JR Snell Capital Management, LLC

I guess I’m “old school” when it comes to investing. I say this because for our clients I invest in real stocks. By “real” I mean the actual shares of actual companies.

I do this for two major reasons:

1. I feel that we have an “alpha” advantage by picking stocks individually. For those of you who have real lives and don’t spend any time at all boning up on investment jargon, “alpha” is the value-added that an investment adviser (like myself) brings to the table. More technically, it is a rate of return that you receive that is a little bit out-sized for the level of risk that you are taking. Layman’s example: The market increases by 5% and your account increases by 5%, but you only have half of your money in the market: That’s alpha (very roughly), if you will.
2. Reason Number Two: Never Pay Retail. I read that the total markup on diamonds can approach 1000%. The reason for this is that there are a lot of hands that a diamond goes through on the way from the dirt to your digit. So goes it for packaged investment products as well; investment company, investment manager, investment manager’s stock broker, fund wholesaler, brokerage firm, broker, you. The bottom line here is that paying retail is never OK if you are buying an investment and hope to make any money at all on it.

I got this way because I am a “reformed stockbroker” and if Joshua Brown at The Reformed Broker hadn’t already snagged the name, I probably would have. I’ve had similar experiences and find myself left with a similar disdain for the industry because I’ve seen it from the inside out as well.

Joshua’s history with the industry started about the time that mine left off and it’s interesting (although not surprising) to see that things haven’t really changed, despite all the spin that’s being thrown out by commissioned brokers about how it ain’t so.

For the record, if you are a stockbroker, here is The Reformed Broker’s best recommendations about what to do with the latest packaged product that management is “suggesting” that you offer to your clients.

And if you’re not a stockbroker, then you ABSOLUTELY MUST READ IT if you don’t want to be the one wondering why you were invited to play.

beginner, humor, investments, Joshua Brown, Reformed Broker, rules, strategy

I’m not a fan of New Year’s resolutions, but I’m making one anyway. No, it’s not to lose weight, nor to work out more, nor to eat less, eat right, drink less, be nicer, be more thoughtful, or even to be more considerate. Although I could probably stand to resolve all these things, it’s too much to think and worry about right now. No wonder I’m not a fan.

Nope… I’m resolving to write more often and to be more actionable when I write. When I reflect upon bits and pieces of the past couple of years, I can see that I’m too obsessive about how I put together my posts. I agonize over a lengthy story and what feels like a great idea, until it isn’t either one of these things any more. I think it to death… or something like that.

I’ll write something, or a part of something and then have to set it aside while I tend to the real business of taking care of clients. And then, I don’t get right back to it or I’ve derailed my train of thought for the time being and “can’t” get back to it. This might go on for a few days and then one of three things usually happens…

1.) I lose interest in the article entirely. Maybe the good idea doesn’t seem so “great” or interesting any more.

2.) It’s no longer timely. It’s possible I’ve thought about exactly the right way to write or phrase something way past the time when the article is relevant and whatever I’m thinking about has already happened or resolved itself… so there’s no longer a story.

3.) I completely lose the point. I had a great point, but I don’t usually outline articles because when I start to write, I believe that I’m actually going to finish it in one sitting… and then I don’t. And then when I get back to it, there’s no obvious point that I’m trying to make anymore. Or, I’m getting old and forgetful? I can’t remember.

The point is (and I must hurry and finish here!), that I’m resolving to evolve my writing style to adapt to the little snippets of time that I usually have here and there during the day. So, posts will be more often and more in little snippets than the lengthy tomes with lots of time in between like before.

Oh yeah, and more actionable. I want to include an action item with each post. In a great start to my new resolution, I don’t have an action item for my first post about action items. Sorry, I guess it gives me something more to strive for!

humor, strategy

My wife is an aficionado of the second-hand; a fiend for yard sales, flea markets, estate sales, and the like. It’s not a bad thing like many people might think. Mainly because the major difference between her and the people you see on television collecting diapers and cat feces is that 1.) She knows what she’s doing, 2.) She has limits, and 3.) She loves what she does.

Oh yeah, and she’s damn good at it. Seriously… like professional-grade damn good.

Yes, she has rules too. One of her rules is that if something’s coming into the house, another item must go out. We’re way past the “accumulation” stage of our lives and we’re now in the “upgrade” stage.

(My rather crude translation of this is, “You can’t put ten pounds of sh** in a five pound bag”, but now that I’ve actually written it down, it doesn’t sound very bright.)

Another rule is that it has to be actually worth something. You would be surprised at the amount of good stuff that some people will practically give away. I can’t figure out why people do this, but they do. Too tired? Too lazy? Just way too sick of looking at their own junk? I have no idea.

But because these people are out there, my wife never goes anywhere without a jeweler’s loupe and a diamond tester. These are admittedly odd things to keep in your purse… but the payoff can be handsome for the trouble. That and she’s addicted to the hunt.

And all along the way of the Never-Ending-Great-Treasure-Hunt that her travels are, along with the gold and platinum and various diamonds, rubies and what-not gems and doo-dads and unwanted heirlooms come the oddball bits and pieces of the equivalent of the precious metal family’s loser child: Silver.

