The Long Term Investor

I have never done or followed REITS. You guys above....feel free to post anything you can on this form of real estate investment, with nice dividends and potential for capital appreciation, etc. I am sure there are many that would like to learn about this form of investment from people like you guys that have some experience. HERE is one very simple article on some of the pluses and minuses.....but BEWARE....i dont have any experience with this sort of investment and have about ZERO basic knowledge in this area.

Are REITs (Real Estate Investment Trusts) a Good Long-Term Investment?

https://investorjunkie.com/real-estate/is-reit-good-long-term-investment/

PARTIAL info from the article:


"Advantages of REITs
REIT advantages include:

• Guaranteed Dividends — REITs must payout at least 90% of their income as dividends. Management can raise the payout to more than 90% but by law can't lower it below 90%. This requirement is the number one reason income investors buy REITs.
• Hassle-Free Real Estate Investing — REITs are a hassle-free way to own real estate. They're conveniently packaged into shares that can be easily bought and sold. There are also REIT mutual funds and ETFs (exchange-traded funds) that diversify by investing in many individual REITs.
• Low Minimums — You don't need a lot of money to start investing in a REIT. And owning a REIT index fund gives you exposure to the real estate asset class with very little money.
• Passive Investment — Directly owning and managing a property is a business and requires time and effort. REIT shareholders do not own the property or mortgages represented in its portfolio. As such, they also avoid the headaches many property owners and managers experience, such as maintaining or developing the property, providing landlord services and collecting rent payments, to name a few. REITs truly are passive investing, like mutual funds.
• Low Stock Market Correlation — REITs historically have a low correlation to other asset classes. This makes it easy to create a diversified investment portfolio by adding REITs.
• Liquidity — Unlike owning property directly, you can quickly sell a REIT if you've made a mistake. Traditional real estate has a long enter-and-exit process, so your investment isn't liquid.
• Better Performance — While some REITs have historically experienced diminished performance when interest rates increase, many REITs outperformed other investments, even in the face of high interest rates. And REITs often outperform other stocks in a slow economy.
• Mandatory Distributions to Investors — REITs are companies whose assets consist mainly of real estate holdings. This gives them favorable tax treatment. In exchange, they must distribute at least 90% of their income to unitholders. This pretty much guarantees payouts to investors.

Disadvantages of REITs
When you buy a REIT, you're becoming more of a real estate investor than a dividend stock investor, and there are potential risks to consider:

• Declining Value Properties — As we learned from the housing bubble that burst in 2007–08, real estate doesn't always go up in value. When choosing a REIT, be mindful of the growth prospects of the industries, property types and geographical locations it is targeting.
• Fees and Markups — While REITs offer the advantage of liquidity, trading in and out of a REIT has a high cost. Most of the fees charged by a REIT are paid upfront. These fees are run roughly 20–30% of the value of the REIT. This takes a sizable chunk out of your potential returns. And because REIT prices are set in the public markets, they can trade at a significant premium to the real value of the underlying assets they hold.
• Potential Market Correlation — Some publicly-traded REITs tend to be highly correlated to the broader stock market (most are not). This means that prices for some REITs can go up and down with corporate stocks, regardless of whether the underlying values of the properties within the REIT have changed. You'll want to be careful that the REITs you choose for your portfolio actually provide the diversification you're seeking.
• Gains Taxed at Ordinary Income Rate — As we mentioned, REITs have to pay out 90% of their income to their shareholders. This gives many REITs attractive yields. But unlike stock dividends, which are currently taxed at a maximum of 15%, REITs are taxed at your ordinary-income rate. So in most cases, you are best to invest in REITs in tax-deferred accounts like an IRA or 401(k) to minimize taxes.
• Inherent Potential Limited Growth — The 90% rule can limit a REIT's future growth. Because the government requires the company to distribute 90% of its income to unitholders, little capital is left over for acquiring or renovating new properties. Some REITs get around this limit by using debt (leverage)."

 

MCD reported quarterly today.....they were treated fairly NICELY by the market. Gives HOPE that earnings will NOT be held against big companies as we go into the heart of earnings reporting over the next 4-6 weeks.

