The Long Term Investor

I have owned Boeing in the recent past......I sold AFTER the 737 stuff started......BUT.....before the big drop in price. I STILL like the company.....but......I would not be a buyer yet. I would need to see that management is going to be able to fix all the issues that this company has with the 737 and in general. It could take a year or two more to get things going nicely again and I DO NOT want to sit in a LINGERING STAGNANT sock waiting for that to happen. I ALSO......HATE.....boom and bust companies. That is one reason I dont own and will not own any of the old school auto companies, most drug companies, oil companies, banks, etc, etc.

 

OLD NEWS......hours ago. BUT....here it is. Looks like I just got the SECOND leg of my three events with Tesla. The first one was the production numbers. Number three will be inclusion the SP500......which appears to be a SURE THING. I am interested to see how much of this stuff is already baked into the price.

(BOLD is my opinion OR what I consider important content)

https://www.marketwatch.com/story/tesla-reports-surprise-q2-profit-2020-07-22

Quarterly sales above Wall Street expectations; Tesla selects Texas as next factory location

"Tesla Inc. stock rose more than 5% late Wednesday after the Silicon Valley car maker reported a second-quarter GAAP and adjusted profit, setting it on a course to join the S&P 500 index and surprising investors as most of the quarter was beset with coronavirus-related stoppages.

Tesla TSLA, +1.52% said it earned $104 million, or 50 cents a share, in the quarter, contrasting with a loss of $408 million, or $2.31 a share, in the year-ago quarter.

Adjusted for one-time items, Tesla earned $2.18 a share, swinging from an adjusted loss of $1.12 a share a year ago. Sales fell 5% to $6.04 billion from $6.35 billion a year ago.

Analysts polled by FactSet expected an adjusted loss of 2 cents a share on sales of $5.15 billion.

“Demand is not our problem,” Chief Executive Elon Musk told analysts on a conference call after the results. Most of the challenges, including some parts shortages, are related to supply-chain and production issues, he said. “Don’t worry about demand, that’s not the issue.”

Neither Tesla in its letter to shareholders nor Musk during the call addressed the coronavirus pandemic directly. Musk started the call thanking employees for their efforts: “There were so many challenges, too numerous to name, but they got it done.”

The call veered on sedate, for Tesla standards, with Musk issuing calls for “revolutionary actuaries” to further develop Tesla’s insurance product; urging more mining companies to mine for nickel, used in batteries; and announcing the Austin, Texas, area as the site of Tesla’s future second U.S. car-making factory.

Tesla is not trying to be “super profitable,” Musk said, but rather it is focusing on maximizing growth and making electric cars that are affordable, he said.

The second-quarter numbers were “very strong,” setting Tesla for S&P 500 index SPX, +0.57% inclusion, said Alyssa Altman, an auto-industry consultant with Publicis Sapient.

“Tesla is showing the market they move fast, make quick decisions and are not afraid of failure,” she said. “They made bold choices to reduce costs while still launching a new model with all the challenges that go with a new model launch. In doing that, they are seeing success and confidence from the market. Any profit in this environment is good and shows resilience in uncertain times.”

The “real news,” said Gene Munster of Loup Ventures, “is Tesla hit profitable and free cash flow with sustainable measures. The company did not pull a one-time lever to get to profitability.”

In the letter to investors, Tesla said its progress in the first half of the year “has positioned us for a successful second half of 2020. Production output of our existing facilities continues to improve to meet demand, and we are adding more capacity.”

Tesla did not provide an outlook for 2020, saying it was still “difficult” to predict shutdowns and shifts in consumer sentiment for the second half of the year. The word “pandemic” appeared only on standard legal disclosures at the very end of the document.

The company also kept its 2020 goals unchanged from its first-quarter letter, mentioning again “capacity” to achieve the milestone of selling more than half a million vehicles in the year.

“We have the capacity installed to exceed 500,000 vehicle deliveries this year, despite recent production interruptions. While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains our target,” it said in the letter.

The company said has enough liquidity to fund production and long-term capacity expansion plans.

Tesla said it continues to build capacity for the Model Y, its compact SUV, at factories in Berlin and Shanghai, and it remains on track to start Model Y sales from both locations in 2021. Tesla Semi, the company’s long-haul electric truck, is also slated for 2021.

Preparations in the Austin area for the auto factory, which will be Tesla’s largest property, are underway, Musk said. Austin will be tasked with making the Semi and the Cybertruck pickup, as well as the Model 3 and Model Y for eastern North America.

Before Wednesday, the Silicon Valley car maker had reported three consecutive quarters of GAAP and adjusted profit. That fourth consecutive quarterly profit now opens the likelihood of joining the S&P 500 index within a few months.

