Archive for December, 2009

Some Resolutions for 2010

December 31st, 2009

sinking_shipYep, it’s the time of year to set some goals and to figure out how to reach them.

As I mentioned Tuesday, I’m looking for answers to the question: why have we not made more headway in convincing the world they can invest successfully. That’s my sole goal, at the moment—other than heeding the best advice I’ve ever received: “Keep breathin’.”

And my sole resolution is to pursue this course, find out the real reasons why no one is interested in investing, and then do something to correct it.

I realize that this nation has had a series of setbacks during the past year—the past decade, actually. But the good news is that, as a nation, we’re still breathin’.

Sure, we’ve seen some grossly ignorant, political giants smash gaping holes in the hull of our ship of state. And, even as the water swirls around their hips, keep swinging to widen those holes in hopes the water will flow out instead of in.

Our democracy is under siege from within because the average voter believes in magic! Healthcare, all the entitlements—social security, Medicare—all of the admirable, altruistic, do-good projects, from the earmarks that benefit a small town (and buy another term for some Congressman), to the rights-nee-privileges and necessities-nee-luxuries that we all hound our legislators to get for us—will be paid for by a bunny rabbit that pops out of someone’s hat! (No one’s come up with a more plausible scenario to date!)

So, let’s all resolve, in the coming year, to respect those who think differently from us and vow to help them realize their goals. Let’s retreat from the personal castigation and try to help our president be a better president instead of trying to take him down.

We’re way out on a limb. Let’s quit hacking it off the tree!

And if this wasn’t enough of a collection of metaphors for you, I’ll try to come up with some more!

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Are they out there?

December 28th, 2009

The next generationOver this past holiday weekend, my family and I were talking about about “today.” And “attitude.”

The thrust of our conversation was why no one out there seems to have any interest in investing at all! It wasn’t that long ago when NAIC volunteers, looking to build attendance for an annual investors’ fair, could find plenty of folks who wanted to find out what it was all about and learn how they, too, could make a buck in common stocks. Not so today!

I suggested that it might be a generational thing. The world is evolving and our youth are moving into active adulthood. And it’s they who set the attitude for “the world out there.”

I also suggested that the same kind of disinterest shows up in the schools. Few are in it for the education; more are in it for the credentials so they can “get a good job.” (I’ll leave the definition of a “good job” for another day.)

Could it be that those of us who are financially well off have been so successful and intent on not making our kids “go through what we had to go through” that we’ve stripped them of the need, the urgency, the ambition—and the satisfaction—that comes with doing it themselves?

For all these months, I’ve been trying  awfully hard to arouse some interest in making money with one’s money, to no avail! What am I missing?

Any ideas?

Current Events, Food for Thought, Fundamental Investment Views, NAIC Veterans' Lounge , , ,

A Time for Giving

December 24th, 2009

gold_wrapped_gift-thumb-600x422Whether you celebrate Christmas, Hanakkuh, Kwanzaa, or whatever, there’s an almost universal commonality among faiths—and non-faiths—that this is the season to give.

In that spirit, I’ve spent some time putting together as concise a summary of our investment approach as I could. And, because it’s so simple, I’ve been able to cram everything I think anyone needs to know about investing into my thirty-minute broadcast on Take Stock with Ellis Traub this evening at 7:30PM Eastern (6:30PM Central).

As you know, my intent is to separate as many folks from “the herd” as I can; and I’m hopeful that this offering might help them to understand why our way works and the herd’s doesn’t. Read more…

Food for Thought, Fundamental Investment Views, How to Invest, Investment Concepts, NAIC Veterans' Lounge, Successful Investing , , , ,

Are We There Yet?

December 22nd, 2009

crowd_hands_447x324Has the market yet fully recovered from the beating it took? Everyone who cares, raise your hand!

Now look around. Everyone whose hand is up is a member of the herd!

“Well, I care if the stocks I own haven’t yet recovered,” you might say. But why should that even make a difference? Unless you have a need to sell them right now for some personal reason, you need only to wait a little longer—provided those underlying companies meet the standards for high quality we’ve talked about. And, if they do, you might even consider buying some more!

We’ve just been experiencing a “market correction”; and, as with any “correction,” something that was wrong is made right. Generally, as is the case today, the “wrong” is that stock has been in the hands of those who don’t have a clue as to its real value, expecting someone else to pay more for it than they did.

What’s “right” is that the shares of the well-managed companies are now being gathered up by those who know their real value. And the prices of shares in those companies are rising nicely to regain their true, rational value.

Because there are relatively few companies that meet our high standards, the market average continues to languish. And, as happens in most down markets, it will continue to do so for some time while the quality companies recover smartly.

Are we there yet? Heck, “we” business owners ain’t never left!

But it might be a while yet before “they” come back.

Food for Thought, Fundamental Investment Views, Investment Concepts, Successful Investing , , ,

Here’s the Result

December 17th, 2009

surveyI’d like to thank those of you who took the time to answer my question.

The results are in and were helpful. I think we can do a better job going forward.

Here‘s a graph showing how much interest you have, collectively, in each of the categories I mentioned.

And here’s a graph showing what percentage of you were interested in each of those categories.

