Hasbro: a stock nobody likes (but me!)

I first bought Hasbro in October of 2012 because it showed up on a list of companies that had a big dividend and they had consistently raised it.  I understood the product because I'd played with their toys as a child, bought them for my own children and now I'm buying them for my grandson. Monopoly, Play-doh, Playskool, GI Joe - plus a bunch of licensed products based on Star Wars, Spiderman and Sesame Street. 

This is a perfect example of what I've come to think of as a "low IQ investment."  A dividend that is significantly higher than what I can earn on the money market, a consistent track record of taking care of their shareholders by raising it - and it doesn't require an advanced degree in economics or technology to understand the stock.  If kids are going to continue to play with toys they can hold in their hands, they are probably going to play with Hasbro products.

But the best thing about Hasbro?  Nobody likes it.  Morningstar has a "hold" rating on it, as does Standard & Poor's.  Bank of America (Merrill Lynch) doesn't even bother to assign an analyst to follow it.  Everybody's decided this company - in an internet-based world - is yesterday's news and they've stopped caring - the exact same opinion they all held when I bought my first 200 shares 2 years ago.  And my position is up over 40% after expenses. 

I know it's counter-intuitive to get excited about a company that puts the professionals to sleep, that nobody rates "buy."  But think about it.  If everybody is already excited about a company, it's really hard to get a surprise to the upside.  Who is left to buy it?  We've seen this happen time and time again with top-notch companies.  Apple comes to mind as a great example.  It hit $800 a share (pre 6:1 split), all the news that came out about earnings, the dividend, their products was fantastic - and the stock still went down to $400 because everybody had already bought into the "Apple is the best company in the universe" scenario.  The time to buy a stock if you want to make the big money is BEFORE the analysts get excited, not after. 

Now we're heading into Christmas season and yesterday Hasbro announced they are partnering with Disney and Walmart (not bad partners) to introduce a new product that takes advantage of 3-D printing. 

"The SUPER AWESOME ME experience begins when the fan visits an in-store scanning station where a 3D face scanner captures their likeness to create a 3D model. At launch, fans can visit one of ten Walmart or two Sam’s Club stores and choose from Captain America or Iron Man to create a personalized 12” action figure. The SUPER AWESOME ME figure features a traditional 12” articulated plastic action figure body and a full color 3D printed head. Recommended for fans ages 4 years and older and available for an approximate retail price of $45, the SUPER AWESOME ME figure will be available for pick up at Walmart locations or ship to Sam’s Club customers in four weeks."

Come on - I'm not even a comic book fan and I'm cheap - but I'm dying to plunk down $45 to see what my grandson looks like as a 3-D ,12" version of Captain America. 

Even if it turns out Christmas shoppers don't love this idea, I'm stuck with a great dividend record and a package of iconic toy names that can continue to be re-imagined in ways that take advantage of changes in technology. Who cares what the analysts say?  Today I'm looking for cash to add to one of those rare, common sense companies that I can hold for years, confident that their seasoned management team will take care of the children who play with their toys as well as their shareholders - the way they have for generations.  

What are you waiting for?

I know you.  You're always going to start investing in individual common stocks someday.

When you learn enough.
When you get your next bonus.
When your savings account or IRA or mutual fund hits a magic number.
When the market pulls back.
When you get your tax refund.
When the bald, loud guy on TV confirms that the time is right.
When you pay off your credit card debt.  (Well, this one might have some validity to it.)
When you get a raise or win the lottery or your great Aunt Gertrude dies and unexpectedly leaves you her baby grand piano - which you don't play.

Enough.

Stop waiting.  Just do it.  Scrape together a few bucks from somewhere, be it your next paycheck or part of the mutual fund you own in your retirement account.  Stop waiting for a sign from the heavens and get thee to a discount broker.  Merrill Edge.  Ameritrade.  Fidelity.  It doesn't matter.  Stumble your way through the on-line account application (and transfer process if you are moving your retirement account).  Call the 800 number. Ask questions.  Do what you've got to do because there is no perfect time, there never has been and never will be.  Do it now.