Tesla pinned the surprise profit on “fundamental operational improvements,” with costs with factory shutdowns offset by cost-cutting measures. GAAP operating margin reached nearly 5%, the company said, adding it expects it to continue “to grow over time, ultimately reaching industry-leading levels.”

Tesla earlier this month reported second-quarter sales that crushed Wall Street expectations, even as its U.S. car-making factory in California was shuttered for most of the quarter under local shelter-in-place orders.

The sales surge was one of the recent catalysts for the stock rally, which has pushed Tesla’s market valuation around $300 billion, about $95 billion ahead of Japan’s Toyota Motor Corp. TM, -0.00% and the No. 1 car maker in the world by market value. The shares ended at a record $1,643 on Monday, and hit an intraday record of $1.794.99 on July 13.

In April, Tesla also surprised investors by posting a first-quarter profit. Musk kept the surprises going on a post-results call with analysts, going off script to condemn the closures put in place to curb the spread of the virus and likening them to fascism.

Musk also ignited Twitter and legal spats that prompted President Donald Trump to chime in on the factory closure.

Tesla’s Fremont, Calif., factory reopened in May in defiance of local shutdown orders. The standoff was eventually resolved, with Tesla reopening the plant after filing a health and safety plan with local authorities.

Earlier Wednesday, analysts at Bank of America Securities kept their cautious stance on Tesla, saying that the stock was overheated and urging investors to “remain cautious despite hype and momentum.”

The analysts increased their price target on the shares to $800, from $500, but kept their equivalent of a sell rating. The mean price target on Tesla from 31 analysts polled by FactSet is $912, with the top of the range being above $1,500.

Tesla shares have gained nearly 300% this year, comparing with gains around 1% for the S&P 500 index SPX, +0.57% and contrasting with a loss around 6% for the Dow Jones Industrial Average DJIA, +0.61% ."

MY COMMENT

I am VERY CURIOUS where the stock will be tomorrow. Three HUGE announcements today......the PROFIT........the Austin, Texas gigafactory........and the.........Full Self-Driving functionality.......POSSIBLY..........to be released by the end of 2020. All three MASSIVE events.

As to inclusion in the SP500....I believe there will be an initial bump.....but....after that being in the INDEX will stabilize the price and STOP all the rampant speculation and crazy price jumps.

 

HERE......is the other BIG ONE yesterday.

Microsoft revenue grew 13% despite coronavirus

https://www.cnbc.com/2020/07/22/microsoft-msft-earnings-q4-2020.html

(BOLD is my opinion OR what I consider important content)

"Microsoft shares fell as much as 3% in extended trading Wednesday after the company reported better-than-expected fiscal fourth-quarter earnings that exceeded analysts’ expectations, although quarterly revenue guidance was lighter than expected.

Here’s how the company did:

• Earnings: $1.46 per share, adjusted, vs. $1.34 per share as expected by analysts, according to Refinitiv.
• Revenue: $38.03 billion, vs. $36.50 billion as expected by analysts, according to Refinitiv.

Microsoft’s overall revenue grew 13% on an annualized basis in the quarter, which ended June 30, according to a statement. Revenue went up 15% in the prior quarter, which saw less impact from the coronavirus pandemic.



Microsoft’s Intelligent Cloud business segment, which includes the Azure public cloud, Windows Server, SQL Server, GitHub and enterprise services, posted $13.37 billion in revenue, up 17% year over year and above the $13.11 billion consensus among analysts polled by FactSet. Azure revenue growth slowed to 47% from 59% in the previous quarter. Microsoft does not disclose Azure revenue in dollars, but did say its commercial cloud business surpassed $50 billion in revenue for the fiscal year.

Capital expenditures came to $5.8 billion, almost double what they were three years ago as the company looks to expand the infrastructure to deliver Azure and its own online services.

The Productivity and Business Processes unit, which contains Office, Dynamics and LinkedIn, contributed $11.75 billion in revenue. That’s up 6% and less than the FactSet consensus of $11.91 billion. LinkedIn’s revenue grew 10%, the slowest growth since 2016 as Microsoft closed the $27 billion acquisition, given the weaker job market and less spending on advertising. The operating margin for that part of the company, at 33.8%, was the lowest since 2017. Marketing of the Teams communications app that competes with Slack partly caused an increase in the unit’s operating expenses.

The company’s More Personal Computing unit, including Windows, search, Surface and Xbox, had $12.91billion in quarterly revenue, which is 14% up and higher than the $11.48 billion FactSet consensus. Xbox content and services revenue was up 65% with record engagement as people stayed home and played games. The performance, which included benefit from the company’s Minecraft video game, was better than the company had expected, Amy Hood, Microsoft’s chief financial officer, said on a conference call with analysts Wednesday.

