The Long Term Investor

SO......Smelloscope

What is your investing style. What funds or businesses do you own? You have certainly been riding a rare golden wave since you started in 2008. Have you been shaken out of the markets along the way? Are you a long term investor? Risk tolerance? Education? What made you lose your confidence?

Investing does not have to be complex or difficult. Keep things as simple as possible. Find out what works for you and your personality and is successful and do it over and over and over till it no longer works. If you cant beat the SP500......most people cant....just put the majority of your investment money in a SP500 Index Fund for the long term. AND.....remember......INVESTING IS NOT THE SAME AS TRADING. Nothing wrong with being a trader, but KNOW what you are and have the awareness to be able to evaluate your level of success or failure compared to some unmanaged Index like the SP500. If you are having success AVOID the temptation to make changes. RIDE THE WAVE for as long as you can. That is why in my very concentrated stock portion of my portfolio model I only hold 10-12 stocks and I DO NOT re-balance. I let the winners run for as long as possible.

 

Hey Smello

You are welcome. Post anything you wish on this thread anytime. What instrument (including voice) is your primary as a musician? I dont post a lot about music since I dont want to identify myself online. Not that I am a known name.....I am a side person. But, I have toured behind some national and international names so if I get into too much discussion it might be possible to find out my identity. Are you doing music on a local, regional, or national level?

In terms of art, I collect Early Texas Art, mostly oils. We also collect various categories of antiques, Americana, Folk Art, etc, etc. I see this as part of a unified financial plan. TOP QUALITY art and antiques will hold value and are somewhat of an inflation hedge. I look at assets as being......real property (home).........stocks and funds.........and personal property (art and antiques).

Yes, I have some schooling in business, including accounting, and having been a successful small business owner for 22 years I have a pretty good feel for reading company financials.......balance sheet, profit and loss statement, income statement, cash flow, etc,etc. Even though this is hard data, there is still an element of intuition and judgement involved.

To me, finding companies that are ICONIC today means evaluating management and owners, and company momentum and direction long term. In other words evaluating the business POTENTIAL. Much of this is just basic common sense. For example looking at Amazon 10 years ago. Or looking at MSFT in 1990/1991. Or COSTCO in the mid 1990's. I do not gamble or speculate. At the times above it was obvious (at least to me) that these companies had massive potential, were already relatively young but semi-mature businesses with many years if not decades of growth ahead of them, and had gained a level of consumer acceptance that they were going to be around for a very long time. They also were not anywhere near the saturation point when it comes to consumers and thus had massive potential for consumer and investor growth. That is what I look for in an investment.

I dont try for a home run or swing for the fences. Although I have a few times in the past with an exceptional situation......like MSFT in 1990/1991.

Sounds like at age 38, you are well ahead of most people when it comes to investing and awareness. One thing I have always done to balance out my personal bias and potential lack of vision is to hold about one half of my portfolio model in a few mutual funds. I have held......Fidelity Contra Fund, Dodge & Cox Stock fund, and SP500 Index Fund for a long time. This gives me a pretty good chunk of money that is outside of my personal bias and thinking.

For me it is a question of a great business model, that seems obvious but is in the early to mid stages of investor and consumer interest. I like companies where management is exceptional, often a founder. I like companies that have a REAL business model and are reinvesting lots of free cash back into growing the business.

 

I own HD......Home Depot and have for some time now. It has been a very nice investment and I will continue to hold this company for the long term. I like MONOPLOY type businesses. In the home improvement/hardware/lumber area to me there are ONLY two players......Home Depot and Lowes. I strongly prefer Home Depot to Lowes. Like Boeing, my opinion is that the current weakness in HD is a buying opportunity for those that have wanted to own this company. We are NOW a society of WHINERS and and WIMPS. The slightest bump and the media and followers of media go crazy. OH MY GOD........NO....NO...NOT HD, WHAT ARE WE GOING TO DO? SO WHAT.......the company had a technical miss of what the analytical geeks think it should have done. BALONEY. The stock is up over 33% in ONE YEAR. I will continue to hold and reinvest dividends in this stock for the long term. I dont let this sort of very short term DRAMA jerk me around as an investor.

Home Depot shares sink after sales miss but there’s reason to be optimistic

https://www.marketwatch.com/story/h...but-theres-reason-to-be-optimistic-2019-11-19

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

"Home Depot Inc. shares sank 5.4% in Tuesday trading after the home improvement giant announced sales that missed expectations, but Raymond James analysts say there’s reason to be optimistic.

Home Depot HD, +0.88% reported net income of $2.77 billion, or $2.53 per share, down from $2.87 billion, or $2.51 per share, last year. The FactSet consensus was for $2.52.

Sales for the quarter totaled $27.22 billion, up from $26.30 billion but below the $27.53 billion FactSet outlook. Same-store sales grew 3.6%, below the 4.7% FactSet guidance.

The results put Home Depot stock price on track for the biggest one-day post-earnings decline in more than a decade.

Watch: Here’s how much speedy delivery really costs

Home Depot’s chief executive blamed the shortfall on the timing of benefits from company investments.

“We are largely on track with these investments and have seen positive results, but some of the benefits anticipated for fiscal 2019 will take longer to realize than our initial assumptions,” he said in a statement.

As a result the company updated its full-year guidance, and now expects sales growth of 1.8% with a 3.5% same-store sales increase versus previous guidance for 2.3% sales growth and a 4% same-store sales increase.

Still, analysts are bullish. Raymond James says mortgage rates are now about 100 basis points lower year-over-year and existing home sales are positive, which will work in Home Depot’s favor.

