The Long Term Investor

I am new to this board. I am NOT new to internet stock posting, however, having previously posted for over 25 years on another site under the same thread title. Over the years that forum degenerated into just politics, social discussion and general gossip and chat. As a result I made the decision to eliminate my LONG TERM INVESTING thread (the highest viewed investing thread on the board) and begin the search for a new INVESTING discussion home.

I will post more over the next few weeks on my background and investing history. Needless to say, I am a LONG TERM INVESTOR and have been for 50+ years. I have invested through the bear market of the 1970's, the stagflation time of the early 1980's, the Regan boom, held through the "flash crash", through the dot-com era and crash. I have invested up to and through the CMO and derivative mess of 2008 to 2009 and continuously up to the present.

My approach is LONG TERM investing in a concentrated portfolio of, usually, 10-15 individual stocks and three mutual funds. I DO NOT believe in or use Market Timing, Technical Analysis, or Trading. My approach is basic Fundamental Analysis combined with my experience, education, and investing intuition. I focus on the BIG CAP side of the markets and hold my stocks and funds for years until they no longer fit my criteria for anticipated growth.

I have two SEPARATE investing goals:

1. Beat the SP500 annually.

2. Achieve a LONG TERM total return of at least 10%.

I have achieved both goals over the LONG TERM. BUT.....due to my financial situation, I never get greedy. I am content to simply double my money over 7.2 years (rule of 72's). In spite of my age my stock market money is and will continue to be LONG TERM for the remainder of my life since I am not dependent on that money.

I currently manage a number of family accounts as well as a family trust. All of the accounts are set up the same way and in the same investments. Basically on a very MICRO, MICRO level I run a "family office", doing the investing, taxes, estate planing, legal, and other work for extended family.

Here is my "PORTFOLIO MODEL" for all accounts managed:

STOCKS:

Alphabet Inc
Amazon
Apple
Boeing
Chevron
Costco
Home Depot
Honeywell
Johnson & Johnson
Nike
Nvidia
3M

MUTUAL FUNDS:

SP500 Index Fund
Fidelity Contra Fund
Dodge & Cox Stock Fund

 

To continue my "little" introduction to this forum:

As a LONG TERM, fully invested, all the time, investor I do not trade, I hold for the LONG TERM. I do NOT sell unless a holding starts to under-perform my expectations and lose long term growth potential. In an average year I will usually make ZERO trades.

My portfolio (see above) was started many many years ago with half the funds put into the stock side of the portfolio and half the funds put in the mutual fund side of the portfolio. Over the years I allow the investments to run as they wish and I DO NOT re-balance. Currently the stock side is about 60% of the portfolio and the funds about 40%. My personal belief is.....much of the "stuff" you see in the media now about re-balancing and diversification, at least how practiced by the majority of investors, is simply busy work and killing returns for the majority of investors. I believe people using the current thinking are re-balancing and diversifying themselves to death in their investing and killing their returns. The emphasis and doubling up of holdings in the fund and stock side is INTENTIONAL.

Over the years I have held many of the BIG name stocks, stocks like EXXON, GE, Colgate, P&G, General Mills, MSFT, Cisco, etc, etc, etc since my focus investing is......BIG CAP, ICONIC BRAND, WORLD WIDE, AMERICAN, GREAT MANAGEMENT, MARKET DOMINANT, companies. I do NOT do International investing....ever, or developing country investing. I consider my BIG CAP, AMERICAN, companies that dominate around the world with their products and business model to by my International exposure. I NEVER invest in auto companies, drug companies, banks, airlines, insurance, or financial companies.

I am NOT afraid to take a chance once in a while with a BIG single stock investment IF....and only IF...I see a probability (yes probability, not possibility) of a once in a lifetime company. For example, I invested ALL of my liquid cash assets in MSFT in 1990 and held through 2002. Another example of a once in a lifetime company that I have invested in is AMZN. I am EXTREMELY clinical in my investing and decisions about investing. I see "the markets" and "indexes" for what they are....individual businesses. As an "old time" investor, financial reports are my main source of information and I definately know how to read a balance sheet, Income statement, cash flow statement, etc, etc.

