In 2018, U.S. stocks have lost more value in the month of December than during any other December since 1931. With the Federal Reserve now slowly raising rates, risky bets are being reevaluated, and market volatility has returned. Reuters reports: ...the benchmark S&P 500 index began the trading session almost 8 percent lower for December. “We’re facing the biggest December fall in U.S. stocks since 1931 and this is striking and worrying at the same time,” said Chris Bailey, European strategist at international financial services firm Raymond James. “We are at a regime shift moment and … [Read more...]
Brilliant Investors Know: Cash Flow & Compounding Rule!
Retired or retiring not too far down the road? You will be a winner if you are “the ultimate patient investor.” To be a genius in the financial markets you need a steel-trap grip on the single concept that virtually guarantees long term financial security. The strategy is based on Einstein’s miracle of compound interest. Here, in a nutshell, is the story: Young Research’s Dynamic Maximizers® (DMs) portfolio is a maximum safety portfolio ideal for retirement investors, IRAs, and education programs. The Dynamic Maximizers® portfolio model invests primarily in dividend and income … [Read more...]
Making Money the Old Fashioned Way
You may be familiar with Ronald Read’s story. It’s a story worth telling over and over and over again to anyone you know. My father in law Dick Young wrote: Hard to even comprehend, but this great story, courtesy the WSJ‘s Anna Prior, recounts how Ronald Read accumulated an estate valued at almost $8 million. Mr. Read, who passed away at the age of 92, made a modest living pumping gas for many years at a Gulf gas station in Brattleboro, Vermont. A Five-Inch Stack of Stock Certificates How did Ronald Read manage to become a multi-millionaire? Mr. Read invested in dividend-paying blue-chip … [Read more...]
Marry Compound Interest, Divorce Market Timing
This week a long-time reader contacted me looking for some insight he could pass along to his children about the dangers of market timing. I’ve written on the topic many times over the years and wanted to share something he might find compelling. In April of 1996, I wrote about how three of Wall Street’s bright minds had completely failed while attempting to make market timing predictions about the future of the Dow Jones Industrial Index. Back then my advice was—as it is now—marry compound interest, divorce market timing. I wrote: Market timing is a bankrupt strategy whose time has never … [Read more...]
How Pennies Can Win the War
Back in January of 1987, Ronald Reagan gave a State of the Union address in which he lamented the brutal war being waged by the Soviet Union on the people of Afghanistan. Behind the scenes though, Reagan was operating what has become popularly known as “Charlie Wilson’s War.” Reagan and his supporters in Congress, including Charlie Wilson, were sending Stinger missiles to the Afghans fighting against the Soviets. Those missiles cost pennies on the dollar compared to the Soviet MI-24 Hind gunships they were used to target with a lethal 79% successful kill rate. The mere pennies the U.S. … [Read more...]
The Most Important Thing in Investing
Back in 2006 I was celebrating 20 years of writing Intelligence Report. Debbie and I were in Vermont, and had just visited Vermont’s Authentic Designs to purchase lighting fixtures. The shop uses 150 year-old machines to manufacture colonial and early American lighting fixtures. There, on one of the machines for all the craftsmen to see was taped a sign that read “Simple is Sophisticated.” After reading that taped up sign in Vermont all those years ago, I adopted “Simple is Sophisticated,” as a personal mantra to keep me focused on the essential elements of my investment strategy. The most … [Read more...]
The Profound Power of Patience & Compound Interest
Patience and the awesome power of compound interest are the heart and soul of investing. The NY Times reports that Sylvia Bloom, a legal secretary from Brooklyn amassed a fortune of over $9 million dollars on a modest salary. What was the key to Mrs. Bloom’s success? Mrs. Bloom saved and invested and allowed the power of compounding to work for over six decades. Since Ms. Bloom never talked about this, even to those closest to her, the fact that she had carefully cultivated more than $9 million among three brokerage houses and 11 banks, emerged only at the end of her life — “an oh my God … [Read more...]
How Many “Retirees” Will Keep Working?
The Employee Benefit Research Institute (EBRI) reports that 79% of workers expect to keep working to supplement their retirement incomes. That's a plan for those who haven't saved enough to enjoy their golden years. But what happens if you can't work in retirement? At the Washington Post, Michelle Singletary explains what happens when retirees who expected to work more, simply can't. Yes, more seniors are staying in the workforce past 65 and happily so. But many others are finding themselves in a retirement quandary. They thought they had more time, but the reality is they are forced to … [Read more...]
Richard Russell’s Rule #1
Originally posted January 7th, 2016. You need to have some will-power to stick to your guns in this stock market. No one said it was going to be easy. But to allow the magic of compound interest to work for you, you have to be patient. Here is one of the great lessons I love to read over and over again from the late Richard Russell. Mr. Russell passed away in November at the age of 91. He wrote daily to his beloved subscribers right to the bitter end. I miss reading his daily thoughts on the market and, even more so, on life in general. RIP Mr. Russell. Rule 1: Compounding: One of the most … [Read more...]
Compound Interest is Key
For prudent investors, the last three years have meant watching the so-called FAANG stocks (and other speculative shares) rise at a rate that is seemingly unbounded by profits or dividends. The FAANGs have gobbled up an ever-larger portion of the S&P 500 index total market capitalization. Four of the five largest companies in the S&P 500 are now FAANGs. Today’s market environment feels similar to the late 1990s when speculation was dominant. To successfully navigate the environment then, I advised a focus on patience and compound interest. Compound Interest Is the Key Legendary … [Read more...]