt good. I hadn't done that since 1998, and back then I was too ignorant to get nervous about it.

Getting out of cash, on the other hand, is turning out to be messy. The cacophany of Klaxons is overwhelming. And they're all sounding different tunes. Between Jeremy Grantham and good old Grandpa Vince Farrell, I change my plan every five minutes. Somebody's fooling somebody somewhere.

It's gotten so bad that, last week, I called Vanguard and asked them for financial services.

A Lesson to Me

I've been beating myself up, lately, thinking that I'd mishandled my GOOG holdings to the tune of a $30K missed opportunity. That's the kind of opportunity you hate to miss.

But then I went over the sequence of events and my actions, and I think a case can be made that I acted rationally, for the most part.

First of all, I considered that I incurred additional risk by putting 20% of my resources into a single stock. But I believed that I understood the premise of the company behind the secular growth story, and I believed that it was worth making a big bet.

I wanted to be a long-term holder of GOOG shares. I thought that was the way to increase my wealth significantly. I still do.

But the size of the bet made me acutely sensitive to the stock's fluctuations. They made my bottom line tremble.

Right after I made the bet, a year ago today, the stock took off and ran to 750. When it started faltering, I was unconcerned. I had my eye on where it would be in 2014.

When it fell through 500, I became concerned. When it hit my cost basis at 489, the talk was that it would end up at 350. I decided, because so much money was involved, I should protect my original investment from a significant drawdown. So I sold the lot.

It started out well at first. I bought it back at 447 and 425, and it moved back up to 450. But the talk was that this was still one sick puppy. Josh Hayes said that he was going to short it.

So, I got scared again. This was when the buzz was that Google had run out of paid clicks and and the recession was going to cause everybody to watch television all the time instead of being on their computers. In his videos, Blodgett chortled.

I feared going into Google's next earnings with the number of shares that I owned. It seemed foolhardy. I reduced my stake. Then I decided that owning any shares at all seemed foolhardy, so I sold my remaining shares. I felt shaken.

But the worst was yet to come. The earnings release was a thunderclap. I know a lot of short money got lost that evening. I didn't actually lose anything. I just failed to gain $30K. I had to buy it all back, up a hunnert.

That was the cost of insurance for my investment, given that it was a time of great turmoil. In retrospect, I should never have sold it the first time, or if I did sell it the first time, I should never have sold it the second time. I should have just held it and let the drawdown draw down.

But, at the time, I believe, my actions were rational. To do anything else would have been to ignore the increased and substantial risk of loss. I preserved my capital, but it cost me.

You don't tug on Superman's cape. If I had, I'd be ahead of where I am right now. I should have no regrets, but it feels like a loss. Where do I put that on my tax return?

Meaningness

I was reading Cramer, a few minutes ago.

I like Cramer. Not because he's arguably a great stock picker, but because he tells the truth about himself. That makes him my role model. I want to be like that, in public.

So I was reading this end-of-the-day piece in TSC, today, where he was saying how tech was too hard, right now. Not following the script.

At the end, he said:

"... it's just too reactive, because it's pro-active to nothingness on the part of hedge funds that simply can't resist playing no matter what."

What is this? I like the way it sounds, but I don't know what it means. What do I buy? What do I sell?

What Am I Bid for this KeyWord?

These days, it's hard to escape the fact that I'm not the guy in the Schwab commercial who smiles modestly and says, "I do OK."

So it was, this morning, that I found myself in a glum mood and in need of a little ego salve. More in idleness than in earnest, I went to the GOOG message board and searched for "The Google Opinion."

A bunch of references came back and among them was a post, asking if there were "any blogs for Google like MacRumors or AppleInsider for Apple?" And there was a reply from google1000orbust who said, "Larry Blumen has the google opinion."

I thought that was nice. I could use a few more like that. As it turned out, most of the references were my own posts, advertising this blog.

I decided to broaden the search by putting in just "Blumen".

At the top of the list that came back was, "BLUMEN is a moron."

Sunday is for Summing Up

Reading Warren Buffett's homespun homilies* concentrates my mind as I try to crystallize what, if anything, I've learned since last year.

I've learned that it's easy to go completely to cash, but hard to capitalize on it.

I've learned that it's possible to time markets and stocks, but it takes more time than I have to spend. Also, I may not be emotionally disciplined enough to bring it off, although I thought I was.