“With the company prudently reducing Q4 2019 expectations and assuming no improvement in the two-year stacked comp (despite an improving macro), we view Q4 as largely derisked,” analysts led by Matthew McClintock said. “We believe Home Depot should be bought on weakness.”

Even with the better macroeconomic environment, GlobalData Retail says Home Depot has to contend with a resurgent Lowe’s Cos. LOW, +0.60%

“Admittedly there has not been a major erosion in Home Depot’s market share, however, the visibility of Lowe’s has been improving and we believe that growth in the market is now being more evenly shared between the two main players,” Neil Saunders, GlobalData managing director wrote in a note.

“This trend is likely to continue for the foreseeable future and Home Depot will now need to contend with a more determined and aggressive rival.”

Lowe’s stock is being dragged lower by Home Depot, down 1.1% in Tuesday trading, but up 24.5% over the last year.

Lowe’s is scheduled to report third-quarter earnings on Wednesday during premarket.

Home Depot will be able to hold on to its market dominance with help from those aforementioned investments. Saunders thinks the spend, which is going towards store improvements and the shift to a more multichannel shopping experience, will pay off.

But while Home Depot is willing to spend, consumers are a little less so.

“The number of people undertaking various big do-it-yourself activities is not growing as fast as it was this time last year, and this is likely one of the reasons why sales numbers are more modest than forecast,” Saunders said.

“The worry is that this trend will sharpen into 2020 as consumer finances come under more pressure – something that could weigh down on Home Depot’s prospects.”

CFRA doesn’t see an easy path forward either.

“We do not see significant growth ahead, given Home Depot will be entering the slower six months of the year,” wrote Kenneth Leon. Concerns include tariffs, lower lumber prices and the sales benefits that will come of the company’s e-commerce upgrades.

“Despite improving existing home sales, Home Depot sees only stable demand for home improvement products,” he said.

CFRA rates Home Depot shares sell, but raised its price target to $210 from $202.

Home Depot shares have gained 33.6% for the last 12 months while the Dow Jones Industrial Average DJIA, +0.13% is up 14.2% for the period."

MY COMMENT

I will take a company that is investing back into their business any time. I will continue to hold this stock for the very long term as I have for many many years now.

 

Actually Smello.....you posted very late at night.......home late from a gig? I dont put much thought into what I post at all. It is just off the top of the head stream of consciousness. I am always amazed at how often I stumble onto an article that fits what I am thinking about. Although often an article will trigger some line of thought.

You seem to have a good grasp of how to make a living in music. With multiple instruments you are more valuable and multiply your opportunity. The studio and engineering and record label is another source of money. People dont realize that most professional musicians have to give lessons, play shows, own a studio, work in a music store part time, etc, etc, to equal the income from a regular job.

"No one tours for the fun of it" YOU are so right....but it does get in your blood. Touring is a grind. I dont tour anymore other than some regional shows once in a while. I usually play about 100-120 shows a year, mostly local. The longest that I have toured is one front-man that I played behind, we toured for three years. Over 400,000 miles. Six, seven eight, ten weeks out, one or two weeks home, over and over and over and over. Most of the bands doing the same national+Canada circuit as us usually went home just before Thanksgiving and took a break till after Christmas than back out again. We stayed in motels every night, usually provided by the venue or promoter. We also got one meal per day paid for, again usually paid for by the venue or promoter. It WAS nice that the person was on a major label (which handled much promotion and publicity) in their musical niche and had management and was booked by one of the major national booking agencies in their musical niche.

I know some people that work in the paper conservation field. It seems to be a really booming field right now, more so than painting conservation. I see the people on the Antique Roadshow talk about paper conservation all the time for items that they feature and how an investment of $500 in paper conservation can increase value by $1500. I have a friend that collects Early Texas lithographs, etchings, and other original paper type art. It is amazing the brightness and crispness of his items after conservation. Definately worth it when you see the final result compared to the cost.

Re investing..........is knowing when a company has massive potential objective or intuitive? For me it is definately intuitive....much like Peter Lynch used to talk about. Two examples.....COSTCO and MICROSOFT. Both somewhat luck. I knew of Costco by happening to live in the Seattle area when they opened their first few stores. We shopped there and saw their explosive growth on a regional level first hand. The stores were packed from the start and you had to drive around the parking lot for 20-30 minutes just to wait for a spot. So I saw the company from day one, I saw first hand the crazy packed stores, I saw them expand and do the same thing in every new store after another. I started to see and hear them talked about in business stories. I saw them become a BIG HIT with the suburban moms that lived on the East side of Lake Washington. So I put tiem into my portfolio and they have become a very long term investment. Same thing with MSFT. We lived on the East side of Lake Washington and I was familiar with MSFT employees all over that area early on. The company was a HUGE local news story day after day as the computer revolution started. I purchased 1000 shares in 1990/1991 for $80,000. All the liquid money we had at that time. One item of non-financial info was the key to me to buy that stock. That item was........they were going to make money on every single PC sold in the world with their operating system monopoly. The era of home computing seemed to me to be a given at that time, yet the saturation of the market was minimal. I have never made another single stock bet that represented such a large portion of available liquid cash. That was a lot of money back than. I used to go over to their Redmond campus and drive around and look at the number of people working late at night and the MASSIVE construction that was going on on the campus. At that time it was not even secured, anyone could drive on. They were building the largest suburban office buildings I had ever seen. MASSIVE holes all over the campus for buildings under construction.

So my process is to screen companies with the financials, and analyst reports, any other available data. Than at that point once I have a short list of companies I do some intuitive thinking about the business, management, customer base, products, marketing, etc, etc. Sometimes I might use the objective data to put together a list of possible companies, other times like with MSFT, COST, NKE, AMZN, and others I was awakened to the company by the massive, rocket to the moon, buzz and consumer growth they had.

