The Long Term Investor

MY portfolio has been performing exactly as expected over the past three or so weeks. Usually beating the SP500 on the Up days and doing the same or slightly worse on the down days. Of course, the BIG factor is what particular segments of the economy and business are being skewered on any particular day. As far as I am concerned we are NOW back in a normal market and business situation with at least TWO BIG events likely to happen this year with potential to drive stocks and the averages UP NICELY. The two events that are likely to happen this year.....first the resolution of the trade dispute with China. It is likely that we will come to a deal some time over the next 3-9 months. If I was forced, I would say most likely some time over the next 3-6 months. Second will be the END of THE FED doing their tightening. With what they have done so far, little to no inflation (above what is normal and healthy to the economy), and the fact that the ten year treasury yield in particular has maintained a historically low yield, in spite of all the increases, I believe it is likely that we will see one or two increases this year and the obsession with rate increases will fade totally into the background as is normal. So that leaves only sudden news type, black swan type, events to cause market weakness on a short term basis. As a LONG TERM INVESTOR, I am willing to put up with this sort of aberrant short term event and just sit through it when it happens as usual. I ALSO agree with this opinion going forward:

Sorry, Folks, But Gridlock Is Good For The Economy

https://www.investors.com/politics/editorials/gridlock-economy-ibd-tipp-poll/

(my emphasis is in BOLD)

IBD/TIPP Poll: Americans now rank "gridlock" as their top concern when it comes to the economy. We are reluctant to disparage the wisdom of the masses, but in this case they're wrong. Gridlock, for lack of a better word, is good.

The new IBD/TIPP Poll asked "Which of the following poses the greatest risk to the current U.S. economy?"

At the top of the list was "gridlock in Washington" which 41% named as the greatest risk. Coming in second a good distance back was "trade disputes" at 26%. "Higher interest rates" came next at 12%, followed by "rising prices," 9%, and "Special Counsel investigation" at 8%.

"Gridlock" came in first place among Democrats, Republicans and independents. Among the young and old. Men and women. North, South, East and West. Rural and urban. Wealthy and working class. Investors and non-investors.

In fact, the only group that the IBD/TIPP poll breaks out that didn't rank "gridlock" first was liberals. More liberals named "trade disputes" as the biggest threat, with "gridlock" coming in second.

These days, it's hard to find anything that all these different demographic groups will agree on.

But the truth is that they're wrong. Gridlock is not a threat to the economy. If anything, at this point, it's a potential blessing.


First, let's dispel the notion that "getting things done" in Washington is a good thing.

In President Obama's first two years in office, Democrats controlled the White House, and the House had a near supermajority in the Senate.

And what did that gridlock-free era produce? A trillion-dollar stimulus that failed to stimulate the economy. Huge increases in the national debt. A massive financial regulatory regime that acted like a millstone on the economy. It also produced ObamaCare, which disrupted millions of Americans who had health plans they liked, caused insurance premiums in the individual market to more than double, and still left 10s of millions uninsured.

In 2010, the economy eked out a 2.6% increase in real GDP, followed by an anemic 1.6% in 2011. In the two years after the recession ended, the economy created only 1.3 million new private-sector jobs. That was at a time when the working-age population increased by 3.8 million.

Given that the recession ended in mid-2009, those two years should have seen robust growth, which is what typically happens after a deep recession.

Gridlock has also proven to be an excellent way to keep federal spending under control.

From 2003 to 2007, for example, Republicans controlled both ends of Pennsylvania Ave.

During those years, federal spending climbed at an average annual rate of 7% a year.

That's double the rate of spending growth that took place when Democrat Bill Clinton was in the White House and Republicans controlled Congress. The average spending increase from 2005 to 2011 was just 3.5%.

When Democrats controlled both branches of government in the first two years of Obama's first term, spending climbed a total of 16%. In just two years! But when voters opted for divided government for the remaining six years of the Obama presidency, spending climbed at an average of just 1.9% a year.


Spending growth accelerated over the past two years — increasing 4% on average — when Congress and the White House were both in Republican hands. It's on track to climb by almost 6% this fiscal year, which started before the midterm elections.

Now, it is true the Republicans managed to get a significant pro-growth tax cut through in those years. And that, as much as anything else, is why the economy has been doing so well. Gridlock, however, will keep those gains in place.

It is also true that gridlock means not dealing with entitlement programs that are consuming the budget and adding to the already gargantuan national debt. But even when Washington has been "getting things done," the two parties remained deadlocked on Social Security, Medicare and Medicaid. It will take a crisis before both sides agree to reforms.

As we have been emphasizing for months in this space, the biggest risk to the economy this year is the Fed. After the last rate hike in December, we noted that "the Fed has plowed ahead with rate hikes, seemingly oblivious to their impact." We added that "the Fed has significantly raised the chance of a downturn for President Trump — after keeping rates at record lows for the two terms of the previous president." (For more on this, see: "Is The Fed Trying To Kill The Boom?")

Yet just 12% listed "higher interest rates" as the greatest risk to the economy in the IBD/TIPP Poll.

Trade disputes — which 26% listed as their top concern — are another genuine risk to the economy. But Trump seems intent on getting a deal done with China that will, hopefully, make that issue largely evaporate.

It's possible that prominence of "gridlock" as an economic risk in the IBD/TIPP Poll stems from the countless news stories warning that the partial government shutdown of the government will be an economic calamity if it continues. But as we noted in this space last week, while the shutdown might have a small impact on the economy in the short term, past shutdowns show that it will have none in the long term.


The bottom line is that, if gridlock reigns over the next two years — both in Congress and at the Fed — that will be good news indeed for the economy.

 

The BIG banks and investment bankers OBVIOUSLY have an oversized impact on the PERCEPTIONS of the economy and investing environment. Here is where and how they are doing right now.....at least what they are willing to tell the general public.

Morgan Stanley: Another market storm is coming

https://www.cnn.com/2019/01/15/investing/stock-market-today-morgan-stanley/index.html

JPMorgan earnings: A master class in how market volatility can hurt banks

https://www.cnn.com/2019/01/15/investing/jpmorgan-earnings-trading/index.html

Citigroup Stock Roars Back, Lifts Bank Stocks On This Spark Of Hope

https://www.investors.com/news/citigroup-earnings-citigroup-stock-q4-2018-bank-stocks/

 

Markets seem to functioning properly and normally today as they have since the first of the year. December was a CLASSIC example of investor/media induced mass hysteria. BUT....here is my real reason for posting. It is important for investors to understand some history.

