Over 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?

Whether 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…

Has 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.

I’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.

For 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.

Early 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.

As 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.

Socialism is not for us!

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!

All 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!

Amid the international chaos, domestic disappointment and rising loss of civility that has intruded on our daily lives, this day of gratitude is a welcome opportunity to put things in perspective. And it comes none too soon!

Each of us, regardless of our individual condition, needs to pause, take a mental step back, and focus on those things we have to be thankful for this day—even if it’s only to be glad not to be a turkey! Read more…