dragonLZ (99.34)

Bette Midler and The Art of Bottom Calling

February 07, 2011 – Comments (14) | RELATED TICKERS: BE , T , TE

Have you ever seen Bette Midler’s and Warren Buffett’sname in the same sentence? Or have you ever read a quote from Bette Midler, in the book on investing which also featured quotes from Ben Graham, Peter Lynch, and other great investing minds? Never, right?

Well, I think that’s about to change. I actually can promise you that after you finish reading this post, you will never again look at Bette Midler the same way you used to. And I promise that you will never again think of her song The Rose as just another love song.

__________________________________________________________________________________________I I remember it like it was yesterday (don’t you love stories that start like this?). It was a cold, cold, day. Freezing cold would be an understatement. Snow everywhere. Lots of it. January of 2009 had just began.

I was driving back home from work, thinking about stocks and investing just like I do 80% of the time, when Bette Midler’s song The Rose came on. And that’s when it hit me. That’s when I finally got it. The Rose lyrics gave me the most powerful investing advice I ever heard.

On 1/6/2009 I made the first purchase of the year through my ShareBuilder account. I got me some shares of OSK, Oshkosh Corp.  A week later, I got a few more. The following week, and the week after that (1/20 & 1/27), I bought shares of BGC, General Cable Corp. (To see all of my trades mentioned in this post, click on the links like this one).

All four of these buys were Automatic Investment buys. For you, who are not familiar with ShareBuilder, Automatic Investments are free buys (after you pay a monthly fee, of course), which happen only once a week (every Tuesday). There is also an option of buying stocks Real Time, but those are $7 per trade. I, for example, buy Real Time only when I'm very excited to buy a certain stock (can’t wait until Tuesday to get my hands on a stock).

Well, in the month of January of 2009, I wasn't really anxious to own stocks. I had no real time trades (see it here), just the 4 above mentioned free Automatic Investment ones.    

And to be honest with you, at that time I didn't know if buying was a right thing to do. As you probably remember, it looked like the whole world, especially U.S.A., was collapsing like a house of cards. 

During the month of January, S&P 500 dropped 8.6%. That was 8.6% on top of 41.7% that the market had already lost since September of 2007.

And it was winter. I don't know where you live, but here in Michigan, it was a cold one. Everything covered with snow. Pretty much, there was nothing to feel good about. But Bette Midler’s advice from her song The Rose is what kept me going.

(Btw., who bought OSK and BGC in Jan. 2009 and held onto them until today, would be sitting on +223% and +155% returns respectively.)

February of 2009 wasn’t much better. Still winter. Still a lot of snow. Still very cold.

During the month of February, I made 5 Automatic Investment buys.  Even though I bought 3 more stocks: Alon USA Energy (ALJ), EnerSys (ENS), and Under Armour (UA), and added to my BGC position, I still didn’t feel the urge to jump into the market with both feet. I once again had no Real Time buys (as you can see here).

S&P500 fell another 90 points during the month of February. That was 11% one month drop. At that point, the market had already lost 53% since its September 2007 highs. It sure was hard to believe that Bette Midler really knew what she was singing about.

(Btw., if you bought  ENS and UA in February 2009 and held until today, you would now be sitting on +183% and +351% returns respectively. On ALJ you would be down 25%).

Then it came March. Still cold, still snowy. The market kept going down. On March 9, S&P500 closed at 676.53, down 57% from its October 2007 value of 1565.15. It sure felt like the end of the world was a sure thing.

Today, we know that was the bottom. Yes, March 9, 2009 was a generational bottom. But as the saying goes, nobody rings a bell at market tops and bottoms. At that time, selling and getting out of the market completely (for the stubborn ones who stayed in the market up to that point), felt much more natural than buying.

On March 10, the snow started melting. There was no bell, but today we know that was the first up-day after the bottom.

On March 11, I had two Real Time buys. I bought BAC, Bank of America, and C, Citigroup.  On 3/11/09, BAC was at $5 today at $14 (+300% return for people who bought and held), and C was at $1.50, today at $5 (+225% return).

Just on that one day in March of 2009, two days after the market had bottomed, I had more Real Time buys than in the previous 9 months put together (as you can see here). That was first time after 6 months that I thought “I have no time to wait until Tuesday.”

