Well Played, Mayans!

Mayans! Well played, Mayans. Well played.

First we had the Rapture a few months ago. And now, December 21, 2012 has come and gone.

As the last few hours of 2012 wane, we’re still here. We’re either heathens (avoiding the Rapture) or the Mayan Mother Ship got lost on the way back to pick us up.

But we’re still here. At least you and me, dear reader.

Perhaps our elected representatives have been counting on one or the other — while indulging in that multi-decade game of “kick the can” (down the road). Take it from one champion can kicker from the early 1970s … they’re not very good at it. Not really.

We got lots of questions about the fiscal cliff during the December 2012 Round Table session held this past Saturday morning. So it’s on the minds of many of you. Hugh McManus compared to something to do with flinging tomatoes to see if they’ll land (???) or something like that. One of my favorite depictions comes from Eddy Elfenbein who calls it a fiscal slope, not a cliff. And there’s not really a hard deadline — at least not in the context that’s being delivered to us.

I think of it as (1) a dramatic display of incompetence and (2) an epic bipartisan abrogation of responsibility.

In the Big Picture scheme of things, it’s material and a better plan needs to pursued and we need to unleash American energy in time-honored ways or we’ll face serious challenges ahead. But, it’s not the end of the world and neither are the forty two other things you’re being told to worry about these days.

During the Round Table, we celebrated something pretty cool. The overall relative return for our stock-selecting knights and collaborators has been mired since inception. It has generally ranged from -2 to -4 percentage points and languished over time. (Drum roll) We’ll close 2012 with a COLLECTIVE relative return (since inception) of +1.8%.

During the session, we added Coca-Cola (KO), Mesa Labs (MLAB) and Staples (SPLS) to the tracking portfolio.

Adding one of the world’s strongest and established brands, one of the best companies from October’s Forbes Best Small Companies and accumulating Hugh’s favorite deep value play all seem like appropriate things to ponder during these “final days.” Steady. Promising. Beaten down but with potential. Hugh’s perspective is uncommonly long-term. He sees stabilizing growth, a steadying and modest growth of the Staples store portfolio … restoration of profitability and a potential that a P/E expansion (currently 8x) could accompany a resounding recovery. The low total return forecast is approximately 30% if these dominoes fall into place and Hugh openly admits that he doesn’t know when … or IF … this will happen — only that there’s a finite probability that it could.

Ken Kavula lamented the 24/7 news cycle during our discussion of how faith in investing has leaped from a bunch of people who need it most. And we’ve all been around long enough to know that opportunities are created (close your eyes and think back to March 2009) when it’s darkest before dawn. PIMCO’s Bill Gross recently clarified that he didn’t mean that “stocks were dead,” but that “the cult of equities was dying …” and with that some of the excesses and exuberances just might be obliterated, at least for a while.

Those who leap with a little faith and prudent analysis just might discover and live an interesting journey.

And unless you’re in the shadow of the Mayan mother ship, there’s another dawn ahead and no better time to plan, prepare and select some opportunities to live through in years and decades ahead.

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