"Opinion: Jack Bogle gave individual investors the power to triumph over Wall Street"

https://www.marketwatch.com/story/b...-power-to-triumph-over-wall-street-2019-01-16

"Mutual-fund shareholders may never again see a folk hero like John C. Bogle, father of the index fund and the founder and former chairman of fund-industry titan Vanguard Group.

Bogle was an outspoken, iconoclastic, in-your-face champion for low-cost, buy-and-hold investing — a populist in a business suit who spent six decades criticizing, cajoling and challenging his fund-industry colleagues to give small investors what he called “a fair shake.”

Advocate and provocateur
Bogle passed away on Wednesday at age 89. He was one of nine investing luminaries profiled in my 2001 book, “Investment Titans: Investment Insights from the Minds That Move Wall Street,” and a consistent source of wisdom and insight about investors and the investment business. This article is adapted from the chapter of that book featuring Bogle, titled “The Average Outperforms.”

Bogle relished his role as an advocate and provocateur. He certainly looked the part — tall and lanky with a sonorous voice, a Princeton-educated everyman hammering out liberty and justice for small investors. It’s a part Jack Bogle was literally born to play. His father came from a well-to-do family that had prospered in business, but he had no great aptitude for it. The younger Bogle took after his maternal great-grandfather, Philander B. Armstrong, a maverick who conceived of mutual insurance in the property field and in 1875 formed a company called the Phoenix Mutual Fire Insurance Co. Armstrong would spend his career railing against excessive industry fees and expenses, and Bogle later carried that torch for individual investors.

‘Strip all the baloney out of it’
He rarely missed an opportunity to pound home the direct and clear relationship between low management fees and superior investment returns. In 1975, a century after his great-grandfather started his insurance company, Bogle opened the doors of Vanguard as a mutual fund company in the truest sense of the ideal. Shareholders of Vanguard funds “own” the management company that administers the funds. Unlike other fund companies, Vanguard operates at cost, with each fund paying its share of the corporation’s expenses for management, portfolio trading, salaries, marketing, advertising and other charges.

In his interview for the book, Bogle said, with characteristic bluntness: “This business is all about simplicity and low cost. I’m not into all these market strategies and theories and cost-benefit analyses — all the bureaucracy that goes with business. In investing, strip all the baloney out of it, and give people what you promise.”

To understand Bogle more fully, it helps to see him almost 70 years ago as a Princeton University undergraduate on an academic scholarship. Bogle needed a topic for his senior thesis in economics. True to character, he was determined to tackle a subject on which no Princeton thesis had ever been written. But he wasn’t sure where to turn.

A ‘remarkable accident’
In December 1949, he happened to read an article in Fortune magazine titled “Big Money in Boston.” The report described the mutual-fund business as a “rapidly expanding and somewhat contentious industry that could be of great potential significance to U.S. business.” Bogle recalled that he had never heard of mutual funds before, let alone invested in them. Perhaps he identified with the “contentious” label. Whatever the motivation, he decided to make this nascent industry the subject of his thesis. This “remarkable accident,” as Bogle referred to it, sparked the remarkable career that profoundly influenced how people approach investing and markets. “If I hadn’t opened that magazine, I wouldn’t be in this business today,” he observed.

His senior thesis, published in April 1951, was titled “The Economic Role of the Investment Company.” Certain passages foreshadow how its nonconformist author would one day shake the status quo of active money management with an innovative upstart called an index fund.

In his thesis, Bogle introduces two themes that would become synonymous with his professional life: performance and costs. He exhorts the fund industry not to boast that it outdoes the market: “Funds can make no claim to superiority over the market averages,” he writes. Then he suggests that fund companies might be overvaluing their services: “There is some indication that the cost of management is too high,” Bogle ventures. He concludes with the admonition that the fund industry’s continued success hinges on giving shareholders a financial break: “Future growth can be maximized by concentration on a reduction of sales loads and management fees,” he asserts.

In an interview 50 years later, Bogle expressed pride in his thesis, noting: “The thesis said that mutual funds should be run in the most honest, efficient and economical way possible. You could argue that that’s the callow idealism of a 21-year-old senior in college. You could also argue that it’s the grand design for Vanguard.”

The birth of the index fund
Vanguard cast its lot with indexing in August 1976 when Bogle launched the Vanguard First Index Investment Trust, later renamed the 500 Index Fund VFINX, +0.22% which mirrored the performance of the S&P 500 SPX, +0.18% A fund that matched a market average was then an untested and uncertain breed — Vanguard’s offering was the first retail product of its kind.

Index funds don’t try to beat the market or buy and sell the latest hot stocks. They own a representative sampling of all the stocks in an index and go for the ride. Their main appeal is the ability to capture nearly all of a benchmark’s return efficiently and inexpensively — which, as Bogle always pointed out, is more than can be said for most actively managed funds.

Said Bogle: “Why can’t managers beat the market? Where’s the value added? In terms of industrywide statistics, it’s just not there. One reason is because of cost. The cost is a handicap on the horse. If the jockey carries a lot of extra pounds, it’s very tough for the horse to win the race.”

For Bogle, the value of an index fund is not that it can beat the market — it can’t. Indexing, he explained, is a proven way to realize considerably all of the market’s pretax gains. Additionally, index funds eliminate much of the guesswork and specific sector and company risk involved with investing. And that, Bogle contended, is worth every penny: “There’s no point in being contrarian about something that doesn’t make sense. An index fund always wins. It wins every single, solitary day, and there’s no way around it. The fact that everybody criticized it made me all the more sure.”

