The Long Term Investor

NOW THAT IS MORE LIKE IT.....DOW +538 points eleven minutes to the close today. How many people that thought they were LONG TERM INVESTORS got shaken out of the markets last week with the FEAR&PANIC caused by the interest rate and inflation media blather, short seller pumping, and quant AI programs? Those that did, I would bet that they are not back invested yet. Anyone that bailed last week is probably siting on the sidelines today and missed this little one day rally. That is the BIG issue with market timing....knowing when to get out.....and....knowing when to get back in. Other than these two little issues market timing works great.(sarcasm). I have been out of touch today so dont know what is being touted as the reason for this little one day bump. Regardless, what REALLY matters right now and going forward is EARNINGS and company financials.

 

"These are the times when it takes cult like belief in an investing philosophy to go against what everyone else is doing."

YOU are so right TomB16. I call it unemotional "CLNICAL FOCUS". I have been investing as I do for about 50 years now and have NEVER deviated from what I do and how I do it. After this long I am never tempted by the latest investing fad or by what everyone else seems to be doing. I KNOW what works for me and I just simply plug along doing my thing regardless of anyone else. To me the KEY for any sort of investor is to identify what works for you and just do it, over, and over, and over, and over, for as long as it works. Of course you have to be REALISTIC with yourself and able to evaluate with CLINICAL FOCUS that what you are doing is actually working and that you are not fooling yourself. Good investing to all.......

 

MARKET DRIVERS of the day:

IBM EARNINGS.....for any that own this stock here are their prepared remarks on earnings. I dont own the stock although I have owned it in the past. It is NOT a stock that I would consider now or in the near to mid future as a LONG TERM holding.

https://www.ibm.com/investor/att/pdf/IBM-3Q18-Earnings-Prepared-Remarks.pdf

THE FED.......as usual, investor OBSESSION with the Fed continues.

"After Hike, Fed Minutes May Flesh Out Thinking on Path Ahead"

https://www.bloomberg.com/news/arti...-minutes-may-flesh-out-thinking-on-path-ahead

SHORT TERM TRADERS taking profits from yesterday.

"MARKET ANALYSIS: Profit Taking May Lead To Pullback On Wall Street"

http://www.morningstar.co.uk/uk/new...king-may-lead-to-pullback-on-wall-street.aspx

ALL of the above are obviously very short term events and exactly what you would epect to be market drivers for a day.

 

TomB16.

I wish I had a better answer for you but here is how....more like why....I maintain CLINICAL FOCUS on my investing.

1. The BIG ONE, this is just my emotional style and make up as a person. It is my basic personality. Whether it was school, sports, runing a business, investing, a hobby......that is just how I am.

2. The way I invest is how MY FAMILY has invested for a long time, going back three generations including myself. My grandfather was a businessman and stock investor. He had a portfolio of about 15 LARGE CAP, dividend paying stocks that he held LONG TERM. His largest holding was Phillip Morris. My mom had four brothers and sisters and when her parents died she inherited one fifth of each holding in his portfolio about $14,000. (early 1960's) She continued to hold those stocks for the next 49 years till her death. She had started mutual fund investing in the 1950's. It was EXTREMELY RARE for people to own funds or stocks in the 1950's and into the 1960's and 1970's and even after that up to the 1990's. ONLY 4.2% OF THE US POPULATION OWNED A STOCK IN THE EARLY 1950'S AND ONLY 20% BY 1990. The advent of the IRA in 1974 opened the door to mutual fund and stock investing for the masses BUT it was not until the corporate policy of traditional pensions being replaced by the 401K in the 1990's and 2000's that the general American public became stock and fund owners. Even now stock or fund ownership is probably about 50% to 60%. SO......I was exposed to this environment as a child and throughout my life, something that was VERY MUCH OUT OF THE ORDINARY at the time for most people. My mom and dad became MILLIONARE NEXT DOOR types. Living on a regular income and holding their stocks and mutual funds for the very LONG TERM with no changes.....EXTREME buy and hold investing. By the time both of them were dead their account was at about $4 MIL. That original position of 14 shares of Phillip Morris with reinvesting of dividends and splits grew to over 15,000 shares.

I eventually started to manage my moms accounts as well as those of my in-laws, siblings, children, a family trust, etc, etc. in the mid 1990's. As an aside, I did at that point start to cut back on the Phillip Morris reinvesting and did diversify their account into more modern holdings. BUT, I continued with the BIG CAP, DIVIDEND PAYING, AMERICAN, ICONIC COMPANY AND PRODUCT, GREAT MANAGEMENT, style of investing. I got used to dealing with large sums of money and being responsible for other peoples money and found that the responsibility of dealing with others money and large sums did not bother me in the least. I have 20+ years experience establishing and managing a very successful small business as a businessman. I did the same thing in business, I did the same thing over, and over, and over. I stuck with what worked and did not try to jump on every fad of the moment. I got used to taking risk with my personal asssets as a business owner over my entire working life. My entire work life I have been responsible for my own success or failure, retirement, etc, etc. SO.....my childhood, young adult years, and business years, have contributed to my investment personality.

3. Education is a big factor in how I invest. I have a degree in Psychology, I took many business classes, including accounting, as an undergrad and went to a year of grad school in business. My emphasis was on marketing with a minor interest in managing people in business. I have a law degree, although I am not licensed. Of course these reflect my underlying personality. Although, I have seen over my life many very educated people that were TERRIBLE with money.

4. As a young adult in my 20's I discovered the rule of 72's and was able to use this to VISUALIZE the results of LONG TERM thinking and investing. I have used VIZUALIZATION and GOAL SETTING through my life and have found these concepts to be very powerfull.

5. Many other similar factors, many of which are just my individual nature. I have NEVER been a fad follower in any aspect of my life. So, I guess the bottom line, is I invest in a way that fits me as an individual and having been very successful doing so, my investor behavior has been rewarded and reinforced over many many years and is now set in stone.

6. I learned along the way how to make hard decisions very quickly and decisively and to impliment them as soon as made. The hardest thing for many investors and business people is knowing when to sell and DOING IT without looking back. If I make a bad investing decision, once I see it, I sell and move on, I consider selling a non performing investment as a lateral move and an opportunity.

7. I was lucky enough to realize at an early age that I had a talent for BUSINESS which the things I did over my lifetime in hindsight added to. Even as a kid I was very business oriented. In school I was allways UNDERESTIMATED and in sports and other activities and interests and aspects of my life have overachieved through very hard work and practice even though I might not start out as the best. I guess for me it came down to a DRIVE to achieve, which I have done.