Anyway.....to be continued:

 

THANK YOU TomB16.

Is everyone else here a trader? Or what? In any event I welcome ANYONE to post on this thread regardless of their investing style. One of my mantras is......if it works for you do it.....ignore everyone else. My style works for me and has for a long time. But, if you are a Technical Investor, or Trader, or Market Timer and it works for you, than do it. All investing is personal. What works for me may not work for you. That is why this thread is NOT intended as investment advice. First, this is the internet, there is no way for anyone to verify what I am saying. Same for all others on this board. In addition, it is impossible to give advice to total strangers. So take what you want from this thread, but it is NOT intended as specific investment advice to others since I do not know you or your situation in the slightest.

Now, to continue this lengthy introduction:

I intend to post actual results once in a while as I go along. I also intend to post any trades or changes in my portfolio (above) as they are made. This serves as a historical investing record for me and will serve as somewhat of a verification of what I am saying and posting for others.

Outside of investing my relevant background is......I am a college graduate, grad school in business and law school grad (although I am not licensed and do NOT practice law). I am approximately 70 years old. I founded, owned, and ran a small business in my earlier life. I sold my business and retired at age 49 and have not worked in day job since. Over the past 20 years I have primarily lived off my investing and personal assets. My retirement at age 49 was made possible by my investing during my business years.

I started stock investing as a child in the late 1950's and a teen in the 1960's. My investing education started with my mother who had a portfolio of individual stocks and a few funds during that time span. It was extremely RARE for anyone in those years to own stocks or funds. It was the era of round lot trades and having to go down to to brokers office to watch the ticker if you wanted to get info on a day to day basis. It was the era of the Wall Street journal and later for me the Investors Business Daily newspaper which was more comprehensive than the WSJ. There were no 401K, no IRA. The changes in investing over that time span have been massive.

One constant over that time that has remained the same is human psychology and the ability of humans to screw things up by making them way more complex than they really need to be. Actually for the VAST MAJORITY of people today about all that is needed in terms of investing is to simply put ALL investing funds and retirement money in a simple SP500 INDEX FUND and let if ride LONG TERM. Research tells us that the great majority of professional money managers will rarely beat the SP500 on a consistent basis. Forget all the charts, quant data, Technical voodoo, etc, etc, etc. Just look at your results and if you are not beating the SP500 at least half the time (hardly anyone is if they are honest) than why beat your head against the wall. Just put it in a SP500 Index fund and forget about it, enjoy life.

So.........

I will post results once in a while.
I will post any moves or trades.
I will post relevant articles and information, with discussion.
I will do my usual stream of consciousness "stuff".
I might make a few predictions once in a while for fun.

Much of the "stuff" that I might post is going to be short term oriented. Market events, historic happenings, recent data, short term results, political events that impact investing. But, all this "stuff" in combination impacts LONG TERM INVESTING. It also impacts the ability of people to stay in the markets and get the benefit of long term compounding.

As for right now.....the markets are BOOMING. I believe we are in for a historic year end rally in stocks. I would not be surprised to see a gain of 8-10% minimum between now and the end of the year. For those that lived through the Regan tax cuts and boom years, which extended all the way to the dot com collapse, this is deja-vu all over again. For those too young to remember that time span, hopefully you will learn something about economics, taxes, business, and investing over the next few years.

 

I have had some times in my investing life that I took a walk on the dark side and did some short term "stuff". In the Dot-com boom era I momentum traded 1000 share lots in a few select stocks.....COST, SBUX, AMGN, and a few others. It was easy to do well in that environment. Most of my trades at that time lasted 1-5 days. I did very well, mostly due to the type of market we were in at that time. Amgen had a lawsuit with one of their competitors at the time and I had 1000 shares outstanding at the time the news hit that they had prevailed. That was a BIG GAIN, couple of day, trade. BUT.....live by the gun, die by the gun......I had my losses like anyone. I lost $40,000 on one trade when a dot-com darling stock failed to pop right after earnings. But all in all it was easy pickings for a while.

