January 2011 – Page 2 – The Aleph Blog

Dave, What Should I Do? (3)

Posted on 18 January 2011 by David Merkel

Some of my friends want to invest with me, but I am not a total solution to anyone’s financial needs, because the only stuff I am managing is the risk capital.? All of my clients have to go through a suitability check, where I tell some of them, “No.? That is too much money to place with me.? You would be placing more money at risk than would be good for you.”

I do that even more with close friends.? Why?? They want to support me.? They have a non-economic reason to invest with me, so I have to be all the more prudent and tell them in many cases, “Not so much invested with me.”? Eeee, my wife worries about investing the money of friends.? So do I, but I also know that I have done well for myself over the last 20 years, and my friends could do worse than investing with me.

So, I have four friends to talk about tonight.

1) 91-year old widow, mother/mother-in-law of some dear friends of mine.? Has all of her money in a money market fund in a bank, and earning what is a very good yield for a money market fund.? Bank isn’t in the greatest shape, but the amount is below the FDIC’s limits.? She doesn’t need the money because she has a pension that more than cares for her needs, and she lives with my friends.? Very conservative lady; does not want to take risk, but she asked for advice.? The excess money would go to her children at death, she already gives them some excess each year now.

I ended up saying that I thought I could earn more for her, but that it was by no means certain.? I thought it would be 1 in 3 over the next ten years that the strategy might lose versus her money market funds.? The FDIC should be good if the US government is good, and for her likely lifetime it probably is.? So she decided to stay where she was.? Easy, and, it keeps the dear old lady from worry.

2) A friend, 55, wants to retire 65-70.? Owns two houses free and clear near DC.? Wants to invest all of his IRA assets with me.? I tell him, “No more than 50% with me, and the rest in bonds.”? So, he says that he has an account at Vanguard.? What should he invest in?? I suggest:

23% Short-Term Investment Grade [VFSTX]
23% High Yield Corp [VWEHX]
23% Inflation Protected Securities [VIPSX]
23% Total Bond Market Index [VBMFX]
8% Long-Term Treasury [VUSTX]

Why did I suggest this?? Credit should do well over the next year, and this portfolio will hedge somewhat against inflation, and to a greater extent deflation.? The duration on this set of funds is below the market average, quality is above, and yield is above as well.? Also, convexity/optionality is above average, and will leave room to make changes.

3) Another friend, born 6 days after me (50), just changed jobs.? Wants advice on the new 401(k) plan, again Vanguard, but a different selection set.? They may want to invest some taxable money with me after that, but who can tell… one thing for sure, I never want to push anyone to invest with me.

I ended up suggesting:

15% V Wellington Trust TIPS Portfolio
15% V Short-Term Bond Index
10% V Target Retirement Income Trust (30% equities)
10% V Total Bond Market Index
10% V FTSE All-World Ex-US Index
10% Templeton Foreign Equity
10% V PRIMECAP
10% V Midcap Value
10% Longleaf Partners Small Capital

That would give reasonable diversification across a broad number of scenarios, and a tilt toward equities versus bonds — 53/47%.

4) The widow of the dear guy I call “The Collector” asked for more advice.? I call him “The Collector” because he bought new funds frequently with new money over many years, and he had a reasonably good eye for managers.? I can kind of guess when he bought them — many did quite well in their time.

But she wants income, so she wants to sell a couple of funds that she owns, and buy some Wells Fargo.? I have no objection to the sale of the funds, but she will not earn much income from Wells Fargo, and she already has too much single stock risk , including existing holdings of Wells Fargo.? What I need to tell her is to use the proceeds add to her holdings in Vanguard Wellington and Wellesley Income funds, both very well run.

I also need to explain to her that total return matters more than current income.? Income can be generated by liquidating small amounts of funds expected to underperform.? (I have given her a list tagging funds add, keep, reduce.)

So it goes.? It is a tough time to be investing, but as a new friend pointed out to me recently, quoting T. Rowe Price, “The hardest time to invest is today.”? Sage words.? The present is always a balance between bullishness and bearishness.