One last comment. So glad to see that you and your partner are new homeowners. I think it is critical for any stock and fund investor to have diversification in assets. That diversification is provided by:

1. Employment/Income
2. Real Property (house)
3. Stock and fund portfolio
4. Personal Property

Anyway.......you are ahead of many your age, Congratulations to you and your partner for having the ability to SEE the future. That is the BIG KEY to me for anyone.......to be able to look 20, 30, 40 years down the road and take the steps at a young age to secure your life. That is why I like the rule of 72's. I tell new investors it is a TIME MACHINE. Using it will tell you where you will be.........PROBABLY.......at X number of years in the future. The light goes on for most people when they look back and see that their account doubled in 7 years just like the rule said it would if they achieve about 10% per year. Once people experience and see that compounding is REAL they are hooked. At least till the next SCARY BEAR MARKET.

 

Smello.....you asked about funds vs ETF. They are basically the same, as you know, other than being able to trade an ETF. Perhaps some ETF's have lower fees. I use the three funds that I hold because I think they have been CREAM OF THE CROP funds for many many years. The two active funds that I use have superior long term records. The SP500 Index Fund is a staple for everyone whether a fund or ETF and to me represents my benchmark.

As I have said many time the funds that I use are

Dodge & Cox Stock Fund - long time value fund.
Fidelity Contra Fund - big cap growth fund with great long term management
SP500 Index Fund - the number one stock benchmark in the world for safety, diversification, growth, and quality companies (my opinion)

 

OK........boys and girls......ONLY 24 days left till Christmas. About a week less in the shopping time this year. Fortunately the internet makes it easy for people to stimulate the economy for the Christmas season. The domination of the internet is making data like Black Friday shopping in actual stores irrelevant. What counts now is the combined numbers and particularly the online numbers ALL IN ALL......looks like another possible blow out year for combined shopping. The STRONG start to the holiday financial season in addition to the correction to third quarter GDP.....UP.....the strong jobs numbers, strong employment numbers, strong wage numbers, etc, etc, etc, makes for good potential for a NICE little year end rally to the end of the year.

Retail Winners And Losers From Black Friday 2019

https://www.forbes.com/sites/pamdan...d-losers-this-black-friday-2019/#324d033e177e

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

"It’s still the early days of the final holiday-season retail push, but early results point to who’s going to win big (e-commerce and omni-channel retailers with strong mobile platforms) and lose (physical retailers dependent on in-store traffic) through the rest of December.

E-commerce retailers killed it this Black Friday, with digital sales up nearly 20%, reaching $7.4 billion across the 4,500 retail websites that Adobe Analytics tracks. It became the second-largest online shopping day in history, eclipsed only by Cyber Monday last year, when $7.9 billion in sales were done.

Adobe predicts 20% increase. Cyber Monday 2019 will blow last year out of the water, to the tune of $9.4 billion in sales, a nearly 20% increase.

Not only did consumers shop more online, but they also sidestepped the wait for delivery in record numbers, driving a 43% uptick in buy-online-pickup-in-store (BOPIS) orders, a sign the company said of retailers “successfully bridging online and offline retail operations.”

The average order value for the tracked online retailers also showed a boost, up 6% to $168, as Adobe remarked that “consumers got more comfortable buying more and bigger ticket items online.”

By comparison, things were not so sunny at malls and shopping centers this past Friday. RetailNext provided an early look at in-store shopping activity across tens of thousand of stores operating under its RetailNext smart-store platform.

The results: Traffic was down 2.1%, average transaction values dropped 6.7%, and overall sales declined 1.6%.

On the plus side, the company found conversions, or the percentage of shoppers visiting a store who made a purchase, rose 1.7%. This reporting includes a wide range of retail segments, including specialty apparel, large-format big-box, mall-based and standalone stores.

A Saturday morning research report from Cowen’s Oliver Chen reinforced these findings, calling this year’s Black Friday calm as in-store traffic continued to trend negative.

While Chen foresees online growth this holiday in the 20-30% range, he is much more conservative overall, expecting the holidays to result in a modest 2-3% uptick, well off National Retail Federation’s 3.8%-4.2% prediction.

“Our belief is that weak season-to-date traffic, difficult weather trends, and a shorter holiday calendar could collectively be an overhang to holiday spending,” he writes, and adds, “We believe the consumer remains strong given low levels of unemployment and rising wages, however, we do not believe this dynamic is benefiting all companies equally.”

Among the retailers best positioned to benefit this holiday season are Walmart and Target, thanks to the strength of their omni-channel strategies, wide product assortments, strong mobile shopping platforms, and BOPIS offerings.

On the other hand, “North American department stores, mall-based retailers, those retailers with store closures underway, and retailers that are more promotional this year vs. last year are at most risk of underperforming this holiday season,” the note states. In other words, just about every other retailer.

Chen expects Nordstrom to be an exception, thanks to more in-store traffic this year and keen consumer interest shown in its footwear and men’s apparel offerings. “We believe promotions remain in-line with last year, and we are encouraged to see higher consumer engagement across various departments fueled by special deals and strong product assortment,” Chen writes.

In Cowen’s analysis, “promotion commotion” is rampant this year, given fairly high inventory levels across the retailers it tracks. For example, Michael Kors was offering discounts up to 70% off, as compared with hefty 50% off discounts last year. Coach was discounting 50% on selected best-selling items with online discounts of 30% off on select styles. Kate Spade offered up to 70% discounts on select styles too. This level of discounting seems particularly desperate for these luxury brands.

Not to be outdone in the discount department were Gap and Banana Republic, both offering 50% discounts on all items in-store and online. Macy’s, American Eagle, Sephora, Ulta, Bath and Body Works, and Victoria’s Secret were more selective in their discounting, but each offered attractive door-buster sales on select items.

