|Should you buy a stock whose price is at a 52-week or all-time high? Or does this even matter to someone looking to invest for the long term?|
Some very smart investors offer conflicting advice.
It has been argued that the overall trend of the market is the key driver of short-term gains or losses.
When the market is moving up, even mediocre stocks can enjoy an uptick in stock price (“the trend is our friend”). Conversely, when the market is moving forcefully down, even good investments can take a hit (“when the tide goes out…”). This also implies that a questionable investment might look better than it is (the trend), while a downtrodden equity may be a good buy (the tide).
So, it can make sense to purchase stocks at high watermarks when the market is moving down because that should be a sign of additional strength. Likewise, delaying the purchase of a stock on the rebound when the overall market trend is up can provide a margin of safety. Recently we’ve seen a shift in the fortunes of stocks, but between industry segments instead of the overall market, offering some evidence of these assumptions. And while the bubble-debate doesn’t much interest me, the recent flurry of SPAC’s makes me nervous. These Special Purpose Acquisition Companies are simply funds that raise money to invest without having any idea what they might end up investing in. The entire point of using a SPAC is to bring companies to market without having to fully disclose a business’s finances. Which sounds more like gambling than investing.
Connected to this line of thought is the concept that over longer periods of time, “reversion to the mean” should be respected.
Put another way, stocks that go up too fast should tend to come back down, while stocks that drop precipitously can often bounce back. All of this is, of course, based on the premise that a pop or drop in an equity is not caused by an outlier event like accounting fraud or sudden product failure. But ultimately, the real problem is that using heuristics in these situations can also mean that we are confusing luck with skill.
My response to a boast about the skill involved in selecting Tesla at a propitious moment was, “Over the last twelve months fourteen other stocks outperformed Tesla so, maybe, you just got lucky?” Tesla is down about 30% since that conversation and my friend is still buying “the dips” but hasn’t added any other new positions to his portfolio. Duke Ellington once replied when asked what makes someone a professional in their field, “The pro can do it twice.”
I typically follow a stock for several weeks, or even months, before taking a position. This allows for time to learn about the company, read an annual report, fully understand what the business does and how it makes money, and see what triggers stock price movement. My preference has typically been to buy on weakness or adverse news. But reading some of the thoughtful commentaries that suggest purchasing on strength, has me reconsidering this bias. That a stock’s valuation is improving may a good sign, not an ominous warning.
No answers here, just something to think about.
Even when looking at stocks for the long haul, it makes sense to acquire a position in an equity investment when the odds favor maximizing the long-term returns. As volatility moves stocks over time – some because of macro events (a down market overall), others because of events specific to the stock (bad earnings report) – the investor should always be looking for an edge while avoiding the falling knife.
|We need only enjoy the magic of what can be described as a six-song diary of the Dave Brubeck Quartet on tour to foreign and exotic places.|
Ruminations about jazz vs. classical appear fairly often here at JazzNotes. Whether it’s clearly stated, such as Gunther Schuller’s The Birth of the Third Stream, or more inferred in music by newer artists like Meg Okura and Victor Gould, it is a profitable exercise for teasing out nuances in music from both genres. For today, we’ll talk about Dave Brubeck. Specifically, the album Jazz Impressions of Eurasia.
First, where credit is due, it was reading the 2020 Brubeck biography, A Life in Time, by Philip Clark that I was introduced to both this recording and the full extent of classical music influences that Brubeck brings to bear. I very much enjoyed the book, but to quote Samuel Clemens, “The statements were interesting, but tough.” Clark is well versed in musical theory and a lot of his analysis went beyond my ability to appreciate it. Yet his thoroughness in describing Brubeck’s life makes clear the importance of classical music to this terrific composer and piano player. As a bonus, Clark’s extensive interviews with Brubeck are delightful.
Second, it is just possible that the cover artwork from the Eurasia album is the worst ever foisted on the record-buying public and a strong argument for why this album is so underappreciated. It has been documented that those of us from a certain generation occasionally bought albums simply on the strength of the cover art. Likewise, an album with a cover you would be embarrassed to have friends see could easily dissuade you from purchasing it. Just saying…
The influence of Eurasia on one of the best-selling jazz records of all time, Dave Brubeck’s Time Out, is unassailable. It is also, to these ears, the superior album. Recorded in 1958 it was one of only two albums to use Joe Benjamin as the bass player in the Dave Brubeck Quartet. Also featured are Paul Desmond on sax and Joe Morello on drums. Desmond, who wrote the Top 40 hit, Take Five, began playing on Brubeck’s first recordings starting in the late 1940s and continued as a collaborator until his death in 1977. Morello played with Brubeck for twenty years beginning in 1957.
