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Twist your brain around supporting evil for the good of humanity. Or not.

"Smoking is cool, and everybody knows it." --Chandler Bing (Friends)

“Smoking is cool, and everybody knows it.” –Chandler Bing (Friends)

So the idea of this blog is to talk about how to make a sustainable nest egg for safety and retirement, without (too much) guilt.

So, why are we here, we who have a list of rules (one of which is “Don’t buy defense contractor and tobacco stocks”) going to make the argument that we should buy tobacco stocks?

Well, lets think about it … money? Yeah, sure, of course. I mean, why invest in stocks if you aren’t going to make money. But, we here always have a secondary objective: Doing good, or, at least not doing (too) bad.

We have morals! We have ideals! And where we may not always live up to the ideals, we at least feel bad when we don’t abide by them. So, we don’t support companies that make things that purposefully kill, exploit or support killing or supporting … even when we don’t know what that means. [Does buying stock in alternative energy from a company that supplies energy to a factory that makes bombs that are used to shell civilians 6000 miles away constitute supporting building and dropping bombs? And if so, or not, does simply paying taxes support that too, thus making the whole thing moot?]

Certainly there are shades of gray  to buying any stock. In a gray fog, while wearing sunglasses.  At night. Underground.  With the Beatles playing (cause it sounds like a psychedelic party!)

So, let’s just set up a set of rules. Actually, 2 cop outs, and 2 rules. No, well, making money is one of the rules, so 3 rules. But, 2 besides that.

Forget it. Lets just focus on the rules:

1) (cop out) Business sucks. But it’s the best thing we have ever found to channel the selfish human heart into constructive gains. Businesses employ people, who support families. They pay (lots) of taxes (or, their employees pay lots of taxes, either way, the government gets more so they are happy). Generally, they pay for everything and move money around. They are the heart of the world. (Roads are arteries and veins. Money is blood. People are cells. Dogs are leukocytes. Food is, well, food. Movie stars are the moles and freckles. Manteca, Ca., is the anus, Etc.)

2) (cop out) In planes with sudden loss of pressure, parents are told to put on their masks first, get some oxygen, and then take care of their children. Like that, we need to take care of our bottom line, so we can continue to fight the good fight. (BTW, this is good justification for taking an evening off from your kids. And just may be true, also.)

3) Avoid bad (self explanatory, but hard to define)

4) But above all, support good.

So, what does this all mean. It is sound and fury signifying nothing, but we’re calling it our “Guiding principals”. (Hey, we want at least the illusion of doing good. It’s working just so long as we believe it, right? ‘Cause, lets be honest, just being alive and breathing is f***ing things up, and it just gets worse from there.)

So, cigarettes kill people. Don’t support that. But, as an alternative, e-cigarettes have lower the risk of cancer and lung disease. So support that.

But, doesn’t supporting e-cigarettes support the tobacco industry?

Yes, it does. So, how can we invest in this? I mean, we are hooking people on nicotine, either way, right? Er … yes.

But, lets look at our algorithm here (you just learned a fancy word for recipe):

Rules one and two: Check!

Rules four: Check!

Rule three:<buzzer sound> Not so much.

But, FIGHTING the big EVIL corporations can be done by methods other than destroying them, but by redirecting their evil ambition towards less evil, but more profitable business ventures. If we are supporting something bad, but steering it towards something good, then we’re doing good, right? Like Michael Corleone in the Godfather, trying to go legit. Or, like an undercover drug operative. Or like James Bond!

No matter how you spin it to yourself, the truth is, is that if the stock price goes up (more people are buying it) then the more tobacco companies will pay more attention to e-cigs. This will decrease the production of regular cigarettes, which, lets face it, stink.

Or, maybe we are just trying to talk ourselves into something stupid.

Look at the stock: Victory Electronic Cigarette Incorporated (OTCBB [Over the Counter Bulletin Board]: ECIG) (These wacky stock brokers! HA HA HA).

It is all over the place, highly volatile. The FDA is cracking down (not really, but hey, when the Wall Street Journal hypes something …) the prices are just going to plummet.

But, as you know, we advocate buying things when they get bad press. And we believe this industry will grow by leaps and bounds over the next few years. And this company is just starting out …

Could it be the next Starbucks? The next Netflix?

Probably not, but, heck, it’s stocks. 99% of new companies fail.

Bottom line: It may not hurt you to invest a small portion of your portfolio on this, like say, $1000. Or, it may cost you $1000 and your soul. We aren’t quite sure.

 

NOTE: StockGuilt is a blog about interesting stocks, and our views. We are not stock brokers, investment councilors, planners or legal advisers. In fact, at least one of us is an idiot. The rest are just folks who think about investments. This is what we think, and what we will do/did. In no way are we telling your what to buy or sell … Do your own homework.

If it works out for you, and you feel generous, well, we’ll probably get in trouble if we take your money, so …  We like Ronald McDonald houseUnicefSalvation Army and SafeNest

 

 

 

Lies we have told you so far … (Quick tip)

As a follower, you have many benifits, such as not having to think. But, there are problems too.

As a follower, you have many benefits  such as not having to think. But, there are problems too.

For the past two months and eight articles, we have been preaching the same fundamental actions: Buy solid stocks, keep costs low, avoid brokers & administrators, hold your stocks long term and ignore stock news.