In the final analysis, Cowen’s Chen sees Walmart, Target and Nordstrom best positioned for strong holiday sales, but advises “caution” for Gap, Macy’s and Kohl’s, mainly as a result of their heavy dependence on women’s apparel. “We expect women’s apparel to be a continued problem spot given no new trends, inventory hangover risk, and the difficulty in captivating a younger shopper,” the note states.

The compressed holiday shopping season this year will put pressure on all retailers, with online retailers needing to front load their sales to allow for shipping times.

On the other hand, well-positioned omni-channel retailers, like Walmart, Target, and Nordstrom and select others, will benefit as the short holiday season advances, particularly those that have mastered BOPIS service powered by dynamic mobile shopping experiences, which could account for more than half of all digital traffic this year."

MY COMMENT

VERY MUCH in line with what I would expect for this year. My opinion, we are very much in a total platform world right now. Business and companies that straddle the real and cyber worlds are going to do very well. The old companies that dont have much of an online presence are going to suck air.......BADLY. Especially as we go forward over the next five, ten, fifteen years. We are in the early stages of an economic change over similar to the industrial revolution. The Cyber Revolution will come to dominate EVERYTHING.......for better or worse. We are all set up for a RALLY to year end. Of course, I expect that the MEDIA will be doing their usual song and dance.......inflation, interest rates, the coming recession, student loans, bad earnings,........etc, etc, etc, will be hammered daily in the usual round robin of fear mongering with each topic lasting for a few days as we have seen ALL YEAR.

AS USUAL I remain fully invested for the long term. HOPING to make some real money this month in stocks and funds.

 

A little HOPE and GOOD CHEER for the holiday season. BUT........dont bet the farm, this short term stuff is random and unpredictable.

Will a Santa Claus rally power the S&P 500 and Dow to their best years in a generation?

https://www.marketwatch.com/story/w...ears-in-a-generation-2019-11-30?mod=home-page

(BOLD is mine)

"Investors have grown used to Saint Nicholas leaving an extra present under their trees at the end of the year, and in 2019 the so-called Santa-Claus rally could power the major benchmarks to record-setting gains once more.

The Santa Claus rally is Wall Street’s nickname for the unusually strong stock-market gains typically seen during the final five trading days of the year and the first two trading days of the following year.

Since 1950, the S&P 500 index SPX, -0.95% has gained an average of 1.3% during this stretch, about six-and-a-half times the average seven-day rolling performance of 0.2%, according to Dow Jones Market Data. For the Dow Jones Industrial Average DJIA, -0.87% , the average return is a touch better during this stretch at 1.4%.

Despite last December’s brutal stock market rout — when the S&P 500 lost 9.1% — the final month of the year is typically a good one for stocks, the third best on average for the S&P and the second best for the Dow.

And given the healthy gains the benchmarks have seen year-to-date, a strong showing in December could power these indexes to calendar-year gains that are stronger than those seen in 2013, making 2019 the best year for stocks since the late 1990s.

Risks remain however.

Chief among them U.S.-China trade tensions, which could boil over with the Trump Administration currently on track to implement new 15% import tariffs on $160 million in Chinese imports on Dec. 15th. Analysts said that they expect these duties to be avoided, given recent optimistic commentary from both sides of the standoff, but they remain potential roadblock to further gains, as do any new evidence that ongoing struggles in the global manufacturing sector threaten the broader U.S. economy.

“December has historically been a strong month for stocks,” Lindsey Bell, chief investment strategist at Ally told MarketWatch. “Barring an exogenous shock like a Fed rate hike or trade news, December should repeat this pattern.”

Bell said that the month of December in general, and the seven-day Santa Claus-rally period in particular, usually sees strong gains because many investors are receiving bonuses, “so there’s a little extra cash in the market.” Meanwhile, "People are in a good mood, shopping and spending and thinking about the holiday period, not focusing on selling stock,” she said.

So far this year, the S&P has gained 25.3% year-to-date, putting it on track for its best annual showing since 2013, when it rose 29.6%. For it to surpass that year’s performance, the S&P 500 would have to gain 3.4% in December, a performance the index has matched or beaten in November, June, April and January of this year. If the S&P 500 can achieve this feat, 2019 would be the best year for the index since way back in 1997, when it rose 31%.

Meanwhile the Dow has gained 20.3% so far this year, also its best since 2013, when it rose 26.5%. The blue-chip index would have to add 5.2% in December to beat that performance, a tougher task. The Dow last gained that much in January, when it rose 7.2%. If it does manage to pull it off, 2019 would be the best year for the Dow since 1995, when it rose 33%.

Ryan Detrick, senior market strategist at LPL Financial, noted that one reason to believe the stock market may achieve these lofty performances is that the S&P 500 tends to have a good month of December during years of overall strong performance. “The past 7 of 8 times when the S&P 500 has been up more than 20% through November, December gains have been positive,” he said. “When the market does well the first 11 months, we tend to sprint into the end of the year.”

Even if the Dow and S&P aren’t able to beat 2013’s stellar returns, Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions expects December to be another strong month for stocks. “We think the market grinds higher into year end,” he said. “If you look at sentiment indicators and based on conversations with clients, they are getting better, but not euphoric.”

Janasiewicz said that while the S&P 500 is priced somewhat expensively at 18 times forward earnings, a historically healthy consumer and good wage growth should help maintain economic growth in 2020 and drive corporate earnings growth, justifying the market moving higher. “If consumption growth holds at 2.5%, there’s no reason the economy can’t grow at about 2%,” he said. “That can easily translate to 5% to 7% earnings growth next year.”