8. LIFE IS NOT ONE UPWARD CURVE. I made various mistakes, had setbacks, lost at times in various aspets of my life, but learned from these and allways had the DRIVE and work ethic to move forward and upward. Of course, there are points in my life that in hindsight were turning points and by LUCK I hapened to take a particular ROAD.

9. By this time, I have lived through many HORRIBLE economic times....the late 1970's bear market, Stagflation of the late 1970's and early 1980's, the flash crash of 1987, the dot-com boom and crash, the banking and housing disaster of 2008/2009. AND IMPORTANTLY if you see one of my posts above, I do NOT depend on my investments or investment results for current or retirement income. I have set up my financial life to NOT be dependant on my investments which allows me to invest for the LONG TERM with NO FEAR and no need to have any limit on the risk I can take or the potential disasters I can weather as an investor.

10. Etc, etc, etc.

SORRY FOR THE LONG RAMBLING ANSWER...........

SO..........there is no magic answer. I look at the above and in answer to your question think......"WTF.....hell if Iknow". That is why I like to say......ALL INVESTING IS PERSONAL.

AS An Aside........Here is some interesting reading for the majority of people that have no clue what investing was like before the year 2000. (bold parts are done by me)

"Stocks Then And Now: The 1950s And 1970s"

https://www.investopedia.com/articles/stocks/09/stocks-1950s-1970s.as

""In many respects, advances in communications and technology have made the world a smaller place than it was 50 years ago. Nowhere is this more evident than in the field of investing, where technological advances have completely transformed the investment process.

At the same time, regulatory changes have blurred the lines between banks and brokerages in recent decades. These changes, and the increase in globalization since the 1980s, have advanced the opportunities available to investors. But these increased opportunities have also been accompanied by greater risks. As a result, investing is now a more challenging exercise than it was in previous decades - specifically, the 1950s and 1970s.

Investing in the 1950s
According to the first share owner census undertaken by the New York Stock Exchange (NYSE) in 1952, only 6.5 million Americans owned common stock (about 4.2% of the U.S. population). With a generation scarred by the market crash of 1929 and the Great Depression of the 1930s, most people in the 1950s stayed away from stocks. In fact, it was only in 1954 that the Dow Jones Industrial Average (DJIA) surpassed its 1929 peak, a full 25 years after the crash.

The process of investing was also more time consuming and expensive in the 1950s than it is now. Thanks to the Glass-Steagall Act of 1933, which prohibited commercial banks from doing business on Wall Street, stock brokerages were independent entities. (To learn more, see What Was The Glass-Steagall Act?)

Fixed commissions were the norm, and limited competition meant that these commissions were quite high and non-negotiable. The limitations of technology in those days meant that the execution of stock trades, from initial contact between an investor and a broker, to the time the trade ticket was created and executed, took a considerable amount of time.

Investment choices in the 1950s were also quite limited. The great mutual fund boom was still years away, and the concept of overseas investing was non-existent. Active stock prices were also somewhat difficult to obtain; an investor who wanted a current price quotation on a stock had few alternatives but to get in touch with a stockbroker.

Although thin trading volumes reflected the relative novelty of stock investing at the time, things were already beginning to change by the mid-1950s. 1953 marked the last year in which daily trading volumes on the NYSE were below one million shares. In 1954, the NYSE announced its monthly investment plan program, which allowed investors to invest as little as $40 per month. This development was the precursor to the monthly investment programs that were marketed by most mutual funds years later, which in turn led to the widespread adoption of stock investing among the U.S. population in the 1970s and 1980s.


Investing in the 1970s
The process of change, as far as investing was concerned, accelerated in the 1970s, although the U.S.stock market meandered through this decade of stagflation. The DJIA, which was just above 800 at the start of the 1970s, had only advanced to about 839 by the end of the decade, an overall gain of 5% over this 10-year period. (For details see, Stagflation, 1970s Style.)

However, mutual funds were growing in popularity, following the creation of individual retirement accounts (IRA) by the Employee Retirement Income Security Act (ERISA) of 1974, as well as the introduction of the first index fund in 1976. In 1974, trading hours on the NYSE were extended by 30 minutes to accommodate the growth of the market. (For further reading on the ERISA, see our special feature on Individual Retirement Accounts.)

Perhaps the biggest change for investors this decade was the increasing settlement of securities trades electronically, rather than in physical form. The Central Certificate Service, which was introduced in 1968 to handle surging trading volumes, was replaced by the Depository Trust Company in 1973. This meant that, rather than physical stock certificates, investors were now more likely to have their stocks held in electronic form at a central depository.

In 1971, Merrill Lynch became the first member organization of the NYSE to list its shares on the exchange. In 1975, in a landmark development, the Securities and Exchange Commission banned fixed minimum commission rates, which had hitherto been a cornerstone of U.S. securities markets and exchanges throughout the world. (For more on the SEC, see Securities And Exchange Commission: Policing The Securities Market.)

These changes, coupled with the dramatic improvement in trade processing and settlement due to the increasing use of automation and technology, laid the foundation for significantly higher trading volume and the increasing popularity of stock investing in the years ahead. In 1982, daily trading volume on the NYSE reached 100 million for the first time. By 1990, the NYSE census revealed that more than 51 million Americans owned stocks - more than 20% of the U.S. population.

Investing in the New Millennium
Investing is a much easier process than it was in earlier decades, with investors having the capability to trade esoteric securities in faraway markets with the click of a mouse. The array of investment choices is now so huge that it can be intimidating and confusing to new investors. Primarily credited to technological advancements, a number of developments over the past two decades have contributed to the new investing paradigm.

First, the proliferation of economical personal computers and the internet made it possible for almost any investor to take control of daily investing.

Second, the popularity of online brokerages enabled investors to pay lower commissions on trades than they would have paid at full-service brokerages. Lower commissions facilitated more rapid trading, and in some instances, this has led to individuals pursuing day trading as a full-time occupation.

Third, the bid-ask spread has also narrowed considerably (another development that facilitates rapid trading), thanks to the implementation of decimal pricing for all stocks in 2001.

Finally, exchange-traded funds (ETF) have made it easy for any investor to trade securities, commodities and currencies on local and overseas markets; these ETFs have also made it easier for investors to implement relatively advanced strategies such as short sales. (To learn how to short sell, read the Short Selling Tutorial.)

These factors have led to trading volumes soaring in the new millennium. On January 4, 2001, trading volume on the NYSE exceeded 2 billion shares for the first time. On February 27, 2007, volume on the NYSE set a new record, with over 4 billion shares traded.

The Bottom Line
While investors now have a plethora of investment opportunities, the accompanying risks are also greater. The globalization trend has led to a closer relationship between world markets, as is demonstrated by the synchronized correction in global markets during the "tech wreck" of the early 2000s, and the credit crisis of the late 2000s. This means that, in a global storm, there may be virtually no safe haven. The investing world is also much more complex now than it has ever been; a seemingly small event in an obscure overseas market can trigger a global reaction worldwide. As a result of these developments, investing is a more challenging (but convenient) exercise now than it was in the 1950s and 1970s.""