Even if I was a trader or short term investor, I would still have my LONG TERM account. As I made money I would filter profits into the LONG TERM core portfolio. What is the use of trading or other market activity if you are not saving or building up assets. I took plenty of risk as a business owner and over the years as an investor. The pay off was having the discipline to transfer those gains into my LONG TERM core portfolio for long term growth at lower risk.

 

As to my current PORTFOLIO MODEL.

Yes, the funds DO double and triple up on many of the stock holdings and also tend to the BIG CAP side of things. This is intentional. Yes, the stock side is very concentrated in just 12 holdings. Even without the funds I believe this is enough diversity. I believe, along with people like Warren Buffet, that many investors today over-diversify themselves to death.

The fund side of the account is there to give more diversity and as a balance and check to my stock picking. All portfolios that I manage are invested the same and at the start half the funds were equally divided between the stocks and half equally divided between the funds. As I said, I do not re-balance the two halves of the portfolio. I let the winners run. I also do not re-balance between the stocks or between the funds. Among the stocks and among the funds I also let the winners run. I will at times.....IF A HOLDING GETS REALLY LARGE.....in comparison to the total portfolio take some profit and reallocate the funds.

Even though I prefer and focus on BIG CAP, proven names, I am willing to take risk for the future. My one stock holding at the moment that is in this category is NVIDIA. I have held it for a while and consider that their business and products in the areas of storage, the cloud, AI, gaming, and especially self driving vehicles, may create a unique once in a lifetime potential for this stock.

Anyway, basic introduction complete. I will post once in a while. I don't want this thread to become a job, or a chore, or take up too much time, so I will try to avoid the temptation to post all the time. At the MOMENT here is where we are for future reference:

DOW 26,906
SP500 2934.52

DOW year to date +8.85%
SP500 year to date +9.76%

Not too shabby......considering.

 

Well even if it goes off topic, that is fine. I am open to anything having to do with investing, money, finance, taxes, etc, etc. As well as anything to do with any style of investing or trading. I have done my thing, my way, for over 50 years and dont think I will ever change. I know what works for me. That is why I have a list of industries that I NEVER buy. (auto, drugs, financial, banks, airlines, insurance)

As to Constellation Brands, I have owned them in the past. Not up to date on them at the moment, but I do think that "weed" will be a huge area going forward. Not an area for me since there will be a massive shake out in the field over the next 10-20 years. It is way too early to tell what companies will survive or become dominant.

HERE is some data that I have been aware of for a long time, but still find interesting:

http://etfdb.com/equity-etfs/the-complete-history-of-the-sp-500-index/

The Complete History of the S&P 500 Index

"The S&P 500 has posted negative annual returns in 14 instances over the last half-century, giving it a nearly 75% chance of turning in a positive year"

https://tdcinvestmentadvisory.com/a-unique-streak/

A Unique Streak

"For example, if we look at the calendar year returns of the S&P 500 Index from 1926-2017, we see that the index produced a positive return roughly three-quarters of the time (74% to be exact)."

My Comment:

There is nothing special about these two articles in particular. I just use them as source data for the 75% statistic. There are many other studies and articles that contain this same data. BUT....for the average person this can provide powerful confirmation of the potential benefits of LONG TERM INVESTING and the power of compounding that will come along with it. Add in the additional power of reinvesting capital gains and dividends and you have a situation that is compelling. I hate to use the "casino" analogy when talking about investing, but if there was a game of chance that produced a positive result for the player rather than the house over 90+ years, I suspect no one would play anything else. That is why I use the SP500 as my main performance yardstick. Add in the LONG TERM average total return of 9.8% for the SP500 and it is little wonder that it is so hard to beat this unmanaged index as a fund manager or investor. As I said above, my opinion is that the average person would be better off simply investing ALL STOCK FUNDS in a SP500 Index Fund for the LONG TERM.

