Advanced Consumer Econ Pt IV - Greybeard U

Before we thump our chests, and start chanting about putting the women and children to bed in advance of our little hunt and kill expedition, there are a few more basics to cover before we go balls to the wall and start spending your children's inheritance on off-shore, pyramid, fractionally owned, currency traded, China-Googled get rich quick investments. These are simple rules, the advice is free, you get what you pay for...

I read somewhere once that managing your invesments/retirement is a necessary part-time job. Swell. I have been working 12-15 hours a day since the first week of January as it is. I already have a part-time teaching job. The sweetness of nitromethane powered drag racing begins next weekend. I have children scattered across the DFW metroplex. The newest chapter to the rest of my life starts in a few short hours. All I need is one more part-time job. In order to keep your pieces o green in your investment account, it makes sense to keep the universe of potential investments limited.

Rule 1: Select a number of stocks that you want to track on a regular basis. 10 may not be enough, 75 may be too many. You probably won't be invested in all of the stocks in your pool at the same time. Inevitably you will read about some wonderkind emerging stock that you will want to take a look at, and there will be a drowning victim in your pool that you want off the list. Out goes the room temperature ballast, in goes the new stock. Think of it as window shopping for stocks.

Rule 2: Stick to what you know. Refuse to by any razor except Gillette? Does your pantry look like a show room for Coca-Cola and Duncan Hines? Do you work for a Fortune 500, and find that you like your job, believe in your product, and your customers love you? Have a pretty good handle on the ebb and flow of retail, or you are certain you understand how Google generates its massive income? You just established the foundation for your pool. If you constantly find yourself bitching about the cost of a tank of gas, only to be greeted by airy commentary on the car radio about how MobilExxonShellBP mega oil just posted record profits again, yet you keep going to the SAME branded gas station for your weekly poke up the ass, guess which oil company you need to invest in...

Rule 3: Open the package. Over the remainder of this course, we will talk about some very simple concepts and vocabulary words that will allow you to simply and easily monitor the health and saftey of your favorite swimmer. You will need to find a library or other public computer so that you can visit the SEC on a regular basis, without the black helicopters hovering over your house in "Silent Mode" ala' Blue Thunder. For now, with your super-secret SEC log-in, all you need to know is WHAT does the company do, WHERE does it do it, HOW does it do it, and does it have to have a lot of DEBT to get it done?

In an earlier post, I mentioned that Blockbuster had found a way to punish its current customer base AND delay bankruptcy for another 6 months, by jacking up the monthly fees on its "FastPass" or "Passport" or whatever the hell where you could take two movies and keep 'em forever, or alternatively, spend all day picking out two movies, walking through the door, and getting two more... the clerks love it when you do that 30-40 times on a busy Saturday. Point is, Blockbuster has been having a bit of trouble keeping banks, bondholders, and other investors happy. (Forget for the moment that they have not been able to stay out of court due to their practices regarding late fees). Just like Aunt May, who had to file bankruptcy last year, or the federal government that files a psuedo-bankruptcy every time it jacks up taxes, or issues more T-bills, companies that rely on credit to operate get themselves in trouble. They lose flexability, they lose the ability to quickly jump on emerging business opportunities, and their credit costs (think of those credit cards in your wallet that will all be at 30% APR's by July) eat into the profit margins they have to produce to keep you, as a potential or actual investor, happy. When Blockbuster raised its monthly fees, I shut off my account. Netflix for me all the way baby (unless Blockbuster wants to bring its bankruptcy bidness to me, then we can talk).

GM claims it has 19 billion in cash, but then you gotta figure in the 3 billion and change that they are sloughing off to Delphi, and you gotta look at that little issue of having lost 4 billion in the last quarter. (Just once, I would like to blow 4 billion in 3 months....). Until GM uses some of that money to design a car that doesnt look like the by-product of a monkey humping a football, there is little chance that they can stop the nose dive. Without access to truly "free" cash, or cheap credit, GM just don't stand a chance with the current line up.

For a while, Sturm Ruger was a great invesmtent. They were debt free. They were closely aligned to their core business. Papa Bill was still at the helm. Liberal activists hadn't started their attempts to pervert a legal system that already has its hand up the girls' skirts by trying to sue gun makers out of existence. Dont expect to find a bushel basket full of debt free companies, but if a member of your pool cannot take a corporate crap without Moody's or Standard and Poor issuing a flurry of press releases, maybe that stock should be on the Dead Pool list.

That is enough for tonight beloved. Scour the home, find 5-6 items that you or your loved ones purchase on a regular basis, start building your pool. Next class, someone remind me to tell you why Starbucks may be a better buy than Burger King...

Dateline Detroit - GM announced today, in a last chance attempt to save North American operations, that it will take a two pronged approach to realign its business model with market demands. In an admission that GM has been whore-mongering its "other" lines, GM will revive Oldsmobile, and at the same time will completely spin-off Oldsmobile and Pontiac so that they can stretch their wings and create some truly unique, muscular opponents to Ford and Dodge. Even more shocking, GM announced a special racing option that will be available for all of the current GM lineup including the Corvette, the Solstice, the GTO and the "Oh we dont know if we will build it or not" Camaro concept. Departing from previous numbering systems, the new racing package will be designated the L69, but your local dealer will know it as simply... Formerly Living.