McDonald’s global same-store sales down 22% in March as coronavirus pandemic shuts dining areas

https://www.cnbc.com/2020/04/08/mcd...rcent-in-march-amid-coronavirus-pandemic.html

MY COMMENT

MCD was UP by 1.08% by the close......even after reporting.....as noted in the article above......before the open today. I suspect that the markets and investors will be VERY tolerant of earnings over this quarter and next quarter. BUT....the potential is there for very erratic stock action based on earnings.

 

COSTCO.....one of my 11 Portfolio Model stocks is not doing too shabby in the era of the virus:

Costco sales jumped by more than $1.5 billion as coronavirus spread in March

https://www.msn.com/en-us/money/com...on-as-coronavirus-spread-in-march/ar-BB12lqbB

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

"Costco Wholesale Corp. late Wednesday said that its March net sales rose nearly 12%, including a 48% jump in online sales, providing a window into stockpiling as the coronavirus pandemic began to keep most of the U.S. population confined to their homes.

Net sales rose to $15.49 billion from $13.87 billion in March 2019, Costco said. Combined, store sales in the U.S., Canada and other countries where Costco has a presence were up 9.6%, the retailer said. The report spanned the five weeks from March 2 to Sunday.

Costco reported an 8% increase in January net sales and a 14% increase in February net sales. That month, when the first U.S. cases of COVID-19 surfaced, e-commerce sales rose nearly 23%. By mid-March, major cities across the U.S. issued orders to self-quarantine and businesses deemed not essential shut down.

“Costco is among the strongest retail brands and there is no better example of the company’s unique position than the flood of visitors in the early stages of the coronavirus,” Ethan Chernofsky of retail intelligence company Placer.ai said in a report ahead of the March sales release.

“Costco has performed exceptionally well during normal periods, and the pandemic has shown that they can still drive strong results — especially compared with other retailers — during difficult times as well,” he said.

Costco shares fell nearly 4% in the extended session, after ending the regular trading day up 0.8%. The stock has gained 24% in the past 12 months, contrasting with losses around 5% for the S&P 500 index (SPX) in the same period.

Going into the report, Placer.ai had detected some slowdown in foot traffic for Costco stores as well as Walmart Inc. and Target Corp. stores by late March as social-distancing efforts and e-commerce took a firmer hold across the U.S.

The retail industry overall lost 46,200 jobs in March to furloughs and layoffs in the wake of store shutdowns related to COVID-19, according to the latest U.S. government data, but a trade group has warned the unemployment will rise much more as the store closures continue.

The retail workforce could drop by two million by May, The National Retail Federation has said.

MY COMMENT

YES....shares fell after the close on Wednesday.....nearly 4%. Picky, picky, picky. Due to....as the article notes....some detected slow down in foot traffic......DUH. This stock is a JUGGERNAUT.

 

GREAT stock gains this week.......go, go, go. BUT....today the oil meeting will the the critical event....if we even get any sort of report on what happens. I would NOT be doing anything right now with that meeting hanging over the markets. If it DOES cause a drop later in the day to the negative I will be looking at potential BUYS since I am in buying mode since March 26, 2020.

This week could be a CLASSIC......dead elephant bounce.....too big of a bump up to be a "cat". One thing I believe is NOW clear is that we are NOT likely to retest the lows earlier in this virus event. The gains that we are racking up have placed those lows out of range in my opinion. HOWEVER, if there is some sort of DRASTIC, NEGATIVE event or news the above opinion will quickly be out the window.

HERE are the stories of the day....at least the ones that caught my attention:

Coronavirus fallout: One-third of Americans missed rent payments in April

https://finance.yahoo.com/news/coro...-missed-rent-payments-in-april-135654889.html

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

"As the novel coronavirus slows the U.S. economy, many renters — now unemployed — wondered how they would pay April rent. New data shows that one-third of Americans did not pay April rent before the due date.

As the novel coronavirus pandemic causes mass layoffs and financial disruption, 31% of U.S. renters did not pay April rent on time, up from 19% a month earlier and 18% in April 2019, according to a new report by the National Multifamily Housing Council (NMHC) based on 13.4 million rentals. Among U.S. renters, only 69% paid April rent on time."