The fox and the hedgehog
Defending the virtues of indexing against the powerful forces of costly active management was Bogle’s lifelong fight — his crusade, really — and he was always one to rally to the ramparts. “The foxes are trying to manipulate people; they’re trying to manipulate investing,” he contended. “Foxes charge a premium for their services, because it’s supposedly so complicated and mere mortals can’t do it. But the hedgehog says, ‘Of course mere mortals can do it. Just understand the one great thing: Own the market, and own it at a very low cost. And you will demonstrably get 98% or 99% of the market return.’ ”

Yet even Bogle admitted that active fund management has its place in a portfolio. Indeed, Vanguard — truly “The House that Jack Built” — offers a broad array of active products. He explained: “I don’t want to push my argument too far, because I think there is room for professional managers who don’t feel bound by style boxes.” Meaning, trailblazers who are sensitive to shareholder costs and taxes. He added: “The chances of beating a fairly measured market starts with having your expenses as low as possible. The active managers who will succeed are those with low costs, relatively low turnover and relatively low cash positions.”

To be sure, with so many investors trying to make sense of so many mutual fund and exchange-traded fund choices, Bogle often seemed a lone voice in the wilderness as he implored investors to build their portfolios on a strong, simple, foundation. Said Bogle: “Simplicity is the master key to financial success. The more complex the world around us becomes, the more simplicity we must seek in order to realize our financial goals.”

Bogle’s beliefs
Bogle’s own simple approach to investing rested on a few well-honed beliefs:

• Investing is not as difficult as it seems.

• Consider index funds first.

• Own stocks, but hold bonds as well. Build a broadly diversified stock portfolio with mutual funds. This will help mitigate the specific risk of owning just a handful of stocks. Better still, buy the entire stock market through a total stock-market fund.

• Don’t own too many funds, and don’t trade them. Fund managers within a particular category tend to own many of the same stocks, so it’s easy to pay twice for a similar portfolio.

• Think long-term. Markets fluctuate, and these short-term ups and downs usually are just noise. So don’t lose sight of bigger goals.

Said Bogle: “Buy right and hold tight.”

Bogle remained modest about his significant achievements. “I don’t think I’m anything like a folk hero,” he said. “But there aren’t a lot of people like me in this business. Most keep a lower profile, are much more guarded in the way they speak, and much less strident in their advocacy of shareholders’ values and rights. If this industry had one fox and 1,000 hedgehogs, maybe I wouldn’t stand out. But if it has 1,000 foxes and one hedgehog, you’re going to be more distinctive. You carry a different set of values and investment ideas. If it’s unusual — even unique — you will stand out.”"

MY COMMENT

It is amazing the changes that have taken place over just the past 50 years.....one investing lifetime. In my time investing I have seen:

The invention of the money market fund
the invention of the IRA, ROTH IRA, 401K, etc, etc
The invention of discount brokers like Schwab, Vanguard, etc, etc.
The advance of investing to now include about 50 percent of US households.
All the technology changes of the past 50 investing years.
The elimination of fixed commissions.
ETC, ETC, ETC.

RIP....JACK BOGLE.

 

TOTALLY AGREE with this little article. I have no idea who appointed the FED and especially the FED chair to control and try to run the US economy. Delusional idiocy. There is very little that the field of economics has any predictive power over. The FED needs to sit down and STFU.

Mauldin: It’s Not Polite, but I’m Pretty Pissed at the Fed

https://www.mauldineconomics.com/ed...ot-polite-but-im-pretty-pissed-at-the-fed/rcm

(BOLD is my emphasis)

"This essay is going to insult a bunch of smart, maybe even brilliant, people. It is not polite nor is it politically correct. I will try to be better. But right now, I am pretty pissed.

Here’s the thing.

No serious scientist would run a two-variable experiment. By that I mean, you run an experiment with one variable to see what happens.

If you have two variables and something happens—either good or bad—you don’t know which variable caused it.

You first run the experiment with one variable, then do it again with the second one. After that, you have the knowledge to run an experiment with both.

And yet, the Fed is running a two-variable experiment. It raises rates and reduces the balance sheet at the same time.

It is decidedly the stupidest monetary policy mistake in a long line of Fed mistakes.

You Can’t Model the Future
Powell and the Federal Open Market Committee listen to very smart PhDs from all the best schools. They all use fabulous multi-algorithmic models.

These models apparently proved that you could raise rates and reduce the balance sheet at the same time. With no consequences.

I’m sure they are smart and nice people—and their kids and dogs love them.

My problem with them is that they mistakenly trust models based on past performance. Or even worse, models based on monetary theory that is clearly, evidently, badly, manifestly wrong.

They have been using these models to forecast the economy for decades. And they are about 0 for 300 in being right.

It is statistically impossible to be that bad unless your models are fundamentally flawed, which they are. Their underlying economic theories simply don’t work.

Because they have no politically and academically acceptable theories to substitute. They are slaves to their own mal-education.


They think this makes them smarter than the markets. I can’t say it any stronger than that.

I have actually been in the room when someone slammed a Federal Reserve economist about said models. He went so far as to say that the best thing that Powell could do would be to fire all those PhDs and ignore their models.

As you might imagine, the Fed economist was not happy with that analysis. The veins in his neck were popping, he was red faced, and his voice was raised. This clearly got his goat.

Now, here’s the lesson I learned, which was burned into my brain. The assaulted economist asked a very simple question, (neck veins popping): “You can’t take away a model without replacing it with another model. What model will you replace it with?”


The critic, who is perhaps the best observer of the bond markets I know, stammered a little bit and then forcefully said, “You can’t actually model the future.”

Messing Up the Economy with Worthless Models
When I say the words “past performance is not indicative of future results,” I damn skippy mean them.

All past performance models were built in a particular macroeconomic environment. Unless you can find a macroeconomic environment that is very similar to today’s, every model deserves a tad bit of skepticism.

Maybe it will work and maybe it won’t. It is up to the macro analyst to try and figure out which one will work well enough to confidently invest your money.

I can’t tell you how hard and difficult and truly daunting that is. Especially after you have done it for many years and have the scars to prove it.

I’ve looked at a lot of macroeconomic models. I can’t describe how much I would love to find a macroeconomic forecasting model that was actually reliable.

To have such a crystal ball would not only be soul soothing. It would also be extremely profitable for my clients and, admittedly, me. It would be the Holy Grail.


All those PhDs at the Fed still haven’t found the Holy Grail after 40 or 50 years. Hell, they haven’t even found a decent cup of coffee. But they think they have.

So their bosses confidently run a two-variable experiment with our economic system."