 

Markets today are being "hit" a little bit by a BLACK HUMMINGBIRD. (way too small to be a black swan) The Saudi situation being focused on by the media. Add in the program trading that is piggybacking and expanding the impact of this situation and you have.......today. I am sure the overhang of the election is also a factor, short term. I REMAIN fully invested for the LONG TERM, as usual, with no changes to the portfolio model listed earlier in this thread.

BUT....sooner or later the markets will turn to earnings and will react to whatever the earnings are. EARNINGS are the obvious actual facts that will show the health of the individual businesses that are represented by stock. This sort of market behavior has now become the norm with the "trading" mentality that is now accepted as the norm and more importantly the lockstep program trading and AI trading used by the BIG BOYS. THIS sort of up and down general market behavior is not going to change ro go away. For individual investors that are NOT traders....you have to ignore this day to day stuff and think LONG TERM, or you will be driven crazy and be constantly jumping around in response and killing any chance for returns.

ACTUALLY.....if I was a young investor or even a trader my primary BIG concern going forward would be the obvious movement picking up speed right now to take the country toward SOCIALISM. A stagnant economy, increased taxes, inflation, government micromanagement of business, government regulation, etc, etc, will be business and economic KILLERS. At my age, I am set and will be just fine. For those younger...you will create your own reality just like happens every couple of generations.....and...you will than have to live with it and in it. There is no GUARANTEE that the country we have now or the one that you grew up in will exist in the same general form LONG TERM. As usual.....it is interesting to watch this ongoing little experiment in human behavior.

 

Here is my "PORTFOLIO MODEL" for all accounts managed. I am re-posting this since I intend to talk about earnings for the individual stocks that I own and some data for the funds. 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 dto talk about it once in a while.

STOCKS:

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

MUTUAL FUNDS:

SP500 Index Fund
Fidelity Contra Fund
Dodge & Cox Stock Fund

 

HERE is the earnings release from COSTCO, a long time holding in the above portfolio, released October 4, 2018. This company has weathered the retail ice age and the advent of the AMAZON era. They have been an ICON of the American economy for a long time. I remember shopping in their first store. We have been COSTCO members for that long. They were a HUGE hit with customers from the beginning.

http://phx.corporate-ir.net/phoenix.zhtml?c=83830&p=irol-newsArticle&ID=2370366

"Net sales for the 16-week fourth quarter were $43.4 billion, an increase of 5.0 percent from $41.4 billion in the 17-week fourth quarter last year. Net sales for the 52-week fiscal year were $138.4 billion, an increase of 9.7 percent from $126.2 billion in the 53-week fiscal year of 2017."

"Net income for the 16-week fourth quarter was $1,043 million, or $2.36 per diluted share, compared to $919 million, or $2.08 per diluted share, in the 17-week fourth quarter last year."


"Net income for the 52-week fiscal year was $3.13 billion, or $7.09 per diluted share, compared to $2.68 billion, or $6.08 per diluted share, in the 53-week prior year. Net income this year was positively impacted by a $41 million ($0.09 per diluted share) tax benefit in the first quarter, related to a change in accounting rules for stock-based compensation. Last year’s net income was positively impacted by an $82 million ($0.19 per diluted share) tax benefit in connection with the third-quarter special cash dividend and other net benefits of approximately $51 million ($0.07 per diluted share after tax) for nonrecurring legal and other matters."

Income statement and Balance statement are included in the above link.

AND.....as USUAL these days the stock was down after earnings were reported. There is an obvious tendency now to NIT-PICK earnings reports and look for some reason to be negative, even in the face of beating all the estimates in every area reported. In the case of COSTCO it was a statement about internal controls and a minor accounting flaw that was reported that gave the "negative Nancy's" a reason to create a minor sell off following earnings. Of course this is old news at the moment having been reported 16 days ago. CURRENT quote on COST is $229.56. When reported on October 4 shares were at 234.65, the next day they were at $218.82.

"Costco Stock Slides as Retailer Discloses Accounting Issue"

https://www.barrons.com/articles/co...etailer-discloses-accounting-issue-1538750131

"Costco, always a steady performer, easily outperformed the market and its retail peers this year.
In the past decade, Costco (COST) stock has been a fairly steady performer: A quick look at its chart shows that the shares barely blinked during the Great Recession, and powered through pessimism that gripped much of retail in 2016 and 2017. This year, it’s jumped 24.5%, three times the gain in the SPDR S&P Retail ETF (XRT).


Of course, with great performance comes with great expectations, so there were some concerns going into Costco’s fourth-quarter earnings report. Yet the company was able to beat even that high bar, reporting earnings of $2.36 a share on revenue of $44.41 billion, while analysts were expecting EPS of $2.34 on revenue of $44.17 billion."

HERE is info from the above article on the little issue used as an excuse for the day after earnings "little" dip:

"So why the selloff? Costco also warned it found a flaw in its accounting, and thus “expects to report a material weakness in internal control” in its upcoming 10K filing.

However analysts aren’t much troubled by the disclosure, focusing mostly on another strong quarter from Costco. That’s really not much of a surprise either: This isn’t a company like General Electric (GE), where financial restatements are just one issue amid a laundry list of missteps, or Petroleo Brasileiro (PBR), where financial chicanery goes hand-in-hand with corruption. Costco’s management has a long track record of steady execution, making the news much less worrisome than it would be from a weaker company.

As for the quarter itself, there seemed to be plenty of optimism, even as the Street positions itself for growth to be a bit more modest going forward."

MY COMMENT:

Costco continues to be a great stock with over 90% member retention at renewal. Those membership fees are a GOLD MINE like the AMAZON Prime fee. I continue to be very pleased with this stock which seems to ALWAYS beat estimates in spite of the usual predictions of modest growth going forward. The key for Costco in my mind will be their ability to continue to connect and hold the MILLENNIAL generation as customers, especially women who tend to do the family shopping. Judging by our local stores and the crowded isles and parking lots things are looking good.

