Just Keep Quiet and Squeeze the Damn trigger!

Noise is all about us this morning.  I just finished reading several essays published at  Seeking Alpha (www.seekingalpha.com) and the tug of words between the bulls and bears have reached the point of an Atlas Rocket upon take-off!  It's even worse than a 25,000 rpm router!

The steady hand of an investor or woodworker requires concentration.  It requires thoughtful analysis. And, it requires knowledge.  Our markets resemble a feeding trough with our cloven hoofed friends snarling at each other over the slightest morsel of new information.  The shop is so noisy from routers, planers and saws, that you can't even measure, let alone read your plan.

Here is the problem:  too much noise and not enough conviction to squeeze the trigger.

I've measured twice but I just can't bring myself to cut the damn wood.  I keep re-checking it because something just isn't right.  I'm feeling insecure.  OMG, I may make a mistake.  As a result, nothing gets accomplished.

I read the WSJ, SeekingAlpha, CNBC and MSNBC web sites.  The talking heads have me believing that I should liquidate this week before the S&P 500 falls to 900!  No, wait, I should be buying because the S&P 500 is going to break through the 1111 mark.., No, I should be in gold.  Well, what about the technology stocks?  Shouldn't I be in them since they will lead the markets?

Enough is enough.  You need to have a plan for the long term, not for day trading.  Wood costs money (why has a sheet of paint grade 3/4" plywood skyrocketed to $40 a sheet from $25 just a few years ago? Deflation-not at Home Depot!).  You can't afford to make a mistake.  Your portfolio represents your life plan and losses, especially those made later in life, can rarely be replaced.

Stick to your long term plan.  When you triage through all the noise and filter the stocks according to your goals, buy them.

Well, Sunday in the work shop was fun.  I completed another section of the counter and will start working on the next set of shelves.  I'd show pictures but the place is still a mess.  It drives me nuts.  However, it still looks better than my sister-in-laws kitchen or my much older sister's room!

A Good Time-Out

I'm excited about Sunday.  It's going to be my day to, hopefully, finish the new counter and some shelving in the wood shop.  If I complete it, I'll include some photos in my next posting.

I've acquired the Delta mortiser and a Jessem router table and lift.  Now I just need to find room for them!  I'm still in the market for a band saw.  My indecision is delaying the bathroom vanity project.  I could buy veneer faced plywood or possibly make my own veneer from the same hardwood I'm using for the door frames. Just can't decide which makes more sense.  But, I'm in no hurry since "she who always has to be obeyed" hasn't raised her voice.

Whereas investing requires decisiveness, woodworking offers the luxury of contemplation.

So, I'm off to contemplate.  Enjoy the weekend!

New Blog--Same Old

I confess the error.  My blog just wasn't set-up correctly.  So, I've reinvented the blog, importing the past musings.  Unfortunately, if you were following me, you will have to sign-up to follow all over agin.

Noble Corp (NE)

Part of doing your homework involves listening to a company's conference call. I find the questions, mostly from analysts employed by the major investment houses, to be the most important portion. They are a great indicator of perceived concerns and values. This morning I dredged out of bed early to listen to the Noble Corp (NE) conference call. Last night earnings were released and I expected somewhat of a sell off. Sure enough, NE opened lower, down about 2.4%. However, mid way through the call, the stock turned around. An hour before closing, it's up about 4%. What accounts for the spectacular turn around in an oil driller with exposure in the GOM?

Simple: the analyst asked several key questions and liked the company's responses. First, they asked how much would it cost to bring rigs up to the anticipated new regulations by our government. Answer: less than $10 million each-and probably in the several million range. Next, an analyst asked about their safety record. The response was exactly what Mr. Market needed to hear: their employees have the authority to stop any perceived unsafe practice regardless of the customer's order.

I always try to relate investing to woodworking and today is no different. Can you imagine NOT shutting off a woodworking tool when your hand could be exposed to amputation? Of course not! Here is a company telling its employees to take the same immediate action that you and I would take in our own shops. Now that is good common sense.

But the real common sense is found deeply buried in a comment by one of their executives:

"...the more you chew, the bigger it gets...."

Hasn't that happen to all of us. We start our project with what looks like a good plan. Suddenly, the deeper we get into it, the more complex it becomes. Our understanding of basic geometry is inadequate. We have to, heaven forbid, recall some trigonometry. The more we do the worse the project becomes. We finally admit we just bit off so much more than we can chew we give up.

"...the more I chew, the bigger it gets..." yep, that's it for today.

****I currently hold a long position in NE. Nothing I say should every be relied upon. Period. Make your own calls, do your own research and good luck!

Personal Energy

This coming week should be a humdinger. The fight between bulls and bears, the debates between inflation and deflation and the non-stop arguments between liberals and conservatives. My best advice: turn down the volume. Give people a chance to be heard.

With that, I'd like to suggest my idiom for the week: there are only two types of people: those who sap energy and those who create energy.

I'm going to spend time with my niece who turns 9. Can't wait to be around all those kids. Why? Well first, I have absolutely no responsibilities to watch or supervise them. That leaves me to soak up the sun and their energy! By the middle of the week, I'll be working in the wood shop, feeling like a 17 year old, creating a shop environment conducive to producing exactly want ever rocks my boat.

The morale: it's ok to absorb some energy of others if you are committed to multiplying it going forward!

Publishing Prices

Every morning I, like so many of my generation, have a routine. I get fresh water for the most perfect dog in the world; next, I give him his breakfast, and then; fresh coffee for me.

I place myself in front of the computer and click on Google News, then The Los Angeles Times and finally, The New York Times. This Sunday morning, all three had published an article on Aetna's decision to limit choices of physicians in the San Diego area. Aetna argues that the choices need to be limited due to costs. Sounds very much like the return to the days of old when the insurers pushed HMO plans. To me, not much has changed.

