Making fewer, more focused decisions with your portfolio is a vastly superior strategy when compared to ill-considered rapid fire trading in and out of stocks. In July of 1997, I wrote about the benefits of a minimalist approach in life. The moral of the story being, the less you spin, the more you win. Here’s what I wrote then:

MONK!…

That’s it. Four letters say it all.

Thelonious Sphere Monk died on 17 February 1982, over 15 years ago. Still today, when the name Monk comes up in Jazz circles, no explanation is needed. From his early days in the San Juan Hill West 60s section of New York to Minton’s Playhouse in Harlem to Greenwich Village’s Village Vanguard, Monk’s unique approach to music and his eccentric approach to life have always engendered lively debate.

The just-released Monk/Straight, No Chaser CD (Columbia/Legacy CK64886) is a definitive Monk reissue, with 25 additional minutes of new music, including three titles restored to their original unedited length by reissue producer Orrin Keepnews, Monk’s long-term producer and the co-founder of Riverside Records. Included are two takes of Duke Ellington’s wonderful I Didn’t Know About You and, at last, the definitive and complete Straight, No Chaser. Listening to these classics as I was putting the finishing touches on the enclosed common stock Monster Master List, I was thinking how spare Monk was in the words he spoke and the notes he played. Even his name—Monk—fit the pattern.

Long-Term Profits Inversely Proportional to Trading Activity

The same approach Monk took to life and music suits us all in the investment process. Here’s what I mean. Your long-term investment success is certain to be inversely proportional to your trading activity. The less you spin, the more you will ultimately weave. Simply put, less is more.

Warren Buffett once said, “We [Buffett and Charlie Munger] continue to make more money when snoring than when active.” In Buffett’s Berkshire Hathaway portfolio, valued at over $27 billion, there are only eight primary holdings. Buffett is no spinner. Each holding is there for the long haul.

If you are looking for help with your investments, and you need guidance on a “less is more,” strategy, click here to sign up for the monthly client letter from my family run investment counsel firm, Richard C. Young & Co., Ltd. The letter is free, even for non-clients, and loaded with information on the strategies we are using to protect and nurture our clients’ portfolios.

Over my five-decade career in investing I have placed high value on on-the-ground intelligence gathered from real people. That’s why Debbie and I have spent so much time travelling in America and abroad, meeting business owners and retirees, and talking to everyone from VIPs to bus boys. Each has a story to tell and information to provide.

Along our way, Debbie and I have been to some of the world’s most interesting places. In November of 1995, I wrote to readers about our trip to the Biltmore Estate. Read my account here:

The Largest Private Residence in America

Biltmore Estate, located in bucolic Asheville, N.C., is not just a national treasure, it’s a terrific example of how to run a profit-making business at its highest efficiency. No government grants and subsidies here. Constructed between 1889 and 1895 by George Vanderbilt, grandson of shipping and railroad tycoon “Commodore” Cornelius Vanderbilt, Biltmore Estate, still privately owned and operated, is a stunning architectural achievement inextricably linked with The Gilded Age.

In the library, Vanderbilt’s scholarly interests are evidenced by 10,000 bound volumes covering history, art, architecture, landscape gardening, and classical literature in eight languages (all in which Vanderbilt was fluent). Adorning the library is a Pellegrini canvas ceiling painting, which graced the Pisani Palace in Venice during the 18^th century and is all the more important today since little of Pellegrini’s work escaped destruction during World War II.

Visitors from around the world flock annually to the unmatched estate tour. Allow a complete day to see it all. You do not want to miss the Estate Winery opened in 1985. It embodies Vanderbilt’s original concept of a self-supporting European estate and features the Estate’s own award-winning Chardonnay.

Biltmore Estate is the linchpin of what has fast become a favored retirement area for discerning Americans seeking a vibrant, moderate weather, four-season community.

Dick Young’s 10-Point Guide to High-Yielding Retirement Income

Put a trip to America’s largest private residence on your schedule. To assist you in funding your vacation or retirement shopping trip, I’ve assembled a strategic 10-point guide to high-yielding retirement investing (current or future). If you firmly follow this 10-point guide to maximizing income, you will greatly enhance your prospects for getaways to the great estates of the world, including an American classic like Vanderbilt’s Biltmore Estate.

When you invest for future or current retirement using conservative income-producing securities, your odds for success will improve immediately when you focus on item #1 and #2 in my 10-Point Guide to High Yielding Retirement Income.

