The Long Term Investor

I looked back recently at my portfolio when this thread was started. Here is what I owned in all accounts when this thread started back about 4.5 years ago.

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

I have since over the course of this thread sold......3M, Johnson & Johnson, Boeing, and Chevron. I have added Microsoft and Tesla. I think all of these moves are reflected in this thread in more detail.....but....here is why my portfolio evolved in this way.

Boeing.....a total disaster in safety, business, and management. I bought this stock due to their TOTAL DOMINANCE as the worlds finest airplane manufacturer and one of only two such companies in the world. The 737 event and the company response to it showed that this company is NOTHING like the old Boeing. Unfortunately when they moved to Chicago they lost all focus on the management, engineering, and manufacturing practices that made them what they were in the past. In hindsight selling this company was totally the right move. This is a company that I will NOT consider again. It was not a super long term holding for me......I cant remember....but perhaps at most 1-2 years.

Johnson & Johnson.....this company was a long time portfolio holding for me. I generally avoid drug companies but the consumer conglomerate nature of this company attracted me to it as one of my BIG CAP holdings for many years. Lack of performance as well as a big push from the BABY POWDER legal disaster were the big factors in finally ditching this company. After holding it for a long time, it was just time to let it go. NOW.....I would not consider this company again.....too much litigation danger......and they have lost much of their consumer product focus.

3M......also another long term holding that was part of my BIG CAP strategy for many, many, years. I just lost confidence in their ability to perform so I sold them. I have no interest in ever owning this company again.

Chevron......I have dabbled in Chevron at least 4-5 times over the past 40-50 years. Usually I would see some article about how they are the best and most promising of the oil companies and that would put me on the path to evaluating and buying the stock. They never seem to last for long in my portfolio. In spite of all that I have seen written about them over many years....the stock never did anything for me.......even though I have owned it multiple times. NOW....oil companies are one of those categories that I WILL NOT OWN.....too much of a boom and bust industry

I have been very happy with my addition of Microsoft. This holding has done very nicely for me over the past years. A definite keeper. One of the best managed tech stocks there is. I want back into this company after selling all of my long term shares in about 2002. I was drawn back to this company by their dominance in the cloud......and as I said......by there superb management.

As to Tesla....they are my smallest holding....a bit over 1% of my total portfolio value. I like this company very much and am content to hold my small position for the long term and see how they do over the coming years. They fit my profile investment target.....a BIG CAP, DOMINANT, ICONIC PRODUCT company that is young enough that there is much room for growth going forward.

As to the funds....I sold off all shares of Dodge & Cox Stock Fund. I owned this fund since the 1990's. It was a good holding for a long time. I cant remember......but I am sure I sold it due to a loss of performance. Looking back I see that I was....probably.... not happy with the number of years that this fund was under-performing the SP500.

As a long term investor i try to not jump around too much. In hindsight I think all these moves were justified and I would NOT want to own any of these companies today. Selling these also tended to continue my move over the past 10-15 years to compress my stock holdings and move my focus onto companies that have better prospects moving into the "modern" future.

I am very satisfied with what I own right now and have no plans to make any changes. Amazon is the one company that I will keep an eye on for a year or two....based on management concerns.

I try to make decisive decisions when it is time to sell. I would rather be wrong about selling some stock than linger in a slowly losing company, I can always buy a stock back later if I am proven wrong. BUT....I have no desire or plans to re-buy any of the above. So I am very comfortable, years later, with the sell decisions that I made in the recent past.

You know.....sometimes you just have to sell a company even if it has been a long term holding for a good length of time. Just like....."life happens"......"business happens".....and companies evolve away from what made you buy them in the first place. So...over the past 4.5 years my portfolio model has become more concentrated on both the stock and the fund sides.

On a side note......Boeing, Johnson & Johnson, 3M, and Chevron are part of the SP500 and probably owned by Fidelity Contra fund, so I do still own them......indirectly. This is enough exposure for me to these companies in case they start to out-perform.

 

To continue the above.

As I move into older age......I am now 73......I expect that if I sell any individual stock holdings in the future....I will just put the proceeds into the SP500 Index Fund.

The stock side of my portfolio model has outperformed the fund side of many decades now....usually being about 60-62% of the total versus 38-40% for the funds. This is due to the OUT-PERFORMANCE of the stock side of the portfolio and the fact that I let winners run and do NOT balance.

BUT......with age I have to consider what would be easier and better for my heirs if I am not around.......or.....if I lose the ability to put much focus on my investing.

As usual......I have a long term plan for money and family.....something I have done all my life.

 

For my ENTIRE adult life I have lived in states with NO income tax. Texas...Washington state....and Texas. I recently saw that Washington state has now imposed a state Capital Gains tax and it was upheld by the Washington State Supreme Court as an "Excise Tax". How in the world a capital gains tax is not a property tax or an income tax is beyond me. I lived for many years in Washington and they were ALLAYS scheming to try to get an income tax. Looks like they finally found a way to do it. NO DOUBT....people that live there will be very surprised how this tax evolves over the coming years and captures way more of them than it was expected to when passed.

The court ruling just came out a few days ago.....BUT.....here is the first impact. It did not take long.....and I am sure there will be many more people and companies leaving the state.

Fisher Investments Relocating Headquarters from Washington State to Texas

https://www.prnewswire.com/news-rel...from-washington-state-to-texas-301781324.html

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

"PLANO, Texas, March 24, 2023 /PRNewswire/ -- "In honor of the Washington State Supreme Court's wisdom and knowledge of the law, and in recognition of whatever it may do next, Fisher Investments is immediately moving its headquarters from Washington State to Texas."

About Fisher Investments

Fisher Investments is an independent, fee-only investment adviser. As of 3/31/2022, Fisher Investments and its subsidiaries manage over $197 billion in assets globally—over $156 billion for private investors, $39 billion for institutional investors and $2 billion for US small to mid-sized business retirement plans.

Fisher Investments maintains four principal business groups: US Private Client, Institutional, Private Client International and 401(k) Solutions, which serve a global client base of diverse investors. Not all strategies are offered/sold in all jurisdictions.

Founder and Executive Chairman Ken Fisher wrote the Forbes "Portfolio Strategy" column from 1984 through 2016, making him the longest continuously running columnist in the magazine's history. In recent years, Ken's columns have run consistently in major media outlets around the world, spanning more countries and more volume than any other columnist of any type in history. Over the last decade, Ken has regularly appeared on CNBC, Fox Business, Fox News, CNN International, Yahoo Finance, Bloomberg TV, and numerous other financial news outlets. Ken has also authored 11 books, including four New York Times bestsellers on finance and investing. For more information on Fisher Investments, please visit www.fisherinvestments.com."

MY COMMENT

I like their style in this announcement....they simply lay it right on the line and are saying.....in your face Washington State. Their entire announcement was that one sentence.

I guess you get what your legislature.......causes you to deserve.

Here is more response to this "new" tax in Washington State.

https://www.geekwire.com/2023/seatt...-state-capital-gains-tax-that-targets-stocks/

 

As I used to hear in Washington......."No man's life, liberty, or property.....is safe while the legislature are in session".

 

Here is the week that starts tomorrow....Monday, March27, 2023.

SVB hearing, consumer confidence, quarter end: What to know this week

https://finance.yahoo.com/news/svb-...ter-end-what-to-know-this-week-160131519.html

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

"An eventful first quarter will come to a close this week with the shadow of a banking crisis hanging over a market that has remained resilient this year, with the Nasdaq sitting on a 12% year-to-date gain through Friday's close and the S&P 500 up 3.4% so far this year.

In the week ahead, the first of what will likely be several Congressional hearings on the events surrounding Silicon Valley Bank's collapse will be held Tuesday, when the Senate Banking Committee grills Federal Reserve vice chair for supervision Michael Barr and FDIC chair Martin Gruenberg, among others.

On the economic data front, reads on consumer confidence from The Conference Board and the University of Michigan will pick up some initial readings on how the current banking crisis is affecting average Americans.

Still, investors are likely to remain focused on how markets react to rolling concerns about banks worldwide with recent volatility and how wild price swings — particularly in the bond market — resolve as we reach the final day of the quarter on Friday.

"Next week's data calendar will be busy, but none of the releases are likely to offer markets direction until Friday," wrote John Canavan, lead U.S. analyst at Oxford Economics, in a note on Friday.

Data on personal income and spending, which also includes the latest read on the personal savings rate, for February will be released Friday morning, offering an overview of how U.S. consumers are spending and saving across categories.

On the earnings side this week, news flow will remain muted as we remain about two weeks out from first quarter earnings season ramping up, though investors will closely watch results from Micron Technology (MU) for updates on investment in the tech space, and results from Lululemon (LULU) and RH (RH) for additional checks on higher-end consumers.

Cal-Maine Foods (CALM), the biggest egg producer in the United States, will also likely get a few more eyeballs on its report, as investors track how the big swings in egg prices over the last few months translate to corporate results.

Last week, all three major averages rose more than 1% — though none logged a gain north of 2% — during a week that began with Swiss banking giants UBS (UBS) and Credit Suisse (CS) announcing an emergency merger finished, and investor concerns about the health of German banking giant Deutsche Bank (DB) bubbling up to cap the week.

As Yahoo Finance's Allie Canal reported Friday, Wall Street analysts appear both sanguine about the status of Deutsche Bank and, to some extent, frustrated by continued questions about what may be "the next" bank to fail during this crisis.

"We have no concerns about Deutsche’s viability or asset marks. To be crystal clear — Deutsche is NOT the next Credit Suisse," Stuart Graham and Leona Li, strategists at Autonomous, a subsidiary of AllianceBernstein, wrote in a new research note.

Data out late Friday also gave investors one of the strongest indications yet of just how much stress the U.S. banking system has come under, with the Federal Reserve's weekly report on bank balance sheets revealing small and mid-sized banks lost $120 billion during the week ending March 15.

"While the SVB-linked panic and lack of FDIC insurance on deposits above $250k explain most of the shifts last week, it is the surge in interest rates that is having the bigger effect," wrote Paul Ashworth, chief North America economist at Capital Economics, in a note on Friday.

"Since peaking almost exactly one year ago (remember the Fed’s first rate hike came at the mid-March 2022 meeting), deposits at all domestic banks have fallen by $663bn, or 3.9%, as money has flowed into money market funds and bonds," Ashworth added.

"Unless banks are willing to jack up their deposit rates to prevent that flight, they will eventually have to rein in the size of their loan portfolios, with the resulting squeeze on economic activity another reason to expect a recession is coming soon.""


"Economic calendar
Monday: Dallas Fed Manufacturing Survey, March (-10 expected, -13.5 previously)

Tuesday: FHFA Home Price Index, January; S&P Case-Shiller Home Price Index, January; The Conference Board Consumer Confidence, March (101.5 expected, 102.9 previously); Richmond Fed Manufacturing Index, March (-8 expected, -16 previously); Wholesale Inventories, February; Retail Inventories, February

Wednesday: MBA Mortgage Applications; Pending home sales, February (-2.3% expected, +8.1% previously)

Thursday: Initial jobless claims (196,000 expected, 191,000 previously); Fourth quarter GDP, third estimate (+2.7% expected, +2.7% previously)

Friday: Personal income, February (+0.3% expected, +0.6% previously); Personal spending, February (+0.3% expected, +1.8% previously); MNI Chicago PMI, March (43.9 expected, 43.6 previously); University of Michigan consumer sentiment, March (63.4 expected, 63.4 previously)"

"Earnings calendar
Monday: BioNTech (BNTX), Carnival Cruise (CCL)

Tuesday: Micron Technology (MU), Walgreen Boots Alliance (WBA), Luluemon (LULU), Cal-Maine Foods (CALM), Dave & Busters (DAVE), Jefferies (JEF), McCormick (MKC)

Wednesday: RH (RH), Cintas (CTAS), Conn's (CONN), Paychex (PAYX), Sportsman's Warehouse (SPWH), Verint Systems (VRNT)

Thursday: BlackBerry (BB), AngioDynamics (ANGO)

Friday: No notable companies set to report."

MY COMMENT

Little to nothing happening in the week to come. The Personal Spending and Personal Income data on Friday is going to be totally IGNORED in favor of continued banking fear mongering in the media. The Friday data even without the banking overlay is simply a snooze-fest.......and has minimal relevance to anyone, especially long term investors.

If you are a trader....ok. BUT.....anyone that is a fundamental investor owning a stock as a representation of a real business......is very FOOLISH to let this sort of economic data have ANY relevance. Personally.....I dont invest based on economic data.

We will see the end of the first quarter this coming Friday. It will be nice to move forward into the second quarter and a fresh start. It will be one more week of moving forward from the banking mini-crisis.

Once again as the quarter ends we will start to see the usual predictions from the "experts" regarding the dismal earnings to come in the weeks ahead. As usual......they WILL be wrong. No matter what they say the earnings WILL be better than they predict. There will be much fear mongering as to the impact of the banking drama on earnings....but of course......much of the first quarter was before anything happened regarding banks. SO.....no real impact.

All in all a very uneventful week ahead. I am sure we will get some choice words from Yellen and Powell or other FED members. As usual I will.....totally IGNORE them all......especially Janet Yellen. That lady is making a fool out of herself with her economic BLATHER. What I have heard out of her over the past 1.5 years makes me wonder how she ever managed to get appointed to be the FED Chair. Well not really........after all it is Washington DC.

Monday futures are up for all the averages.....but we all know....that the futures are irrelevant and more often than not dont have any predictive value as to the REAL results that we will see tomorrow by the close....for better or worse.

 

As to my take on the week. BARING some new bank disaster....to ramp up the psychological fear.....we should have a "probability" for a good week in the general averages. I see it as another week in the new BULL MARKET....that has been happening since last July.

Through most of the time period July 2022 to December 2022......this was a typical STEALTH bull market. I first talked about it using the results of the SP500 starting in July 2022 as an indicator that the worst was over and stocks were moving to the positive. The first three months of 2023 have confirmed what we were seeing in the second half of 2022......a new BULL MARKET.

In my view this is totally expected....considering that it is obvious that the FED is nearing their rate hike target and will soon pause.

My view is that the banking event has made the BULL MARKET even more of a PROBABILITY. The FED is now somewhat MUZZLED and will back off from their constant TRASHING of the markets. I view it as a SURE THING that we are looking at ONLY one to two more rate hikes by the FED.....and at most.....they will be 0.25%. So "perversely"......or perhaps you would prefer the word "rationally".....a banking crisis is going to help lead to a nice bull market rally in stocks.

 

Strathmore and rg7803.

Good to see you guys sharing information that is relevant to EU investors on here.

 

I have seen some stories lately that Twitter is worth about $20BILLION compared to what MUSK paid for it.

Ok.....this is peanuts for him. I find two things interesting in this little story.

First......all the Twitter doom and gloom has not come true. The company appears to functioning as usual for users of the service. The stories regarding Twitter were classic politics and a classic example of the fickle financial media showing its BIAS. A little HISSY-FIT over Musk not toeing the line on his beliefs and comments.

Second.....the company now has somewhere from 60% to 75% less employees. This shows how BLOATED these tech companies were and are with employees, ridiculous perks, crazy benefits, etc, etc, etc. Where are the boards of these companies? The money being spent of this EXCESSIVE stuff is basically stealing from shareholders. Imagine how much more earnings would have been if these companies operated on a lean and mean basis. Imagine how much more productive they would be. Imagine how much more value would have been created for shareholders.

No one flinches when this type of EXCESS happens with employees. That is a HUGE weakness of these companies.....their boards are even more of a rubber stamp than most companies. Every CEO and board just LOVES to talk about creating shareholder value when it comes to gutting various business segments from companies these days. BUT.....on the other hand they allow shareholders to be screwed by condoning and even promoting EXCESS employees and incompetent employees.....not to mention the ridiculous perks provided to employees.

 

Siting here and watching the nice open today. We have been seeing this sort of open for a few weeks now.

Apparently the banking fear is dissipating. This event was an interesting exercise in psychology and how something can cause fear and panic to spread in a rampant fashion through the investment community. What could have been does not matter. The reality is that a couple of banks that were EXTREMELY focused on one type of business (tech) failed due to incompetence, management malpractice, and a good old fashioned bank run. Add in a failing Swiss bank that had been in trouble for about 2 years and that is about it.

Actually it is a good thing that this event happened. It was a wake up call for the banking business to tighten things up. It was a wake up call to the FED regulators and the other banking regulators. Obviously they had not been doing their jobs in allowing this stuff to get out of control. NOT that I think much will change. There is way too much politics in this business and that will not ever change.

In the end we....."should"....come out of this with a stronger banking community. Emphasis on the word "should"....I do not underestimate the ability of the regulators and the banks to simply wait this out and sweep it back under the rug.

 

Over the long term this WILL be a significant issue for investors and business.......not to mention the impact on culture and society which I will not mention on here since this thread is focused on investing and business.

Americans Pull Back From Values That Once Defined U.S., WSJ-NORC Poll Finds
Patriotism, religion and hard work hold less importance

https://www.wsj.com/articles/americ...once-defined-u-s-wsj-norc-poll-finds-df8534cd

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

"Patriotism, religious faith, having children and other priorities that helped define the national character for generations are receding in importance to Americans, a new Wall Street Journal-NORC poll finds.

WSJ/NORC Poll March 2023

The survey, conducted with NORC at the University of Chicago, a nonpartisan research organization, also finds the country sharply divided by political party over social trends such as the push for racial diversity in businesses and the use of gender-neutral pronouns.

Some 38% of respondents said patriotism was very important to them, and 39% said religion was very important. That was down sharply from when the Journal first asked the question in 1998, when 70% deemed patriotism to be very important, and 62% said so of religion.

The share of Americans who say that having children, involvement in their community and hard work are very important values has also fallen. Tolerance for others, deemed very important by 80% of Americans as recently as four years ago, has fallen to 58% since then.

Bill McInturff, a pollster who worked on a previous Journal survey that measured these attitudesalong with NBC News, said that “these differences are so dramatic, it paints a new and surprising portrait of a changing America.’’ He surmised that “perhaps the toll of our political division, Covid and the lowest economic confidence in decades is having a startling effect on our core values.’’

A number of events have shaken and in some ways fractured the nation since the Journal first asked about unifying values, among them the Sept. 11, 2001, terrorist attacks, the financial crisis of 2008 and subsequent economic downturn and the rise of former President Donald Trump.

The only priority the Journal tested that has grown in importance in the past quarter-century is money, which was cited as very important by 43% in the new survey, up from 31% in 1998.

Aside from money, all age groups, including seniors, attached far less importance to these priorities and values than when pollsters asked about them in 1998 and 2019. But younger Americans in particular place low importance on these values, many of which were central to the lives of their parents.

Percent who say these values are ‘very important’ to them, personally, shown among the youngest and oldest age groups

Some 23% of adults under age 30 said in the new survey that patriotism was very important to them personally, compared with 59% of seniors ages 65 or older. Some 31% of younger respondents said that religion was very important to them, compared with 55% among seniors.

Only 23% of adults under age 30 said that having children was very important.

To Kevin Williams, a commercial and residential painter in Bend, Ore., many of these values are linked. Mr. Williams, 33 years old, said he thought that patriotism is declining as a civic value in tandem with rising individualism, a sense of entitlement among many people and a decline in community involvement, possibly because of people focusing on their own racial or cultural backgrounds rather than what Americans have in common.

“I think patriotism encompasses being part of your community and helping other Americans,’’ said Mr. Williams, who said he coaches youth sports and volunteers with a group that provides security at protests and rallies.

Mr. Williams said that, as a middle-school student at the time of the Sept. 11, 2001, attacks, he knew then that he would join the military. “I just felt that I wanted to do my part to protect my country,’’ said Mr. Williams, who supported former President Donald Trump’s two White House campaigns. He eventually served four years in the Marines.

Poll respondents Janet Boyer, Kevin Williams and Elana Reiser.Photo: Ron Boyer; Kevin Williams; Michael J. Epstein
To Janet Boyer, a former Pentecostal minister who lives in Cumberland Township in Southwestern Pennsylvania’s coal country, patriotism has taken on a political sheen and is no longer important to her. “For me, patriotism has turned into right-wing nationalism,’’ said Ms. Boyer, who backed President Biden in 2020.

Political divisiveness also weighs on her. “Back in the day, Republicans and Democrats had a sense of deference to one another,’’ said Ms. Boyer, 52, a self-help author and jewelry designer. “They didn’t act like they were in a schoolyard trying to be vengeful and reactive.”

Asked what values unite the nation, Elana Reiser, 43, of Brookhaven, N.Y., pointed to economic opportunity. “No matter your starting point, you can always become successful,’’ she said.

Some 21% in the survey said that America stands above all other countries in the world, a view that some call American exceptionalism. Half said that America is one of the greatest countries, along with some others. The share who said other countries are better than the U.S. rose to 27%, up from 19% when the same question was asked in 2016.

Ms. Reiser said that, as a university math teacher, she knows that other countries rank higher on tests of math performance. She said longer vacations and maternal leaves in some European countries mean they have a better quality of life. “In America, you basically have to work your whole life, and you don’t get breaks,’’ she said.

Jennifer Benz, vice president of public affairs and media research at NORC, said that views in the survey might have been colored by the downbeat economic outlook that the poll also found. “People are just sort of down on everything about the country,” she said.

The survey found sharp differences by political party on social issues that have gained prominence.

It asked whether society had gone far enough—or had gone too far—when it comes to businesses taking steps to promote racial and ethnic diversity. Just over half of Republicans said society had gone too far, compared with 7% of Democrats. Some 61% of Democrats said diversity efforts hadn’t gone far enough, compared with 14% of Republicans.

Three quarters of Republicans said society had gone too far in accepting people who are transgender, while 56% of Democrats said society hadn’t gone far enough.

Overall, 63% of people in the survey said that companies shouldn’t take public stands on social and political issues, while 36% of people said companies should take such stands. Among Republicans, 80% opposed companies doing so, while 56% of Democrats favored the idea.

Half of people in the survey said they didn’t like the practice of being asked to use gender-neutral pronouns, such as “they’’ or “them,’’ when addressing another person, compared with 18% who viewed it favorably. Some 30% of respondents under age 35 viewed the practice favorably, compared with 9% of seniors.

The Journal-NORC survey polled 1,019 people from March 1-13, mostly online. The margin of error was plus or minus 4.1 percentage points.

Differences in how the new poll and prior surveys were conducted might account for a small portion of the reported decline in importance of the American values tested. Prior surveys, conducted for the Journal and NBC News, used live interviewers to reach people by phone."

MY COMMENT

See the actual article for the charts and data....they do not post properly.

Regardless of the political differences that this poll found.......the REAL critical issue here is going to be how this change in culture, society, and people in general is going to impact the business and investing world. This is the ACTUAL......."new normal".

As these types of cultural changes escalate.......there will be much disruption to society and all aspects of society. AND....no doubt......these changes will ESCALATE and become even more significant. People that are under 40 right now are in for a VERY strange trip over their lives.

The BIG DANGER for investors is how this stuff will impact business and economics. Somehow I dont think it will be good. At the extreme I can see the destruction of free market capitalism and the current system of business.

As I have said on here a few times....once the system is broken.....it will NOT be possible to put it back together. Imagine that we did not have the stock market system that we have. How would the "regular person" be able to have any shot at generating wealth?

 

I like this little article.

Charley Ellis: six nuggets of investment wisdom

https://www.evidenceinvestor.com/charley-ellis-six-nuggets-of-investment-wisdom/

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

"Charley Ellis has been a voice of common sense in the world of investing for more than 50 years. His book, Winning the Loser’s Game, which explains why low-cost, buy-and-hold indexing is the rational choice for all investors, has become a classic. He’s now aged 85 but still working.

Charley recently spoke to Cameron Passmore and Benjamin Felix at the Rational Reminder podcast, and we’d strongly urge you to listen to the whole episode.

The interview contains a wealth of wisdom about investing, but here are six lessons that caught our attention."

1. Success is all about minimising mistakes

“A loser’s game is any competitive activity, where the outcome is not controlled by the winner, but it’s actually controlled by the loser. Golf is a good example. People that are really good at golf will shoot less than par, by two or three strokes on a regular basis. A lot of other people are proud to be able to shoot 90. There are some people who’ve never broken a 100. Well, the difference between the two groups is the mistakes of the people who’ve never broken a 100 and make all the time.

“Another loser’s game is tennis. If you look at your game, or at least my game, how many times do you win a stroke, instead of hitting it at the net, hitting it out of bounds, laying it up so easily for the other person hit it back, that you’ve essentially forced yourself into a loss? If you could cut back on the number of mistakes and let the other guy increased the number of mistakes he made, you’ll come out the winner of a loser’s game.

“That’s what investing is all about. Most of the activity that most of us spend our time engaged in, in investing actually doesn’t help. It actually does harm. Our long-term results are impoverished by the mistakes that we’ve made along the way.

“In investment management, if you could just reduce the number of mistakes you’ve made, you would come out as a winner. The easy summary of all that is, if you index, you won’t be making any mistakes. You have to choose the right index, that’s fair. If you index, you won’t be timing the market, you won’t be trading too much, you will get excited about something you just heard from a friend of yours who heard from a friend of his that looks like it might be a really great idea.”

2. Active managers do more harm than good

“It’s gotten harder and harder and harder to be an active manager, and successful at the same time. More and more people have accepted indexing is a perfectly rational way of taking advantage of the realities of the market, then not getting suckered into doing things that actually do you harm. It does take a sense of humour, and it does take an appreciation for history to realise. I know you’re wonderful. I know you’re terrifically talented. I know you work very, very hard. But you’re actually not helping yourself, or your clients.

“The perception is, you’ve got brilliantly talented people working hard for you all the time, that’s true. That perception is that they’re going to be able to make a real difference to your economic situation. That’s very unlikely to be true. What’s very, very likely to be true is you’re going to make a wonderful difference to their economic situation.”

3. Outperformance gets harder as aggregate skill increases

“Back in the 60s, there might have been as many as 5,000 people worldwide, involved in active investing. More than half of them would have been in the US. The next largest group would have been in the UK, and then have been sprinkled with people, some in Hong Kong, some elsewhere, trying to figure out what they could do to get a comparative advantage.

“Well, today that 5,000 has been increased to something like 2 million, 2 million people does transform the nature of the market, and anything. Okay, so participants are really good. They also have terrific educations. You have MBAs all over the place today. That was a very rare thing years ago. You have PhDs, you have MDs. You have people who’ve got all kinds of skills in there competing all the time. The intellectual level has been raised and raised and raised. Then you think, “Well, what kind of equipment do they have?” We had slide rules. What do you guys have?

“Well, we have more computing power in our pocket than an IBM 360… Everybody’s got a Bloomberg terminal. Everybody’s got Internet access. Everybody’s got terrific computing power. Everybody’s part of this fabulous worldwide network of information from all the major securities firms, with branches in all the major economies around the world, piling information into the system and making it available to everybody who wants to compete.”

4. Indexing is the rational choice for everyone

“I don’t know of anyone that I would say should not (index). It gives you a couple of examples. Most of us, who knew him at all, had the highest regard for David Swensen, who was the Chief Investment Officer for Yale and turned into one of the truly outstanding records of achievement. It’d be very hard to make an argument, David Swensen should have been indexing. He started, when he first took on the responsibility, he had most of the fund in indexing. Then gradually found ways that active investing of the kind that he was particularly good at doing could make a justified case that you’ll get an incremental return by not indexing, but by being active.

“Some of that was portfolio structure. He was not exactly the first, but one of the first to consider hedge funds. He’s one of the first to get involved in private equity. He was one of the first to get involved in venture capital. He was one of the first to get involved in creative real estate. That is a man who was extraordinarily bright, a rigorous thinker, and very disciplined in everything he did. He found that there were places he could get a competitive advantage structurally because parts of the market weren’t being all that well attended. Big change from then to today.

