LOL...up, down, up,down, up, down,......that is why the short term traders love the current markets. The VOLATILITY is their friend. The markets are racing to give back all the gains from yesterday today. Easy come,........easy go.
A CLASSIC article for the current times. As Markets Hit New Lows, Remember the Basics It is difficult, but don’t let frustration and emotion over what has happened this year drive your portfolio decisions going forward. https://www.fisherinvestments.com/en-us/marketminder/as-markets-hit-new-lows-remember-the-basics (BOLD is my opinion OR what I consider important content) "Global stocks hit new lows this week as the bear market persists—extending a disappointing year. Naturally, many investors are frustrated, which is understandable. But frustration often gives rise to the urge to act—doing something, anything, can feellike taking back some control in an uncomfortable situation. However, this long into a bear market, such urges can easily be dangerously counterproductive. As challenging as this year has been, reacting to the past is arguably the biggest risk investors can take right now, in our view. If the past two weeks feel like a bad case of déjà vu, your intuition isn’t far off base. This year has been a rollercoaster for global stocks. After a rocky spring, world stocks first crossed -20%—the threshold for bear markets (typically prolonged and fundamentally driven declines)—on June 13. Days later, on June 17, the MSCI World began a rebound. But after two months, the summertime rally faded and early this week, world stocks hit a new low—down -15.3% since August 16 and -25.1% since the January 4 peak. Exhibit 1: A Challenging Period for Global Stocks Source: FactSet, as of 9/27/2022. MSCI World Index returns with net dividends, 9/30/2021 – 9/27/2022. Enduring bear markets is frustrating and challenging, but it is vital to remember: Investors seeking long-term equity-like returns don’t need to sidestep bear markets to achieve that aim. Now, if you identify a huge, multi-trillion dollar negative developing that markets haven’t already weighed, reducing stock exposure can make sense. However, we didn’t see this bear market forming early enough to encourage readers to act. That is humbling, but it doesn’t change what we think is the wisest course of action now. Absent early bear market identification and taking action, we counsel going back to the basics. Yes, we know. “Patience,” “stay with it” and all the like may sound like tired mantras—but that doesn’t make them unwise. Sometimes, the things you don’t want to hear are still right, important and smart. Here are a few such concepts: One, don’t exit stocks because of what has already happened. Selling now locks in losses, and if you are out of the market when a recovery begins, it will become much harder to recoup those losses. You could then be fighting equal and opposite emotions that want to keep you sidelined to mitigate potential declines. It is a recipe for potentially missing a recovery. Again, avoiding negativity isn’t essential to earn markets’ long-term returns. The S&P 500’s average annualized return of 10.3% includes all the bear markets from 1926 – 2021.[ii] In our view, if you seek growth commensurate with stocks’ long-term results, earning market-like returns is critical. Also critical: making investment decisions based on what lies ahead, as markets are forward-looking. Since stock prices move most on the gap between expectations and reality, weigh how sentiment aligns with economic and political fundamentals. Based on what we have observed, moods today are extremely dour. Surveys of investors and consumers highlight rampant pessimism, as does business activity. For instance, the IPO market is having its slowest year in more than a decade, and merger and acquisition (M&A) activity has stalled, with dealmakers blaming higher costs and economic slowdown fears.[iii] By no means are we saying things are uniformly positive. We also don’t dismiss headwinds from elevated inflation and high energy costs in particular, which could very well hinder growth in parts of the global economy. But we also see signs reality isn’t as poor as many think. Take the New York Federal Reserve’s Global Supply Chain Pressure Index. While still at historically high levels, it has been trending downward for the past four months—suggesting global supply chain pressures, one of 2022’s biggest worries, have been easing.[iv] Fisher Investments Executive Chairman and founder Ken Fisher recently offered a comprehensive look at other sources of reduced price pressures ranging from slowing money supply growth to smaller budget deficits to falling commodity prices—give it a look at RealClearMarkets. Politics should also prove a tailwind as we move into Q4—with the US midterm elections a big source of falling uncertainty—and into 2023. Though just one factor, it is worth weighing for investors. Finally, markets re-testing lows isn’t uncommon in bear markets, and it doesn’t mean more downside automatically awaits before a recovery, as past returns never predict. And therein lies the chief problem many investors are wrestling today: Emotions are shaped and colored by the recent past, but that won’t help you foresee what is ahead." MY COMMENT If you can predict the financial and business future......do the short term thing. As for me......I cant do it with enough regularity to equal the returns I have made simply usually doing nothing. In addition.....I STILL strongly believe in the companies that I own and want to stay in them for the long term. Another issue....for me is capital gains. I STILL have a nice gain in most of what I happen to own. I dont want to give away a BIG CHUNK of my gains in taxes......so I sit for now as usual. I dont really see any hard core traders posting on this thread.....so this is a general comment. I have known and seen many traders over my years of posting and investing. I have yet to EVER see one that talks about their REAL return after INCOME TAXES. I am lucky to be in a low tax bracket now as a result of my retirement tax planing.......but.....for the majority of my life I was in a high tax bracket. The LAST thing I was interested in was turning stock market gains into taxable income at the top of my 28-36% tax rate. That wipes out some pretty BIG gains.