 

HON, a more recent addition to my portfolio reported earnings today before the bell. Current price per share is $155.61. HERE is the company release:


Press Release:

Honeywell Delivers Third-Quarter Reported Sales Growth Of 6%, Operating Cash Flow Growth Of 33%

http://investor.honeywell.com/file/Index?KeyFile=395405135

"- Organic Sales up 7% Driven by Aerospace and Safety and Productivity Solutions
- Operating Income Margin up 40 Basis Points, Segment Margin up 70 Basis Points to 19.4%
- Reported Earnings per Share of $3.11; Adjusted EPS(1) of $2.03, up 17%
- Adjusted Free Cash Flow(2) up 51%, Conversion 119%
- Updated Guidance Reflects Broad-Based Strength in Business Outlook and Impact from Two Spin-Offs"

AND

Honeywell (HON) Beats on Q3 Earnings, Lowers 2018 EPS View

https://www.nasdaq.com/article/honeywell-hon-beats-on-q3-earnings-lowers-2018-eps-view-cm1039638


"Honeywell International Inc. HON reported better-than-expected results for third-quarter 2018.
Adjusted earnings in the reported quarter were $2.03 per share, outpacing the Zacks Consensus Estimate of $1.99. The bottom line also improved 16.7% year over year. This upside primarily stemmed from the company's stellar operational performance during the reported quarter.
Revenues of $10,762 million in the third quarter surpassed the Zacks Consensus Estimate of $10,731 million. The top line also grew 6.3% year over year. Top-line numbers improved 7% organically on the back of stronger sales generated from the company's Aerospace, and Safety and Productivity Solutions businesses."

AND

"Costs/Margins

The company's total cost of sales in the reported quarter was $7,556 million, up 7.1% year over year. Selling, general and administrative expenses remained flat year over year at $1,524 million. Interest expenses and other financial charges were $99 million compared with $81 million witnessed in the comparable period last year.

Operating income margin in the third quarter was 15.6%, up 40 basis points year over year.

Balance Sheet/Cash Flow

Exiting the quarter, Honeywell had cash and cash equivalents of $9,803 million, higher than $7,059 million recorded as of Dec 31, 2017. Long-term debt was $14,059 million, higher than $12,573 million recorded at the end of 2017.

During the reported quarter, the company generated $1,887 million cash from operating activities, higher than $1,407 million recorded in the year-ago period. Capital expenditure in the July-September quarter was $183 million, lower than $212 million incurred in the year-earlier quarter.

Adjusted free cash flow in the reported quarter was $1,809 million, up 51% year over year.

During the reported quarter, Honeywell repurchased common stock worth $300 million. The company also increased its dividend by 10% - marking the ninth double-digit hike since 2010.

Outlook

Honeywell is poised to augment its near-term revenues and profitability on the back of robust end-market demand. This Zacks Rank #3 (Hold) stock is poised to grow on the back of investments, greater operational efficacy and stronger demand for its diversified products. Moreover, Honeywell is on track to boost its shareholders' remuneration over time.

The company lowered its earnings view for 2018 from $8.10-$8.20 per share to $7.95 - $8.00. The outlook is revised after considering the impact of 27 cents per share of net earnings dilution from the separation of Garrett Motion Inc. GTX and Resideo Technologies, Inc. Garrett started operating as a stand-alone company from Oct 1. Resideo spin-off is anticipated to be closed by Oct 29."

MY COMMENT:

Looks GOOD to me. Will continue with this stock for the LONG TERM. Fully invested for the LONG TERM as usual. NOW $153.91, down o.82% on good earnings as is the NORM for the modern era of TRADING.....whoops, I mean....INVESTING.

 

UGLY day today in the general markets. It will be interesting to see if the program trading kicks in and creates a spiral down to the close or if the markets recover some as the day goes on. Of course, I continue fully invested as usual for the LONG TERM.

Right now this is where we are for the year to date with the recent market events:

DOW year to date +.63%
SP500 year to date +.98%

Earnings news from Harley Davidson and 3M and Caterpillar contributing to the down side weakness. AS TO 3M and others.....

Dow Dives on Earnings Disappointments From Caterpillar, 3M

https://www.thestreet.com/markets/dow-dives-on-caterpillar-and-3m-earnings-disappointments-14753282

Key earnings and market reaction noted in the above article are:

""Caterpillar Inc. (CAT - Get Report) fell 9% on Tuesday after suggesting that increased demand had created some supply chain challenges even though it beat third-quarter earnings and revenue estimates.
The Deerfield, Ill.-based construction and mining equipment manufacturer posted adjusted earnings of $2.86 a share on revenue of $13.5 billion. Analysts had been expecting earnings of $2.85 on revenue of $13.26 billion, according to FactSet.
The company reiterated its full-year adjusted profit per share outlook range of $11 and $12 a share, which compared with analysts' expectations of $11.64 a share."

"3M Co. (MMM - Get Report) tumbled 6.8% after third-quarter profit missed expectations and the company cut its full-year earnings forecast.
The maker of Post-it notes reported a third-quarter profit of $2.58 a share, missing estimates of $2.70. Revenue of $8.15 billion also missed expectations of $8.41 billion, according to FactSet.
3M cut its full-year adjusted earnings estimate to $9.90 to $10 a share, which is below consensus estimates of $10.28."

"McDonald's Corp.'s (MCD - Get Report) third-quarter earnings of $2.10 a share beat Wall Street expectations of $1.98. Sales of $5.37 billion also topped forecasts. Same-restaurant sales in the quarter rose 4.2%. The stock rose 5.4%"

"Verizon Communications Inc. (VZ - Get Report) posted third-quarter adjusted profit of $1.22 a share, 3 cents above estimates. Revenue of $32.61 billion topped forecasts of $32.5 billion. Wireless revenue in the quarter rose 6.5% to $23 billion. Shares rose 3.3%."

"United Technologies Corp.'s (UTX - Get Report) third-quarter adjusted profit of $1.93 beat analysts' estimates by 11 cents. Revenue of $3.44 billion beat forecasts of $3.33 billion. The company also raised its earnings and sales guidance for 2018. Shares were up 1.7%."

"Biogen Inc. (BIIB - Get Report) posted adjusted earnings in the third quarter of $7.40 a share, higher than estimates of $6.78 a share. The stock rose 0.9%."

"Harley-Davidson Inc. (HOG - Get Report) posted stronger-than-expected third-quarter earnings and confirmed its full-year shipping and profit margin guidance as the iconic motorcycle maker continues to move away from its trade war spat with Donald Trump. Harley-Davidson fell 2.9%."

