Jim's Investing Continuum

Let’s Be Honest: Are You an Investor or a Speculator?


With the stock market seemingly setting all-time highs every day even as bond prices crumple, this is a crucial time to clarify the difference between investing and speculating.

Unfortunately, that distinction — often credited to the great investment analyst Benjamin Graham — has never been entirely clear.

Every asset is an investment in some people’s hands and a speculation in others’. So it isn’t what you buy, but rather why you buy, that determines whether you are investing or speculating. In his classic 1934 book “Security Analysis” and again in “The Intelligent Investor” (1949), Graham wrote: “An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory [or ‘adequate’] return. Operations not meeting these requirements are speculative.”

I used to regard that description as definitive, but I began to see its flaws a few years ago. Can any analysis ever be thorough enough to “promise” safety or a positive return?

The traditional view, dating back at least to the 19th century, is that an investor buys to capture a predictable long-term stream of cash flow, while a speculator buys to harvest a short-term change in price.
Comment: Click on the image above for larger. On the right is Mark Wahlberg from The Gambler . On the left is the Speculator. In the middle is the planter who patiently waits. Several have asked about my own investing strategies. Here goes:

  • Basically the speculator is the gambler but the gambler may just not care.
  • I try to "treat every nickel like a manhole cover"
  • I don't pay an investment advisor so right there I am saving myself 1% (or more). And I figure that I could be an investment advisor and I care more about my assets than another.
  • About "my assets" - they really are The Lord's. All came from Him - I must glorify Him. A practical outcome of this is that I do not hoard and I do not invest in companies such as tobacco stocks (although their returns are attractive as in MO or BTI)
  • The aforementioned The Intelligent Investor by Benjamin Graham is the definitive read.
  • I do not Day Trade. Never have. I doubt I could make $$ doing it. I regard it as gambling
  • I rarely trade any stock short term 
  • I don't trade Options. I've thought about it and have investigated it but have not and doubt I ever will.
  • If I don't understand what I am buying I pass on the investment
  • I research the company sufficiently to know something about it. I have many examples but here is just one. We think Cracker Barrel is a great restaurant and we have stock in it. 
  • I explain it and "sell" the investment to my wife. She has to agree.
  • It has to, there are exceptions such as BRK-B, pay a dividend.
  • I have to have some confidence that the equity will continue to pay a dividend.
  • Diversification: No one stock dominates. Although we are heavy into several stocks such as ED, JNJ, MMM, and KMB
  • I don't need to beat another investor. I'm not in a contest with another
  • I hope to have a combination of dividends + some growth. I'm happy with 5%
  • I am not looking for spectacular returns - sounds like speculate
  • I buy and hold
  • I try to live humbly (I have a 10 year old car with just about 100,000 m and a 15 year old truck)

The Ontological Argument

Comments: I would have a difficult time explaining this. Video is very good


Sears: The Titanic of retail

The Titanic of retail: Sears is 'set to sink' as stores close, executives flee, and the CFO admits the brand is falling short


Neil Saunders, the CEO of the retail consulting firm Conlumino, likened Sears to the Titanic on Thursday, saying it "looks set to sink." In a note to clients, he said the company's plan to restore profitability is a sham, writing, "the funds raised are not being used to develop of growth the firm — they are being used to prop up an ailing and failed business." "In our view, it is now too late to turn this around," Saunders wrote. "It is just not financially feasible to reverse it."
Comment: The end is near. Chart above is sales decline from 2000 to 2015.  All Sears posts

Update: Sears Transformed America. It Deserves to Die With Dignity.
Sears revolutionized American retail not once but twice, and made a lot of Americans immeasurably better off. But Sears built a great business for an America that no longer exists: eyes on the burgeoning suburbs, lives centered on cars, aesthetics relentlessly bourgeois. That business required a lot of investment in both business expertise and real estate that the company could not change, or shed, as fast as America changed around it. And there's no shame in that. Even the brightest stars eventually burn out.


Chess victory

Comment: A rare win. Must play flawlessly (which I rarely do) and think ahead. The D8 to D4 move where Black sacrificed his (my) Rook enabled me to advance Pawn towards conversion to a fresh Queen

Oakland’s warehouse communes - a failure to govern

Among Oakland’s dozens of artist warehouses is one called Deathtrap


It’s called Deathtrap.

A fire inspector knocked on the door of the graffiti-splattered warehouse in West Oakland on Monday afternoon and told a tenant that the city was taking steps to prevent another “terrible tragedy” like the one that happened just five miles away at Ghost Ship.

He was there, he told The Chronicle, to look into a complaint filed about Deathtrap, a 6,600-square-foot warehouse on 28th Street that, its Facebook page showed, was converted into a live-work art studio. Facebook photos showed that Deathtrap’s interior looks strikingly similar to that of Ghost Ship, with wooden steps and dangling strings of lights, and that the place has served as an underground music venue. And, public records show that the city was aware of the place.

The last open complaint on the Deathtrap property was filed with the city’s building inspection department in March 2011 for unpermitted alterations and damage from a vehicle. A subsequent filing shows the vehicle damage was repaired that September.

It’s unclear what city officials did to respond to the unpermitted alterations. Clearly the place has operated for years. The tenant who spoke with the fire inspector declined to talk with The Chronicle. And the “Deathtrap Events” Facebook page — which listed a history of public events ranging from concerts to classes — was removed Monday.