Buy one share in one company that you believe in with all your heart, a product that you use and understand, a company you like so much you want to own it forever.  If that's all you can afford, then buy that one share.  Or two or five.  It doesn't matter. Stop being afraid and pull the plug because that's the day you become a real investor, when you've got real money on the line, money that you earned and saved, when you stop buying these stupid generic funds and decide for yourself what makes sense.  Stop dabbling.  Stop researching.  Just do it.

Give up eating out for a month - not forever - just a month.  Take that same money that you would have diddled away on waffles (oh, I know they're yummy) and carry out (yes, you're tired after a long day at work and I know you don't feel like cooking), and pale ales (oh, I know it's not easy) and make your first stock investment. Who knows, if you can cold turkey on the $10 lunches, the $20 Happy Hours for one month -  maybe you could stretch it to two.  And then you'd have enough to buy another share of something that would really get you somewhere.

Stop waiting.  Be an owner.  Reinvest the dividends.  Care about the future - yours and our common good.  Because that's what it means to own individual common stocks.  Ticker symbols mean something beyond the random letters and numbers.  They are our collective future, visions to believe in that will make your life rich in a way you can never suspect until you're on your way.   You've got to start somewhere, so start wherever you are.  Start now.

Mindful Spending

About three times a day I tell my husband how annoying he is.

"You've got me trained like a dog," I say.  It's the consistency of his simple messages, delivered every time I think about spending money (or leave dirty dishes in the sink) that is so effective - like boot camp, I imagine.

We're on vacation and like a regular person, I want to go into a cute, little gift shop and look around, but as soon as I step inside, he immediately asks, "What do we need?"  I glance at the charming little doodads, the sparkly things, souvenirs that will soon gather dust on shelves, forgotten. Then I take a deep breath and head right back out the door.

The telephone in our bedroom goes on the fritz. I tell Michele I'm going to shop for another one on-line and he doesn't even blink.  "Do we need it?" he asks.  In my mind I'm thinking we've always had a telephone next to our bed.  My parents always had a telephone next to their bed.  Everybody does.  In case of emergencies in the middle of the night.  "There's a phone on the fax machine in the hall," Michele reminds me.  And I have to admit he has a point.  The phone's been broken for three or four weeks and nobody has died.

Welcome to my life.  This happens with every soft drink purchase ("I saw a drinking fountain next to the restrooms."); every time I suggest we stop at a fast food restaurant ("There's roast turkey in the refrigerator at home."); every time I want to buy a new pair of shoes ("How many pairs do you need?  You only have two feet.") .

This is 2014 and I came into this marriage with my own money, so don't think I always do what Michele tells me to.  Just a few days ago I bought the shoes anyway.  But it takes such energy to justify my needs and overcome my husband's inevitable objections, that the object of my momentary affections is hardly ever worth the effort.

Before Michele, like most Americans, I used to enjoy shopping. It was fun.  Something I did with friends or my sisters as a social activity.    But after three or four years of, "What do we need?" I noticed something strange happening to my brain.  I no longer got that pleasant little buzz of dopa-mine when I handed my credit card to the saleslady for my latest purchase.  Shopping became something to be endured and female friends felt self-conscious while I halfheartedly pretended to look at the sales rack after our lunches.

After Michele I noticed that our net worth increased at a significantly faster rate.  We had more choice and our lives were rich and satisfying - not at all deprived.  We got more pleasure from finding cheap wines we liked, daily specials, and free concerts in the park than I ever did from buying without giving it any thought. The packed lunches we ate in airports were not just cheaper, the food was healthier with better quality ingredients. Now I'm proud to tell people, "I'm cheap."  I worry less and in our fifties, work is a choice, not a necessity.

When I came into this marriage thirteen years ago, I understood how to make money.  But there are two sides to every balance sheet and I've seen surgeons earning $400,000 a year have to file for bankruptcy. Thank-goodness my very annoying husband showed me purchase by purchase how little it takes to live a great life.  Together we make an amazing team.