“I started worrying when restaurants and public spaces started shutting down. I know it was necessary, but, man, it’s painful… When our tenants started getting laid off, I knew we had a huge problem,” said Granger MacDonald, a Kerrville, Texas landlord with over 4,500 units.

Renters are particularly exposed to financial risk during the pandemic. Renters tend to have lower income and less stable jobs than homeowners, contributing to some 35% who have lost income due to COVID-19, according to a March 31 survey of 500 renters by St. Louis-based listing website Clever. Forty-five percent of renters do not have enough savings to cover rent payment for a single month."

Landlords struggling to make it work"

Most landlords are doing everything they can to keep tenants in their apartments, offering flexible payment plans and waiving late fees.

Clever, which found that 23% of renters surveyed did not pay April rent on time." About one in 10 renters have secured rent forgiveness or reduction plans in response to COVID-19-related job loss, said the study by Clever, which found that 23% of renters surveyed did not pay April rent on time.

When Avail, a tenant management platform based in Chicago, asked what renters would do if they could not pay rent, 35% of renters said they would borrow the money, 6% said they would use a credit card, and 6% said they would take out a loan, according to a sample of 20,000 rental units nationwide.

“Landlords need to know that there’s a problem. Tenants need to contact their landlord to talk about their issues,” said David Howard, executive director of the National Rental Home Council, a Washington, D.C.-based advocacy group.

According to Avail, 35% of renters who were laid off proactively told their landlord.

As of April 3, MacDonald in Texas had 120 flexible payment agreements worked out with tenants. Still, about 30% of MacDonald’s tenants are past due and had not asked for a flexible payment agreement or communicated with MacDonald.

MacDonald said he did not know how he would pay his bills, which include mortgage, property taxes, insurance, employee salaries, management fees, utilities, maintenance items and other expenses like pest control.

“We’re all a little bit tattered right now,” said MacDonald, whose tenants mainly work in the hard-hit service industry. His staff has worked “untold hours” to help make this situation work for his tenants, he said. “We got on a video conference call, and I could just see the worry lines on their faces. It’s usually a pretty jovial group, and I didn’t see a smile in the crowd,” he said.

Only 4% of landlords have rent default insurance, and 58% do not have credit options to float expenses in an emergency, according to Avail. In fact, most landlords do not have enough cash to fund flexible payment plans for more than a month, say experts.

“If tenants just stop paying their rents, can landlords absorb that? Most work on thin margins, and there is not a lot of room to backstop. They may have capacity to get through April, but past April, that ability is probably very limited,” said Howard.

CARES is a half-baked solution"
Landlords have called on Congress to expand the U.S. relief package for pandemic-related economic distress via the Coronavirus Aid, Relief, and Economic Security (CARES) Act. So far, relief measures on a national and local level have focused on rent relief for tenants, landlords say.

“We are happy to be part of the solution, but we can’t be all of the solution. The way the CARES Act is written, it’s very unbalanced,” said Andrew Chaban, CEO of Princeton Properties, a Lowell, Mass.-based property management company with 7,000 apartments.

“As more residents face job loss or furloughs and are unable to fulfill rent obligations, many owners/operators fear they, too, will not be able to satisfy their own financial obligations required to operate their properties,” said the NMHC in a statement.

The letter also requested a variety of financial assistance programs and further clarity on eviction moratoriums.

“If the landlord has to put off mortgage payments, they might never get the money from their renters, but the mortgage payment never goes away,” said Chaban. “That puts the landlord in a quandary. We want to do the right thing as an industry, but putting that anvil on our shoulders, it’s just shifting the burden from society onto landlords.”"

MY COMMENT

NO WAY IN HELL would I want to be a landlord in good times or bad....AND....this is far worse than bad times this is a nuclear bomb for landlords. What REALLY amazes me in the article is the fact that in April of 2019.....during the greatest economy and historic booming job markets with companies hiring anyone that can breath......18% did not pay their rent on time.

