The Long Term Investor

WELCOME Snoridersm. Feel free to post and contribute. That initial post of mine that you put up has my portfolio model as it was over two years ago. It has evolved since that time.....but continues as a long term portfolio. Over the past two plus years I continued to refine the portfolio as I always do. Here are the current holdings.

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 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 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. 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
Honeywell
Nike
Microsoft
Proctor & Gamble
Tesla
Nvidia
Snow (100 shares, a rare, long term, speculative holding)

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. (71). 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 twelve 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."

 

Pretty cool.....Emmett.

I have seen them with snakes but not eating a bird. Although.....I know they love to eat pigeons......but I have never seen them eat one. Before we moved to the burbs.....we lived in the country on a 20 acre horse farm.....here in Texas. Nice rolling land with massive 300 year old live oaks, two tanks, (outside Texas people call them ponds or lakes) one large and one small, etc, etc.

In the big live oak grove we had a family of hawks that nested there for years. We had a large covered horse arena on the property that got infested with pigeons....just a few to start but they kept breeding and got up to about 50.. I could not get rid of them to leave so I had to kill most with the pellet gun. Once I got down to a population of about ten the hawks kept the population balanced and under control....but we never saw them eating one.......like your film. We would often find piles of feathers in the hawk area.

 

Tesla progress.....Austin, Texas. This is on the East side of Austin along highway 130, a major toll road with an 80mph speed limit. That side of Austin is relatively flat and in the "old days" was farm land. The Colorado River runs along one side of the site. The other side of Austin, from the downtown West is the Hill Country where the land changes to very large hills with limestone, live oaks. The Hill Country is the desirable side of town because of the dramatic high hills and all the view property

 

IsuCyclones....welcome. Please continue to post.

I used to keep track of my LONG TERM total return. Up to about 2006 it was right about 15%. But I quit keeping that data.....it was not really relevant to anything I was doing. I DO keep a small annual list of the total return of my SP500 Index Fund for each year and my Fidelity Contra Fund. I currently have that data going back to 2002. Prior to that I no longer have it. I DO NOT keep any performance or return data on the individual stocks.

As I have gotten older I no longer really care to keep much data. I can use the tools on Schwab to look at performance of my funds or individual stocks. All I care about is meeting or beating my INVESTING GOALS:

1. Try to beat the SP500 each year.
2. Average at least 10% total return for the long term

I know I am well above goal number 2 for the long term. I see no need to keep data.......since......I have NO interest in CHASING RETURNS. I ALSO have no interest in data BUSYWORK. I do.......obviously....as can be seen from this thread.....keep pretty good track of my portfolio daily (in my head) and know how I am doing (in my head) in any given year as the year progresses.

I am like you IsuCyclones.....I constantly project various situations......not for retirement....since I retired 23 years ago. I dont use calculators....I simply use the RULE OF 72's.....and do it in my head. I have ALWAYS thought of my investing goals in terms of doubling my money. I KNOW from long experience that I WILL double my money at least every 7 years and often every 5-6 years....over the long term. So.....I tend to use 6 years as my REALISTIC benchmark to project where I will be down the road......ie: double my money every 6 years. That means that I NEED to average an annual total return of 12%.....long term. EMINENTLY DOABLE.....especially when you consider reinvesting all dividends and capital gains.

 

Speaking of total returns.....using the Vanguard SP500 Index Fund.....I see that the SP500 is at 16.56% as of December 24, 2020. AND.....we have four market days left in the year. VERY SATISFACTORY result so far.......in fact EXCEPTIONAL......but.....I am PULLING for at least +17% this year.

That would give us the past 6 years at:

2015 1.25%
2016 12.34%
2017 21.67%
2018 (-4,52%)
2019 31.44%
2020 17.00% (hopefully)

Those past year returns are LOCKED IN. BUT.....the past is the past....every year is a new beginning.

 

YES.....we are similar. I too was interested in investing and business at a young age and became a full partner in a business at age 28 and six years later started my own business.......without partners...... which I had till I retired at age 49 to manage investments for myself and my family. You have obviously done well in business and in investing. I am sure that farm land is a very valuable asset.....I assume you are leasing that land to someone that farms it......money in the bank.