BOTTOM LINE.....for me.....investing is all about PROBABILITY. I am simply in the category along with the vast majority of investors....where long term investing gives me the most significant probability of actually making a good return.
Some nice general principles of LONG TERM INVESTING in this little article. John Templeton’s Way https://smeadcap.com/missives/john-...DEs&utm_content=227312308&utm_source=hs_email (BOLD is my opinion OR what I consider important content) "We marveled for years listening to Sir John Templeton talk about the stock market. His best advice was shared during the most difficult stock market environments of the 1980s, 1990s, and 2000s on “Wall Street Week” with Louis Rukeyser. Templeton edict No. 1 “Bull markets follow Bear markets and Bear Markets follow Bull markets!” John was invested for decades and believed in getting rich slowly. He understood that you were going to get much better long-term performance by being optimistic in bear markets and cautious in bull markets. Templeton edict No. 2 Well-selected stocks at value prices were more interesting to Sir John than the shares of more popular securities. The Templeton Way was all about buying meritorious companies at fire-sale prices. He wrote the book on “value investing” and had the track record to show for it. Templeton edict No. 3 Buy at the point of maximum pessimism! Our favorite Sir John quote, “If you can see the light at the end of the tunnel, you are too late.” He had no inhibitions about being early and knew that was the price of admission for getting rich slowly. Templeton edict No. 4 Look for bargains where others aren’t looking. Templeton began buying Japanese shares in the 1950s and 1960s when sentiment was negative, few positive cases could be made, and little research was done. As a result, he was able to purchase shares at very depressed prices and held many of them for decades. Look at the chart below of the ten largest capitalization companies in the world in 1990: Source: @CharlieBiello, Bloomberg Sir John and his investors got gloriously rich by acquiring shares others were afraid to buy in a country that provided the most popular stocks in the world by the end of 1990! When oil prices skyrocketed in the 1970s, Datsun (Nissan) and Toyota automobiles had the gas mileage to attract budget-conscious Americans to their cars. The Japanese market and economy were the envy of the world in 1990. What does this review of the “Sir John Templeton Way” tell us about the current bear market that we are sitting through? First, shares purchased between now and the end of this bear market are likely to get rewarded in the future. Second, the shares we own today trade at very low multiples of earnings, book value, and free cash flow. It doesn’t matter in a market suffering indiscriminate selling, but it should matter a great deal over the next 5-10 years. Third, bear markets bottom on a rotational basis just like bull markets do on the upside. We like buying very depressed mall REITs like Simon Properties (SPG), home builders like D.R. Horton (DHI), e-commerce yard sales like eBay (EBAY), and oil and gas companies like Occidental Petroleum (OXY). Lastly, in the remainder of this bear market in stocks, there will be companies that fit our eight criteria for common stock selection which become available for purchase. We will get interested when the folks who have owned them on the way down give up and professional and amateur investors are afraid to go there. In conclusion, this is a very difficult bear market with an unknown end date. However, just like the Crash of 1987, the Dotcom Bear of 2000-2003, and the Financial Crisis Bear of 2007-2009, this too shall pass. When it does, we believe that stock selection will be at a premium and valuation will matter dearly as it did for Sir John Templeton. Fear stock market failure." MY COMMENT For long term investors.....ALL....the old advice and data STILL holds. We will come out of the other side of the current bear market and the sun will shine again. Will it be a month from now or two years from now.....no one knows. AND.....as usual....when it happens very few will immediately recognize it.....it will take months or even up to a year or two.....for people to get over the PAIN of the current market and admit that we are back in a new BULL MARKET. Bottom line......human nature and behavior NEVER changes. I remember after the 2008/2009 market collapse.....I was posting on another very active board. There were people on that board that were STILL refusing to believe that the collapse was over up to 2-3 years after the market come-back started.
