The Long Term Investor

No, not really. My long term average return has been above 10% for a long time now. I expect that I will still average about 10% per year with reinvesting all dividends and capital gains when, or if, I go all in on the funds at some time in the future due to age and in preparation for less interested/experienced people taking over the portfolio. The long term return of the SP500 is right at 10%. With luck the two other funds will continue to often beat the SP500 and with the three funds mix the long term return will stay at or above 10% per year average. BUT....who knows.

AND....who knows if I will actually be able to move to less active management of my accounts. Easy to say but hard to do. I may have trouble giving up the control after all these years. AND.....of course.....even now I project returns to double my money every 6-7 years for the next 25 years. So I guess I am on some level I am planing to be around and managing money till age 95. One can only hope. On one of the other boards that I had a thread with this same name for years, there was one active investor in his mid 90's.

"According to historical records, the average annual return for the S&P 500 since its inception in 1928 through 2017 is approximately 10%."
A significant detail about the historical S&P returns is that nearly half, over 40%, of the gains made over the years come from dividends. Calculating in the effect of an investor reinvesting all dividends received would render the historical performance figure substantially higher."

Read more: What is the average annual return for the S&P 500? | Investopedia https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp#ixzz5VU798mzF

 

HERE are a couple of "little" articles dealing with CORRECTIONS and BEAR MARKETS. We are in a situation right now with, I would guess, a significant portion, perhaps even a majority, of professionals traders and money people having NEVER experienced many corrections or a bear market. Lets assume that most people dont get into this type of employment before age 25. Lets assume the same for individual investors, that they dont start till some time in the mid 20's or later with stock or fund investing. This means that we have a great number of people, up to age 35, that have NEVER experienced a NORMAL market, have never experienced a BEAR MARKET, and have experienced very few, if any, REAL corrections. People need to GROW UP, and get REAL, the markets do not just go up, up, up. Growth happens in spurts and often explosive moves. Markets go up and down BUT it is the LONG TERM that smooths out all the up and down short term moves. There is ONE simple reason that individual investors and even the so called professionals can NOT achieve the returns of the unmanaged averages, much less beat them. It is the fact that people jump in and out of the markets, often out of fear and panic and human emotion. In my opinion and as shown by the vast majority of academic research, market timing does not work and does not increase returns. People jump out at the wrong time and more importantly NEVER get back in at the right time to capture the explosive market moves UP after a correction or bear market.

(BOLD HIGHLIGHTS BELOW ARE MINE AND REPRESENT MY OPINION)

Stock market: Should investors fear a correction, or 10 percent drop?

https://www.usatoday.com/story/mone...corrections-pullback-bear-markets/1752031002/

"There's nothing more unnerving to stock investors than watching the market go down day after day.

Headlines about 600-point drops in the Dow Jones industrial average and pessimistic pundits predicting more declines have become more frequent in October. The big price declines and shrinking account balances are making investors queasy and prompting them to wonder if the money they have in the market and their 401(k) retirement plans are safe.

But the severity of any market drop on Wall Street needs to be put into the proper perspective – especially in a wild up-and-down environment like now when the Dow can fall 600 points in a single day, like it did Wednesday, only to rebound 400 points the next day, as it did Thursday.

Wall Street professionals use three measurements to define the intensity of a market drop from a recent high.

The three main descriptions of down markets are: a "pullback," or drop of 5 percent to 9.99 percent; a "correction," a decline of 10 percent to 19.99 percent; and the feared "bear market," or 20-percent-plus drop.

Thursday's big rebound rally, which pushed the Dow up 1.6 percent to 24,985 and the S&P 500 up 1.9 percent to 2706, enabled both indexes to climb back into positive territory for the year and dodge the dreaded 10 percent drop – at least for now.

Here's a primer on the three categories of stock market pain:

Pullback: first sign of trouble
Pullbacks, or dips of less than 10 percent, are normal periods of adjustment that get the attention of investors, many who had gotten too complacent. These drops, which often begin without warning, tend to be short-lived, however. And they normally aren't disruptive enough to change the market's longer-term rise.

The Dow, for example, has suffered 395 dips of 5 percent or more since 1900, according to Alan Skrainka, chief investment officer at Cornerstone Wealth Management. That equates to roughly three pullbacks a year. The recent slide marks the second pullback of 2018.

And when it comes to losses, the average pullback for the S&P 500 since World War II has averaged 7 percent and lasted about a month, according to data from CFRA, a Wall Street research firm. Historically, it has taken about six weeks to recoup pullback losses.

At its low point Wednesday, the current downturn's 9.4 percent fall, therefore, is worse than average. . The sharp, swift decline has been sparked by fears that growth of the U.S. economy and corporate earnings will start to slow due to trade disputes and slowing growth in China, the world's second-largest economy.

Correction: 10 percent drop piques fear
Corrections are more serious market declines that kick in when the market suffers a 10 percent drop. Unlike pullbacks, however, corrections do more damage and last longer. In the 22 corrections in the post-war era, the S&P 500 suffered an average loss of 13.8 percent and dragged on for 148 days, or roughly five months, according to CFRA. After hitting a low, it takes the market about four months, on average, to get back to even.

A good example of a scary correction that did not morph into a bear market was the 10.2 percent decline that ended in early February. The S&P 500 recouped its losses in late August and went on to make a record high a month later.