EVERYONE thinks that the poor owners are RICH and they can just absorb this loss. WRONG...they need that rent to pay their expenses, their mortgage, their taxes and debts. What a disaster for the rental industry......both commercial and residential.

AND......second article:

Unemployment claims swell to 6.6 million as coronavirus paralyzes US economy

https://www.foxbusiness.com/economy/unemployment-claims-coronavirus-paralyzes-economy-april-4

"The number of Americans seeking unemployment benefits swelled to 6.6 million last week, surging for the third consecutive week as strict measures to contain the novel coronavirus paralyzed the nation's economy.

Claims between the period of March 28 and April 4 neared the previous week's record of 6.87 million, according to the weekly jobless claims report from the Labor Department published on Thursday. The previous week’s total was revised higher by 219,000.

Economists surveyed by Refinitiv expected the number of initial claims for state unemployment benefits to hit 5.25 million."

AND from CNBC:

"Jobless rolls continued to swell due to the coronavirus shutdown, with 6.6 million Americans filing first-time unemployment claims last week, the Labor Department reported Thursday.

That brings the total claims over the past three weeks to more than 16 million. If you compare those claims to the 151 million people on payrolls in the last monthly employment report, that means the U.S. has lost 10% of the workforce in three weeks."

MY COMMENT

Obviously NOT unexpected. The markets are not reacting to this in the slightest. I believe that this number is SIGNIFICANTLY low. Many have delayed filing and many dont know how or cant get through the flood of peole trying to apply. The REAL figure......just guessing....is perhaps 20-30% of the work force is out of work. Many are out of work but dont know it yet. they think they will have a job to come back to.......not going to happen for many people.

ALL IN ALL.....nothing unexpected today....so far. I will continue to move toward being fully invested with my remaining 40% that is in cash in two of the six accounts that I manage for myself and family. I am racing to get reinvested over the next 1-3 weeks. When we start to see a good turn around in this situation the market UP SIDE is going to be EXPLOSIVE.

 

SURPRISED when I checked my primary account just now. The majority of my 11 stock holdings were DOWN. AMZN, COST, MSFT, AAPL, GOOGL, JNJ, MMM. PERHAPS, I will be able to make a few more BUYS today after all.

I would not be surprised if we see a pretty good turn around to the NEGATIVE by mid day and to the close today. Just a hunch. This is the last trading day this week with the markets closed tomorrow for Good Friday. I suspect we will see a combination of profit taking and skittishness that the markets have gotten ahead of themselves. ALSO...the usual program and AI trading which I suspect will be selling to close the week.

 

MADE a few small trades in both accounts today. When the DOW was below +300 for the day. I am now buying even on the UP days, when I see some of my 11 stocks down. For example, COST. Each account is now at about 62% fully invested.

For ANY that care. I dont post this "STUFF" for personal GLORY or attention.........obviously. I post this stuff here as a trading and investing blog and trading, money, and investing journal. I HONESTLY post exactly what I am thinking and doing as I do it. I post in the HOPE that it might be interesting to others and might actually be helpful to others. At the minimum at least of some interest to others. I post EVERYTHING....the good, the bad, and the UGLY. It DOES NOT help me in any way to post FANTASY numbers or events.

I am rushing and pushing to get FULLY INVESTED again. I am NOT trying to time the absolute bottom. I am more concerned with the medium to long term when the buys I am making today and over these weeks will look dirt cheap. If the news turns generally positive in terms of the virus and the market direction becomes generally UP, I dont want to be siting around waiting for a LOW that never happens. I am willing to take what I see as the current down side risk at the moment. I also STILL have cash in each account of about 38% of the account. So plenty of funds available to continue to buy over the coming weeks.

Looks like there is an OIL DEAL agreed to according to the news stories. That might help to get the markets to a positive close today. ALTHOUGH news of that deal has been out for over an hour and did not seem to have a BIG market impact.

 

AGREE Zukodany that there are many signs of HOPE now. HERE IS SOME:

Stock market news live updates: Stocks rally, S&P posts best week in 46 years after Fed rides to the rescue with new stimulus

https://finance.yahoo.com/news/stock-market-news-live-updates-april-9-2020-221426994.html

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

"Stocks rallied to their best weekly gain in more than four decades on Thursday after the Federal Reserve unexpectedly unleashed a new multi-trillion-dollar stimulus plan to support businesses during the coronavirus pandemic.

