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Tom Armistead
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I am a retired accountant, having spent the early years of my career in the insurance industry and the later part in the field of accounting. My insurance experience has given me the willingness to accept investment risk if I feel the return justifies it; also, an interest in applying risk... More
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Tom Armistead's Instablog
  • The View From Bear Mountain 13 comments
    Jan 13, 2013 7:10 AM

    Back in December, my interest in hiking the Appalachian Trail took me to the summit of Bear Mountain, the highest peak in Connecticut.

    (click to enlarge)

    Standing high on the mountain, looking out over the valley below, the market in NYC is far away. With the distance, one gains a sense of perspective.

    I reached the summit from the south, after a leisurely morning hike from the Brassie Brook Shelter, where I spent the night. After resting and enjoying the scenery, I continued north to Sage's Ravine, on the border between Massachusetts and Connecticut. The north side of the mountain was somewhat icy, and rather steep. I descended cautiously, staying off the ice as much as possible and finding the occasional handhold as a margin of safety.

    Sage's Ravine was beautiful, lots of pools and little waterfalls, pine trees, ferns profuse on the north side which probably gets very little sun even in summer.

    A Sense of Perspective

    Wall Street, when viewed abstractly as a marketplace for equities representing an ownership interest in businesses, makes sense and has a definite place in the scheme of things. It's a place where companies that need capital for productive purposes connect with investors who want to share the risk and the rewards.

    But Wall Street as presented on CNBC or Bloomberg makes less sense. Many of these people talk faster than I can listen, on insanely trivial topics. When the TV cameras go to a brokerage or other financial institution, there is this vision of a large room, populated with men and women sitting elbow to elbow in front of multiple computer displays. These people are making a living from minute gyrations of those squiggly lines and colorful charts in front of them.

    From time to time, a learned man intones about the importance of support or resistance on the S&P 500 (NYSEARCA:SPY). He throws out the numbers with confidence and assurance. They'll be different tomorrow, but he will be equally as self-assured. Others will discourse on how they (or their firm) have been long whatever has been going up.

    Each day brings burning questions: who will win the clash between billionaires Bill Ackman and Dan Loeb over HerbalLife (NYSE:HLF)? Bill is Mr. Nice Guy, doing it all for a good cause, and donating the proceeds to charity. But Karen Finerman, and others equally astute, note that money is fungible. Tomorrow it will be something else.

    Money is very fungible on Wall Street. As demonstrated by Jon Corzine, the difference between customer funds and other money is easily forgotten, overlooked, or circumvented.

    Everybody is talking their book. Perception is equally as important as reality, if not more so. Patterns emerge over time: these sage individuals who so kindly voice their opinions in public have their own agenda, and many of them are not telling everything they know.

    Who Needs Capital?

    Most of the companies trading on Wall Street don't need capital. They have more than they need, and are sitting passively on it, or returning it to shareholders by paying dividends and buying back shares.

    Companies that do need capital are shunned by investors. Existing shareholders will be diluted, in favor of opportunistic types who are better placed to capture the value created by recapitalization.

    When companies go public by means of IPO's, it's buyer beware. Facebook (NASDAQ:FB) didn't need money. It was more about letting the original investors cash in, and creating a value for their holdings.

    Dealing With Bears

    Bears are active in the area, although by mid December all but a few of them will be hibernating. The thing with bears is, they like food, which hikers carry.

    The shelter had a bear box, constructed of steel, chained to a tree, and equipped with a closure designed to foil greedy ursines. I used it. A common tactic is to hang the food from a tree, high enough and far enough from the trunk that bears can't reach it. Alternatively, the food can be kept in a bear can or an OP (Odor Proof) bag.

    Bears on Wall Street do not hibernate, nor are they easily foiled by protective measures. If they can find a way to claw at, mangle or chow down an investors stash, they will do so.

    Investment Implications

    Life's a journey, and Wall Street is not the destination.

    American businesses, in the aggregate, are run much better than the government. Just look at the balance sheets and income statements. That raises the question, why would an investor accept a return of less than 2% on ten year treasuries, when many fine companies have an ROE of 15% or 20%, and use a fraction of that to pay a dividend that exceeds the return on treasuries?

    Since March 2009, American business has been on sale. With the market hitting new 5 year highs, there are still companies that trade at attractive prices. The antics on Wall Street are a distraction. The prudent investor should stop there, take his pick of what's on sale, and continue his journey.