Sales of licenses for commercial Windows devices shrank 4%, the slowest growth since 2016, while licenses for consumer devices accelerated to 34% after falling 10% one quarter earlier. Search ad revenue, excluding traffic acquisition costs, declined 18%, with customers reducing how much they spend.

The company’s earnings were pulled down slightly by a shift in Microsoft’s retail strategy. On June 26 Microsoft said it would close its physical stores, resulting in a one-time charge of $450 million, or 5 cents per share, before taxes.

Also in the quarter Microsoft disclosed a plan to shut down its Mixer video game streaming service, and announced the acquisitions of CyberX, Metaswitch and Softomotive. Industry research group Gartner estimated that PC shipments, a factor in Microsoft’s Windows sales, returned to year-over-year growth in the quarter, following a decline in the first quarter in connection with the pandemic.

Microsoft called for $35.61 billion in revenue for the fiscal first quarter, implying 8% revenue growth. The forecast was lower than the $35.91 billion that analysts polled by Refinitiv had been looking for. The company is changing its accounting to better reflect the useful life of server equipment, raising it to four years, and that adjustment will benefit operating income for the full 2021 fiscal year by $2.7 billion, Hood said. Amazon, the leader in the public cloud market, announced a similar shift in January.

Excluding the after-hours move, Microsoft shares are up about 34% since the beginning of the year."

MY COMMENT

Looks good to me. Of course.......the stock is down based on a good earning report. AS USUAL........lately.....earnings that GENERALLY beat expectations are totally discounted and ignored. Picky, picky, picky.....

 

Markets are TIRED today. We get tired and have to rest every 2-3 days. Weighed down by the unemployment numbers being up a little bit.

BUT.....so far, so good with earnings and the markets reaction to.......even....... DOWN earnings. So far I continue to see little reaction to earnings.....just a CONTINUATION of the typical reaction we have been getting for the last couple of years. A trend where earnings generally meet or beat expectations......but.....the markets focus on some small part of the report or on some forward looking statement and the stock goes down for a few days. NOTHING to do with the virus.

That.....the markets are snubbing earnings......is the REALLY GOOD NEWS today as we slog our way through earnings reports day by day. To me the LACK OF REACTION to earnings means that the average investor is NOT concerned with the earnings HYPE in the news every day. That is also a really good thing.

I CONTINUE to be fully invested all the time for the LONG TERM. NO plans to buy or sell anything..........hopefully for a long time.

 

A solidly RED day with only 2 positions in the green slightly. AND to rub salt in the wound......the SP500 hammered me today by 1.1%.

I was AMAZED to see on the business news yesterday that SILVER was up to $22 to $23 per Oz. I dont usually pay any attention to the metals.....especially silver. If I was a speculator.......I would be looking for a time to BAIL out.....assuming that most of my purchases were in the $14 to $16 dollar range. That is the general purchase range for the majority of the silver that we have. We probably have about 1000 to 1200 ounces. NOT as an investment or any particular reason. Years back I started buying rolls with a goal to fill up a GREEN MINT BOX with Silver Eagles. A box holds 500 one ounce coins. We filled it a few years back.

I was thinking about my income annuities a day ago. The current 10 year treasury rates are .60%. When I bought the annuities in 2014 the ten year rate was about 2.9%. If I was purchasing the same annuities today the pay-out per year would be about $21,000 less per year.

 

THE markets are now caught up in the..........USUAL.........news media stuff. With the Robinhood mania now walked back the past couple of days with losses.......we are left with the USUAL doom and gloom media opinion baloney as the ONLY market driver. I WONDER how many of those Robinhood guys have now lost their shirts. TECH.....will be under pressure for a while.........short term..........as the Robinhood traders,......young stock gambling males,.....get hammered in a self created MINOR vortex of selling out of fear and to try to preserve a little bit of profit and stem the pain. Add in the bailing out of those that egged them on...........and......the reality of that OLD SAYING........."buy the rumor, sell the news".......and you have the current markets.

It is amazing how many of those OLD SAYINGS.......like the one above.......are proven true time, after time, after time, etc, etc. Looks like the NEW NORMAL has very quickly turned out to be the OLD NORMAL.......as usual. As to myself I STILL have a GAIN of 23% on my Tesla mini-holding. With the SP500 inclusion pretty much assured.......the MANIA is now being driven out of the stock.

 

There is ALWAYS some reason NOT to invest. ONE of the most common is people that can NOT see the difference between the general economy and investing. They get TOO caught up in ALL the BS that you see daily in the TOTALITY of the opinion articles...... masquerading as news.......that cite some economist for something or other. NOVICE investors tend to think that being.......an economist......has something to do with investing and investing knowledge. They dont realize that all these so called EXPERTS are TOTALLY OUT OF TOUCH with reality when it comes to investing. ACTUALLY.....the LAST person I am going to trust for information or opinions on ANYTHING is some economist.

