Investing in the Future

Posted in Uncategorized on 20, May 2017 by nathanbusch

During a discussion period at the AAII Conference in Minneapolis on 11th May 2017, I briefly discussed that, in the near future, there will be no investment opportunities and no money to invest even if there were investment opportunities.  Of course, this concept took the audience of more than 100 people by surprise.  One woman even asked me the following: “how will we buy groceries”?  My answer was simple:  “there will be no cost because there will be no money”.

Towards understanding my view of the future, it is necessary to understand what is money.  In the simplest possible terms, money is a measure of the amount of human labour, which is measured in units of time, required to produce a unit of goods or services.  As an example let us consider the case of a blacksmith and a farmer.  The farmer needs a scythe to cut his wheat crop so that it may be prepared for market.  The blacksmith needs only a small amount of wheat for his stables: however, he does require a considerable amount of wood for his forge.  For the moment, we shall set aside the issue of the relative utility of the scythe to the farmer and the wood to the blacksmith.  Let us say that it takes the blacksmith 400 hours to make a scythe of sufficient quality to be of long-term use to the farmer and it takes 400 hours for the farmer to cut and stack 15 cords of oak wood.  It is apparent to both the farmer and the blacksmith that a fair trade, ignoring relative utilities and future gains, would be one scythe for 15 cords of wood.

However, how can we handle the trade if it is planting season and the farmer needs the scythe by the harvest while the blacksmith needs the wood during the planting season so that he can have the scythe finished by the time that harvest arrives.  Also, we must consider the possibility that the two parties are remote in both to time and space.  If the farmer could exchange his wheat on a market for money, then he could use that money to purchase the scythe from the blacksmith rather than cut and stack sufficient oak wood to exchange for the scythe.  Similarly, the blacksmith could sell a scythe to another farmer to obtain money to purchase the wood to build the scythe for the farmer in time for the fall harvest.

That is, each of the farmer and the blacksmith would exchange a unit of their productive time in exchange for an amount of money.

Now, what if no human labour was required to produce either the wheat or the scythe.  In the most basic sense, neither the blacksmith nor the farmer could exchange money for any unit of goods or services.  Of course, the most apparent counterpoise argument is that the blacksmith owns the forge and the farmer owns the land.  Without the forge, the scythe could not be built and without the land, the oak wood would not be grown.  The issue is actually one of capital allocation, which we shall address shortly.

I hope that this helps.

Nathan A. Busch

Traitor President Bannon who has Obstructed Justice

Posted in Life in the Country with tags , , on 20, May 2017 by nathanbusch

President Bannon gave top secret information, which he received from the Israeli Government, to the Russians while the Russians were in the White House.  That is High Treason to the United States.  Then he has the audacity to order Jeff Sessions to throw reporters in jail for publishing classified material as to the treason committed by Traitor Flynn.  President Bannon is clearly trying to protect his own corrupt hide whilst giving the United States to Murderer Putin.  Then President Bannon committed a felony by throwing Director Comey out of the Justice Department.

If there were any Repub Nazis with any balls in Congress, President Bannon would be on his way out of the White House for committing High Crimes and Misdemeanors as well as pursuant to the Twenty-Fifth Amendment.  Of course, Ryan and McConnel would have to get up off their knees in order to do anything about President Bannon.  It seems that these two like the view from down there.

I hope that this helps.

Nathan A. Busch

 

Advice to My Nephew Clayton

Posted in Investing, Life in the Country on 2, May 2017 by nathanbusch

Nephew Clayton:

You will, most probably, have by now been taught to work hard, get an education, and make a moderately good living working for some company or other.  That is total bullshit!  Were I forty years younger, here is what I would have done.

Get yourself into the Physics Department of the California Institute of Technology.  There, work on your Doctorate of Philosophy in the field of Quantum Field Theory.  You will want to study systems in which spacetime is subject to random fluctuations.  Examine the Radon Transform of information deriving from such a system: specifically, you would be looking for the Riemann-Stieltjes Integral of the underlying field weighted by the probability measure of the random fluctuations.

