Work to Make Money/Invest to Save Money

Originally posted October 17, 2017. With the exception of the large sums of money that I invested in zero-coupon treasuries (Benham Target Funds) in the 1980s and 1990s, I have never invested based on how much money I expected to make. I work to make money. And I save to keep every dime of the money I have worked a lifetime to earn. There was a day when I had darn few of those dimes. Those days made an indelible impression on me, and will so forever. I invest with a rolling 10-year average annual return portfolio target of a balanced 4+%. This modest target is based on the normalized annual portfolio draw I advise for retired investors. Long-term balanced targets include surviving through … [Read More...]

Richard C. Young Explains: How to Invest Like Einstein

Originally posted October 23, 2018. When asked to name the greatest invention in history, Albert Einstein responded, compound interest. Over three decades ago I started our family investment counsel firm focusing on the miracle of compound interest to help retired and soon to be retired investors just like you. My short and quick goal was, as it remains today, safety of principal and a consistent flow of income through investors’ long and peaceful retirements. In J.R.R. Tolkien’s The Hobbit, when the wizard Gandalf asked Bilbo Baggins to take part in an adventure, the Hobbit told Gandalf that he viewed adventures as “… nasty, disturbing, uncomfortable things! Make you late for … [Read More...]

Coronavirus Snapped the Cord on the Market Elevator

For the past ten years, the stock market has been an elevator that has only gone up. Now the cord has snapped. What floor are you falling from? Here’s how I explained what I call “elevator investing” some years back. I wrote: Elevator Investing Where do you want to be when the cord snaps? I often think of risk management with a simple elevator analogy. In the investment process, I quantify risk first. Then I evaluate potential gains. Just envision, if you were in an elevator and the cord snapped, where would you be better off? Dropping from the second floor or the 10th floor? Makes your palms sweat. You sure would not fare well plummeting from floor 10. Today’s level of risk in the … [Read More...]

Here is Your Family’s Guide to the Coronavirus

I visit Dr. Ward at least once a week when Debbie and I are in Newport for the Summer. -- Dick Young. Dear Patient, As promised, I am sending this email to share some useful information that I have found over the last week. As one of your healthcare providers, it is my intention to provide you with knowledge to keep you calm and healthy. I am lucky enough to have access to information coming out of Wuhan, China where this disease began. The treatments used on the front lines were a combination of western pharmaceuticals along with Chinese Herbal Medicine and shown to be quite effective. Therefore, I have been able to understand this disease through the eyes of Chinese Medicine and gain … [Read More...]

Never Bet the House

Investing is not betting. There are people who buy stocks to invest in them, and people who buy stocks to bet on them. Never be the latter. After the crash of 1987, I compared that to the surprise defeat of “sure thing” Sonny Liston by Muhammed Ali. I wrote: “Bet the house on Liston…it’s a sure thing.” Once again, what could never happen, happened. Once again, the underdog defeated the favorite. And once again, people learned — many the hard way — that there are few “sure things” in life. The lead quote appeared in a provocative Wall Street Journal ad run by FGIC (municipal bond insurance). The headline, of course, looks back at the astounding boxing victory of a brash Louisville … [Read More...]

There Are No Second Chances at Retirement

There are no second chances at living a full and happy retirement. You enter retirement only with what you bring with you, and you leave behind whatever remains. You don’t get another try, but there is a way to make your investment plan pay you to retire. The only catch is, many of you will have to make a 180° degree change in how you approach retirement. Here’s how I explain my plan: You Need to Make a 180° Switch in Your Approach to Common Stock Investing In the past you have probably looked on common stock investing as a program of (1) buying a stock and (2) selling it to someone else at a profit. Most likely you have not given dividends any thought at all. I want you to make a 180° … [Read More...]

You Must Defend Your Wealth with a Tactical Battle Plan

There’s nothing more important to your investment success than protecting your principal. Capital gains will come and go, but losing the money you worked hard to earn is like taking a direct hit from a Scud missile. You need to build a tactical battle plan to kill the enemy—in this case, risk—and to win. Here’s the battle plan I laid out for readers shortly after Operation Desert Storm, and I remain committed to it today. You’ll Be The Big Winner! General Norman Schwarzkopf built the allied forces military victory in the Middle East on diversity. Schwarzkopf did not go into battle single-handed. Given the mental make-up of Saddam Hussein, the American general had no idea what might be … [Read More...]

One More Reason You Shouldn’t Invest in China

The coronavirus is just one more reason you should avoid direct investment in China. Symptoms of a bigger problem are the decisions of the Chinese government to: restrict information on the spread of the virus, deflect blame onto others, and to silence early attempts to alert the public to the problem. In 2012, I explained China’s bigger problem to readers, and why you should avoid the Middle Kingdom as an investment destination: China I have long advised against direct investment in China. Among the many reasons I am bearish on China is the country’s vastly distorted economy. China is a command style economy run by an unelected political party—the Communist Party of China … [Read More...]

How I Overcame My Biggest Investment Failure

Back in 1991, I had already been through multiple business cycles in my investing career. I wanted to teach investors how to avoid my biggest failure in investing up to that point. Here’s what I wrote: Reduce Risk with Betas Not only do I want to help you achieve an “A” in total-return performance, I want you to achieve this return with as little risk as possible. In the stock market, the words risk and volatility are synonymous. I want you to concentrate most of your efforts on stocks that are less volatile than average. What you need to know is a stock’s beta, or the measure of its volatility. A stock with a beta of 1.0 has characteristics of volatility that equal the average stock. A … [Read More...]