Greetings,
I’ve been spending my “free time” over the last couple of weeks studying the philosophies here. I won’t pretend to have a good handle on the nuances of what Saul is trying to do, but I’m pretty sure I get the main gist of things. I’ve always believed that it was hard to beat the market if you own the market, and I almost always have one or two “high-flyers” (I call them Wild Cards) in my ports. So I can’t disagree with the theme of the program here on a wholesale level … except, I’m sorry, but the risk, oh my, the risk.
Rather than digest what’s already been digested (and coughed up no doubt) I’d like to simply propose a port that uses half of “my” philosophy (although I don’t disagree with Saul and there is some overlap to be sure) and half of “Saul’s” philosophy (although he may not hate Google as much as one might guess.)
The reason is simple. Volatility. Volatility seems to be one of those words that CNBC wants us to hate, but after awhile one must realize that the volatility of the S&P 500 requires one to pretty much accept the RETURNS of the S&P 500, and I trust you wouldn’t be reading this on this particular board if achieving the results of the SPY was really your goal in investing. So without further adieu, here is my thought, tossed out for ridicule.
I’ll take 50% of the gains from my choices and 50% of Saul’s gains and see if that beats either of us and more to the point, to see what it does to the volatility. I would guess in a great year, Saul would come out ahead, but no guarantees. I mean one bad choice in 8-12 and “Oops”. Been there, done that. Only once. And in a bad year … I don’t know, maybe we’d both go and hide for awhile. 
My whole point is that I don’t understand (but am willing go learn) why one shouldn’t/ wouldn’t / would-wish-he-did, take a few granite Gibralters and anchor even a wilder portfolio’s ride against a sudden and unexpected storm. (hmm, always unexpected - How silly is even the thought that one wouldn’t expect a storm in world economics?) Anyway, the port:
15% GOOG Google Inc
10% AAPL Apple, Inc
10% FB Facebook Inc
5% FAST Fastenal Company
5% MIDD Middleby Corp
5% UTX United Technologies
50% "FLASH" (Saul's Port Fund)
100%
Why these?
• Google Inc Love 'em or hate 'em (I do both, for example) these purveyors of data resulting in humans acting on every possible range of reason and emotion, have nailed the motherlode of data for sellers and advertisers of almost every type of product and behavior imaginable. To the victor goes the spoils. For proof, one need only look at their balance sheet over the last 10-year period. Privacy rights be damned, GOOG and the Pres say everything is not only legal, but justified. Profit is everything.
• Apple, Inc I’m not a fan of Apple products, but the company, oh my … a precision wealth builder if ever there was one. How big can it grow? That’s the question.
• Facebook Inc Speaking of not being a fan … I dislike the site, but I’m not the judge. I’m the observer looking at trends and their ramifications. “Like us on Facebook” is now the mantra of every other company in America. "Nuff said.
• Fastenal Company A mid-sized, well-run, small cyclical-products company that I trust to be profitable for the next 12 months no matter what The Orange One and/or Congress do to surprise us.
• Middleby Corp Another small manufacturer of the most boring equipment you can imagine, for an industry that is the king of cyclical (restaurants.) The important thing is that they do it better than anyone else and they do it for shareholders. Alas, they won’t double in price over the next 12 months.
• United Technologies One of the few large-ish companies that I both admire and that currently passes most of my value filters.*
• (Saul’s Port Fund) I don’t disagree with the philosophy of total balls to the wall, but my sense of fear of flying in my investments, I earned from experience. More than once:)
Not the best port in the world, you say? Maybe not. Probably not. Okay, definitely not. But that’s not the point. My point is that nothing in this port is not going to go to zero this year, no matter what. And my choices above, what’s so special about them you might understandably ask. Nothing special. Nothing at all. It’s just that I don’t have to watch them with a microscope 24/7. I don’t have to worry about them. And one signature on a form at the DEA can’t send me down the river. Guess I’d rather go on a trip with MrsRaptor than watch Cramer all day. So you guys watch ‘em, okay?
And watch SHOP too. I’ve owned SHOP for quite awhile and still enjoy the ride. Oh! And yes, see, I’m not the enemy, I bought a certain little pharma that I learned of here, looking for a quick ride and then I plan to jump off. So watch that little booger for me, will ya? Grab my 10-20% gains for me while you’re at the office next month.
So maybe I’m not 100% boring. But 99%, well, maybe … You know what? Maybe I’m just lazy. Maybe I’m a scaredy cat. But I retired at 46, so I don’t have a steady personal income and I don’t care to start a business or work for others again in this lifetime. And I didn’t get here by taking undue risk. Risk, yes, many times over, but undue? No, no, hell no. Plan for the best, hope for … well, frankly hope has no business being mentioned in the same paragraph as investing.
Good luck and good skills to everyone.
Dan
- None of these companies do I consider remotely “cheap.”
ps: Saul, kudos to you, brother, for putting it on the line in this forum and for wanting to share with others. Methinks there aren’t many more rewarding endeavors. Well done.
pss: Did Shopify just go down a nickel!? What’s going on? Turn the channel to CNBC! Call my broker! Call the Times, find out what’s happening! Any word from the CEO of KITE?