The FED members have been out IN FORCE this week, including today......talking the markets and the economy DOWN. It is an OBVIOUS INTENTIONAL strategy. Here is the markets today. Stock market news live updates: Stocks resume losses after relief rally falters https://finance.yahoo.com/news/stock-market-news-live-updates-september-29-2022-105414183.html (BOLD is my opinion OR what I consider important content) "U.S. stocks cascaded Thursday morning as recession jitters returned to Wall Street after a fleeting relief bounce in the previous session spurred by the Bank of England’s bond-buying move. The S&P 500 plummeted 1% early into the session, while the Dow Jones Industrial erased more than 200 points, or around 0.8%. The technology-focused Nasdaq Composite sank 1.4%. On the economic data front, initial jobless claims slid to 193,000, the lowest since April, in the week ended Sept. 24 from a downwardly revised 213,000 the prior week, the Labor Department said Thursday. Economists called for 215,000 claims, according to consensus estimates compiled by Bloomberg. Elsewhere, a third reading from the Commerce Department on gross domestic product (GDP) showed U.S. economic activity contracted at an annualized 0.6%. In corporate news, CarMax (KMX) shares tumbled 14% after the vehicle buyer reported second quarter earnings that missed Wall Street estimates, citing "affordability challenges" that weighed on sales. Bed Bath & Beyond (BBBY) fell on Thursday after the company posted a wider quarterly loss as persistent merchandising and inventory snafus and inflationary pressures hit the home goods retailer. Shares fell about 2%. The renewed risk-off mood places all three major averages on pace to give up gains that came after England's central bank said Wednesday it would resume bond purchases to help stabilize financial and currency markets. Investors celebrated the shift away from aggressive policy tightening by officials in recent months. The S&P 500, Dow, and Nasdaq each rallied roughly 2%. EY Parthenon Chief Economist Gregory Daco said in a note that “the absence of proper policy coordination along with the speed and synchronization of rate hikes” risks an “excessive and disorderly tightening of financial conditions.” “In the UK, the economic outlook has recently taken a turn for the worse with the release of Prime Minister Liz Truss’ budget leading to a market rout, with treasury yields surging to their highest since 2010 and the British pound plunging to its lowest level in 37 years,” Daco said. Following the Bank of England’s intervention Wednesday – the purchase of around 65 billion pounds, or roughly $69 million, of long-dated gilts – British 30-year bond yields tumbled 100 basis points after touching a two-decade high. Meanwhile in the U.S. on Thursday, Treasury yields nudged higher after rising – and then falling – at the fastest pace in decades. On Wednesday, the benchmark 10-year Treasury note — a crucial economic benchmark — briefly hit 4%, hitting an important milestone amid the worst bond sell-off since 1949. Atlanta Fed President Raphael Bostic said on Wednesday that the decision by his central bank peers across the Atlantic to return to bond buying did not change his views on U.S. Federal Reserve policy or stoke fears England's economic faults could pour over. "I would expect growth to be below trend, we would start to see demand for a wider range of products start to soften, and we would start to see labor markets start to be more rationalized," Bostic said, adding that if job openings fall substantially, officials may contemplate stopping and holding at that level." MY COMMENT OBVIOUSLY the FED is determined to CRASH the economy as quickly as possible. They think this is the way to stop and cut inflation. I actually think they are wrong and will be very surprised at the severe recession that they cause and the length of time that it takes to recover. It is not mentioned above but the current 30 year mortgage rate is at 6.7%. WOW.....those 3% rates of a short time ago are looking pretty AMAZING right about now. BUT....those rates were totally ABERRATIONAL........a once in a 100 year event. So....get used to it.....we are going to see 30 year rates in the 7.5% to 9% range in the near future. My view is that the markets have NOW devolved into the RIDICULOUS. We are seeing IRRATIONAL daily action to the down side and the up side. this is the sort of thing you see in the terminal stages of a bear market.
Now we are seeing what happens to the markets when.....EMMETT....disappears. He is probably off on vacation. EMMETT....come back.....the markets need your help.