Short term trading seems de rigueur these days, but I've made most of my money when I held things for a long time. And I was more successful when I was less intelligent about what was going on.

So what'll I do now, my brown-eyed self?

I've got three stocks (GOOG, AEO and TEX). I'm going to try to stop worrying about their rips and dips. A little benign neglect is in order, if I can muster it.

I'm going to re-establish a position of mutual funds. But I'm moving away from index funds and toward actively managed value funds.

I'm going to remain cautious, keeping 35-50% in cash, but be ready to add to my existing positions as conditions improve.

And I'm going to keep my day job as long as I can.



*
(http://money.cnn.com/2008/04/11/news/newsmakers/varchaver_buffett.fortune/index.htm?postversion=2008041410)

GOOG Again

Here's what happened.

Thursday night, my wife and I were going to hear Temple Grandin speak downtown. We had to leave at four-thirty to get there at six, and GOOG's earnings came out at four.

At four, I was glued to the Stock Channel. They had two guys there. One was a nice looking suit, who said his firm was advising their clients to buy this amazing money machine prior to the earnings release. The other guy was a smirking little jerk who said that Google had saturated its market and would soon go out of business. I hated being on that schmuck's side.

Then Jim Goldman came on with the news in his patented peppy style and I sat there stunned, thinking God really does have it in for me. I just sat there, watching a world-class short squeeze unfolding. I had no game plan.

I went to my wife and said, "Google. Earnings. Stupendous."

She said, "Why don't you buy it back?"

That was the last thing I was going to do. Before that, I would quit my job and become a priest. But then I remembered that Cramer was in this fix once and he bought it all back. Suddenly, I realized that I would have no chance to get rich if I didn't buy it all back.

It made perfect sense. When GOOG was down, I made a few bucks trading it between 425 and 450. So, now, at 505, I quickly figured that I could get back in, even, with the proceeds.

It was four-twenty-five and my wife was saying, "Are you ready to go?"

I said, "I'll be right there," but raced upstairs, turned the computer on, and went into my after-hours trading place. By the time I put my order in at 505, it was up to 509. I didn't have time to dick around, but Cramer says only chumps put in market orders, so I put in 510, thinking that would get it, and then I had to leave. I couldn't stay to see what happened.

Temple Grandin was great. The smartest, most successful and funniest autistic person on the planet. I forgot about what did or didn't happen back home.

We got back about ten. I checked the computer and the order had expired unexecuted. Of course.

But, after giving it up, I had seen GOOG again in my future. I knew what I was going to do. The next morning, before the market opened, GOOG was at 528 and still climbing. At work, I put in an order to buy 200. At the market. I got 535. It kept going up to 547, proving there are greater fools than I.

It settled back to 539 at the close. Next week, it will probably correct. I don't care.

The dream is back. Schrodinger's Cat lives.

Back in the High Life Again

Wednesday night and all day yesterday, I moved around like the dead. I lived in a world where ignorant hedge funds clash by night. A world now cracked open, with me on one side and GOOG irretrievably on the other.

Last night, I watched it soar to 500 and beyond. As it rose, my spirit sank. I knew that I would never own GOOG again. I had bad dreams all night.

This morning, in the office, by ten o'clock, I owned 200 new shares of GOOG. The price was exorbitant. I was wild with irrational exuberance. My life again has meaning.

Google Eve

My first Google Eve, since 2005, with no GOOG beneath my feet. You'd think I'd feel nothing for the game, but of course I do. What an exquisite moment in time.

I feel like Dover Beach tonight. The moon, the night, the coast, the salt spray.

My feeling is, I'm done with GOOG. Fairy tales, after all, don't really come true. Unless they do. Schrodinger's Cat curls up in the corner of my ceiling and draws its last, and future, breath.

The Sea of Faith
Was once, too, at the full, and round earth's shore
Lay like the folds of a bright girdle furled.
But now I only hear
Its melancholy, long, withdrawing roar....

What a Revoltin' Development This Is

It's always been my nature to take chances,
My right hand drawing back while my left hand advances


Why am I in cash at this late date? I, who was buying with abandon on January 23rd. And selling with abandon on January 24th. Have I abandoned my mind?

I should be buying now. In truth, I was buying, but it wasn't working for me. So I'm trying something else.

The situation is either clearing up or it's just getting started. One way, I'm hosed. The other way, I'm bound for glory.