Ode to My Income Taxes

I hate doing taxes.  As soon as I get out my little bag of crumpled receipts and the pink, plastic calculator that doubles as a pencil box I immediately start to complain and don't stop until the forms are in the mail. Every year the sighs get louder, more dramatic, as it gets closer and closer to the 15th.  I hate taxes like I hate washing windows or painting walls, bored to tears before I've finished entering the information from our first 1099.

And yet in my entire adult wage-earning life, I have only paid a professional accountant once and even though he did a decent job at a reasonable price, I will never trust my numbers to a stranger again.  In fact, I am making my husband, Michele, learn how to stumble and bumble through the Turbo Tax prompts the same way I do.

The ritual of income taxes is the only time I force myself to sit down and study the data of my life to reflect on what I value.  When I pay someone else to plug in the numbers, I miss the most important part of the process.  Our check registers and account statements tell Michele and I in black and white what was important to us over the past 12 months and what wasn't.  Tax returns make us face up to those decisions - sometimes painfully - and rethink them.

What are some of the discoveries we've made about ourselves from the numbers of 2013?

1.  Michele figured out we paid less than $400 for gas and electric in Cincinnati for the whole year.  We knew we were paying less in the condo than in our old house - but because the amount is added onto our HOA fees, we didn't realize quite how much we were saving.  (*Please note we are not here in the summers and never use the air conditioner.  We wear sweaters in the winter.  This is not realistic for normal people.)

2.  At 58, how I appear to the rest of the world is apparently no longer of significant importance to me.  I only saw one professional hair cut come through on the credit card statement and a charge for $342  at T.J. Maxx for clothes.  I think I might have also bought a couple of sun dresses for cash in the market in Savona, but I never pay more than 10 Euros apiece.  To all of my friends and family who are always polite about what I'm wearing, I sincerely promise to try to care more in 2014.

3.  Even though I think we never eat out - Michele says we do and it turns out he's right.  I was surprised by how much money it costs us just to buy groceries in Italy where I add up every single cent we spend. In Savona I do my shopping on a daily basis and the total surprised me. I worry about average families who bring home the equivalent of about $1,500 a month and wonder how they do it because I'm a bargain shopper.

4. Michele also says I spend way too much money on art - which must be where all the money I used to spend on my hair and clothes is going - and this year it might not be such a bad idea to slow it down a little bit.

Of course we're not done yet.  With another four or five days to bicker and fuss this is probably just the tip of the discovery iceberg.  The numbers for School Amici on our schedule Cs (self-employment income) will trigger a lot of thoughts about how we use our resources, what works and what doesn't.  I'll want to give more to charity and Michele will be more conservative.  Then he'll tell me how easy it would be for me to do a little more consulting.   It's awful.   But I swear it's worth it.  We make better financial decisions year-round because of a few days of pain  - and believe me, we'd never do it voluntarily.

Buy Low, Sell High: How it Works in Real Life

They make it sound so easy, don't they?

Buy a stock low.  Wait a little bit.  Sell it after it goes up and then buy something else that is low and repeat the process until you have so much money you don't know what to do with it.

But the most oft repeated rule of good investing is a gross oversimplification that puts way, way too much pressure on the investor.  You are never - not in a million years - going to be able to time markets or purchases, at least not on a consistent basis.  Let's take an investment I own to see how it really works.

I like Google.  When I use a search engine, I prefer to use Google.  I like the Google doodles.  I'm used to the format and over the years I've appreciated the other services the company has developed to earn my loyalty.  Stuff like Google Docs, Google Chat, Images, Maps, Google Earth.  They offer a high quality product and make my life better on a daily basis.

But it's always been an expensive stock.  So the first time I bought it, I purchased 5 shares on November 16, 2007 for $627.75 a share.

Then the world fell apart in September of 2008.  Remember that?  I sat there watching the collapse in absolute and complete terror like every other sane person who owned financial assets.  But good investors learn not to freeze.  You have to take a deep breath, open your statement - the one where the entire portfolio has declined by 20 % or 30% in a matter of weeks - and you have to get very quiet and learn to think for yourself instead of like a sheep.

Is the world really going to come to an end?  No.  Assuming an absolute worst case scenario which companies will survive?  You sell your weakest companies, the ones that had been struggling before the downturn and you take that money and  reinvest it in the strongest parts of the economy.  Or at least that's what I try to do.