The S&P 500’s 1.5% rise Thursday brought its weekly gains to 12.1%, or its best one-week gain since 1974, as the Financials and Real Estate sectors outperformed. U.S. equity markets will be closed Friday in observance of Good Friday.

The Nasdaq posted a 10.6% weekly gain for its best since 2008. The Dow’s 2,666.84-point gain since last Friday marked its best weekly rise in point terms ever, and its 12.7% weekly advance was its best on a percentage basis in two weeks.


Market participants have weighed recent coronavirus outbreak developments with a more positive tilt as of late. Growth in new cases has slowed or even turned negative in global epicenters, with New York state reporting a recent decline in hospitalization numbers even as new deaths – a lagging indicator – increased by the largest single-day amount on Thursday at 799."

AND HERE IS SOME MORE

S&P 500 dividends are in better shape than the market expects. Here’s where investors should worry, says Bank of America.

https://finance.yahoo.com/m/47ada930-abb0-3a6f-b69f-cf0d42ff8f06/s-p-500-dividends-are-in.html

"Hopes that a pandemic peak may not be far away and that governments are at least thinking of exit-strategies from damaging shutdowns are the positives to cling to ahead of a long Easter weekend — one that could keep the grim headlines coming.

“The difference between now and the start of the pandemic is that we can at least see the end. We can see that we have flattened the curve, and we can reasonably project when the pandemic will be brought under control,” Brad McMillan, chief investment officer for Commonwealth Financial Network, told clients. Granted, zero infections may still be weeks away.

Our call of the day looks at the outlook for dividends, suspended or cut by many companies as they brace for coronavirus fallout. It comes from Bank of America Merrill Lynch, which sees big-cap S&P 500 SPX, +1.44% in better shape to maintain dividends than in 2008/09, when investors saw a 24% peak-to-trough decline in those payouts.

“During the financial crisis, S&P 500 EPS fell 50% and more than 80 companies cut their dividends, with the biggest cuts in financials (which contributed a quarter of index dividends),” says a team of strategists led by Savita Subramanian.

Fast forward to the present, and technology and financials are the biggest contributors to index dividends, she says, and the plus is that both have fewer earnings-per-share fluctuations, payouts that are well below average and clean balance sheets.


So while the futures market is pricing in a 30% cut in S&P 500 dividends for this year, she expects closer to 10% and notes that market “grossly overestimated” in 2008/09 as well.

As for the risks, the bank sees share buybacks remaining under pressure, with financials and discretionary companies so far leading those suspensions. And smaller companies will struggle to maintain dividends, with expectations for 40% to 50% of those to cut versus around 13% of larger companies.

“Small cap leverage ratios are at record highs, debt maturities are half that of large caps, and small caps have the highest percentage of low-quality stocks ever,” says Subramanian.


AND.....this one, which I REALLY LIKE:

Stocks are finally flashing signs of a confirmed bottom, says analyst who called 25% rally

https://finance.yahoo.com/news/stoc...ys-analyst-who-called-25-rally-203558299.html

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

"If history is any indication, according to Fundstrat Global Advisors Managing Partner Tom Lee, stocks could be setting up for an even more “fierce recovery.”

Central to Lee’s thesis is the historical performance of markets during prior 30% declines. Looking at the last 10 such occurrences stretching back over the past two centuries, Lee points out striking symmetries between the time to recover losses and how quickly stocks moved from top to bottom.

Using the average ratio of collapse-to-recovery times during prior bear markets, Lee hypothesized on March 24, just after losses totaled 33% at the short-term bottom, that the S&P 500 could recover 50% of those losses in just three weeks. On Thursday, the S&P 500 briefly achieved just that.

