A long time ago I considered the prospects for the Tombstone Index, which engraves the financial achievements of the post-life care industry, as the funeral homes and coffin makers like to classify themselves. In fact, it was actually a great deal more lively than its composition might suggest, with mergers, acquisitions, and doubtless even a futures market – if not for the industry’s actual clients.
Then, a year or so ago, Service Corporation International, the world’s biggest chain of funeral homes, announced an earnings surprise which analysts coyly ascribed to ‘poor demographics’. In plain English, this meant that the unseasonably cool summer and warm of winter of 1998 had a nefarious effect on sales – not many people died. The stock dropped by two thirds to $15.
Even though sell-side reports read more like epitaphs than analysis, I felt sure these customers were postponed rather than canceled. After all I was still paying taxes, so if the IRS was working, could death be less energetic? Like an expert ghoul, I swooped. I invested my IRA in Service Corporation and waited for the summer heat and winter chill of 1999 to restore demography to its normal stately and profitable progress.
Alas, I was yet another casualty of global warming’s effect on weather patterns. As the new millennium dawned, the demographics were even poorer and by this year Service Corporation was six foot under, down from a high of $45 to less than $3 a share. The stock was a dead loss. I mourned my only investment to go down and stay down unresurrected.
Amour propre and my future pension called for quick action. I am a jackdaw investor: I buy to keep, so selling and thus boxing in my losses was unthinkable. Life and death, light and dark, binary numbers in computers based as they are on an on/off principle all suggested the way to go. My new financial strategy was dialectical binary synergistic investment. The solution was to buy another stock in an industry whose effect would be to boost the first.
The symmetry of death and taxes suggested an immediate pairing for Service Corporation. I rushed out and put my 1999 IRA in Philip Morris. This diabolically cunning move paid off immediately as a revived bullish Marlboro Man leapt up by one third. More importantly, in the long term, I felt sure that smoking would have a positive effect on Service Corporation’s revenues.
Other opportunities beckon – like investing in an Andrew Lloyd Webber show and an anti-emetic maker. I may balance my shareholdings in the insurance companies against a judicious investment in the makers of those juggernaut SUV’s that obliterate every other car they run into and over. Alternatively one could invest simultaneously in liquor companies and in pharmaceutical companies that make painkillers and antacids.
Indeed, as the possibilities rose up like reanimated zombies before me, I began to wonder whether to stick to the binary principle. For example, if you are in tobacco, why not move into fire extinguishers? Unless of course you feel that this might negatively impact the positive effects of heavy smoking on the Tombstone Index.
You could link up a whole chain of stocks, each feeding on the others. We can, in short, move to concatenate synergistic investing. For example, you invest in a food company that makes cupcakes. These tend to create obesity in compulsive eaters, and you have to admit, you need to be fairly compulsive to eat them at all. Having thus helped create a big fat marketing opportunity, then you buy stock in a company that makes synthetic diet cooking oil, which does not get digested as it is pumped peristaltically through the intestines, and hence allows people with uncontrollable appetites to stuff their faces regardless.
Of course the problem with such cooking fats is they have a known propensity to ‘leak’, as they euphemistically call it in the stuff-your-face-while-losing-weight trade. However, that should not deter an intrepid concatenate synergistic investor. This is not a problem, it’s a challenge – indeed an opportunity! Where there’s muck there’s brass, the old saying from the early days of free enterprise affirms. Instead of furrowing your brow and wrinkling your nose in despair, there is an obvious solution: you buy stock in companies that make adult diapers.
The chain can go even further. I recently met a Californian with an impending IPO that’s a natural link. The company’s main business is a new process that dismantles disposable diapers into their plastic and paper components so they can be recycled. He had a few too many Margaritas when I met him, so I was not able to find out what happened to – ahem – the rest. However, the chain can be almost endless – I mean, if the cooking oil is undigested, maybe it could be recycled as well? (Just to extend the chain farther, he claimed that Al Gore was going to open the plant. I don’t want to offend anyone’s partisan politics, but you have to admit that if you were auditioning for an escaped funeral home client, then central casting would probably send the vice president along first.)
You can see that dialectical binary and concatenate synergistic stock picking flows smoothly as a concept. Your investments flourish in a cycle of heterodyning value. Next month, I will unveil my exciting new IPO: DIY Funeral Kits!
The Speculator