Mid-2005 FOMC

Posted on 15 January 201116 January 2011 by David Merkel

In mid-2005 I wrote a piece that I knew would be controversial at RealMoney: Real Estate?s Top Looms.? I had debated about writing it sooner, but delayed, because the momentum felt wrong.? But by mid-2005, I concluded that the negative arb that investors in residential real estate had could not persist for long.? Markets that rely on capital gains tend to get capital losses.

So, when a friend of mine pointed me to the 2005 FOMC Transcripts this morning, I naively decided to look at the transcript closest to my June 2005 piece (graphs here) on the residential real estate markets to see what they were thinking then.? It was a two-day session, and they spent the whole first day on the… residential real estate markets!

Intrigued, I read the whole first day of that session, and skimmed the rest.? There were a few things that impressed me:

The lighthearted attitude that the FOMC took in the meeting.? Laughter was frequent.? That doesn’t impress me, given the seriousness of the task entrusted to them.? I know we are Americans, for whom nothing is truly serious, but the transcripts annoyed me with the frequency of humor in the midst of a serious situation.
They had three staff economists present contrasting views on residential real estate, but they were all optimistic compared to what eventually happened.
The Presidents and Governors spent too much time with minutiae of modeling.
They also spent too much time on arguments that were the equivalent of wish-fulfillment.
They also spent too much time on the price-to-rent ratio, which is a bogus concept.? Better to turn everything (bond manager style) into spreads — look at the difference between rental yields versus mortgage yields.
They spent too much time on what they could learn from Ag land prices to give them wisdom on urban land prices.

On the whole, I felt that our FOMC was not well-equipped intellectually to consider the concept of an asset bubble.? There was a genuine unwillingness to consider that monetary policy could have an impact on asset prices — we only have to worry about goods price inflation and unemployment!? Don’t give us another ball to juggle!

This set of statements from Ph. D. economist members of the FOMC helped confirm to me that the neoclassical view of economics, which biases people toward the idea that nothing ever matters — market structure is irrelevant, is wrong.? We might do better to staff the FOMC with random selection via social security numbers.

Did they consider the increasing level of indebtedness on residential real estate, or the effects of short term finance?? Not in any significant way.

Some people criticized me in 2005 for being too dismissive of the FOMC.? How can you be so bright, and this group of distinguished people on the FOMC be so dumb in your opinion?? Because they have the wrong theory on monetary policy.? The idea that monetary policy if properly implemented could assure prosperity was a bad goal.? Good monetary policy is not enough, and most concepts of good monetary policy leaned toward loose monetary policy.

Basic concepts like level of indebtedness were neglected in favor of other less demanding measures.? No wonder the residential real estate boom went foul.

Book Review: Inflated

Posted on 15 January 201120 June 2017 by David Merkel

This book was not what I expected.? I expected a book on the current crisis, and got a book on monetary/credit policy over the whole of the existence of the US.? What is more, unlike most books that cover a long sweep of history, this book is even, and does not overemphasize the recent past, which is a humble thing for an author to do, because we don’t know the full ramifications of recent actions yet.

Now, I respect the writings of Chris Whalen at Institutional Risk Analytics and elsewhere — a bright guy.? But this outperformed my high expectations.? Some books I glide through because I know the topic well.? This was a book where I thought I knew the topic well, but found that I did not know as much as I thought, and so I read more slowly than I usually do.

But this book changed my view on financial crises.? Whether one is under a gold standard or a fiat currency standard, the main order for assuring stability is the regulation of banks and credit.

In the same way that people need help in verifying whether a drug is effective or food is pure, they need to know that promises to pay will be honored.? It does not matter what backs the currency if banks are allowed to overlever, or mismatch assets long — there will be a financial panic, and it is not due to gold, silver, or fiat money necessarily, but that that banks made promises that could not be kept under all scenarios.