MY COMMENT

As I said.........DELUSIONAL IDIOCY. Kind of like the insane focus on imaginary inflation. If anything, we are still in a DEFLATIONARY environment as we have been since 2008. At least the markets are kicking ass right now. I assume all that got out of the markets in the December HYSTERIA, timed the market properly and got back in to take advantage of this ten to fifteen percent bump up. You did get back in...right???? I am too lazy but it would be interesting to go through all the various financial message boards and correlate how many market prognosticators actually predicted this new year BUMP UP of the part three weeks with THEIR systems and models AND more importantly got back in to take advantage of it. That is why I NEVER act as a MARKET TIMER. It just never seems to work well in real life or in the research studies that use actual data and actual statistical analysis rather than anecdotal reports. I remain fully invested for the LONG TERM as usual.

 

At the moment:

DOW year to date +5.53%
SP500 year to date +6.40%

NOT too SHABBY for less than three weeks into the new year. BUT, you know what they say about short term results and data........STILL fun to see.

 

GOT......NEGATIVITY?

At the moment:

DOW 8% away from the ALL TIME HIGH.

SP500 8.8% away from the ALL TIME HIGH.

Pretty sure we will see a run at the ALL TIME HIGHS some time over the next 4-6 months. Of course, NO ONE can predict short term markets and events.

 

INVESTING according to Jack Bogle:

"Time is your friend; impulse is your enemy."

"The two greatest enemies of the equity fund investor are expenses and emotions."

"Don't look for the needle in the haystack. Just buy the haystack."

"Don't do something... just stand there!"

"In investing, you get what you don't pay for"

"Develop a long-term plan—and stick with it
Be a supersaver
Stick with your plan, despite volatility [even "Stay the course" is used!]
Be diversified
Consider low-fee investment products that offer good value
Focus on generating after-tax returns"

"The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently."

"Investing is not nearly as difficult as it looks. Successful investing involves doing a few things right and avoiding serious mistakes."

"Time is your friend; impulse is your enemy."

"It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."


“When there are multiple solutions to a problem, choose the simplest one.”


“The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently.”

“The true investor . . . will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.”

“Over the short run, however, the fundamentals are often overwhelmed by the deafening noise of speculation—the price at which the stock market values each dollar of earnings.”

“Pressed to identify useful financial innovations created during the past quarter-century, Paul A. Volcker, former Federal Reserve Chairman and recent chairman of President Obama’s Economic Recovery Board, could single out only one: “The ATM.”

“The greatest enemy of a good plan is the dream of a perfect plan.” Stick to the good plan. Traditional”

“Financial markets are far too complex to isolate any single variable with ease, as if conducting a scientific experiment. The record is utterly bereft of evidence that definitive predictions of short-term fluctuations in stock prices can be made with consistent accuracy. The prices of common stocks are evanescent and illusory.”

“The message is clear: in the long run, stock returns depend almost entirely on the reality of the investment returns earned by our corporations. The perception of investors, reflected by the speculative returns, counts for little. It is economics that controls long-term equity returns; emotions, so dominant in the short-term, dissolve.”

“For finally, “you can always count on Americans to do the right thing,” as Churchill pointed out, “but only after they’ve tried everything else.”

“The greatest Enemies of the Equity investor are Expenses and Emotions.”

“Graham’s timeless lesson for the intelligent investor, as valid today as when he prescribed it in his first edition, is clear: “the real money in investment will have to be made—as most of it has been made in the past—not out of buying and selling but of owning and holding securities, receiving interest and dividends and increases in value.”

“A recent study by Morningstar Mutual Funds—to its credit, one of the few publications that systematically tackles issues like this one—concluded essentially that owning more than four randomly chosen equity funds didn’t reduce risk appreciably. Around that number, risk remains fairly constant, all the way out to 30 funds (an unbelievable number!), at which point Morningstar apparently stopped counting.”

“Investors need to understand not only the magic of compounding long-term returns, but the tyranny of compounding costs; costs that ultimately overwhelm that magic.”

“In the short run, the stock market is a voting machine; in the long run it is a weighing machine. —Benjamin Graham, Security Analysis (1934)”

“I would add that I am not persuaded that international funds are a necessary component of an investor’s portfolio. Foreign funds may reduce a portfolio’s volatility, but their economic and currency risks may reduce returns by a still larger amount. The idea that a theoretically optimal portfolio must hold each geographical component at its market weight simply pushes me further than I would dream of being pushed. (I explore the pros and cons of global investing in Chapter 8.) My best judgment is that international holdings should comprise 20 percent of equities at a maximum, and that a zero weight is fully acceptable in most portfolios.”

“When you have identified your long-term objectives, defined your tolerance for risk, and carefully selected an index fund or a small number of actively managed funds that meet your goals, stay the course. Hold tight. Complicating the investment process merely clutters the mind, too often bringing emotion into a financial plan that cries out for rationality. I am absolutely persuaded that investors’ emotions, such as greed and fear, exuberance and hope—if translated into rash actions—can be every bit as destructive to investment performance as inferior market returns. To reiterate what the estimable Mr. Buffett said earlier: “Inactivity strikes us as intelligent behavior.” Never forget it.”

“It will also tell you how easy it is to do just that: simply buy the entire stock market. Then, once you have bought your stocks, get out of the casino and stay out. Just hold the market portfolio forever. And that’s what the index fund does. This investment philosophy is not only simple and elegant. The arithmetic on which it is based is irrefutable. But it is not easy to follow its discipline. So”

 

While we are on the subject of QUOTATIONS........Warren Buffett, anyone?

“We select such investments on a long-term basis, weighing the same factors as would be involved in the purchase of 100% of an operating business:

(1) favorable long-term economic characteristics;
(2) competent and honest management;
(3) purchase price attractive when measured against the yardstick of value to a private owner; and
(4) an industry with which we are familiar and whose long-term business characteristics we feel competent to judge.”

“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”

"Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
“If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes”

"When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
“Time is the friend of the wonderful company, the enemy of the mediocre.”

“Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a fly epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”

"Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.”
“Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.”

“I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business.”

“What an investor needs is the ability to correctly evaluate selected businesses. Note that word ‘selected’: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.”

“What counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know.”

“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.”

“Long ago, Ben Graham taught me that ‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”

"So smile when you read a headline that says ‘Investors lose as market falls.’ Edit it in your mind to ‘Disinvestors lose as market falls—but investors gain.’ Though writers often forget this truism, there is a buyer for every seller and what hurts one necessarily helps the other.”