For city inspectors concerned with fire, health and safety code violations, however, Deathtrap is one of dozens — perhaps hundreds — of live-work warehouses and buildings in the city where artists crowd together in often dangerous conditions like those found in the Ghost Ship warehouse at 31st Avenue and International Boulevard, where at least 36 people were killed in Friday’s fire.

The inspector who showed up Monday at Deathtrap told the tenant he was educating property owners about their duty to bring buildings up to code, and warning tenants about unsafe living conditions. The city, he said to her, is trying to hold owners to “a higher standard” and to “empower tenants, not displace them.” He spoke to the woman for 20 minutes as a Chronicle reporter and photographer listened nearby. He never went inside the building. The place, he told The Chronicle, was his second stop that day. Oakland officials have kept largely mum on whether they plan to change the city’s code enforcement processes as a result of the Ghost Ship fire.
Comment: Clearly looking  the other way is unconscionable. Source of victims images

Image source. Updated on 12/7 with top image. Source



Theodore Roosevelt on Immigration

Theodore Roosevelt's ideas on Immigrants and being an AMERICAN in 1907. 


"In the first place, we should insist that if the immigrant who comes here in good faith becomes an American and assimilates himself to us, he shall be treated on an exact equality with everyone else, for it is an outrage to discriminate against any such man because of creed, or birthplace, or origin. But this is predicated upon the person's becoming in every facet an American, and nothing but an American ... There can be no divided allegiance here. Any man who says he is an American, but something else also, isn't an American at all. We have room for but one flag, the American flag ... We have room for but one language here, and that is the English language ... and we have room for but one sole loyalty and that is a loyalty to the American people."
Comment: After I posted my Immigration comments Monday, my sister mentioned the Teddy Roosevelt quotation (Thanks Sis). His quotation represents my own view


The Muslim immigration debate: "good" Muslim / "bad" Muslim

At times I am asked my view and it is as follows:
  • Muslims have been in the United States since our inception. I don't think there is much debate about this: Link, Link, Link
  • While it seems clear that the United States was founded on Judeo-Christian values ("The majority of the founders believed that religion was necessary for maintaining moral virtue and assumed that the nation would remain culturally Christian") - frankly any study of the colonization of America will confirm this (think the Pilgrims) - it's fairly obvious that there have been many non-Christians, Deists, atheists, and cultists in our history
  • I believe that the intent of the founders was that this nation would specifically not be a Muslim nation -  being that Islam in its essence does not believe in a separation of faith and state, and promotes Sharia law: "many Muslims around the world say sharia should be the law of the land in their country"
  • Sharia law is not compatible with US Jurisprudence
  • Sadly countries that are majority Islam do not provide religious liberty for Christians and Jews (there may be exceptions). Example: The Constitution of the Islamic Republic of Afghanistan
  • I have a sense that were the United States a Muslim majority country that freedom of religion would be imperiled
  • It seems clear to me that the recent rash of terrorist attacks have a Muslim connection. The Ohio State attack today is a case to point. BostonSan Bernardino, Saint Cloud, Orlando, Fort Hood and New York come to mind
  • I support legal immigration and accept that immigrants will come from a variety of countries
  • The Scriptures call the Christian to love the foreigner and I hope to obey this directive
  • I personally have Muslim friends and acquaintances (and before I retired co-workers). Those who know me know this to be true. At our table, we have entertained Hindus, Muslims, atheists, et cetera. I always pray to my heavenly Father in the name of Christ in public prayers in our home. In another's home, I will testify of my hope in Christ but not press the point if my views are not welcome.
  • As a Christian, I view various belief systems as contrary to the Christian faith.  I John 2:22 states "Who is the liar? It is whoever denies that Jesus is the Christ. Such a person is the antichrist—denying the Father and the Son." Islam ≠ Christianity. From time to time on this blog I point out the errors of Islam. This is not "Muslim hate"! It's a role I have assumed as a Christian. As an aside there are Muslim blogs that are critical of Christianity. I don't regard those blogs as "Christian hate"
  • As a citizen, I have worked hard, I have paid taxes, I have not been a slacker / suck on society. I believe in the US Constitution and the laws of the United States
  • I personally have completely eschewed violence as a method of promulgating my personal views - "But when you talk about destructionDon't you know that you can count me out"
  • Back to the topic at hand - The Muslim immigration debate: "good" Muslim / "bad" Muslim. Every Muslim I have known is a person of peace and a person of good character. I would like to reframe this debate as who is a good candidate for immigration: That would be:
    • One who will believe in the US Constitution
    • One who will study and embrace the amazing history of our country (at this point a critic could easily mention the black spots of US history such as slavery (and more). I am not suggesting that these flaws should be glossed over or ignored!)
    • One who will endeavor to learn the language of our country which is English
    • One who will pay taxes, eschew violence, and not be a suck on society
    • One who, if qualified, would be willing to defend our country.
    • With regard to Muslims, only those who will reject Sharia law
Images: Abdul Razak Artan, Stats, UK Muslims inciting violence.  About the photo of Artan see this link and this link

Feel free to debate my comments. Anonymous comments welcomed and will be answered


#TrudeauEulogies: Twitter users mock Justin Trudeau for milquetoast Castro statement

Canadian PM Trudeau's statement on Fidel Castro's death met with ire, humor


Canadian Prime Minister Justin Trudeau, whose family's ties with the late Cuban leader Fidel Castro go back decades, mourned the loss of a "remarkable leader" on Saturday, sparking a flurry of criticism and humor at his favorable tone.

Comment: The statement

Follow the hashtag #TrudeauEulogies Good reminder: If you ever wondered where Jill Stein stands: A better view from Brit Hume: