Astute Investor

After over 47 years in the investment business and working with all kinds of people, I’ve seen a lot in the markets. When it comes to investing, are you a long-term investor or a trader? There’s a big difference. Long-term investing is certainly a good idea and a noble goal. But when people say they will hold an investment forever, most will either make infinity or zero. I’ve never heard of a stock going to infinity, so ultimately, what happens is that they make zero.

I am often asked for my thoughts on inflation. Of course, I don’t like it any more than you do. To borrow a phrase from a famous rock song, Americans “Can’t Get No Satisfaction.” At least not concerning how people think things are going in general. According to the research company Gallup Inc., Americans have been generally grumpy for two decades. Their regular monthly survey, which shows public satisfaction with “the way things are going,” was over 70% in 2000, dropped below 50% in 2004, and is now down another 20 points to only 23%. Wow! Talk about being in a foul mood.

In the 2000 movie Almost Famous, actress Kate Hudson gleefully proclaimed, “It’s all happening.” She played the part of a groupie who calls herself Penny Lane (after the Beatles’ song of the same name) as she travels with a rock band in the early 1970s. The line suggests that Penny feels something meaningful is taking place in the world, culturally and politically, and that traveling with a rock band makes her a part of it all.

Growing up in Sioux City, Iowa I worked part-time at a local Rexall drug store during high school. I enjoyed it a lot and stocked the shelves, rung up sales and helped the pharmacist count pills for prescription orders. I even earned the incredible wage of $1.50 an hour. This was in the early to mid-1960s.

Here’s a simple question for you: “Are you a hedgehog or a fox?” The answer has profound implications for you. If the question rings a bell, maybe you’re familiar with the 1953 essay by philosopher Sir Isaiah Berlin, “The Hedgehog and the Fox.” Many different essays have been written about this topic. There is a line from the Greek poet Archilochus that says: “The fox knows many things, but the hedgehog knows one big thing.”

The investing world lost a legend on Tuesday, November 28, 2023. Charlie Munger, who was Warren Buffett’s right-hand man, passed away at 99. He was just 33 days short of 100.

If you believe that a trade will make you virtuous, you will be more willing to accept losses. About 30 years ago, a few mutual fund companies came up with an idea called “socially responsible investing.” The appeal to some investors was that they did not invest in the stocks of companies involved in alcohol, tobacco, guns, or other businesses that some people objected to. They were sometimes referred to as the “sin stocks.” While not having these kind of companies in their investment portfolio made some people feel better or morally superior, it didn’t necessarily improve their investment performance. But isn’t investing for the best performance relative to risk the whole point of investing in the first place?

As I have often said, something that is unsustainable will, by definition, stop at some point. Trends continue until they can’t anymore. Deficits don’t matter until they do. It would then appear that the larger trend of a dysfunctional Congress and executive branch essentially depending on the Fed to clean up their collective mess is reaching the end of the road. Let’s look at those numbers.

In August 2023 the United Auto Workers Union (UAW) presented their list of demands for the upcoming contract negotiations. Top on the list is a 40 percent bump in pay, with 20 percent due upon ratification and the rest spread over the four-year contract.

Here’s a friendly little quote from our friends at the United Nations. UN Chief Antonio Guterres said, “Extreme weather is becoming the new normal. All countries must respond and protect their people from the searing heat, fatal floods, storms, drought and raging fires that result.”