‚??If you are a long-term investor, you will view a bear market as an opportunity to make money.‚?Ě —¬†Sir John Templeton
Last Saturday, I spoke for the first time at the national AAII convention in Las Vegas. AAII stands for the¬†American Association of Individual Investors¬†(www.aaii.com). I’ve spoken to dozens of local chapters of AAII, and it was a thrill to speak at the national convention.
Luncheon Speaker: Mark Hulbert Shares Lessons Learned
Mark Hulbert, former editor of the¬†Hulbert Financial Digest, was the AAII‚??s luncheon speaker. He‚??s famous for rating the investment newsletters. His service ended last year because of declining demand for his tracking system.
Over the years, I‚??ve found Hulbert himself to be decidedly bearish. Even back in 2014 he was saying that corporate insiders are dumping stocks, and he has warned about the ‚??overvalued‚?Ě stock market for several years now.
In his luncheon talk, he outlined a series of lessons he‚??s learned from tracking newsletters. All were pretty much negative. For example, Hulbert said, ‚??Beating the market is more luck than skill.‚?Ě He used¬†Warren Buffett¬†as an example: Investing in GEICO was a lucky bet that has paid off handsomely. But if he hadn’t invested in GEICO, his results would have been mediocre.
I’ve found that the most successful investors have developed a unique skill: buying qualify companies in a growing industry when they are cheap, and they then hold through thick and thin.
In his classic book, ‚??How to be Rich,‚?Ě¬†J. Paul Getty,¬†one of¬†America’s first billionaires, states, ‚??It is possible to make money — and a great deal of money — in the stock market. But it can’t be done overnight or by haphazard buying and selling. The big profits go to the intelligent, careful and patient investors, not to the reckless and overeager¬†speculator. The seasoned investor buys his stocks when they are priced low, holds them for the long-pull rise and takes in-between dips and slumps in stride.”
Bear Market or Bull-Market Correction?
I encountered in the exhibit hall a group promoting a sophisticated new technical trading system. Based on its ‚??artificial intelligence‚?Ě technology, they turned negative on the market in early October. The market‚??s pullback is still ‚??not over,‚?Ě one of the salesmen told me.
We shall see. Wall Street has rallied sharply in the past two days. Is this the bottom or a dead cat bounce?
Bull markets climb a wall of worry, and there‚??s plenty of headwinds these days: The Fed raising interest rates, President Trump‚??s ongoing trade negotiations and tariffs, the growing federal deficit and Middle East instability.
But I remain optimistic for two reasons:
First, economic growth is strong. Not only is gross domestic product (GDP) growing at 4% this year, but gross output (GO) is growing even faster. The federal government just released second-quarter GO data, showing GO (which includes the supply chain) growing at a 7.9% clip in nominal terms and 4.6% in real terms — ahead of second-quarter GDP. When GO grows faster than GDP, it demonstrates strong growth ahead.
Second, the spread between risky junk bonds and low-risk Treasury bonds has remained stable in October. This suggests that the sell-off in October is temporary.
What to do? Stay invested!
My topic at the AAII meeting was devoted to the wit and wisdom from my book¬†‚??The Maxims of Wall Street,‚?Ě and I quoted a number of famous lines applicable in today‚??s volatile climate.¬†Daniel Drew¬†once said, ‚??Troubled waters make for good fishing.‚?Ě
In the case of the stock market, a sell-off like we have witnessed in October offers the chance to pick up some bargains.¬†Sir John Templeton¬†said it best: ‚??If you are a long-term investor, you will view a bear market as an opportunity to make money.‚?Ě
That‚??s been our approach, and we‚??ve picked up some bargains.
‘Maxims’ Half-Off Sale for the Holidays
Financial guru¬†Dennis Gartman¬†paid me the highest compliment at last year‚??s New Orleans conference. After I quoted from my Maxims book at a panel discussion we were both on, he told the audience, “I love that book, and keep it on my shelf and refer to it every day. When I’m short half a page in my newsletter, I reach for Maxims and fill in the half page with a pithy quote.”
