Bruce Borkowsky-- Florida Leonardo

Bruce Borkosky knows a batch about varied things. He also practices psychology in Florida. I asked him about the market which in recent weeks has been in an uncertain state, after Bernacke's statement about tapering the stimulus, a strong market reaction, a positive job report,  some backtracking from various officials about the timing of the stimulus tapering, and a subsequent push through previous levels of resistance. I thought his response clarified some matters nicely.

Interest rates are at their mathematically lowest possible - near zero. That means they cannot go down unless the market crashes and we get deflation. They can only stay the same or rise. Also, they have been propping up the market by buying stuff, keeping interest rates artificially high.

When interest rates rise, fixed rate instruments (e.g., bonds) go down in price, because people want the higher interest rate.

The problem - EVERYONE knows this, and they also know that everyone else knows this, AND they know that everyone doesn't want to be the last man holding the stick. BUT, no one knows WHEN rates will rise - just that SOMEDAY they will. But there's few places to put money, EXCEPT for the market, so everyone invests and watches the fed carefully so they can pull out immediately. 

So the fed announces "maybe, someday" things might change, and everyone freaks, trying to sell before everyone else, so the market drops.

And this affects the stock market too, both for dividend stocks and other stocks. When interest rates rise, the whole economy slows, their borrowing costs more, etc.

After awhile, everyone figures 'hey, maybe the worst is over, this isn't so bad', etc. Besides, being invested is better than fed funds rate (0.125%), so 'why not'?

Like rats on a ship, running from one thing to the next.

No, I don't follow analysts, although I've always been fond of Value Line (the old tried and true investment method  - volume plus direction). They give you some good information about sectors and individual stocks.

I belong to www.AAII.org and I've wanted to investigate betterinvesting.org, - same thing as AAII, but I never have the time.

I'm not sure that any analyst would do much good these days. The computerized hedge funds are something like 90% of the market now. You might consider ETFs - AAII has a computerized investing newsletter, and the current issue features etfdb.com, xtf.com, etftrends.com. Some research has shown that the extra return in a managed account does not compensate for the percentage taken out by the manager - thus ETFs sometimes provide a better return.

The main thing I think about is - the overall market - where I think we are going over the next 2-3 years, and who seems to run a good company, based on my experience with them. There's too much noise in the market to take a short term view. I cannot see anything else for the economy but to continue what it has done for the last 4 years - slow rise, barely rising, whatever you want to call it. So, if there is a sell-off, you might want to consider buying, because the market is more likely than not to plug along. OTOH, if interest rates do rise, both stocks and bonds will go down, bonds for good, and stocks for the short term.

I was mostly out for the crash of '08, and a good portion I put into Google, because I seems well run and has morals. Search is a cash cow that's going to last for at least a decade, and they seem to make good investments in other tech.

I'm on an investment committee for a psychology association. Most of the monies are invested in fixed income because they think that's low risk. I try to tell them there isn't any such thing as 'low risk', because there are many different kinds of risk, and fixed income investments have risks that other investments do not, such as a depreciation risk that will come to pass when interest rates rise. There's an even chance they can lose half their funds. They've also got a small amount in a gold mining company, for 2 years now. Gold is supposedly a contrarian investment - when the market goes down, as during a recession, precious metals like gold go up. But it doesn't always.

Well, the recession is over,and gold has had an extraordinary runup over the last 8 years. Based on psychology and return to the mean, I don't think gold will continue to run

Uncle Eddie

Uncle Eddie lived in Florida and sometimes came to NY to visit our family during the 1960s, driving up with Aunt Jean and sometimes Katherine, their daughter. Eddie was born in Brooklyn with the rest of the LaBarbera siblings, but by then he was from what seemed that very faraway place Florida.

He  was always anticipated--he was the most spirited and gregarious of the siblings. The lively one My father was older and more restrained. I remember having meals on our screened in porch in the New York summer heat.

