The Long Term Investor

Some good thoughts above TomB16.

I obviously tend to be a fundamental/value investor. I am sure this is a function of my business education and small business ownership background. We are all victims of our life history and experiences.......like the old parable of the elephant and the blind men. I dont know if younger people know this sort of cultural thing so it is below:

https://www.jainworld.com/literature/story25.htm

"ELEPHANT AND THE BLIND MEN

Once upon a time, there lived six blind men in a village. One day the villagers told them, "Hey, there is an elephant in the village today."

They had no idea what an elephant is. They decided, "Even though we would not be able to see it, let us go and feel it anyway." All of them went where the elephant was. Everyone of them touched the elephant.

​

"Hey, the elephant is a pillar," said the first man who touched his leg.

"Oh, no! it is like a rope," said the second man who touched the tail.

"Oh, no! it is like a thick branch of a tree," said the third man who touched the trunkof the elephant.

"It is like a big hand fan" said the fourth man who touched the ear of the elephant.

"It is like a huge wall," said the fifth man who touched the belly of the elephant.

"It is like a solid pipe," Said the sixth man who touched the tusk of the elephant.

They began to argue about the elephant and everyone of them insisted that he was right. It looked like they were getting agitated. A wise man was passing by and he saw this. He stopped and asked them, "What is the matter?" They said, "We cannot agree to what the elephant is like." Each one of them told what he thought the elephant was like. The wise man calmly explained to them, "All of you are right. The reason every one of you is telling it differently because each one of you touched the different part of the elephant. So, actually the elephant has all those features what you all said."

"Oh!" everyone said. There was no more fight. They felt happy that they were all right.

The moral of the story is that there may be some truth to what someone says. Sometimes we can see that truth and sometimes not because they may have different perspective which we may not agree too. So, rather than arguing like the blind men, we should say, "Maybe you have your reasons." This way we don’t get in arguments. In Jainism, it is explained that truth can be stated in seven different ways. So, you can see how broad our religion is. It teaches us to be tolerant towards others for their viewpoints. This allows us to live in harmony with the people of different thinking. This is known as the Syadvada, Anekantvad, or the theory of Manifold Predictions"

 

OR.....not to step on tom's toes.......share it on this thread. But....share it somewhere. It gets real boring real quick if there is nothing personal or real in these threads other than.....bought blah blah at blah, sold blah blah. It helps to keep a forum alive and active if people are willing to share even though this is the INTERNET.....and........ for all anyone knows we are all full of it and have never invested a dime, are living in our parents basement playing games all day, and eating Cheetos. Just be careful not to share enough info that others can identify you.

 

NICE to string together a couple of positive days in the markets. HOPEFULLY we are now going to get clear of the.....vicious circle...negative feedback loop....groundhog day...situation we have been in for the past month or so. A classic, little, nasty, old fashioned, correction. Something a BIG percentage of current investors have never experienced.

After all the turmoil we are now back positive for the year in the big averages:

DOW year to date +0.12%
SP500 year to date +0.32%

After all the FLAILING around for the past month or so and all the negativity it is nice to be positive for the year even if it is very slight. We need to build on this to the end of the year. AND, I do think there is a decent "chance" (possibility, not probability) that the sellers have now been worn down and a lot of the fear has dissipated and the correction is starting to be exhausted. If so, I will JINX us once again and mention that there is still time for a little year end rally. I am seeing more and more talking heads mentioning picking up stocks at the current "bargain" prices. Not that they know what they are talking about any more than anyone else, but it helps to boost market moral.

HERE is a little light reading for those with nothing better to do with their time:

Opinion: This bear market signal is throwing stock investors off the scent

https://www.marketwatch.com/story/t...wing-stock-investors-off-the-scent-2018-11-27

AND

Opinion: How to avoid making stupid investing mistakes when the stock market drops

https://www.marketwatch.com/story/h...stakes-when-the-stock-market-drops-2018-11-26

MY COMMENT:

Step by step, day by day. We need to string together a few good weeks to break the back of the current correction. Lets hope for good retail numbers over the TG and Christmas/Holiday season. Looks like we are off to a very good start.