Still, the greater severity of these losses tend to boost fears on Wall Street of a more serious coming decline, says Bruce Bittles, chief investment strategist at investment firm Baird. If the current pullback morphs into a full-blown correction, it would be the second of the year.

"The question is: Does it lead to a bear market?" asks Bittles.

Corrections often intensify when fear levels rise on Wall Street and panicky investors sell to avoid even bigger losses, which exacerbates the downward pressure on prices. The market's situation often becomes more precarious when closely watched indexes like the S&P 500 sink below key levels that investors viewed as floors, or areas of support.

On Wednesday, for example, the S&P 500's downward spiral picked up steam after it was unable to stay above the 2710 level, its low from a selloff earlier this month. Similarly, the large company stock index's dive below its average price over the past 200 trading days also spooked investors, as it signals that the market's trend may be shifting from up to down.

What makes a correction "trickier" for investors to navigate is the fear that prices can fall a lot more "before stabilizing," says Nick Sargen, chief economist and senior investment advisor for Fort Washington Investment Advisors. "Selling also breeds more selling," he adds.

Not knowing if the double-digit percentage decline will get worse or prove to be a buying opportunity creates uncertainty for investors.

Bear Market: Wall Street's most feared decline
Bear markets, or drops of 20 percent or more, are feared by investors. The reason: They tend to erase a large chunk of the gains from the prior bull market, which results in huge losses for individual investors. The current bull run, which began in March 2009 and is the longest in history, registered a gain of 333 percent as of its recent record high on Sept. 20.

The average loss in bear markets dating to the Great Depression is nearly 40 percent, according to S&P Dow Jones Indices. But the past two bear markets, including the one caused by the banking crisis that ended in March 2009 and the 2000-02 tech-stock meltdown, wiped out half of the market's value.

Stock prices in bears, on average, tend to slide for 21 months, or nearly two years, before hitting a bottom, data show.

If a bear drop of 20 percent occurs, it would slice a $100,000 investment in the S&P 500 at last month's high down to $80,000.

Brutal bear markets are normally caused by wildly overvalued markets like tech stocks in 2000, or shocks such as the OPEC oil embargo in the mid-1970s, or financial crises like the mortgage meltdown in 2008 that cause massive damage to the banking sector.

Bear markets also occur when the U.S. economy suffers a recession. Currently there are no signs of recession.

"A bear market is scary because the market decline is typically swift, and it's difficult to time when to get out," says Sargen.

To survive periods of market turbulence, Skrainka says it is imperative that investors have the right mix of investments that they can stick with in "good times and bad." In short, make sure your portfolio wasn't too risky for you to handle.

Other survival tips include maintaining a long-term perspective, making sure your portfolio is diversified and is filled with shares of quality companies that have a history of surviving difficult times.

"Most people buy when they feel good and the news is good; this is when prices are higher and future returns are lower," Skrainka says. "Market declines can be the long-term investor's best friend because they offer the opportunity to buy good investments at a lower price.""

AND

Stock market corrections: How bad can they get and how long can they last?

https://www.usatoday.com/story/money/2018/10/31/stock-market-how-far-can-prices-fall/1819728002/

"With the stock market as wobbly and erratic as it has been since early February, all this talk about a so-called price "correction" can cause nervousness and confusion.

A correction is a rather mechanical-sounding term to describe a major stock market index such as the Standard & Poor's 500 falling 10 percent or more from a prior closing high. The recent slump on Wall Street has pushed the large-company stock gauge down by more than 10 percent a few times in recent days, but not yet on a closing basis.

Tuesday, after briefly dipping into correction territory but closing 1.6 percent higher, the benchmark index finished the day down 8.5 percent from its Sept. 20 high.

So what should investors prepare for if an "official" correction eventually strikes?

What's the average correction drop?
In the 22 corrections since World War II the average price drop for the S&P 500 has been 13.8 percent, according to data from CFRA, a Wall Street research firm. They normally last around five months.

The takeaway: The recent slide could cause more pain.

"More downside would not be surprising," says Joe Quinlan, chief market strategist at U.S. Trust, noting that a steeper decline would still be within the "historic norm.""

MY COMMENT

STFU and just invest like a BIG BOY or BIG GIRL. I actually think most "regular" investors and people do a lot better job of dealing with corrections and bear markets than the so called professionals. Ignore the MEDIA, they have one goal, generating clicks and eyeballs. Nasty headlines and the most extreme language is their tool to do this. They have absolutely no knowledge beyond anyone else and are far from experts. The VAST MAJORITY of stuff they publish on investing is GARBAGE. Rely on garbage and the results you will get will be garbage. One closing thought......the article above talks about the SCARY correction we had this February....does ANYONE reading this remember a scary correction back in February? I suspect not. In hindsight it was nothing. And, in reality even when it was happening I suspect that very few people were concerned at all. Of course, I am sure if you look back the MEDIA was going crazy as usual with the DOOM&GLOOM. ENJOY this correction and the good prices you are geting in your 401K and other regular investments during the time it is happening.

