1. More Transparency in Municipal Bonds: One of my peeves for years has been the lack of transparency in the bond market. It was difficult to find information about particular bonds or anything resembling current trading data. The FINRA web site went a long way to providing trading information on corporate and treasuries free of charge to the average individual investor without access to a Bloomberg terminal or some other costly subscription based service. Gretchen Morgenson told me something in her NYTimes column that I did not know, a new web site has finally come into being providing data on municipal bond trades and easy access to their prospectuses. Municipal Securities Rulemaking Board::EMMA This is link to the data page for recent trades: Municipal Securities Rulemaking Board::EMMA If you click the link under "Security Description", it shows you the recent trades for that security. The tab "official statement" contains the prospectus. Like the FINRA site this one does not work properly for the Apple operating system using either safari or firefox browsers. I am always grateful to someone who tells me something that I do not know, and need to know.
2. Why Read Abelson's Column-The Hazards of Being Set in Your Ways and Opinions: I try to absorb as much information as I can by reviewing and attempting to assimilate data from original sources. I do not care about person's opinion about what the information means. Bungee Jumping Aegon and ING Preferred Stocks/ BlackJack and Stock Investing: Lessons Learned & Applied I try not to approach an evaluation of information with an ideology or worldview that will warp or distort the information to fit the pre-existing frame of reference. A commentator like Abelson will always find something to support his worldview, and will discard or minimize any contradictory information. That is a dangerous process for an investor to imitate, at least for one that has the responsibility to make the best decisions possible with the information available. Part of that process has to be sorting through information to determine reliability and importance. Sometimes, a bird like Alan will provide me with a perspective on data that will cause me to downgrade its importance or to learn more about its shortcomings when the information is positive of course. That is why I read his column and have done so for as long as I can remember. I view his approach to forming opinions as ludicrous.
Back in early March, I was absorbing the negativity in his Barrons column, mentioned in a prior post as the one published just prior to the start of the market's explosive run during the week of March 9th. The indicators that I use were still flashing warnings signals. Yet, I started to buy. I asked myself why over the weekend in a more serious vein than I use in my stream of consciousness narrative contained in this blog. My explanation at the time was that the RB has committed a coup d'etat, seized the keyboard away from the ever cautious LB, and went on some frolic and detour buying stocks for almost the entire next 2 months, in violation of all of LB' elaborate trading rules for a bear market Actually, the buying started just prior to Alan's column that weekend. The buying is summarized in the posts from March and April:
In retrospect, one factor that was probably critical in the change of heart, though I did not fully appreciate its significance at the time, was the chart referenced many times by me from the NYTimes which showed the S & P index, adjusted for inflation, using a 10 year average earnings, a favorite benchmark used by Professor Shiller in measuring valuation. I looked at that chart when it was originally published on March 14th, and just said to myself that is low enough for me. Others would look at the chart, refer to some past event when the market bottomed at a 7 P/E using this formula and wait for that number, or some other number lower than what turned out to be the bottom, still waiting now for that opportunity no doubt.
I had already started to lean in the direction of "that is low enough for me", which explains some modest buying before seeing that chart. The chart on housing prices also showed me that the bubble in pricing had largely been corrected by March. That was viewed as important. (page 2 of the article).
The first initial wave of buying on March 6th was timid, but important considering the flow of bad news. Buys of JWF KSA DIS and NYX/SOLD Entire Position in TFI/ Just a Day of Ignoring My Own Rules This sort of broke the ice, the rigidity that sets in when a human is scared, sometimes referred to as that deer in the headlights look. For a few weeks, I had been selling some bonds. Now, I was going to move all of those funds into stocks and higher yielding corporate bonds. On the following Monday I bought 50 MJH at $7.51 while noting continued negativity, Buy of 50 MJH at $7.51/ Pop in My Animal Spirits Balloon/Japan/ Zulauf/CNBC/Meet the Press. Later that day, March 9th and continuing for the week, I shifted into higher gear without saying why really. Buys of CPB LQD SYY XKK/Regressive Taxation-Cap & Trade/; Buy of 50 JZV at 9.93/Movement in Aegon and ING Preferreds: More of A Reflection on the Human Psyche; Buy of KO at 38.72/N Buy of 50 NADX at $1.27 BUY OF KXI Buy of HNZ at 31.67 This was the explanation given at the time: Right Brain Still In Control: Acting on "Feelings" and "Instincts"
Whatever, the buying continued in the next week with adds of Uniliver, the Ishares for Canadian stocks (EWC), Brookfield Asset (BAM), Ebay, and DKF (a TC with a Goodrich bond). In the following week I started to note what later was called "green shoots". By now, I had read the NYT article, and went into higher gear with a much larger movement into individual stocks, followed by additions to stock mutual funds, and the purchase of several stock ETFs. Some of thoughts for delving deeper were expressed in a post which was critical of those who value companies based on the worst possible year, as if nothing will ever improve again: Tribe on Impairment of Contracts/Alexander & Baldwin/Stock Rallies and Quantitative Easing The Forsyth column in Barron's about the impacts of quantitative easing was also important to buttress what I was doing.
Reading those posts again, I was struck by the increasingly positive tone of the news in the weeks following early March even while noting the negative. When an investor frees their minds of biases that warp the processing of information, then the focus becomes what is the relevant data telling me about what is happening. If the news is bad, I want to know. If the news is improving I want to know that too. I do not want to cherry pick data to support a rosy view or a dour one. In the last analysis I started to buy because equities had become too cheap when viewed on a normalized earnings basis. The financial crisis had been effectively addressed by the governments and central banks around the world. In March, Armageddon was already off the table. The major financial firms were not going to be allowed to cause an implosion of the world's financial system. The lessons learned from the Lehman failure had been learned and applied. Hopefully, when we all look back on March 9th, it will be seen as one of those rare buying opportunities that comes along infrequently in one's life. The perennial pessimists of the world will never be able to seize that opportunity. And, the giddy ones, this time is different crowd, who discards the tried and true techniques for valuing companies circa 1999 or real estate (2004-2007), will not be able to anticipate the likely course of events when reality pops the bubble created by them.
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