To Hell With Dow Jones

As a kid, I housed my cache of baseball cards in a paper bag underneath my bed.  One morning as my mother was cleaning house she hit the bag with her broom.  Then she promptly dispatched my collection into the garbage bin. 

So much for collecting at an early age. Maybe, I was 9 years old. I recently astounded friends by reciting the 1939 starting line-up for the New York Yankees. Yes, Joltin Joe would patrol centerfield. Do you remember Tommy Henrich and Charlie Keller who manned the outfield turf too? 

Buying war bonds then was the patriotic thing to do. Stock buying on the New York Stock Exchange was dull. There was no Xerox ticking at your back. General Motors, General Electric, were alive and kicking up dirt along with Exxon. Nobody cared.

The chart here shows the market ballooning to near 30% of household assets. But, speculation was mild in the fifties.  In the sixties we reached high twenties in household assets. The starched white collared corporate heads at General Motors and General Electric prevailed. Tom Watson headed IBM,  with its great electric typewriter that clicked and zipped in offices all over town. 

Growing up poor, stocks and bonds which traded on financial exchanges, had no place in my life. I devoured the sports section of the New York Times, but threw away section 5 on financial markets. 

The market hit 29% of household financial assets in the late sixties, I was already a player on Wall Street.  My thirst for speculation and striking it rich was unquenchable. Fairchild Camera was my semiconductor play. Polaroid was already old hat along with Xerox. Money managers promised clients they'd earn 2%, monthly, on these growthies. 

As a fully margined speculator, when the FRB would hike interest rates,  I’d cry myself to sleep, cursing McChesney Martin for getting in my way.  

The Fed remains my bitter enemy for life. I remember paying 14% interest on my debit balance and even 9% when I sought deal money. 

Consider, financial assets of corporations dwindled down to 9% of assets for households. If I had to draw a trendline it would come out around mid-teens on wealth. If you can’t recite most names in the Dow Jones list and how their weighting changed over the decades, you don’t belong in the business. 

The passive investor must filter out The Street’s noise, not just on “big picture” stuff, but on the consensus for stock valuation. You can’t act like an economist and use it on the one hand and the other hand rationalization. You’ve got only 1 hand to invest with. 

John Kluge who saw value in cellular phones made a great investment play.  Kluge was right. When someone tells you to go be right someplace else, you know you’re on the right track. Tell ‘em to get lost and then buy more.