“That same model says we should be making all-time highs in three times the amount of time it took to fall, which means if we fell over six weeks, sometime in July, August, September, we may be back at all-time highs.”“The speed that you fall tells you how quickly you recovered half your losses and actually how long it takes to recover your full losses,” Lee said about his model on Yahoo Finance’s YFi PM. “That same model says we should be making all-time highs in three times the amount of time it took to fall, which means if we fell over six weeks, sometime in July, August, September, we may be back at all-time highs.”


View photos
(Yahoo Finance)

“The fact that it recovered 2,793, it's a big deal,” he said. “If you look back at 1987, 2002 or even '08 or '09, when the stock market recovered half its losses, it was already deep into a bull market recovery. I think the move today is pretty decisive.”


View photos
Looking at the historical average ratio of time to travel from peak to trough to recovery, Fundstrat's Tom Lee points out that the last 10 drawdowns indicate the time to fully recover is 2.5x the amount of time to collapse. That would indicate a 100% recovery from March lows in three to four months.

Conceding the counter-intuitiveness of a market bouncing back quicker if the news was so bad that it sent the market into bear market territory faster than ever in history, Lee pointed out that the stock market tends to bottom ahead of fundamentals turning higher.

“I know it sounds insane, and I know everyone's rolling their eyes, but we've already recovered half the losses in what history says should have taken place: half in three weeks,” he said. “Look back at every bottom, '87, '09, '02, '74, stock markets bottom before jobless claims peak. Stock markets bottom before consumer sentiment bottoms… I just think it's telling us we've already discounted the worst.”

After hitting the first part of his call for the S&P 500 to recover 50% of its losses nearly perfectly, hitting the second part of Lee’s call would entail a return to the S&P 500’s all-time high of 3,393 by the third quarter."

MY COMMENT

OBVIOUSLY I believe that we have hit a solid bottom. That is why I am buying nearly every day when I see opportunity. I still say there is 10-12% or 10-15% down side risk and I am willing to take that risk to get back in at current prices. I ALSO agree that the return to RECORD HIGHS will be EXPLOSIVE and will probably happen by the Fall or year end. If you want the NEGATIVE view...there are many articles online that present the contrary view for various reasons.

 

HI rg7803 and Husker.

Good to see you guys posting. Sorry Husker...I did not see your post. That question about the oil stocks is a good question. I USED to own EXXON many years ago. I dont remember for sure, but, perhaps the last time I owned it was at least 15-20 years ago. It was part of my Mom's account when I was managing her money in the 1990's and early 2000's. The most recent oil stock that I have owned was CHEVRON perhaps 10 years ago.

I have not said it for a while but there are a good number of business categories that I tend to NEVER hold. Auto companies, oil companies, insurance companies, banks, health care and drug companies, financial companies. PRIMARILY because in my life of investing, the times I have owned these sorts of businesses, I have NEVER done well over the LONG TERM. SURE, I made money but when I compared them to my other holdings they never compared well. The times that I have owned these sorts of companies they have never done as well as my other BIG CAP, etc, etc, type companies in my portfolio. They have always SEEMED TO ME to LAG the rest of my portfolio over the long term in the middle to distant past.

The main thing that FRUSTRATES me with these companies long term is the fact that....for me at least....they are BOOM or BUST. They go UP and DOWN....not once in a while, but regularly. Look at the recent history of Auto manufacturers, Look at the recent 15 year history of oil, look at banks over the past 15-20 years.

Other than oil....I have NOT owned any of these categories for over 20 years. My focus looking back has always been on the BIG consumer side of things and I put the DOMINANT, HUGE CAP tech stocks in that category. I just don't like boom and bust businesses. I have tended for the past 30-40 years to ONLY hold 10-15 stocks for the long term. The closest I got to owning a bank was GE back in the WELCH GLORY DAYS. They were as much a financial company as a conglomerate manufacturing company. I sold that stock when Welch left.

I dont actually prefer TECH. Although my portfolio might look tech heavy at the moment. The companies that I hold now that I look at as TECH are...MSFT and GOOGL and perhaps AAPL. I look at AMZN as a consumer conglomerate. I look at AAPL as a consumer manufacturing company....although they are obviously a tech company......AND.....both companies...AMZN, cloud business, and AAPL, computers, phones, etc, etc,......are very tech oriented, especially AAPL. BUT.....these days what industry is not tech oriented?

