Norm Thompson RIP

Norm Thompson is a mail order clothing brand which is being discontinued.  Apparently their parent company Bluestem Group announced this back on January 31, 2019 but I didn't get the word until a few days ago when I received in the mail their "Final Sale" catalog.  I was a bit sad to learn they were closing because I have been wearing their "Shikari" shirts for many years.  Judging by old photos my mother started giving them to me in 2003. I like shirts with front pockets to help hold some of the junk I carry around and the Shikari shirts have two so they quickly became my favorite shirt.  Although I continued wearing other shirts for some time as my mother was only giving me a few shirts a year.  In fact I was a little surprised to find a photo of me wearing a different shirt as late as 2013.  However in recently years I have worn the Shikari shirts almost exclusively.      

Norm Thompson mostly sold women's clothing but they did have a small men's section in their catalogs. Some of their offerings are being picked up by Appleseed's, a Bluestem brand which sells women's clothing exclusively.  Perhaps another Bluestem brand which sells men's clothes (such as Blair or Haband) will pick up the Shikari shirts.  If not I do have about 40 of them at this point which is enough to last me for some time.

The photo was taken July 2007 in a sleeper compartment on an Amtrak train in Florida.  Around the time the train ran into a flatbed truck someone had managed to get hung up on the rails at a grade crossing.  Fortunately no one was seriously injured but we had to finish our trip by bus.  It shows me wearing a short sleeved (there is also a long sleeved version) Shikari shirt.

Phishing

I sometimes receive emails pretending to be from a legitimate business such as a bank trying to get me to divulge sensitive information such as account numbers or passwords.  This fraudulent practice is called "phishing".  Such emails are easy to recognize when they purport to be from a business that you do not have a relationship with.  However if you are sending out millions of such emails you don't need a high response rate.  You just need to get lucky a few times with recipients who for one reason or another find the email plausible enough to get past their guard.

This happened to me.  I have a corporate credit card with American Express which I rarely use but had recently used on a business trip.  I had also recently filled out an online form with a financial institution which has moved to a mandatory 2-factor authentication system.  So when I received an email purportedly from American Express (similar to this) asking me to update my authentication information I accepted it as genuine without much thought. 

It is a well known psychological phenomenon that people prefer to incorporate new information into an existing world view rather than rather than use it to overturn previous beliefs.  So once I had accepted the email as genuine I didn't revisit this question as I filled out the attached form despite some in hindsight red flags.  Even when the form asked for my email password (which I refused to provide) I didn't question that the email was genuine believing instead that American Express was being unreasonably nosy.  It wasn't until I was driving to work the next day that the penny dropped and I realized I should consider the possibility that the email was fake.  Still I was a little reluctant to abandon my preexisting belief even as I added up the considerable evidence favoring fake.

Fortunately my mistake will apparently have no serious consequences.  I am not sure any of the information I provided actually got back to the sender as I didn't complete the form and submit it (whereupon according to the link above I would have been redirected to a genuine American Express page).  In any case I notified American Express that evening who told me they hadn't been any recent activity on my card and that I wasn't responsible for fraudulent charges.  All in all they didn't seem very concerned but did give me an email address to forward the fake email to.  I did so and received an acknowledgement so I think I am covered.

I was a little concerned that the email might have ill intentions besides eliciting sensitive information (like for example encrypting my hard drive and requesting ransom to decrypt it) but the link above seems to discount any such possibilities. 

2018 Portfolio Review

In 2018 my brokerage account performed slightly better than the market.  As usual I will use the Vanguard S&P 500 ETF, VOO, as my benchmark.  VOO was down 4.37% (6.31% capital loss partially offset by 1.93% of income).  My account was down 4.21% (6.67% capital loss partially offset by 2.46% of income). Unlike last year I had some transactions during the year which makes breaking down my overall performance a little more complicated.  Aetna (AET) was bought by CVS near the end of 2018, I will figure the performance for the year by taking the year end value of the cash and CVS stock I received.  I also made four stock purchases in the fourth quarter, I will figure yearly performance by assuming I had set aside the cash needed for these purchases at the beginning of the year.  I will continue to ignore the interest earned on dividends I received during the year.  I included the (approximate) interest paid on the cash assumed to be set aside for investment but ignored the interest paid on the cash I received for AET.