Risk Analysis Always First

#1 It only makes good sense to recognize that when you work hard and save for a lifetime to retire in comfort, you do not want your life’s savings evaporating in some speculative venture. I can’t tell you how often I hear heartbreaking, first-hand stories from investors who have been virtually wiped out in some limited partnership scheme or other ill-advised sales-pitched nightmare.

In a recent book review, The Wall Street Journal commented on a big brokerage firm’s disaster with limited partnerships. “(XYZ) went for the whole enchilada when it adopted a policy of defrauding its customers. The firm sold $8 billion in limited partnerships spread over 701 entities to more than 600,000 investors. Only a handful of those investments ever performed as promised. (XYZ) continued to pressure its brokers to push new deals long after it knew that many of the previously sold ones were all but worthless.”

What do you think of that sorry mess? Stunning, isn’t it? Thousands of investors took the pipe. And I’d bet big bucks that the vast majority did not bother to read carefully the prospectus for those deals nor ponder the element of risk before committing hard-worked-for lifetime savings.

Always remember, when you lose 50% (not to mention all your money) on an investment, you have to make 100% next time out just to get even. And at that, you have made a zero return on your investment over perhaps an extended period of time. The math is bad, real bad. In my three decades as a professional investor, I’ve found that there are surprisingly few opportunities to actually double your money on any single investment.

Counting on a double-your-money bailout is long odds at best. So first and foremost, make sure you understand the risks of any investment before you invest. Do your prospectus homework well, and ask questions—plenty of questions.

If you want to spend your retirement travelling to the world’s finest places, you can’t go frittering away your hard-earned savings by taking risks you don’t understand. Avoiding risk and focusing on the creation of a steady stream of income you can live on during retirement is the course I recommend to all investors. It’s hard to make money in investing, but it’s even harder to make back what you’ve lost.

Around four years ago I was practicing French with Debbie before a trip to Paris. I wrote then:

Je Me Sens Bien

As you read this month’s strategy report, Debbie and I will be in Paris. Practicing her French yesterday, Debbie asked me if I knew the meaning of je me sens bien, with James Brown as a clue. Well, not knowing for certain, I guessed, “I feel good,” a great James Brown lyric. Debbie was astounded that I got the quiz, as was I, because I really had no idea. So what gives? The answer lies in association. The rhythm of the four words simply brought the James Brown lyric to mind, literally out of the blue. These things can happen with association. It’s a mindset thing that isn’t always easy to explain. In recent days, given the extraordinary volatility in the financial markets, mindset and association are an especially vital concept for investors. When you are in the right place mentally, you can have no problem weathering volatility. If not, well…

Successful Investing Is a Mindset

As you know, I do not check the prices of my investments daily, weekly, or even monthly. I do an annual checkup only at tax time. When I make a significant investment, I have no intention of liquidation anytime soon. I am in for the long haul. Thus, short- or even medium-term volatility is of zero concern to me, beyond keeping an eye out for a name on my watch list that may have taken a temporary beating due to no particular fault of its own. So, then, successful investing is a mindset based upon a master plan that allows an investor to find comfort through thick or thin.

Since then, I have traveled to Paris many times, and I am in the city now, amidst the sad reaction to the burning of Notre Dame cathedral. People in Paris are not exactly feeling good. But there is hope. Much of the cathedral is still standing, and a city as old as Paris has endured tragedies of this kind before.

Revolutions, occupations, crippling riots and terrorist attacks have befallen Paris, but the city’s people have a way of focusing on the long-term. Quality, durability, and timelessness describe the aesthetic that has made Paris the center of the cultural world.

The lesson of Paris’s success is to focus on the long-term. Weave that principle into your investment portfolio, as well as your life in general. Avoid risk, compound your portfolio, and don’t let emotion guide your actions. Steadfastly adhering to such a plan will make you feel good.

In July 2007 there was a sense of unease in the markets and I was warning investors to prepare themselves with a low draw on their portfolios. I also gave investors two ways to help prevent outliving their money. Read here:

At the start, retired investors and investors saving seriously for retirement (76 million boomers will begin retiring next summer) must answer two basic questions: (1) What is the proper mix of stocks and bonds? (2) How much money can be drawn annually from an investment portfolio? I have used Ibbotson data and examined 20-year rolling time periods from 1926 on. I have concentrated on minimum returns in order to advise a portfolio mix most likely to assure a draw of my advised 4%. The highest minimum return over 20-year rolling periods was achieved with a portfolio mix of 50/50 bonds and stocks. That minimum return was 4.6%. I would treat a 50% fixed-income portfolio component as suitable. And there is no way I’d go over 4% (inflation adjusted) for my annual draw. In fact, if possible, investors of suitable means are advised to cut back to a 3.5% draw (of an initial portfolio). Of course, the two best ways to make sure that you and your spouse do not outlive your money are to (1) work longer, and (2) slash your annual living expenses.