Black Friday Sales Show Consumers May Be Cooking Up A Retail Rebound This Holiday Season

https://www.forbes.com/sites/elyraz...etail-rebound-may-be-on-the-way/#11bb2ce97fa3

HERE is another take on where we are right now in the season, but dont be fooled by the headline, the news is GOOD:

Earlier Sales and Late Christmas Dent Thanksgiving Weekend Turnout

http://fortune.com/2018/11/27/black-friday-sales-3/

"According to a poll commissioned by the National Retail Federation to look at American consumers’ behavior over the biggest shopping weekend of the year, some 165 million people made purchases either online or in stores over the five-day Thanksgiving weekend that ended on Cyber Monday (Nov. 26). That’s down from the 174 million who did so on the corresponding weekend last year.

What’s more, people who did shop over the five days spent a bit less, $313.29, compared to $335.47 last year. But that does not mean the holiday season is off to slow start. One the contrary: despite those declines, the NRF said the weekend heralded a strong shopping period and expects sales to come in at the high end of its forecast range for total retail spending excluding cars and restaurants to rise between 4.3% and 4.8% over 2017, or a total of $717.45 billion to $720.89 billion."

HANG IN THERE........we are FAR from a negative economy in general. I remain fully invested for the LONG TERM as usual.

 

WELL......I hope TOM reconsiders....ALL investing is subject to discussion and debate if that is what people wish to do. TOM, I dont mind others having their own techniques or style of investing or trading. I am confident in what I do and it does not bother me in the least that others have different opinions. Please stick around and contribute. You know, the main thing is that over the LONG TERM all will become clear and there will be actual market results as well as individual results that show REALITY. Remember, this is not a competition. Personally having argued these sorts of topics for so many years I rarely will get involved anymore in these "style of investing" arguments. I simply post what I believe and hope that it might be shown over a long time of posting to have some validity and to help others or make them think. To me it is often the LURKERS on boards like this that my posts are aimed at. Most of us that actively post are pretty set in what we do. Getting all involved in competing on an anonymous message board where nothing can be verified in the least, including what I say, is a waste of time. That is why I invite ALL to post anything they want on this thread. It is not "MY" thread, I dont own it. So, TOM, I appreciate your support, but you need to keep posting and giving us the benefit of your opinions and let the passage of time show when we are right and when we are wrong. AND.....over time we will ALL be right at times and wrong at times.

PLEASE.....for any on these boards......the fact that I dont believe in certain techniques is NOT CRITICISM of others. It is simply my opinion, right or wrong. If you are secure in what you do than whatever I think should NOT bother you in the least.

HERE is the article I intended to post when I logged in today and saw the above posts. I post this sort of STUFF to try to encourage thinking and discussion NOT as a BARB aimed at others.

The Growing Crisis In Modern Finance

https://www.forbes.com/sites/brettsteenbarger/2018/05/25/the-growing-crisis-in-modern-finance/

"Note: In this article, I interview two distinguished professors and practitioners of mathematical finance, David H. Bailey, Ph.D. of Lawrence Berkeley National Laboratory (retired) and the University of California at Davis, and Marcos Lopez de Prado, Ph.D., of Lawrence Berkeley National Laboratory and an experienced quantitative money manager. In a series of recent blog posts and journal articles, they have made the case that we are in the midst of “the greatest financial fraud in history.” What is this crisis facing finance and how does it impact individual investors, as well as financial institutions? Here are eye-opening perspectives from professional mathematicians who apply their work to financial markets.

Imagine that a pharmaceutical company develops 1000 drugs and tests these on 1000 groups of volunteer patients. When a few dozen of the tests prove “significant” at the .05 level of chance, those medications are marketed as proven remedies. Believing the “scientific tests”, patients flock to the new wonder drugs, only to find that their conditions become worse as the medications don’t deliver the expected benefit. Some consumers become quite ill and several die.

Clearly, there would be a public outcry over such deceptive practice. Indeed, that is precisely the reason we have a regulatory agency and laws to help ensure that medications have been properly tested before they are offered to the public. According to Marcos Lopez de Prado, no such protections are offered to financial consumers, leaving them vulnerable to unproven investment strategies. Indeed, he and several co-authors contend that the majority of investment strategies promoted by academics and quantitative practitioners are false. As Lopez de Prado explains in his recent book, Advances in Financial Machine Learning, these strategies look at so many combinations of so many variables that they are likely to find models that seemingly work both in- and out-of-sample, only to fail dismally in the real world. These false positives are particularly misleading, as they are promoted by researchers with seemingly impeccable research backgrounds—and who do not employ the scientific tools needed to detect such false findings.

