In Search of Ignorance….
One result of government shutdowns is that the Bureau of Labor Statistics doesn’t release closely followed stats on everything (e.g.: jobs, inflation, and trade). The truth is, the consumption of economic data often collides with the law of diminishing returns. Humans can process only so much information before it stops helping them. Academic studies have shown that giving more data to experts – from psychologists to gamblers – tends to make them more certain of their decisions but not more accurate. One study found that horse-race handicappers made more accurate decisions when they received 20 pieces of information than when they received 40 pieces, even though they were more confident of their answers when they had more data.
Could it be that investors and the Federal Reserve don’t actually need the monthly employment information to make effective policy or asset-allocation decisions? I’ve stated all along that investing is as much art as it is science. There is only so much information that you can gather before making a decision. All of decisions are informed, yet there is also an element of “gut” to a lot of what we do. Clearly, groping around in the dark isn’t a good long-term strategy. But sometimes, neither is groping around in the light.
Having money isn’t everything. …. NOT HAVING IT IS!
Call Me Stubborn….
To put it mildly, we have been on a wild and crazy ride with Uni-Pixel (UNXL). We mostly tripled our money (with rare exception), with the shares we originally purchased ($5/share), matched against the shares we sold this summer. Normally, we’d be happy, but not when the stock was much higher just weeks prior to selling. It’s been a very nerve-wracking/time-consuming company for GCM to own due to their missing stated timetables (probably the major reason for all the volatility and negative press). They did not purposely intend to mislead us but, rather the science/chemistry/equipment necessary for mass production, was more complicated than anticipated. But…. shame on them for getting ahead of themselves and building lofty expectations – before it was time. It is always better to under-promise and out-perform.
Scaling from lab based volume to fully-automated roll to roll production is no easy task. In hindsight, not selling shares at a higher prices was a mistake. If shipping had occurred in the third quarter of 2013 as planned, it would have been the success story we were expecting. I held for one reason; I wanted UNXL to make a bigger impact toward your financial well-being.
When you over-promise and under-deliver, it’s difficult to quickly right yourself with the investor base. It was therefore necessary for somebody to fall on their sword. As of year-end, the CEO and COO are no longer with the company. Two current Board members are now serving as interim CEOs. For all the timetable failures, Uni-Pixel and Kodak have made tremendous progress with the science and production capabilities. Furthermore, the market for roll-to-roll thin film touch screens is not going away. There is a tremendous need for their capabilities and cost-saving manufacturing process.
Their latest release (dated 1/6/14) indicated that they will be in production and will begin shipping in the second quarter of this year. Hopefully, this is either accurate or… an under-promise. With all that we’ve been through, I still believe Uni-Pixel will have its say in the thin film display market. We have a maximum 6-month wait to see if they get it right. Trust me, Kodak is counting on it. We are still long-term UNXL.
For those of us that still own Emerald Dairy (EMDY)…. I personally contributed funds to a lawsuit (made up of large, domestic shareholders) on behalf of all GCM clients to force the company to settle with U.S. shareholders. The company is thriving but the stock is not trading. The only reason we held going into 2014 was because the settlement could be 5-10X current price. It is a long-shot worth waiting for.
White Mountain (WMTM) did not raise money as expected earlier in 2013, thus the stock price took it on the chin. They recently raised cash and committed to finishing the final feasibility study in the first quarter of this year. This study will indicate the quantity of titanium rutile on the property, the grade of rutile, expected life of the mine, etc. Once the study is completed and absorbed, we expect suitors and/or partners to emerge. If we’re right, WMTM’s market-cap is worth much more than its current value.
Faked Out By Fruit….
Is your dessert an optical illusion? A psychology journal reports that people under-estimate the calories of unhealthy food if it’s adorned with a healthy topping (think fresh strawberries on top of that luscious chocolate cake). A dish of ice cream with fruit was judged to have 125 fewer calories than the same amount of plain ice cream. And people given berry-topped pastries ate more, on average, than those given plain ones. We subconsciously try to justify our choice and reduce our guilt when we eat high-calorie treats. Next tempting experience, ask yourself: How much would I eat if it had no redeeming experience?
Here’s to a healthy 2014,
Goldberg Capital Management is an investment adviser registered with the State of CT Department of Banking. This Newsletter and its contents are for informational and educational purposes only. You alone will need to evaluate the merits and risks associated with the use of the information provided herein. Although this Newsletter may provide information relating to approaches to investing or types of securities and other investments you might wish to buy or sell, no information provided in this Newsletter is intended or should be construed as an investment recommendation or endorsement from Goldberg Capital Management. Please remember that past performance is no guarantee of future results.