First off, I’d like to thank everyone who bought a copy of Dead Companies Walking this year. I had a great time writing the book and it was fun hearing from folks who seemed to enjoy reading it, as well. I probably wasn’t able to respond to everyone who contacted me about it (though I tried), but I appreciate the kind words that many people sent my way. Thank you!
As for the markets, investors have had more than their fair share of emotional and actual volatility in 2015. After all the huffing, puffing, and cussing, the S&P and the Dow are more or less flat. That doesn’t surprise me very much (I expected modest gains for the indexes, at best). But a number of things have surprised me this year, some quite a bit. Here’s my list of the five biggest events of 2015, in order of earth-shattering importance:
If you missed Tim Cook’s interview on 60 Minutes on Sunday, watch how fired up the normally serene CEO gets when Charlie Rose asks him about the billions Apple is keeping overseas (email subscribers can find the video here):
I don’t blame Cook for being angry. I’ve been saying similar things for awhile now. Our corporate tax system is “awful for America.” It would be bad enough if we were growing at a decent, or even somewhat decent rate economically. But in this ‘new normal’ era of slow to no growth, it’s inexcusable.
My last post generated a fair amount of negative feedback on my Yahoo Finance page and on Twitter. There’s nothing quite like waking up in the morning and being called an idiot (and worse) by all sorts of strangers on the internet. I understand that people have strong feelings about Fannie Mae and Freddie Mac, but I have to say, the vitriol of the comments took me by surprise.
Setting aside whether it was fair (or legal) for the government to change the bailout terms for Fannie and Freddie, my main point in writing about the two giant GSEs seemed rather straightforward: the low-priced stocks and preferred shares of Fannie Mae and Freddie Mac are extremely risky investments. If Washington formally nationalizes these companies (or does so informally, as it seems to be doing right now), there is a good chance that their stocks will go to zero. Sure, the big hedge funds and their armadas of lawyers might prevail in court and win the return of the companies’ dividends to shareholders. But even if that happens, it will probably take years. As I wrote in the last line of the post, “There are easier ways to make money.”
The broader lesson of the GSEs for both retail and professional investors can be stated in four words: