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The Crucial Role Of Emotion In Investing

Just a quick post for today.

A few days ago, I wrote an article for this blog entitled Millennials: Here's Your Best 2016 Investment Portfolio. Long story short, my friends over at Seeking Alpha apparently liked the article enough that they reproduced it on their site.

I received several comments on the article; some extremely favorable and even a little emotional for me. Others, not so much. Here's an example:
You say this "plan" is for people in their mid 20's early 30's.


Anyone that age should have a high appetite for risk, and therefore growth, which is only achieved by picking individual stocks.

Keep your paltry gains. Anyways, that's investing on easy mode. No fun, and meager returns. I wish you would have included this in your article. Well, at least the commenter had an unequivocal opinion. I like that.

Goldman Sachs - Increasing U.S. Debt Poses Fiscal Dangers

Last week, I penned a quick article suggesting that not everyone is getting rich off the stock market. It highlighted the most recent NY Fed report which featured, among other things, that U.S. household debt reached an all-time high in Q4 2017, some 17.9% above its most recent trough in Q2 2013. Further, that the segment with the largest gains was credit cards, with a 3.2% increase. The article went on to feature the sharp rise in the U.S. stock market over that same period and posited that, clearly, the rising tide was not lifting all boats. Finally, it raised the question of what this might portend for U.S. households should interest rates rise moving forward.

Today, Goldman Sachs is out with a piece suggesting the U.S. government faces exactly this same challenge. Here's a quick picture from the linked Bloomberg article.

The Heisenberg, whose economic and geopolitical commentary I find most helpful, has recently featured the concept that current U.S. fiscal policy of piling sti…

The Mueller Russia Indictment For Dummies

This past Friday, February 16, 2018, Robert Mueller released an indictment relating to the ongoing Russia investigation. The indictment contains the grand jury charges against 13 Russian individuals and three organizations for interfering in the U.S. electoral processes. Here is a brief summary, from paragraph 2 of the indictment (link to actual indictment here).
From in or around 2014 to the present, Defendants knowingly and intentionally conspired with each other (and with persons known and unknown to the Grand Jury) to defraud the United States by impairing, obstructing, and defeating the lawful functions of the government through fraud and deceit for the purpose of interfering with the U.S. political and electoral processes, including the presidential election of 2016. In this short post, I will attempt to briefly summarize the contents of the indictment in a straightforward and factual manner, while carefully avoiding any attempts at commentary or opinions. I will then offe…

Clearly, Not Everyone Is Getting Rich Off The Stock Market

Well, the NY Fed was out today with its Quarterly Report on Household Debt and Credit for Q4 2017. Clearly, Americans are in a lot of debt. Take a look.

Just a couple of quick hits from the report. Total U.S. household debt rose $193 billion in the 4th quarter, to a new all-time peak of $13.15 trillion. That's 17.9% above the most recent trough in Q2 2013. Broken down by segment, what do you suppose was the largest gain in percentage terms? Credit cards, with a 3.2% increase. In the picture above, the widening gap represented by the red arrows reflects the fact that non-housing debt is rising at a faster pace than housing debt.

Here's what's troubling about that. Below is a picture of the stock market, as represented by the S&P 500 index, over that same period; from the most recent credit trough in Q2 2013 to the end of 2017.

And thus, the title of this article. Over that period, the S&P 500 index rose by 75%; from roughly 1,600 to 2,800. Apparently, however, the r…

I Couldn't Care Less

Wanted to take just a minute to share one of my favorite examples of where what I can only attribute to mental laziness corrupts the proper use of the English language.

I hear it, if not once a day, at least several times a week: "I could care less."

"I could care less."

If, indeed, it is possible to care less, whatever it is that you mean to dismiss by use of the phrase is, in fact, not dismissed at all.

No, the phrase is: "I couldn't care less." As in: "You can talk to me all day long about (insert topic here) and it would literally be impossible for me to care any less than I do at this minute."

Added A Little Wells Fargo to The ETF Monkey Core Monthly Dividend Portfolio

In February, 2017, I wrote an article for Seeking Alpha entitled A Dividend Portfolio Built From The World's Best Dividend ETFs. I later expanded on the work I did in a second article, entitled 20 Top Stocks For A Monthly Dividend Portfolio. In this article, I expanded the original portfolio of 12 stocks to 20, with the specific goal of adding companies that, together, generated at least some level of income for the portfolio each and every month.

At the end of that second article, I revealed that I had "put my money where my mouth is," selling all my holdings in 4 dividend-focused ETFs and replacing them with the 20 stocks listed in the article, as well as two "bonus" stocks. I implemented all of this on July 20, 2017.

I recently added a few additional shares of Wells Fargo (WFC) to the portfolio.

My original position was purchased at $54.93 per share. Since that time, the share price has continued to decline, allowing me to pick up a small additional…

The Power Of A Diversified Portfolio

Just a quick note for today.

Just over a month ago, I wrote an article for Seeking Alpha in which I suggested 20 Top Stocks For A Monthly Dividend Portfolio along with 2 "bonus" suggestions.

Today, Apple was hit by a Wall Street Journal article confirming rumors of iPhone 8 production delays. General Electric got trashed by a negative JP Morgan note. Speaking of JP Morgan, it too got hit by, from the best I can tell, a continuation of concerns over falling interest rates. And Starbucks appears to have another general case of the blues.

Guess what? All of these stocks are in my portfolio. They are represented by the areas highlighted in red below. I also highlighted AT&T, falling solidly as well, for good measure.

Ah, but go back up and take a look at AbbVie. Up 6.26%! Why? It turns out that they received a favorable decision with respect to patent protection for key drug Humira. You'll see AbbVie as one of the areas featured in green above. I also highlighted some po…

Traveling In Italy - Manarola

One of my favorite destinations in Italy is the Cinque Terre. The phrase "Cinque Terre" literally means "five lands," and refers to 5 small towns (Riomaggiore, Manarola, Corniglia, Vernazza, and Monterosso al Mare) that hug the western coastline of Northern Italy.

If you are a fan of Rick Steves, you likely know that he feels many travelers make the mistake of viewing the Cinque Terre as an afterthought; descending on the region early one morning, blowing through all 5 towns and leaving the same evening. I agree with him that those who do so miss out on so much. I hope to share an overall post on the Cinque Terre at some future point. For this effort, however, I will focus on the town of Manarola.

Manarola is believed to be the oldest of the five villages, with the cornerstone of San Lorenzo church dating back to 1338. Ultimately, the name traces to "magna roea," which means "large wheel," a reference to the mill wheel in the town. My wife and …