 

Well, a negative end to the current week. This post will be simply opinion, HOPEFULLY, educated opinion.

It is allways amazing to me to see the negative commentary start up every time we have a down general market for one or two days. Personally I dont see ANYWHING negative at all. HERE is my take on where we are right now:

1. Yes, interest rates, the ten year treasury in particular are up.....a little bit. Ten year treasury yields at about 3.2 are STILL way below historical norms. I dont give any credence at all to the DOOM & GLOOM over the ten year yield.

2. Yes, as a result of number one above, mortgage rates are up and approcahing 5%. Again below or at the bottom range of the historic norm. Those that did not take advantage of the historic rates in the 3-4% range to refinance or purchasse for the first time were simply foolish. Both mortgage rates and the ten year yield in the ranges we have seen over the past few years are totally unsustainable.

3. I see NOTHING about the general stock markets or the economy that is out of the ordinary or signaling a recession or for that matter a nasty correction. In my view, earnings will hit it out of the park when the reporting begins in a week or so for the third quarter. The business tax cuts are having a massive positive impact on the bottom line. The vast majority of economic indicators, many of which have nothing to do with how an individual business, are performing, are uniformly at historic or all time highs.

4. The NEGATIVITY that is out there is for the most part political and irrelevant. The business and economic negativity that is out there is a good thing. I dont see any evidence of a bubble, or out of control investors. I welcome the negativity...the more the better. I prefer to see the markets "climb a wall of worry". This tells me that we have a long way to go for the current BULL MARKET.

5. As to the various, so called, "professionals" that are negative........well so what. The majority of these people are traders, or short term, and are irrelevant to the average invertor or the LONG TERM INVESTOR. Even in their short term mentality or trading mentality they are wrong as much or more than they are right. They tend to be media personalities and try to use the media to advance their view and of course in conjunction their investing positions.

6. When it does happen....and yes, it will happen,....and we have a correction, so what, who cares. Corrections are part of the normal general stock market and are totally healthy. We had a correction this summer. Guess what, it is now forgotten and I would guess that many people were not even aware that we had a correction (market down 10% or more). REAL INVESTORS need to be very wary and gird themselves to NOT get shaken out of the market based on fear and panic every time we have a nasty correction. YOU will not win, jumping in and out of the markets. The majority of academic research shows that MARKET TIMING does not work in real life.

Yet Another Study Shows That Timing the Market Doesn't Work
https://www.fool.com/investing/2017/04/02/yet-another-study-shows-that-timing-the-market-doe.aspx


Market Timing Fails As A Money Maker

https://www.investopedia.com/articles/trading/07/market_timing.asp

 

Probably many on this board are familiar with what I am going to post. I have often over the decades relied on a research outfit...DALBAR......for academic research on various aspects of investing. HERE is a very good summary article of their updated findings as of year end 2017.

Dalbar 2017: Investors Suck At Investing & Tips For Advisors

https://seekingalpha.com/article/4109442-dalbar-2017-investors-suck-investing-and-tips-advisors

This little article summarizing the Dalbar 2017 update of their ongoing Quantitative Analysis Of Investor Behavior study is a primer of investing knowledge. Of course, for those that want more detail I refer you to the actual Dalbar report itself.

https://www.dalbar.com/QAIB

My Comment:

There is so much relevant data and information in the summary of the study and in the actual study it is nearly impossible to discuss it. I STRONGLY recomend the first article as a summary for any investor. Once the summary gets your attention than go on to the actual Dalbar report.