At the beginning of 2017 I had  46.59% of the value of my account in VOO, 12.76% in other ETFs, 31.48% in individual stocks and 9.17% in cash (of which 4.50% was used near the end of the year to buy some more individual stocks).  VOO of course matched the market.  The other ETFs collectively underperformed (mostly because of the poor performance of the energy ETF, VDE) and contributed  -.31% to my overall relative performance.  My individual stocks collectively outperformed despite the fact that most (11 out of 17) of them lagged the market.  This was because of AET a big holding which was my best performer (up 11.92% even after accounting for the later drop in the CVS stock I received for it as most of the purchase price was paid in cash).   They added .44% to my overall relative performance.  My stock purchases (BLK, MET, TD and some more CVS) were largely poorly timed coming just before the year end market drop. Collectively they contributed -.28% to my relative performance. My remaining cash of course outperformed a down market contributing .31% to my relative performance.  This all adds up to .16% of outperformance as expected.

As noted above my individual stocks collectively outperformed the market even though many did poorly. Only two (AET and BBL) outperformed by at least 10% while 8 (ALL, BNS, CAT, CM, IBM, WBK, WFC and XOM) underperformed by at least 10%.  The remaining 7 (ED, INTC, JPM, NSC, PEG, SOUHY and TGT) were within 10% of the market performance.  Fortunately the outperformance of AET (whose good performance in previous years had led to it becoming an oversized position) was enough to bring the collective performance above that of the market.

As noted I purchased some stock during the year.  But not enough to use up the cash I received from the AET forced sale.  So my cash position increased to 13.19% at year's end.  I have a general intention to keep this account fully (or nearly fully) invested but in practice this requires more effort than I have been willing to devote to selecting and purchasing stocks.   As it was my buys were not all that carefully researched.  I bought the CVS to bring the share count up to match what my AET share count had been.  I have an account with TD (TDBank) and feel more comfortable investing in companies I have some sort of positive (or at least neutral) relationship with.  AET is my health insurance provider and did very well so I bought MET (MetLife) which provides my dental insurance (both through my employer).  BLK (Blackrock) was my pick in an out of favor sector (which promptly got a lot more out of favor).  I considered other investment management companies like IVZ (Invesco), LM (Legg Mason) or FII (Federated Investors Inc.) which were cheaper in terms of earnings yield but seemed more dependent on high fee active funds (which don't in my opinion have a promising future).  

CVS Buys Aetna

A couple of weeks ago on Wednesday, November 28, 2018 (almost a year after the deal was announced on December 3, 2017), CVS completed its purchase of health insurer Aetna.  This was of particular interest to me because I owned some Aetna shares.  I had bought them in late 2012 when I had some money to invest.  I had Aetna health insurance through my employer and (contrary to the claim by some that everybody hates their health insurer) was satisfied with their performance.  The stock seemed very cheap (in terms of price versus earnings per share) so I bought some.  This worked out quite well as I paid less then $50 per share and the sales consideration (a mix of cash and CVS stock) had value in excess of $210 per share.  So I have a capital gain in excess of $160 per share.  Unfortunately the gain is fully taxable (at capital gains rates) even though part of the purchase price was paid in CVS stock.  Fortunately I adjusted my estimated tax payments throughout 2018 to account for this.  This wasn't actually required (to avoid a penalty) since you aren't required to predict the future and pay estimated tax for income you haven't received yet but convincing the IRS of this requires filling out a complicated form in which you report your income by quarter (approximately) instead of lumping all 2018 income together.  So it seemed simpler to pay in advance although this would have meant getting a large refund if the deal hadn't gone through in 2018.

I held my Aetna shares in a brokerage account.  On Thursday (one day later) the position seemed to be in limbo but by Friday (2 days later) I had the CVS shares and money in my account.  This beats locating and and mailing in paper stock certificates which I have had to do in the past.  CVS initially said (in a statement that appears to have been removed) that the fair market value (for tax purposes) of the CVS shares I received was $79.50 per share (the CVS closing price on Tuesday).  However my broker thinks it is $80.715 (the average of the CVS high and low for Wednesday) which seems more consistent with IRS regulations.  I suppose I will go with whatever the 1099 (which I haven't received yet) says. My broker valued the fractional CVS share (for which I received cash) at $80.2644 per share.  This is close to but slightly less than the CVS closing price on Wednesday of $80.27 (perhaps there was a commission paid when the fractional shares were sold).