Between your business ownership interest, your farm land holdings and your stock holdings you are nicely diversified. Feel free to post your views and contributions to this thread any time.

 

I debated posting this little article.....since the headline is a little misleading. BUT....the concepts that it summarizes......in simple form......are worth REPEATING:

Warren Buffett: How to Invest in 2021

https://www.fool.ca/2020/12/26/warren-buffett-how-to-invest-in-2021/

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

"Warren Buffett is well known to be one of the best investors the world has ever seen. However, in addition to the incredible value he has built for shareholders, some of the advice he has given over the years is invaluable.

Buffett hasn’t just given a little bit of advice either. Over the years, he has offered his thoughts and opinions on a wide range of subjects, giving investors insight into how the greatest investor of all time thinks.

Some things have changed over the years, but a lot of the core advice he offers has stayed the same. So, with a tonne of uncertainty heading into the new year, and economic issues that are unprecedented, here’s how to invest for 2021.

The number one takeaway from any of Warren Buffett’s advice is that investors need to stick to long-term investing. This means avoiding impulsive or short-term investments. These tend to be a lot more speculative, which can be highly risky with the savings you’re trying to grow.

Sure, sometimes you can get lucky on a long-shot stock, but more often than not, investors learn an expensive lesson about speculating.

Warren Buffett: Always invest for the long term

Investing for the long-term reduces your risk considerably. However, we still have to make sure to buy only the best stocks. And while it’s important to try and buy these high-quality companies for cheap, you shouldn’t worry too much about the price.

Always choose the highest-quality stocks, even if you have to pay a premium for them, as long as they still have value and you believe in the stocks long term.

Warren Buffett used to be a value investor first and foremost. And while finding value is important, and you still don’t want to overpay, in recent years, buying growth stocks at a reasonable price has been a better strategy.

The companies to target are those that are the best of the best. They dominate industries and only get stronger the bigger they get. So, while they may trade with a premium, if they really are of the best quality, they’ll be worth an investment.

With these incredible growth stocks, though, of course, it’s better the earlier you get in.

There are businesses such as Canadian National Railway or Brookfield Asset Management, which have grown rapidly over the last 10 or 20 years. But due to their size now, continuing that level of growth forever will be next to impossible.

These stocks can still be great long-term investments and core stocks in the portfolio, because of their stability and low volatility. However, to expect them to perform the same as they have in the past is a bit of a stretch.

So, in addition to having stable businesses like these in your portfolio, you’ll also want high-quality growth stocks that are capable of outperforming the market and driving the growth in your portfolio.

Growth stocks make up some of the biggest gains on the market these days, so they can’t be ignored.

However, remember, just because you may consider buying a higher-risk, higher-reward stock doesn’t mean you shouldn’t still be considering it as a long-term investment, just as Warren Buffett would.

By having a long-term timeline, it eliminates a lot of speculation out of the investment. So, if you believe in the company’s potential long term, the volatility doesn’t matter in the meantime."

MY COMMENT

Sounds easy...right? BUT....like everything what sounds simple and easy.....in theory.....it never is. The first issue is the INABILITY of most people to TRULY stick out various market time periods for the long term. Lots of people think they are long term investors....but....become VICTIMS to their own emotion and panic and fear the first time the markets hit a rough patch. UNDERSTANDING yourself and your REAL risk tolerance is the key. DO NOT.....invest above your REAL risk tolerance. For many people this will probably mean holding.....NO.....individual stocks and sticking with broad based Index or other funds.

The second issue is selecting the right investments. MOST people are pretty POOR stock pickers. Once again it is human genetic based brain behavior that is the VILLAIN. This is one reason why I focus on the BIG CAP DOMINANT GROWTH companies.....hopefully somewhat early in their life......but.......once they are already exhibiting that dominance. It is very easy for humans to convince themselves that a company is the next great thing. I PREFER to wait till the handwriting is clearly......on the wall. HOPEFULLY....this will allow the majority of my stock picks to TRULY be long term holdings.....rather than stocks that seem AMAZING, but over the medium term NEVER live up to expectations.

BUT......I ALSO....obviously.....keep a "GOOD CHUNK" (investing term of art)....of my money in my two mutual funds.....SP500 Index Fund and Fidelity contra fund.......to increase my odds of success and achieve broad diversity across the BIG CAP portion of the USA economy.