The Economy Looks Rough. The Stock Market Doesn’t. Here’s Why That May Make Sense.

https://nymag.com/intelligencer/202...t-is-soaring-even-as-the-economy-falters.html

(BOLD is my opinion OR what I consider important content)

"As I wrote on Monday, the near-term economic picture looks a fair amount worse now than it did a few weeks ago. What had been a rapid recovery in economic activity has turned into a stall, because a rise in COVID cases across the South and Southwest has caused states to freeze or reverse their economic reopenings and has made consumers more cautious about their behavior, even in less affected regions like the Northeast. When I say stall, I choose that word carefully — so far, the trend in economic activity since mid-June appears to be flat rather than falling. And since the economy has flattened out in a place with high unemployment and lots of businesses still closed, that’s a very troubling development.

All that said, the stock market has had quite a good few weeks. The S&P 500 is now higher than it was at its prior intra-crisis peak on June 8, and higher than it was at the start of the year. How could that be? Are the markets being irrational? Financial markets can always be wrong, but I don’t think the buoyant stock market and the stalled economy are necessarily in contradiction. Here, some good explanations for why stocks would appear to shrug off the very serious economic problems the virus has caused this summer.

First, stock prices are supposed to reflect market expectations of the future profits of corporations. I don’t love the phrase “the stock market is not the economy,” because stock prices can be an important economic indicator and shouldn’t be brushed off. But it’s definitely the case that the stock market reflects expectations about only a portion of the economy, and that it reflects expectations. There has been news in recent weeks that gives us good reason to believe companies will be less profitable this year than we would have thought a few weeks ago. But there has also been news about medical research developments that provides reason to believe companies will be more profitable in future years than we might have expected a few weeks ago. Investors have increasing reason to believe we will see widespread distribution of one or more vaccines by, say, mid-2021. That’s a positive development for the long-term outlook for the economy and for corporate profits, and so it should push stocks up, or at least offset the downward push from the bad nearer-term news. But you wouldn’t expect that good news about the future to show up in the current job creation or consumer-spending data.

Second, the most commonly discussed measures of stock prices, like the Dow Jones Industrial Average and the S&P 500, focus on very large companies. Because the companies in these indexes tend to have global footprints, the indexes are heavily influenced by the economic outlook outside the U.S. — including in other countries that have done a much better job managing the virus than we have. The S&P 400 mid-cap index, which looks at midsize companies that tend to have operations focused heavily on the U.S., is still down 10 percent for the year, even while the S&P 500 large-cap index is up one percent. In addition to having a more global footprint, large companies have more financial resources at their disposal than small ones do, and may be better positioned to weather a bad 12 months as they wait for vaccine hopes to come to fruition. The sorts of businesses least equipped to wait it out — small businesses, especially restaurants and bars — mostly aren’t traded on the stock market at all.

Third, interest rates have continued to fall, and low interest rates boost the prices of many kinds of assets, including stocks. You hear this discussed more often with regard to bonds: “Bond prices move up when bond yields go down.” That is, if you own a ten-year bond that pays 4 percent annual interest, and then interest rates fall from 4 percent to 3 percent, your bond will rise in value because its interest payment has become more attractive compared to what else is available in the market. You can think of a stock as having a yield like a bond: The stock share is a little piece of a company that’s expected to produce some amount of profits every year, and as other kinds of investments become less attractive, the amount you are willing to pay for that given stream of profits goes up. This doesn’t mean that a worsening economic environment where yields fall should actually cause stock prices to rise in absolute terms — unlike a bond that pays a fixed interest rate, the expected profits associated with a stock share should tend to decrease when the economy worsens, and that fact pushes stock prices down. But the fall in yields across asset classes should still partially offset the drag on stock prices from a deteriorated economic outlook.

For those reasons, I don’t think you should assume stocks are in a bubble, or that Wall Street investors have not admitted to themselves how bad things are right now. Things are very bad and have gotten somewhat worse lately, but things might look quite a bit better in a year, especially for companies that trade on the stock market.

MY COMMENT

ADD in as a positive the HUGE stimulus and commitment on the part of government and the FED to prop up the US economy and you have another positive. AND.......NO......I do not see ANY issue with inflation. ALSO add in the fact that we are the ONLY game in town.........world wide.......for capitalism AND business success and you have another positive factor. ADD in the fact that we are the SAFE HAVEN for the entire world and you have another factor. ADD in the millennial generations maturing and moving into the house buying years.......as well as......entering good earning years and you have another positive factor. ADD in the fact that.....outside of government workers......no one has a pension and therefore everyone is FORCED to save for retirement in a 401K or other retirement vehicle with the VAST majority of that money averaging into stocks and funds.......FOREVER.....and you have another positive factor for the long term. ETC, etc, etc, etc.