On October 7, 2008 I bought 5 more shares of Google at the half-price sale:  $355.05
I got a little braver and bought 25 shares on October 13, 2008 at $365.45 and then in a different account on October  17, 2008, 20 shares at $385.11.  After watching, learning, getting to really know Google over the next five years, I liked the direction they were taking and was pleased with their acquisitions.  On February 28, 2013 I added another 70 shares at $805.10.

Today the stock closed at $1,192.10 and I'm pretty pleased with my investment.

Does that mean it's time for me to sell?  Nope.  Someday it's very possible that their self-driving cars will fundamentally change our ideas about transportation.  Google is working on contact lenses that monitor blood sugar for diabetics and automatically transmit regular data to their health care professionals.  In December alone, they bought seven robotics companies.  Recently Google announced a 2:1 stock split to be distributed on March 27.

This is a company I plan to own forever. But forever is a very long time.  And there are always bumps along the way. That's the way it really works when I buy low.   I know I may get the chance to buy even lower before I ever think about selling high.  My objective is to build wealth, not to be perfect.

I'm still in Italy, far, far away from the stock market.

Sitting next to an American businessman during my most recent flight to Europe, he asked me the same thing lots of people do when I tell them I'm going to Italy for a few months.  "What do you do over there?"  They can't imagine, especially when I'm traveling alone.

It's the last week of February and our weather is mild on the Italian Riviera year round.  Today there isn't a cloud in the sky and it's sixty degrees, warm enough to get by with a sweater.  So I did what everybody in Savona was doing today.  I walked down to the Lungomare, the walk by the sea, and I sat on a bench in the sun looking out at the shimmering blue water.

I didn't understand what walking was really about until I started to spend longer periods of time in Italy.  It's not just a way to get from Point A to Point B for the Italians.  Walking is what people do.  It's a social activity, a hobby, a chance to get dressed up in your best pair of boots, window-shop and chat with your neighbors. It's built into the fabric of everyday life.

Even though I brought a book to read, I didn't open it, transfixed by the normal, everyday pageantry of the Savonese. The whole town was there.  Middle-aged daughters with their white-haired mothers on canes. Young couples cooing at babies in strollers.  Thick-wasted lovers, married forever, strolling slowly hand-in-hand - the same way they've done for years. The wifeless men, widowers, clumped in their own little groups.. A random tourist or two from the cruise ship in the port.  Families with young children on their first two-wheelers - they'd ride and wait, ride and wait. Everybody talking, everybody telling stories, everybody touching and kissing each other on both cheeks. All of them walking their dogs. "Say hello to your wife," they'd call.  "What a beautiful day."  An hour or so later, I knew the sidewalk would be almost empty, everybody home with their families for Sunday lunch, the same routine they follow every week.

In the United States, I'm always trying to accomplish something.  I need to exercise more or study Italian harder.  I need to fix things, get a better hair cut, make lists, solve major social problems, write books, figure stuff out.  I'm always figuring stuff out.  If I just read one more research report, I can beat the S&P 500.  But in Italy I am perfect exactly the way I am.  I already have everything I need and sitting on a bench in the sun on a beautiful day in February, it's all I can do to keep myself from bursting into tears out of a gratitude so pure, so complete, it can scarcely be contained.

That's what I do over here in Italy. Not all that much.  I sweep the kitchen floor every morning.  Maybe I'll run across the street to grab a wood-fired pizza.  Sometimes I write.  But mostly I take walks and refocus my heart on the everyday beauty of being alive..

Do's and Don'ts of Market Corrections

Anybody can be a good investor in an up market.  It's the corrections that weed out the amateurs.

If you want to get rich with stocks, here's what you're not allowed to do:

1.  Sell everything because you are absolutely positive the market's going lower.  Even if you're right, even if the market drops another 5 or 10% before it turns around and goes back up - you will screw it up.  Because you will not buy back in.  You will be all puffed up from having been right about the decline and that smug pessimism will turn into your pride and joy, your guiding star.  You will keep sitting there with your cash in a money market fund paying a tenth of one percent and you won't believe any bounce up is real.  You'll miss the whole damn thing.  I've seen it a million, gazillion times.