Gartman said, “It‚??s amazing the depth of wisdom one can find in just one or two lines from your book.‚?Ě
My book also has been endorsed by¬†Warren Buffett, Jack Bogle, Bert Dohmen, Richard Band¬†and¬†Alex Green.
Hundreds of valuable Wall Street sayings are found in my one and only collection, and they will bring back memories. The book is divided into categories, such as ‚??bulls and bears,‚?Ě ‚??contrary investing‚?Ě and ‚??market timing‚?Ě with over 800 quotes, proverbs, poems and short stories offering a wealth of insights about investing. It has several sections on ‚??bear markets‚?Ě and ‚??doomsayers and Cassandras.‚?Ě It also includes Dennis Gartman‚??s ‚??20 Rules of Investing.‚?Ě
As we approach the holidays, ‚??The Maxims of Wall Street‚?Ě is the perfect holiday gift for your relatives, students, investment friends, stockbrokers, money managers and business colleagues. Buy them by the box and give them out throughout the year.
Stockbroker¬†Rodolfo Milani¬†said, ‚??I find them to be ideal gifts for my best clients. They love it!‚?Ě The book is beautifully bound in leather-like green with a gold ribbon.
I‚??m offering a 2-for-1 deal. Buy the first copy for $20 and all additional copies are only $10. I pay the U.S. postage. Also, if you order an entire box of 32 books, you pay only $300 postpaid.
Hetty Green¬†said it best, “When I see something cheap, I buy a lot of it.”
To order, call Harold at Ensign Publishing, 1-866-254-2057, or go to¬†www.miracleofamerica.com. (For orders sent outside the United States, contact Harold at Ensign Publishing for additional charges.)
Cuba¬†is hot as a destination!¬†All cabins aboard the five-star Oceania Insignia for our November 9-16, 2019,¬†cruise¬†(next year) have sold out EXCEPT ours. And we have to turn back any cabins not sold by the end of December. I urge you to sign up now before it‚??s too late. This week-long trip to¬†Cuba¬†is special ‚?? we will be given a¬†private tour in Havana¬†by a free-market economist who actually lives in¬†Cuba¬†and will show us parts of ‚??communist-controlled‚?Ě Havana that no one else sees. This¬†cruise¬†is not to be missed!
Greg Galloway¬†and I will be speaking on investing.¬†Dave Phillips, president of Estate Planning Specialists, will be talking about estate planning in response to the Trump tax cuts. I also will be giving a talk on the important economic and cultural differences between Latin America and North America.
Plus, my wife¬†Jo Ann, an English professor, will speak on Ernest Hemingway and¬†Cuba. This will be a small private conference with ample opportunity to interact with the speakers and attendees. We‚??ve already sold over 20 cabins.
Please call¬†Nicole¬†at the MoneyShow (which is organizing the¬†cruise), toll-free at 1-844-225-5838¬†for a free color brochure, which you can also¬†access here¬†as a PDF. Make your deposit NOW. Cabins are available as low as $2,399 per person/double occupancy, and the price includes airfare from getaway cities, free WiFi and even a $400 shipboard credit. But you must act NOW if you want to join us.
You Blew It!
U.S. Postal Service Fails Again
Yesterday, I sent the following letter to the Postmaster General:
Dear Ms. Brennan,
I decided to write this letter on Halloween because of my nightmare experience with the U.S. Postal Service‚??s mailing of a box of my books from New York to Las Vegas.
I took a box of 32 copies of my book ‚??The Maxims of Wall Street‚?Ě to the post office in Irvington, New York, on October 13, and mailed it ‚??media‚?Ě rate for an investment conference I was speaking at on Saturday, October 27. I planned to sell the books at the conference.
The Post Office promised delivery within a week. The box of books never arrived, at least in time for the conference. Lost sales, over $500. Using the tracking system, I discovered why: Your people sent it to LA, then to Chicago, then back to LA, where it sat for three days, and finally made it to Las Vegas 17 days later. It appears that my box of books were transported through Los Angeles twice!
I used the Post Office because it is half as expensive as UPS. Now I know why.
This is all the more embarrassing because I am a direct descendant of Benjamin Franklin, the first postmaster general. He created this once great federal agency and would never tolerate this kind of mismanagement.
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