The variable that may determine the market’s performance in December is the ongoing U.S.-China trade negotiations. With the U.S. set on Dec. 15 to add new tariffs of 15% on the final $160 billion in Chinese imports that have so far avoided new taxes, the stage is set for a potentially serious escalation of tensions or the signing of a long-promised “phase-one” trade deal that could raise expectations for global economic growth in the quarters ahead. “We could see a take-off if that phase one trade deal is signed,” Bell argued.

Given recent market gains, Janasiewicz said, even a delay of the Dec. 15 tariffs, along with continued assurances of progress toward a deal, could help power the market higher. “We’ve already done okay without significant progress on trade, helped by central banks around the world cutting interest rates.”

The coming week will feature a series of U.S. data releases that could confirm the theory that market watchers have overestimated the impact of new tariffs, foremost among them will be the Institute for Supply Management’s and Markit’s manufacturing indexes, due Monday morning. Investors will also get a reading of U.S. construction spending in October that day.

On Wednesday, ISM and Markit will issue their indexes of the U.S. services sector and payroll firm ADP will issue its estimate of private-sector job growth for the month of November, while Thursday will feature data on weekly jobless claims and October factory orders.

The headliner will come Friday, when the Labor Department will issue its estimate of U.S. job growth for the month of November, which investors will be watching for signs that the U.S. consumer can maintain the sort of strength that has recently powered the U.S. economy amid weak business investment."

MY COMMENT

Lets HOPE so, and let me be the first to say.......MERRY CHRISTMAS.

 

TYPICAL........news driven few market days. We have a severely split market. The news driven short term trading using AI and algorithms on one hand. And, on the other hand the fundamental economic and business financial driven long term market. the short term speculative news driven daily action is TOTALLY SPECULATIVE and for the most part disconnected from reality. Considering the current state of journalism and media, the short term stuff is usually driven by fantasy, sensationalism, political wishful thinking, etc, etc, etc.

One thing is sure and that is the fact that us "little people" can NOT compete with the big boys when it comes to the short term. HOWEVER, when it comes to the LONG TERM we are every bit their equal and probably their superior. The professionals are so consumed with all the short term CRAP and their trading technology that they have surrendered any interest in the long term game. They cant beat the unmanaged indexes and never will. So.....they pretend, or actually fool themselves, into believing that their short term speculative gambling is actually based in fact and reality.

NOW.........today.......China as usual is the great big monster hiding in the closet today. Talk about a PAPER TIGER. Fake financials, fake economy, enslaved people, communist dictatorship, stealing technology and secrets from the world. Just like Russia when Regan drove them to collapse, their power and economic strength is ILLUSION. If they were not supported by our business elites they would be just another third world country. SO.......I welcome any news that a trade deal with CHINA is being delayed. I welcome news of increased tariffs. I welcome any news that we are NOT going to just go along to get along with China. The longer the so called trade war lasts the better off we will be and the worse off they will be. I am willing to accept days like today to see them pay the price. In fact, I wish we had the nerve and guts to RAMP UP the tariffs and use the full power of our government and business to isolate them from our economy and the world economy in every possible way.

I am SURE many are fearful that this December will be like last December. BUT.......WHO CARES. The past has no relevance to today or this December. And for those that just sat through last December, within a few weeks, the markets were back at new highs and portfolio balances were too. HUMAN NATURE and behavior are interesting, but sad, to watch. The ability of LONG TERM investors to shoot themselves in the foot over short term events is EPIC.

I continue to be FULLY INVESTED, as usual for the very long term.

 

YES......Emmett.

Today is one of those days that you just ignore as a long term investor. That is my mindset. The markets LURCH up and down short to medium term.......that is just reality. For those that are having problems with the SCARY markets.......focus on family and Christmas or the holiday season because........THAT is what counts short term.

We have had a GREAT year for investors.

DOW year to date +17.43%

SP500 year to date +22.91%

CONGRATULATIONS to ALL that have sat through this year and are about to lock in another year of HISTORIC total returns.

 

I own it and will continue to do so long term........BUT, I think Boeing stock right now is a screaming buy. There is continued risk due to the ongoing 737 FIASCO and it is not clear if it is at any sort of bottom right now. I still think there is $75 to $100 upside over the next year.

ALL that is in this paragraph is simply personal opinion.......BUT.....the article below is one of the DUMBEST articles I have seen in a long, long, time. First it starts with a RIDICULOUS theme and subject and than it goes on and on repeating the question and never really giving an answer. I cont believe that this sort of "stuff" is featured on numerous national financial sites. The GYM COMPARISON is particularly idiotic. I dont think working only one muscle in the body is similar in the least to investing in or using an index that contains 500 individual companies, the largest and greatest in the American economy. The implication of this blather is that the SP500 does not provide diversification. RIGHT......lets see, I can have a portfolio with 500 individual holdings......the greatest names in business around the world......and somehow that is not diverse enough.

(BOLD is my highlight of what I consider idiocy.....just my personal opinion)

Why Trying to Beat the S&P 500 Is a Bad Idea

https://money.usnews.com/money/blog.../why-trying-to-beat-the-s-p-500-is-a-bad-idea

An advertisement on social media touts a trading product that is, apparently, beating the S&P 500 index.

The ad shows performance of the domestic large-cap index in 2018, as compared to the performance of this product. According to the data shown, the product had a better return last year.

Setting aside the highly unlikely scenario that buyers of the product were responsible for making all the right trades at the precise times, the question remains: Why is beating the S&P 500 even relevant?

Frequently, you'll see the S&P 500 described as the "benchmark index." The index measures performance of the 500 largest domestic public companies. Exchange-traded funds that track the index are widely held. The SPDR S&P 500 ETF (ticker: SPY), launched in 1993, was the first fund to track its namesake index, and the first ETF to trade in the U.S.