If you want to get rich with stocks, here's what you have to do:

1.  Catch your breath.

2.  Wait for the market to stop collapsing.

3.  Look at your account with a steady hand.  

4.  If you have losses in a taxable account (not your retirement accounts), this is where you should be ruthless.  Lock in losses and bank your tax-losses against any future realized gains.  If you like the stock you just sold, immediately repurchase it in another account (in your spouse's name, in a retirement account).  Do not wait.  When the market starts to recover, you want to be an owner and participate.  This is just a strategy to get some use out of your short-term (normally unrealized) losses so that you are making maximum use of market volatility.  

5.  If you have cash, add to best quality favorites.  

6.  If you have stocks you really don't like, once again, be ruthless.  Don't worry about "getting back your investment" or "waiting until you break even."  That's yesterday's news.  Go ahead and re-position the money into your favorites. But if you sell something, don't try to get too smart and time the turn around.  Buy now.

Why I Hate, Loathe, and Despise Mutual Funds, Second Verse

Let me clarify my hatred.  I don't hate all mutual funds per se.  I hate the way they are used by the vast majority of financial advisers who charge a fee for their services.  It makes my blood boil.  It makes me so mad that I woke up this morning and had to come straight to DIY Stocks to tell you about it.

A friend of mine volunteered to act as a case study for the experiment that is DIY.  I figured it's easier for people to learn about their own situation if we use specific examples from real life.

At first I was kind of disappointed because my friend and her husband have done everything right.  They are super-organized, savers at heart, have already retired (which is the feet-to-the-fire test of how good your investment program is), and are living the life of everybody's dreams.  How could anything I have to say possibly improve their situation?  Nothing was broken.

Of course their investment accounts came with personalized annual reviews, fancy booklets printed in vibrant color at least 30 pages long and full of bar charts, pie charts, line graph comparisons, risk-reward scatter-plots, graphs in the shape of triangles, graphs in the shape of cubes, maps of investments by geographical region.  Alpha, Beta, and R-squared indicators. Weightings and Valuation Multiples.  Equity investments were divided down into High Yield, Distressed, Hard Asset, Cyclical, Slow Growth, Classical Growth, Aggressive Growth and Speculative Growth.  This template is a Morningstar product, one of the most highly respected names in fund analysis and widely used throughout the industry.

I've been reading the language of investing since 1979 - and I'm really good at it - but I couldn't figure out what the heck this report was telling me.

Except I did understand one thing:  buried in the middle of the report were the actual performance results of my friend's investments.  Her husband's assets had realized 7.44% versus 14.39% during the same period for the S&P 500.  Her accounts had realized 5.74% versus 20.22% for the S&P 500 since she had used their services.

But that's not what made my blood boil.

What made me absolutely furious was when I happened to notice that all the graphs in the annual review read Year-to-Date for 2013 and yet they started in February.  What the heck was that about?  So I went back and checked the market performance in January of 2013.  Turns out the S&P had gotten off to its best start since 1997 and returned 5.2% in a single month, the month their adviser so conveniently forgot to include - because if he had, my friend - my honest, hard-working, trusting friend - even she might have noticed how much she had under-performed a non-managed index and asked questions.

The one fact I couldn't find anywhere in the report was how much this firm was charging for their advice.  Let me guarantee nobody in this business works for free.

Normally I try to give people the benefit of a doubt.  But these reports are pure and simple gobbelty-gook designed to make people feel stupid.  If you can't figure out what you are paying or what you own or why you own it, it's not your fault.  It's a system that has been designed to produce maximum revenues for service providers while keeping you helpless.  What is presented as objective fact, is not. It is carefully selected facts chosen to make the adviser look good.  In this case (not at all uncommon), I'd call it outright fraud.

And if this were my money, I wouldn't pay this guy another dime.*

*www.vanguard.com is the web address for Vanguard funds.  The symbol for the un-managed S&P500 Index fund is VFIAX - and last year it returned 32.33% JANUARY to December.

