In the 21st Century, investors have been subjected to a roller coaster ride. From the dot com crash to the housing bubble, the financial crisis, and the Trump Bump, the market has proven volatile. Be wary of these violent market swings. It is easy to become complacent in bull markets, but if recent bear markets are any guide, that complacency is dangerous. More than anything else, to beat that danger you need a consistent approach. I wrote in February 2010: Consistency through cash flow—that is the goal at our family investment management company and that is my primary goal for you in … [Read more...]
The Final Nail in the Coffin for Mutual Funds
The mutual fund industry has been facing headwinds for years. First, the industry became too big. So dominant were the biggest funds, they couldn’t invest without moving the market themselves. The next problem for mutual funds was the advent of the ETF. ETFs hollowed out the high-fee actively managed equity fund industry. I wrote about these problems here in November of 2006: I write often that the majority of mutual funds offer no compelling reason for investment. Here’s a double shocker for you. Of the top-ten largest equity mutual funds, seven come from one family. How could one … [Read more...]
Here’s What to Look for As Markets Enter an Election Year
Election years have historically been good to stock market investors. It is now one year away from Election 2020, and market participants are hanging on every word from the candidates. Here’s what I wrote about election year markets back in November 1991: Remember Tom Mix? All the great old black and white Western movies of the 1950s, like Tom Mix, featured patented three-part bank robberies that went something like this: Scene 1: The bank is robbed. Bad guys ride out in a cloud of dust and the chase is on. Scene 2: Bad guys split—one-half to an arroyo or cottonwood grove; one-half to a … [Read more...]
Big Macs or Sit-Down Service
Today, you can lend $10,000 to the U.S. government, which just closed its books for the year with a deficit of almost $1 trillion, and lock in an income stream of about twelve dollars per month for the next decade. That’s enough to treat yourself and the wife to a couple of Big Macs once a month. But if McDonald’s keeps raising prices, a couple of years from now, you may need a buy-one-get-one coupon to treat the wife. The interest payments on government bonds are fixed, and are so tiny today they don’t even keep pace with the massaged inflation numbers reported by the Labor … [Read more...]
There are Two Ways to Avoid Investor Overkill
I wrote in March 1991: Listen to me and listen to me hard as I tell you that investors miss the boat over and over because (1) they insist on timing the market, (2) they insist on investing with emotion keyed to events of the moment, and (3) they steadfastly refuse to buy when news is bleak. It’s the old buy-high-sell-low game again and again. Most investors regularly equate action with profits. But you don’t want a lot of action in your portfolio and you only need to follow a handful of indicators and a handful of investments. Most investors simply cannot help themselves, and that leads … [Read more...]
Do You Have the Tools to Carry Out Your Investment Plan?
I regularly meet investors who are going it alone. They are overwhelmed with choices and have little or no investment planning experience. Back in December of 1986, I told investors that they need a game plan and the tools to carry it out. I wrote: “’It was an overcast day.’…Everything on the beach came to a halt…When he passed out 40 Redsand volleyballs,…’it looked like it had rained radioactive bowling balls.’” These graphic quotes from Bruce Anderson’s recent “Shoptalk” column in Sports Illustrated describe the beach scene at Manhattan Beach, California when Olympic volleyball star … [Read more...]
Four Ways to Win the Investment Horse Race
In 1993, Julie Krone became the first, and still only, female jockey to win the Belmont Stakes. As Julie, riding Colonial Affair, rounded the first turn, they sat in sixth place. A horse named Antrim Road had dashed out way ahead, taking a big risk with a fast pace. As the horses came into the far corner, Cherokee Run took the lead, and still, Julie and Colonial Affair remained in sixth place. Then as they turned for home, Julie’s patience paid off. The five horses ahead of her had risked it all and gotten tired. Julie had conserved energy and came on strong in the end to win. Finishing … [Read more...]
This is the Most Persuasive Test of High-Quality Investing: Does Your Portfolio Pass?
Of all the ways you can test the holdings in your portfolio, Ben Graham codified what he called the most persuasive in his book Intelligent Investor. Companies paying dividends for 20 consecutive years were first on Graham’s list of high quality. I explained high quality to readers in August 2007, writing: Laurent & Villchur... Back in 1967, Acoustic Research’s demonstration room on Mount Auburn Street in Cambridge, Massachusetts, was ground zero for state-of-the-art high fidelity. My experiences in Cambridge led me to buy the Acoustic Research AR3 speakers and AR turntable that I am … [Read more...]
Are You Confused by the Investment Hype?
As an individual investor, you may be confused by the hype and pressure aimed at you by the media and securities salesmen. The constant drumbeat of news, both good and bad, can create an emotional response from even the most stoic of investors. Couple that with many investors’ lack of experience, and trouble can erupt from portfolios during tough market times. In July 1993 I wrote: You’re on the 15th Tee. At the Four Seasons golf course in Nevis, West Indies, high in the lush green hills of this remote Caribbean island, you are overlooking the yawning expanse of a many hundred foot deep … [Read more...]
How to Build 37% of Your Wealth in Just Ten Days
In the Spring of 1996, I explained how important just ten days of a 31-year period were to building 37% of their wealth. I wrote that March: Market Timing Strategy—Bankrupt Before I tell you what other funds I have bought this month and which funds I have on my short list for the next few months, I want to startle you, shock you, and convince you beyond any doubt that market timing is a bankrupt strategy whose time has never come. Here’s the only example you’ll ever need to never market time again. T. Rowe Price put these numbers out a year or so ago. The original research was done by … [Read more...]
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