Nor is this crisis limited to the world of quantitative finance. David H. Bailey, in a post to the Mathematical Investor site, points to a wide range of financial providers, from banks to brokerages, that promote untested, unproven technical analysis strategies. These encourage traders and investors to put their money to work, while offering guidance with no objective information value. Indeed, Bailey and Lopez de Prado note that the most important plot in finance is not a technical analysis pattern, but a statistical distribution of Sharpe Ratios as a function of the number of backtests conducted. If one looks at enough combinations, it is quite possible to find technical patterns that will achieve seemingly astronomical risk-adjusted returns. The great majority of these are spurious.

Lopez de Prado and Bailey are not alone in calling attention to the crisis in finance. Peter Coy recently quoted Campbell Harvey’s presidential address to the American Finance in which Harvey noted that standard testing methods are often inadequate for answering the questions posed by research. Indeed, Harvey and Liu, in their paper on evaluating trading strategies, show that strategies built with random numbers can test as significant. Nor does raising the significance level to avoid false discoveries work, as it misses potential true findings. Citing the potential for abuse of misleading research findings, Harvey implored his professional finance audience to think of themselves as scientists, not salespeople.

What does this proliferation of false investment strategies mean for traders, investors, investment advisers, and institutions managing client capital? Professors Bailey and Lopez de Prado graciously agreed to answer a few questions:

• Five years ago, you brought this issue to public attention. Still, here we are with one brokerage firm after another, one media outlet after another, dispensing advice from chart patterns, wave structures, technical indicators, and other unproven methods. How might we better protect financial consumers?

Bailey: Yes, it is very distressing that after all of the research published by ourselves and many others, numerous unproven and technically dubious techniques (“head and shoulder patterns”, “b-waves”, “technical indicators”, “support levels”, etc.) are still widely featured in the financial press, and thus presumed by millions of consumers and professionals alike to be the “scientific” way of handling one’s investments. Our own research has amply confirmed that these methods do not work. For example, in our recent study of market forecasters, we found that those forecasters who rely on charting, technical analysis and/or wave analysis averaged only 44% correct predictions, which is even less than the disappointing score (49%) achieved by the full collection in our study. It may well be that the vast majority of persons featuring and promoting these techniques do not realize that they are scientifically ill-founded, but that does not excuse those who do.

Lopez de Prado: When we have confronted financial firms, a typical response it that they are merely satisfying customers’ demands. The reality, of course, is quite different. For decades, these firms have told retail investors that technical analysis, fundamental analysis and academic papers “work.” At this point, investors do not even challenge the notion that those claims may be false. They assume that, if those claims were fraudulent, regulators would have taken action, just as the FDA would not allow pharmaceutical companies to sell crack-cocaine. But the SEC does not have the oversight powers of the FDA. Investors do not receive the level of malpractice protection that patients enjoy.

Regulatory agencies cannot protect retail investors unless there is a public outcry. And the public outcry has not happened because of the successful misinformation campaign alluded earlier. Our best hope is to educate investors.

Bailey: The challenge here can be seen in some recent studies of individual investor behavior. For example, the 2017 DALBAR report found that over the 30-year period ending in 2016, individual equity fund investors averaged only a 4% annual return, compared with 10.2% that could be had by simply investing in a low-cost S&P 500 index fund. As we have pointed out, most of the shortfall is due to panic selling in downturns, lack of diversification, not understanding the basics of long-term compounded returns, and, in the end, a failure to establish a rational financial plan and stick with it over the long term.

If most consumers do not understand, much less practice, the basics of rational investing, and if even fewer understand that reliance on charts, graphs and frequent trading is not the answer, then it is much less likely that individual consumers can understand difficulties with backtest overfitting and other potential pitfalls that unfortunately pervade the investment world. Although improved consumer education would undoubtedly help, I personally see no alternative to some significantly higher level of government regulation.

• You've also written on the topic of evaluating the probability of backtest overfitting. I find that most professional money managers are not familiar with these methods and simply use in-sample and out-of-sample backtesting to establish the validity of an investment strategy. Can you address why traditional backtests are not sufficient and how they can be made more rigorous?