On another topic that is touched on in the Dalbar data and in many other studies of investor performance, lets talk for a moment about how to invest available funds....do you "dollar cost average" the funds in over some time? Or, do you invest all in all at once? It is very difficult for the typical investor, even an experienced investor to NOT dollar cost average the funds in. Intuition tells you that is the way to do it. BUT.....experienced investors will know that the vast majority of research proves that the "all in all at once" approach will win out. I am too lazy to put up the data. So, google "which is better dollar cost averaging or all in investing". The result of the search will be many many articles like the following:

Retirement: Dollar-Cost Averaging Or Lump Sum Investment?

https://seekingalpha.com/article/4142997-retirement-dollar-cost-averaging-lump-sum-investment

When Lump Sum Investing Works to Your Advantage

https://money.usnews.com/investing/...ng-might-be-better-than-dollar-cost-averaging

I have ALLWAYS followed the lump sum all at once approach and over the past 50 years have rarely regretted it. I recently advised a family member to put $10,000 into the SP500 Index even at the current market high. In my own account and those that I manage for family I recently.....March and June of 2018.....added significant money into stocks like BA, NVDA, COST, AMZN, AAPL, NKE, and a few others. Many of these stocks at the time were near market tops. Many investors would have NOT invested that money and would have waited for a market downturn (market timing) to invest or would have dollar cost averaged the funds in. The result of puting that money in ALL AT ONCE is a significant profit in those shares after just 6 months and 3 months. Of course, the key for me is EXTREME CLINICAL ability to invest without emotion or fear......EVER. I act the same way when I decide to sell a holding. Once I am not satisfied with a holding I will sell it immediately with no regret looking back. No waiting for a little bump or holding on longer hoping to gain some or make up some loss. When I sell I sell all at once and immediately, even if I am taking a loss. I would rather get those funds free of a poor holding and get them working for me in something that will hopefully produce better returns. For me it is simply a lateral move into a more productive investment.

Anyway, just some late night stream of conciousness posting..GOOD NIGHT ALL.

 

Oh one last effort.....thanks for your input JerryM. Any commentary or input is definately welcome. I also excourage anyone else to post anything about their investing experiences of any type.

Over time anyone that follows this thread will see that I tend to put up many articles and data as well as my opinion on many short term topics and events. That is because as a LONG TERM INVESTOR my portfolio is BORING. I mean, what am I going to say about it......"well I did nothing today in my portfolio". So I tend to discuss random items that might catch my attention on the economy, investing, human psychology, business, etc, etc, etc. Kind of like a "topic of the day" type of post. The topics taken one by one might not seem relevant to LONG TERM INVESTING, but as a whole they will be.

 

There is a lot of REALITY in the little article below:

(quotes are bold, my comments not bold)

A decade of U.S. economic sluggishness may have just snapped back to normal

https://www.reuters.com/article/us-...ave-just-snapped-back-to-normal-idUSKCN1MF220

For a solid decade after the collapse of Lehman Brothers touched off a global financial crisis, there was good reason to think the U.S. economy remained broken, from skepticism about the health of the labor market to tepid economic growth and the moribund rate of interest paid on U.S. Treasury bonds.

Yes, although it was NOT the collapse of Lehman that touched off the crisis. It was the IDIOTIC creation and use of collateralized mortgage securities that touched off the crises. It was also the policies of the US government and the government mortgage entities that set us up for this totally unnecessary crises. The reality was and is that it was the Wall St investment banks that created this crises with their "made up" mortgage securities. (sonetimes the quants are not as smart as people think they are) The policies of the US government over that time span were embarasingly and obviously ineffective. Not that this was any surprize to anyone that had any grasp of economic history and REALITY.

In a heartbeat, that seemed to change this week, adding facts on the ground to Federal Reserve Chairman Jerome Powell’s glowing portrait of a historically rosy and extended period of super-low unemployment, modest inflation and steady growth.

Not exactly a heartbeat. The recovery from the DOOM&GLOOM years has been ongoing since the last election and particularly since the passage of the tax cuts. And, the years since the near collapse of the banking system in 2008/2009 represented one of the greatest BULL markets in stock market history. Unfortuantely many missed out on many of those years waiting to get over their fear and for an entry point to get back in. Those years present a valulable lesson in the fact that the course of stocks and mutual funds is not necessarily dependant on GENERAL ECONOMICS. Many investors lose track of the fact that they are investing in individual busineses NOT the general economy.

On Friday, it came through the 3.7 percent unemployment rate, a 49-year low.

