The Long Term Investor

NOW....that we are done with 2023......and are all siting with ZERO gain and ZERO loss....somewhere in investing LIMBO till the open tomorrow.........time to count our BLESSINGS.....and congratulate ourselves for having the guts and insight to be in the markets for our.....FAMILIES.

The goal is to create a better future for yourselves and those that are important to you.....not to simply rack up more money. It has been my HONOR to manage the money for most of my family over many years now. I am looking forward to the new year and a new start.

In that regard.....I will simply continue to do what I have been doing for decades. My focus will be to continue with my same....lifelong...investing style that I learned from my mother and indirectly from my grandfather and grandmother.....since my mother inherited 1/5 of their account...which was made up of AMERICAN, ICONIC PRODUCT, BIG CAP, DIVIDEND PAYING, GREAT MANAGEMENT, WORLD WIDE MARKETING.....companies. In other words BIG CAP GROWTH COMPANIES.

I am once again posting my PORTFOLIO MODEL. My initial criteria to start the process to consider a business are.......BIG CAP, AMERICAN, DIVIDEND PAYING, GREAT MANAGEMENT, ICONIC PRODUCT, WORLD WIDE LEADER IN THEIR FIELD, LONG TERM HORIZON, etc, etc, etc.

PORTFOLIO MODEL

"Here is my "PORTFOLIO MODEL" for all accounts managed which is the basis for MUCH of my discussion in this thread. 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 60% of the total portfolio and the fund side at about 40% 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 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 10 stock portfolio.At the same time the funds double and triple up on my individual stock holdings............that I consider the BEST individual businesses in the WORLD.

STOCKS:

Alphabet Inc
Amazon
Apple
Costco
Home Depot
Microsoft
Nvidia

MUTUAL FUNDS:

SP500 Index Fund
Fidelity Contra Fund

CAUTION: This is a moderate aggressive to aggressive portfolio on the stock side with the small concentration of stocks and the mix of stocks that I hold and with the concentration of big name tech stocks. Especially for my age group. (74). So for anyone considering this sort of portfolio, be careful and consider your risk tolerance and where you are in your life and financial needs. I am able to do this sort of portfolio since my stock market account is NOT needed for my retirement income AND I have a fairly HIGH RISK TOLERANCE. In addition I am a fully invested, all the time, LONG TERM investor. (LONG TERM meaning many years, 5, 10, 20, years or more)"

MY COMMENT

This portfolio is HIGHLY CONCENTRATED on the big cap side of things. OBVIOUSLY between the funds and my ten stock holdings there is MUCH doubling and tripling up on the stocks. THAT is INTENTIONAL. I strongly subscribe to the view of Buffett and some others that TOO MUCH diversification kills returns. I do NOT believe in the current diversification FAD that most people seem to now follow.......or think they are following. I DO NOT do bonds and think the current level of bonds held by younger investors.....those under age 50.....is extremely foolish.I DO NOT do market timing or Technical Analysis."

 

Oldmanram......I sold all shares of HON in all accounts on November 27, 2023. It is noted in a post on here.....that day....on page 893 of this thread.

EMMETT....how are you doing? How did you end up 2023?

 

OK....last thing first....I DO NOT like buy-backs. I dont think shareholders get much out of them. I would much rather get a payment like a dividend than some vague promise that a buy back benefits me. They may benefit the company or the executives of the company.....but I hate this modern trend.

As to dividends.....any BIG CAP GROWTH company should be paying dividends. Over the long term reinvested dividends can add a lot of compounded value to a stock holding. As an owner of a business.....shareholders.....should share in the profits....not just stock appreciation. You get up to where a portfolio has higher value and dividends are REAL MONEY......going into additional shares every quarter. Remembering my mom's account at its peak she was getting about $25,000 per year in dividends that were being reinvested from just one of her stocks.....Phillip Morris. We eventually stopped reinvesting those in PM stock due to the Tobacco litigation risk and the fact that the position was so top-heavy in her portfolio. That money than funded some big positions in other companies.

Basically I say give me my share of the profits.....and I will decide how and where I want to invest them.

It is not a HUGE part of my criteria....but I want to see that money as a partial business owner.

THIS is what I say about buy-backs:

"With the majority of their compensation coming from stock options and stock awards, senior corporate executives have used open-market repurchases to manipulate their companies’ stock prices to their own benefit and that of others who are in the business of timing the buying and selling of publicly listed shares. Buybacks enrich these opportunistic share sellers — investment bankers and hedge-fund managers as well as senior corporate executives — at the expense of employees, as well as continuing shareholders.