Lopez de Prado: Statistical tests assume a certain false discovery probability. In the context of investing, that’s the probability of saying a false strategy will make money. That probability is generally accurate if the test is dispensed only once. However, if a researcher dispenses 20 times a test with let’s say a 5% false positive probability, it is all but guaranteed that one false strategy will be produced. In modern finance, researchers conduct millions of tests. The implication is that most discoveries in finance are likely false, and that most investors are putting their money on losing strategies. This methodological error is called selection bias under multiple testing. One reason financial researchers get away with this scientific fraud is because we don’t have laboratories where discoveries can be challenged based on new evidence. It will take decades to collect the new evidence needed to debunk each of these claims, and by then new false claims will be marketed to investors.

All forms of backtesting are susceptible to this flaw: Cross-validation, out-of-sample walk-forward, hold-out, etc. As long as researchers do not control for the number and variance of the trials involved in a discovery, false positives are almost certain.

Backtesting should not be used as a research tool. Understanding the cause-effect relationship in complex systems like finance requires more sophisticated tools. One example of such tools is features importance, where the researcher evaluates the degree to which subsets of variables inject information into a problem. Backtesting should not take place before a theory has been formulated. The goal of backtesting is to try to invalidate a theory, not to suggest it. Moreover, if we apply the same tool for research and validation, overfitting will take place by design.

Bailey: What is happening here is that when one uses a computer program to explore many variations of a proposed strategy, portfolio or fund design, one’s results are immediately compromised by what is known as the "multiple testing” fallacy. If one conducts enough tests, one is certain to find a result that looks good, even though there may be absolutely nothing there. As we have shown in our research papers, if even just a few variations have been explored, the results are statistically questionable; if millions of variations have been explored, or if a computer-based optimization scheme has been employed to produce an “ideal" design, then almost certainly the resulting strategy, portfolio or fund is statistically overfit, and those who invest real money in such vehicles are dart throwing at best and risking a catastrophic loss at worst. I might add that the academic finance community badly lags other fields in strengthening its standards for peer-reviewed publication. It is high time that the field upgraded its professional standards for reproducibility and statistical rigor to those that have been established in other fields.

• The financial machine learning book raises an enlightening but uncomfortable metaphor. Centuries ago, gold could be found near the surface of the earth and could be mined by enterprising individuals with shovels and pick axes. As the visible gold supply dwindled, it became necessary to utilize complex techniques for detecting microscopic gold and gold hidden far beneath the earth's surface. The days of California gold rush, where individuals could strike out and find their fortune, are long gone. Do you foresee the same in finance? Have we reached a point where the "alpha" at the surface of the market has been thoroughly mined and we now need complex tools to extract the "gold" within financial markets?

Lopez de Prado: Since the turn of the century, the performance of discretionary hedge funds has steadily decayed. There is a limited amount of alpha that can be extracted using pre-industrial methods. The good news is, macroscopic alpha is only a fraction of the overall alpha. Some of the most successful hedge funds in history are quantitative funds that deploy industrial methods for mining that alpha. Machine learning methods have demonstrated their ability to model complex and even chaotic systems in many scientific fields. Machine learning algorithms not only offer better market prediction, they also achieve them at a fraction of the costs involved in traditional firms. Firms that fail to adapt will not survive.

Bailey: Yes, indeed, the easily mined gold is long gone. Today’s markets are dominated by highly computerized quant operations, using highly sophisticated mathematical algorithms and big data, which are continually scouring the multiple large datasets to find subtle correlations and other opportunities for profitable trading. As we’ve noted, such operations are pretty much the only ones that consistently make money.

So in today's finance world, the message is clear: either go big or get out. One should either employ state-of-the-art mathematical algorithms, big data and machine learning--computers working together with highly trained humans--or else leave the field to those who do. Increasingly, there is no middle ground left that has any scientifically rigorous basis.

On the bright side, one upside to the “arms race” of competing quant operations is that the resulting market prices are closer to the “true” market price, since if some price were not, a savvy computer program will quickly capitalize on the situation and arbitrage it away. Thus when an individual investor buys or sells a security, it is more likely that he or she is getting a “fair" price. In particular, this system benefits those wise investors who simply invest in a diversified portfolio, or even a handful of low-fee index-tracking funds, and hold these securities consistently over the long term.

***

So what can we learn from the alarms raised by Lopez de Prado and Bailey? A crisis exists in the money management world because few financial organizations find an interest in educating financial consumers. The quest for investor dollars among most brokerage firms, investment banks, financial advisers, hedge funds, and asset management firms leads to an unwillingness to acknowledge that most active strategy emperors have no clothes. Meanwhile, billions upon billions of investor dollars are lost in pursuit of these false strategies, even though the tools for identifying such false positives are available. We would not tolerate the commercialization of false drugs and their harm to human health. Perhaps it is time we exposed similar affronts to human wealth, particularly in a society where wealth and health are not independent variables.