The ONLY way to capture the future gains as we move forward over the next many years will be to invest for the LONG TERM. Trying to predict and time the markets will NOT work......as usual. As an investor.....you just have to bite the bullet and stay invested for the long term.

 

A few little snippets of data in this article:

Americans Now Point to Stock Market as Favorite Long-Term Investment

https://www.southernmarylandchronic...tock-market-as-favorite-long-term-investment/

(BOLD is my opinion OR what I consider important content)

"New York – July 23, 2020 – There has been a resurgence of Americans that point to the stock market as the best way to invest over a period of 10 years or more, according to a Bankrate.com report. This year, 28% of Americans indicated the stock market would be their preferred way to invest money not needed for a decade or longer, more than any other investment option. This is also up from 20% last year and second only to the 32% that said so in 2018.

Last year’s top choice, real estate, was a close second at 26%, down from 31% last year and within the range seen in the past eight years. Cash investments such as savings accounts or CDs were cited by 18%, down a tick from 19% last year, but the lowest seen in eight years of polling. Gold and other precious metals were cited by 14% of Americans, up for the second straight year. Bonds and bitcoin or other cryptocurrencies were each cited by just 4% of Americans.

“Despite falling by more than one-third in just over a month at the outset of the pandemic, more Americans point to the stock market as the best place to invest money long-term,” said Bankrate.com chief financial analyst Greg McBride, CFA. “The swift rebound this spring and following a 20% decline at the end of 2018 have convinced more investors of the market’s long-term merits.”

The stock market was most popular amongst the highest earners (39% making $75,000 or more per year vs. 22% making less than $30,000) and those with a college degree (37% vs. 23% with no more than a high school diploma). Relative to other income groups, lower earners were more likely to cite cash (25% making less than $30,000 vs. 12% making $75,000+) or gold or other precious metals (18% vs. 10% of the highest earners).

Millennials (ages 24-39) showed a noticeable shift away from real estate this year towards the stock market and gold or other precious metals; 27% pointed to the stock market and 17% to gold or other precious metals, compared to 16% and 7% last year, respectively. Real estate dropped from 36% last year to 24% thisyear.

Of all those not pointing to the stock market as the best way to invest long-term, more than half (54%) said the coronavirus pandemic played a part in their decision; 34% said it was a major reason, 19% said it was a minor reason and 43% said it had no impact (the rest didn’t know or refused to answer). Men (40% vs. 29% of women) and baby boomers (39% of those ages 56-74 vs. 33% of Gen Xers, ages 40-55, and 29% of millennials) not selecting the stock market were more likely to say that the pandemic was a major reasonwhy.

The pandemic has also altered the investment strategies for more than 2 in 5 (42%), with 26% saying they will invest less aggressively and 16% saying they will invest more aggressively moving forward. Fifty-seven percent said the pandemic will not affect how aggressively they invest in the future (the rest don’t know/refused to answer).

Millennials were more than three times as likely as baby boomers to say the pandemic will influence them to invest more aggressively (24% vs. 7%), while Gen Xers fell in the middle (16%). Conversely, 30% of baby boomers will invest less aggressively, compared to 24% of Gen Xers and 26% of millennials.

Twenty percent of households with incomes below $50,000 per year plan to invest more aggressively over the next 10 years as a result of the pandemic, compared to just 12% of those with incomes of $50,000 or more.

Sixty-one percent of those earning at least $50,000 will not change how they invest, compared to 53% of those who earn less than that.

MY COMMENT


MUCH......good and bad......behavior reflected in these results.

 

I HATE to mix investing and gambling.......but......there is lots of GOOD, applicable, information in this little article. Especially......for long term investors:

Poker Skills Can Make Investing Less Like Gambling

https://www.msn.com/en-us/finance/r...make-investing-less-like-gambling/ar-BB178XeB

(BOLD is my opinion OR what I consider important content)

"Bloomberg Opinion) -- When “Moneyball” by Michael Lewis(1)was published in 2003, it quickly gained a big following on Wall Street. The book is ostensibly about baseball, but it’s really about how to seek out value in places others aren’t looking.

“There are all these biases that infect the human mind in making intuitive value judgments,” he said in one interview. The protagonist of “Moneyball,” Oakland A’s general manager Billy Beane, takes advantage of those biases by using a data-driven methodology to find good players that traditional baseball executives tend to overlook. As a result, the A’s have fielded competitive teams despite having far less money to spend on players than other franchises.

You didn’t have to be Warren Buffett to see how the lessons of “Moneyball” apply to investing. The book’s implicit but easy-to-see message is that the most successful investors — such as Buffett — usually have a way of finding value that most investors miss. Successful investing virtually requires that skill.