If this happens to be the first bear market for newer investors it will be a valuable experience for later on. It is important for any long term investor to have an idea about their individual risk tolerance. Although, most young long termers will have time on their side to recover, it is still important to get the feel for what may or may not be tolerable. Knowing this will help one stick to their plan or create a plan that matches their tolerance. Everyone has a different threshold, just find what works for you and will allow you to stay on course. It is common for that tolerance to change as investors near retirement. Many times the "need" for risk lessens because your plan has grown over the many years of investment and it is not necessary to carry a higher risk. Losing 50% late in the game can look and feel dramatically different than early on.
AND....to state the OBVIOUS.....yes...the country is in a RECESSION. Final GDP reading shows US economy shrank 0.6% in the spring, cementing start of recession Economists expected the final GDP reading to be unchanged at 0.6% https://www.foxbusiness.com/economy...onomy-shrank-spring-cementing-start-recession "The U.S. economy shrank for the second consecutive quarter in the three months ended June, according to the final estimate from the Bureau of Economic Analysis, meeting the criteria for a so-called technical recession as raging inflation and higher interest rates weighed on spending. The updated report, released Thursday, showed that gross domestic product (GDP), the broadest measure of goods and services produced across the economy, shrank by 0.6% on an annualized basis in the second quarter. That is below the initially reported 0.9% decline and unchanged from the second reading of a 0.6% decline. Economic output already fell over the first three months of the year, with GDP tumbling 1.6%, the worst performance since the spring of 2020, when the economy was still deep in the throes of the COVID-19 induced recession. However, another data point known as gross domestic income, which is an alternative measure of economic growth, actually increased by 0.1% in the second quarter. Recessions are technically defined by two consecutive quarters of negative economic growth and are characterized by high unemployment, low or negative GDP growth, falling income and slowing retail sales, according to the National Bureau of Economic Research (NBER), which tracks downturns. With back-to-back declines in growth, the economy meets the technical criteria for a recession, which requires a "significant decline in economic activity that is spread across the economy and that lasts more than a few months." Still, the NBER — the semi-official arbiter — weighs multiple factors when calling a recession and typically takes up to a year before announcing the decision. The NBER has stressed that it relies on more data than GDP in determining whether there is a recession, such as unemployment and consumer spending, which remained strong in the first six months of the year. It also takes into consideration the depth of any decline in economic activity. The latest downturn stems from a number of factors, including declines in private inventories, residential and nonresidential investment, and government spending at the federal, state and local levels. Those decreases were offset by increases in net exports — the difference between what the U.S. exports and what it imports — as well as consumer spending, which accounts for two-thirds of GDP. "Thus, real GDP could decline by relatively small amounts in two consecutive quarters without warranting the determination that a peak had occurred," the nonprofit said on its website. The committee does not meet regularly, only when members decide it is warranted. There are growing fears on Wall Street that the Federal Reserve will trigger a downturn as it raises interest rates at the fastest pace in three decades as the central bank races to catch up with runaway inflation. Policymakers last week approved their fifth consecutive interest rate hike and laid out an aggressive path for future increases that will put the federal funds rate range well into restrictive territory. Fed Chair Jerome Powell also walked away from the promise of a soft landing — the delicate balance between curbing inflation without crushing growth — warning that fighting inflation warranted economic "pain." "The chances of a soft landing are likely to diminish to the extent that policy needs to be more restrictive or restrictive for longer," Powell told reporters in Washington. "Nonetheless, we’re committed to getting inflation back down to 2%. We think a failure to restore price stability would mean far greater pain."" MY COMMENT Waiting for a committee that does not even meet on a regular schedule to "declare" a recession is a joke. This is simply politics in action. Fortunately it does not matter.....you can refuse to see what is in front of your face but that does not mean it is not there. In the end this sort of IDIOTIC posturing with the economy does not help.......it makes the situation worse. it creates confusion and fear and distrust.
Yes. Just keep moving forward and sit tight. I remember in the 2008/2009 I had a friend that pulled everything out of the market then and never returned to the market. I gently tried to talk to him about maybe getting back in at some point, but psychologically he could not do it. In fact, he would remind me about every time there was any sort of down turn later on. He was quite a bit older than me, so I'm sure he looked at it through a different lens than I did.
Yes, but if you can live off someone else ( parents, government, friends, etc ), who needs a career? Words that historically have been thought of as profanity or vulgar are now in vogue - and words that used to be considered worthy are now the "new profanity" - if you want to offend someone these days, you have to use vulgar and offensive terms like "work ethic", "responsibility" and "accountability". Strange place, indeed.