MY COMMENT:

I do believe that the above is accurate and reflects the current state of academic investing data and research. BUT, that is in the context of my personal investing BIAS. Just as EVERY investor has BIAS toward what they do and believe. SO, if there is something you take from this post that is fine, if not that is fine too. My personal opinion is that much of what we see in individual investor behavior reflects our genetic heritage as humans. Part of that heritage is the fact that the human brain is constantly looking for patterns and complex systems and explanations to predict what is going on around us. I personally believe that as humans we make things like investing WAY more complex than it needs to be due to this quirk in our make up. It is very difficult for humans to just sit and do nothing with investments. As I have seen in music, business and many other aspects of my life doing something SIMPLE is very very difficult. We CRAVE complexity and the feeling that we are in control and are doing something. My view is that systems like Technical Analysis reflect this craving for everything to be a big controllable system that can be understood and mastered. It satisfies our human brains desire to DO SOMETHING and understand and predict our environment.

SO to ALL reading this thread......REMEMBER.....if you are secure and confident in what you do, you will not care what I think or post. It is NOT personal. It is NOT aimed at "you" or anyone else. The important thing on a site like this is to MAKE MONEY and be successful investors. I DONT CARE how you do it on an individual level.......if it works for you do it. For those that are new, or just starting out or LURKING, it is good for them to be exposed to different opinions. That is why on this thread I will give mine and will welcome others that do NOT AGREE with mine.

SO......COME ON GUYS lighten up. TOM we need you on this site please reconsider and stick around.

LAST COMMENT since I have to go to the dentist, I DO NOT in the least agree with the implication in the above article that ANYONE or any brokerage should be restricted or controlled in what they put out there for their customers. EACH INDIVIDUAL must control what they do with their money and how they do it. There should be NO restrictions or regulation on what brokerages can put out there for their clients, right or wrong, as long as it is not outright manipulation or fraud and I DO NOT consider belief or argument for strategies like Technical Analysis as manipulation or fraud. It is simply personal OPINION.

 

I like to have fun with business and investing so......I AM CALLING THE MARKET BOTTOM as November 23, 2018. I was thinking on the way back from the dentist that we had hit the bottom if we could get a nice gain today. When I got home I saw that the markets were up nicely based on the FED being unable to STFU, I took that as confirmation of my thinking. I was worried that the obsession with the FED and the speech today would TANK the markets. There will of course be the usual up and down days going forward, but I am calling the end of this NASTY little correction as November 23, 2018. I am also calling the same date as the bottom and simultaneous beginning of the recovery of the FANG and other tech stocks.

Obviously I am a LONG TERM INVESTOR, but I watch the short term day to day markets like most investors, and, I like to challenge myself with CALLS and PREDICTIONS like the one above. PLEASE these sorts of "calls" are for fun and NOT investment advice.

 

NOW.....there is much discussion above about Technical Analysis and Fundamental Analysis. FOR THOSE that are not sure what those terms and philosophys are, or are new to investing or like all of us STILL LEARNING here is some basic info:

Technical Analysis

https://www.investopedia.com/terms/t/technicalanalysis.asp

"DEFINITION of 'Technical Analysis'
Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. Unlike fundamental analysts, who attempt to evaluate a security's intrinsic value, technical analysts focus on patterns of price movements, trading signals and various other analytical charting tools to evaluate a security's strength or weakness."


AND MUCH MORE DETAIL:

Technical analysis

https://en.wikipedia.org/wiki/Technical_analysis

"In finance, technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.[1] Behavioral economics and quantitative analysis use many of the same tools of technical analysis,[2][3][4] which, being an aspect of active management, stands in contradiction to much of modern portfolio theory. The efficacy of both technical and fundamental analysis is disputed by the efficient-market hypothesis which states that stock market prices are essentially unpredictable.[5]"

Fundamental Analysis

https://www.investopedia.com/terms/f/fundamentalanalysis.asp

"What is 'Fundamental Analysis'
Fundamental analysis is a method of evaluating a security in an attempt to assess its intrinsic value, by examining related economic, financial, and other qualitative and quantitative factors. Fundamental analysts study anything that can affect the security's value, including macroeconomic factors (e.g. economy and industry conditions) and microeconomic factors (e.g. financial conditions and company management). The end goal of fundamental analysis is to produce a quantitative value that an investor can compare with a security's current price, thus indicating whether the security is undervalued or overvalued."

