A nice MODERATE gain for me today. I also got in a good beat on the SP500 by....0.67%. Five of my seven stocks were UP today. My down stocks today were.....AAPL and GOOGL. As I mentioned earlier I sold all shares of HON today. My list of stocks is shrinking. I now have the smallest number of stocks that I have had in the last 20-30 years.....minimum. Back in the 1990's and into the 2000's I seemed to always have about 15-20 stocks. Over the past 10-15 years I usually had at least 10-15 stocks. Now.....only seven. I dont seem to have much that is calling to me to buy it at the moment. So I will just stick with my list of seven.
HERE is my current PORTFOLIO MODEL........after selling all shares of HON today. 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 60% of the total portfolio and the fund side at about 40% 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 Microsoft Nvidia 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. (73). 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."
As to HON....yes....I sold all shares in both of my brokerage accounts and in all the accounts that I manage. In my siblings BIG account she will use some of the HON proceeds to fund a loan to a family member for a significant.....$160,000....home remodel. She is basically doing a refinance for them.....a new mortgage......to include the remodel money and their prior mortgage balance. She holds their prior mortgage. The term will be 40 years and the interest rate will be 4%. She likes the income she gets from the two family mortgages that she holds for my kids. She basically plows ALL the mortgage income right back into the stock market.......monthly.......by investing it into her SP500 Index Fund. The remainder of her HON proceeds will also go into the SP500 Index Fund. Her account make-up is identical to mine.
YEP....it all depends on how you choose to look at it. Weekly Market Pulse: Some Things To Be Thankful For https://alhambrapartners.com/2023/11/26/weekly-market-pulse-some-things-to-be-thankful-for/ (BOLD is my opinion OR what I consider important content) "We have a lot to be thankful for here in the US of A. It is sometimes hard to remember that while being constantly bombarded by negative news, about the economy and the country more generally. I don’t like to comment about politics – I have to watch my blood pressure these days – so I’ll stick to economics and despite the problems we have, there is a lot to be thankful for. The current data reflects an economy still trying to rebalance from the COVID shock; the goods/manufacturing side still working off a hangover from the COVID stuck-at-home buying spree and the services side continuing to recover. The result is an economy growing roughly at trend of 2% and I’d say that’s pretty amazing given the enormity of the COVID shock. But I’ve been writing and talking about that rebalancing for over a year so it isn’t a surprise. And frankly, it wasn’t that hard to figure out, that the goods boom wouldn’t last and neither would the services bust. COVID and the response to it had a dramatic impact on consumption and balance sheets. The trends in consumption were already in place – goods consumption has been rising relative to services since 2009 – while the changes to balance sheets were more profound. Household and corporate balance sheets improved – dramatically – while government finances deteriorated – dramatically. That’s why we’ve been consistently saying, for over a year, that recession isn’t imminent. That could change but it hasn’t so far and markets certainly aren’t predicting it right now. Everyone knows the bad things going on right now. Our government makes drunken sailors look prudent (and that from an ex-drunken sailor), there are multiple wars going on, China isn’t to be trusted, our own political process has turned into a circus, prices are still rising, mortgage rates are through the roof, rents are crazy, and all commercial real estate is on the verge of foreclosure. But there are some good things going on if you take the time to look: Real disposable personal income (adjusted for inflation, after tax) is up 3.5% over the last year Real personal consumption expenditures are up 2.4% over the last year As of Q3 2023, the delinquency rate on all loans at US commercial banks was just 1.33%. The average since 1985 is 3.27%. As of Q3 2023, the delinquency rate on single-family mortgages was just 1.7%, down from 2.3% prior to COVID Light vehicle sales (cars and trucks) are up 14.3% over the last year Consumer prices are up 3.2% over the last year. That’s down from a 9.1% annual rate a mere 17 months ago Producer prices are only up 1.3% over the last year. Corporate margins are fine. Import and export prices are both down over the last year (2% and 4.9% respectively) Median sales price of a new home is down 12.3% over the last year Single-family new home sales are up 33.9% over last year New claims for unemployment are essentially unchanged over the last year at generationally low levels The economy has added nearly 3 million new jobs over the last year The unemployment rate is 3.9%, up from 3.4% in April which was the lowest since 1969 The labor force participation rate has risen from 62.2% to 62.7% over the last year Real average hourly earnings are up 0.8% over the last year Household debt service payments as a % of disposable personal income are less than 10% Mortgage debt service payments as a % of disposable personal income are less than 4% Consumer debt service payments as a % of disposable personal income are less than 6% I’m not saying that we don’t have our problems because, of course, we do. There are always parts of the economy that are undergoing change, sometimes good, sometimes bad. That’s just how economies work. You can’t look at only one side of the ledger and expect to get a clear view of the world. And that applies to those who always look for clouds as well as those who see only silver linings." MY COMMENT We are bombarded.....daily.....with the negative. The positive is never mentioned. Even if it is no one pays attention. Fortunately the markets do notice over the long term and reflect the TRUTH.