MY COMMENT:

A GREAT environment for TRADERS. At least, the few talented, professional, traders. As to LONG TERM INVESTORS, this short term action represents one of those times that you just ignore the NEWS, the MEDIA, and the general market action and get on with your everyday normal life. SMALL but nasty events like the current general markets over the past few weeks serve as a GUT CHECK for investors. Many will find out that they do not have the risk tolerance they thought they did and will bail. That is actually a good thing in my opinion. This sort of market is definately hard for those that are recently retired or coming up to retirement and have been counting on their stock accounts to keep up the HIGHLY UNUSUAL gains of the past 8-9 years. Those that are smart have set up their retirement income in a fashon that insulates them from market fear and panic. One word of advice.....TURN OFF THE TV......you will drive yourself crazy listening to the talking heads on this stock market "stuff". It is ALL hindsight talk. For example, I just heard one regular on a business channel talking about investor psychology and how....."you dont want to be the one stuck with the hot potato" when the market goes down. The stock markets are NOT a game of musical chairs. Keep in mind that you are investing in specific businesses, NOT the general markets. Even in an Index Fund you are investing in a basket of very specific businesses. We are past due for a weak or even a down year. That is just part of the reality of investing. You will not achieve the long term gains and averages if you are constantly being shaken out of the markets by fear and panic. Actually, I still believe there is a significant chance (possibility not probability) of a very nice year end rally after the election. On these DRAMA QUEEN down days it is also important to keep in mind that NO ONE is able to predict the markets with any degree of accuracy, sometimes we end up with self-fulfilling prophesy, but the market future, especially short term, is unknown. (except to someone like Biff in Back To The Future)

 

Are YOU drastically underperforming the market averages? NO ONE ever admits that they are, but the academic research show that this is REALITY and has been for a long long time. How people react to minor down times like the past few weeks has a BIG impact on their long term results. DALBAR is the gold standard of investor reaearch. Here is a summary of their classic annual investor "behavior" and "returns" data that they release every year. (for 2017)

Opinion: Americans are still terrible at investing, annual study once again shows

https://www.marketwatch.com/story/a...ting-annual-study-once-again-shows-2017-10-19

"The key findings of the study show that:

• The average equity mutual fund investor underperformed the S&P 500 Index SPX, -1.97% by a margin of 4.7%. While the broader market made gains of 11.96%, the average equity investor’s return was only 7.26%.

• The average fixed-income mutual fund investor underperformed the Bloomberg Barclays Aggregate Bond Index by a margin of 1.42%. The broader bond market realized a return of 2.65%, while the average fixed-income fund investor’s return was 1.23%.

• Equity fund retention rates decreased materially, from 4.1 years to 3.8 years. (This is directly related to psychology and behavior.)

• The 20-year annualized S&P 500 return was 7.68%, and the average equity fund investor’s was only 4.79%, a gap of 2.89%."

AND

"As noted by Dalbar:

“The retention rate data for equity, fixed-income and asset-allocation mutual funds strongly suggests that investors lack the patience and long-term vision to stay invested in any one fund for much more than four years. Jumping into and out of investments every few years is not a prudent strategy because investors are simply unable to correctly time when to make such moves.”"

WHY?
Three causes, capital not available to invest, capital needed for other purposes and the BIG ONE.....psychology.

"While the inability to participate in the financial markets is certainly a major issue, the biggest reason for underperformance is psychology. Behavioral biases that lead to poor investment decision-making is the single largest contributor to underperformance over time. Dalbar defined nine of the irrational investment behavior biases:

Loss aversion: The fear of loss leads to a withdrawal of capital at the worst possible time. Also known as “panic selling.”

Narrow framing: Making decisions about one part of the portfolio without considering the effects on the total.

Anchoring: The process of remaining focused on what happened previously and not adapting to a changing market.

Mental accounting: Separating performance of investments mentally to justify success and failure.

Lack of diversification: Believing a portfolio is diversified when in fact it is a highly correlated pool of assets.

Herding: Following what everyone else is doing. Leads to “buy high/sell low.”

Regret: Not performing a necessary action due to the regret of a previous failure.

Media response: The media have a bias to optimism to sell products from advertisers and attract viewers or readers.

Optimism: Overly optimistic assumptions tend to lead to dramatic reversions when met with reality."

For those that like to get way down in the "weeds".....and NO, I am not talking about people living in states with legal pot....Here is the actual DALBAR 2017 report:

DALBAR’s 23rd Annual
Quantitative Analysis of Investor Behavior

http://svwealth.com/wp-content/uploads/2018/04/dalbar_study.pdf

My COMMENT

Read it and weep. What is contained in this report is a GOLD MINE of information and a roadmap for long term investors. The actual data shows the folly of market timing, dollar cost averaging, trading, short term thinking and investing, etc, etc. However, the percentage of people that are able to actually follow the information in this and many other research articles that show the same, is VERY low. Good luck, dont let the short term market "stuff" get you down. Stiff upper lip....chin up....tally-ho.

 

One of my holdings in my PORTFOLIO MODEL (see above) reported earnings today.....BOEING....BA. Results look pretty good to me and the markets seem to agree with the price jump in BA stock being up +3.33% or $11.67 as I post this. Here is the bare-bones version of the earnings in a "news" format:

Boeing Beats Views, Lifts Profit Outlook Sharply As Production Improves

https://www.investors.com/news/boeing-earnings-q3-737-air-force-tanker/

"Boeing Earnings
Estimates: Analysts see Boeing earnings rising 26.8% to $3.45 with revenue down 2.5% to $23.72 billion.

Results: EPS of $3.58 on revenue of $25.15 billion, a surprise increase of 4%. Results also reflect charges related to planned investments in the newly awarded T-X Trainer and MQ-25 programs, totaling 93 cents per share. Operating cash flow jumped 34% to $4.56 billion.

Commercial revenue dipped 1% to $15.28 billion. Operating margin widened to 13.2% from 9.8% reflecting higher 787 margins and strong operating performance on production programs.

Boeing already surprised analysts with better-than-expected 737 deliveries for September, as it resolves delays from key suppliers. Overall for the quarter that ended in September, Boeing deliveries hit 190 commercial jets, down from 202 total aircraft in Q3 2017.

Defense revenue rose 13% to $.573 billion. Boeing took $176 million in charges on the KC-46 tanker and will be be late delivering the tanker to the Air Force after deficiencies were found last month. Operating margin swung to -4.3% from 9.6% due to the T-X and MQ-25 investments and KC-46 costs.

Global services revenue climbed 14% to $4.09 billion, primarily driven by higher parts volume.

Outlook: Full-year EPS is now seen at $14.90-$15.10, above consensus estimates for $14.57 and up from a prior view of $14.30-$14.50, on revenue of $98 billion-$100 billion, about in line with consensus views for $99.12 billion and up from a prior view of $97 billion-$99 billion. Operating cash flow guidance was reaffirmed at $15 billion-$15.5 billion.

Boeing said the higher earnings guidance was driven by a lower-than-expected tax rate and improved performance at its commercial aircraft unit, while the higher revenue outlook was driven by defense volume and services growth."