Maria Konnikova’s terrific new book, “The Biggest Bluff,”(2)is, to my mind, the new “Moneyball.” Its subject is ostensibly poker. Konnikova, 36, is a writer with a doctorate in psychology, and she decided she wanted to learn to play poker to explore the interplay between luck and skill. There are few exercises as ready-made for such an exploration as the most popular of poker games, Texas Hold ’em.

What prompted her adventure, she writes, was reading “Theory of Games and Economic Behavior” by John von Neumann and Oskar Morgenstern, the book that essentially created modern game theory. Konnikova was taken aback upon learning that this seminal book about strategy was largely inspired by poker. Von Neumann, a brilliant mathematician and strategist, believed that poker represented, in Konnikova’s words, “that ineffable balance between skill and chance that governs life.” She adds:

“If he could figure out how to disentangle the chance from the skill, how to maximize the role of the latter and learn to minimize the malice of the former, he believed he would hold the solution to some of life’s greatest decision challenges.”

Spoiler alert: Over the course of the year and a half the book spans, Konnikova goes from being a rank novice who doesn’t know a straight from a flush to an accomplished pro who gets to final tables in tournaments — sometimes winning — and makes serious money ($350,000 and counting she told an interviewer). She even had a sponsor for a time.

How does she do it? First, she finds the perfect teacher in Erik Seidel, a poker legend who’s a kind of Delphic presence in the book. He tends to guide her toward knowledge rather than imposing it, so that her poker breakthroughs feel like her own discoveries at least as much as his teachings.

Second, she goes all-in, devoting herself fully to the task at hand, even though there are many discouraging moments along the way — moments when her lack of poker smarts allow better players (usually men) to goad her into making mistakes.

And third — and this is the part that truly grabbed me — she learns a mode of thought that is vital to winning poker. This is where “The Biggest Bluff” intersects with “Moneyball.” What Konnikova has to say about thinking can also be applied to investing. “It’s all about thinking well,” Seidel tells her during one of their first meetings. “The real question is can good thinking and hard work get you there?”

In one of her few direct references to stock picking, she quotes the Nobel laureate Daniel Kahneman: “For a large majority of fund managers, the selection of stocks is more like rolling dice than like playing poker.” He continues:

The successful funds in any given year are mostly lucky; they have a good roll of the dice. There is general agreement among researchers that nearly all stock pickers, whether they know it or not — and few of them do — are playing a game of chance.”

Thinking like a poker player could well be an important way to minimize the element of chance in investing, and heighten the element of skill.

Konnikova’s first lesson — and it’s a painful one — is that she’s going to need to lose to get better. “The benefit of failure is an objectivity that success simply can’t offer,” she writes. “If you win right away — if your first foray into any new area is a runaway success — you’ll have absolutely no idea to gauge if you’re really just that brilliant or it was a total fluke and you got incredibly lucky.”

Lesson No. 2: How do you react to losing? She quotes Dan Harrington, the author of several widely read poker strategy books: “Everyone plays well when they’re winning. But can you control yourself when you’re losing? And not by being too conservative, but trying to still be objective as to what your chances are in the hand. If you can do that, then you’ve conquered the game.”

And so it goes: A good poker player has to be comfortable with uncertainty — just like a good investor. She has to have a good reason for every single decision she makes. She has to be able to acknowledge mistakes — and adjust accordingly. She has to be able to shut out all the white noise while searching for meaningful patterns. She can’t get too high when she wins a big pot or too low when she’s on a losing streak. A player who is self-aware enough to clearly see her own strengths and weakness has a big advantage. All of these attributes are important for good investing as well.

Konnikova stresses the importance of not dwelling on bad luck — those times when you have a good hand that you played correctly but lost because your opponent got lucky when the last card was turned over. What matters is whether your decision was sound.

At one point, when she is complaining about a hand she lost, Seidel tells he doesn’t want to hear the result of her hands anymore. He just wants to hear her explain her decision-making. “When you’re telling me hands, don’t even say how it ended,” he says. “I want you to do your best to forget how it ended yourself. That won’t help you.”

“Poker taught me not to be focused on the outcome, but on the process,” Konnikova told me when we spoke a few days ago. “And that has been liberating in everyday life. It feels nice to wallow when things go wrong. Give me some sympathy! Poker just knocked that out of me. You are just wasting valuable emotional resources. It serves no purpose.”

More than just about anything, Konnikova learns how to take emotions out of her decision-making. That may be the single most important thing Seidel and several other mentors taught her.

What surprised me the most is the idea that you can be taught to think in a less emotional, more rigorous way. You don’t see many adults changing their thought process — and I asked Konnikova if it were really possible on a wide scale. After all, not everyone has a doctorate in psychology like she does or undertakes a task they will fail if they don’t learn to think differently.