    As for the bears, let them dance in the moonlight.

    (click to enlarge)

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Comments (13)
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  • Guitar Man
    , contributor
    Comments (227) | Send Message
    Wonderful article, Tom! Sensible, straightforward, creative (beautiful imagery), short and to the point.


    Should be required reading for all. This article is proof that an Editor's Pick (which this should be) doesn't need to be lengthy and include numerous charts and figures. It can state its point as simply as you do within.
    13 Jan 2013, 07:26 AM Reply Like
  • Tom Armistead
    , contributor
    Comments (6284) | Send Message
    Author’s reply » Guitar Man,


    I'm glad you enjoyed the article - I had a lot of fun writing it...
    13 Jan 2013, 09:54 AM Reply Like
  • dancing diva
    , contributor
    Comments (2764) | Send Message
    Very nice, Tom. Will your next trip be to Pamplona?
    13 Jan 2013, 09:24 AM Reply Like
  • Tom Armistead
    , contributor
    Comments (6284) | Send Message
    Author’s reply » I've already been to Bulls Bridge, also in CT. It's a covered bridge, and the Housatonic, when flowing strongly, represents a mighty force of nature, the churning water, etc. From there you can walk along the side of the river, beneath majestic pines, and contemplate the rapids below.


    How about, "The View from Bulls Bridge?"
    13 Jan 2013, 09:53 AM Reply Like
  • dancing diva
    , contributor
    Comments (2764) | Send Message
    Sounds good to me.
    13 Jan 2013, 10:54 AM Reply Like
  • bbarberayr
    , contributor
    Comments (219) | Send Message
    Tom, are you doing a long distance hike or sections around your place? Lots of great Appalachian trails in New Hampshire if you can get down there.
    13 Jan 2013, 07:27 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (6284) | Send Message
    Author’s reply » bbarberrayr,


    So far it's been sections in CT. I'm planning to head down to Georgia this Spring and head north for several months.


    New Hampshire as I understand it is some fairly rugged terrain, at age 65 I'm hoping to get myself toughened up quite a bit before I attempt it. I've had several people tell me I should go hut to hut, apparently they have pretty good accommodations up there.
    13 Jan 2013, 07:35 PM Reply Like
  • bbarberayr
    , contributor
    Comments (219) | Send Message
    Probably have seen this, but is a great source of info and inspiration for hiking the Appalachian trail.


    Here's a couple in the their mid-60's who I followed a couple of years ago who made the whole trek:


    New Hampshire is pretty tough and the trail through there seems to go up and over every mountain, but the scenery and views are outstanding and the huts are well spaced out to allow for various hike lengths.
    14 Jan 2013, 07:37 AM Reply Like
  • Ridolfi
    , contributor
    Comments (42) | Send Message
    The NH terrain is very rugged. I've done the huts, an excellent way to see NH. You can hike for days and only have to carry a minimal amout of gear. The people you meet in the huts are usually an interesting experience as well!
    14 Jan 2013, 07:45 AM Reply Like
  • Tom Armistead
    , contributor
    Comments (6284) | Send Message
    Author’s reply » Thanks for the link. They talk quite a bit about their training routine, which has been a concern for me, very helpful to see what others have done.
    14 Jan 2013, 08:38 AM Reply Like
  • expatsp
    , contributor
    Comments (303) | Send Message
    Thanks for this. Your hikes sound beautiful and your philosophy, on life and investing, wise.


    13 Jan 2013, 09:32 PM Reply Like
  • loonsong
    , contributor
    Comments (344) | Send Message
    you made my morning. what a nice piece to wake up to.
    brings back memories of hikes through the Pisgah National
    forest in the N.C. mountains...some of the best moments of
    my life.
    Have a great day,
    14 Jan 2013, 09:14 AM Reply Like
  • JeffreyLangBoyd
    , contributor
    Comments (663) | Send Message
    Like a number of things about this article but what speaks to me is the unknown (wilderness) aspect of investing/speculating. Many of us try so hard and while I like to think it makes a difference deep down I think it is 99% luck so one might as well enjoy the scenery.


    This does not belong on an Instablog. It should be a featured article.
    14 Jan 2013, 11:16 AM Reply Like
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