Yet the most influential artist on the album might be Frederic Chopin. This highly regarded Polish composer and pianist died at age 39 in 1849. Brubeck acknowledged his fascination with Chopin after visiting a museum dedicated to the classical composer in Warsaw. In fact, all of the tunes were written while the quartet was on a 14-country tour sponsored by the U.S. State Department. Both Turkey and India are referenced in song titles.
Desmond’s contributions are particularly noteworthy here. His use of the saxophone’s high registers brings to mind some of the playings by contemporary clarinet player Jimmy Guiffre. As for Morello, it is a complete mystery why his sophisticated drumming is not better appreciated. It sounds as if his drum solo on “Take Five” was born in the crucible of the Eurasia. It is worth mentioning that the song “Brandenburg Gate“ was rerecorded by Dave Brubeck and Desmond a few years later with a symphony orchestra.
As to the album itself, it only takes one listen to recognize the interplay of jazz and classical. Additional play reinforces the delightful seriousness of the compositions. It can be easy to forget that all this music is being played by a jazz quartet. The sound is full, like an open-air market and then, almost suddenly, becomes a contemplative solo heard across a vast expanse of desert. It was reported that Polish audiences applauded the nod to their native son and the Turks marveled at the familiar sound of what seemed a tabla. We need only enjoy the magic of what can be described as a six-song diary of the Brubeck Quartet on tour to foreign and exotic places.
|There’s a little part of the art world not widely traveled offering a nuanced view of an artist’s oeuvre called Ephemera.|
By definition, ephemera are “items designed to be useful or important for only a short time, especially pamphlets, notices, tickets, etc.” So, in the art market, this includes exhibition posters, announcements – usually postcards – of exhibits in private galleries, rough studies, and notebook pages, privately printed artist’s books, autographed catalogs (especially those with sketches) as well as personal correspondence to friends and family.
I happen to spend a lot of time traveling in this space, with my collection of Sol Lewitt ephemera now numbering over three hundred items. There’s also ephemera on my shelves relating to Max Beckmann, Ad Reinhardt, Ed Ruscha, Chuck Close, William Wegman, and many others. My friend in the business, Lawrence, is also smitten by the ephemera bug and has helped to grow my Lewitt collection.
An exciting new addition is a pen and ink drawing inscribed to Heiner Friedrich from 1967. I was intimately familiar with this work for several years before adding it to my collection, though exactly what its original intention was had remained elusive.
It had an odd version of Lewitt’s signature – which was discovered to have been in use for only three years during the late 1960s. The grid contained eleven columns – highly unusual for an artist known for his serial work formulas like 3-6-9 or 4-8-12. A serendipitous comparison with another bit of ephemera, a poster from an early Lewitt show at Dwan Gallery, revealed the drawing’s connection to the large-scale piece, Serial Project #1 (A, B, C, D). An analysis of the various equations explained the eleven columns – there were only nine. Finally, the recipient of this drawing had both seen the Dwan show in California and visited Lewitt in NYC on the same visit to the U.S. Friedrich was one of the first gallerists to exhibit Lewitt’s work in Europe the following year.
So, here’s my best guess. After visiting Virginia Dwan’s eponymous gallery in Los Angeles and seeing the exhibit that put Lewitt on the art world’s radar, Friedrich visits Lewitt in New York on his way back to Munich. Lewitt gives Friedrich one of his working sketches from the sculpture then on display at Dwan. Their meeting in NYC becomes a catalyst for Friedrich’s gallery to participate in Lewitt’s first series of shows in Europe.
And then there is the equation on the upper left that was later corrected (appears to use a different pen) on the right side closest to the grid. Turns out if you count the horizontal sides of eleven connected squares (equation on the left) there are, in fact, twelve lines (equation on the right). A possible reason for Lewitt to hire a mathematician while designing the incredibly complex incomplete cube series? Yeah, another bit of ephemera in the collection.
Most visitors prefer Lewitt’s bright prints of color bands in squares and rectangles. No one has commented on the goofy sketch hanging in the midst of my Lewitt collection. Yet, like so much of its fellow ephemera, the drawing reveals a fascinating insight into the world of Sol Lewitt.