HERE is the modern, "breathless", over the top, way of reporting earnings news in the story below:

"Boeing shares surge after the company reports blowout results and raises 2018 forecast

• The aerospace giant reports third-quarter adjusted earnings of $3.58 a share, topping Wall Street expectations by 11 cents.
• Boeing raises its full year 2018 earnings forecast.
• CEO Dennis Muilenberg notes that the company landed billions in military contracts this summer."

https://www.cnbc.com/2018/10/24/boeing-earnings-q3-2018.html

MY COMMENT:

I will leave it to readers to look at the CNBC article above. Lots of positive info in that article, especially about the defense and government side of Boeing's business. Actually, (I dont give stock tips), but if I did I would probably say even after this little jump up today BA might be a good short to medium term play with very significant upside. The so called trade war with China has in my opinion, especially in light of this earnings report, significantly, for the short to medium term, depressed Boeing stock. I believe the trade situation with China will be resolved some time within 3 to 12 months. We hold all the cards with China and their economy is much more fragile than anyone thinks. They need us and our money and technology way more than we need them. It is similar to the Regan era when Regan was able to force Russia into capitulation and the end of the cold war by geting into a defense trade war with them that wrecked their economy. Once things are resolved with the China situation I believe it is likely Boeing stock will quickly rise 15% to at least 20% perhaps even as much as 25%. So there MIGHT be a chance for a short to mid term trader to make 15-20% or more over the next 3 to 12 months. BUT, I will leave that to others since I am not a trader.

We CONTINUE with our "little" correction. I remain fully invested for the LONG TERM as usual. TOO BAD I dont have any money to invest right now. I am not a market timer, but I dont mind buying nice dips if I have stock market money that is available to be invested. BUT:

DOW year to date +1.28%
SP500 year to date +1.37%

Not too bad considering where we are right now and the explosive move UP in stock and fund prices we are LIKELY (in my opinion) going to see once this "little" correction is over with. ALTHOUGH, keep in mind that people have gotten a screwed up view of a "typical" correction over the past 8-10 years. We have often, over that time, had very sharp and very short corrections. Many lasting just a week or two, or, perhaps a month. In my mind a more typical correction would be 2-6 months. So, when a more typical correction hits, dont FREAK OUT........it just means that you have not been investing for more than 8-10 years and your market reality is limited to a HIGHLY UNUSUAL period of time for stocks and funds.

 

The PROBLEM with numbers and human psychology is that when numbers get bigger your brain does not work in percentages. Your brain just sees a BIG number. Like the drop of 608 points today. Your brain says.....OMG......six hundred points is a HUGE drop. Although the reality is that it is a 2.41% drop, not earth shattering. And....the reality is....since the market high in early October JUST 20 days ago, we are down on the DOW by 2245 points......OR.......8.36%. ACTUALLY using the historic definition of a correction, the market being down 10% or more, we are NOT even in official correction territory yet.

This month has been a wake up call and a shock to many people that have never invested before the last 9 years of extreme BULL MARKET. It has also been a shock to those under about 30 to 35 that have never invested except for in an extreme BULL MARKET. WELCOME TO REALITY.

Jumping into the old market TIME MACHINE, we have been transported back to July 6, 2018. We have lost about 3.5 months of gains as of the close today. LOTS of "things" overwhelming earnings and everything else at the moment. The bombs this morning, the Saudi screw up, China, the election, Italy and the EU, The housing numbers today. The fact is the markets are very jittery right now and LOOKING for any reason to panic and/or sell off. I am sure the program traders at the big firms are cleaning up in this environment. Us "little people" just siting as usual and perhaps going......WTF. I REMAIN fully invested for the LONG TERM as usual.

 

TWO BIG earnings reports today. Amazon and Google. HERE is the company release for Amazon:

https://ir.aboutamazon.com/quarterly-results

"SEATTLE--(BUSINESS WIRE)--Oct. 25, 2018-- Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its third quarter ended September 30, 2018.

Operating cash flow increased 57% to $26.6 billion for the trailing twelve months, compared with $17.0 billion for the trailing twelve months ended September 30, 2017. Free cash flow increased to $15.4 billion for the trailing twelve months, compared with $8.0 billion for the trailing twelve months ended September 30, 2017. Free cash flow less lease principal repayments increased to $8.1 billion for the trailing twelve months, compared with $3.5 billion for the trailing twelve months ended September 30, 2017. Free cash flow less finance lease principal repayments and assets acquired under capital leases increased to an inflow of $5.4 billion for the trailing twelve months, compared with an outflow of $1.1 billion for the trailing twelve months ended September 30, 2017.

Common shares outstanding plus shares underlying stock-based awards totaled 507 million on September 30, 2018, compared with 503 million one year ago.

Net sales increased 29% to $56.6 billion in the third quarter, compared with $43.7 billion in third quarter 2017. Excluding the $260 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 30% compared with third quarter 2017.

Operating income increased to $3.7 billion in the third quarter, compared with operating income of $347 million in third quarter 2017.

Net income increased to $2.9 billion in the third quarter, or $5.75 per diluted share, compared with net income of $256 million, or $0.52 per diluted share, in third quarter 2017.

“Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organizations in eight countries,” said Jeff Bezos, Amazon founder and CEO. “And we’re not slowing down – Amazon Business is adding customers rapidly, including large educational institutions, local governments, and more than half of the Fortune 100. These organizations are choosing Amazon Business because it increases transparency into business spending and streamlines purchasing, with increased control. The team is doing a fantastic job building and innovating for customers.”

"Fourth Quarter 2018 Guidance

• Net sales are expected to be between $66.5 billion and $72.5 billion, or to grow between 10% and 20% compared with fourth quarter 2017. This guidance anticipates an unfavorable impact of approximately 80 basis points from foreign exchange rates.
• Operating income is expected to be between $2.1 billion and $3.6 billion, compared with $2.1 billion in fourth quarter 2017."

(bold is mine, not Amazon)

HERE is the Google release:

https://abc.xyz/investor/static/pdf/2018Q3_alphabet_earnings_release.pdf?cache=d17140f

"Alphabet stock sinks on revenue miss

• Alphabet reported its Q3 earnings, missing revenue expectations but beating on the bottom line.
• The stock sunk as much as 5.3 percent after hours.
• It's closely-watched traffic acquisition costs remained stable."

https://www.cnbc.com/2018/10/25/alphabet-google-earnings-q3-2018.html

MY COMMENT:

As USUAL the FANTASY numbers (analyst expectations) hammer the stock price after earnings are reported. It would be nice to live in a world where the actual RESULTS drove the reporting and stock price after earnings. Both companies had nice substantial gains across just about all categories.......BUT.........not what the analysts wanted. So, they pay the short term price, at least in after hours trading. Of course, LONG TERM investing eliminates this sort of nonsense and allows the stock to find its "real" level based on actual results over a reasonable period of time. We continue to follow the recent pattern seen over the past few years of the media, analysts and others nit-picking quarterly results and punishing successful businesses short term after earnings. I REMAIN fully invested for the LONG TERM as usual.

