Nice walk

We took a nice walk this morning.  It was pretty much our usual walk taking about 45 minutes.  We saw a quail, a couple jack rabbits and, unusually, a coyote.  The parcel of land that we use for our walks is probably 100 acres (40 hec.), maybe more, I'm not good with knowing the size of an area.  There are other odd empty pieces of land but they are more lot sized, 1 acre or 4,000 sq. m.  Given that there is little vegetation, it doesn't seem like a lot of land for a coyote.  Happily this guy just wanted to be left alone so took off in a direction opposite from us. 

Read a very interesting article about value investing the other day but I didn't make note of the address so can't find the stupid thing.  The whole point was that some university professor made a study of what would happen if you invested in 'value' companies vs 'growth' companies.  In this country and overseas the result was that the value investments were more successful than the growth style investments.  Now this was simply an article written for a magazine or Yahoo Finance or something equally un-rigorous so there weren't actual numbers.  Not to mention, the professor has probably got, and needs, half a book full of charts to support his thesis.  Nor were the terms 'value' and 'growth' defined.  Do I agree with 'value' beats 'growth'?  I guess so.

It seems to me that to be a 'growth' investor almost requires one to be a pretty active trader.  Constant growth is pretty unusual.  As an example, look at Google.  In the last year it's share price has varied between $450 to almost $650 and is at about $525 now.  There are no dividends so the way to make money is by trading; seeing a buying opportunity at $450 and selling at $550 would work if you can do it.  So you are going to have more turnover in a 'growth' environment; and I'm not sure how many swings of up-a-third you are going to find.  Apple did even better, it went from $240 to $320 over that same year.  Another great performance but again, the only way you get money in your pocket is by selling.  Apple's gain was less choppy than Google so the date of purchase was less important but if you bought in the last six months you are only looking at a 10% gain. 

For me it's better to buy value and hold it for some period.  In my experience as a trader, I make a good loser.  I don't know if my basic stock choosing is too influenced by things I read or if there is some other reason but my timing stinks.  What can I say?  I just don't do timing well.

Have a good one!

ETF madness

We've had money in traditional mutual funds for a long time.  For example, when I started working for a new company in 1988, one of the funds available in their 401k was Fidelity's Contra (FCNTX) and I still own those shares.  It's not like I intentionally invest for the long term but 20 years certainly isn't short term!

My basic philosophy is to save as much as you can then invest in something that you expect to be more valuable in the future.  I figured that whatever I bought at forty would be more valuable when I was sixty.  (Of course I'm not talking about a six-pack of  beer that didn't make it past my fortith birthday!)  It isn't really a difficult thought!  So I bought some stocks and some mutual funds and we did ok.  Let's face it, folks, this isn't rocket science. 

The folk who are objecting at this point are the ones who just started investing about two years ago.  You can hear the howls "I bought XXX  in 07; look how I'm doing!"  Well, I feel for you.  I bought Armstrong Flooring not long before the company went under due to asbestos claims.  I bought Thornburg Mortgage before the mortgage debacle. Back in 1974 I bought IBM just before the market crashed.  Trust me; worse things will happen to you.

Invest in the market; invest broadly; read about the companies; then read the papers & pay attention:  you will be fine.  If I'd read about the asbestos claims; I could have gotten out of Armstrong.  I drank the coolaid about Thornburg being a 'different' company.  More fool me!

So now we have ETF's.  You can buy small sectors of the market or large ones via these products.  Some are managed; some are indexes.  There are a lot of new ways to invest here.  We can talk about them later.

"The trouble with most people is that they think with their hopes or fears or wishes rather than with their minds."  - Walter Duranty