AND MUCH MORE DETAIL:

Fundamental analysis

https://en.wikipedia.org/wiki/Fundamental_analysis

"Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements (usually to analyze the business's assets, liabilities, and earnings); health;[1] and competitors and markets. It also considers the overall state of the economy and factors including interest rates, production, earnings, employment, GDP, housing, manufacturing and management. There are two basic approaches that can be used: bottom up analysis and top down analysis.[2] These terms are used to distinguish such analysis from other types of investment analysis, such as quantitative and technical.

Fundamental analysis is performed on historical and present data, but with the goal of making financial forecasts. There are several possible objectives:

• to conduct a company stock valuation and predict its probable price evolution;
• to make a projection on its business performance;
• to evaluate its management and make internal business decisions and/or to calculate its credit risk.
• to find out the intrinsic value of the share.[3]"

MY COMMENT:

For those that may be learning. There are of course many different types of Technical and Fundamental analysis. Value investing is perhaps one of the largest sub-categories of Fundamental Analysis. (see post 103 above) Both methods of investing have many many offshoots and variations of how they are applied. And, many investors use aspects of both. In the end the simple truth is whatever works for you and allows you to successfully invest and make money.......DO IT. Every individual investor needs to find the style that fits their personality, risk tolerance, short and long term goals, etc, etc, etc. THE KEY is to find what works for you and do it over, and over, and over, and over, and over as long as it is producing the result you are aiming for. (ASSUMING that your "result you are aiming for" is realistic)

 

Here is my "PORTFOLIO MODEL" for all accounts managed. 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 12 stock portfolio.

STOCKS:

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

MUTUAL FUNDS:

SP500 Index Fund
Fidelity Contra Fund
Dodge & Cox Stock Fund

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. (65+). 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.

 

Three Eyes. You got a great buy on the Boeing stock. In just a few days it is now at $340+. when we get a trade deal with China some time over the next 3-12 months you will certainly have the potential to go to $370 to $400 per share......short term. NOT TOO SHABBY.

AND, I have been meaning to say on here on the topic of my Portfolio Model, above. This is a moderate aggressive to aggressive portfolio with the small concentration of stocks and the mix of stocks that I hold. Especially for my age group. (65+). 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. (I will add this language to the PORTFOLIO MODEL post that I repeat once in a while)

 

I would GUESS that we are in for a year end rally to some extent OR at worst a lingering market environment. I dont think we are going to see further BIG drops in stocks in general. KEEP IN MIND, that this is SIMPLY personal opinion based on NOTHING MORE than 40+ years of investing and following markets. I am also basing this view on the very good fundamentals we are seeing in businesses right now and the continued good earnings we just saw. I am adding in the stability of 10 year treasury yields at about 3%, the lack of inflation, and the recent FED comments. BUT, I dont own a crystal ball for short term news and other events.......yet.

I believe that info and analysis like that in the article below also tends to point toward the potential for a year end rally. BUT, in the end who knows. We continue to be in a SIGNIFICANTLY news and event driven era, and people and the media are very jumpy with the current political environment and the HUGE SCHISM that exists in the country which I expect is now the NORM going forward for the country and investors.

Opinion: Crowd psychology supports a year-end rally in stocks

https://www.marketwatch.com/story/crowd-psychology-supports-a-year-end-rally-in-stocks-2018-11-29

Last year around this time, stock investors were floating on Cloud 9. Not this year. In fact, some recent headlines have been gloomy. From a contrarian perspective, are things bad enough to be good? Look at these headlines:

CNN: “Morgan Stanley: We are in a bear market”

CNBC: “Bear market is mauling stocks, says Jim Cramer”

Forbes: “The bear continues to drive this stock market”

Almost exactly a year ago, I wrote about the correlation between financial headlines and stocks. The article included a 10-second test and concluded that: “The risk of a correction is getting closer.” While looking at headlines can be helpful, the focus of this article is actual investor-sentiment indicators, which allow us to gauge crowd psychology. The premise of contrarian analysis is that the market tends to do the opposite of what most people expect. The key question therefore is: What do most investors expect? Or, what will the market have to do to separate the majority of investors from their money?