Do You Really Want to Be a Grown-Up?

I have the advantage of having kept a journal since I was fourteen years old.  Never very consistent about making entries, large chunks of my life are missing.  Writing is where I go when I'm confused so most of what I saved are the hard, annoying questions.

If there's a theme to my first forty plus years, it was, "What do I want my life to look like?"  Which was almost always followed by a long list of the things I thought would make me happy.

Periodically I look back over my lists and, it's weird, I got most of what I wanted.  New furniture for the screened-in porch. Christmas in Costa Rica with our kids.  I was the first female producer to make Chairman's Club at Merrill Lynch.  My picture was often in the newspaper.

But it didn't matter what I got or achieved.  I just kept on asking.

"What do I want my life to look like?" - contentment always just out of reach.  Even after I got divorced, quit my job, and remarried.  It seemed like I'd never get there.  Wherever there was.

One day I happened to stumble on a new book at the Public Library called, How to Live Well Without Owning a Car: Save Money, Breathe Easier and Get More Mileage out of Life by Chris Balish. The author had gotten in over his head in debt, was forced to give up his car and liked his life so much better he never bothered to replace it.  Inspired, I decided to limit my driving and ride my bike 5 days a week even though I lived at the top of a steep, one mile hill.  It was 2006 and I was fifty years old.

Riding the eight miles downtown and back made me feel like I was twelve years old again.  Free and powerful and independent.  Do you remember?  How it felt to be able to go anywhere you wanted without your parents for the first time.  I loved being twelve.

There was one special morning in particular.  It was June, just after school had let out for summer vacation and my mother was in the backyard watering her azaleas - that part of the day when the air is still cool, but you know it's going to get really hot in the afternoon - which was something you noticed and appreciated before everybody got air-conditioning.  I was standing in the grass in a patch of sun, my whole summer ahead of me.  The birds were singing and I could smell the wet dirt in the garden.  My best friend, Paige, and I had plans to spread a quilt under the elm in the backyard and work on the novel we were writing together.

Bingo. It took me fifty years but I finally figured it out, what made me happy.  The exact same things that made me happy when I was twelve.  Riding my bike.  Sunshine.  Free time to do anything I want. Writing. It had been there all along.  I just couldn't see it.   So that's the way I live my life these days, the same way I did when I was twelve. There is nothing I can pay for with money that could make me feel as good and have it last.

Of course, I still make lists every once in a while, but now they say things like, "Make pot of lentil soup."  "Return library books."   "Take a walk down by the river."  And I never, ever, ever have to ask myself what I want my life to look like any more.  Because I'm exactly where I want to be, doing exactly what I want to do.   And I'm very, very happy.



 

The DIY Stocks Guinea Pig Tells All

The DIY Stocks Concept was started because I ran into a former client at a social event.  He asked me for a recommendation for a new financial consultant and when I couldn't think of anyone, I offered to help him learn how to make his own investment decisions.  After two years, these are his impressions so far:

What prompted us to move from our broker?

·         We didn’t feel as if we were getting any personal attention such as advice or suggestions.

·         After 2008, we saw our portfolio decimated and the rise back up was too slow for our liking.

·         I ran into Kathy again after years and remembered our long and informative conversations peppered with what struck me as very personally targeted advice.

Why DIY Stocks?

      Kathy took a genuine interest in our personal situation and our short- and long-term goals.

·         Kathy offered to teach me about her approach with the goal of weaning me from her services

·         The payments to DIY Stocks were a flat rate as opposed to regular payments based on a percentage of growth.

Why individual securities as opposed to funds?

·         Well, they are more fun! What I mean is that Kathy’s approach is to research stocks of companies that are:

o   Already a part of our lives – examples for us are: Target, Starbucks, TJMaxx, P&G, GE, Facebook

o   Industries in which we are interested such as electric vehicles, solar energy, wind energy, 3D printing

 . . . and then buy ones that are strong with good potential. This makes it fun because our research is ongoing as we shop or listen to the news. This approach changed the way we look at and our interest level in our own neighborhood and chosen industries.

·         Stocks offered the growth potential that we wanted to get our portfolio back where we needed it.

