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9.17.2017 - Free Investing Newsletter Bookmark

The Storm

Hello everyone, I've made it through the storm.  I'm sorry about not putting out a letter on Sunday or Wednesday, but as you all know, Hurricane Irma made a visit to our part of Florida and well, things just took a bit of time to get 'normal".
 
For some in Florida, normal won't be for two years. For others like me, normal started showing up Thursday when the power came on. So, while I don't want to bore you with all the gory details, let me give you the Readers Digest version of things.

Irma was roaring towards the Florida coast all last week. We had all used up our Prayers trying to turn it out into the sea, but it wasn't to be. On Friday, I spent the day at my wife's office, packing up records, computers, files, you name it. We did everything we could think of to protect what we could.
 
We felt we were in pretty good shape, because earlier in the week, I had made reservations at the Hyatt hotel in Sarasota. They told us the Hyatt would be a great place to hunker down. They had a generator, and they had food for the restaurant, and it was built to very good specifications.  So my plan was simple, I'd board up the office Friday, the house Saturday morning  and then go hunker down at the Hyatt and watch the show.
 
Well, while securing the office, a friend called and had no where to go. So we called the Hyatt trying to book another room. The person on the line said something that hit us like a punch in the gut. They said "not only are there no rooms, we're evacuating the building".  I said, "what about my reservations for Saturday, Sunday and Monday?"  Sorry sir, they're canceled.
 
So, it's a day and a half before a CAT 4 storm is about to land somewhere near us and we didn't have a really wonderful place to go. I had already set my mom up pretty well, her sister lives in a retirement home, complete with generators, steel shutters and no where near a flood zone. So she was to be in good hands. But the wife, the kids and me? Not so much. 

Thus, we came up with an alternative. Our friends D and B, have a modern house, Concrete block, built to hurricane standards with steel shutters, etc. We'd go there, along with some fragile friends with some disabilities.

On Saturday, I sent my boys down to help them put up the hurricane shutters, and I remained home putting up my shutters and plywoods. Then things got really goofy. As they kept raising the storm surge estimates, the emergency folks ordered even D&Bs area evacuated. While I had absolutely no belief that the surge would be anywhere near what they were saying, we had disabled folks with us. Folks in wheel chairs. We couldn't risk it. They had to go.

In a rush of what you could call controlled panic, my two boys, and a convoy of people left to head north. It seemed to me to be a doomed plot. They were hoping to maybe find a hotel somewhere near maybe Orlando, or Jacksonville, or where ever. HA!  There wasn't a hotel in the State of Florida. So they fought off empty gas stations, and bumper to bumper traffic for some 16 hours to end up holed up somewhere in Georgia.

As for me and the wife? I'll tell you about that saga some time in the future, it's an interesting story.

When the storm hit us late Sunday night, the town of Sarasota was blessed. Irma had ducked into the west coast of Florida down in Naples, and came up "inland" of Sarasota. As it was chewing through the marshes and the thick wooded areas of central Florida, it lost a lot of steam, and by the time it reached us it was more like a very strong tropical storm with a few hurricane blasts. Yes there was trees down. Yes the power went down. Yes there was localized flooding. But in the big picture, it was nothing.

However, the poor folks inland got massacred. It's a sin that the media shows you some storm surge on the beaches and some waterfront homes with a little damage. That's NOTHING. Half of the interior of Florida looks like the Keys. Total destruction. Massive flooding. Livestock dead or missing, the orange crop decimated, barns gone, houses gone. Yet little is said about them.

The Peace River and the Myakka river hit all time record flood heights. People in the surrounding areas had 3 - 8 feet of water in their homes. Some homes are gone completely. It's very very sad. Having had my house removed by Hurricane Sandy, I know what those poor people are living through. Been there. Done it.

But in Sarasota proper, the storm was more of an annoyance than anything else. 185,000 families lost power. I was down for 6 days. Yes I cleaned up branches, yes I  chain sawed a tree off my neighbors shed. Yes I cut down a tree that was blocking another neighbors garage. Yes I had to throw out all the food from two refrigerators. Yes I had to run on Generator power for a couple days. But all in all? It was nothing. Not compared to what the Keys went through or the Virgin Islands.
 