This is why we can't have nice things...LOL. We are so detached from the truth and reality it seems anymore. I know we try to stay out of politics in this thread and for good reason, but I just have to make a general observation. As great as our country is...and it is by far the best...Can you imagine how great we could be if political motives and political driven policies took a back seat? Or at the very least if it had not seeped its way into every single aspect of our decisions, choices, media, and just about everything. Can you imagine what today would look like had we entered the pandemic with a single, concerted effort to handle the incident without regard to political motivations? All sides included. I mean we can't even be honest about defining economic terms anymore for fear one side will gain leverage over the other. Can you imagine them disagreeing on ideas or policies, but still being able to put our country first before political gain? What a nice change that would be.
Back on the subject of investing, risk tolerance, and plan management. I remember my first downturn and at that time my plan was held at a financial firm. I was young and "didn't know what I didn't know" at the time. Not a bunch of money at that time, so it was not going to ruin me one way or the other. I eventually moved on to handle my own investment plan after much research and realizing I could do much of the same without all of the extra fees and multiple pointless funds they used to charge even more management fees. Best decision I made way back then. Over the years I have held a few individual positions and some index funds. I have never went wild with speculative plays or did any type of trading. No shade to those that do, each person has to chart their own path. I have stayed pretty true and sound with my own plan. I am at the point now where I could pretty easily go strictly with my index funds and eliminate the individual positions by the end of the year. I actually have reduced those positions considerably over the past few years and transferred the money into my largest percentage holding of my Total Stock Market Index fund. My point was to have a really simple portfolio as I got closer to retirement. I still have a bit to go in the work world, but I can see the finish line is in sight. The simplicity of it is very appealing. Looking at my plan, I see this was the year I had anticipated being able to execute it if I wanted to. I had given myself kind of a five year "downshift" to do so. Although, I had considered earlier this year possibly retaining some of the individual positions or increasing their percentages within the plan, I have decided against it. This was kind of my "optional year" to do so and since I have already whittled it down I am going to stick to it. It is kind of refreshing actually to look back and see that the plan to simplify has worked out right on schedule.
I mentioned mortgage rates earlier.....here you go if you want to torture yourself.....as a future buyer, Mortgage rates race toward 7%, hit 15-year high https://finance.yahoo.com/news/mortgage-rates-hit-15-year-high-140020863.html
What I cant believe is that the markets are.....SUPPOSEDLY....tanking over fear of a recession. At the same time....HELLO....we are already in a recession and probably have been for months now. Not to mention......there is nothing particularly special about being in a recession....compared to the past SIX MONTHS. Stock market news live updates: Stock sell-off intensifies after relief rally fades; Dow sheds 500 points, Nasdaq falls 3% https://finance.yahoo.com/news/stock-market-news-live-updates-september-29-2022-105414183.html (BOLD is my opinion OR what I consider important content) "U.S. stocks cascaded Thursday as recession jitters returned to Wall Street, paring gains from a fleeting relief bounce spurred by the Bank of England’s bond-buying move. The S&P 500 plummeted 2.3%, while the Dow Jones Industrial Average erased more than 500 points, or around 1.7%. The Nasdaq Composite sank over 3%. Technology stocks led the slide lower as heavily-weighted Apple (AAPL) shares erased roughly 4.8% on concerns around waning demand that prompted a downgrade from Bank of America. Analysts warned in a note out Thursday that BofA's research team "expects the demand trajectory to worsen." Apple's declines began Wednesday following a report the tech giant is backing off plans to increase production of its new iPhones this year after demand for the product failed to meet expectations." MY COMMENT The rest of the article is.....mostly...... old from this morning. At least I am playing with FREE MONEY today. Most of what I am losing is the gains that I got yesterday. You know the markets have gotten simply IRRATIONAL.....when they are going down based on what is happening in ENGLAND......and based on the recession BS. It is a good sign when the markets become totally detached from REALITY....reality being that we have had the same issues and conditions for about 6 months now. I do consider it a good sign the more irrational the markets get.....it might mean that we are at or near a bottom.