Once you have finished that, which should take you less than three years, tell the physics world to go shove it where the Sun never shines.  Instead, get yourself some financial backers and apply what you have learned to the system that is the international financial market.

If you have accomplished what I think is the correct way of evaluating this last mentioned system, you should be wealthier than both Warran Buffet and Bill Gates combined by the time that you reach 65.

The gauntlet has been thrown down.

I hope that this helps.

Nathan A. Busch

President Bannon and the Armada

Posted in Observations during Life on 20, April 2017 by nathanbusch

President Bannon tweeted that an armada was heading to the Korean Peninsula and no one seems to be phased about some of the most critical consequences.

First, President Bannon put the lives of more than 6,000 sailors at risk by disclosing to the world their location and their destination.  That is treason.

Second, that tweet demonstrated that President Bannon is clueless about what the military of the United States is doing.  And, he is supposed to be the Commander in Chief.

Third, North Korea is ruled by a god-king who is so ruthless that he killed his own uncle and brother just to consolidate his power:  Kim Jong-Un.  “Un”, that sounds like something that would come out of the mouth of a rabid dog with a really bad case of constipation trying to take a shit.  Also, he has a really strange haircut.  The only person more unpredictable, psychotic, paranoid, and simply crazy in the world than President Bannon is Kim Jong-Un.  Yet President Bannon openly informed Un that an armada was on its way to further threaten Un.  When Murderer Putin and Repressive Xi step up to the plate and tell both sides to back down, we know that the world is rapidly falling into the abyss of nuclear war.

Fourth, Congress is still doing nothing about this Lunatic President Bannon?

I hope that this helps.

Nathan A. Busch

By the way, you better get practiced up bending over and kissing your ass good bye.  You will soon need that skill.

Separation of Fool from Purse

Posted in Internet Frauds and SCAMS on 20, April 2017 by nathanbusch

I recently received the following from an audience member.

I paid $500.00 for 5,000 shares. The shares tripled almost overnight. I’m an investor not a trader. I didn’t sell. Again, almost overnight, the price went to zero. Do I have any recourse? How can I get this out of my portfolio?

Because I so often hear and read of such stories, I have decided to put my response to his query front and center in this post.

I was not aware that TAGG was still being flogged as a penny stock. It is a fraud perpetrated upon those who are looking for a “get-rich-quick” scheme only to soon be separated from their purse.

Let us look at the basics of your transaction. You claimed to have purchased 5,000 shares for $500.00, which means that you paid $0.10 per share. Let us take this transaction apart in an exercise to demonstrate that you do not know what you are doing. Anyone who purchases a stock at $0.10 per share is not an investor: rather that person is a speculator. I am a deep value investor: however, I will not even consider any ticker symbol with a market price of less than $4.00. Also, you spent $500.00 on this transaction. I do not know which broker you used nor do I care. The arithmetic is simple. Say your trading cost is $10.00: that means you paid 2% of the total transaction amount in transaction costs. We will not even start to consider the bid/ask split problem, slippage, liquidity, & etc. By paying 2% going in and 2% coming out of a ticker symbol, you have already paid someone else 4% of the total transaction amount just so you can lose money on an ill-considered transaction: that means, you were betting that the market price of the ticker symbol would appreciate by $25.00 by the time that you intended to sell it. By the way, I would bet a dollar to a doughnut hole that you never thought about the rules by which you would sell the shares. If I am correct, you are not an investor: you are a fool intent on retiring poor and being a greeter at Walmart. Let us look at that $25.00 claim: you would spend $10.00 purchasing the shares; you would spend $10.00 selling the shares; and, you would have to make enough to pay the income taxes that $20.00 assuming that your average tax rate is 25%. This means that you were betting that the market value of the shares would appreciate 5% just to break even. What were you thinking?

Also, did you give any consideration to the people on the other side of this transaction: odds are that they were shorting the ticker symbol whilst you were intending to go long. I find it incredulous that any one would be long against a short on a stock trading at 10¢ per share: that is just too much to get my simple mind around.