“The most common cause of low prices is pessimism—some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It’s optimism that is the enemy of the rational buyer.”
“You shouldn’t own common stocks if a 50% decrease in their value in a short period of time would cause you acute distress.”

“Keep all your eggs in one basket, but watch that basket closely.”

“Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing.”

“We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it. In stating this opinion, we define risk, using dictionary terms, as “the possibility of loss or injury.”

“We’ve long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.”

“In the 54 years (Charlie Munger and I) have worked together, we have never forgone an attractive purchase because of the macro or political environment, or the views of other people. In fact, these subjects never come up when we make decisions.”

“Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the models. Beware of geeks bearing formulas.”

"You need to divorce your mind from the crowd. The herd mentality causes all these IQ’s to become paralyzed. I don’t think investors are now acting more intelligently, despite the intelligence. Smart doesn’t always equal rational. To be a successful investor you must divorce yourself from the fears and greed of the people around you, although it is almost impossible.”

“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”

“You’re dealing with a lot of silly people in the marketplace; it’s like a great big casino and everyone else is boozing. If you can stick with Pepsi, you should be O.K.”

"I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”

“There seems to be some perverse human characteristic that likes to make easy things difficult”

“Rationality frequently wilts when the institutional imperative comes into play. For example:
(1) As if governed by Newton’s First Law of Motion, an institution will resist any change in its current direction;
(2) Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds;
(3) Any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops; and
(4) The behavior of peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated.”

 

TomB16

How did you survive the December Christmas Eve massacre? You doing good with your long term strategy? Made any changes additions or sales of investments lately? Any thoughts on the markets in the correction (Oct, Nov, Dec) and now into the bull run we are in so far in the new year?

Hope all is well.

 

No action today, the markets are closed. BUT, here is some simple yet important information for LONG TERM INVESTORS. Yes, corrections are a good thing and healthy for the markets......as is normal inflation, normal interest rates, AND normal investor behavior which usually means jumping in and out of investments and severely under-performing the unmanaged averages. Of course, LONG TERM INVESTORS with a grasp of reality and logic will not end up like the "normal investor" that I reference above.

(BOLD below is my comment and emphasis)

"A correction is actually good for the stock market"

https://nypost.com/2019/01/19/a-correction-is-actually-good-for-the-stock-market/

"A few short weeks ago, the stock market was in the throes of a very substantial correction. And December corrections can get particularly nasty as they bring into play tax-loss selling.

Numerous “eco-ticians” — the disingenuous economic-minded folks with a microphone, pen and a deep political bent — were screaming across the airwaves and writing about the impending recession.

Of course they were, because that’s what they do. It’s the same crew who told you the stock market would crash if Donald Trump won the presidential election.

However, since stocks have rallied 13.7 percent, or 3,000 points, since the last week of December, we must be in a boom all of a sudden, by their logic. But they say nothing.

If you try to find the basis of their arguments, you come up with crickets. Predictably, their reasoning is predominantly politically partisan in essence: The stock sell-off was telling us something about the overall economy.

So much for economic geniuses and their opinions. Economics is a politically agnostic sport — it doesn’t care how you vote, or if you’re a man or a woman. It is math and the laws of supply and demand.

Market corrections are the healthiest thing in a long bull market. They may not feel good — they’re not supposed to. But that’s the circle of life in such markets.

So, fellas, what about that impending recession?"

AND

"Why the stock market is headed for a swift recovery"

https://www.usatoday.com/story/mone...ck-market-why-headed-for-recovery/2602043002/

"Welcome to the last in my series of columns on the year ahead. In my four earlier ones, I covered why December was lousy and why stocks are on the right side of a swift V-shaped recovery. U.S. stocks have climbed more than 10 percent since the market close on Christmas Eve. Accompanied by wild wiggles, the rest of 2019 should be similarly happy.

On December 17, I explained how stocks’ have averaged 34 percent before dividends in the 12 months after all of history’s correction bottoms (meaning a drop of 10 to 19.99 percent in the Standard & Poor's 500 index).

Assuming December 24 remains the bottom, this correction ended later in a calendar year than any correction or bear market ever. An average aftermath now would make 2019 simply stellar, and surprise almost everyone. That’s bullish.

Maybe December 24 wasn’t the bottom. We can’t know for sure. But there were abundant bottomish signals. Mutual fund outflows reached levels only associated with major market bottoms. December outflows matched March, 2009, when the last bear market ended. U.S. stock market liquidity sank like a brick, also echoing prior lows.

Price-to-earnings ratios contracted last year – earnings soared while stocks fell. A simple secret: Basically every year valuations shrink, the next year they expand. So unless earnings fall, stocks rise. Analysts expect 6.9 percent earnings growth in 2019. Earnings almost always exceed analysts’ estimates. Expanding valuations on top of earnings growth would cause big positive stock returns

Good years follow bad years unless you have global recession or world war. We’ve never had two straight negative stock market years – except with the Great Depression, the two World Wars, the early 1970s debacle and the tech bubble. Otherwise, stocks were spring-loaded the next year.

And recession is unlikely. I showed you exactly why last week via the Leading Economic Index series – a great predictor for this.

Many misguided people still think the interest rate “yield curve” inverted, signaling that a downturn lurks. I explained on July 22nd why that is wrong and how to view it correctly to see reality.

But, suppose it were inverted. So what?

History holds four examples of the yield curve inverting without a recession the next year. Stocks rose every time, averaging 16.6 percent that next year. Since inversion fears are now in the marketplace – that’s big potential upside surprise, and bullish!

The government shutdown flooded folks with fear. Yet it shouldn’t. The aftermath of shutdowns is also great, with U.S. stocks averaging 12.8 percent in the next 12 months.

Sure, shutdowns must end to have an aftermath. But shutdowns themselves aren’t bearish. The prior 19 shutdowns occurred while markets were open. Stocks rose during 11, including 1995-1996 – the longest shutdown before the current one. Now people worry this one’s length will cause problems. But U.S. stocks, a leading indicator, have risen over 8 percent since it began. They’re telling you not to worry.