So I guess the short answer:

I do not follow or have any interest due to my personal experiences and bias.
I prefer BIG consumer product or service type companies.
I prefer BROAD product and market type companies.
I try to avoid boom & bust type industries that have BIG SWING business cycles.
I dont follow the oil companies or any of the other categories listed above in the slightest.
I look for what I hope will be SUPER LONG TERM investments that I can hold for many years.
I STICK with what I am comfortable with and have had good success with over many decades.

I am sure there are many GREAT deals in OIL right now.....BUT....for me being a LONG TERM investor, I am not interested in what I would see as a short to medium stock.

I also think OIL beyond medium term 1-5 years......and even medium term....has lots of issues with the global warming crowd, clean energy crowd, alternative energy crowd, the environmental crowd, etc, etc. They are a DEMONIZED and HATED industry. They are subject to a negative NARRATIVE....true or not......that is believed......true or not...... by a good percentage of the population.

In addition I dont see any time soon that the oil GLUT will lessen. We currently have 200+ years worth of natural gas. I also DONT like the fact that they are often operating in a FAKE and MANIPULATED market. Countries get together and manipulate production and demand to try to impact the price of oil.

So, anyway.....a long and rambling answer....but that is why I dont own any oil companies.

 

The markets are closed today for Good Friday. A good time to recap where we are right now, especially after the past month or so:

DOW year to date (-16.89%)

SP500 year to date (-13.65%)

AMAZING that after all that we have gone through over the past six weeks, we are ONLY down the above amounts.

HOWEVER.......with EVERYTHING being OPAQUE at the moment as to the near term future.....we could EASILY be EVEN to POSITIVE within a few months......we could EASILY be DOWN by another 10-15% over the next few months. A few months is TOO SHORT TERM for me. I prefer to look out to at least year end and I believe we will be SIGNIFICANTLY POSITIVE by than. AND.....no one is thinking about the election at the moment. The election will be a BIG issue in the FALL and to year end and will potentially have a big impact on where we are at by year end.

 

I am NOT saying....that others should avoid oil or steel stocks. They are just....NOT....in my personal investing niche......and as a result I dont follow them at all.

Like HUSKER.......I have ALWAYS tried to buy companies that are popular with the younger age groups AS WELL as older groups. That is why I like companies that are DOMINANT and have ICONIC products. Like AAPL. NKE, COST, AMZN, MSFT, etc, etc. These sorts of HUGE GROWTH COMPANIES tend to market and sell to ALL age groups....all around the world.

 

Hi Husker....you said:

"What is your plan when AAPL and NKE report earnings? Roll with it? Sell the day before and re purchase? Those are the things I think about. After all we're chasing the highest percentage. Of course being long term it's not that big of a deal. But why have capital tied up in a possible short term dog that won't recover for sometime"

THAT is EXACTLY RIGHT....I will DO NOTHING when they report earnings. If I still have cash available and they drop I will buy more. My GOAL is to get my cash reinvested as quickly as possible....while at the same time trying to buy the DIPS all the way down. At the same time.....I would rather get in early than late....that is my bias.

I am an INVESTOR.....NOT....a trader. The cash that I raised during this little event was NOT a trade. It was done to preserve capital during an event that had the POSSIBILITY to collapse the economy or at least cause MASSIVE short term damage. That going to cash.....according to my rough calculations is going to cost me about 3-4% compared to NOT going to cash in those two accounts. BUT.......I NEVER invest by looking backwards and second guessing myself. What is done is done.......ALL that I care about is what I can make going forward by following my normal decades long investing plan and style. Trying to invest to make up for or erase the past is......in my opinion.......the MOST DANGEROUS way to deal with money and most likely way to LOSE MONEY.