If you are still working, there is a third way to stretch your retirement portfolio, save more. Saving more today and compounding it for later is the key to a happy retirement. Prudent investors may also consider a 3% draw today.

If you have been reading the financial papers or watching CNBC, you have seen the news that the U.S. yield curve has inverted. Typically, this is a sign of a coming recession, and that could be the case today. If, though, you have been following my advice, there is no reason to panic. Have patience and rely on the diversified, counterbalanced portfolio you have built for generating dividends and compound interest. In August of 2013 I explained the power of counterbalancing in your portfolio:

Managing a common stock portfolio takes— above all else—patience. Your goal should never be what to sell next; rather, it should be what stocks you can hold through thick and thin. It is true that portfolio activity, for most investors, runs inversely to consistent long-term performance. How should you measure performance and how should you construct an all-weather portfolio? First, “all-weather” means you do not want to be jumping in and out of the market attempting to predict bull and bear markets. For five decades, I have been investing my own money as well as advising conservative investors saving for retirement. As such, I have invested through many gut-wrenching bear markets and disastrous single years like 2008, which ended with the speculative non-dividend-paying NASDAQ down a frightening 40% for the year. Through all the years of turbulence, I have remained fully invested in a balanced, widely diversified securities portfolio featuring a counterbalanced approach.

I have firsthand experience of what happens when counterbalancing is not in force. The Harleys I rode back in the old days had engines bolted straight to the frame. Talk about vibration and calamity. The constant vibration caused nuts and bolts to loosen and fall off. When you’re on a long-distance road trip, a breakdown in the middle of nowhere is cause for concern. I have found myself in just such a situation and it’s no fun. Today’s Harleys feature counterbalanced engines offering both a smooth ride and a minimum of road trip calamities.

A 2008 Test Kitchen

Counterbalancing simply makes common sense. Let’s look at 2008 as a test kitchen. All the broad averages got hit. High ground, so to say, was achieved by owning positions that got hit least. Consumer staples worked well; no matter how bad the times, investors are not going to forsake toilet paper, toothpaste, or their prescription drugs from Walgreens or CVS.

Counterbalancing is a necessity for your portfolio. If you need assistance in creating a portfolio that is counterbalanced to protect your investments in good times and bad, please fill out the form below. You’ll receive a call from a seasoned investment professional at Richard C. Young & Co., Ltd., my family run investment counsel firm, dedicated to helping retired and soon to be retired investors like you enjoy a successful retirement.

One of the biggest mistakes an investor can make is to imagine that the market will perform the same way year after year. Last year’s winners are often this year’s losers. I warned investors against this mistake in July 1992, writing:

How many investors—not you I hope—buy mutual funds keyed to recent performance ratings? These are usually the funds not to buy. Have you ever heard of Frank Russell Co.? These folk do a really good job of researching vital investment info. In a recent Pension & Investments article, the following item was of vital importance to you. A new study by the Frank Russell Co. has confirmed a long-held tenet of the investment industry: It’s useless to select a money manager based on past performance. In fact, the study found, there is no satisfactorily significant relationship between past and future performance.

Not only will you not find value in looking at past performance as a predictor of future results, you will not be able to deal with the high turnover, high taxes, anti-compounding issue. And just how important is compounding? Fortune magazine in its special investment strategy article “A Low-Risk Path to Profits” noted the views of Joe Rosenberg of Lowes Corp. “Joseph Rosenberg, who manages more than $1 billion for Lowes Corp., believes so fervently in the awesome power of compounding that he carries a compound interest table in his pocket at all times. His faith is simple and absolute.” Says Joe, “It is the most important thing in investing. It’s foolish to undermine the power of compounding by taking big risks that could kick you out of the game.” Joe is dead on the money here.

Joe was right. You don’t want to get kicked out of the game by making a bad decision. Don’t buy last year’s winners hoping for a repeat. Work to mitigate risk in your portfolio and allow the awesome power of compounding to do the rest.