In order for the merger to go through CVS had to get various approvals including from the US Department of Justice (USDOJ). The USDOJ approved the deal with certain conditions which CVS agreed to.  Usually such agreements are formalized in a legal settlement which a federal judge has to approve.  Such approval is usually routine and it is normal for companies to complete a merger (as CVS and Aetna did) before the judge has signed off. However in this case the judge, Richard Leon, has been expressing doubts about the wisdom of allowing the merger.  But it is my (layman's) understanding that while the judge may not like the agreement that the USDOJ arrived at, he can't actually block the deal if the USDOJ is willing to allow it since the USDOJ can just drop their lawsuit if the judge doesn't approve the proposed settlement.  Since the main condition was that CVS sell part of Aetna's business the USDOJ has little need for a formal settlement agreement once this sale goes through (as I believe it now has). We will see if this is correct.            

Take Back Day

The DEA periodically (every six months or so) sponsors "Take Back Days" on which people can safely dispose of unwanted prescription drugs.  Last Saturday, October 27, was the most recent.  I had been unaware of previous days but this time had been alerted by some timely internet advertisements.  My local police department had a collection site so I collected up a bunch of my expired prescription drugs and took them in.  This seems like a good idea.  The DEA is primarily concerned about controlled substances (and I did have some unused painkillers) but expired drugs can also become dangerous.  I had not taken this possibility too seriously and have sometimes ignored expiration dates but in collecting my unused prescriptions I saw in one case the pills had undergone some chemical reaction that had cause them to split open and when I (foolishly) opened the pill bottle to take a closer look I was greeted with a pungent odor. Obviously no one in their right mind would take these pills but it seems likely that pills can become dangerous in less obvious ways.    

Crashed

I recently read "Crashed" a recent (2018) book by Adam Tooze about the great financial crisis (GFC) of 2008-2009 and its aftermath.  I had previously read Tooze's book "The Wages of Destruction" about the economy of Nazi Germany and found it interesting so when I saw this book on the new books shelf at my local library I thought it might be worth checking out.  This was a mistake.

The book is very long (over 700 pages including nearly 100 pages of index and notes) but displays little insight.  There is a old saying about not being able to see the forest for the trees which seems to apply.  We are now at some remove from the GFC and so (one would hope) are better placed to identify its important features and effects.  But this book doesn't really attempt to do this. Instead it largely consists of a chronological recounting of events with little real analysis. The failure to develop any sort of convincing theoretical framework means the book is of little help in understanding and evaluating policy alternatives going forward.

For example the book states in several places that the American response to the crisis (although flawed) was more effective than the European response.  However the book doesn't consider the obvious possibility that the American response just appeared more effective because the problems in America weren't as serious as in Europe.    

Again the book seems to vaguely disapprove of the way Europe dealt with Greece but with little consideration of concrete alternatives and their advantages and disadvantages.  When the Euro was introduced many American economists thought it was a mistake because the area involved was too diverse to be adequately served by a single uniform monetary policy.  The book does not really discuss this.

One general view of the GFC is that people want to save more money than the system can safely accommodate.  That is there are more people who want to lend money than credit worthy borrowers.  In such a situation there is a great temptation to pretend certain loans are safe when they are not.  If this imbalance is real than specific regulations aimed at preventing certain types of bad loans are likely to just cause the problem to reappear in different forms.  But this sort of bigger picture view is lacking in this book making it of little value in my view.

To sum up I didn't like this book at all.  It just recapitulates events at length without adding much in the way of understanding.  I would avoid it.        

Press 1 for English

Back in July, Paul Campos (of the Lawyers, Guns & Money blog) posted a rant in which he derided the  ""press 1 for English" myth" declaring (among other things):

The claim that people are forced to “press 1 for English” is pure racist bullshit, peddled by liars ...

I was pretty sure I had encountered this in the past  but of course it was hard to cite specific examples.  But now I can.  This morning I had reason to call New York E-ZPass service center (1-800-333-8655) and one of the first things I heard was "press 1 for English" (or some close variant).  So more confirmation of my opinion that the left is increasingly living in a fantasy world.

I was calling the service center because yesterday I received an E-ZPass statement which showed a bogus charge for using the lower level of the George Washington Bridge.  This was easy to spot since it was the only charge on the statement and I haven't been in New York State for some time.  Once I got a live person on the line this proved fairly simple to resolve.  She determined by some unspecified means that the charge was in error and agreed to have it reversed.  It was not clear what happened.  She said something about the license plate number not matching so maybe she was able to pull up a photo.