Eddie had a crewcut and looked youthful though he must have then been in  his fifties. He had a grin, and a deep tan (which I later learned was from taking atabrine for Malaria).  His car seemed fancy and exotic--it had air conditioning (air conditioning in a car!) that blew from several roundish vents, each with concentric, ever smaller circles of plastic inside.  He did very well as an insurance salesman in Florida too, winning numerous prizes with Prudential.

Uncle Eddie was outgoing , though experiences in the war had been very harsh and probably what would be objectively considered traumatic.  Twice he had been shot down in New Guinea--and like many other aviators, had to manage in a dense jungle, with injuries, the risk of being caught and perhaps killed or tortured by the Japanese, and the likelihood that he would be regarded by his superiors as dead, with no attempt to reach him. It took some time to get back to American held soil, while enduring horrific circumstances and likelihood of being eaten by insects, animals, or humans.

The plane that Uncle Eddie flew was  a p-47d, which was a bomber escort and ground attack fighter, and sometimes called the Thunderbolt. They were turning them out by the thousands. The Jap plane probably was a zero or Ki-45. 

Others in the family talked about their war experiences when I was a child. Uncle Jerry had been in North Africa, mom had lost a cousin at Battle of the Bulge, and Dad wrote a diary daily of events. But Eddie never partook in the discussion. .  Nowadays, there would be no doubt that he could easily obtain a full VA disability--they would probably give it to him without ado, giving his expediences in the jungle.  Additionally, the aircraft engines on that plane were so loud that the cochleas of those pilots must have looked like burnt lima beans.

Oddest of coincidences, Eddie and Jean eventually had a vacation place in Panama City, and I visited him when I moved here decades later, about 1989, via a rather random route of  jobs and schools in various places. By then there was some tension in the adult family, maybe just time and in-laws, not much interest to us children. Eddie was a bit  independent minded and may not have enjoyed the permanent role of the youngest male sibling, the subordinate status involved in perpetuity.He was very gallant and fatherly to me. I remember him reaching into his pocket and giving me a lot of bills. "Its only money." He seemed to like my then spouse Nancy, whose father was also in the insurance business.  He bought  us a big meal on Panama City Beach. 

The air force has reproduced the old records of planes shot down, and there is annotation of Eddie's plane, with date, identification number of plane, and type of plane. It was  New Guinea on 6-21-1943, which made him 27 years old. Its hard to imagine a 27 year old managing that kind of situation--seems so young. Several other aviators also went down that day.

430621

LABARBERA, EDGAR R

P-47D

42-22314

During the time Eddie was training, my Dad was quite fearful of his younger brother's future. Around 1942, my Dad, working at  with the Australian Air Force on Tonga, remarked in his diary that  men hardly older than boys were given a few months training and expected to maneuver against Jap fighters. Probably the young men of the Japanese air force had as little training as their counterparts. My Dad secretly hoped Eddie, his junior by five years, would wash out and be given a clerical job. The family already had had two sibling deaths, one from a infant dropped by a nursemaid, another as aftereffect of the flu epidemic, which carried their mother off as well. So they had experienced three deaths in their immediate family already.

Anyone who piloted one of those planes faced high mortality rate. It might not have been as bad as a ball gunner, but probably near.. It was not exactly the modern air force. My Dad also described sitting on a court martial board for an Australian pilot who left a beer can in the cockpit which had gotten lodged under controls. My Dad tried to get him off the hook.

Eddie would send me elaborate penned letters with a fatherly tone, and I tried to keep in touch. He died at age 83, five years after my Dad,  same age. 83 seems, for my father and brothers, a sort of a set ending point. The causes of death vary--the body just wears out at about the same time, and not a bad time at that considering that aging past one's early eighties tends not to be a whole lot of fun.

A letters is produced below. I wonder if Eddie's handwriting, showing great fine motor coordination, indicated the type of coordination skills that  made him suitable to be a fighter pilot.  In any case, I have great respect for individuals who choose that work. Contrary to the stereotype of hot dogs, the ones I have known seem responsible, disciplined, and good natured individuals.