 

TGIF.......very nasty day today. BUT, we just have to go through the process and shake this stuff out. Dont hear much about the ten year treasury yield anymore, do you. Typical how that FEAR MONGERING over the ten year treasury yield and inflation only lasted a few days. We are now experiencing.....rolling fear mongering over the "crisis of the day". When will this stuff end? When it ends.

EVEN as a LONG TERM INVESTOR it is disgusting to look at an account on a day like this and see one day losses of $100,000 plus or minus. On the other hand, I understand just holding through events like the past few weeks. Since I am NOT a trader, or market timer, I will as usual just sit through the BAD as well as the good. On a positive note...disregarding the analyst BS.....earnings are actually pretty good. A very nasty period of consolidation going on right now and once things settle, we will be able to continue to extend the BULL MARKET.

 

TIRED of investing "stuff" right now and it is the weekend.....so I will go off topic a little bit. As an art collector (see post about art collecting in this thread) I sat through the online version of an art auction today. Early Texas Art. I was thinking that after the past month we have had that prices might be down some or buyers backing off. NO, not at all. Most lots went well into their pre-auction estimate and probably at least half the lots blew past their estimates. The top items DEFINITELY sold well. I am glad that I got into this type of collecting over 20 years ago. If I was starting today many of the pieces that we have would be out of reach.

IF anyone on here is from or living in Texas or interested in Early Texas Art you might want to check out......Vogt Auctions in San Antonio (auction November 3, 2018), Heritage Auctions (they have an Early Texas Art Auction twice a year) and David Dike fine Art (the auction I watched today, they do two auctions per year). The David Dike auction today probably had about 500 people attending and biding in person at the auction site in Dallas. Many, many more participating on-line.These are the places that I would trust if I was starting out. They all have good quality items and a good range of prices. Many good quality items can be had in the $1000 to $10,000 range for newer collectors. In addition Heritage and David Dike regularly include in their Texas art auctions works by RECOGNIZED Texas modern and contemporary artists from the 1940's up into the 1980's. For example works by the Dallas Nine. These works appeal to Millennial collectors and people that want something more modern than impressionistic and more historic art. Anyway, it was a BLOW OUT auction, so I guess many are not too concerned with the market action this month.

 

REMEMBER "irrational euphoria"? Well NOW we are in a period of IRRATIONAL DOOM&GLOOM in the general markets and in many specific stocks. There is absolutely no rational basis for much of the market action over the past few weeks. Earnings to date have been very nice. In my opinion much of what we are continuing to see is being driven by the fear mongering media. Add in professional traders and BIG BOYS whipping up the news even more to create favorable trading volatility and the program/AI trading platforms and you have the past few weeks in a nutshell. I suspect very few "little" investors have made any move at all. Those that have should probably evaluate their suitability to be stock or fund investors. That is one good thing about a few weeks like now, it serves as a gut check time for those that think they are stock and fund investors but in reality dont have the fortitude to do so. They end up being whipsawed by the markets. MUCH of what we are seeing right now in the month of October is nothing more than speculative DOOM&GLOOM. I agree with MUCH of the article below, especially the laundry list of why the markets are down right now. Of course, the list is so long as to be IRRATIONAL and represents nothing more than the FEAR topic of the day.

The key reasons behind the stock market’s ugly October fall

https://www.marketwatch.com/story/w...tory-for-the-first-time-in-2-years-2018-10-24

"A few short weeks ago the Dow industrials were on the verge of busting through another psychological milestone at 27,000.

However, all that momentum has evaporated as a sweeping downturn grips financial markets, sending the Dow Jones Industrial Average DJIA, -2.06% tumbling more than 600 points on Wednesday and pushing the Nasdaq Composite Index COMP, -3.33% into correction territory for the first time since Feb. 11, characterized as a drop of at least 10% from a recent peak. The Dow has shed about 2,140 points, or 8%, since an Oct. 3 peak, as of Friday’s close.

The S&P 500 is down 0.6% year to date, while the Dow is off 0.1%.

So, what happened?

The return of volatility

Well, investors have grown all-too comfortable with a market that has merely churned higher as it did in 2017, producing boffo returns without a significant bump lower.

Market pragmatists and technicians say those days were statistical anomalies to start and have come to a natural conclusion. And October, an already seasonally volatile month, has delivered the clearest sign so far that the old quiescent regime is over.

“The market selloff has taken on a life of its own and selling is begetting more selling.....

The source of all this stock-market angst is manifold.

• Policy mistake by the Federal Reserve
• Rising interest rates that could make borrowing more expensive
• A slowdown in global economic growth exemplified in China weakness
• An overall breakdown in stocks, represented in equities trading at multimonth lows
• Midterm election jitters, which have seasonally resulted in some jitters in U.S. markets
• Seasonal October volatility, which has tended to translate into choppy trade
• Worries that the U.S. economy is in the late stages of its expansion and due for a recession
• Brexit
• Italy’s budget crisis
• The looming end of quantitative easing in Europe
• The political implications of the killing of dissident journalist Jamal Khashoggi
• Worries about the health of emerging markets outside of China.
• Signs from U.S. companies that they are see earnings growth slowing
• U.S.-China trade relations which may be exacerbating Beijing’s economic malaise
• Growing deficits partly derived from President Donald Trump’s corporate tax cuts in 2017
• Weakness in the banking sector which hasn’t benefited from rising interest rates
• Softness in transports which Dow theorists tend to follow as a gauge of the health of the market
• A rotation of investors out of growth stocks and into those names viewed as value
• Major cracks in the housing market
• A weak earnings outlook

The earnings conundrum

Problems in the stock market come as earnings have thus far been stellar, reflecting strength in the domestic economy. But any weak outlook from corporate executives and any sign of under-performance has been punished, while out-performance at times has been, well, punished too.

Of the 240 companies in the S&P 500 that have reported third-quarter results this year (as of Friday) 78.3% posted earnings per share that were above Wall Street expectations. That compares with an average of 64% of companies beating EPS expectations and 77% over the past four quarters, according to I/B/E/S data from Refinitiv.

Bull or bear market

Art Hogan, chief market strategist at B. Riley FBR Inc., said valuations remain attractive and the current downturn may amount to a garden-variety correction.

“Good news in my mind is valuations have become much more attractive here with the S&P 500 trading at about 15 times next year’s estimates,” Hogan said.

“Current earnings look great. The yield on the U.S. 10-year has settled down from its earlier explosive 20 basis point pop. Economic data continues to show no sign of a pending recession, and recessions are what kill bull markets. We are in a correction in a long-term bull, driven more by uncertainty over China and trade, than rising rates,” he said.