Yes, she replied, she was convinced that modes of thought could be taught. “My graduate adviser was Walter Mischel,” she said. Mischel was a psychologist who conducted one of the world’s most famous experiments: the marshmallow test.

That’s the delayed gratification test in which children were put in a room with a treat (often but not always a marshmallow), which they could either eat right away or hold off, knowing their reward for doing so will be a second marshmallow. The marshmallow tests were conducted in the 1960s, and Mischel then followed the subjects for decades afterward. He found that those who were able to hold off eating the first marshmallow fared better in life than those who lacked that self-control.

“There were actually two other fascinating trajectories that no one talks about,” Konnikova said. “There were children who couldn’t wait to eat the marshmallow, but learned self-control later in life. And there were some who did wait for the second marshmallow but whose self-control ended up deteriorating.”

Guess what? Those who were taught self-control had the same life outcomes as those who had that mindset at the start and never lost it. “A lot of these skills can be taught,” she said “And the same is true of critical thinking.”

Maybe it’s time for investors to start learning how to play poker.

MY COMMENT

NO......I am NOT equating investing to poker or any gambling. ALTHOUGH, there are a LOT of investors that are simply gambling. The KEY investing is to make good clinical.....rational.....decisions. Based on data, self awareness and reason. That basically means fundamental analysis or some means of actual analysis that can be replicated.

 

THIS, little article is an...........INSTANT CLASSIC. Just about anyone that trades or invests will read it and say......well.....everyone knows that. YET.....how many people ACTUALLY exercise this sort of behavior in real life.......in a way that BENEFITS THEM..........very few. There are a FEW basic......simple....concepts that are at the CORE of investing success. This article outlines one of them. They are......ALL.....typically ignored or violated by the average investor......over, and over, and over.

Good, not necessarily perfect, financial plans and behaviors still can get the job done

https://finance.yahoo.com/news/good-not-necessarily-perfect-financial-142037377.html

(BOLD is my opinion OR what I consider important content)

"How often has this scenario or something similar happened to you? You hear about a promising stock or mutual fund but wonder if there's something better, or a better time to buy. So you wait around and end up doing nothing, missing an opportunity that, if not perfect, certainly would have been profitable.

With all sorts of money decisions, it's easy to get thwarted by inaction. Often this results from waiting in vain for a perfect opportunity to arise rather than accepting one that's good enough. Here are some examples:

Invest without benefit hindsight
It's worth holding off on your investing plan until you have everything figured out about the stock market, individual companies and the economy, right? Anyone agreeing with that statement could face real paralysis.

Sure, it would have been nice to put $1,000 each into Home Depot, Amgen, UnitedHealth, Apple and Danaher — the top-performing large companies over the past 35 years. Such a combined stake would be worth about $3 million today, noted Karen Wallace, a certified financial planner at Morningstar, in a recent blog.

But that was apparent only in hindsight. "Picking stocks isn’t so easy when you don’t know the future," she noted. "What if you invest in five companies and three of them go bankrupt?"

One factor that likely derails a lot of investors is waiting to find the perfect stock, mutual fund or other vehicle — and waiting for the perfect time to buy or sell. But identifying perfect investments is nearly impossible to do, and perfect entry and exit points are difficult to spot.

One way to deal with uncertainty is to diversify by selecting many stocks (easy to do with mutual funds or exchange-traded funds) and including bonds and other types of investments in the mix.

Another way to handle uncertainty is to dribble money into the market using a "dollar-cost averaging" approach and to hold your investments for years, if not decades.

In the short run, the stock market can bounce around wildly — diversified large-company returns (including dividends) since the 1920s have ranged from +54% to -43% in a given year, according to Morningstar. But over that long span, the average annual return has been a fairly consistent 10%.

"You can expect stock prices to fall occasionally over short periods," Wallace wrote. "But if you’re investing over long-term periods of a decade or more, chances are excellent that stocks as an asset class will earn a positive return."

In terms of buy or sell decisions, it can be helpful to ponder what factors might prompt you to enter or exit the market before circumstances might sway your thinking.

"It's so much easier to carry out a decision if you have made it earlier," like a football coach drawing out plays before the game starts, said David Daughtrey, an investment adviser at Copperwynd Financial in Scottsdale. Otherwise, you run the risk of letting emotions sway your thinking.

Refinance the best you can
Another area that can trip up people is not taking advantage of attractive interest rates in hopes that rates improve even further. This can apply in a number of areas, from credit cards to deposit accounts, but the issue is most relevant with mortgage loans, for both potential new homebuyers and those seeking to refinance. Rates are already highly attractive, but is it worth holding out for even better deals?

There's a good chance today's bare-bones rates could persist for many more months, if not longer, owing to underlying weakness in the economy, said Greg McBride, chief financial analyst at Bankrate.com. Many lenders have been overwhelmed by applications lately. If home-purchase and refinancing volumes ease up, we could see slightly better deals ahead as lenders compete more vigorously, he said.

