(B)(N) Harry’s World & The Dow Jones Industrial Companies

Chesapeake Bull Ships LP

Drama. Harry is the stock broker from Baltimore who has done very well for himself this year – starting from nothing in January, he’s now running the limited partnership “Chesapeake Bull Ships LP” (say it slowly, please) with about $100 million of high net worth funds.

In January, he sent his Newsletter gratis to about 1 million small business owners and professionals in medicine and dentistry and lawyers and accountants who advertised their credentials on the Internet and were looking to make contact with new clients and customers. And they met Harry who got them to think about investing in businesses like theirs (and his) which were also trying to make money with more or less success.

Half of them received Harry’s conjecture that the Dow Jones Industrial Company, AXP American Express, was likely going up in January and he told them why and the other half received his opinion that AXP was possibly going down and he told them why too.

Right On Harry

As it turned out, American Express lost 10% of its value in January and so to half of those people he sent out his prediction for February which was that BA Boeing Company was likely going up in February and to the other half that it was possibly going down for some other reasons.

And as it turned out, Boeing Company gained 12% that month and to half of those people he sent out his prediction for March that UNP United Health was probably going up in March (and he gave his reasons) and to the other half that UNP was possibly going down in March.

And as it turned out, United Health gained 10% in March and to half of those people he sent out his prediction for April which was that CVX Chevron Corporation was probably going up in April and to the other half that it was possibly going down.

And as it turned out, Chevron Corporation went up by 5% in April and Harry now had over 62,000 high net worth individuals and potential investors who believed that Harry was the bomb – four out of four in the Dow both up and down and he seemed to know something that they didn’t, they thought.

Amen

And you know the rest of this story, don’t you? In May, Harry said that his Newsletter was now available for subscription only and for a limited time, he was taking new deposits for the “Chesapeake Bull Ships LP” (say it slowly, please!) and over three thousand of his “clients” and some of their private pension plans coughed-up an average of $30,000 for his new long-short hedge fund.

And of course, Harry was quite right in what he did because that’s how it’s done in Harry’s World and investments are “sold” and not bought, so to speak.

But in contrast to Harry (and the Dow which gained net nothing this year and Harry was right again), we’re up +15% in capital gains on the Dow this year (at the stop/loss prices) and we made another 2.4% in dividends and we’re still holding nineteen of these companies but eleven that we’re not and we know exactly why although we don’t know anything about stock prices – we just know a lot about investing. Amen.

And it gets better; the Dow Jones Industrial Companies have picked-up $1.7 trillion in aggregate market value for a +50% gain since 2012 but the (B)-class portfolio in these companies has already returned +101% at the current stop/loss prices so that we doubled our money and it can’t get any worse than that in 2016 even as the World struggles with slow growth and financial problems; please see Exhibit 1 below for more details and a heads-up on what might be happening next year (and click on it and again to make it larger as required).

Exhibit 1: (B)(N) The Dow Jones Industrial Companies – Harry’s World

Figure 1.1: Harry’s World

For more information and examples of the Free Market Yield and the terms that we have used above, please see our Posts “(P&I) The Dismal Equation (Ecclesiastes 9:1)” and “(B)(N) S&P 100 Volatility Risk and The Full Moon” and “(B)(N) NASDAQ 100 Volatility and The Stone Bunnies“ and for an introduction to The Barometer “(B)(N) What’s A Girl To Do” or “(P&I) The Swiss Franc Debacle“.

And for more information on real “risk management” in modern times and additional references to the theory and how to read the charts and tables, please see our Post, The RiskWerk Company Glossary and “(P&I) Dividend Risk and Dividend Yield“, and our recent Posts “(P&I) The Profit Box” and “(P&I) The Process – In The Beginning“; and we’ve also profiled hundreds of companies in these Posts and the Search Box (upper right) might help you to find what you’re looking for, such as “(B)(N) TLM Talisman Energy Incorporated” or “(B)(N) ATHN AthenaHealth Incorporated” or “(B)(N) PETM PetSmart Incorporated“, to name just a few.

And for more applications of these concepts please see our Posts which rely on the Theory of the Firm developed by the author (Goetze 2006) which calibrates The Process to the units of the balance sheet and demonstrates the price of risk as the solution to a Nash Equilibrium between “risk-seeking” and “risk-averse” investors within the demonstrated societal norms of risk aversion and bargaining practice. And for more on The Process, please see our Posts The Food Chain and The Process End-Of-Process.

And for more on what risk averse investing has done for us this year, please see our recent Posts on “(P&I) The Easy (EC) Theory of the Capital Markets” or “(B)(N) The Easy (EC) Theory of the S&P 500“, and the past, The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class action, La Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in America, Big Oil, Shopping in America or Banking in America, to name just a few.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond™
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
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For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”). The Canada Pension Bond®™, The Medina Bond®™, The Barometer®™, the Free Market Yield®™ and Extreme Economics®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.