MY COMMENT:

Above is what I consider to be relevant in the above article. When you have 20-40 different reasons for a short term market drop, you are simply seeing fear, panic, and self-interest driving the markets with no rationality at all. At some point the people and media pushing this CRAP will become exhausted and move on. Or, market participants and investors will simply tune out them and their message of negativity that does not fit the reality of earnings.. Till than expect more of the same.

ANOTHER little article that I consider to speak the TRUTH, here, are the relevant portions of the article that I believe reflect reality
:

Goldman Sachs: Market mayhem has gotten out of hand. Stocks will rebound

https://www.cnn.com/2018/10/29/investing/stock-market-goldman-sachs/index.html

"Nervous investors are bracing for a dramatic slowdown in America's roaring economy.
But Goldman Sachs thinks the October market scare -- the S&P 500 plunged as much as 9% from its record high -- has gotten out of hand.....
the US economy still looks healthy. Economists don't foresee an imminent recession.
"The sell-off appears to have overshot the fundamentals," Goldman Sachs chief US equity strategist David Kostin wrote to clients after Friday's closing bell.

Investors appeared to agree with that thinking, with the Dow soaring as much as 352 points on Monday morning. But the rally eventually crumbled and the index was down about 300 points late in the day.
The recent market mayhem was swift. Despite Monday's rebound, the Nasdaq is down a stunning 13% in October. If that loss holds, it would be the Nasdaq's worst since November 2008. Highflying stocks are down much more. Amazon (AMZN) and Netflix (NFLX) have each plunged about 24% in October.

Too negative?

Even though some economic and earnings reports have fanned the fears of a sharp slowdown, Goldman Sachs expects "positive" economic data to continue. The firm predicts the S&P 500 will recover to 2,850 by year end, representing a significant rebound of 7% from Friday's close.
"We believe the market has moved past fair value," Kostin wrote.
In other words, the pendulum swung too far into pessimism.
Rather than a sharp economic slowdown, Goldman Sachs economists are calling for "gradually decelerating" US GDP growth from 3.5% in the third quarter to 1.6% at the end of 2019.
Investors have also grown worried that the Federal Reserve may be raising interest rates faster than the economy can handle. Higher borrowing costs are already slowing home and auto sales. The SPDR S&P Homebuilders ETF (XHB) plunged nearly 30% since late January. Ford (F) has lost about a third of its value over that span.
Ed Yardeni, president of Yardeni Research, said the Fed may need to pause rate hikes and monitor how the economy responds to higher borrowing costs.
"The plunge in stock prices," Yardeni wrote to clients on Monday, "suggests that the economy may not be as strong as the Fed perceives."

More room to fall?

"We think this decline will become a mild-to-medium correction," Sam Stovall, chief investment strategist at CFRA, wrote to clients on Monday. "We don't anticipate a new bear market."
The recent market turmoil marks the second decline of 5% or more for the S&P 500 so far this year. In the 26 years since World War II that twin 5% declines have occurred, the second decline was typically deeper than the first, Stovall found.

Buybacks to the rescue

Even if the market slump deepens, Wall Street is welcoming a powerful buyer coming off the sidelines: Corporate America.
The market mayhem coincided with a "blackout" in share buybacks. Companies typically avoid repurchasing shares during the two weeks prior to reporting earnings. That's a big deal because Corporate America has been the biggest buyer of shares since 2009.
But Goldman Sachs estimates that 48% of S&P 500 companies are now out of their blackout windows. UBS predicts that buybacks and dividends will total $170 billion over the next month, tripling the level of the past four weeks.
That could be just what the bull market needs to get back on track.

MY COMMENT:

The one BIG issue right now is that the FED in all their glory will tank the economy. A pause in their interest rate mania is definately indicated. Chasing after fantasy inflation as the FED is doing now and has done for the past 30 years is a FOOLS GAME. Unfortunately the FED has gotten to the point where the economic idiots, that seem to always populate it, seem to think it is their function to try to control the economy. There is no economic reason for the continuation of interest rate increases at the moment. It is time to let the markets and the economy digest the MANY rate increases over the past two years.

As to investors, especially those with a LONG TERM horizon, the behavior we are seeing in the markets right now is just RIDICULOUS. I continue to be fully invested for the long term as usual.

 

POSTED THIS in another thread but I will put it up here as part of the HISTORICAL RECORD that is this thread. I was asked basically, why do you own the three funds in your portfolio. The funds are:

SP500 Index fund
Dodge & Cox Stock Fund
Fidelity Contra Fund

My bias is to hold a very concentrated portfolio of ONLY 10-15 stocks. By having about 50% of my money in these three funds I substantially broaden my stock exposure. This approach gives me broad diversification for about half of my money. At the same time it still continues my investing focus on the BIG CAP, DIVIDEND PAYING, ICONIC BUSINESS, WORLD WIDE, AMERICAN, side of the markets. I prefer to have exposure to what I consider the cream of the crop for mutual funds for about half of my money. I DONT want to have all of my eggs in the one basket of........my own thinking.

SP500 Index - we know that the VAST MAJORITY of investors can NOT beat the SP500. This fund gives me exposure to the 500 largest businesses in the USA.

Dodge & Cox Stock Fund - gives me exposure to a VALUE portfolio. Something that my concentrated, long term, stock portfolio does not necessarily do. Beats the SP500 at 3 year, 10 year, and 15 year. SP500 wins out at YTD, 1 year, and barely at 5 year.

Fidelity Contra Fund - a premier fund for many years now. Gives me exposure to one of the few funds that for many time periods beats or equals the SP500. Gives me access to the investment picks and thinking of the very good management of this fund. For example this fund BEATS the Sp500...year to date, 3 years, 5 years, 10 years, and 15 years. SP500 wins out at...1 year. (data from Morningstar)

I suspect that some time over the next five years, perhaps ten, I will simply sell off my individual stocks and put all money into the three funds. I am nearly 70 now, and I will simplify things due to my age and the fact that my wife might be left with this portfolio and having it all in just the funds will make it simple for her to just let it ride for the long term. Since 90% of the "professionals" can not beat the SP500 regularly, and since the three funds meet or beat the SP500 (obviously the SP500 Index Fund does) most of the time which in my mind is exemplary performance,......that is good enough for me. I have been in the two managed funds for a long time and their performance has been very nice over that time.

The other portfolios that I manage will have to be run by their owners when I reach the point where I believe age is becoming a factor in my money management.

KEEP in mind that GREED is not one of my goals investing. As stated earlier in this thread I have two goals in my investing:

1. Beat the SP500 each year.
2. Achieve a LONG TERM lifetime return of at least 10% per year average.





#4