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Are You Turning 40 and Looking for a Profound Life Change?
Have a great day!
By James Altucher - Financial Times
I can’t believe I’m turning 40 two weeks from today. I think I’ve written about this before, but it’s starting to bother me. For one thing, I haven’t been to a doctor since I was 17. Several readers have written to me that I need to start going to a doctor, if only to check for prostate cancer on a regular basis, which apparently can start plaguing men “my age”. Here’s how I think about decades: In your 20s you should try as many things as possible (whether in your career or personal life) and try to ramp up as many learning curves as you can. In your 30s you have to have some initial success and start making money. In your 40s (I’m guessing now) you need to translate that initial success into permanence and in your 50s you need to figure out something completely new that you’re going to do for the rest of your life.
Nothing is set in stone but this is the way things seem to be shaping up. I was excited to turn 30 because I felt as if nobody would take me seriously in a meeting until I was 30. Particularly since I have the personal presence of “Pigpen” from the Charlie Brown comic strips and that tends to be a mark against me in business meetings.
But now that I’m almost 40 something else is starting to occur to me. I might die soon. And by soon, I mean, “fewer than 40 years”. I might be more than half way through my life span. So for the first time ever I have to think about ways to live longer. This is a matter of common sense and not thorough scientific research. For instance, basic exercise – such as walking an hour or so a day – is probably better than doing nothing. Reducing stress is also probably another good way to live longer. And how can you reduce stress? By laughing more. Using a magical tool called “Google”, on something the kids are calling “the world wide web”, I just found out that 100 laughs is equivalent to 10 minutes of rowing. Personally, I hate to row. I’d rather laugh. Another way to reduce stress: not worrying so much about your portfolio or the markets (more on this in a second). And it doesn’t take a rocket scientist to know that no smoking, no alcohol and better calorie intake is probably better than the reverse.
Now that you can live forever by following the tips above, it’s time to make your portfolio live forever since we don’t want you to run out of money when you’re 300 years old. The good news is that there’s no better time in the past four years for your portfolio than today. How come? Because people are assuming that the US is on the brink of a devastating economic collapse. I won’t get into all the reasons for or against this. I’m bored of that already. You can turn on CNBC to listen to endless pundits expounding on their books with well-crafted arguments on how we’re either going to boom or collapse. The reality is the markets will ultimately do what they always do: go up.
Here’s what we know. Citigroup and Bank of America have 7.5 per cent and 6.3 per cent dividends, respectively, and are at multi-year lows in stock price and price/earnings ratio. Not only that, but what happens when all their write-downs on subprime get marked back up sometime in 2008 and 2009? And it will happen. They might not get marked up to par but they were definitely marked down too much in 2007, thanks to hedge funds shorting the ABX index that was used to define the market in these instruments.
And Time Warner at $16, with a new CEO on board, is a great pick for the next year. I was at HBO when Bewkes took over. He was a monster who cut everything. People were prosecuted to the fullest extent of the law if they stole from the supply cabinets. The famous HBO Christmas party at Tavern on the Green was cancelled! But he brought us The Sopranos and ever-increasing profits. Look for Time Warner to spin off as much as possible, conserve cash, increase cash flows, buy back stock at these reduced levels and all sorts of other good things, and hit $20 by June. Similarly, expect Citigroup to return to $40 and Bank of America to $55.
A slightly smaller pick: Applied Biosystems Group. Carl Icahn just loaded up on ABI, which makes and sells systems and software used for human disease research, genetic analysis and pharmaceutical drug discovery. I view ABI as a backdoor play on the ageing baby boomers. Additionally, it helps that the company trades for just 12 times cash flows and analysts are expecting around 15 per cent growth over the next year.
I’ll have more picks next week. But these three are no-brainers right now. Meanwhile, speaking of eating well: I’m going to eat at Zen Burger on Lexington and 46th (465 Lexington) today. They serve “chicken, beef, tuna”, etc but none of it is real. It’s all vegetarian and tastes excellent. The grand opening is today and I’ll be holding “office hours” at 12pm if anyone wants to try out this place with me and talk stocks for a while. Live long and prosper.
Copyright The Financial Times Limited 2008
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