The Right Resources

Woodworkers and investors have to cull hundreds of articles to find experts.  I recently purchased a used Jet bandsaw.  It's in excellent condition for its age and the previous owner added all the features I wanted:  mobile base, Cool Blocks and fence.  It was always my intention to replace the high tension spring.  Well, trying to sift through the sales puff and the facts led me to The Source:  Iturra Design of Jacksonville Florida.

Louis Iturra is the owner and apparently shuns the web as he has no web site!  It's like almost 2011 and he operates like it's the 1970's.  I called and left a message requesting a catalog.  It took several weeks but when it arrived, what a surprise.  It's thorough covering every aspect of bandsaw maintenance.  It's technical but not incomprehensible.  It offers high quality parts at reasonable prices.

If you own a bandsaw or are looking to buy one, contact Mr. Iturra at KALL@comcast.net.  I'll be placing my first order for the high tension spring and four other parts next week.

Now, onto the resources for investing.  You would think that this would be easy given the number of web pages devoted to stocks.  But it isn't.  There are very few reliable resources that provide independent research.  I can recommend several:  Credit Suisse (offered through TD Ameritrade); Jeff Saut at Raymond James and Matthew Bradbard at wbwealth.com.

Today the markets sold off.  Because of the advice of both Mr. Saut and Mr. Bradbard, I placed trailing stops on my largest holdings.  Both were triggered allowing me to preserve gains of over 13% and 15%.

You Wouldn't Use a Bone Saw to....

I started this week's blog with a simple concept:  picking the right tool for the job.

Marshaling all my imagination I decided to analogize saws.  And to what extremes could I go?  That was easy: amputation in a surgical suite versus cutting framing lumber with a mitre saw.

I Googled "bone saw" and found a 1998 posting where a bone saw was being used to repair guitars!  So much for the first creative thought for the week!

But, the topic of picking the right tool for the job is still important.

For investing, you would think the job is much easier given the plethora of timely information on the internet.  But take a look at the price movements in two stocks, both significant in their respective markets:  Blackstone (BX) and Seadrill (SDRL).

I've been all over the web looking for new analysis on either. Zippo. Nothing.  The tool I need right now is one that tells me the enterprise or target values.  Both are in movements up yet I have no idea whether to buy, hold or sell.

So, much like using a framing hammer to tack carpet, I'm using Bollinger Bands to decide what to do. Need the right tool.

Disclosure:  Long both BX SDRL.

Mariage and Gas?

I watch the relationship between oil and natural gas.  It has traditionally replicated a marriage:  some ups and some downs but pretty much in touch with one another .  That just isn't the case today: it's a divorce.

On a BTU comparison, natural gas has never looked better as an alternative energy.  Yet, the price continues to collapse.  Why?  simply supply.

The divorce rate is somewhere between 50 and 55% for first time marriages and much higher for  multiple times around. Pessimism is deserved.  But does that keep somebody from getting married again?  Of course not. That's why the divorce rate is significantly higher for subsequent marriages.

And, investing in natural gas just may be the same.  It's one failed investment opportunity after another.

Too many crabs. Too many crabs. Too many crabs.  I'll stay on the sidelines.

Past Themes and Today's Performance

The Dow and S&P 500 rose about .51 and .61 respectively.  Our account rose .67 resulting in us outperforming both, 4 out of 5 days.  This trend will not continue. I sold about 1/3 of our position in oil resulting in a 13% profit.

Next week is anyone’s guess as is any other week.  Gold is clearly over-bought.  Our two diversified commodity holdings will suffer as gold is sold off.  If there is a correction, I will add to both positions. Our two week results in these positions is 5.19 and 7.37.  Both positions are very small and the returns insignificant relative to our portfolio.

Your account manager was Salieri, knowing that at his best, he could not equal the big boys. The noise around me all week was just too much and I couldn’t pull the trigger.  The crabs are still pulling me down.

Amadeus or Salieri?

The headboard awaits the purchase of fabric and installation.  In the interim, it sits in the living room, subject to review by friends, family and a few of my wife's clients.  It is amazing what they see:  some are overwhelmed by its size;  others appreciate the fine hand rubbed oil finish; while others see mortise and tenon joints with 1/64th of an inch gaps.  Their observations reflect whether they are big picture or detail oriented personalities.  I thought I would enjoy discussing the construction but analyzing how our guests visualize quality, promptly replaced any opportunity for bragging.

The equity markets turned in a rather unusual September, outperforming any other September in some 70 years.  Yet, observers on the cable programs and the web saw weakness.  Few spoke up during September or better yet August, to recommend risk.  Now, in the first week of October, the opinions range across the entire bell curve of human nature.

What do the observation of the headboard and the equity market have in common?  

A few of us will be Salieri, worrying about the details and conflicts, the timbre and rhythm, knowing that our headboards are the best they can be, and that at our best, there will be imperfect mortise joints, losses on good stocks and a few gains here and there.  

We will be, unfortunately,  paralyzed by mediocrity.

But if you are willing to risk the criticism of the masses, the crying of the dumb dumbs and the crabs in the bottom of the pot, maybe, just maybe, you can reach for excellence.

The moldings on the headboard are perfect.  Seriously perfect.  The Pytagorean Theorem tells me the diagonal is spot on.

The homework and diligence is beginning to produce decent investment results.  The balance between conserving cash (or notes) and scoring (pun intended) profits is euphoric.  

Reaching out and touching Amadeus, if every so slightly, is the prize.