But as one of our genius friends always says, “There is an exception that makes the rule.” He must be a genius, because that axiom doesn’t make any sense to us.

Here is the exception: Read stock news, on losers — because the bigger the loss, the greater the potential recovery. So, every once and a while, Google something like, “Prices fall”, “Stock slips” or “investors are selling”, and note the names of companies on that list. Here are three current examples: Caterpillar; JCPenney; Apple;

However, don’t actually read the article! You are trying to get ideas on companies with a sale price, not over think it. Why this is true: here.

***

Bonus quick tip!

So, now your thinking, “These people are asking me to put my money into the least safe place I could put it! I’m going to lose all of my money!”

Well, maybe yes and maybe no. You want to be sure about your money? Put it in a savings account. That is as close to a sure thing as is possible in this life — too bad the sure thing is that it will lose ground on inflation.

We live in a world of volatility. The question is not if a company experiences volatility in it’s price/business, but, is this volatility based on real or perceived problems.  

There are a lot of reasons there can be a loss  in the price of a company: Pending legal action/outcomes, income loss, change in management, market loss, change in strategy/product/the color of the VPs tie, opinions, economic astrology, etc.

Where there are many reasons for a price loss, there are only two categories: Real and perceived.

Remember, the market is run by people that a) panic b) follow the panic-ers and c) people that take advantage of all the panic. The thought process of each of these people can be very, very complex, but the results in aggregate are fairly easy to understand: if there is bad news, the price goes down; if there is good news, the price goes up.

This is where you’re BS detector comes in, and a little common sense. Also, the slightest hint of research … but just a pinch! Just enough to answer this: Is the price low because the product sucks or because the press sucks?

NOTE: StockGuilt is a blog about interesting stocks, and our views. We are not stock brokers, investment councilors, planners or legal advisers. In fact, at least one of us is an idiot. The rest are just folks who think about investments. This is what we think, and what we will do/did. In no way are we telling your what to buy or sell … Do your own homework.

If it works out for you, and you feel generous, well, we’ll probably get in trouble if we take your money, so …  We like Ronald McDonald houseUnicefSalvation Army and SafeNest

How to invest like a big-time, Cristal guzzling, yacht cruising, hairy-chested hedge-fund manager — on a teachers salary. AKA The StockGuilt manifesto.

Bubble

“I’ll take that one …”

The name of the game is: Beat the S&P. The S&P 500 is an index, a lump, of the largest 500 companies on the Dow-Jones market. And we have to beat them! Beat them?

How the heck can we beat the biggest companies in the world? Do we really have to beat them? Why?

Well the answers are, in order: You probably can’t, and no. Why? Why, is because that is the baseline everyone else is trying to pass. You may have heard this, or, if you are serious about investing in the stock market, you will hear about it: the S&P grows (or declines) in a given amount of time, and you compare your portfolio to it. If you are better than the S&P, you polish up your trumpets and sell seats to your carnival show. If you don’t, you just don’t mention it.

But, here is the truth: The line in the sand is arbitrary (why not every other company listed on the NYSE, numbers 103 till 2175?). Clearing the  hurdle is based on chance (i.e., luck) and really doesn’t mean anything. It is — (get ready for a swear word) — bullshit. 

Let me tell you right now, you may beat the S&P for one year. You may beat it for two. You may beat it for 10 years. You may throw heads on a quarter 14 times in a row. But it ain’t skill, its dumb luck.

So get the image of the swaggering, uber-intelligent, market savvy stock trader out of your mind. You aren’t her, just like you aren’t Beyonce or Jessica Flecher (Murder She Wrote reference … I lost a bet. ).

What we want to do is about as lucky and glamorous as making a brick out of mud. We take the ingredients,  use a system someone else taught us, slap it together, and build a house. We don’t really think too much, because we know we can’t outsmart the market. We just build bricks and make a strong foundation, and shore up walls, and build a future. It’s slow, boring, messy and unglamorous, but, fortunately, it’s pretty foolproof, and it makes more money, and is nearly as safe as your savings account or a CD (or even Bonds). Besides, we don’t have time for this crap. The reason we are doing this is for our families; it would be pretty dumb to ignore them while you are planning for their futures!

So, here are the basics, no messing around. Each of these will be expanded and explained in detail later, but for now, just make a checklist:

  • Buy individual stocks!
  • Keep fees down! 
  • Do your own financial planning!
  • Don’t move your money around, plan to buy and hold for at least 10 years.
  • Use an online brokerage … and if someone wants to give you $600 for putting your money in there, do it. 
  • Save as much as you can — remember, $1 today is $100 when you retire! Every penny counts. 

Now, the moment you’ve all been waiting for: How to invest like a super-smart, Ivy league educated, platinum TAG-Heuer watch wearing  mutual fund managing superstar! 

  • The secret is you simply buy the companies listed on their prospectus (a document they make for number’s geeks, that tells all the financial voodoo, wizardry and statistics; this document shows what their mutual fund is buying). Why pay them, when they are giving you their expertise for free? 

So, about that S&P. The funny thing is, the S&P does just fine. So fine, in fact, there are funds you can purchase (which we discourage, due to fees) that do nothing but mimic the S&P. You would do well to come close. Everything else is luck and should be cherished like gold found on the sidewalk. 

Now, send me $1000 every year until you retire, like a financial planner. Yeah, I didn’t think so. Still think people that invest have to be super-smart? You are now smarter than 90% of them.