My third Real Time buy in March 2009 was MIC, Macquarie Infrastructure, on 3/25/09. Back then, MIC was at $1.50, today at $21 (+1400% return).  

But that’s not all. During the month of March, I also had 15 Automatic Investment buys:

On 3/3, I bought BYD, Boyd Gaming. Then at $3.50, now at $12 (+225% return).

On 3/10, I bought BYD again, Lantronix (LTRX, then at $2.80 split adjusted, now at $3.60, +30% return ), and Finisar (FNSR, then at $2.48 – split adjusted, now at $25, +1480% return).

On 3/17, I bought New York & Co. (NWY, +135%), Manitowoc (MTW, then at $3.80, now at $18, +400% return), Headwaters (HW, +130%), FCSX (-100% return), and Las Vegas Sands (LVS, then at $2, now at $47, +2200% return).

On 3/24, I added to HW and C, and I also bought Modine Manufacturing (MOD, then at $2.50, now at $16, +550% return), and Hertz (HTZ, then at $3.80, now at $15, +300%).

On 3/31, I added to NWY, and I also bought Gibraltar Industries (ROCK, then at $5, now at $10, +100% return).

Then it came April.  During the month of April, I made 15 Real Time buys. Fifteen. Not Automatic Investment buys but Real Time ones (Does this show urgency to buys tocks anyone?).

I bought:

Zales (ZLC, +40%)

Century Aluminum (CENX, then $4, now $16, +300% return)

Sl Green Realty (then at $19, now at $72, +500% return)

Cbl $ Assoc. Properties (CBL, then at $5, now at $17, +250% return)

Harry Winston Diamond (HWD, then at $4, now at $12, +200% return)

Apartment Investment (AIV, then at $6, now at $24, +500% return)

Developers Diversified Realty (DDR, then at $2.50, now at $14, +450% return)

Cache (CACH, -30%)

Teck Resources (TCK, then at $10, now at $62, +520% return)

Pacific Sunwear (PSUN, +30%)

LodgeNet (LNET, -6%)

Fifth Third Bank (FITB, then at $4.50, now at $15, 300% return),

And I also added once to my C and twice to my BAC position.

But that’s not all. I also had 10 Automatic Investment buys (this was the first time I had more real time buys than automatic investment buys).

I bought:

Genworth Financial (GNW, then at $2, now at $13, +520% return)

Sealy (ZZ, -15% return)

Solutia (SOA, then $3, now $24, + 700% return)

Cno Financial (CNO, then $1.30, now $6.30, +500% return)

Fortress Investment Group (FIG, then at $2.30, now at $6.50, +250% return)

Unisys (UIS, then at $13 split adjusted, now at $36, +280% return)

Gannett Comp (GCI, then at $3.40, now at $17, +400% return),

And I also added to my positions in NWY, PSUN, and LVS.

The month of April was a good one. Snow was gone, and sunny days replaced cold ones. The spring was finally here.

___________________________________________________________________________________________Getting Back to Bette Midler. The lady has no idea how much she helped me. Will I ever be able to thank her enough? I doubt it.

The least I can do, if I ever publish a book on investing (Investing Dragon Style or something like that), I will put her quote on the front page.

The quote is going to be that same great advice she gave me through her song The Rose:

Just remember in the winter

Far beneath the bitter snows

Lies the seed

That with the sun’s love

In the spring becomes the rose 

Good luck everybody, and as always, don’t forget to have fun when investing. :)

DLZ 

Disclaimer: Bette Middler is not a qualified financial advisor. Talk to your financial advisor before making any investment decisions. Unfortunately, the chances are, your financial advisor most likely knows less about how the market works than Bette Midler.  

_________________________________________________________________________________________ p.s.Here's

Here's more timeless advice you can find in The Rose (click here to watch video). Just replace word Love with Investing, You with Your Stock Pick and see what you get:

Some say investing, it is a river
that drowns the tender reed.
Some say investing, it is a razor
that leaves your soul to bleed.
Some say investing, it is a hunger,
an endless aching need.
I say investing, it is a flower,
and your stock pick its only seed.

It's the heart afraid of breaking
that never learns to dance.
It's the dream afraid of waking
that never takes the chance.
It's the one who won't be taken,
who cannot seem to give,
and the soul afraid of dyin'
that never learns to live.

When the night has been too lonely
and the road has been too long,