Everywhere I look, sentiment seeks negatives, ignoring positives. Did you know global lending and money supply are growing around 6 percent year-over-year? That the global purchasing managers’ index is higher now than during most of 2016, a fine year for stocks? That world trade is growing nearly 4 percent year-over-year despite this supposed trade war? That global profit margins are too?

If you didn’t know any of this, you aren’t alone. Most good news goes unreported or gets couched as bad – a phenomenon I call the pessimism of disbelief. When it strikes, better times are ahead."

MY COMMENT:

AMEN......Brothers. I could not have said it any better myself.......thats why I allowed the authors to do so and put the BOLD into the articles to emphasize my agreement and opinion with what they said. OK guys, lets get ready to KICK SOME ASS in the markets tomorrow.

I LOVE the one two word sentence in the second article...."SO WHAT". Probably the most important two words in business, investing, money management, life. One of the most important questions that I would usually have as a business owner along with the other BIG, one word, question that I would usually ask......"WHY". Rare questions in the business world, especially the BIG business world where conformity, political correctness, peer pressure and business culture CRAMP real thinking. These sorts of questions and the responses they bring will tell you a lot about your business management and team members, especially those that are young and still learning the business world.

 

BUMMER....but absolutely typical:

"Wall Street edges lower as global growth fears resurface"

https://www.reuters.com/article/us-...-lower-on-global-growth-worries-idUSKCN1PG1G6

"...fears of slowing global economic growth resurfaced after the International Monetary Fund trimmed its outlook in a week of heavy corporate earnings."

MY COMMENT

Absolutely typical and I would bet that there are ZERO mom and pop investors or "average" investors that reacted in the slightest to this news. The IMF, come on, a total joke. A bunch of international politicians, bureaucrats, and sycophants. The odds of the IMF being accurate or even anywhere near the ball park in anything to do with business or stocks or investing or for that matter actual economics is ZERO. The real headline should be:

"Stock Speculators, Big Bank Trading Operations, and Program Trading Algorithms Go For The Short Term Profits As Usual"

Of course it is actually doubtful that they make a big profit with this sort of erratic day to day activity. If they do it is off of their fellow traders and speculators for the most part. I was actually surprised to see that many of the BIG BANKS trading operations did not do so well during the correction when the data was reported a week or so ago.

There is a reason that I do not do any INTERNATIONAL investing. I prefer to let my BIG CAP, DOMINANT, AMERICAN companies that trade and dominate around the world be my international exposure. Looking at Africa, South America, Europe, the Near East and the Far East, there is no country that I trust their economy in the current world environment. Especially China. The numbers and data out of China are absolutely corrupt as is their economic system, government, and all of their economy. I guess I agree with Jack Bogle and his view below that an allocation of "0" International exposure is just fine:

“I would add that I am not persuaded that international funds are a necessary component of an investor’s portfolio. Foreign funds may reduce a portfolio’s volatility, but their economic and currency risks may reduce returns by a still larger amount. The idea that a theoretically optimal portfolio must hold each geographical component at its market weight simply pushes me further than I would dream of being pushed. (I explore the pros and cons of global investing in Chapter 8.) My best judgment is that international holdings should comprise 20 percent of equities at a maximum, and that a zero weight is fully acceptable in most portfolios.”

 

TomB16

"I am a long term investor who follows the market like a short term investor. My wife would love it if I would throw my phone away but I need it to be available for my business and I check the markets a few times per week."

Understand completely, I am also in that camp. That is obviously why I have stuff to post on here often and use this thread as a running record of my off the cuff investment thinking at any one time in history.

Sounds like you got some really good buy in points during the peak of the correction at a time when you had maximum funds to invest. The perfect storm.

I really enjoyed reading your posts above, especially your extended comment on the how and why of what you were doing and thinking. Those kinds of posts are what gives value to this sort of board. I DO WISH you would name the companies you are talking about throughout the posts. That allows others to look up the companies and perhaps put them on their watch list for the future.

"An older investor friend tells me he was like this at my age and lost interest over time. After a life of owning stocks, he is now exclusively in a couple of Mawer funds. He said the funds are managed the way he would manage his portfolio so he bought the funds and stopped worrying about it."

I understand this attitude also. Being around 70, there are times that I think I should just sell everything and put it all in a SP500 Index and let it sit for the long term. Or at times I think well I should sell off the entire stock side of the various portfolios and put all the funds in the three mutual funds....50% in SP500 Index, 25% in Fidelity Contra Fund and 25% in the Dodge & Cox stock fund. I would keep track of annual performance and if, or, when either of the managed funds started to fail I would move that position also into the SP500 Index Fund FOR LIFE.

 

TIME for me to come on here and TANK THE MARKETS by commenting that we are on the way to another POSITIVE week in the general averages. HERE is a little light reading for anyone looking to kill some time. This talk of increasing income taxes, and the WEALTH TAX is pure delusional idiocy. The wealth tax in particular is crazy stuff. BUT with what is going on lately with people supporting SOCIALISM over capitalism well who knows. All the STUFF in the wealth tax article is basically the same arguments that resulted in us having an income tax in this country. We ALL know how that worked out for EVERYONE (except the 50% that pay no income taxes). It started out as only going to apply to the TOP 1% and now about 70+ years later applies to just about everyone that makes a working income. There is NO DOUBT that the wealth tax will end up the same way if people are DUMB enough to elect people that support this type of economic garbage. It will be interesting the next time those that support this CRAP have the presidency, the house and the senate. After all, there is no 60 vote filibuster rule for tax legislation, it only takes 50 votes to pass this sort of LOONEY TUNES law. (at the moment) Of course, the party in power can change the rules at will in the Senate as needed.

As to increasing income taxes on business or individuals, it is settled economics that the impact of tax increases is a drag on employment and business and the economy. AT LEAST TO ME, having lived through many different situations in my lifetime. BUT, I always say, you get the reality that you vote for......and don't bitch about it later.