Reminder: Join me on Take Stock with Ellis Traub, this evening (Thursday) at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial “1″ to join the conversation. This evening we’ll talk about what companies/industries in the health care sector will benefit and which will suffer if health care reform should be enacted into law.

Read more…

Investment Concepts , , ,

Your Turn!

December 14th, 2009

listeningFor nearly a year, I’ve been experimenting with content for this blog.

Yes, we’re bound together by an interest in investing. More specifically, we’re interested in “real investing” —not the kind of gambling the securities industry has led us to believe is the real thing for all these years.

Along the way, we’ve added commentary about current events, especially how they affect our economic interests or how they might affect our ability to invest wisely in common stocks. And, I’ve sometimes simply indulged myself, either for humor or for some other issue I’ve felt strongly about and thought might have some value for you—or I’ve just felt the urge to mouth off about.

Please give me some feedback to help guide the way this site develops in the coming year. I want to hit the ground running after the holidays and focus on information and opinion that you feel would be valuable enough to pass on to others.

Please take just a moment to answer this question.

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Thinking Bigger: A Case in Point

December 10th, 2009

newspaper-stands1Early last month, I offered a comment the thrust of which was that many industries that “evolve themselves” out of business could survive and flourish were they to abandon their Luddite perspective and broaden the scope of the businesses they’re in.

I cited the railroads who might have done better had they realized they were in the transportation business, as could the oil companies or automotive manufacturers who should actually be in the energy or transporter business, respectively. One of the most obvious of these, and vanishing right in front of our noses, is the newspaper and print media business.

Reminder: Special Broadcast Join me on Take Stock with Ellis Traub, this evening (Thursday) at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. This evening IRVING ROTH, distinguished and beloved teacher, talks about his early investing experiences and his investment club.

Read more…

Current Events, Food for Thought

Are Investment Clubs Still Relevant?

December 8th, 2009

art.investment.clubAs typically happens, interest in investing declined in lock-step with the Dow. But there are signs that some color is returning to the cheeks of a nearly moribund body of amateur investors.

Many investment clubs—microcosms of that larger body—attest to the same phenomenon in their ranks. Members lost interest as the market value of their clubs’ portfolios seemed to evaporate while they stood helplessly by; and many clubs lost members or, worse, fell by the wayside.

In view of this, the question must arise in the minds of some whether clubs are even relevant any more.

Reminder: Join me on Take Stock with Ellis Traub, this Thursday evening at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. This week: Listen to my guest, IRVING ROTH, talk about how his 21st Century Investment Club weathered the storm.

Read more…

Food for Thought, Fundamental Investment Views, How to Invest, Investment Concepts, NAIC Veterans' Lounge, Successful Investing , , , ,

Let’s Talk about Socialism

December 3rd, 2009

Socialism is not for us!Socialism

Ask any political conservative why not. Her lips will curl, her eyes will narrow, and you’ll probably be sorry you asked.

I react the same way, so let’s get that straight up front—as will anyone who understands the downside of the collectivists’ creed: “From everyone according to his ability, to everyone according to his need.”

This approach to national economic policy is the quickest and surest way to kill the goose that lays the golden eggs for everyone in our great land, no matter how skilled or needy. It’s insidious and dangerous because it destroys incentives, discourages creative thinking, and ultimately places rapidly dwindling resources into the hands of a very few who reserve the right to apply them. As history unfailingly bears out, those who gravitate to power will invariably squander those resources and squeeze them out of the very fools who expected socialism to serve them.

We have only to look to the global landscape that is littered with the failures, of which Castro’s Cuba and Chavez’s Venezuela are as good examples as can be found.

So why is our nation headed that way? And don’t let anyone kid you that it’s not!

Reminder: Join me on Take Stock with Ellis Traub, Thursday evenings at 7:30PM Eastern (6:30PM Central). Call (347) 857-3608 to listen. Dial “1″ to join the conversation.

Read more…

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Diversification versus Diversification

December 1st, 2009

eggs-in-one-basket__1226944359_5742All of us know that it’s not smart to put all of our eggs in one basket. It just makes good sense.

What makes no sense to me. after all these years of being  advised to diversify by industry and by company size, is the potential dilution of return that this practice produces. So I quit doing it! For the same reason I don’t invest in index funds or EFTs.

I’m looking for a return of as close to 15% as I can get. Therefore I invest in companies whose operations are capable of consistently producing the highest earnings growth possible. And, once I own them, I’m happy to let their managements do their jobs and keep that performance rockin’ until they can’t do it any more.

Diversification, for me, is nothing more than having enough of those excellent companies in my portfolio.

Warren Buffet says that six are enough for him because, once he’s found that many good companies, he’d only dilute his return by adding others that are not quite so good. I find it more comfortable to have at least eight, but no more than fifteen in my portfolio.  I don’t dig into the research nearly as diligently as he does [understatement of the week], so I accept a little sacrifice in my return, just to have enough to cover me when the inevitable Enrons and Worldcoms come along to prove that the “rule of five” works.

Any other effort to diversify by market sector or size—to compensate for down markets—tends to produce a lackluster return over time. Certainly investing in indexes, EFTs, or other broad “market baskets”—even mutual funds—guarantees you  no better than the average return, which is lousy, compared with the performance of the undiluted cream of the crop!

You don’t need to compensate, you just need to be patient!

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