 

DOW year to date +1.60%
SP500 year to date +1.43%

IF today was year end for 2018 and you added the above SP500 return to the previous 9 years and did a simple average for the ten years you would have a simple average of +14.17% per year. WAY ABOVE the average long term return of the SP500, which is about +10% per year. Counting this year, over the past ten years the SP500 has NOT been negative a single year. The only years below +12.34% are 2011 at +1.97% and 2015 at +1.25%. Hardly meaningful data, but it is not the end of the world if the SP500 ends up in the +1% to +3% range for 2018. In fact it would actually be normal.

I seriously DOUBT that this year will end up negative. I STILL anticipate a nice rally for the year end and at this point if I was to GUESS where we will end the year I would GUESS (yes, just a wild ass guess) that we will end up the year at somewhere between +6% and +11% on the SP500. If the markets can pull this off, it would be a NICE continuation of the longest BULL MARKET run in history. Even if we ended this year at +1% for the SP500, it would still be a continuation of the longest BULL MARKET run in history. In fact, even if we ended the year with the SP500 in negative territory, my opinion is we would still be in the longest BULL MARKET in history.

THERE.......I have now probably jinxed the markets for the rest of the year.

Incidentally, we are at the apex of the earnings reports right now. During the three days.....October 30, 31, and November 1........826 companies will report earnings. November 5,6,7, and 8.....1100 companies will report earnings. After that, earnings taper off significantly and will be over within a few weeks. Earnings are coming in very nicely, although as has been the case for a few years now, if earnings are bad the stock goes down, if earnings are good the stock goes down. EVERYONE wants to nit-pick earnings and parse earnings language, especially forward looking statements. BUT, sooner or later good earnings will force the markets to go up. I am thinking that is where we will be at year end this year and into the start of the new year.

I remain fully invested for the LONG TERM as usual.

 

HERE is one take on where we are right now. A comprehensive little article that discusses many different aspects of various markets and investing. I may not agree with ALL the opinion in this article, but it does contain much information that is foder for discussion or at least consideration.

The Stock Market Bandwagon Is Filling Up Quickly

https://www.bloomberg.com/opinion/a...-bandwagon-is-filling-up-quickly?srnd=opinion

( BOLD is mine and represents my opinion of RELEVANT article info)


"The U.S. stock market as measured by the MSCI USA Index just posted its best two-day performance since February, rising 1.58 percent Tuesday and 1.13 percent Wednesday. What’s notable is that the gains, in the wake of a nasty sell-off that left equities on the cusp of a correction, aren’t coming with the usual caution from prominent Wall Street strategists about “dead cat bounces.” Instead, they are expressing a remarkable sense of enthusiasm.

Marko “Gandalf” Kolanovic issued a report Tuesday talking up the possibility that the October “rolling bear market” turns into a “rolling squeeze higher” into the end of the year. Then on Wednesday, Fundstrat Global Advisors’ Tom Lee — another analyst known for making exceptionally timely calls — went even further. He wrote in a research note that “the potential for a violent upside rally is substantial.” While a big part of Kolanovic’s thesis focused on fundamentals such as a likely surge in stock buybacks by companies, Lee honed in on the technicals. The percentage of stocks in the S&P 500 and Russell 2000 that are above their 50- and 200-day moving averages is “unusually low,” and that has often signaled a bottom when it has happened outside of a bear market but in a correction, reports Bloomberg News’s Kriti Gupta. As Lee points out, returns over the following three and six months — when the markets have become as “oversold” as they are now — have averaged 13 percent and 19 percent, with positive gains in eight of nine cases. Cynics might say that now would be the perfect time to sell given such unbridled optimism among strategists.

But there are signs that all those who wanted to sell have already done so. State Street Global Markets came out Wednesday with its monthly index of global institutional investor confidence. The measure has some authority because unlike survey-based gauges, it uses actual trades and covers 15 percent of the world’s tradeable assets. For October, the index dropped to 84.4, the lowest in almost six years. The index has been this low in only two other periods in the history of the series going back to 1998 — late 2012 and late 2008, and each time stocks went on to rally. Who wants to play those odds?

CHINA TO THE RESCUE. MAYBE.
I would be remiss to talk about the good feelings that have suddenly permeated equities markets not only in the U.S. but globally without mentioning China’s role. As the world’s second-largest economy, significant fiscal and monetary announcements there tend to ripple through global markets. There have been countless times in the past few years when China’s stock and bond markets looked to be in freefall only for the authorities to announce plans to stimulate the economy, bolstering risk assets worldwide. Well, it just so happens that on Wednesday a statement from a Politburo meeting chaired by President Xi Jinping said that the nation’s economic situation is changing, that downward pressure is increasing, and that the government needs to take timely steps to counter all this. “In recent years the balancing act has been addressing risks in the financial system against pressure to stabilize economic growth,” Katrina Ell, an economist at Moody’s Analytics in Sydney, told Bloomberg News. “It appears the latter is again more of a priority.” The statement could also be a signal that China’s leaders are trying to soften the blow if, or more like when, the yuan weakens to the widely watched 7 per dollar level. The yuan was at 6.9757 per dollar Wednesday, steadily depreciating from 6.2690 in April amid an escalating trade war with the U.S. Some market participants worry that if the yuan does weaken beyond 7 per dollar, it could spark a flight of capital that causes the yuan to fall even more and turn into a full-blown currency crisis that officials can’t contain and infects global assets.