Another simple....but true....little article. The “Art” of Market Timing https://ritholtz.com/2023/11/the-art-of-market-timing/ (BOLD is my opinion OR what I consider important content) "This weekend Jeff Sommer discussed a DFA research paper on market timing; both are well worth your time to read. The broad strokes are: Market timing is extremely difficult, very few people (if any) do it consistently well. Not only are the odds stacked against you, but very often systems that have successfully timed the market have been simply lucky, and do not succeed in out-of-sample tests. This is before we get to the issue of capital gains taxes, which create a hurdle of (minimum) 20% on those pesky profits just to get to breakeven. Let’s add some color to the discussion on timing itself and add a little nuance.1 I’ve had some pretty good market timing calls in my career, and I attribute my success in that space to three factors: 1) Instinct; 2) Low Stakes; 3) Luck. Let’s delve into these to see if they apply to your own investing and trading: Instinct: Malcolm Gladwell’s Blink: The Power of Thinking Without Thinking, discusses the strengths and capabilities of the “adaptive unconscious.” Gladwell credits success in many fields to rapid, automatic judgments that come from years of practice. After enough reps, it becomes second nature for the brain to quickly recognize patterns and regularities to make good snap judgments.2 Color me skeptical. There are many problems with instinct, but two stand out in particular: First, markets evolve over time; that “market sense” traders develop can be rendered fallible as the financial world changes. Second, being a “Contrarian” requires you to fight the crowd — and you as a social primate desperately want to stay with your tribe or social group. Catching the exact right moment when the crowd is mostly wrong goes against all of your instincts as a social primate.3 Imagine a private placement memorandum seeking to raise money based on “decades of honed instincts” as an investment model. It’s utterly laughable. Low Stakes: The most successful market timers are often those people who do not have actual assets at risk. The less it matters, the easier it is to be bold and outside of the mainstream.4 Newsletter writers are notorious for making big calls. But when they get market timing wrong, they lose subscribers. When you get it wrong, it crushes your retirement plans. Hence, the less it matters, the less actual capital is on the line, the easier it is to make those bold calls. My own track record at making big calls is pretty damned good, but none of our clients wants me slinging around their retirement monies based on my gut instinct. I sure as hell don’t want to either. Luck: I put luck last because it’s so often overlooked. Consider what you would have had to do over the past 2 decades to be a successful timer. The dotcom top, the double bottom in Oct 02-March 03; the highs in 2007, the lows 2009. Staying long through the 60-day 34% drop during the 2020 pandemic; getting out of the market ahead of the 2022 rate hiking cycle; and getting back in October 2022 for the next bull leg. I have dozens of examples of traders who made the right call for some of the above for all the wrong reasons. It is little wonder these folks are inconsistent. If you want to have a small percentage of your portfolio in a cowboy account where you can swing in and out without affecting your real money, sure, why not¡ But with your core portfolio — the capital that really matters — the best thing you can do is leave it alone to compound over time." MY COMMENT Same message over and over and over. The rules for investing success never change......even if people refuse to believe the rules apply to them.
Seems like a "normal" market today. I noticed that about 10:30 East Coast time.......the averages turned positive. A fairly typical event lately. The markets just want to go up....that is the current market BIAS. We are still mildly positive in the averages.....with the SP500 and the NASDAQ.....in the green but not wildly so. A good start to the day........IF......we can build from here. The final few days of November. It has been an EPIC month for investors as well as a very good year. Most of the....TRAUMA.....of 2022 is now forgotten.
I am now siting and starting to do my December bills. I still do them by hand with checks....for the most part. I dont trust automatic bill pay. I also dont want to deal with all the issues that come with automatic bill pay......if you decide to cancel some service......and they continue to charge your account or card for an extra month or two. I dont want companies to have my checking account info or credit card info. I saw an example of this lately with our Water District. They fined about 500 people $500 each for watering more than the two days allowed or watering on the wrong days. The accounts with automatic checking debit or automatic credit card.....they simply took the money out.
Of course.....to avoid doing the bills for as long as possible I have been playing with some numbers. We now have four horses....we lost our oldest horse about six months ago. Since Elon Musk bought the property where we boarded our horses we had to line up a new boarding facility. The old board.....$1300 per month. The new board....$2600 per month. BUMMER. Fortunately I was able to adjust our budget.....so we will not see any real impact. It did cut into our off budget...."slush fund".
AND....in relation to the above.....and to violate my own privacy......( who has any these days anyway).....our income for 2024 will be $185,000. This is all from Social Security and our income annuities. We live very well on this since we have no debt, no car payments, and no mortgage. Surprisingly our property taxes just went down by $2500. A very nice little bonus......but the horses will eat up that money. That is how it is....you gain money as one door opens.....and at the same time it goes out the other door. Perhaps I need to do some Feng Shui adjustments to our house.....to keep the money rolling in and not going out the door. Actually.....our house is pretty good when it comes to the principles of Feng Shui.