"Let’s Not Kid Ourselves about 70 Percent Tax Rates"

https://www.nationalreview.com/2019/01/lets-not-kid-ourselves-about-70-percent-tax-rates/

AND

"Opinion: How a wealth tax would work in the United States"

https://www.marketwatch.com/story/how-a-wealth-tax-would-work-in-the-united-states-2019-01-24

AND for investors that might be too short term in their thinking and need a shot in the arm to boost their LONG TERM thinking:


"Why denial might be a smart investment strategy"

https://www.marketwatch.com/story/why-denial-might-be-a-smart-investment-strategy-2019-01-24

".......But now consider what your reaction would be if, instead of focusing on calendar year returns each January, you focused on the S&P 500’s trailing 10-year annualized returns. Not only is there a lot less year-to-year variation in this return, right now it’s at the highest since before the Financial Crisis. By focusing on 10-year trailing return, your likely reaction would be just the opposite of what it would be when focusing on the annual results.

Even better, you could focus on trailing 20-year annualized returns, where you find even more consistency. Over the last decade, trailing 20-year annualized returns have varied within a narrow band from a low of 7.2% to a high of 9.9%. Blips in individual calendar year returns hardly even register........"

My Comment

Above is a taste of the DENIAL article, a good little article with a reminder of how important it is to look at the BIG and LONG picture in investing. As to the taxation "stuff"....well if young people are crazy or DUMB enough to vote this sort of stuff in, they will be the ones that have to live with it. They will find out that........REALITY IS A BITCH.

 

WELL, well, well......close today is five weeks in a row that have been positive for the week in terms of the averages. Day by day, week by week, year by year........and pretty soon we are talking about real money.

DOW year to date +6.04%
SP500 year to date +6.30%

 

TODAY sold ALL SHARES of Nvidia in ALL accounts. It is not one of my longer holdings. Long enough to not be HUGE loss but still a loss. I am a LONG TERM investor, but the direction and loss of value in this stock along with all the various warnings and business hurdles they seem to be experiencing at the moment make this a company that I am not content to ride it out for what I anticipate will be years to hit their stride. I prefer to have the money that was in this holding working in something else that has a greater opportunity for gains and compounding. The funds from this sale in all accounts is reinvesting in the SP500 Index Fund. I still believe that this company has a potential HUGE upside in the AI and autonomous vehicle market but that upside may be 5-10 years down the road. I prefer to hold stocks and funds for the LONG TERM but when I decide to sell I have no hesitation to sell and consider it a lateral move into a better opportunity to make some money.

Opinion: This part of Nvidia’s warning should scare investors the most

https://www.marketwatch.com/story/t...ng-should-scare-investors-the-most-2019-01-28

Nvidia stock tumbles after warning of huge revenue miss

https://www.marketwatch.com/story/n...after-warning-of-huge-revenue-miss-2019-01-28

NVIDIA Updates Financial Guidance for Fourth Quarter of Fiscal Year 2019

http://globenewswire.com/news-relea...e-for-Fourth-Quarter-of-Fiscal-Year-2019.html

SO......here is where my various portfolios stand at this moment in time:

PORTFOLIO MODEL:

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
3M

MUTUAL FUNDS:

SP500 Index Fund
Fidelity Contra Fund
Dodge & Cox Stock 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. (65+). 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.

MY COMMENT:

HOPEFULLY the stock portion of the portfolio will now be stable for many years into the future with good performance on the part of the various companies in their business and no trades necessary. I prefer to NOT make changes or trades, but if necessary I will pull the trigger without hesitation or emotion. This was the one stock in my portfolio that was the most speculative. I tend to stick with the "tried and true" more established, more mature companies.

 

AT LEAST in my sale of all shares of Nvidia I got close to the high of the day......so far. $140.83 per share. NOTHING intentional about this, simply a result of sleeping in today and not getting around to doing the trade till later in the morning. So, a random, chance, happening......but I will take it.

 

HOT day for the markets today. If we can hold these gains and get what is expected this week in terms of news and data we will be in for YET ANOTHER positive week.......SIX in a row. Probably counting my chickens way too early. We are seeing lots of good signs lately for a strong spring for investors:

"Fed set to hold rates steady as it navigates data blind spots"

https://www.reuters.com/article/us-...s-it-navigates-data-blind-spots-idUSKCN1PO0DO

".......U.S. stocks opened higher on Wednesday after Boeing Co raised its 2019 profit and cash flow expectations and Apple Inc reported sharp growth in its services business, continuing a rebound that may ease the Fed’s fears about market volatility beginning to hurt the broader economy.

Meanwhile, payroll processor ADP reported that companies in the United States added 213,000 jobs in January, well above the 178,000 that had been expected by economists in a Reuters poll.

Though a volatile indicator, the ADP report was “an upside surprise ... Overall, it looks like the labor market remains in solid shape,” JP Morgan analyst Daniel Silver wrote.

Still, the Fed is likely to remain in a holding pattern on Wednesday.

FILE PHOTO: U.S. Federal Reserve Board Chairman Jerome Powell attends a luncheon discussion hosted by the Economic Club in Washington, U.S., January 10, 2019. REUTERS/Jim Young
Analysts at Goldman Sachs said they expected policymakers to “water down” the language from the December policy statement in which the central bank said “some further” rate increases would be warranted, evidence officials don’t want to box themselves in on the timing of any further action on rates.

Such a change could pave the way for a possibly extended pause in monetary tightening, buying the Fed the time to see whether unemployment remains low and inflation, which by some measures has weakened, continues to hover around the central bank’s 2 percent target........." (SEE ARTICLE for content before and after this quote)

AND

"Private Payrolls Smash Expectations"

https://www.breitbart.com/economy/2019/01/30/private-payrolls-smash-expectations/

".........Private payrolls grew by 213,000 in January, according to ADP and Moody’s Analytics.

Economists polled by Bloomberg expected payrolls to grow by 174,000.

“The job market weathered the government shutdown well. Despite the severe disruptions, businesses continued to add aggressively to their payrolls,” said Mark Zandi, chief economist at Moody’s Analytics, in a statement. “As long as businesses hire strongly the economic expansion will continue on.”.........." (See article for additional content and analysis)

AND

"Treasury Secretary Mnuchin: Expecting ‘significant progress’ on China trade talks this week"

https://www.cnbc.com/2019/01/29/tre...ignificant-progress-on-china-trade-talks.html

• "“I expect we’ll make significant progress this week” in trade negotiations with China, Treasury Secretary Steven Mnuchin says.
• Chinese representatives are due to meet with a group of White House officials on Wednesday and Thursday.
• Mnuchin said the criminal charges filed against Chinese manufacturer Huawei will not be part of the discussions."