The MODERN WORLD......I felt like I was in a Seinfeld show today. We go to the drive through for some chicken. We order two meals. When we get to the window the woman puts the plastic in the bag, confirms the sauces......so....I hand the bag to my wife and tell her....we can wait.....if you want to check to make sure the honey is in there for the biscuits.......you know how you always get FU@KED at the drive through.....but, this lady seems really on top of everything. We go over and park to eat in the car. As we go through the bag we find out that.....she forgot to give us our extra biscuit.....my side dish is wrong......one drink has no ice.....my wife was given a 2 piece meal instead of a 3 piece......her order has a back and a breast when it was supposed to have 2 legs and a breast........and of course.......there is NO HONEY. While we are siting there eating.......I hear on the local radio station that Lyft is going to start to do driver-less cars in Austin.....for their car service. They are NOT going to have a driver.....but each one will have TWO TECHNICIANS in the car. OK.....my driver-less car will not have a driver.....except for the TWO drivers that will now be in the car. That is how my day is going.......I dont even care about the markets at this point.
Very good to see that you are on track executing your plan Smokie. This bear market should be a WAKE UP CALL for all the baby boomers that are nearing retirement and are still close to 100% in stocks and funds. They might want to consider the impact of LOSING 20-40% of your money in the first year or two of retirement.......at the same time that you will be drawing down your account to live on. I would DEFINITELY put my funds 100% into a SP500 Index Fund....for the rest of my lifetime....and ditch the individual stocks. The problem for me is the big hit I would take on capital gains tax if I sold out all the individual stocks to do so. At some point over the next few years I am......however.....going to STOP adding to the individual stocks and simply put any additional funds into the SP500 to increase the percentage of my account that is in that index. At the moment....my account is about 60% in individual stocks and about 40% in my two funds. Since it started out generally half and half......(see post below).....it is clear that the individual stock side of the portfolio is outperforming the two funds (SP500 and Fidelity Contra). That is a good thing since it shows my continued OUT-PERFORMANCE of the SP500 in the account.
I have no plans to sell anything or do anything. As a long term....fully invested all the time investor......I will do nothing in response to the current short term events and environment. AS USUAL.........HERE is my current PORTFOLIO MODEL. 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 59% of the total portfolio and the fund side at about 41% of the total portfolio over time. That is a GOOD THING since it tells me that my stock picks are generally beating the funds over the longer term. AND....since the funds in the account generally meet or beat the SP500, that is a VERY good thing. As mentioned in a post in this thread, I include the funds in the portfolio as a counter-balance to my investing BIAS and stock picking BIAS and to add a top active management fund that often beats the SP500 (Fidelity Contra Fund) and a SP500 Index Fund to get broad exposure to the best 500 companies in AMERICAN business and economy. The funds also give me broad diversification as a counter-balance to my very concentrated 10 stock portfolio. At the same time the funds double and triple up on my individual stock holdings............that I consider the BEST individual businesses in the WORLD. STOCKS: Alphabet Inc Amazon Apple Costco Home Depot Honeywell Microsoft Nike Nvidia Tesla MUTUAL FUNDS: SP500 Index Fund Fidelity Contra Fund CAUTION: This is a moderate aggressive to aggressive portfolio on the stock side with the small concentration of stocks and the mix of stocks that I hold and with the concentration of big name tech stocks. Especially for my age group. (72). 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. #11936
I have NOT said this for a while......so.....I dont talk much about the Fundamental stock picking process on here....but that is the name of the game. Anyone that is a long term investor needs to know how to read and understand company financials. The primary thing that I look at when considering a new company is the.....BALANCE SHEET, INCOME STATEMENT, CASH FLOW STATEMENT, etc, etc, etc. HERE is the site that I tend to use for this sort of info: https://www.macrotrends.net/ For example here is the financial data on the site for APPLE: https://www.macrotrends.net/stocks/charts/AAPL/apple/stock-price-history I learned about accounting in some of my business classes in grad school. My preferred course is to compare a minimum of five years of data....quarter by quarter and year by year. I dont have any particular keys that I look for.....I just go line by line looking for anything that stands out as a negative or a positive....TREND. I than follow up by looking online for the reason for anything that catches my eye in the financials. My goal is to NOT get too far down in the weeds of financial obscurity....but at the same time to see any recent to long term trends going on in the business. I am NOT a number cruncher.....I can find all of that data online without doing it myself.
Yeah, I can definitely see why you are doing it that way for sure. I have always had my plan set to start reducing those individual holdings five years ago and I have stuck to it. There were a few times I thought about just letting it drift, but I did not because I wanted to get to the point where I am at currently. At that time I initiated the plan to reduce, I had no idea where or what the market might be forward to this time. I just knew I wanted to simplify things on a reasonable schedule and it would put me accomplishing that around the end of 2022 I figured. I am actually about three months ahead of schedule I guess.