The week’s events were not just consistent with the good times scenario both Powell and U.S. President Donald Trump have laid out. They validated it, and in doing so pointed to a U.S. economy that may be starting to work more like it used to.

Even former skeptics have become open to the idea that a recent rise in productivity may turn into a trend, drawing comparisons with the “Great Moderation” period of growth during the 1990s, which also featured low unemployment and solid wage growth.

We are seeing solid wage growth right now and going forward. Of course that is raising talk of the INFLATION BOGYMAN, as usual. Personally I see NOTHING out of the ordinary in terms of inflation. Actually other than the late 1970's and early 1980's, show me any time since that we have had out of control or a "bad" inflation environment. The REALITY in my opinion is that we have been stuck in a DEFLATIONARY DEPRESSION for the past ten years kicked off by the near collapse of the banking system and sustained by the political policies of those in command for the past ten years.

The rise in long-term bond rates also may herald a return to more normal conditions, giving cautious investors a reasonable return after years of lackluster outcomes, and easing concerns about a flat or “inverted” yield curve that would herald loss of faith in the future.

Yes, that is a good thing, as well as the short term rates gradually moving back to normal levels. Of course the danger is that the Fed as they usually do will over-do things and move too soon, too fast, hampering the economy.

The return of volatility, of reasonable returns for savers, of wage pressure benefiting workers, may all pose risks. But they are the risks of a more normal world. “The economy is performing extraordinarily well, at least relative to recent history,” said Joseph LaVorgna, chief Americas economics at Natixis. “It’s not the boom of the late ‘90s, but it’s doing pretty well.”

Thank goodness it is NOT the boom of the late 1990's. That time period, the dot-com era, was one of rampant investor delusion and semi-fraud as people jumped into, and drove up prices, on companies that were nothing more than a domain name and a web site. The dot-com crash shook all that mania out of the markets.

MY COMMENT:

I believe that short term we are looking at a very nice year end and start to the new year for investors. We are experiencing a more normal economy for the first time in 8-10 years. Businesses are energized by the tax cuts. Inflation is NOT going to be an issue, other than if the FED overreacts. Inflation will be kept in check by massive influx of foreign and illegal workers that continue to flood into the country and depress wage pressure. We will soon be done with the rising yields if the FED has the snese to stop at around the 3% fed rate level. HOPEFULLY we are only looking at two or three more increases before the Fed pauses for a significant time to evaluate where we are. As we have seen up to now each rate increase will cause a small impact on the general markets for a few days to a week and than be forgotten. As in any normal economy, there will be ups and downs over the next six months, but all in all it will be a continuation of the good times for stock and mutual fund investors. It will continue to be a time for INVESTORS to keep their eye on FUNDAMENTALS and ignore the media and political "stuff" that prompts fear and panic.

 

ONE last fun "little" article:

Jeff Immelt ‘destroyed’ General Electric: Ken Langone

https://www.foxbusiness.com/markets/jeff-immelt-destroyed-general-electric-ken-langone

Former General Electric CEO Jeff Immelt, the scandal-plagued leader who was ousted after years at the helm of the company, is responsible for destroying the sprawling, multinational conglomerate, according to Home Depot co-founder Ken Langone.
“He had a big steel ball on a crane and he destroyed it as if he was tearing down an old building,” Langone said on Friday during an interview with FOX Business’ Maria Bartiromo.

Heaven help those that have hung on to GE stock over the past year or two. I used to own this stock during the Welch years and it was a monster company.

This year alone, GE has lost more than 35 percent of its value. In June, the Dow Jones Industrial Average also removed the 125-year-old company from the index after more than 110 years. “He took the most valuable corporation on Earth in 2000, and today, there’s the possibility that General Electric’s bonds might very well become junk status,” Langone said.
On Tuesday, Reuters reported that credit ratings agency Moody’s had placed GE on review for a downgrade. S&P Global Ratings downgraded GE and GE Capital earlier this week. “The tragedy is these poor people that spent their whole lives in GE and believed in Mother General Electric and invested money in the stock,” Langone said.