My family is fine. Most of my friends are fine. Some of my friends inland need some help and we’re doing what we can. “Normal” won’t return to us for a couple weeks. “Normal” won’t return for some down here for a couple years.

I’m penning this on Saturday morning. In Sarasota county, 46,000 families and businesses still have no power. The way the trunk lines run truly boggles the mind. You can have two businesses occupying the same parking lot. One has power, one does not. Or two houses on the same street. One NEVER lost power, the other is still down 7 days later.  Go figure.

A lot went right for me and my family and for that I will forever be thankful. For those still in desperate need, we pray daily for you.
 
The Market:
 
I tell no tales. From Sunday through Wednesday, I didn’t see a TV, have a computer, or know anything more than what I was receiving via my small handheld shortwave radio. For all I knew, the market could have crashed, or hit new highs.  I found out later, it took the high route.
 
So by Thursday, I’m finally starting to look around, and a few of the first things I saw, was enough to make me wish the power didn’t come on. The following is from Bloomberg:

Like so many companies in America, Boeing Co. has largely neglected the gaping deficit in its employee pension as it doled out lavish rewards to shareholders.
 
 What's raising eyebrows is how it plans to shore up the retirement plan.
Last month, Boeing made its largest pension contribution in over a decade. But rather than put up cash and lock in the funding, the planemaker transferred $3.5 billion of its own shares, including those it bought back in years past. (The administrator says it expects to sell them over the coming year.)
 
It's a bold move, and one cheered by many on Wall Street. Yet to pension experts, it isn't worth the risk. After a record-setting, 58 percent rally this year, Boeing is betting it can keep producing the kind of earnings that push shares higher. If all goes well, not only will the pension benefit, but Boeing says it will be able to forgo contributions for the next four years.
But if anything goes awry, the $57 billion pension -- which covers a majority of its workers and retirees -- could easily end up worse off than before.
 
So, the pensions- the retirement of so many of the folks that are building this company’s planes, rests on the idea that the market never crashes. Does anyone but me see a problem here? This is just like the Norwegian wealth fund, which wants 70% of its pension money in equities. Either they know that the global Central banks will never let stocks fall, or they’ve been conned into something truly frightening.
 
My guess is that they see so much financial engineering, so much manipulation, they’re banking on things going just swimmingly for ever. Consider this little gem:
 
CVS Needs Aggressive Buybacks to Meet FY18 Estimates: Jefferies
 
So Jefferies is saying that based on organic growth, sales, revenues, expenses, etc, the only way they’re going to make their earnings estimates is if there’s less stock out in the float. Now follow the plot... what’s CVS going to do? They’ll probably sell corporate debt to fund a massive buy back program, thus boosting EPS, while at the same time incurring debt liability.  How lovely.

We hit all time highs again on Friday. No one cares about North Korea’s missiles. No one cares about anything but watching stocks soar to unimaginable heights. I didn’t have any swing positions or short term trades on this week simply because I had no power and my computers were holed up in a safe room many miles away. But come Monday, we’ll be back in the swing of things.

Personal:  Back on 9/11, after the twin towers came down,  we made a deal where anyone that bought a year’s subscription to the Insiders Club, we’d donate half the price to the Red Cross.  I’ve been asked if I’m going to do that or something like it for Irma relief. The answer right now is no. I think we picked the wrong outfit. I would have much rather seen the money go to the salvation army, because frankly they’re the people I see out in my community. I haven’t seen a Red cross truck. But I’ve seen the Salvation Army people everywhere.
 
I don’t want to use this publication and leverage it to this disaster. What I will say is that if you want to use the “donate” button below and toss us a few bucks, I’ll be using donation money to continue to buy gas, water, food, chain saw oil, gas cans, etc, for the people that I can help personally. I’m not looking for sympathy or praise, it’s just how I’m wired. I cannot live with myself seeing someone struggle with a vehicle on empty, and a flooded house, when I have 5 gallon jugs and gasoline.   Take care, and I’ll see you all on Wednesday. 

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