It currently holds about $286 billion in assets under management.

Because of the fund's long history and its popularity, it's understandable that investors might believe the S&P 500 is the most important index. That's compounded by home country bias, a term for a narrow focus on one's home-country investments. Morningstar research has identified this phenomenon among investors in several developed countries, including Canada, the U.K., Germany and Japan.

Home country bias results in American investors and financial reporters placing outsized emphasis on this index, as well as the Nasdaq composite and the Dow Jones Industrial Average.

Certainly, as the index that tracks the biggest U.S. companies, the S&P 500 is not to be dismissed. But neither is the importance of broad diversification, which is why the notion of "beating the S&P 500" is erroneous.

In most calendar years or quarters, there is some other asset class that outperforms the S&P 500.

In fact, U.S. investors don't even need to give up home country bias to find an asset class with a better year-to-date track record. Mid-cap growth stocks, which are not included in the S&P 500, advanced 35.9% year to date, vs. 28.6% for the S&P 500.

This may cause some investors to feel buyer's remorse, if they decided the S&P was the only necessary domestic investment. However, outperformance of mid-caps should not really be all that shocking, considering that stocks with smaller market capitalizations typically outperform their larger peers, over time.

Think of it this way: Say you want to improve your health, and you join a gym. You decide that a well-known, familiar exercise is all you need to do, so four times a week, you do bicep curls. Nothing but bicep curls.

Now, you might end up with some great-looking guns after a few weeks, but to what effect? Has that improved your overall health?

You've overlooked all your other muscle groups, both upper and lower body. You've also overlooked your core muscles. In addition, there's no cardio in the mix to improve your heart and lung health.

It's pretty easy to see how this analogy applies to investing. You're probably at least somewhat familiar with the S&P 500, and you've heard it called "the benchmark index." But why should a group of the largest U.S. stocks be a benchmark for broader market performance, any more than one muscle group should be the benchmark for your overall physical health?

Part of the focus on large U.S. stocks goes back decades, before other asset classes were widely available to retail investors. Before the widespread availability of ETFs, domestic investors were largely relegated to choosing from a handful of large-cap single stocks for their portfolios.

Buying a single foreign stock can still be difficult, and that's where funds come into the picture. Even buying a stake in a small U.S. company can be a bit daunting, as there is often little research into smaller firms, and there's often a lack of liquidity, as fewer shares are available.

Here again, mutual funds and ETFs allow today's investors easy access that previous generations didn't enjoy.

So if you see some trading product or even an index being touted as having performance superior to the S&P 500, ask yourself a few questions:

• Does that particular asset class outperform large-cap U.S. stocks over time?
• Are you looking at comparisons of asset classes at all, or simply some trade suggestions, which, if executed perfectly, would have outpaced the S&P 500?
• Why is it even important that one asset class outperform another, if your portfolio is allocated properly, to generate the return you need to meet your financial goals?

It all comes down to your financial needs, and your unique situation.

Just as in the gym, a focus on one particular area probably won't do much for optimal health.

MY COMMENT

A pointless article. ESPECIALLY the part about HOME COUNTRY BIAS. YEAH......I might give some credence to home country bias if I lived in Luxembourg, or Nigeria, or Argentina, or Finland, or wherever. But since I happen to live in the most economically successful country in the world for over 100 years......BY FAR.......with the VAST majority of businesses that are the top companies in all sorts of business areas, in the world,........BALONEY. For my money, if someone wanted a single, diverse, investment with historic performance over many decades the one investment that beats everything else is the SP500 Index.

 

As a LONG TERM INVESTOR the most important single thing you can do is reinvest dividends and capital gains. The KEY to long term wealth generation is compounding. This little article is a substantive reminder to all of us of this FACT.

Reinvesting Matters! (A Great Deal)

https://www.morningstar.com/articles/958463/reinvesting-matters-a-great-deal

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

"Income versus Growth

Interest receipts provide the initial investment lesson. If you are fortunate enough to possess capital, others will pay to borrow it. Money for nothing! But of course, those receipts are not free, because you have paid an opportunity cost. Others now have your funds. They may put them to work, while you may not.

Then comes capital appreciation. That understanding arrives later, because most possessions lose value over time, not gain it. Among the exceptions are real estate and stock shares. When savers accumulate enough money to buy those items, they become investors (or, less happily, speculators). Now, they possess something tangible, rather than the mere promise of future payments. They own an asset.

The most-visible investment successes come from capital appreciation alone. California properties that consume cash rather than generate it, but which are eventually sold at huge profits. Berkshire Hathaway’s equity, which has never declared a dividend. Bitcoin 2017. For purchases that don’t require ongoing investment, the math is pleasantly simple: Total return = ending price/starting price - 1.

Income With Growth

What can be difficult to comprehend, says Javier Estrada of Barcelona’s IESE Business School, is the combination of income and capital appreciation. The one greatly enhances the other, thanks to the effects of compounding. For most people, those effects are not particularly intuitive. Estrada has therefore created a chart of the S&P 500’s long-term returns, to illustrate the point.

It appears below. The green line represents the price return on the S&P 500, on a one-time purchase. Invest one dollar into the index in 1900 (never mind how), discover the Fountain of Youth, then come back in 2018 to claim your shares. They are now worth $416, because the index grew from $6.02 to $2506.85. Something, though, is missing: the dividends. The blue line depicts the value of that $1 purchase, were the S&P 500’s dividends promptly reinvested back into the index.