MY COMMENT:

It is a shame what has happened to this company, although it is a common story in todays business world. The glad-handing, celebrity CEO has in many cases replaced the competent business CEO. One critical element of any business is competent and experienced management. When I look at a company I look at FUNDAMENTALS and MANAGEMENT. These two factors tell the story moving forward. When Welch left GE and Immelt was crowned, I sold all of my shares of GE stock. At that time the company was still a powerhouse and expected to continue as such. But, I did not like Immelt or his style so I sold.

Over the past few decades we have seen deterioration in CEO ability and responsibility time after time when companies are failing. I cant count how many times over the past decade or so I have seen CEO's quoted as saying something along the lines of...."gee, how could I know about that" or basically "I never looked at or knew about that". Another good example is the turmoil and scandle that has plagued Wells Fargo for the past couple of years. (glad that I am NOT Warren Buffett...big Wells Fargo holder)

On a side note I find it interesting that GE was the personification of the CONGLOMERATE model of business. Other companies that I have owned in the past like General Mills, Colgate, Proctor & Gamble, etc, etc, were all conglomerates and dominated in many business segments. Of course the conglomerate business model is now being thrown under the bus by the current "unlocking shareholder value" fad. (short term results thinking that often benefits the CEO and management with their incentive packages) Companies are shedding business segments right and left. It is like musical chairs right now in the business world as companies sell of segments to other companies, go private, and than in a few years go public again.

In response to the ANTI-CONGLOMERATE and UNLOCKING SHAREHOLDER VALUE fad I have a one word answer.......AMAZON. This company is the definition of a conglomerate. The difference is MANAGEMENT.

 

HERE is some interesting data that I pulled out of the article below. It shows the impact of "reference point". Depending on what and how you use a reference point can greatly influence your thinking, investing, etc, etc.

"Here’s a breakdown of S&P 500 performance (all numbers through 9-30-17 when the article was done) since…

…the start of this year: 14%

…the market bottom in mid-February of 2016: 42%

…the market melted up 32% in 2013: 42%

…the market bottom in March of 2009: 346% (19% annualized)

…Lehman Brothers filed for bankruptcy in September of 2008: 156% (11% annualized)

…the market peak in October of 2007: 100% (7% annualized)

…the dot-com bubble deflated in 2000: 136% (5% annualized)

…Alan Greenspan gave his famous “irrational exuberance” speech in late-1996: 392% (8% annualized)

…just after the 1987 crash: 1851% (10% annualized)

…the start of the bull market in 1981: 4800% (11% annualized)

…the first index fund was created in 1976: 9314% (11% annualized)

…just after the Great Depression in 1933: 873887% (11% annualized)

…1926: 688849% (10% annualized)

Then there’s the fact that the S&P 500 wasn’t really even created until 1957 (the numbers before that have been pieced together)."

My Comment:

"Reference Points"

awealthofcommonsense.com/2017/10/reference-points/?curator=t...

Also contains some similar data, although not as much detail, on bonds, gold, and Japan as examples.

The BOTTOM LINE from this little article:

"It’s very easy to cherry-pick historical data that fits your narrative to prove a point about the markets."

"Historical market data is full of caveats and deserves context."

"The unpredictable nature of the return streams shown here just goes to show you that risk comes in many different flavors and rarely shows up in the same place at the same time."

My Comments:

In general LONG TERM investing helps to smooth out some of the market behavior. The Japanese figures show that even over the LONG TERM it is possible to make NOTHING over a time span as long as 30 years. This Japanese situation reflects the impact of a DEFLATIONARY DEPRESSION. The Japanse situation also shows that it is possible to be a modern, industrial, technical, society and have NOTHING to show for 30 years of commerce and investing. A good lesson for any that think investing does not involve risk. In general stock investing is the best way to build wealth over the LONG TERM, but it is possible to go for long periods of time with little to no return. We saw this in this country in the 1970's and into the early 1980's. There is a danger in having the retirement funds of the entire country (401K system), except for government workers that still have a pension, dependent on the stock markets. UNFORTUNATELY people dont see or understand the risk. They dont see the value of having a paid off house. They dont see the value of income streams in retirement outside their stock account. They think they can rely on their stock account to produce returns for a 20-40 year retirement.