Yes, I think it is better to be under a gold standard, because it restricts the power of the government.? But that is not the main issue with financial crises; we need to restrict that ability of banks to borrow short and lend long; we also need to restrict their overall leverage.? Do that, and crises disappear — also, banks are far less profitable, and that is a good thing.? We will get fewer banks, and bright people will go to more useful places in the economy.

Other things that stood out to me were the First and Second National Banks of the US, and how their creation led to booms, and dissolution led to busts.? Lincoln is unique in every way, even in monetary policy terms, as he created unbacked paper money to fight the civil war, which funded a lot of it.? After the war, the return to the gold standard, much as it should have been done, was depressive, but it was an effect of paying off the war.

I came away from this book with a more balanced view of US politics — many of those I like came off worse, and those I did not like were shown to have been better than I thought — with the exception of Lincoln, who in hindsight seems to be a radical in most senses.? I am very glad that slavery is gone, but not the way that it got done.

Quibbles

Ignore Roubini’s introduction.? Better Whalen should have gotten a real intellect like James Grant or Caroline Baum.

Also, in the middle of the book, in WWII, the US spends far more than its GDP on the war.? I get it, but I think it would be more reasonable to classify defense spending inside GDP so that we can see what proportion of national output is going to the war effort.

Who would benefit from this book:

Anyone with a moderate intellect or better could learn from this balanced account of America’s monetary and credit policies.? It is very well written; those with little knowledge will learn much, but those with greater knowledge will still learn something.

If you want to, you can buy it here: Inflated: How Money and Debt Built the American Dream.

Full disclosure: This book was sent to me, because I asked for it.

If you enter Amazon through my site, and you buy anything, I get a small commission.? This is my main source of blog revenue.? I prefer this to a ?tip jar? because I want you to get something you want, rather than merely giving me a tip.? Book reviews take time, particularly with the reading, which most book reviewers don?t do in full, and I typically do. (When I don?t, I mention that I scanned the book.? Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.? Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.? Whether you buy at Amazon directly or enter via my site, your prices don?t change.

3.4%, NOT 34 Basis Points

Posted on 14 January 201114 January 2011 by David Merkel

With thanks to jck at Alea, I retract part of what I wrote earlier, but leave it up for all to see my mistake.? 3.4% is correct for the ROA.? Now, note if you are levered 44 times, 3.4% means you earned ~50% more than your capital in a year, which is quite a haul.

Post-embarrassment for me, 3.4% is reasonable, and more in line with what I thought my topic would be about when I started writing last night.? The Fed is taking risks:

Duration — short liabilities, long assets.
Convexity — mortgages are prepaying
Credit/Equity — GSEs (modest), Maiden Lanes, AIG

Will they prove to be prudent risks? Not sure.? The duration risk concerns me the most.? Now the Fed doesn’t have to mark to market like the rest of us mortals, and having 3.4% of ROA covers a multitude of errors.? It would engender a loss of confidence if the yield curve got really steep, that the Fed was insolvent on a mark-to-market basis — that could lead to a loss of confidence in the dollar.

But that would take more than a 2% move up from here, and who knows?? Maybe the Fed would suck in a lot of high coupon, long duration treasuries at that level, and profit off of a bigger spread, kind of like the attitude some life insurers had in the mid-80s.? Mismatch long to earn extra money, and if rates rose higher, write more business to get out of distress caused by unrealized capital losses.? Eventually won’t work if you have risk-based capital rules, or liabilities that can run, but if you are the Fed, then there are almost no limits except that of inflation kicking in amid economic weakness.

Following this is the piece with the math error, as published.

-=-==-=-=-=-=–==-=-=-=-=-=–=-==-=–=

Who cares what the Federal Reserve remits to the US Treasury?? Some are amazed by the record $78.4 Billion remitted to the US Treasury, as if that were “found money.”? It is all stolen out of the pockets of savers, who deserve a currency that is truly a store of value, and rewards saving.