Source: Javier Estrada; IESE Business School

Quite the difference! As Estrada points out, this chart directly relates to my column on Renaissance Technologies’ Medallion Fund. That fund boasts stunningly high total returns that assume the reinvestment of all cash proceeds, only those proceeds can’t be reinvested, because Medallion won’t accept them, so as to maintain its slender asset base. Its oft-cited returns are therefore hypothetical. The performance is real, but because of the fund’s reinvestment policy, its investors’ profits are mostly illusory.

Interpret Carefully!
Also illusory is the gap between the two lines on Estrada's chart. That chasm powerfully demonstrates his point, that reinvested dividends are critical for stock-market performance. However, it also may deceive. The instant and obvious suggestion is that the S&P 500’s income distributions dwarfed its capital growth. In fact, the opposite held. The index’s capital appreciation was the larger of the two ingredients.

This may be understood by recognizing that areas underneath the two lines multiply, not sum. One should not interpret the space under the green line as arising from appreciation, and the space between the two lines as coming from income. Rather, the entire area is a product. That is, the $416 from capital growth multiplied by the income component equals $49,990. The income component, it turns out, is $120. That figure represents the total dividends that the S&P 500 would have distributed over the time period, on a $1 initial investment.

Another of the graph’s mirages is the impression that nearly all these gains occurred over the past quarter century. Technically, that is true. The S&P 500 required 95 years to turn a $10,000 profit on a $1 investment, then 23 more years to make the next $40,000 (rounding up). The picture does not lie. But it obscures. What matters for investors how the rate of return varied over time, and on that topic the diagram is silent.

Logarithmic Improvement

Which is why logarithmic graphs were invented. Estrada's second slide replots the returns, this time on a logarithmic scale. What a change!


Source: Javier Estrada; IESE Business School

The new chart conveys two important details that were concealed by the previous graph. First, it reveals the correct relationship between the price and income returns. Each item is critical--the index’s performance would have been far, far weaker without either one--but with this picture, capital appreciation receives its just due. It was indeed the larger of the two contributors. Second, we can now see that the index’s rate of return has been consistent, at least since the late 1930s. The blue line has grown at a steady clip, pausing only briefly along the way.

(More subtly, the green capital-growth line is more volatile than the blue total-return line. This transpires not only because annual income levels are relatively stable while capital returns are not, but also because income is counter-cyclical. As stock prices drop, thereby damaging capital appreciation, income rises. To be sure, those improved yields only offer so much protection when stocks decline rapidly, but they nevertheless do pull in the opposite direction.)

Setting the Controls
The stark contrast between stock market performance with dividends reinvested and performance without indicates the importance of fund-reinvestment programs. However, it's easy to overlook such features. When writing this article, I checked on my own investments. All my equity mutual funds automatically reinvest my dividends. However, my single ETF and single closed-end fund do not, because the dividend-reinvestment program is managed by the funds' brokers rather than the fund itself. When I purchased those investments, those brokers didn't offer reinvestment options.

They almost certainly do today; such features are routine. Nevertheless, the decision-making process is different when coming through the broker than when coming through the fund. One could easily overlook the detail.

Which leads to Estrada's final issue: European markets sell ETFs that have accumulating share classes, which means that they automatically reinvest their dividends, at the fund level. He writes, "If you don't have the discipline of periodically reinvesting the dividends when using "distribution" ETFs (which are the ones typically sold in the United States)--and most people lack that discipline--your return and the total return of the underlying index may be dramatically different." He wonders why there aren't accumulating share classes in the United States, too.

Good question."

MY COMMENT

Of course, I always reinvest all capital gains and dividends in the mutual funds that I own. I ALSO reinvest ALL dividends produced by any stock that I own back into additional shares of the stock that produced the dividend. I NEVER pull out dividends or capital gains. The simple, small, things, like reinvesting, make a HUGE difference when you are talking about investing over a long period of time. Like everything else with investing the simple small things seem so easy and obvious, but the capacity of investors to screw up the obvious is EPIC.

 

SO........looking at some of my many general stock market sources today. This is what I see as the lead article:

Why top investors think it's time to dump US stocks

https://www.cnn.com/2019/12/10/investing/premarket-stocks-trading/index.html

(BOLD IS MINE)

"First things first: Wall Street expects the longest bull market in American history to extend into next year. For all the concerns about slowing US economic growth, there's consensus that stocks can continue to rise.

But for the best returns, strategists and portfolio managers have indicated they'll look elsewhere.
Neil Dwane, portfolio manager and global strategist at Allianz Global Investors, thinks that the heated run-up to the 2020 election is likely to weigh on prices.
"While the United States has offered investors strong returns for many years now, the country will likely spend much of next year grappling with growing political uncertainty," he wrote in an op-ed for CNN Business. "The real investment opportunities in 2020 may very well be found abroad."

Dwane's case: "The US equity market appears overvalued, trading at around 19 times earnings, and we don't expect much more upside in 2020 as a possible recession looms. Meanwhile, non-US equities are around 20% to 45% cheaper, offer higher dividend yields and better earnings growth prospects, and may benefit from a softer US dollar."
It's a view that's cropped up in a good chunk of Wall Street's predictions for the year ahead.
Here's Bank of America: "In a reversal of trend, US stock returns are expected to lag gains forecast for Europe and emerging market stocks next year." The bank recommends that clients rotate some of their holdings out of US stocks and into equities from the rest of the world.
JPMorgan made a similar call in September. It advised moving into international stocks, particularly from Europe and Japan.
Not everyone is on the same page. LPL Financial said in its 2020 outlook that despite attractive valuations in developed international markets like Europe, it would need to see a move toward stimulus spending to become more bullish. Expect the debate to continue in the coming months."