Obviously, I am a fully invested, all the time, LONG TERM investor. I might even call myself a PERMA-BULL, since even in a correction or an exceptional downturn I am looking ahead to what I expect the future will be. I am a very CLINICAL investor and NEVER give in to fear or panic. BUT....I do have my finances set up so I am NOT dependent on stock market funds. This allows me to be fully invested for life and hopefully see the rewards of stock investing while being realistic, reasonable, and positioned so events in the markets WILL NOT impact my lifestyle or retirement.

 

SOMETIMES it takes a LONG LIST to make a point. The list below shows the TEN YEAR TREASURY yield as of January 1 of each year from 1959 to 2018. Basically from 1959 to 2008 we NEVER had ten year treasury yields as low as they are now. For accuracy, there were a few, very few, months in a few random years with yields in the 3-4% range. But those very few months were very rare. The point is, the yields we have had since the near banking collapse of 2008/2009 are EXTREME ABERRATIONS on the LOW side of things. In other words, there is absolutely no reason for any sort of focus on rising yields at the still extremely low levels we are at today. Yes, the investment banking world and other financial areas tend to be populated by younger people many of whom over the past ten years or so have had no experience with normal interest rates. But, their lack of experience means nothing, other than they have no basic experience with a NORMAL economy.

Oct 5, 2018 3.23%
Jan 1, 2018 2.58%
Jan 1, 2017 2.43%
Jan 1, 2016 2.09%
Jan 1, 2015 1.88%
Jan 1, 2014 2.86%
Jan 1, 2013 1.91%
Jan 1, 2012 1.97%
Jan 1, 2011 3.39%
Jan 1, 2010 3.73%
Jan 1, 2009 2.52%
Jan 1, 2008 3.74%
Jan 1, 2007 4.76%
Jan 1, 2006 4.42%
Jan 1, 2005 4.22%
Jan 1, 2004 4.15%
Jan 1, 2003 4.05%
Jan 1, 2002 5.04%
Jan 1, 2001 5.16%
Jan 1, 2000 6.66%
Jan 1, 1999 4.72%
Jan 1, 1998 5.54%
Jan 1, 1997 6.58%
Jan 1, 1996 5.65%
Jan 1, 1995 7.78%
Jan 1, 1994 5.75%
Jan 1, 1993 6.60%
Jan 1, 1992 7.03%
Jan 1, 1991 8.09%
Jan 1, 1990 8.21%
Jan 1, 1989 9.09%
Jan 1, 1988 8.67%
Jan 1, 1987 7.08%
Jan 1, 1986 9.19%
Jan 1, 1985 11.38%
Jan 1, 1984 11.67%
Jan 1, 1983 10.46%
Jan 1, 1982 14.59%
Jan 1, 1981 12.57%
Jan 1, 1980 10.80%
Jan 1, 1979 9.10%
Jan 1, 1978 7.96%
Jan 1, 1977 7.21%
Jan 1, 1976 7.74%
Jan 1, 1975 7.50%
Jan 1, 1974 6.99%
Jan 1, 1973 6.46%
Jan 1, 1972 5.95%
Jan 1, 1971 6.24%
Jan 1, 1970 7.79%
Jan 1, 1969 6.04%
Jan 1, 1968 5.53%
Jan 1, 1967 4.58%
Jan 1, 1966 4.61%
Jan 1, 1965 4.19%
Jan 1, 1964 4.17%
Jan 1, 1963 3.83%
Jan 1, 1962 4.08%
Jan 1, 1961 3.84%
Jan 1, 1960 4.72%
Jan 1, 1959 4.02%

My take......the economy is booming. There is NO inflation to speak of. Wage growth, unemployment, the GDP, business health and earnings are excellent, etc, etc, etc. Any focus on interest rates is NOT justified in any way and will have zero impact on investors.