The amazing thing to me is that the Fed only earns 34 basis points on assets, especially since they pay less than 25 basis points on assets as a cost of funds over the last year.? The huge earnings points me to the massive leverage the Fed uses, 44x, which it would/should not let the banks it regulates operate at.

But the Fed is different, because it can create money/credit out of thin air.? It can’t go broke as a result.? But, in the limit, that doesn’t mean that really ugly things could not happen if the Fed were to create money/credit with abandon in order to make its books balance after massive capital losses.

So I don’t give the Fed any credit for remitting a record amount to the US Treasury.? The day may come when the US Treasury may have to recapitalize the Fed after credit losses, or the day may come when inflation causes people to distrust the value of the US Dollar.

My big surprise is that the Fed isn’t earning more in this environment.? QE 1&2 should be rich sources of earnings, but is it not happening because the Fed keeps its maturities short?? If so, good, and it explains why QE is so weak.? QE is meant to stimulate through lowering longer interest rates, and that has not happened to the degree that it might, which means the Fed is playing it safe.

Humph. So we have a Fed that muddles in the middle.? Probably the best that we could hope for?? Perhaps.? I need to think about this more, and perhaps this mutes my criticism of the Fed.? That’s not what I intended when I started writing tonight, but it is where I am now.

Mary Miller at BCFAS

Posted on 13 January 2011 by David Merkel

Assistant Treasury Secretary Mary Miller Met with the Baltimore CFA Society [BCFAS] on Tuesday.? Given her prior efforts at T. Rowe Price, it was a bit of a “welcome home” for a local woman who has excelled.? And she said that it was great to be back in Baltimore, though at the end of the presentation she said it wasn’t unpleasant working in the Treasury Department.

She talked about four things, and left a lot of time for questions, much to her credit.? Here are the four items:

1) Drafting of regulation for the Volcker Rule.? Her direct comments and answers in the Q&A indicated an understanding of the difficulties in getting banks to stop taking significant trading and equity risks.? Nonetheless, she did not offer that the Treasury has a silver bullet.? And, as I would say, there can’t be one, unless the US wants to outlaw investment banking.? Nonetheless, new regulations are coming next week for comment.

2) On securitization, new rules are being proposed as well next week.? There are several targets:

Raise underwriting standards.
Align incentives of originators with investors.
Create a clear and open system.
Don’t interfere with the efficiency of capital.
Place the proper burdens (my phrase) on each player in the chain of securitization.

These goals are somewhat self-contradictory, but hey, this is the US Government!? They specialize in contradictions.

3) Two weeks from now, housing finance reform ideas will be out.? They have many contradictory goals:

Make mortgage finance widely available.
Protect consumers against deception in lending.
Provide for affordable housing, both through renting and ownership.
And not burden the taxpayer with these costs.

We can all dream, but for me this is the financial equivalent of antigravity.

4) Financing the Government

Focus on flexibility of funding
Mention that the TARP has lost little money, if any at all.? See, I mentioned it. Mary.? (Please ignore the GSEs, who may lose half a trillion before this is all done.? How does that affect the value of our money?)
She mentioned how the US government has lengthened the maturity of debt from 49 months to 60 months.
She then mentioned that it was critical for the government to raise the debt ceiling.

I like Mary Miller.? I interviewed with her in 2003 as a 42-year old oldster, because T. Rowe Price hires only young people, and promotes from within.? It took 4 major investment banks banging on the door to get me the interview, but you can’t overcome T. Rowe Price culture for good or for bad.? Their loss, I say.? At my interview, I remember thinking that I would like to work for her.

There was a long Q&A, which she did pretty well at answering.? There was at least one nut in the audience who could not formulate his question clearly in a short amount of time.? Very annoying.

That said, there was one questioner who asked about about offering floating rate and long duration debt, and she gave him a complete but noncommittal answer, much as he received from Treasury officials at another time.? A reasonable answer on that question, but got no answer to his second question, “How much help to your Treasury issuance is the buying of the Federal Reserve for QE2?”