I was recently going through some of my old business and tax records. I was a SMALL BUSINESS.....sole owner....from 1984 to 1999. I was also a business owner from 1978 to 1984 but I had partners. Twenty two years all together. I retired in 1999. I have old personal income tax returns going back to 1984. I wish I had all the returns going back to my first adult tax return....but I disposed of the earlier returns long ago. I dont need those old returns.....but it would be interesting to look back at those days in my personal and financial life. I thought it might be interesting to......."voyeurs"..... on here to see what I was making as a small business owner in the 1980's and 1990's. So Here is my basic income data from my tax returns. All my taxes were done as an individual....my business was simply a sole proprietorship.....not a corporation or some other form. There are no big SHOCKING secrets here......so I dont care about posting this info. ADJUSTED GROSS INCOME 1984 $237,000 1985 $108,000 1986 $80,000 1987 $229,000 1988 $167,000 1989 $587,000 1990 $254,000 1991 $453,000 1992 $518,000 1993 $266,000 1994 $143,000 1995 $145,000 1996 $288,000 1997 $183,000 1998 $1,172,000 1999 $237,000 I am always amazed at what we were able to do back in those days as a SMALL BUSINESS when I look back. In the 1980's and 1990's this was a very high income level. Even the lower years....were nice income....for back in the old days. We always saved well and invested as I have described on here. That allowed me to sell my business and retire early. We never had much personal debt and from about 1986 forward had no mortgage. This allowed us to personally finance the business overhead from personal assets without being under the gun financially....too much. I ws able to avoid being on the hook to banks or business line of credit. As a business owner I never took our income for granted.....and....you can see that it did vary from year to year.....sometimes significantly.
Keep in mind when you consider the above.....that....in the time period from 1973 to 1977....we were on Food Stamps and had an income of ranging from $7,200 to $8,100 per year. But we got ourselves educated in our early years and worked hard. We bought our first house.....A zero down HUD foreclosure...in 1974 for $16,000. We were very worried about that $160 per month payment. We had dreams and plans as to how to achieve them....and we made it happen. I guess it was our little version of the American Dream. I look back now and think....how did we do that?
Having just looked.....I have a nice little gain going on so far today. Only two stocks down....NVDA and AMZN. AND....both of them are showing only MILD losses for the day....so they both have good potential to join the Green side of the force today by the close. But as always....BEWARE the late day fade.
One thing about me as an investor......I ALWAYS follow my "PROBABILITY" rules. I stay fully invested all the time. When I have money I always go all in all at once....no market timing. So yesterday when I sold all share of HON in multiple accounts.....I immediately put in orders to get that money into the SP500 Index Fund.....at the close. I dont like to be out of the markets for even.....a single day. Of course that cost me a few....extremely minimal..... dollars in margin interest since the stock trades would not settle for three days and the SP500 Index fund purchase happened and settled immediately. A very minimal cost to avoid being out of the markets for a few days.
Nice posts and some history above. We all spend so much time working and then one day we take a moment to look back on some of the things accomplished and it all seems to have went by so fast. During the many moments it often seems as if progress can be and is a mighty struggle. The satisfaction comes one day when we are able to look back, catch our breath and say...."I've done alright."
In addition to some of the above as pointed out...knowing YOURSELF as an investor is a very key element. You have to figure out what you are comfortable with and what you are not comfortable with. Knowing your risk tolerance, what your goals are, your management style for your investments/portfolio...and generally what keeps you balanced and able to execute and stick with your plan. It has to be what YOU can do. Not your friend, your relative, your neighbor, or even someone posting on an investment forum. It has to be YOUR own, otherwise you will likely never stay with it and stray from one thing to the next. Sometimes it takes a little time to figure yourself out, but once you do, it is truly a "lightbulb" moment. It becomes easier to just follow your plan and tune out a lot of BS. Quit looking around and find yourself and what works for you. You will be glad you did. As one of our fellow posters in this thread has said, "Run your own race."
Thanks for sharing W! You were putting up some big numbers! I think it's a real eye opener for non business owners to see the fluctuations in year to year income. I own a small business but also have a day job so I get some animosity from my 'true' business owner friends which is ok by me because additional money is bigger than my ego. You always have to plan and save like things could go south. Depending on your personality and work ethic there are pros an cons to both. You definitely have a lot more earning potential but that comes at the cost of stress and quality of life. It seems like you found the secret sauce in 1998! That's one hell of a record year! I'm not sure if you have done the math but even with those crazy successful earning years I'm willing to bet you have generated more income by investing/buying and holding than you ever did in sweat equity. Compound interest is a fierce competitor. Still sitting and doing nothing all year with AMD and NVDA. Onward and Upward!
I had a very small LOSS today. I also got beat by the SP500 today by 0.13%. At least the loss today...being small....will have a negligible impact on my year to date gain. I live to fight another day.