DEBT’S ‘THREAT TO SOCIETY’
Perhaps the equity bulls wouldn’t be so, well, bullish if they looked at the deteriorating U.S. debt situation. The Treasury Department on Wednesday announced planned debt sales that will surpass levels last seen when the country was digging out of its worst economic crisis since the Great Depression, according to Bloomberg News’s Saleha Mohsin and Liz Capo McCormick. A ballooning budget deficit — fueled by tax cuts, spending hikes and an aging population — is driving the Treasury to raise its long-term debt issuance at its quarterly refunding auctions to $83 billion from $78 billion three months ago. Already, total marketable U.S. government debt stands at $15.3 trillion, up from $13.9 trillion when Donald Trump took office in January 2017. The debt situation has become so bad that even a prominent Trump administration official on Wednesday called it a “threat to the society” that requires significant cuts to the government’s discretionary spending. That’s not what stock bulls want to hear, especially since it was a surge in discretionary spending that came along with hefty corporate tax cuts that spurred on equities in 2017 and for much of this year before October’s downdraft. The concern is that all this government borrowing will “crowd out” companies, making it more expensive for them to sell debt and squeeze their profit margins. Already, yields on investment-grade bonds have risen to 4.24 percent on average, the highest since 2010 and up from 2.75 percent in mid-2016, data compiled by Bloomberg show.

CURRENCY TRADERS ARE HAPPY — FOR ONCE
About the only thing that made investors any money in October was currencies. While the MSCI All-Country World Index of equities, the Bloomberg Barclays Global Aggregate Bond Index and the Bloomberg Commodity Index were all headed toward losses, the Citi Parker Global Currency Index was poised for its best — and first — winning month since May. The measure, which tracks nine distinct foreign-exchange investment styles, was up 0.95 percent for the month through Tuesday. Currency traders are notoriously bad at making money. The Citi Parker Index has fallen in seven of the past nine years and is on track to drop again in 2018 even with October’s gains. But much of the good fortune of late was likely due to the big rally in the U.S. greenback, with the Bloomberg Dollar Spot Index up 2.40 percent in October for its best showing since soaring 3.91 percent in November 2016. Hedge funds and other large speculators have 242,000 contracts betting on dollar gains, Commodity Futures Trading Commission data show. That’s about seven times more than the average over the past 10 years and shows just how optimistic currency traders are on the outlook for the U.S. economy and higher interest rates. But maybe the dollar, which by the Bloomberg index is the highest since May 2017, is becoming too strong. Officials at conglomerate 3M Co. said on the company’s earnings conference call last week that “foreign currency, net of hedging, reduced per-share earnings by $0.08 as the U.S. dollar strengthened against many currencies throughout the quarter.”

COMMODITIES SEND NEGATIVE SIGNALS
Here’s another thing that the stock bulls might want to consider: The Bloomberg Commodity Index fell in October, bringing its year-to-date loss to 5.65 percent and increasing the odds that the market will have a losing year for the first time since 2015. That’s usually not the type of performance that would signal an up arrow for the global economy. Consider the oil market. West Texas Intermediate prices fell on Wednesday to their lowest level since mid-August at about $65 a barrel and are headed for the biggest monthly loss since 2016. “There’s a sense that the global economy goes into a bit of a slowdown and demand in 2019 isn’t quite as robust as it has been over the past couple years,” Brian Kessens, who helps manage $16 billion in energy assets at Tortoise Capital Advisors, told Bloomberg News. “We are still in more of a risk-off sentiment.” U.S. supply data released Wednesday also showed a sixth consecutive increase in domestic crude inventories, a sign that perhaps demand is softening. The flip side is that consumers will see some relief at the pump. Gasoline futures fell 2.10 percent Wednesday to their lowest levels since April. One commodity that has bucked the softening trend lately is sugar, with prices up 18 percent in October — just in time for Halloween. And despite the first increase in candy prices three years, Americans were expected to boost spending on sweet treats this October by 4.2 percent from a year ago, according to Bloomberg News’s Sophie Caronello. As candy is a comfort food, the increase in spending makes sense if it helps investors reduce the pain from the broad losses in markets in October.

TEA LEAVES
So, is all this renewed optimism in the stock market warranted? The answer to that question may unfold in coming days. First up will be the Institute for Supply Management’s manufacturing report for October on Thursday. The median estimate of economists surveyed by Bloomberg News is for a reading of 59, which will keep the gauge at about its highest level since 2004. The measure is a diffusion index, meaning readings above 50 denote expansion and those below 50 signal contraction. Within the index, economists will be zeroing in on the new orders component for signs that the escalating trade war may be having a negative effect. Then on Friday, the U.S. Labor Department releases its monthly employment report, with economists expecting the government to say that 200,000 jobs were created in October, up from September’s storm-depressed 134,000 figure. The downside is that average hour wage growth is expected to slow to 2 percent from 3 percent. Those two reports will be a prelude to next week’s midterm elections, which have the potential to roil markets depending on how they shake out. In short, it may not be time to signal the all clear in equities just yet."