But why can't I go halfies and hedge my bet? Because there's nothing worse than being hosed in Hallelujah Land.

Free At Last

Compulsive buyer and compulsive seller in the same cranium. I wonder if the New England Journal of Medicine would be interested in my case. Probably not.

But that's OK. Today, I cured myself. I sold everything for cash. I understand that I have done this before. It's true, but I always held something back. This time, I sold everything, including GOOG. I got a margin call on my sanity. I had no choice.

But it worked. In the past, when I went to cash, I was thinking all the time about when I would be going back in at a great advantage. Hence, the twin obsessions. Early anticipation, followed by early disappointment and eventual panic.

I'm different now. Like most people, I would like to have a lot of money. Great wealth has its place. But I'm not concerned about that now. I'm going to grow my wealth the old-fashioned way, by saving it. And collecting my 2 percent. The predictable result will be to increase my coffers by 8% per annum over the next few years. That projection compares favorably with my not too shabby performance over the past three difficult years, of 6% per annum. From what I'm reading these days, the next few years will be even more difficult.

But I don't worry about that, now. I am at peace with myself. I can hear the birdies singing. And I can smell the bees.

If you see St. Annie, please tell her thanks a lot

Did you ever get the feeling that you wanted to go?
And still get the feeling that you wanted to stay?

Last fall, when I went to cash, I thought I would wait until the Klaxon sounded and then traipse back into the market without a bruise. What they don't tell you is, there's not just one Klaxon. There's lots of them and, right now, about half of them are making a fearful noise, while the other half sit mute.

This is stupid. Somebody ought to know what's going to happen and let everybody know. Well, at least, the paying customers. But nobody seems to know. Or everybody does. It's pretty confusing.

Since the beginning of the year, I have bought and sold AEO three times, and I've bought and sold MSFT twice. Just today I sold VTI and SPY. It seems to me that I sold both of them a few weeks ago. When did I buy them back?

I have become completely risk averse. At the same time, I'm continually seized by an uncontrollable urge to buy something. So I buy something, and then I get an uncontrollable urge to sell it. My fingers are all in a knot.

I'm driving myself crazy, even though I'm only down about 6% from my all-time high on 11/5/2007, when GOOG closed at 741. What would I be like if I were down big?

Nate's Way

I'm thinking about my friend, Nate, tonight. He and I worked in the same outfit for a while.

Nate understood that the Man wasn't going to hand him anything, so he had to look after himself. He started laying up every buck he could find, and fifteen years later, he said, "I've got over a million put away." I asked where, and he said, "All mutual funds."

The next to last time I saw him was the year after 9-11 and he said, "I lost over 300 thousand dollars!"

The last time I saw him was the year after that. He anticipated my question with, "It's all fine, now!"

Sometimes, it was hard to tell what Nate was really saying.

Crying Time

So they gave Dylan a Pulitzer Prize.

For his "profound impact on popular music and American culture, marked by lyrical compositions of extraordinary poetic power."

Well, I guess.

If I was giving him a prize, I would say it was for the most glorious fade-out in the history of musical performance. At the end of the third track on Empire Burlesque, after he takes leave of his "dear, sweet friend," in "I'll Remember You," the instruments take over for one more time through, and then they go into the fadeout.

To appreciate it fully, you have to listen to it in a good set of earphones. Try not to anticipate anything. After the last verse, when the instruments start in, you might think that's the beginning of the fadeout, but it isn't. You'll know when the fadeout begins. There won't be any doubt in your mind.

Let the waves wash over you as it slowly fades. It'll make you cry.

Larry's Little GOOG

Today, the market was beneath contempt. I will not dignify the action, today, by discussing it.

Instead, I will ruminate on one of my financial whimseys, a GOOG version of God's Little Acre, which was not a particular plot of ground, but one that moved around so as always to be beneath the feet of a particular someone, in need of God's constant reflection.

Larry's Little GOOG is a hundred shares of Google stock that I have owned and sold and owned again, and sold again, through the years, and into the future. It's always the same hundred shares. Even though I may buy and sell many other shares of GOOG, I can always trace the purchases and sales of that original lot.

I first acquired Larry's Little GOOG in late 2004, in three separate purchases, and sold it a few weeks later, along with another, undocumented lot for a $200 profit.