MY COMMENT

WOW. TOP INVESTORS that are portfolio managers and big money strategists are warning to "DUMP" US stocks. To make things worse and more scary, this is an article in a mainstream source, CNN. Should I be worried? Should I take action? Should I dump everything and go to cash? OMG.....WHAT AM I GOING TO DO (wringing hands and gnashing teeth)

WELL......"MY"......response to this sort of BLATHER is.......I am going to do nothing. I WILL use this little DOOM&GLOOM article as an example.

One of the primary sources for this info is a stock picker named Neil Dwane. He is the........"TOP INVESTOR" and first person mentioned and quoted in the article. He is not just an investor he is a PORTFOLIO MANAGER and on top of that.........(GASP).......a GLOBAL STRATEGIST. OMG, OMG!!!!

So, I decided to see what info I can find on this EXPERTS stock picking record as a manager and strategist. So I will use this example to make a very BIG point. ANYONE that follows this sort of MEDIA stuff in their investing is a FOOL. Of course people are influenced by this sort of daily drip, drip, drip, without knowing it. This sort of stuff.......MEDIA SENSATIONALISM (my personal opinion)......... causes that little bit of doubt to start to creep in and grow and grow. This is exactly what causes the average investor to SEVERELY UNDER-PERFORM the unmanaged indexes.

Of course, the fact that Neil specializes in International investing outside the USA is NOT mentioned in the article. AND......HERE are his actual results as an investment manager..........

(BOLD IS MINE)

https://www2.trustnet.com/Managers/ManagerFactsheet.aspx?personcode=00000DWA01



"Trustnet verdict
Overall, performing worse than the peer group composite. Nevertheless, over a long track record, the manager has outperformed the peer group more often than not. Poor stock picking has had a material downward effect on results, which have not been particularly exposed to falling markets.



Manager profile
Neil joined RCM in 2001 as Head of UK Management from JP Morgan Investment Management where he had been a UK and European specialist portfolio manager since 1996. He began his investment career in 1988 with Kleinwort Benson Investment Management as an analyst, later as a fund manager before moving to Fleming Investment Management in 1992. Neil holds a BA in Classics from Durham University and is a member of the Institute of Chartered Accountants.
FOLLOW ON FUNDSWIRE
Annualised total return over 16 years -0.3%
Cumulative performance (% growth)

1 year 3 years 5 years 7 years 10 years

Neil Dwane 6.2 1.1 10.6 45.4 56.0
Peer Group Composite 0.5 2.2 17.8 53.2 62.9
Over / Under 5.7 -1.1 -7.2 -7.8 -6.9




Total return for Neil Dwane




Discrete calendar year performance : Neil Dwane





Discrete performance
0-12m 12-24m 24-36m 36-48m 48-60m 60-72m 72-84m 84-96m 96-108m 108-120m

Neil Dwane 6.2 -13.4 10.0 11.3 -1.1 4.3 26.8 13.4 -4.5 -0.9
Peer Group Composite 0.5 -0.7 2.4 10.9 4.2 3.7 26.5 14.6 -8.6 1.4
Over / Under 5.7 -12.7 7.6 0.4 -5.3 0.6 0.3 -1.2 4.1 -2.3



Performance vs peer group composite: Neil Dwane
How a manager matches up against their peers gives you some idea of how talented they are. Very few managers perform equally well in rising and falling markets, so knowing which type of market a manager is capable of performing well within is also important.




Overall markets

Outperformed peer group composite
6 years
out of a possible 10







Overall markets

Underperformed peer group composite
4 years
out of a possible 10


Rising markets

Outperformed peer group composite
5 years
out of a possible 8







Falling markets

Outperformed peer group composite
1 year
out of a possible 2



Funds currently managed
Fund Sole/Co-managed Sector Periods Video"

MY COMMENT

Of course they do NOT compare his performance to an Index in the above, like the SP500. To be fair, he is an INTERNATIONAL focused manager, that is why they do not see the SP500 as a relevant comparison. BUT.....since that INDEX......"IS"...... available to me and every other investor it IS RELEVANT to me as a comparison. His...................Annualized total return over 16 years -0.3%. So.......I decided to look at his fund and how it has performed......after all he is the LEAD MANAGER. Here is the data:

3 m 6 m 1 y 3 y 5 y
-5.8% 0.2% 3.4% 1.1% 8.2%

NOW to be fair, he may be a good manager when it comes to "global fundamental strategy CT2 Nav Europe" type investing. He may be one of the best in his very narrow field of expertise.......BUT.....in the first article he is being broadly used as a TOP INVESTING expert to scare the SH*T out of AMERICAN investors in an article in an AMERICAN investing source. NOT his fault, poor guy, he is being used by the MEDIA as a source for a DOOM&GLOOM story.

I personally PREFER to look at and compare results to the simple SP500. His results are not in the same ball park. In my opinion, not even in the same universe. The purpose of this little exercise is NOT to demean him and the others quoted in the article, they have their opinions and I have mine. The purpose is to point out the dishonesty of the headline of the article and fear mongering, nature of the article. The purpose is to point out to LONG TERM INVESTORS the INSIDIOUS NATURE of this sort of article that day after day after day can get in your head and cause that nagging little doubt to grow and grow and grow till YOU SCREW YOURSELF. I prefer to stick with my usual AMERICAN investments and broad indexes like the SP500. EVEN in the most DISMAL period I think I can beat an annualized return of -0.3% over 16 years. I am willing to take that risk. THE BIG lesson here.....as usual.....BEWARE media headlines and content. Invest based on your own fundamental analysis of businesses and indexes. AND........MY primary opinion.......invest AMERICAN and the returns, safety, and security that results will be way over and above anything that can be achieved in the International or Emerging Market arena........EVEN CONSIDERING the usual, normal, corrections and recessions that are part of the NORMAL business and economic cycle.