 

INTERESTING......we will find out tomorrow if the markets REALLY think anything of the Stimulus bill since it is now a DONE DEAL. It would be nice for this to KICK the markets in the butt for the last four market days of 2020. DOW FUTURES....are up about 130.....and SP500 about 21....... at the moment.....not that the futures mean anything.

LOOKING FORWARD to being DONE with 2020......and.....starting a new investing year.

 

CHINA......what a house of cards. When a brutal totalitarian dictatorship has ABSOLUTE control over banks, stock exchanges and ALL businesses in the country......it is a DISASTER WAITING TO HAPPEN for those that choose to invest in Chinese companies or the Chinese economy. NOT to mention.......the total lack of TRUSTWORTHY financials or data from China or Chinese companies and the RAMPANT potential for fraud in China.....much of it....potentially....at the hands of the government.

As a result......"I"....choose to ABSOLUTELY NOT invest in China or Chinese companies. Lets see......I can invest in the greatest companies in the world.....American companies......or I can have some of my money subject to the absolute control of the government of China......DUH. It AMAZES me.....the number of people that BLINDLY invest in Chinese companies........what could possibly go wrong?

This might be of interest to those investors:

Chinese banks to feel fund-raising pain as investors fear bad loans

https://www.reuters.com/article/us-...ain-as-investors-fear-bad-loans-idUSKBN2910RH

 

I would SIMPLY LOVE.....to see ALL the American companies that are enabling China simply make a concentrated effort to move their manufacturing to other countries with low wages.....Vietnam, Cambodia, India, South America, Africa.....anywhere but China. I have little HOPE they are going to being anything home....now.

We are going to see FULL OUT globalism again.....and.....I suspect most companies will make a concerted effort to move manufacturing out of this country while they have the chance. In addition....many companies will use the next four years to import as much blue collar, white collar, tech, scientific, and unskilled labor as they can. AND....it will be a massive numbers.

Some day all those that support this "STUFF"....are going to wake up and wonder why there are no jobs for their kids or grand-kids....except for mediocre jobs in the service industries.......especially in anything to do with the tech industry. Although....over the longer term.....15-30 years.....there is not going to be much need for employees in the tech industry here in the USA....those jobs will be outsourced to India and other countries as contract labor.......and.......toward the end of that time....20-30 years down the road.....even those workers will not be needed as most of the coding and other work in tech will be taken over by ARTIFICIAL INTELLIGENCE. In addition..most manufacturing and other corporate jobs will be done by robots and AI. We are going to see corporations shed millions, and millions, and millions, of jobs over the next 10-30 years.

The GOOD that will come out of all this will be the PROBABILITY that inflation will NOT be an issue for a long time. Without any wage pressure and in all likelihood....falling wages.....and.....falling demand for employees.......there will be NO INFLATION. The continued issue.....as is apparent around the world......will be DEFLATION. In my opinion......the BAD.....the economic danger....for as far as I can see.....will be deflationary stagnation.

THAT....is my BLEAK and unfortunate assessment.....the JOY of being a brutally clinical REALIST.......of the next 5-40 years. That is WHY my......total focus.....is on providing as much as possible for FAMILY......kids and grand-kids.....going forward.

BUT.......we have some pretty good years for investors going forward over the next 10-15 years.......and.....who knows....time has a way of making ALL predictions look pretty FOOLISH......so I AGREE, Jwalker......lets kick ass next year....and....lets get out there and make some money.

 

WELL....a good start to a short market week. I suspect....that most on this board are at or near new personal highs......in stocks and funds that is. I am....but....lately it has been one step forward and one step back as I linger at or near new highs......for the past few weeks....but have not been able to BREAK OUT strongly to the up side. This may be the week and push us into a strong start for the new year.

HERE is some nice economic data:

Holiday retail sales jumped 3% as more people shop for decor and furniture for their homes

https://www.cnn.com/2020/12/27/business/holiday-shopping-retail-sales-mastercard/index.html

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

"When you're stuck at home for a year, you're probably going to get bored of staring at the same old couch, and those creaks and quirks are going to start to drive you nuts.