Also, did you do any research on this company? Years ago before I purchased REGI, I travelled from southwest Minnesota to the other side of Des Moines, Iowa, to visit the plant that the company had in that location. The first thing I looked for was whether the parking lot was full of vehicles of the employees and what was the condition of those cars. That told me almost everything that I wanted to know about the company. Then I considered the condition of the plant, was it using electricity efficiently, was it using rail instead of semi for transportation. I then visited the office: were the employees happy with their work and their pay, & etc. Upon return home, I carefully examined the financials of the company; I read the transcripts of the past 4 quarterly investor conferences; I studied biodiesel credits and at what price were those credits were trading. In other words, I knew more about the company, most probably, than the employees working at the company. I established the rules by which I would sell the shares. Only then did I purchase shares. The appreciation in the stocks by the time that I sold was quite satisfactory.

As to what you can do now that you have lost money: first rule, never lose money; second rule, never forget the first rule. You could file a complaint with the FBI and the SEC. A few years back, an agent from the FBI contacted me about John Bell. Amongst all the information that I gave him, I informed him that because the FBI was so incompetent that they could not even find a buggar hanging out of their nose, they would never find or convict John Bell. John Bell is still alive, well, and perpetrating frauds upon idiots willing to believe his stories about “fantastic penny stocks”. With President Bannon in the White House, your chances of ever getting the FBI or the SEC to do any thing are about as good as your having a date with Ivanka Trump: good luck.

You could try to sue: good luck.

Here is my advice: register for automatic withdrawals from your paycheck every month to fund your 401(k) or 403(b) retirement account and utilize the matching program offered by your company. That matching money is a freebie, use it. Instruct the manager of your retirement account to put everything into either VTI or RSP. Leave the money alone until you retire at 72: you will be just fine.

And, please, do not try to invest in any ticker symbols on your own: you do not know what you are doing. If you insist on repeating such foolish trades, then first purchase and memorise the following books: Graham and Dodd, Securities Analysis; Graham, The Intelligent Investor; Philip Fisher, Common Stocks, Uncommon Profits. Also, stay away from anything regarding investing that was written after 1960. Further, turn off your television, your radio, and stop reading any news paper other than the Wall Street Journal, the Financial Times, and Barrons.

I hope that this helps.

Nathan A. Busch

 

Educate to Innovate

Posted in Observations during Life with tags , , , on 28, February 2017 by nathanbusch

The importunate rhapsody of the Liberal Left is that we need immigrants to help the United States stay competitive in the world markets because they are our innovators.  The Repub Nazis hate the immigrants, both legal and illegal, because, claim the Repub Nazis, these immigrants are stealing our jobs and driving wages down in the United States.  Both sides are wrong.

The Repub Nazis have produced absolutely no evidence that the existence of immigrants in the United States has driven down wages and stolen jobs.  Back in the mid 1990s, my brother used to work for Mapleleaf Ducks in Milford, Indiana, as a foreman in the freezer department.  The footprint of the freezer building exceeded two football fields and the entire place was maintained at -20 degrees fahrenheit.  He refused to hire white workers primarily for the following two reasons: (1) the white people refused to either show up on time or show up sober; and, (2) the white people would work perhaps an hour and then quit and go home.  As a counterpoise, the mexican workers would work nonstop for an entire 8-hour shift even though the icicles would hang from their noses.  My own personal experience with mexican workers are that: they show up to work both sober and on time; they work hard and do not complain about either tedium or physical conditions; they given an honest day worth of work at the prevailing wage; and, they are usually willing to share their meager lunch if you are considerate enough to talk with them as human beings.  The mexicans typically are found in the lowest rung of the labor force because the white people refuse to touch any such jobs with a ten-foot pole.  That is not the fault of the mexicans, rather is because the white are fat, lazy, and entitled.  It has been more than four decades since I have last encountered a white worker, male or female, that can even come close to the qualities and character of mexican workers.