Her silver hoard was mostly represented by orphan spoons, charms, bracelets, candlesticks, and the like that have kind of come along for the ride like barnacles on the Cutty Sark. But every now and again, even the great sailing ship comes in to dry dock to scrape off the barnacles. And such it was recently for the accumulation of silver whatsits and doodads that she decided the time was ripe to be unceremoniously “scraped off”.

And in the “scraping off” process, she matter-of-factly inquired of me about the price of silver. Out of curiosity I suspect because she’d heard a blip about it on the news. Even though I don’t personally trade commodities, I still keep a sideways eye on them because they can occasionally affect the stock and bond markets and at the moment they seem to be on everyone’s mind. But I only peek out of curiosity, or if someone asks me about something commodities-related and I need to sound smart.

I was thinking it had been somewhere in the $20’s, but I was wrong… very wrong: Silver had gone vertical. After about thirty years of languishing between $5 and “who cares”, the loser child had suddenly gotten a PhD! It was almost 50 bucks an ounce. Of course, I had to check a couple of times… but, yep it was closing in on $50.

So she hustled “the hoard” down to a friend who owns a jewelry store that buys such things for a percentage of the melt value. She had a quicker step to get down there this time, I suspect because the price of the stuff seemed a bit out of line with reality. But, other than that it was all rather routine and typical. She’s a frequent customer.

The deal was done, a check was pocketed and it was back to business as usual for the Never-Ending-Great-Treasure-Hunt that her travels are.

And during the next two weeks (right up to today even) the price of silver has collapsed. It’s lost about a third of its value: It was around $48-plus an ounce and now it’s in the low $30’s. It’s been an historic selloff… dramatic and speedy.

I know my wife doesn’t care. She accumulated a large position at cheap prices over a long period of time. She then sold her entire position, without emotion when the market appeared to have lost its senses. And then she moved on to “business as usual” without another thought.

She just executed the perfect trade.

cash, humor, investing strategies, investments, market timing, merchandise, strategy, timing

Even I am a little surprised at this one… Here’s the quote, clipped straight out of a MarketWatch article:

Click to enlarge

Let me paraphrase my favorite part….

“You can look at all the great fundamentals in the world, but if there’s not a demand for the stock, it really doesn’t matter. I learned that point blank in the last few months.”

OK, two points… First, if the only financial thing you’ve ever done is to have a garage sale, then you know that if there’s no demand for something, it ain’t going to sell… no matter how lifelike Elvis looks on velvet.

Second, if you get all the way to chief investment officer before you figure this “no demand” thing out… and only in the last few months?? Well, I don’t even know how to explain how “squishy” that makes me feel.

beginner, bummer, buy and hope, humor, investing strategies, investments, markets, rules, timing

In the last two paragraphs of my last post, I chastised “The Great Orator” (BHO) for being so down in the dumps and putting forth what I feel was an excessively pessimistic view as a part of an agenda to get his stimulus package passed.

This past weekend I was sitting with my Grandson, eating Cocoa Puffs together on the sofa and watching on the boob tube the kinds of stuff that appeals to your average five year old…. and that’s when I heard it… that fimiliar refrain… “Yes We Can”

That’s where BHO got it! That’s where he got it all, the chant and the building stuff about putting the American people back to work in construction jobs! This has to be the genesis, the root, the seed of the Great Economic Recovery and Ego Act: “Yes We Can!”

On a serious note: I was, in fact, a little less distraught at last night’s speech. It seemed more hopeful and “Rooseveltian” now that he’s gotten the package passed. I think the hopeful message that he put out there is a bit of the salve that Americans need at the moment.

As usual, I just wasn’t finding much substance to the whole thing. The FDR flashback is a very popular faddish image at the moment for “pseudo-economists” to grab a hold of, but the problem is that most serious students of economic history concede that FDR’s plan didn’t really work.

The market’s action since early January when the plan started to come to light seems to be saying that BHO’s plan may not work any better. Back in Roosevelt’s day, the whole world at war finally snapped us out of it. Although it worked, nobody wants that kind of a stimulus plan.

bailout, credit crisis, humor, Market Comments, rescue

Click to buy

If you’re gonna be out here on the links, ya gotta know & ya gotta show who’s got your assets covered. What you need (in my humble opinion) is Official JRSCM Bling.

My official golf-style, collared t-shirt is a comfortable, lightweight way to play 18 holes and beat the heat. Actually, it’s so damned comfortable you could probably even play 36 if you wanted.

Even though the shirt’s got stylish (aka cheesy) wood-tone buttons, I wear mine all the time for two reasons: 1.) The material is thicker than most golf shirts, it’s all cotton and it kind of feels like a t-shirt and 2.) It has my name on it, so it matches my socks and underwear.

It’s going to set you back about $16.99 + shipping. I’m not sure it’s a “great” deal, but it is at cost! My logic here is that having an army of little bipedal bulletin boards out on the links should be a good thing, right?

Naturally, if you’re sportin’ my bling, try to behave yourself. This includes choosing to use the course-provided restrooms at the turn instead of your typical free-lancing in the OB off the 12th fairway. You know who you are.

beginner, bling, golf, humor, merchandise, rules, shirt

401-k, deflation, humor, safety