“Today, many other institutions are doing hedge funds and private equity and real estate and international and all kinds of other things like that. At the time, he was able to create quite a significant comparative advantage. The second thing, all of us who knew David had to stand in awe at his skill. He was awfully good at selecting individual managers. He had over 100 different investment managers. If you looked at this list, I promise you, you would not have been able to say, “I know 20 names on this list.” Most people couldn’t come close. Most people would say, “I know two or three names, but the rest I’ve never actually heard of.”

“Candidly, you’ve got better things to do in terms of trying to figure out, what kind of investing is best for your organisation, or for you as an individual? Defining the purpose of the investing is for most people where they could really do a lot of good for themselves by being very active about that part of investment management.”

5. Disciplined investing is like raising teenage children

“You got to recognise… all of us are always our own worst enemies. This is not because we’re mean-spirited people. It’s just that we’re human beings and we tend to make mistakes.

“How people feel is a very important part of the reality. It’s not how they feel today. It’s how will they feel when it doesn’t look like things are going the right way. That’s a little bit like the secret to raising teenage children, is to be able to take a long-term view, if you’re going to get upset about what they did, or didn’t do in a particular day, you’re not going to have an easy time being a parent. If you’re able to keep in mind, “No, no, no. By the time they’re 30, they’re going to be people I really like a lot,” you’ll be fine.

“I think the main thing (investors can do to manage their behaviour) is study the markets enough so that you realise how skilful the price setting really is, and how hard it is for anybody to do better and say, “I’ll take what’s available.”

6. The most important thing is to know yourself

“The first and most important thing any of us can do as individuals, or as institutions, is to figure out what is it about us that’s different? Then if you use individuals in as you’d say, playing field for a second, we differ a lot in terms of our age, our ability to save, how much we have saved, our attitude towards gifts to members of our family and inheritance. We differ in terms of our desires to accumulate for philanthropic purposes. We differ in terms of risk tolerance, or comfort. I mean, short-term risk tolerance and long-term risk tolerance, both. We differ substantially in how much we enjoy investing, and whether we’re interested in it or not. Are we willing to spend a lot of time trying to figure ourselves out what makes us tick? What’s our psychological weakness? What do we have to be protecting ourselves against? All sorts of things like that.

“When you get all of those together, it’s my own personal, simple summary, we’re all unique. Each one of us is different. You and I wear eyeglasses, but I’m sure that your prescription for your eyeglasses is a little different from mine. You probably wear a different size shoes than I do. Your family likes you to wear certain colours more than my family likes me to wear. One after another after another after another differentiation. We are wonderfully different. If we just have a little bit of reverence and appreciation for the fact that we’re all different, and then find out what’s right for us and stay focused on what’s right for us, I think we’ll be very, very well advanced.

If you could find out what makes you particular, you could probably do a great job starting from there to build an investment program that’s really right for you and your family.

“I’m an art history major, but I had friends who were engineers. They all told me the same thing. Most of engineering is learning how to figure out and define the problem. Solving the problem is not very hard. Most of us candidly, with regard to investing, have not figured out what is the problem.”"

MY COMMENT

Some good reasons to focus on Index Investing in this article.

I believe number 6....."know yourself".....is the most critical. In the "old days" brokers were required to "know" their customer. Now with all the self directed investing......the vast majority of of people operating as their own investment advisor.....have no clue as to themselves. They trade, they market time, they panic and jump in and out of the markets at exactly the wrong times, they buy something based on rumor, fake news and hear behavior. They are victims of classic investing human behavior. At least with long term Index Investing ALL of this stuff is taken out of the equation.....assuming that a rational Index is chosen......something like the SP500.

YEP......I own some individual stocks......but i believe for most people with a family, kids, a job, and all the distractions and obligations of modern life.....rational Index investing will produce the best long term result.

 

I see that the averages....especially the NASDAQ....have now backed off. Hopefully the normal mid morning dip. We will all have to wait till the close to see.

 

The market today.

Stock market news today: Stocks, bank stocks rise after SVB sale

https://finance.yahoo.com/news/stock-market-news-today-live-updates-march-27-2023-121320839.html

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

"U.S. stocks rose Monday, while bank stocks also moved upward after North Carolina-based First Citizens (FCNCA) bank agreed to buy most of Silicon Valley Bank.

The S&P 500 (^GSPC) added 0.6% and the Dow Jones Industrial Average (^DJI) gained 0.9%. The Nasdaq Composite (^IXIC) edged up by 0.3%.

Bond yields got a bounce. The yield on the benchmark 10-year U.S. Treasury note rose to 3.5% Monday morning. WTI crude oil was up $70 a barrel.