AND

"Boeing profits soar to record on plane sales, more federal contracts"

https://www.foxbusiness.com/industr...in-2018-on-more-federal-contracts-plane-sales

"Boeing saw sales increases across core business segments leading to record earnings Opens a New Window. in 2018, shattering Wall Street expectations.

Revenue at the Chicago-based aerospace giant was $101 billion in 2018, supported by a 14 percent sales increase. in the fourth quarter to $28.3 billion, higher than analyst estimates.

Profits for the year rose 24 percent to $10.4 billion, it said on Wednesday. In the three months through December, adjusted net income surged 49 percent to $3.9 billion, or $5.48 per share, also topping Wall Street predictions......" (See article for more content and analysis)

MY COMMENT:

The DELUSIONAL media, caught up in their vendetta against all things TRUMP, is of course NOT reporting much of the positive financial data and news. At the same time they are destroying themselves. I suspect that the average person dealing with work, family and day to day life is not aware of much if any of the positive things that are driving the economy in general and stocks.

I HOPE that investors are NOT being negatively impacted by the FALSE environment that the media is creating in their FRENZY to destroy or at least deny reelection to Trump. I say this not from the standpoint of politics, but from the standpoint of the uninformed modern young investor/worker.

HERE is the impact of the media war and total destruction of journalistic ethics and honesty:

U.S. consumer morale at one-and-a-half year-low; house price gains slow

https://www.reuters.com/article/us-usa-economy-idUSKCN1PN271

"U.S consumer confidence fell to a 1-1/2 year-low in January as a partial shutdown of the government and financial markets turmoil left households a bit nervous about the economy’s prospects.".......(See article for further info)

Of course, the TRUTH is that the shutdown had little to NO impact on the actual economy. Lost productivity on the part of government workers due to being off is the primary factor that people are citing as the economic impact on the economy. PURE FANTASY.....there is no impact at all in the REAL WORLD. The ABOVE article is a laundry list of ALL the negatives that many in the media are HOPING will tank the economy. Unfortunately most are just "hope" and nothing more. Actually, in my opinion ALL this STUFF is actually a POSITIVE INDICATOR and shows that the BULL MARKET has a long way to run. On the other hand I do not totally discount the ability of the MEDIA to talk the economy down with opinion reporting masquerading as news coverage and the constant barrage of negative slant combined with the lack of reporting of the ACTUAL economic news and conditions. OBVIOUSLY this is the NEW NORMAL when it comes to journalism, if we can still call it journalism. SO......LONG TERM INVESTORS need to be diligent to make sure they are investing and acting on REALITY rather than fantasy or simple uninformed OPINION by someone that has a media soapbox.

 

Having DARED to mention the name "Trump" and criticize the "MEDIA" in the above post, I want to talk about politics VERY briefly. I will disclose my political direction, like everything else I disclose on a personal level in this thread, so readers know. I would call myself a LIBERTARIAN. Liberal on the social and personal rights side of things and conservative on the financial side of things.

NOTHING MORE will be said on my politics or based on politics on this thread other than the above. Now, when I talk about subjects like in the post above this one, I am NOT talking politics. I am talking seeing the world the way it is and REALITY. It is very important for investors to TOTALLY DIVORCE their politics from their investing philosophy, habits, and actions. In that vein I find it totally irrational that the MEDIA is ignoring economic and financial news based on THEIR politics and opinions. I also find it very HUMAN to do so, since the current model of media is based on pushing personal agenda and opinion. To the extent it ever existed, the old model of factually reporting the news is DONE, OVER. It is not coming back and from here "opinion", point of view, "news" will continue to get more and more extreme.

I do know a lot of younger people that never read news sources and never watch news sources. They get their so called "news" from late night comedy shows and social media. In my personal opinion this is disastrous for an investor. Of course, many of these people just passively invest in INDEX FUNDS and do so through automatic type investment systems like the 401K, so I guess financial news and data is irrelevant to them. Knowing NOTHING about business, economics, basic investing strategy, fundamental analysis, etc, etc, etc, means you are divorcing your investing thinking from the fact that stocks are actual businesses.

I DO try to balance my daily reading.......the online news sources and sites that I read daily are about an equal mix of liberal and conservative sites as well as more in depth business and financial and investing sites. I guess I should not really care if people wish to base their world view and investing on biased or even worse, inaccurate data. Perhaps it is my background as a long time business owner and investor, but when I am investing and managing my own and my families money, I want to be informed and act on REAL DATA. I try to have a pretty broad grasp of what is true or not in the investing and financial areas. BUT, I also know you can not change human nature. AND, I know that the model of society we are seeing right now is just a continuation of human history and the rise and fall of all the various countries and societies throughout human history.

The bottom line is that KNOWLEDGE is power when it comes to investing, especially over the LONG TERM.

BUT.....perhaps I am the one that is out of touch and living in fantasy. After all, it is my opinion that the world and the USA has been in a deflationary environment since the near collapse of 2008 and that deflationary depression environment is continuing today. YES, in my personal opinion there is no inflation. I think we quickly saw this with the impact of the FED actions over the past year or so, the inability of treasury yields to rise, the ten year treasury being stuck at about 2.75%, world economic events, the current backing off policy on the part of the FED, etc, etc, etc. I find this DEFLATIONARY environment here in the USA and around the world very dangerous and the cause of much of the economic and financial turmoil we have experienced over the past 11 years. The ever escalating computer revolution, AI, and replacing of human workers with intelligent machines, moving low end workers around the world for cheap labor, temp and contract labor, the ever escalating ability to run a huge business with machines and a small team of executives, etc, etc, are massive changes that will impact investors and investments for decades to come.

Unfortunately, if it turns out to be true, I see the future in the next 15-50 years as being the typical science fiction type scenario where you have the few world elites, the workers and bureaucrats that serve them, and the vast majority of the human population scrambling to eke out a day to day existence. That is why.....and it drives my family crazy....in investing I DONT CARE about anyone else, politics, society, the world, or anything else......my ONLY focus is generating a result for my MICRO WORLD......myself, my wife, and my family. Beyond that I have no power to do or control anything.

The BABBLING of a LONG TERM INVESTOR...........I continue to be fully invested for the long term as usual.