Unsurprisingly, furniture and home improvement items were big sellers this holiday season, helping give retail sales a 3% boost during this year's expanded holiday shopping season, according to a report by Mastercard (MA) SpendingPulse.
Online shopping sales also grew a whopping 49% between October 11 and December 24, further emphasizing how the Covid-19 pandemic has reshaped shopping habits.

The longer-than-average holiday season, which kicked off with a delayed Amazon Prime Day, was marked by a number of retailers offering special deals and promotions to incentivize customers to make earlier purchases to guarantee on-time holiday deliveries.

The holiday sales surge brought on an influx in shipments. Yet in many cases, that limited parcel services' abilities to deliver them on time.

But retailers' boost in shopping and shipping perks led to a decline in last-minute shoppers from the year before, the report found, with online shopping sales making up 19.7% of total retail sales. And Black Friday, a cornerstone unofficial holiday marked with unprecedented deals, landed as the top spending day of the season.
The bump-up in sales and shopping dates was a "testament to the holiday season and strength of retailers and consumers alike," said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated, in a statement.

"American consumers turned the holiday season on its head, redefining 'home for the holidays' in a uniquely 2020 way. They shopped from home for the home, leading to record e-commerce growth," Sadove said.
Meanwhile, department stores and apparel brands took a plunge in sales falling 10.2% year-over-year and 19.1%, respectively, per Mastercard's report. This comes as many stores have been crushed by loads of debt and changing shopping trends brought on by the pandemic. Roughly 30 retailers and restaurant chains have been forced to file for bankruptcy.

In spite of this, retail offerings including curbside pick-up and online buying led to incremental e-commerce sales growth. Apparel sales swung up 15.7% and department store sales jumped 3.3%, coming at a time when more shoppers focused their attention and shopping decisions on their homes. Furniture and furnishing sales rose 6.2%, while spending on home improvement rose 14.1%, the report found. Electronic and appliance sales also followed suit, increasing by 6%.
The holiday shopping shakeups underline how the pandemic's impact on outside activities has pushed shoppers to make purchases better suited for the inside and with more time spent at home."

MY COMMENT

NOT BAD. Good numbers considering. As you would expect.....BAD NEWS for the old school department stores as they continue to be hammered by the change over in shopping to the ONLINE FORMAT.

BUT......for better or worse.....this data.....in fact in my opinion ALL financial data, economic data, GDP data, etc, etc,.....that we see over the next 6-9 months is IRRELEVANT. NONE of it will mean anything going forward. This is because the new political administration will be SIGNIFICANTLY changing many if not all of the policies that have been in place for the past four years. The data we will see released over the next 6-9 months will reflect the OLD policies. It will take a while....I would guess about 9 months.....to see the impact.....good or bad.....of the new policies that will be put in place. The Georgia elections in a couple of weeks will give us a CLUE......where we are headed in terms of the economic environment that INVESTORS will be dealing with in about 6-12 months.

THIS is just something investors deal with every time there is a change over after an election. Sometimes for the better.....sometimes for the worse. WHATEVER.....investors WILL adapt to the new environment and will PROBABLY......see some pretty good returns next year as the vaccine eliminates the virus lock down of the economy. NO DOUBT......the media.....will FLOOD us with stories over the next year about the HORRIBLE impact of the virus on small business, the economy, etc, etc......but it will all be hindsight reporting and NOT particularly relevant to forward looking, long term investors.

 

NICE.....strong day today even though we had a little bit of a fall back during the last hour. PLENTY of green today....with good strength in some of the tech names...I think I had at least 5-6 holdings that were strongly positive. SO....a good green today with a beat of the SP500 by .22%.

We are +15.62% GAIN year to date for the SP500 as of today. I am looking forward to seeing the year to date TOTAL RETURN data later today once it is available. I am thinking that we PUNCHED over +17% total return year to date today.

 

For those that ARE......or.....are considering......investing in China....the worlds most brutal totalitarian dictatorship. Some might find this a good buying opportunity......others.....like myself consider this a BIG RED FLAG. BUT.....in the end everyone must do what the must do.....tit is your money:

Global investors flee from Chinese tech stocks after the government crackdown on Ant and Alibaba

https://finance.yahoo.com/news/global-investors-flee-chinese-tech-182732349.html