Love Stinks

I know that “Love Stinks” is not exactly an original sentiment. It’s either wildly appropriate or inappropriate of a sentiment on Valentines Day.

The other day as those who were not watching Oprah Winfrey’s show on a behind the scenes look at life in an Orthodox Jewish were watching the Grammy awards, they got to see songstress Adele receive six awards.

Love StinksBy now, everyone on the planet knows the stories of personal and emotional pain behind some of her songs, such as “Someone Like You.” Great story for sure, but I’d really like to know the story behind the J. Geils Band song “Love Stinks.”

Yeah, yeah.

But as long as it is Valentines Day, it’s obligatory to search for things that you do love and express those feelings.

Among the things that I love is how egalitarian Twtitter is, allowing everyone to rub elbows, as long as they maintain some kind of decorum and don’t show excessive skin on their Avatars.

You also get to see communication, exchange and banter between and sometimes among reasonably well known people. That is, if you happen to travel in a highly defined circle. The love of my life, my Sugar Momma, doesn’t travel in that circle or even its outskirts, where I hang out, but even she now knows the name Herb Greenberg.

Even the “hoity toity” of Twitter will occasionally respond to the “hoi polloi.” Greenberg is not among the “hoity toity,” he’s a big advocate of engaging the masses and does so on a very regular basis.

Today, Herb Greenberg posted a Tweet making a poignant observation regarding the extent of the irrational behavior being exhibited by the people that used to be called “investors.”

His comment expressed how he is “always surprised how so many people dismiss the concept of risk in high-flying stocks.”

I don’t think that he was looking for an answer. Instead, he was probably trying to exercise some form of personal restraint, as everyone has been giving him a hard time of late for being too emotional and getting overly worked up about irrational investor behavior. Top that off with the ridiculous nature of the things that corporations seem to be getting away with and you’ve got the makings of many a good rant.

Although Sugar Momma isn’t familiar with the name “Ed Ponsi,” I am, as are another 20,000+ on Twitter, in addition to a less quantifiable number that follow him through his television appearances, books and professional capital management pursuits.

His response to Greenberg’s Tweet was certainly appropriate for the day and a very likely partial answer to the question.

“Cupid’s magic – They fall in love.”

For today’s purposes, it was the entire answer really. For today, all you need to know is that people do sometimes fall in love with a stock. They fantasize about the great things in store for their time together, or they remember the good old days.

Some other time there’ll be opportunity to discuss greed, stupidity, fear and fear of missing out.

To top of the great things about Twitter you can interpose yourself and sometimes get some recognition.

I took the opportunity to agree with Ponsi’s observation and added that “investors should treat stocks the way they do their marriage. Without passion.”

Now luckily, Sugar Momma never reads this blog, but occasionally some of her friends happen to see it and may point out some stupid things that I’ve written.

If there’s any passion in their lives they’ll be too occupied to read the blog today, so I’m probably safe.

Whether it’s love, hate, greed or fear, there’s absolutely no place for emotion when it comes to investing or trading.

Everyone knows that, but sometimes it’s just so hard to resist the temptations.

I actually do have stocks that I love. Among them are JP Morgan Chase, Goldman Sachs, Microsoft and RIverbed Technology.

I don’t think that I’ve had a single day over the past 4 years that I haven’t owned at least one of them.

At the moment, I only hold shares in RIverbed, as well as having sold some put contracts a few days ago. Despite that, I can’t wait to get any of those others back, even if only for a week.

To do as I do, selling covered calls on just about everything that makes sense, it’s not a good idea to form an emotional connection with any stock. Before you know it, they’re gone and they leave behind a terrible mess when it comes to filing tax returns.

With the unexpected rally in January I said goodbye to more than my usual share of stocks, although some of them came right back home. You can’t be very thin skinned if that’s the life you choose for your stocks.

The reality is that at some point they’re going to find a new home. If they don’t, that’s really a bad sign. In fact, the longer a stock stays with me, the less I’m likely to fall in love with it.

Isn’t that just the summary of the human condition?

It’s exactly the same that you want with your own kids. They need to get out of the house, even though you’re not likely to replace them with another kid. Although a new hot tub, pool table, media room and the like would all be nice and might soothe the loneliness.

If your stocks find greater success in someone else’s hands and are assigned away, well that’s just the natural order of things. They can always come back when they falter, so that you can restore them and make them desirous again.

Think of it as pimping your stocks.

That’s a form of love, isn’t it?

For me, what makes a stock lovable is just how often I can bring them back into the portfolio and milk them for their options premiums.

Pretty unsentimental words to describe the love, but nonetheless, it is love.

But love makes you do stupid things.

Herb Greenberg knows that, Ed Ponsi knows that and even I know that.

Knowing it doesn’t always seem to prevent the stupidity, though.

Since I don’t prescribe to the Bernard Baruch philosophy regarding cutting losses and I revile selling at a loss, I can instead sit and watch how the love of options premiums caused me to do stupid things.

Research in Motion and MolyCorp are usually outside of my comfort zone, except when emotions take over and stupid thoughts get put into action.

I can think about how the love of trading made me execute stupid trades.

Selling puts because there were no values to be had in purchasing new shares is akin to soliciting a prostitute just because your wife went to the mall for a couple of hours.

Would it have killed me to have waited a day or two?

But there you go. Ed Ponsi was right and Herb Greenberg kept his blood pressure below the boiling point.

I don’t know where J. Geils is these days. I hope that things have worked out better for him in the “love department” now that about 30 years have passed.

As far as Adele goes, since her album titles are based on the her age at the time of their release, I really don’t want to know what’s going on with Adele in 30 years. It’s not likely that I’ll be interested in listening to soulful and mournful songs about adult onset diabetes.

But hopefully with time common sense can temper passion and emotion just a bit, especially when it comes to management of investments.

In my case, I’m not quite so certain that I won’t occasionally trip up and follow the weakest link of my being.

True, love does stink, but only if you really think about it and still have a functioning memory.

I’m going to try and cut off all emotion in the future when it comes to my stocks.

I’m thinking of adopting the warning that accompanies some medications that are widely used on Valentine’s Day.

I will be certain to call my broker if I own a stock for longer than four hours.

But, even if only for a few hours, you can still convince yourself that it’s real love that you felt. Better to have owned for a short time than to never had owned at all or owned well beyond the time the rose faded.

Yes, “Love Stinks,” but the alternatives are far worse.



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