Nobody’s Going To The Moon Tomorrow

With Trump pulling the levers on his wrecking ball, nobody’s going to the moon real soon. The S&P 500 Index is pricey and the guys in steel hats need new orders to keep their furnaces open. I’ve never seen the financial world more discombobulated. But, you’d never know it looking at the prices of Apple, Tesla, Meta, even Goldman Sachs and Netflix. 

I never expected to see Warren pull such a cowardly act as choosing early retirement at the age of 94. Will his successor, a financial man, dare to redistribute hundreds of billions held in Apple and energy plays like OXY?

Meanwhile, ragamuffins in hard hats sell around 10 bucks a share but nobody cares. They earn pennies and could see the wolf at the door. Then, there’re financial stocks like Goldman Sachs selling at over $500. Traders and deal makers, mostly with good outcomes. 

Decades ago, actually, over 50 years, when I decided to go into business as a money manager, I first subwayed down to see Gus Levy at Goldman Sachs for his stamp of approval. Readily granted with the advisory that Gus would call my card at the UJA dinner., “ I’m looking for a nice increase, Gus commented as he finished his simple lunch, baloney sandwich on a seeded roll. 

My 50-year old coverage of value vs. Technology stock performance pretty much sums up my life as a growth stock investor. I’d own growthies just so long as they’d sell at not much more than 1.5 times the S & P 500. But you never 

get your own way. By the time you look at Apple, it’s very pricey. 

Some 50-years ago the “growth-at-any-price” practices started with Morgan Guaranty Trust. They were trashed in the 1973-’74 recession. Nobody talks these days about growthies-at-any-price like Polaroid and Xerox. They were destroyed by technological obsolescence. No development of any new toys to offer to play with. I’d advise my clients back then that they should look for 2% monthly appreciation. But, Polaroid and Xerox ran out of new toys to sell and their stocks became relics of the sixties. 

I'm not immune to General Motors if I saw a strong auto cycle coming. But it’s a rarity when to own the guys who don hard hats at Alcoa, U.S. Steel. Throw in a copper and paper producer, too. Never bought the starched white shirt group, 

either. When the guys in T-shirts came along I listened, particularly to Jeff Bezos et al. I’m still with Jeff at Amazon and I got to Apple early on. If I can’t build a credible spread sheet on a property in question, I’ll pass it by. No Tesla, thank you and I pass on Meta and Nvidia, too. Microsoft now is too efficiently priced but they issue understandable data. 

This chart says you gotta be early on tech houses. At more than 1.5 times corporate earnings. Anything in excess leaves you open for rapid destruction. You won't go to the moon on Microsoft,  but at least it’s ownable on valuation. If you want financial leverage, buy Goldman Sachs. Get a zippy market to go along. Berkshire Hathaway is an obvious play on Apple and oils like OXY. But, I’m not bullish on their world. 

To own a stock at 20 times earnings, you first had to believe in their unwavering high growth rate.  Its reciprocal is a $10 ragamuffin that can’t be modeled with any forecasting power. On a bouncy day in the market,  junk dances up and down some 10%. There is no explanation excepting market forces. Bankers like to see stocks dance in a cha cha cha rhythm, and own a dozen or so that keep you young at heart. 

I wouldn’t want to be in Buffett’s shoes today. His oils leave me cold and Apple could be facing troublesome times during the Trump presidency. It has lost any forecasting powers

Luck and pesetas, Warren. I coulda done what you did. But, I didn’t.