Back in October of 2006, as the crest of the Housing Bubble was forming, I remained doggedly attached to my principled investment strategy of diversification and compound interest. That month I encouraged readers to build a “volatility barricade.” Here’s what I wrote (with updated numbers to reflect the intervening years): Your Volatility Barricade Your portfolio’s fixed-income position does two things for you. (1) It either throws off cash for you to spend at Ace or True Value (not Wal-Mart or Home Depot) in retirement or, instead, allows your interest to compound in an IRA. (2) Your … [Read more...]
High Barriers to Entry Make for Safer Investments
I have written many times through the years about the benefits of businesses with high barriers to entry. Those barriers often include protection by government regulations, including rights of way, monopoly power, and intellectual property. In November of 1996 I explained the value of intellectual property and how difficult it is to generate. I wrote: Have Mercy!... Back in the spring of 1964, XERF was the most powerful commercial radio station on earth. With a thunderous quarter-million watts of energy pumping from its massive transistor deep in the Mexican Coahuila Desert south of the … [Read more...]
How to Avoid Wall Street’s Unshakable Attachment to Earnings
Back in December of 1997, I explained Wall Street analysts' fixation with earnings, and more specifically, earnings guidance. I wrote: Forget Wall Street’s Myopic Attachment to Quarterly Earnings It’s important for you to grasp the primary control force of short-term market action. The control force is quarterly earnings reports versus Wall Street projections. Companies that fail to meet Street projections face utter carnage. However absurd this senseless, myopic concentration on quarterly earnings may be, it is reality. The gyrations brought on by earnings’ hits and misses confuse and … [Read more...]
What Are You Getting Paid?
It’s a seemingly simple question, what are you getting paid? Most people can recall their weekly or monthly employment income without hesitation, but do you know what your portfolio is paying you quarterly? If you aren’t focused on generating income from your investment portfolio, you may want to adjust your strategy. In April 2006 I discussed the importance of getting paid, now. I wrote: Pay Me Now When you invest in portfolio securities, your first question should be, what am I getting paid? I do not want you investing your serious money in securities that pay you neither interest nor … [Read more...]
When You Get OLD, Things Have to Be RIGHT
It all started for Chuck Berry on 21 May 1955 with Chuck’s simple three-chord--Bb, Eb7, F7 (played in A by many guitarists for ease)--recording of Maybellene, an adaption of “Ida Red,” with Jerome Green on maracas, Johnnie Johnson on piano, Jasper Thomas on drums, and the legendary Willie Dixon on bass. By the end of June 1956, “Roll Over Beethoven” ran to #29 on the Billboard charts. Berry would go on to produce hit after hit, including “School Days,” “Rock and Roll Music,” “Sweet Little Sixteen,” and “Johnny B. Goode.” Berry, the Real King of Rock & Roll, died in March of 2017, … [Read more...]
Build Your Investment Strategy for the Field of Play
Are you a trader or speculator? Or are you long term investor saving for a comfortable retirement? What’s your field of play? In December of 2011 I wrote to readers explaining that each sport is dependent on the field of play. Coaches and players enter the game with a clear understanding of what they are trying to achieve, and the area within which they are trying to achieve it. Does that describe your current investment planning picture? If not, your first step is understanding your field of play. I wrote: Football, baseball, soccer, hockey—each has something in common that can be … [Read more...]
The Dynamic Maximizers® Solution
How did your portfolio perform in December? The Dow was down almost 15% for the month at its Christmas Eve low, and were it not for the Fed once again rushing to Wall Street’s rescue, the losses might have been much deeper. If you were glued to CNBC while your family enjoyed Christmas Eve dinner and the losses felt gut-wrenching, you’re doing retirement investing all wrong. How does your retirement portfolio look? Do you know how much you should have invested in the stock market? Do you actually have any idea what you are doing? Do you feel like you are in over your head and … [Read more...]
The Surest Way to Win in Equities
When it comes to your investments, you must develop a plan that is more than just reliance on rising stock prices. Share prices can remain depressed for agonizingly long periods of time. A decade or more of no return with a regular retirement draw, can quickly decimate a life-time worth of savings. Regular dividend payments offer a refreshing stream of income to help you navigate long dry spells in the stock market. If you haven’t yet been convinced of the power of dividends, read what I wrote back in April of 1992 below: Dividends Are Key to Your Stock Investing Success Now what about … [Read more...]
Like a Loaded Shotgun, Capital Protection is Your Best Defense
The adage “defense wins championships,” is perhaps as true in investing and personal security as it is in football. In April of 2012 I explained to readers that investors who understand two critical points about their investment strategy will be better prepared to defend their capital. I wrote: What’s your competitive advantage? It does not matter what your endeavor, if you do not have a competitive advantage, you must expect, at best, a mediocre outcome. A surgeon who performs a given operation many times a week will always enjoy a competitive advantage over a surgeon who performs that same … [Read more...]
Risk Analysis for Consistent, Positive, Prudent Returns
Through the years, I have been relentless in my efforts to alert investors of the dangers of taking on too much risk. It may seem redundant, but investor minds have been proven to be easily distracted, especially when it comes to matters of prudence. In August 2014 I explained my policy of risk avoidance, writing: One of the most important investment steps you can take is to look at the big picture—that is, get high above street level so you can actually see the parade. Big risks are always big ideas, loaded with complexity and controversy. In most cases, the media is geared to work against … [Read more...]
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