Is this for everyone?

No. This is for people who:

·         Are interested in business and businesses.

·         Have a general understanding of business.

·         Enjoy some level of research (it’s not necessary to read the financial statements with a thorough understanding, but I must admit that I just read a book to hone my skills in this area)

·         Can stomach more risky investments than mutual funds.

Cons?

·         Riskier than funds

·         Requires more work on your part

Pros?

·         You become active in your future

·         You learn about the world around you

Socially Responsible Investing: My List of Stuff I Absolutely, Positively (almost never) Will Not Buy

If you watch enough television - especially the evening news and shows like American Greed – it’s a wonder we can get out of bed in the morning. While the fear-based perspective might sell advertising, this is not a complete or even accurate picture of where we are going as a species.  The nature of public companies is changing in a fundamental way, most of it for the better.

A great example is Google.  They’re working on all kinds of strange products, way outside their core of data collection from the search engine business.  Their most recent corporate announcement highlights the development of a smart contact lens for diabetics that will monitor blood glucose levels through tears once a minute and send the information to the patient and doctor’s mobile devices.  They are even planning to add an LED light that will flash when blood sugar hits dangerous levels.  In a recent blog post they explained why they entered this market:

"We're not going to do this alone: we plan to look for partners who are experts in bringing products like this to market. These partners will use our technology for a smart contact lens and develop apps that would make the measurements available to the wearer and their doctor. We've always said that we'd seek out projects that seem a bit speculative or strange, and at a time when the International Diabetes Federation is declaring that the world is "losing the battle" against diabetes, we thought this project was worth a shot."

They have sufficient excess cash flow to fund the research.  They have the expertise.  They plan to partner.  They want to help people live  better lives.  That’s the kind of co-operative world I want to live in and the a company I want to own.

Every investment decision we make should be in support of a better world.  The stock market is a giant voting mechanism and over time, good eventually triumphs over greed.  There’s some part of human consciousness that recognizes cooperation and a broader view is the right way to go on both a social as well as individual level.  There is enough for all of us if we operate from a place of faith rather than fear.

With that in mind, here is my personal list of industries I want no part of as I try to live a consistent life:

1.       Coal-mining Companies:  in every labor dispute I’m always rooting for the miners.  But in my heart, I hope the workers are forced out of business and have to retrain.  Oh, that they might find other ways to earn a living, one that isn’t so dangerous and doesn’t pollute the air.

2.       Automobile Companies:  I drive my 2005 Pontiac Vibe less than 2000 miles a year and will never buy another car if this one conks out.  Three years ago we moved downtown to a walkable neighborhood.  I ride my bike to do errands and take the bus to the airport.

3.       Weapons Manufacturers:  I don’t own a gun.  I’ve never touched a gun.  I long for a more peaceful world.

4.       For-Profit Prison Operators:  I don’t believe people should be financially rewarded by prisons full to maximum capacity. 

5.       Tobacco and Alcohol:  While I have smoked the occasional cigarette and enjoy a glass of wine while I cook dinner, I do not want to make money from the self-destructive addictions of others.

6.       Gambling Stocks:  Oh, the guilt.  I hate gambling.  It makes no sense to me and it upsets me to even walk through a casino and watch people put hundred bills down on the tables.  But MGM is one of my biggest positions.  They’re the biggest operator on the Strip in Las Vegas and I bought it as a uniquely American vacation destination that would benefit from the economic recovery.  My Italian mother-in-law is gaga about the place.  I rationalize my ownership by telling myself that lots of people, like her, go to Vegas for the neon lights, theme hotels, shows and fine dining. 

7.       Luxury Goods:  I don’t get them.  When I wear jewelry, it’s most often plastic, purchased on Ebay.  Shopping is a tedious bore and if you are going to judge me based on what I’m wearing, good luck.

8.       Drug Companies:  I stopped going to doctors 8 years ago.  All my well-intentioned physicians wanted to do was write me prescriptions.  The pills didn’t help.  I had to change the underlying problems in my life.  Now I take no pills.  Michele takes no pills.  I wish people would rely less on pharmaceutical intervention and listen more carefully to the messages from their body and not wait until they are in crisis to do it.