His friends noted that there was no answer, and a few commented, “Hey, you were there only one that asked a question that got no answer.? Way to go!”? He was less happy or excited about all of it.? He just wanted an answer, and wasn’t sure if Mary Miller forgot, or didn’t want to answer.? He assumes the former, being a humble blogger, small asset manager, and one who assumes the best of others most of the time.

Creating a Stable Financial System, Part I

Posted on 11 January 2011 by David Merkel

I’ve been thinking a lot about bank reform lately.? Here’s the core of the problem: deposits are sticky in ordinary times, particularly once you have a guarantor of deposits like the FDIC.? But for some banks, they look to other short term funding, whether it is short CDs or repo funding.

Now to me a lot of the issue is asset-liability mismatch.? Banks borrow short and lend long.? That leads to banking panics.? Financing illiquid assets with liquid liabilities is unstable, and begs for bankruptcy at the first significant loss of confidence.

But there is a greater mismatch present, which I want to explore.? Every asset is financed with some liability or equity.? And, every liability is someone else’s asset, but not vice-versa, because assets owned free and clear are equity-financed.

Assets financed by debt are frequently mismatched short.? Long mismatches are rare because of the cost of financing being too high.? Now, if short mismatches are small, that’s not a problem.? There is enough flexibility in financial balance sheets to accept small mismatches.? Real disasters happen when long assets are financed in such a way that there is a risk that the financing will fail prior to the assets being paid off.

The fundamental mismatch in debts that finance assets is that the ultimate assets being financed are longer-dated than the financing.? We fund land, houses, buildings, plant & equipment, and do it off of deposits, savings accounts and CDs.? Some financial companies finance off of short-dated repo funding.? The reason that this mismatch is hard to avoid is that average individuals who save want short-dated assets that can be used for transactions.? That doesn’t fit well against the need to fund long-term assets.

The same problem exists in the municipal bond market.? Much more money wants to invest short, while municipalities want to borrow long.? This leads to a steep muni yield curve.? Commercial insurers writing long tail business, and wealthy people that can tolerate interest rate volatility end up buying the long end, and lower taxes in the process.

If banks were required to approximately match cash flows for assets not financed by equity, yield curves would steepen for other areas of the fixed income markets.? Areas of the financial market where there are long/strong balance sheets, such as Life Insurers, Commerical Insurers, Defined Benefit Pensions and Endowments would get higher yields for longer commitments.? Banks would become a lower ROE business, and that would be good, as there would be many fewer failures, and there would be fewer banks; we are over-banked.? Time to re-educate bankers for more productive activities.

Long dated floating-rate loans could be a solution for banks funding loans? off of short-dated lending, or, using interest rate swaps to achieve the same result.? The risk is that a bank locks in what proves to be a low spread on the asset, while funding costs are volatile.

A few final notes: 1) the standard of broadly matching asset and liability cash flows should be applied to all regulated financial institutions, including investment banks.? Only surplus assets not needed to match liabilities can be used for investments with equity-like risk. 2) There must be an unpacking of complex vehicles with embedded leverage to do the Asset-Liability management.? As examples:

Securitizations
Repo Funding
Private Equity
Hedge Funds
Margin loans
SIVs and the like

would need to be reflected as looking through to the items ultimately financed.? As an example, the AAA portion of a senior-sub securitization is long the loans, and short the certificates sold to the rest of the deal.

Repo funding has its own issues.? In a crisis, haircuts rise as asset values fall.? Institutions relying on that funding often fail at those times, and leaves losses to the repo lender.? There would need to be something reflected for the risk of repo market failure, though the grand majority of the losses go to the borrower, and not the lender.

3) Even short lending to those getting loans that do not fully amortize should be reflected as loans that are longer-dated, because of the risk of rates being higher, and refinancing is not possible.

I have more to say, but I’m going to hit the publish now.? Comments are welcome.

