THREE CHEERS FOR DIVERSIFICATION

The Estimable Less Antman writes: “What should you do about your investment portfolio as a result of the current crises?  Nothing, of course.  The market, at any one time, reflects what is already known.  Future changes are the result of what is currently unknown.  This is why I diversify widely: because I’m ignorant about the future.  A diversified portfolio containing US stocks, international stocks, emerging market stocks, domestic REITs, international REITs, and commodity futures has, so far (knock on wood) insulated my portfolio (whose components and target weights are publicly viewable on my wiki) from all the excitement.  With the S&P 500 down around 10% with one day to go in the quarter, my portfolio is somehow up for the year (not by much, but still better than being down).  Because I know something others don't know?  Hardly.  It is because I know what I don't know.  Ignorant Investors of the World Unite!”

F I largely agree.  I do think the market sometimes – like the law – is a ass.  And that when it is, one might reasonably try to lean against it.  The housing market was an example.  One could have fairly guessed it was overvalued.  One could even have guessed this would lead, sooner or later, to a decline in the stocks of, say, homebuilders.  (In the gap between sooner and later a lot of money can be lost, to be sure.)  And that falling home prices might lead to other things. 

But for most of us – except for some play money we can truly afford to lose (and to glean from the speculative volatility a bit of tax advantage, using the losses to lower ordinary income and the long-term gains to fund our charitable giving) – a strategy like Less’s makes lots of sense.

HAPN - INHI

One such speculation were our HAPN warrants, which are now INHI warrants, giving you the right to buy INHI stock (for which some institutional investors paid $6 not long ago, but which trades at $2.50 today) at $5. The warrants are currently around 18 cents, down from the 30 cents and more where some of us bought them, but still with three years to run.  Will the company grow fast enough (or at all) for this to work out?  I have no clue.  But for those who own it, here’s a link to a recent investor call.

SERIES I SAVINGS BONDS

Max:  “I’ve read with interest over the years your discussions of Series I bonds.  And my wife and I have invested in them periodically.  This past week, we tried to buy them at our credit union.  We found out that, unlike past years, we could only buy $5,000 per social security number.  (Details here.)  What gives?  It’s a bit hard to understand, really.  As a debtor nation, one would think the U.S. would want to have the debt held nationally (like Japan did when its property bubble burst).  Instead, we reduce the amount citizens can buy and, to use Warren Buffett’s words, ‘force-feed’ the rest of the world $2B of our debt daily.  Does it make sense to you? And if you believe Bill Gross and others who say the government understates inflation, the whole thing becomes curiouser and curiouser.  Personally, instead of messing around with Series I bonds (or any other U.S. government bonds) anymore, I’ll invest even more in foreign currencies and stocks.  If the Treasury doesn’t want my money, so be it.”

F Well, they definitely want your money two weeks from tomorrow (April 15).  But you make a great case.  I assume the limit was lowered from $30,000 to $5,000 because the financial lobby wants as little cash as possible escaping their opportunity to earn fees, spreads, or commissions on it.  Republican Administrations, at least the past few, have generally done what corporate interests have asked them to.

NEWSER

James Musters:  “Have you used Newser?  It’s cute, fast and configurable.”

F Good tip.

WORLD MAY NOT END; CAVE MAY MELT FIRST

Newser offered this item, which begins:  

Seven members of a Russian doomsday cult, all women, have emerged from the cave where they have been holed up since November, awaiting the end of the world (note: in May), Itar-Tass reports.  Twenty-eight more remain in the cave southeast of Moscow—but they are expected to come out soon, as melting snow has caused part of the cave to collapse.

Holdouts have threatened to explode gas canisters if anybody tries to remove them by force, but  rescue workers and Russian Orthodox priests have been negotiating through a chimney. The cult's leader was brought from a psychiatric hospital to help with talks.  Authorities have agreed to let the women take refuge elsewhere to wait for the apocalypse. . .

F And you think some of your neighbors are a little nuts.  If it were me, and I believed the world would be ending in May, I sure wouldn’t have spent the preceding months in a cave.  What ever happened to “eat, drink, and be merry?”