I guess I couldn't stand not having it around any more, because I bought the lot back a month later and kept it close for over a year. By then, it had grown to 350. When it got to 366, I sold half of it. I didn't want to, but Cramer said I was a schmuck if I didn't, so I did. I regretted it immediately.

Then, in April, 2007, I bought those 50 prodigals back. They were included with a bunch of other GOOG shares that I got. The price was a lot higher, but it was good to have the whole hundred in one place again.

I determined to keep them together through thick and thin, but I didn't realize how thin it was going to get. This past January, I pawned them again - the whole lot, this time. For a couple of months I was totally without GOOG shares, with no prospect of ever seeing any of them again.

Nevertheless, through the kindness of strangers, I was offered my original shares back at a cheaper price. Actually, for a while, they were included in a batch of over 300 shares, but I soon pared them down, closer to the essentials.

Now, I have Larry's Little Goog back, plus 17 shares that I am holding for Somebody Else's Little GOOG. It's called Grid Investing.

A day for being bored

Sunday

For text, this day, I choose the place in Kierkegaard where, to satisfy the custom of his time, he begins with a principle, that all men are bores.

From this incontrovertible beginning, he proves that boredom, not idleness, is the Devil's domain and the root of all evil. And then he proceeds to distinguish two kinds of bored men: those who bore themselves and those who bore others. Those who bore themselves are the few, and they are highly entertaining to others, whereas those who bore others are the herd, and they are continuously entertained by the morose few.

I read these lines as a lad in school. I underlined many passages, using a straight edge for neatness. Beside one sentence, I wrote "Oh?" in the margin. By another, I wrote "Ha-Ha."

I'm different, now. I would not write "Ha-Ha" in the margin of anything today. I would not underline at all. And I wouldn't keep the book for forty years.

The difference is slim. Back then, I was not really interested in joining the ranks of the few, unless it was free. Today, I'm happy to be swept along with the herd.

Dogwood Afternoon

At the time, I didn't know much about Martin Luther King. I knew who he was. I liked his name. I guess I knew his story, but not in a way that drew me in.

I missed the March on Washington. I wasn't a marcher. But I didn't even see it on the news. I was out on the west coast, going to school, and a guy I knew who was from Michigan and who probably had never been in the south in his life, told me, the next day, that he had really been stirred by King's speech at the march. Later, I saw re-runs of the speech on television and I saw what he meant.

That was when I first took note of the man. As a speaker, he was clearly in the spirit, which is not something you can say about many preachers. But, clearly, King was. An American saint, right up there with Lincoln.

The night he died, my wife and I had been invited by a guy we knew, and his wife, to go to the Playboy Club in downtown Atlanta for a meal and some middle class titillation. As we were driving home, we heard the news on the car radio. We talked about it for a while.

Five days later, I stood in the crowd that watched the mule-drawn wagon pass by with his mortal remains. Back then, I worked in downtown Atlanta, two blocks from the procession route, so I brought my camera to the office that day and went out at the appointed time to see what I could see.

For a while there was nothing. The procession was late. Crowds of people lined the street on both sides, waiting restlessly. Then, before we saw anything, we heard it - a kind of far off hubbub. And then we saw it, coming toward us like a floodtide, held in its course only by the banks of spectators, on both sides of the street - a river of people.

The street full of people moved by us at a stately pace for a long time before we saw the wagon with the coffin, in the middle of the river, swept along in the flood, like some mournful Call me Ishmael on the bounding main.

When the tide had passed, I stood around looking for something to take a picture of. I saw some young black guys standing in the shade of a dogwood tree in full bloom. I took one picture.

It became one of my favorite pictures, although I wonder if I would have felt the same way if it had been a bunch of white guys, standing there.

I thought I was losing my religion

April Fool's Day, two years ago, I turned on my computer and watched it self-destruct. I called the Geek Squad and a guy came right out. I asked him what kind of words he could say. He said it's a bad day. Comes only once a year.

I asked him, could he fix it. He said, well, yes. I said, how much will it cost. He said, not much. I said, what about my data. He said, that's a bit more.

I seen he had me.

We made a deal and he went to work. He took out my hard drive and stomped that sucker flat. Then he put the windows back in and started to go. I said, thanks for nothing. He said, you'll never know.

Now every year, on April Fool's, I'm afraid to turn my computer on. So I don't. It's a religious holiday for me. Like Yom Kippur, except you can eat.