Eliminating the Rating Agencies

Posted on 7 January 2011 by David Merkel

Yes, I’m the same guy that wrote the series that culminated with In Defense of the Rating Agencies ? V (summary, and hopefully final).? But I’ve heard enough unintelligent kvetching about the rating agencies, post Dodd-Frank.? You would think that some of them would realize there is something more fundamental going on here, but no, they don’t get the fact that the regulators have outsourced the credit risk function to the rating agencies, and that is the main factor driving the problem.? Okay, so let me give you a simple way to manage credit risk without having rating agencies, even if it is draconian.

Let’s go back to first principles.? As a wise British actuary said, “Risk premiums must be taken as earned, and never capitalized,” even so should regulatory accounting aim itself.

In general, earning Treasury rates is a reliable benchmark for an insurance company.? Match assets and liabilities, and never assume that you can earn more than Treasury yields.

But what if we turned that into a regulation?? Take every fixed income instrument, and chop it in two.? Take the bond, and calculate the price as if it had a Treasury coupon.? Then take the difference between that price and the actual price, and put it up as required capital.

I can hear the screams already.? “Bring back the rating agencies!”? But my proposal would eliminate the rating agencies.? All yields above treasury yields are speculative, and should be reserved against loss.? If the whole industry were forced to do this, the main effect would be to raise the costs of financial services.? It would be a level playing field.? Insurance premiums would rise, and banks would charge for checking accounts.

Such a proposal, if adopted, would simplify life for regulators, reduce risk for most financial companies, and lead to higher costs for consumers.? That’s why it will not be adopted, easy as it would be to use.

Incentives Matter, or, Why I Didn’t Set up as a Hedge Fund

Posted on 5 January 20116 January 2011 by David Merkel

I didn’t set as a hedge fund for a reason.? First, I changed my mind from prior plans, and wanted to serve people below the top 1% of society, as well as those above, and institutions.? But there is another set of reasons that is more fundamental.

My view is that requiring a manager invest almost all of his spare assets in his strategies is a far more effective means of aligning interests than a performance fee, because it discourages taking undue risk.? It?s the same reason why Wall Street worked a lot better when the firms were all partnerships, and not offering performance incentives to employees.? I?m with Buffett on this one, which is why I set up my firm the way I did ? 80%+ of my liquid assets are in the strategy.? Buffett started with more of a hedge fund structure, and ended up running a corporation where most of his assets were invested.? That provides alignment of interests, while acting to limit the downside, which I think are the goals of most investors.

Beyond that, I think shorting is a difficult way to make money.? Double alpha sounds wonderful in theory, but is really difficult to do in practice.? Common risk control works for long investments — as investments rise, trimming them locks in gains and lowers risks.? As investments fall, their ability to hurt diminishes.? Downside is limited, and upside is unlimited.

With shorting, upside is limited and downside is unlimited.? I can’t tell you how frustrating it is in working for a hedge fund when a large short moves against you.? You might be right in the long run, but can you survive the short run?? As a short goes wrong its impact gets larger, versus when a short goes right, its impact diminishes.

This is why I think alpha-is-the-goal shorting is very difficult to do.? My suspicion is that the average hedge fund that tries it loses, which is why bear funds rarely attract assets, even over a decade as bad as the last one.? Also, hedge fund fee structures encourage undue risk taking.? I did not set up as a hedge fund partly out of my last hedge fund experience, where I saw that risk control is almost impossible to achieve on the short side in a concentrated portfolio.

Part of the problem rests in the concept of the? credit cycle.? The best time to be a short is when the negative phase of the credit cycle arrives.? Aside from that, you are wasting your time being a short.? But who can wait for that time?? The optimal portfolio would be long during the boom phase of the credit cycle, and short during the bust phase.? That is tough to do, but at least it helps to know what the goal should be.? For me as a long only manager, it means taking more risk when credit spreads are tightening, and less when they are falling apart.

