Mission Statement for 2016

Sunday, January 3, 2016

Mission Statement: To generate financial returns on invested money that meet the goal of providing greater financial resources and flexibility for the future. This goal is a self-serving one and is therefore not sufficient in meeting my wish to be of help to others. Therefore, there is a second part of this Mission Statement, and that is to openly share in a very transparent manner the weekly investment decisions I make and the reasons why I take the actions I do. My hope is that by doing so I will provide others with a perspective that may add to the factors they consider in establishing their own financial plan for their future.

Closing and Opening Comments for 2015 and 2016, respectively.

The year 2015 closed with a final full year return of 11.6%.

I am pleased with the overall performance in the past year, but, and this is a meaningful BUT, it should have been so much better. The value of education is immeasurable, and for me, the October 2015 period found me positioned incorrectly with my Short E-Mini and Put option choices. After the poor employment report at the end of September, I kept a material short hedge in place that in hindsight I wish I had taken off once the market told me it was headed higher, and it did tell me, BUT I ignored the Market Tells. What should have been a full year return of in excess of 20% settled at a positive return of 11.6%. Good, but not good enough given my models and analyses provided me with the indicators that, if followed in that October period (consistent with my approach during the rest of the year), would have enabled me to do better for the full year.

As I look to the year 2016, I am targeting a return of greater than 15%. Why do I see this as being attainable? There are a number of reasons and they are as follows:

1. For the first time during my professional life, I will commit 100% of my time and effort to investing. Retiring from Ernst & Young as a Senior Partner in December 2015, now enables me to focus completely on my investing passion. My business experience is extensive, and that experience will now have a singular focus, building net worth through a studious and knowledgeable focus on something I love, the puzzle and opportunity of the market.

2. My financial models reflect 30+ years of data analysis. These models range in focus from long-term, to medium term, to short term. They cover economic trends (U.S. economy, interest rates, money flows, and FX), overall equity market internals, detailed analysis on 187 companies, including cash flow, operating margins, balance sheet strength, relative market value, dividends, price movements, and industry performance, and finally, asset class strengths/weaknesses. When interpreted in a coherent and collective manner, the guided investment choices are consistently accurate in generating above average returns.

3. The acceptance that I will be wrong at times, and the wisdom to know it is not about being right and wrong as much as it is about being right more than wrong and most importantly, how great my returns are when right and how limited my losses are when wrong. Management of the portfolio is the most paramount charge, and in my waking moments this will be my focus each and every day.

4. Because investing is what makes me happy. Intellectually challenging, emotionally full, and demanding of self-control are the attributes that drive me, and success in the market demands the highest level of performance in these areas. I know that investing is where I will receive a report card every day, and I expect to receive “A’s”.

Going forward the readers of this Blog will find the following on a weekly basis:

• The prior weeks purchases and sales of individual equities and a complete listing of the stocks currently owned. Additionally, I will provide a recap of the returns on my portfolio and on the market returns YTD, coupled with my view of the investing questions that must be answered with the outlook for the coming week.

In addition to the weekly report and commentary, I will provide:

• A periodic commentary on what I call the “Lab”. The Lab will discuss economic trends within the United States
• A periodic commentary on what I call “Trends” Trends will discuss weekly market movements and the confirmation or lack thereof of the movement in index averages.
• A commentary once every quarter of the composite themes coming from the analysis of the 187 companies within my database called “Equity Analysis”.
• Various other posts that may have relevance given the twists and turns of the macro or micro environments in which we live.

As I close this first post of 2016, I wish you all well, wanting happiness, success, and joy for each and every one of you that read this blog.

Now let’s go make some money……………………