In contrast to buybacks, dividends provide a yield to all shareholders for, as the name says, holding shares. Excessive dividend payouts, however, can undercut investment in productive capabilities in the same way that buybacks can. Those intent on holding a company’s shares should therefore want it to restrict dividend payments to amounts that do not impair reinvestment in the capabilities necessary to sustain the corporation as a going concern. With the company plowing back profits into well-managed productive investments, its shareholders should be able to reap capital gains if and when they decide to sell their shares.

https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for-the-economy

BASICALLY....my personal preference as an old school stock investor.

 

LORI......your post is an inspirational message to others. We need more posts like yours. So glad you are here and posting. Your message is extremely important as motivation to others. Probably as important as any other single post on here.

So glad to have you here and part of the long term investing family.

 

You too Blake.....please keep up the good work.....and...posting about your experiences on here.

 

BUMMER......the open today.....but:

Why 2024 will be good — and possibly great — for investors

https://nypost.com/2023/12/31/business/why-2024-will-be-good-and-possibly-great-for-investors/

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

"Happy New Year! It should be.

After 2023’s 26.6% return, 2024 holds more in store. Fortunately, few are lampshade-on-head gleeful. Most investors remain skeptically timid, fretting about all those “risks” you hear abundantly.

As Sir John Templeton legendarily said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”

Today’s skepticism helps. Simply said, it’s far harder to kill a young bull market than almost anyone fathoms. Once they hit a first anniversary (done in October 2023), they almost always get a second.

Hence, my forecast: Moderate double-digit S&P 500 gains, with big growth stocks leading early, and likely twisting to value stock leadership late in 2024. Maybe lampshades dance next December.

Yes, I know you think that’s stupid. Christmas Day 2022, I detailed here exactly why 2022 was more like 1966 and its bear market than any year ever — and in so many ways — so 2023’s market should react much like 1967 (without flowers in your hair). It did. The S&P’s 1967 total return was 24%. Most all of my 1966-1967 parallels happened: a no capitulation-based stock market bottom, tech led up 58%.
6
2024 should still resemble 1968 more than most will fathom. The S&P 500 should return roughly 11-18%.
Ongoing inflation slowed to near normal. America’s widely anticipated 2023 recession? Somebody better put it on a milk carton. US GDP accelerated all year. That “Mid-term Miracle” thing I extolled worked perfectly, delivering gridlock’s normal stock market big bang by blocking big, controversial legislation.

While those 1966-68 parallels will start breaking down, 2024 should still resemble 1968 more than most will believe. The S&P 500 should return roughly 11%-18%. Again, no recession. Normalized inflation with the Fed claiming victory and cutting rates — but less than many hope.

A Republican, likely Trump, will win the White House. The GOP should take the Senate but probably lose the House (like and unlike 1968). I’ll handicap the political races in May.

Despite histrionics, politics are a 2024 tailwind. Since 1925 (when accurate data start), The S&P 500 climbed in 83.3% of presidential election years. Average returns: 11.4%. (Eerily near 1968’s 11.0%.) When positive, election years averaged 17.0%.

6
The S&P 500 climbed in 83.3% of presidential election years.
A stunning secret: Whenever the second year of any president’s term was negative, like 2022 was, the next election year, like 2024, has been positive every single time since 1932’s Great Depression bottom. No exceptions! Expect it again! Bear markets scare the bejabbers out of us. And it takes a really long time to get bejabbered back up to where we’re optimistic. (Templeton again.)

And, of course, early in election years we fear the “wrong guy” wins. That fades. Upon election, overall, we always like the winner better than we originally expected we would — improving sentiment —temporarily.
6
Expect positive returns in 2024.
Our economy? Moderate growth will help finish inflation’s normalization (increased supply from growth is anti-inflationary, not inflationary as economists imagine) and helps growth stocks relative to value, like in 2023. But later year rate cuts likely usher in value stock leadership.

Value stocks thrive from the accelerating bank lending that rate cuts render. They need bank lending to fund expansion initiatives. That comes as rate cuts steepen the so-called “yield curve.” Banks borrow short-term to fund the longer-term loans that let mundane firms grow.

Reduced short-term rates increase bank lending’s profitability, creating more lending — helping the little piggies at the slop trough with more slop. Quite contrary to mythology, rate cuts aren’t needed for stocks to rise. 2023 proved that vividly!

Well-known worries can’t kill young bull markets. Optimism and euphoria do later. Only a supersized, surprise shock could now. None seemingly lurks. So, expect a good-to-great 2024. Maybe save those lampshades for next New Year’s."

MY COMMENT

Sounds about right to me. Not that you would know it by the start to the year today.

 

I like this little article for a good market and economic summary. Yes......we are finally at the end of the pandemic distortions and disruptions.