Note that this was NOT a government mandate. It was free enterprise trying to control costs by limiting consumer choices. This brings me to back to craigslist.org. and the stock market-nice segue?

I research stock prices every day. it's easy as every internet outlet publishes prices throughout the day, perhaps delayed by 20 minutes. My broker provides on time pricing. When I research prices for tools on Amazon or Criagslist, they do likewise. Prices change based on demand and supply, just like we were all brainwashed into believing they should!

But when was the last time medical providers published their prices and allowed consumers to choose? Other than for some cosmetic procedures (think dental veneers, face peeling etc.), I just don't recall seeing prices. I can't shop for my cholesterol test by price. Can't do it for my EKG or treadmill either.

I just have to believe that consumers, paying more and more out of their own pockets for every medical procedure, would make different choices if they could shop using the same rationale they use to consume other services and goods.

Why didn't Aetna negotiate with their network providers to publish all prices rather than limit choices?

Don't know.

Idiom of the Day

The difference between rich people and poor people: rich people EARN interest, poor people PAY interest.

Deflation-A Value Buyer's Delight

Another very busy week.

Following up on my earlier blog, I continue to seek value in stocks and tools. So, first to stocks: volatility has changed the very nature of our markets-price action with minimal volume over seven days. A tug of war between the bears and the bulls with trading within a range. But, few market leaders to provide any direction. So, the search for value continues. This week I looked at the two Hussman funds. Very interesting approach to protecting downside risk while still being able to participate in any upside potential. However, I'm remaining in the camp of keeping your powder dry.

Is deflation the real concern with the Fed? If it is, being in cash is the best play. Most commentators fear this scenario seemingly ignoring that productivity improves while prices fall. if you have cash, it buys more. If you have other assets, they depreciate.

This brings me to the search for additional tools at reasonable prices. The Delta mortiser sells close to $300 new. I find them on craigslist.org in excellent condition for about $185. Apparently, they are not selling. Today, I negotiated a price of $100. Now that is deflation!

When is it a Bargain?

I spent most of the day researching equities. I ran across a very interesting article on valuations. It's written by Simon Lack and does justice for the case of buying equities in the natural gas sector. His article can be found at: http://seekingalpha.com/article/213594.

I think his analysis is well balanced, weighing the factors for and against investing in just a few exploration and development companies (Southwestern Energy and PetroHawk). However, his most important contribution may be in his warning: "While timing is never easy..." Timing your purchases is nearly impossible.

There are two approaches I can recommend to assist you: First, if you are looking at growth stocks, follow the market, don't try to lead it. Wait for pullbacks in price when volume is low. Secondly, if you are contemplating value stocks, average your purchases on the way down. My rule is to NEVER average purchases of growth stocks on their way down-average them on their way up.

Interesting how valuations work. I've been following the asking prices for used woodworking tools on Craigslist.org. It's a great resource for computing depreciation of your equipment and weighing the value of purchasing new versus used. Just like researching stocks, it's always a question of price versus timing.

I found a Porter Cable 893 router, never used and in the original box (retail $275+-) for $160. Was it worth it to me to wait for a lower price or to purchase it immediately? I felt that is was a very high quality product with very old units selling for not much less. Did I try to pick the bottom? Of course not. Nobody can. I pulled the trigger and bought it because: 1) it has value to me at the purchase price and 2) it serves the intended purpose.

Buying either SWN or HK as an investments makes sense on a value basis at their current price. And, if the price falls, you can add to your position since there is value. However, if the intended purpose is immediate appreciation or income, they fail.

Whether buying a tool or a stock, better know both their real values and their intended purposes.

The lawyer in me needs to remind those who follow my blog that I am an amateur investor and not a registered investment advisor. Do your own research and seek the guidance of your own experts. There, the legalize has been posted.

Mortisers

image found at www.deltaportercable.com

What the heck is a mortiser? So, for those of you who don't know, it's a combination drill and press. The drill portion uses an auger drill bit while the 'press' portion pushes a four-sided chisel that squares the hole.

A series of square holes makes a "mortise." Without a specialized machine, it's a lot of drilling and manual squaring with a chisel.

It's time to pick a mortiser! First, should I get a floor standing model? What about a tilting mortiser? Maybe just a bench top model.

I'll be researching my options with the same intensity that I research stocks and bonds. The process of selecting equipment is very similar to the discipline we use for investments: homework homework homework.

Why The Investor WoodWorker?

I'm convinced that that America has become a land of mono-mindedness. We focus on just one issue, one game or one hobby and then swiftly become bored and move on to another.

What ever happened to the "renaissance" person? A person well versed in multiple endeavors reaping the joy of creativity with an eagle eye.

Well, if you love investing and wood working, you found your new home. No mono-mindness here.

A little background just to get started: I became an active investor in 1972. I've lost money and made some. I've survived recessions and market volatility, corruption in the market place and everything Mr. market can throw at me. I did it by following rules.

My woodworking hobby started in the early 1960s. I've made some simply dreadful and some incredibly beautiful projects. I did it by following rules.

So, to start, I'm going to disclose all sorts of rules to follow when investing or woodworking. You'll see how much they have in common:

Like making a plan before doing either;

Executing the plan by "measuring twice before cutting once";

Doing your homework;

Rewarding yourself even when the outcome is less than your expectation.

Over the next several weeks, I'll be posting photos and a discussion on refacing a bathroom vanity. I'll also follow the market and provide some insight. I'm lucky enough to be retired and live in California. I get the benefit of working the market between 6:30 AM and early afternoon and then working in the shop the balance of the time.

Idiom of the day: "pay yourself first."