Investor sentiment
The chart below plots the following six sentiment indicators against the S&P 500 SPX, +0.14% :


1. CBOE SKEW Index (5-day simple moving average, or SMA)

2. CBOE Equity Put/Call Ratio (5-day SMA)

3. CBOE Volatility Index VIX, +1.86%

4. Bullish exposure of National Association of Active Investment Managers (NAAIM)

5. Share of bullish advisers polled by Investors Intelligence (II)

6. Share of bullish investors polled by American Association of Individual Investors (AAIM)

The dashed gray and red lines allow for an easy comparison of current readings with the January/February 2018 and August/September 2015 corrections.

Conclusion
Investor sentiment, when combined with other indicators, allows for a short-term and a long-term conclusion:

1. Short-term: A large amount of investors is quite bearish, and a rally would burn those premature bears.

The Russell 2000 RUT, +0.05% Nasdaq 100 NDX, +0.08% and Dow Jones Industrial Average DJIA, -0.04% just carved out bullish divergences, which would allow for further gains (bullish Nasdaq divergence is shown here).

2. Longer-term: Although similarly bearish sentiment readings marked many of the lows seen in recent years, this correction might become deeper than any other correction we’ve seen in recent years.

This could translate into a year-end rally followed by a New Year hangover. This article includes a longer-term forward projection based on multiple indicators (including sentiment).

MY COMMENT:

HEY.....I even included some charts in this post and the article has some very light stuff in the conclusion that might be considered somewhat on the Technical side of things. But, regardless of where an article falls, if I think it might contain hints or potential for where we are headed I will put it up on here. Of course, we will still have to go through the December rate increase and the usual 2-5 day negativity, gnashing to teeth and "woe is me, the sky is falling" media coverage that always follows such an event. You would think there is no longer anyone on the planet that is not aware of the coming December rate increase and that it is TOTALLY baked in right now, but you never know. As usual, the language of the FED will also have a big impact heading to the end of the year short term.

BUT, being a LONG TERM INVESTOR, I remain fully invested as usual with no change in sight. One comment on LONG TERM investing. I do not equate being a long term investor to being a mindless buy and hold forever investor. If I can own a stock for five or ten or even twenty years or longer, great. But I do look at performance and financials of the companies I own at the minimum on an annual basis. And, when or if a company does not meet what I hope for I will sell it...decisively.... and put my money elsewhere. Examples of companies that I held in the past but have sold....IBM, MSFT, AMGN, GE, KO, PG, MO, etc, etc, etc. I would guess that my average holding time for a particular business is 5-10 years. Some of my longest holdings at the moment are NKE, COST, JNJ, HD, and 3M. Often it is management changes or failure that drives me to sell, although at the moment there are HUGE SEISMIC changes going through the economy based on the change over from a baby boomer dominated economy to a millennial dominated economy and the resulting changes in consumer taste and preference and habits.

One last comment on the content of this thread. The best way to describe what I post here is STREAM OF CONSCIOUSNESS. Thoughts of the day and moment. It is not like I am siting here and composing articles to post. Something catches my attention and I comment on it. I do scan a lot of news and other sources EVERY DAY, five different newspapers, many many financial sites, various magazines, many internet news sources and sites, etc, etc. I try too look at both liberal and conservative leaning sources and content as well as content that cuts across various age groups and business and market segments. In other words I try to be a very educated investor. ANYWAY, that is why obviously nothing on here is intended as investment advice to others.

 

I think you have these words mixed up Emmett. Sorry......but I did like you post.

conscious/ conscience
Both words have to do with the mind, but it's more important to be conscious, or awake, than conscience, or aware of right and wrong. Remain conscious while listening to your friend's moral dilemma so you can use your conscience to give good advice.

Conscious, pronounced "KAHN-shuhs," means being aware of yourself or the world around you. It also means being sensitive to something or being awake, not asleep or insensible:

Witnesses say he was bleeding profusely but conscious and talking. (Washington Post)

He was even horribly conscious of a slow pallor creeping over his face. (Bertram Mitford)

Conscience, pronounced "KAHN-shuhns," is a moral understanding, an inner feeling, of right and wrong. If you were a cartoon, your conscience would be that little angel on your shoulder, telling you the right thing to do (and to ignore the little devil on the other side). See the word in action:

They went out guiltily, as men whose consciences troubled them. (Richard Marsh)

Passports are not required, but a social conscience probably is. (New York Times)