9.       Oil Companies:  Don’t like fossil fuels.  But, boy, we sure are dependent on them.

10.   Financial Service Firms and Banks:  I’m still mad at my former industry for what happened in 2008.  They continue to make way too much money.  Besides, I’m a firm believer that the internet is really going to turn this sector upside down eventually.  Micro-lending will eat the banks for lunch in the not so distant future.

The Best Investment I Ever Made

The year was 1998 and I had just paid all the closing costs to establish a 15-year fixed rate mortgage a few months earlier.  The market was going gang-busters and my business partners thought I was crazy when I told them I was going to pay off the loan.

"But it's tax-deductible," they cried, shaking their heads in unison.

"You'll make so much more money in stocks," they tried to tell me again and again and again

But I didn't care.  Even though I'd managed stock portfolios for over 20 years and everything looked great, something inside kept poking at me.  It didn't matter what they thought.  The whole world could say how stupid I was, but I went ahead and wrote the bank a big, fat check.  A year later I married an Italian who also owned his home free and clear.  Even though we've bought three houses since, we've never financed a penny of any of them, including our vacation home in Italy.

There's something that happens when you own your house outright that has nothing to do with balance sheets or opportunity costs.  You think about yourself in a different way.  While it seems so cowardly, like hiding under the bed, the very opposite is true.  Major life decisions are no longer tied to a monthly payment. You are suddenly free.  Really free. For the first time in your life.  You have a roof over your head that nobody can take away no matter what happens.. That's when you start to question a lot of other expenditures you've always taken for granted, like shiny, new cars and dry cleaning and window washers.  Soon you can't help but notice how little money it really costs to be happy - which is when you finally get it.   That paycheck you've been bringing home every two weeks is a choice, not a necessity.  Less than two years after I paid off the loan, I quit my job.  I was 44 years old.

Every once in a while, friends ask me for advise about their finances.  First thing I always say is, "Pay off your house."  But - as far as I know - nobody ever does it.  The concept of the mortgage is ingrained in American culture and everybody knows that smart, financially sophisticated people borrow money to buy real estate.

I guess it all depends what you are trying to accomplish.  The dot.com bubble that burst on March 10, 2000 at a NASDAQ high of 5,408 fell to below 1400.  More than 13 years later it has yet to break its old high. My goal isn't to get as rich as possible. It's to enjoy my life and sleep well with what money I've got.

38.04% in 2013

The numbers are in and Michele's and my accounts returned 38.04% net of all expenses last year.  Not bad.  Total return on the S&P 500 was 32.39, so I beat the market.

Which is considered to be a good thing, or so I've heard.  But why?  Why do news anchors and countless Ivy League educated professionals obsess over what the market does?  Everybody agrees.  Market's up, it's a good year.  Market's down and we're all depressed.  That's when we run for the back of the cave because the market says so.

Don't get me wrong.  I think the stock market is one of the most amazing inventions in the history of mankind, as important as the wheel.  A minute-by-minute voting mechanism where anybody in any country (with any money) has a say about their best guess for the future - that's a powerful tool. Because we all know something.  Everybody has a piece of the highly complex puzzle that is the 21st century.  The financial indexes quantify all our hopes and dreams and fears, the wars, everything we know, the dirty little secrets our governments think they can hide, our inventions and scientific advances, every mistake, bluff and blunder we make on this planet.  It's all there somewhere, condensed into a single, simple number.  I love the language of stocks.  So messy yet so precise.

But. . . but. . .

If you are a professional paid to manage other people's money, then you have to worry about beating the S&P 500.  But to normal folks like you and me, what does it really matter?  The market isn't right or wrong. It's just a bunch of human beings voting.  At it's best it's a tool to make our own decisions about what we think and invest our hard-earned dollars accordingly. 

But beating the market will never be as important as a good night's sleep.  Or a friend we can call when everything's gone wrong.  It's not a walk in the woods or a good book or the time to enjoy those things.  And it's definitely not our health.  Beating the S&P 500 is not a goal.  It's just a number on a page and I'm never going to use it to measure my life.