Stocks ended a volatile week with gains on Friday, in a week that saw the Federal Reserve raise rates by 0.25%, while pressures in the U.S. and European banking sectors remained in focus for investors. Shares of Deutsche Bank (DB) came under heat Friday after the costs of insuring the bank against a credit default spiked overnight. The major stock market indexes all tallied a winning week in the end, with the Dow Jones average gaining 1.2%, the S&P 500 rising 1.4%, and the Nasdaq Composite closing up 1.7%.

Banks will dominate the headlines again this week with the earnings and economic calendars in light. The Senate Banking Committee will hold a hearing on bank failures on Tuesday, with the witness list including FDIC Chairman Martin Gruenberg, Federal Reserve Vice Chairman Michael Barr, and Treasury Undersecretary Nellie Liang.

“Looking forward, the banking sector will clearly set the scene this week as we approach the month-end on Thursday. The data will be a bit secondary as it'll be too early to judge any impact from the mini crisis so far,” Jim Reid and colleagues at Deutsche Bank wrote in a note to clients.

Bank sentiment gained momentum Monday morning. Regional bank stocks trading higher Monday morning include First Republic Bank (FRC), PacWest Bancorp (PACW), Western Alliance Bancorporation (WAL) , Zions Bancorporation (ZION), and Regions Financial (RF).

Wall Street heavyweights led by JPMorgan (JPM) have been trying for more than a week to raise capital for First Republic, which included a $30 billion cash lifeline amid the failures of regional lenders Silicon Valley Bank and Signature Bank.

Meanwhile, First Citizens Bank entered into an agreement to buy all of Silicon Valley Bank’s loans and deposits, according to a Federal Deposit Insurance Corporation (FDIC) announcement. The North Carolina-based lender’s assets will nearly double following the acquisition. The 17 branches once belonging to Silicon Valley Bank will now open as First Citizens Bank branches beginning Monday. Shares of First Citizens Bank (FCNCA) rose more than 46% Monday morning.

Big bank stocks also gained, including Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C).

On the economic front, a pulse check on the U.S. consumer will come from the Conference Board's consumer confidence measure on Wednesday. Then, at the end of the week, the most important datapoint and the Fed's preferred inflation gauge, the PCE, is set for release Friday. Economists expect personal income in February to come in at 0.3%, slightly lower than January’s read of 0.6%. Personal spending its expected to reach 0.3%, lower than 1.8% January’s reading."

MY COMMENT

Not much happening this week. The next BIG event will be earnings which will start in a few weeks down the road after we get done with the first quarter. Till than.....the markets will be relatively free of drama and bling.

I like the use of the term......MINI-CRISIS......in the above article to describe the banking event that we have seen over the past couple of weeks. Right up my alley.

SO....at the moment....NOTHING happening with the FED for another 4-5 weeks. NOTHING happening with earnings for another 2-4 weeks or more depending on the company.

A LULL for investors.....but.....somehow I dont think it will be boring. It never is when humans are involved.

 

Besides shows this Friday and Saturday......the big event for me this week will happen on Tuesday.

One of my paintings is going to have a full page color image in a new book that is being released right now. A few weeks ago when I was meeting at a museum to start the process of doing an exhibition on one of my artists.......I got an advance look at the book.

A very nice book with many color images. The first book that I know of on this particular deceased artist. I was able to skim through the book.

Like many art books the initial run of this book will be small....probably below 1000 copies. It is likely that it will sell out quickly. There are many people that collect art books. Many of them are low issue and over time they go up significantly in value due to scarcity.

 

OH NO......say it is not true.....the NADAQ has now gone RED.

 

I just did my first look at my accounts today. Definitely in the red so far....by a moderate amount. It is not a happy day at the moment for the BIG CAP TECH stocks......at least those that I happen to own. I have only THREE stocks UP today......TSLA, HON, and COST. Notice the absence of my tech stocks in that list.

BUT the day is young........around and around we go....where we stop nobody knows.

 

Looks like now that the bank issues are resolving and gong to fade away.....the DOW is back in the green today....as was the SP500. The BIG CAP TECH stocks seemed to love the bank crisis.....but not today.

I ended the day with a single stock UP today.....TSLA. Everything else was in the red. Of course...I got beat by the SP500 by 0.78% today.

I STILL have high hopes for this week and will happily move on to tomorrow.....not that I have any choice anyway.

 

Here is the sad end for SVB.....pretty much summed up in these two articles.

Why First Citizens got a $16.5 billion discount for taking over Silicon Valley Bank
To get a deal done, government regulators agreed to a series of concessions.

https://finance.yahoo.com/news/why-...aking-over-silicon-valley-bank-154218153.html

and

Fed's Barr to Congress: SVB's failure is 'textbook case of mismanagement'

https://finance.yahoo.com/news/feds...textbook-case-of-mismanagement-175627335.html