I am not out to make a fortune for myself, just enough to support my family.? If more comes beyond that; that’s fine, but I am not aiming for that.? Money for me is not my main goal, rather, I will not be happy at all if my clients do not do well.? I abhor the idea of being a sponge off of the assets of others.? I want to earn my own way for clients.? Lord helping me, I will do that.

UPDATE: One more note.? I say “I eat my own cooking.”? Hedge funds might say (after the truth serum was administered): “We eat lots of our own cooking when we succeed, much less when we don’t.”

Incentives matter.? Do you want asymmetric (but still positive) goals for your managers, or do you want them to genuinely lose money if they fail?? The hedge fund structure offers a free-ish option to the managers — after all, much like mutual funds, they can start a new fund if the first one fails.? Eventually some fund will achieve a performance incentive.

Tickers for the Current Reshaping

Posted on 5 January 20115 January 2011 by David Merkel

I am still trying to get my portfolios entirely transferred from Fidelity, and I am on try #4 now.? I think it will work.

Beyond that, I am registering in Texas, which is now my second state after Maryland.? As for Maryland, when I registered, I goofed by not registering myself as a CFA Charterholder; now they are charging me for a series 65 exam.? The CFA exams are much more robust than the series 65.

I have deleted my portfolio at Stockpickr.com.? There is no long any public reference to what my portfolio is.? Clients will know my portfolio, because they get a clone of it.

Here is my current Industry rotation model:

And here are the tickers I have accumulated since the last reshaping:

AAPL ABAX ABC ABT ACAT ACH AEIS AEP AES AFL AGN AKS ALEX ALL AMAT AMP AMX AMZN AON APA ART ATNI ATO ATYI AVX AWR AXP AZO BAC BAX BBBB BBBY BCR BDX BELFB BGCP BHI BIDU BIP BJ BK BMY BP BR BRS BTH BWS CAH CAT CBOU CHD CHL CHSI CIG CL CMI CNQ COST COV CPE CPSI CSCO CTSCVS CWT CYBX D DCX DEER DELL DF DFG DISH DLTR DLX DPL DS DTV DV DWSN DYN EBAY EFII EFX EMC ENR ENZN EPD ESRX ESY ETR EXC EXPE F FCS FCX FE FOX GASS GE GILD GLW GME GOOG GYMB HAE HAS HCC HES HIG HRB HRBN HRC HRLY HSV IART ICUI INTC INTU IOCC IPXL ISRG IVZ JBL JCP JEL JNJ JOF JOSB JOYG JPM JSAK KALU KCI KCP KEI KFT KMX KOC KRA KSI KSS LIFE LINTA LLL LNM LNT LO LSI LSTZA LTR LUK MA MANT MCA MCD MCO MDT MEA MENT MEOH MET MHP MHS MJN MMM MOT MOTR MRK MSFT MST MU MUR NEE NEM NIHD NOK NOV NRG NUAN NUS NUVA NVDA OCL OCR OFIX OMC OMI ORLY OTEX OXY OYOG PBY PC PDC PDCO PEG PFE PG PKX POR PPL PRU PVR PXP RCL RIG RIM RIO RLI RMD ROP ROSA ROST RSH SAFM SANM SHEN SIRO SKX SM SMG SOHU STE STJ SUN SUP SVA SYK SYMM SYNA T TC TER TEVA TGT THOR TJX TLAB TLK TM TNDM TONT TOW TRV TSN TTWO TUP TUZ TV TXN UGP UMC UN UNF UNH UNM UNP UNTD UPS USB VALE VAR VECO VOD VOLC VVC VZ WAG WBSN WCN WDG WEC WFC WFR WLK WMGI WMT WPI WPZ WRB WRC WST WTR WU WXS XOM YHOO YZC ZMH

That’s more tickers than usual, and more of a challenge now that I don’t have a Bloomberg Terminal, but I do not worry, because I have done without a Bloomberg Terminal for many years in my early days.? I can draw upon other resources with ease.

And now, for the first quarter in some time, you won’t know what I buy; nonetheless, I hope you benefit from my general commentary.