That is the....."FEE" (just calling it that it is not really a fee) or self imposed "PENALTY"...I knowingly and willingly paid for the safety of not being invested during a short time of an event that for a while had the potential to spiral out of control and tank the entire economy......for a long time. I did the same thing in 2008/2009. Other than this time and 2008/2009.......I NEVER sell a holding or try to trade or market time. The responses of the FED and the government along with.......I believe......confirmation of where and how the virus is heading, gave me the confidence that we are....... NO longer looking at a possible economic collapse. THUS.... I decided to reinvest the funds in accordance with my usual LONG TERM investment style. I DO NOT ever try to time or avoid corrections or bear markets. I simply hold through them for the long term. that is what I will be doing now.

It is also my personal opinion that we will see a very significant.....very quick.....recovery by FALL or the end of the year. If this is true.....great. If not........OK....I will still be siting on my normal portfolio model with NO trading. When I talk about being long term.....I mean 7-10 years MINIMUM..........and.....actually forever. As long as a stock meets my expectations I will hold it for decades if I can.

The stocks I hold....and many I dont....are the cream of the crop of the world and AMERICAN economy. If we are in a time period where they are doing poorly....I dont believe, there is going to be anything else that will do better for me. I will RIDE OUT any normal market event to recovery.

 

BELOW is my PORTFOLIO MODEL.....this is how I am reinvesting the funds......which is NOW about 62% complete. BUT.......I am reinvesting the funds in the same proportion that they were in each holding when I sold. Over the years the stock side of each portfolio was at about........55-60% in the stocks and 45-40% in the funds. I want to get reinvested in the same proportion of each stock and fund that existed when I sold out.

My goal is to get the funds reinvested over the next 1-3 weeks. HOPEFULLY buying dips or drops. BUT, if necessary I will buy even on UP days to get this money working and exposed to the markets again. To me the GREATER RISK is to NOT be invested going forward since I KNOW that sooner or later we will recover ALL the losses and hit new highs. The ONLY unknown is when.....not if.

HERE is a repeat of the portfolio model.......as usual:

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

PORTFOLIO MODEL

"Here is my "PORTFOLIO MODEL" for all accounts managed which is the basis for MUCH of my discussion in this thread. I am re-posting this since I often talk in this thread about my portfolio model. My custom in the past on this sort of thread was to re-post my portfolio model every once in a while since I will tend to talk about it once in a while. I "manage" six portfolios for various family including a trust. ALL are set up in this fashion. If I was starting this portfolio today, lets say with $200,000. I would put half the money into the stock side of the portfolio, with an equal amount going into each stock. The other half of the money would go into the fund side of the portfolio, with an equal amount going into each fund. As is my long time custom, I would than let the portfolio run as it wished with NO re-balancing, in other words, I would let the winners run. Over the LONG TERM of investing in this style (at least in my actual portfolios), the stock side seems to reach and settle in at about 55% of the total portfolio and the fund side at about 45% of the total portfolio over time. That is a GOOD THING since it tells me that my stock picks are generally beating the funds over the longer term. AND....since the funds in the account generally meet or beat the SP500, that is a VERY good thing.

As mentioned in a post in this thread, I include the funds in the portfolio as a counter-balance to my investing BIAS and stock picking BIAS and to add a VALUE style component (Dodge & Cox Stock Fund), a top active management fund that often beats the SP500 (Fidelity Contra Fund) and a SP500 Index Fund to get broad exposure to the best 500 companies in AMERICAN business and economy. The funds also give me broad diversification as a counter-balance to my very concentrated 10 stock portfolio.

STOCKS:

Alphabet Inc
Amazon
Apple
Costco
Home Depot
Honeywell
Johnson & Johnson
Nike
3M
MSFT
PG

MUTUAL FUNDS:

SP500 Index Fund
Fidelity Contra Fund
Dodge & Cox Stock Fund

CAUTION: This is a moderate aggressive to aggressive portfolio on the stock side with the small concentration of stocks and the mix of stocks that I hold and with the concentration of big name tech stocks. Especially for my age group. (70). So for anyone considering this sort of portfolio, be careful and consider your risk tolerance and where you are in your life and financial needs. I am able to do this sort of portfolio since my stock market account is NOT needed for my retirement income AND I have a fairly HIGH RISK TOLERANCE. In addition I am a fully invested, all the time, LONG TERM investor. (LONG TERM meaning many years, 5, 10, 20, years or more)"

MY COMMENT

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