MY COMMENT

This little article is a mix of the good and the bad. As to China, currency trading, and commodities, I dont feel this info is relevant to stock and fund investors, especially those that are LONG TERM INVESTORS. China is a BLACK HOLE. Fake financials, manipulated government economy and currency, communist dictatorship, rampant fraud and theft in business, etc, etc, etc. China needs to be careful, there are many other countries that can become the manufacturing centers for the world. They have no idea how to deal with Trump. They also have ZERO leverage in dealing with the USA. They need us way more than we need them. The current MEDIA take on China reminds me of the distorted and totally inaccurate reporting on the economics and strength of Russia during the early Regan years. We all......well at least a few of us.....know how that turned out for Russia. Actually speaking of Regan and Russia....the total lack of knowledge of pre-internet history by many people astounds me. UNFORTUNATELY it often seems like we are quickly heading to the future depicted in the movie......IDIOCRACY. BUT....perhaps that will turn out to be a good thing for those that do have some understanding of economics, business, science, and other fields that is not based on and driven by superstition, myth, MEDIA BS, emotion, and political correctness on steroids.

 

MARKETS continue to be extremely JUMPY in general. At least, when it comes to the media types and the professionals. Reading that I do on sites with "regular" people....not at all. We had a good week this week that reflects a normal market.

DOW year to date +2.23%
SP500 year to date +1.85%

 

As a shareholder of AMAZON and as a stock and fund investor I welcome the news below. First this should create a GREAT quarter and year end kick for Amazon. Combine that with the recent dip in price and you have a COMPELLING opportunity with this stock. IN ADDITION this move has kicked off a WAR among all the online retailers, big and small, for this HOLIDAY SEASON. This sort of business activity has the potential to make the next few months very positive for stock and fund holders. Add in the end of the election, rising wages, the good economy, the potential for a deal with China, the recent good earnings, etc, etc, and you have all the pieces in place for a year end rally with potential to extend into January to start the new year.

Amazon drops free-shipping minimum for all customers
https://www.foxbusiness.com/retail/amazon-drops-free-shipping-minimum-for-all-customers

(color represents my emphasis and opinion)

Competition for online holiday shoppers is heating up, and Monday Amazon announced that it is offering free shipping with no minimum purchase for orders that will arrive in time for Christmas.

As previously reported by FOX Business, Amazon competitor Walmart announced Tuesday it will expand its free two-day shipping options in November. Millions of additional items on its website sold by third-party sellers will qualify for the free two-day shipping perk.


Target also announced it would offer, for the first time, two-day shipping, with no minimum purchase this holiday. The offer starts Nov. 1 and ends Dec. 22.

According to the National Retail Federation, holiday retail sales in November and December will increase between 4.3 and 4.8 percent over 2017 for a total of $717.45 billion to $720.89 billion. Over the past five years, the average annual increase was 3.9 percent.

MY COMMENT

In my opinion there is a lot of pent up GOOD FEELINGS out there in the general economy. As a result, I believe there is great potential this year for people to open up their pocketbooks and celebrate for the November/December holiday season. Markets about to open for the week in just a few minutes. I remain fully invested for the LONG TERM as usual.

 

Here is my "PORTFOLIO MODEL" for all accounts managed. I am re-posting this since I often talk in this thread about my portfolio model. My custom in the past on this sort of thread was to re-post my portfolio model every once in a while since I will tend to talk about it once in a while. I "manage" six portfolios for various family including a trust. ALL are set up in this fashion. If I was starting this portfolio today, lets say with $200,000. I would put half the money into the stock side of the portfolio, with an equal amount going into each stock. The other half of the money would go into the fund side of the portfolio, with an equal amount going into each fund. As is my long time custom, I would than let the portfolio run as it wished with NO re-balancing, in other words, I would let the winners run. Over the LONG TERM of investing in this style (at least in my actual portfolios), the stock side seems to reach and settle in at about 55% of the total portfolio and the fund side at about 45% of the total portfolio over time. That is a GOOD THING since it tells me that my stock picks are generally beating the funds over the longer term. AND....since the funds in the account generally meet or beat the SP500, that is a VERY good thing.

As mentioned in a post in this thread, I include the funds in the portfolio as a counter-balance to my investing BIAS and stock picking BIAS and to add a VALUE style component (Dodge & Cox Stock Fund), a top active management fund that often beats the SP500 (Fidelity Contra Fund) and a SP500 Index Fund to get broad exposure to the best 500 companies in AMERICAN business and economy. The funds also give me broad diversification as a counter-balance to my very concentrated 12 stock portfolio.

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

 

TOO BAD I dont have any stock money to invest. I would definately be buying AMAZON at these levels ($1627). Although buying on October 30 would have been nicer when the price hit a short term low of $1530.

THEY and a few other companies NEED to do some stock splits. It is absolutely ridiculous that they allow these share prices to run up like they are right now. In my opinion there is no reason or excuse to allow a price per share to get over about $150 per share. We NEVER used to see this sort of stuff, it all started about 10-15 years ago and has escalated. TALK ABOUT unleashing shareholder value. A split of most of the various high priced stocks would cause a buying frenzy. Nothing more than human psychology since a split does not impact value, but it would still nonetheless unleash a buying frenzy. Those of us OLD enough to remember investing prior to about 10 years ago remember very well the impact that a split announcement would usually have on the share price. Often the price would shoot up in the 2-4 weeks before the split and than settle in and perhaps even drop a little after the split.

FOR EXAMPLE here is the stock split history for MICROSOFT back in the glory days. I held this stock from 1990 to 2002 and believe me, there was a lot of money made leading up to each of these splits.