We do not need immigrants to innovate.  This used to be a country where our parents inspired us to have a life that was better than theirs.  I remember the family sitting at the picnic table, at our home in northern Indiana, overlooking Dewart Lake on a crystal clear, warm July late afternoon, having our evening meal.  My father said that the future was “wide open” as it concerned technology, innovation, and dreams.  These days, it is the rare situation if the family is together for a meal let alone having the father of the family in attendance.  My father said all that we needed was a good education and we could go further than he could have ever hoped for himself.  In those days, Sputnik inspired the United States to focus primary and second education on language, science, mathematics, and the arts.  The thinking was that a well-educated populace was a stable, wealthy, and healthy populace.  We were the innovators, educators, scientists, artists, writers, and politicians who were the envy of the world.  We never gave thought to following Russia, China, Europe, England, or any one else.  We were at the top of our game.  We were the champions of the world: it was the rest of the world that wanted to be as we were.  That is no longer a true statement of the United States.

Today, we are a fallen nation full of fat, lazy, entitled generations who cannot read the instructions necessary to open a can of baked beans with a can opener.  On my rare trips back to Indiana, I was always baffled at my grand nephews lack of motivation:  never, have I ever observed these three do anything but sit on the couch playing various video games with hand-held devices.  They had neither curiosity nor motivation to determine how that hand-held device even worked.  They did not even know what was a transistor.  To my knowledge, they had never read an entire book in their lifetime nor did they have any interest in doing so.  These three are so lacking in motivation that they could not even engineer their way out of a wet paper bag out of which the bottom had been removed.

I have personally observed hundreds of our youngest generation who are “clones” of my grand nephews.  It need not be this way.  Were he alive today, Niccolò Machiavelli would be aghast at our reliance upon foreign “mercenaries” to be our engineers, scientist, and innovators.  We have failed ourselves.  No, Liberal Left, we do not need immigrants to be our innovators: rather, we need parents who will work with their own children to insure that every member of that generation has a top-notch education and is inspired to reach their loftiest dream; we need a public education system that has stripped itself of all of the politically correct bullshit and that has returned to the hard-core Three-Rs; we need politicians at the local, state, and federal level to realize that they have miserably failed the country.  No, Repub Naxis, the answer is not to defund the National Endowment for the Arts, the National Endowment for the Humanities, the National Public Radio, and other inexpensive institutions that return great value for money spent and then rape the public education system of money to give vouchers to a select few to attend private or religious schools.  The Liberal Left and the Repub Nazis must pull their heads out of their collective asses, realize that they have failed, and fix the system so that every child in America has an equal opportunity to create and own the next Apple, Incorporated.

Only then will the United States rise to the chair at the head of the table.  The alternative is that we will be diminished to being a foot stool to Russia and China.

I hope that this helps.

Nathan A. Busch

Not Judaeo-Christian Values

Posted in Life in the Country, Observations during Life with tags , , , , on 27, February 2017 by nathanbusch

President Bannon:

You vulgarly refer to the satanic values that you intend to impose upon the citizens and residents of the United States as “judaeo-christian” values.  In modern christianity, the “Old Testament” contains the Holy Scriptures given to Moses by G_d, which is the Torah.  It was the intent of G_d to reduce to writing his laws and covenants with the Jews so that generations may study his words and learn the path to his grace by examining the actions of Abraham and Moses.  That is,  through the great task of beirurim, the Jewish People contemplate the mixture of good and evil, which arose upon internalizing the fruit of the Tree of Knowledge, to extract and liberate holiness entangled with the evil in that mixture.

You, President Bannon, have bastardized the words of G_d to create a veil behind which you can operate to force your hatred and Satan-inspired evil upon the people of this world.  Your values are the values of neither Judaism or Christianity.  Your values are the manifestation of the evil of Satan brought into this world to lead mankind way from the path given to us by G_d on the emerald tablets in the form of the Torah.

No, President Bannon, your values are not the values of what you call the Judaeo-Christian world.  Your values are nothing more than pure evil and you have found a minion in the form of “The Donald” to expouse those values upon an inherently corrupt segment of our society.

I hope that this helps.

Nathan A. Busch