2024 Market Outlook: What a ‘Return to Normal’ Means for Stocks
2024 is lining up to be the first year after the pandemic when we are finally past all the disruptions and dislocations.

https://www.morningstar.com/markets/2024-market-outlook-what-return-normal-means-stocks

"2024 Stock Market Outlook Key Takeaways

• The U.S. stock market is now trading equal to a composite of our fair value estimates.
• Value stocks and small-cap stocks still trade at attractive discounts.
• The technology sector moved back to a choice for underweighting along with industrials, whereas communications, basic materials, real estate, and utilities are attractive overweightings.
• The rate of economic growth is forecast to slow in 2024, but no recession."

MY COMMENT

Click on the link for the.......whole ball of wax.

 

Here we go.

Stock market news today: US stocks sink to start new year as Apple slips

https://finance.yahoo.com/news/stoc...-start-new-year-as-apple-slips-121819056.html

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

"US stocks fell Tuesday morning, setting Wall Street up for a downbeat start to 2024 after a winning year that left the S&P 500 just short of a new record high.

The benchmark S&P 500 (^GSPC) lost nearly 0.6%, while Dow Jones Industrial Average (^DJI) shed 0.3%, or about 100 points. The tech-heavy Nasdaq Composite (^IXIC) lost about 0.9%.

The rally in stocks stalled on Friday, after two months of gains that helped the major gauges end 2023 with strong yearly gains. Plus, the S&P 500 notched its 9th weekly win in a row, the longest streak since 2004, and is inching toward taking out its all-time closing high of 4,796.56.

Tech stocks lost ground after Barclays analysts downgraded their rating on Apple's stock, citing concerns about demand for new iPhones. Apple (AAPL) shares fell 1.7% as tech stocks slid.

Economic updates this week could also put the rally to the test, with the December jobs report due Friday watched for its potential to sway the Federal Reserve's thinking. Investors' bets that interest-rate cuts will come fast and deep in 2024 have buoyed stocks.

Elsewhere in markets, oil prices rose after Iran sent a warship to the Red Sea in response to the US Navy’s sinking of three Houthi boats over the weekend. West Texas Intermediate crude (CL=F) and Brent crude (BZ=F) futures climbed over 2% as tensions escalated.

Meanwhile, bitcoin prices jumped more than 3% to top $45,000 for the first time since early 2022, as hopes grew that the SEC will soon approve a spot bitcoin ETF. Crypto stocks popped in premarket trading, with Marathon Digital (MARA) shares up almost 12% to recoup some recent losses."

MY COMMENT

In other words....there is NOTHING happening today. Just normal market action.

 

Today we are seeing the USUAL short term market drivers.

Negative commentary from experts. Downgrades Ike the APPLE downgrade. The Rivian delivery numbers. The Ten Year Treasury being UP to 3.937%.....low by historic norms....but who knows anything about history anymore if it happened before the screen era (about 2000 on). Etc, etc, etc.

The fear mongers are out there and very active today.

With a drifting market....that is enough to result in a down day. Investors remain VERY SKITTISH and very nervous. The events of the pandemic, the constant 24/7 media which ESCALATES every year, the shadow of year 2022. The vague feeling that 2023 was just a pause in the market drop. ETC, etc, etc.....are all out there and impacting the short term markets.

Even more important....there seems to be a general feeling of....society, culture, the world...being out of control and disintegrating. People are very uncomfortable with what is going on around them on a daily basis. Government is a big part of the problem as is the media. We are seeing various events happening and impacting USA society and culture that have never occurred before. Under the surface people are very uncomfortable.

This is probably a very good indicator for the markets. The WALL OF WORRY is intact and growing higher. There is ZERO exuberance....rational or irrational. The TRAUMA of 2022 was and is much more than people realize. We are definately seeing PTSD in the markets. Of course MUCH of the people working in the investment, media, and other financial businesses are young and have little long term experience or seasoning.

My one word.....RELAX. Learn to allow things to settle. Avoid the social media......instantaneous screen.......mentality. Learn how to live in the LONG TERM.....not.....the moment.

 

Lori......and other new and/or young investors. I remember very well when we hit $10,000 in the market for the first time WAY BACK in the 1980's. At that time I was building my business and money was tight for me....even though we were doing very well financially.

Most of us on here have gone through the process of being new investors and not having much money invested. It is just part of the process. TRUST the process.....it all boils down to being a......"function of time".

We were so excited when we got to that first $10,000. Than a short time later a big nasty market drop hit and we lost at least half or more of that money. BUT...we stuck it out. We were young but we had the support to trust what we were doing.

The first $100,000 is the hardest. It can seem impossible. BUT....if you stick with it....put as much as you can into your account.....and invest in RATIONAL vehicles like the SP500....IT WILL HAPPEN.

YOU....can do it. A journey starts with a single step....the first step. In investing....it starts for everyone....with the first dollar.

You do your 401K at work. Next step......at some point you contact Vanguard or Schwab or Fidelity and you open a brokerage account. You than make your first investment in a SP500 ETF or whatever you prefer. It is an exciting and proud time in your life. BUT...you have to stick with it....for the long term.