09/21/1987 2 for 1
04/16/1990 2 for 1
06/27/1991 3 for 2
06/15/1992 3 for 2
05/23/1994 2 for 1
12/09/1996 2 for 1
02/23/1998 2 for 1
03/29/1999 2 for 1
02/18/2003 2 for 1

For example, In 1990, I scraped together ALL FREE CASH that I could and put it all, about $80,000 into MSFT as a single stock bet. (this was a HUGE amount of money in 1990) I bought 1000 shares. If my math is right by the completion of the 3-29-99 split my 1000 shares would have grown to 72,000 shares. Now THAT is UNLOCKING SHAREHOLDER VALUE. Of course I did not have quite that many shares since I did sell off a few along the way to diversify into other holdings. At my peak I probably had about 30,000 to 40,000 shares. BUT, this one long term trade resulted in a MASSIVE gain in the millions of dollars. The POWER of doing stock splits. This was an extreme time for this particular company obviously.

This is the SINGLE BEST stock holding I have had.

 

Hi TomB16.

NO, actually I never have cash held in reserve. I try to keep ALL my stock market money FULLY invested all the time. I never try to time the markets. If i have money available from some source, I put it all in, all at once, to get it working asap. The academic research shows that this approach beats dollar cost averaging. My philosophy is that keeping cash on hand for a future buying opportunity is not worth being out of the market and the gains that can hopefully be made with that money in the markets compared to waiting to invest it. If I get to the point that I am selling out of a position due to poor performance, I immediately reinvest the money into whatever I have decided to buy at that time.

 

Anyone else have an example of a KILLER investing move like my MSFT investment above? I consider myself VERY VERY fortunate to have made that MSFT investment when I did and in the large amount (1000 shares, $80,000) that I did. It was an EXTREME move at the time , but paid off. At the time, investing that much all in, on MSFT, was NOT the obvious move that it seems today in hindsight. That was a HUGE amount of money to plop down on one stock in 1990.

Now on the other hand, my single worst investing moves.....there are two of them....first momentum trading in one of the big tech names in the mid 1990's I lost $40,000 in the span of about 30 days when a stock failed to react as I expected from earnings. And....that was supposed to be about a 1-3 day momentum trade, which I ended up having to sweat out for about 30 days to get back to a loss of ONLY $40,000. Second one......I will call it a loss....In the dot com era I rode about $25,000 of CISCO shares all the way up to $250,000 and than all the way back down to $25,000. This was during the dot com collapse, I thought that CISCO was a big enough name to weather the crash and hang in there.......WRONG. I wish I had taken my profit on that one.

The LESSON.........we all make some mistakes along the way, but what counts is the LONG TERM record of how you are doing and if you are nicely positive and beating your benchmark.....DONT WORRY ABOUT THE ONES THAT GOT AWAY (as long as your LONG TERM record is strongly positive)

 

Well to be honest I have never considered LMT. However, I would still prefer Boeing if I was trying to choose between the two. Primary reason would be the fact that LMT is a captive to the US government and politicians being a defense company and is subject to all the ups and downs of being at the mercy of political winds blowing out of DC. Boeing has a significant civilian business with their commercial airline business. I consider Boeing to have a virtual lock on the WORLDS commercial airline business. Yes, there is AIRBUS, but in my mind they are clearly inferior to Boeing. So with Boeing I get good exposure to the defense business but more importantly to me I get the premier, commercial airline business in the world. So, I see Boeing as a more diversified, broad company, with a HUGE consumer business and little to no competition in this area. REALLY........ they and one government subsidized competitor control and dominate the entire worlds commercial airline business. PLUS defense business, plus space business, etc, etc.

On a more general level, there are many business areas that I NEVER invest in. Auto companies, Insurance companies, banks, financial companies, drug companies (I consider J&J more of a consumer company), and I will throw in there defense companies. I prefer BROAD companies that are more toward the consumer product side of things. I try to avoid companies that are subject to government control and regulation and have all their eggs in one product basket. In the "old days" my portfolio contained names like....Colgate, Proctor & Gamble, General Mills, Phillip Morris, Altria, Costco, Nike, Exxon, General Electric, 3M, etc, etc. My investing BIAS is toward companies that are BIG CAP, AMERICAN, ICONIC PRODUCT, DIVIDEND PAYING, WORLD WIDE MARKETING, GREAT MANAGEMENT, BROAD CONSUMER, companies. Many of these sorts of companies in the last ten to fifteen years have fallen off due to the Millenial generation and broad changes in consumer habits and taste. They have been impacted by new technology, IDIOTIC stagnant or worse, CELEBRITY CEO type incompetent management, failure to keep up with consumer trends, etc, etc. As a result my portfolio has evolved. I am a LONG TERM INVESTOR and like to hold stocks for the very long term. But, when they fail to perform and I think their business model is having issues, whether management, or product related that are not short term I sell and move on. I am a BUY and HOLD investor....but within reason. I have no problem selling a long time holding when performance starts to weaken and I see continuing issues ahead.

 

AGREE...in general:

All Over but the Shouting
Midterm elections brought gridlock, likely paving the way for strong stock returns.

https://www.fisherinvestments.com/en-us/marketminder/all-over-but-the-shouting

"....... for investors, the real winner should be gridlock—and stocks, as midterms’ completion ushers in the most bullish part of the presidential cycle.

