Investment Common Sense

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February 14, 2022

Another week of taking a beating in the stock market. I cashed out of IShares Expanded Tech ETF (IGM) before I lose any more of my profit. It promptly went up 54 cents a share. Shows how smart I am, but it was still a profit. Ya gotta remember the rule, buy low sell high. Maybe I'll buy IGM again someday and maybe not. It was good while I owned it. I sold enough last July to recoup my initial investment, but it was contrary to the conservative philosophy I preach on this web site.

I kept my IShares Small Cap IT ETF (PSCT) thinking the small cap IT companies will fare better in current conditions, and was rewarded (today) with a 55 cent gain. My reasoning was that small, relatively unknown or un-glamorous companies trade at not such nose bleed multiples, therefore might not fall as far as the big guys. Having made my working money in a tech business I started and sold, I think if you are going to be a smart investor, you have to bet part of your money on tech. My two faves right now are Keysight Tech (KEYS) and Fortinet (FTNT). KEYS provides testing equipment and software for high tech companies, and Fortinet provides cyber security solutions.


January 30, 2022

Now having read Jeremy Grantham's recent web article, maybe I'll be a bit more cautious and take some profits while I still have some. Might even sell some that have exceeded my 20% trailing stop limit. It is good to be cautious. I've been in the market for more than 50 years and this is the longest I can remember without a serious downer - 14 years since the last big correction. And, I cannot understand "Non Fungible Tokens" and the only time I bought any crypto curency I lost 35% in two days. What I'm trying to say is this. When something does not make a lick of sense except to the seller, find something else to buy or keep your money in your pocket.


January 25, 2022

Baron Rothschild an 18th century British nobleman and successful investment banker said, "Buy when there's blood in the streets, even if the blood is your own." I now have blood in the street, down about 6% in the last two weeks. I also have 32% cash. Therefore, I think it is time to buy. I'll buy stocks on my Weekly List (USA or Canada only) and double down on my favorite value ETFs. In particular I'll double up on my winners that are still on my Weekly List, add a few new ones and put about 1/2 the reinvestment in some value ETFs. (VLUE,FNDX,PSCC).


November 12, 2021

Well, it's old fashioned and kinda boring, but I just finished one year in one portfolio investing mostly in value stocks I picked using "What Works on Wall Street" methods and I made a little over 39%. The S&P 500 was up a little over 30% in the same period. I did break O'Shaughnessy's rules a little bit: I sold when I had trailing stops greater than 20% rather than 50% and I threw in a couple of tech darlings at prices that Travis Johnson, the "Stock Gumshoe" thought were fair. I get nervious at PE over 15 and think that PEG is an acronym for "pure egregious guess".

I threw in some ETFs, two Schwab value funds FUNDX and FUNDB and one iShares fund VLUE for about 1/3 of the money. The ETFs did just about as well as my own pix. The real winners were PAG and ENVA. It takes a couple of superstars to really make a good year.


May 13, 2021

Here's the grizzled old investor finally writing again. I've enjoyed a nice run this year and regret that I did not invest more. As of right now I have almost 1/2 my savings in cash or money market accounts paying between 0 and 1%. That's probably a bad idea, because everybody knows or should know that stimulus (government printing money) has always and probably will always result in inflation. Nobody really benefits from inflation. It's just an exercise about running in place, but, like a treadmill, if you don't run, you fall off. So how should an old fossil like me hedge my meager savings to continue my moderately lavish life style?

The answer is that I should invest in assets that will increase in dollar value, not hold dollars as they devalue.

That's easy to say, but what kind of assets? My choices are pretty limited. I really do not want to buy any more real estate. Real estate including farms, rental properties, commercial buildings or warehouses require professional management and are not liquid if you have a sudden emergency need for a lot of money. Besides what will become of office buildings with much of the economy switching to "work at home" or "gig economy".

REITs are probably a good way to hedge using real estate, but be cautious. Many REITs merely take advantage of the pass thru tax treatment to disguise earnings from their main business such as growing marijuana, running data centers or operating prisons. Not that these are bad businesses, but the underlying real estate is only as good as the income it can produce. So far (except for marijuana) I do not know of any REITs that enable direct investing in ordinary farm land. let me know if you know of any. I do continue to believe that carefully selected REIT investments are not only good dividend producers, but also pretty good investments.

Commodities are another type of asset that can hedge against inflation. But, for the average investor, the only way to invest in commodities is buying and selling futures.

Investing in commodity futures is a diffferent kettle of fish. That is an interesting idiom to use because in spite of extensive research (10 minutes on the web) I cannot find any way to hedge fish. Nevertheless, commodity futures are not for the faint of heart and amateur traders usually loose.

Another interesting hedge against inflation that I understand is popular in Iran is buying luxury cars. Based on recent developments in the US Auto markets, that might not be a bad idea. The problem is where can you store your stable of Beemers and Mercedes? Maybe in a warehouse you buy for the purpose. Oh but then there's the problems of secuurity and maintenance, etc.

So we're back to the good old stock market. I'm too old to bet very large on high flying high tech - a few good ETF handle that for about 10% of my portfolio. The rest I continue to invest in value stocks or hold in cash. I think for now, I'll sit tight since I'm still only 50% invested. One old strategy says, "Sell in May and go away". That old strategy also says to reinvest in November. I think I'll follow this advice this year and take a serious look at investing more after Haloween.