But it's also true that mortgage rates for people with good credit scores already have ebbed to historically low levels a tad below 3%. On a refinance, for example, "If you can shave one-half to three-quarters of a percentage point (from your current rate)," it's often worth doing, he said.

While rates could dip a bit further, it's also true that you can start cutting your monthly mortgage payments by pursuing a new loan now. Plus, your ability to qualify might change for the worse, especially if your job situation deteriorates. And interest-rate movements, even for professionals, are hard to predict.

“You’ll never sell your stocks at the absolute peak nor buy them all at the absolute bottom, and you probably won’t grab the absolute lowest mortgage rate in history, either," McBride said.

But you can start saving money by grabbing a decent deal now.

Heed key credit principles
Many Americans are struggling not just to raise their credit scores but to understand how scoring systems work. It's really not all that complicated, but it is easy to miss the forest for the trees.

Stephen Brobeck, a senior fellow at the Consumer Federation of America, recently cited just a few key behaviors that, if adopted, can boost your credit score to a superior level.

First, he said, consumers should strive to make loan payments on time, every month. Second, those who use credit cards should use just a modest slice of their available credit (preferably below 25%). Third, people should check their credit reports (at annualcreditreport.com) at least a couple of times a year for inaccuracies that could hurt scores, then alert the credit bureaus to have errors removed.

If you want higher scores, you can pursue various other moves such as keeping long-held credit accounts open if you continue to use them (the length of credit history accounts for about 15% of scoring in the FICO system, for example). But it mainly boils down to paying your bills on time while keeping debt levels modest, which together weigh in at 65% of the scoring total.

Build an estate plan as you go
Planning for your eventual demise or possible incapacity isn't easy, especially when you don't know the answers to questions such as how long you will live or how much help your children, spouse or other beneficiaries might need. These and other uncertainties can paralyze you from doing any estate planning, but it's often best to get started, tackle what you can and make adjustments later.

"Having an imperfect plan is usually better than having no plan at all," stated Elder Law Answers in a recent blog.

Most documents or forms typically can be changed or amended later. Key steps to take initially include drafting a will along with financial and health-care powers of attorney — documents that allow you to name a spouse, relative or other trusted person to make decisions on your behalf if you're alive but not able to act on your own.

While you're at it, designate beneficiaries to receive any assets held in retirement accounts, life insurance policies, bank accounts and so on. Consider life insurance to help children or a spouse cope with a possible loss of your job income, and make sure your deeds are titled properly. In Arizona and some other states, beneficiary deeds are one option homeowners can use to pass their properties at death, probate-free.

Down the road, you could always add more elaborate documents, such as a living trust. In other words, view estate planning as a process you can start now and build on or tweak later, when those elusive answers might come more clearly into focus."

MY COMMENT

HERE is an amazing little chart of......investor behavior. A SOMEWHAT "old" chart.....BUT....this lesson applies today.



HERE is another example:



STILL as true today as four years ago when this chart was created. IN FACT......probably even MORE relevant today considering all the day-trading mania going on that.......WILL NOT END WELL. THE problem? SAME as always........HUMAN BEHAVIOR:

• Loss Aversion - The fear of loss leads to a withdrawal of capital at the worst possible time. Also known as "panic selling."
• Narrow Framing - Making decisions about part of the portfolio without considering the effects on the total.
• Anchoring - The process of remaining focused on what happened previously and not adapting to a changing market.
• Mental Accounting - Separating performance of investments mentally to justify success and failure.
• Lack of Diversification - Believing a portfolio is diversified when in fact it is a highly correlated pool of assets.
• Herding- Following what everyone else is doing. Leads to "buy high/sell low."
• Regret - Not performing a necessary action due to the regret of a previous failure.
• Media Response - The media has a bias to optimism to sell products from advertisers and attract readership.
• Optimism - Overly optimistic assumptions tend to lead to rather dramatic reversions when met with reality.

THE ABOVE charts come from a 2016 DALBAR report on investor behavior based on ACTUAL DATA. IMAGINE THAT........actual data.

 

Oh yes.......TESLA......DOWN 15.5% since the $1677 high early in trading the morning after earnings came out.

I am NOT negative on the company......BUT.....my position is less than 1% of my total portfolios value. This is STILL a RISKY stock.....especially......with all the crazy day-traders out there. A VERY YOUNG company that will face..........MANY.......trials and tribulations over the next ten years. The POTENTIAL return is BIG........but.........definately NOT assured. In other words.......have a BRAIN.....dont get carried away with emotion in your investing or trading behavior. BE PREPARED for THE LONG SLOG FORWARD with this sort of company.