Overall, the contest went largely as we expected. ..........with very little of consequence passing over the next two years. Beltway insiders might spend weeks musing about the political implications of Indiana and Missouri’s Senate seats flipping to the GOP, but that is sociology—not a stock market issue. ............The nitty gritty of who won where means far, far less to stocks than the upshot of gridlock, in our view.

Most importantly, the midterm uncertainty is gone. ....... All the guessing is over, as is the angst over potential late-breaking surprises. To the extent midterm uncertainty contributed to stocks’ correction (sharp, sentiment-driven drop of -10% or worse) this autumn, that headwind is gone. In our view, now stocks can enjoy the tonic of falling uncertainty—and the typical bullish aftermath of midterms.

Historically, the S&P 500 has risen far more often than not in the midterm quarter and the following two quarters. In each, the frequency of positive returns is 87%—far higher than stocks’ typical 64.6% frequency of gains in non-midterm calendar quarters..........does speak to stocks’ overwhelming tendency to rise as gridlock deepens after midterms. Historically, short-term volatility hasn’t derailed this positivity. ............ Better still, this overlaps with the third year of the presidential cycle—the most consistently positive, with the highest average return.

Investors might logically ask whether stocks’ lousy October makes this time different, but we doubt it. As Exhibit 1 shows, it isn’t at all unusual for stocks to have a rocky month or three during the nine-month stretch but still finish the period positive. ........this history does speak to the importance of keeping a longer view, focusing on fundamentals and not getting distracted by short-term wobbles.

In short, nothing about Tuesday’s results alters our forecast. We remain bullish and expect strong returns over the foreseeable future, powered partly by gridlock and falling uncertainty. .............we think the future looks very bright indeed."

MY COMMENT

Edits above are mine and reflect my view. HEY......anyone remember INTEREST RATES? WTF, a few weeks ago this was a MAJOR ISSUE.......well for a few days. The ten year yield is at about 3.2% right now and NO ONE SEEMS TO CARE..............EXACTLY.

 

BET you are now very happy you did nothing. Unless it is your trading style it is NEVER, in my opinion, a good thing to trade based on anticipated news or events. Even if you are right, whatever it is will only be a short term event and will quickly recover. At times we all have to PRETEND to be fearless. It does get easier as you get older and have more and more experience as a LONG TERM INVESTOR. Although, if the money you have invested is retirement money, it can start to get more nerve wracking as you get within a few years of retirement and you see some of that money slipping away in a bad market. That is why I have TOTALLY disconnected my stock market and investing money from the money I live on. This allows me the peace of mind to be fully invested for the long term all the time.

VERY NICE day in the markets today, lets hope we can string it along for the rest of the week and it becomes the start of a very nice Santa Clause RALLY.

DOW year to date +5.82%
SP500 year to date +5.25%

What a difference a few weeks makes........

 

"That is why I have TOTALLY disconnected my stock market and investing money from the money I live on. This allows me the peace of mind to be fully invested for the long term all the time."

I made the above statement in the post right above this one. For any wondering what this means........well. I was a self employed business owner, until I sold out and quit in 1999, after 22 years in business. During my business years I was a very dedicated saver and investor. (see MSFT trade a few posts up and this thread in general). I did a lot of investing and saving in my taxable brokerage account over my entire life. I dont believe in puting too much in tax defered retirement vehicles. As a self employed person I have been responsible for my own income and retirement for my entire working life. Part of my long term plan was to seperate my retirement living money from my stock and fund investing money. I also wanted to guarantee a lifetime income for my wife and myself, taking into acccount that both of us come from families where the vast majority of people live well into their 90's. So, at age 65 I purchased six different defered income annuities, using taxable account money. ALL provided for guaranteed income for the life of my wife and myself or the survivor. These are SIMPLE income annuities. They were defered for five years, and kick in this year at age 70. So, I have set up a permanent lifetime income that will be paid for as long as I or my wife is alive. With Social Security, we will have an income of about $180,000. per year. I will save about $10,000 of this amount each year and invest it to use when/if we need to add more income.

So.....NO....I dont have a BIG POT of cash siting around NOT working for me as "living money". I have used investing profits to put in place simple income annuities that along with Social Security will provide me with a lifetime, guaranteed, income. As a result, my stock and mutual fund money is free to remain FULLY INVESTED for my lifetime, with no worrey about market ups and downs.

One additional comment.....I purchased six different income annuities from three different companies. I also split the primary insured on the annuities so half are my wife and half are me. Three each with three different insurance companies. The six annuity contracts were done to keep the dollar amount of each annuity under my states STATE INSURANCE GUARANTEE FUND maximum. By spliting the annuities among six companies and having half in my wifes name and half in my name, all the annuity funds are fully covered by the STATE INSURANCE GUARANTEE FUND in my state. I also choose to spread the slight risk of an insurance company default by using three different insurance companies for the annuities. All three of the companies are long time top, top rated companies.

 

Well a BIG reason is...........I dont care to turn LONG TERM CAPITAL GAINS that are taxed a 15% in my case, into ordinary income, taxed at up to about 28% or 33% or 35% or 39.6%. I prefered to pay the taxes when income was realized and NOT put myself into an ever higher retirement income tax level for the 20-40 years that I will live in retirement. I was given advice by some pretty smart business people about 25 years ago about investing and saving in a regular brokerage account rather than having everything in a tax defered account of some sort. I did have a KEOGH PLAN when I was in business and contributed the max most years and invested that money in my usual stock market fashon. (at the time I was in business a KEOGH PLAN was a form of small business pension plan, the max contribution was about $30,000 per year) But, my primary savings and investing was done in my taxable brokerage account. That is where I had much larger amounts of money as time went on. Over my lifetime it was a HUGE advantage NOT to have everything tied up in retirement accounts and to have access to and the use of my money. (When I closed my Keogh Plan from my business I rolled over my account into an IRA. This year I will exhaust and close that IRA.) Next year with the annuity income and Social Security, my tax rate will be significantly lower saving me about $15,000 to $20,000 a year on taxes for the balance of my life.

Of course, when I was in business, I was puting much more away each year in the pension plan and in the taxable account than most people. Today if I was saving and worked in a job, I would put the max in the 401K to get the match. If I was going to save beyond that I would do a ROTH IRA. ALL FUNDS over and above would go into the taxable account. Since I am a LONG TERM INVESTOR, I never tended to have a huge amount of capital gains in my taxable account since I tend to hold stocks and funds for many years.

KEEP IN MIND that I come from the era where there was NO Roth IRA (started in 1997) and when I closed my business in 1999, the 401K was just starting to become the mainstream AMERICAN retirement system and replace the traditional pension. (1990: 401(k) plans held more than $384 billion in assets, with 19 million active participants.) (Today: 401(k) plans hold more than $4.8 trillion in assets. And pensions, in the private sector, are increasingly rare.)

AND......yes the rules are subject to government change at any time. As are the tax rates on income. The typical course is that tax rates rarely go down over time.

DOW closed positive today.....although only +11.12 points. SP500 down (7.05 points). A mixed day, but nice that we did not lose any of yesterdays gains to speak of. LETS GO year end RALLY!!!!

 

I HAPPEN to use Schwab for all my accounts and those that I manage for family. This allows me to see ALL the accounts on one LOG IN page and to apply the various analysis tools available through Schwab to look at performance and other data for the accounts. It also simplifies my tax prep to have all the accounts in one place that I can access statements and tax reporting data. (Since I do the tax returns for the family members and the trust I manage) Since I AM NOT a trader I prefer a BIG discount brokerage house that has ALL services and investment vehicles available. There are a number of good general brokerages available like Schwab, Vanguard, Fidelity, etc, etc. Main thing to me and I suspect for most investors with multiple accounts is to have a place that ALL accounts can be under the same roof.

HERE is a little summary on Schwab today dealing with the SP500 earnings that are wrapping up:

(Bold represents my opinion and focus)

"Third quarter earnings season is wrapping up with 90% of the S&P 500 having reported quarterly results.

Third quarter EPS are now expected to grow just over 25% in aggregate with sales up 9.3%. Expectations were for 19% EPS growth with sales up 7% heading into the reporting season. Just over 77% of the S&P 500 beat earnings estimates while 62% beat revenue estimates; 52% traded higher in response.

Fourth quarter EPS are expected to grow 14.3% with sales up 6.7%. Expectations were for 17% EPS growth with revenue up 6.5% one month ago. Estimates for the following quarter normally get pared down a bit based on conservative guidance but higher input costs (raw materials, transportation, wages, etc.) have consistently been cited as a headwind this earnings season.

For 2018 as a whole, S&P 500 EPS are expected to grow 20.6% with sales up 9%, marginally higher than one month ago.

In 2019, EPS are expected to grow 9% with sales up 5.5%.

But third quarter earnings season isn't over just yet. Retail earnings season starts kicks off next week."

MY COMMENT:

A TYPICALLY good earnings season this reporting period. Generally EPS and SALES beat the expectations. As noted 77% of companies beat earnings estimates and 62% beat revenue estimates.......and......as usual, many companies were NOT rewarded for their good earnings by the markets. Next quarter expectations are down some....a good thing in my opinion, and 2019 EPS and SALES estimates are very reasonable, if not low. Again, a good thing in my opinion since there is a lot of room for upside surprise going forward as the general markets continue to climb the usual WALL OF WORRY, FEAR and DOUBT. I much prefer the psychology of upside surprise versus downside surprise. Keep in mind, that generalities are meaningless, unless you are an Index investor in a broad Index like the SP500. Each stock you hold of course represents a specific business and it is the results from that particular business that will determine how things go in the future for that company, not generalities of the stock market or economy. General averages like the SP500 and the DOW continue to be in the +4-5% year to date range heading into the last 7-8 weeks of the year. I continue to be FULLY invested for the LONG TERM as usual. I continue to believe that we have good potential for a year end rally if we can get out from under the shadow of the election and the October correction, fear, and jumpiness. GREATEST NEGATIVE I see going forward is, as usual, THE MEDIA. They will continue with their FEAR MONGERING, SENSATIONALISM, DISTORTION, and NEGATIVITY as has become the norm to generate clicks and eyeballs. LONG TERM and other investors need to be especially vigilant to not let this environment drag them down psychologically with the constant drip, drip, drip, of breathless negative, sensational, and IDIOTIC opinion that is reported as though it was actual news.