Why I am bullish!

Why I am (and remain) bullish!

I have been a professional investor for over 30 years and the first thing I want to say is that this is what a bull market feels like.  The market goes up regularly, almost every single day.  It goes up in small increments.  Then, it will move sharply lower for a short period of time, often just a day, before rebounding and begin the slow move upward.  If you think back to the last panic or correction in 2008 and 2009 we had exactly the opposite phenomenon.   The market went down with gut-wrenching regularity.  Sure we had an occasional rally, but each one was followed by a swift move to the downside erasing the one day gains as the market moved inexorably lower.

The above chart is incredibly sexy and makes me very excited for the near and mid term future for stocks.  To explain it, let me start with a basic principle: the intrinsic value of stocks and the underlying companies always goes up.   (This is not true for every individual corporation on the S&P 500 or even the Dow, but it is certainly true for those corporations as a whole.)  The price of the stocks fluctuates around that intrinsic value sometimes wildly.   As a result, we have these powerful bull markets that always end in an excess of exuberance.   When the bubble of irrational exuberance bursts, stocks plummet and we end up with a "lost decade."  We had two of these "lost decades" in the 20th Century; 1929-1942 and again from 1967-1982.   After each "lost decade" the market rose precipitously for a long period of time eventually increasing the value of a basket of stocks exponentially. 

Looking at the chart, we see that we seem to have completed another "lost decade."   If history repeats itself, the next 15-20 years should take the market to dizzying levels.   I would suggest it is a ride you cannot afford to miss.

Scott A. Grant
www.standfastic.com

Why I held onto my GE stock. (and why I am glad I did)

Why I held onto my GE stock. (and why I am glad I did)
Originally published on Facebook 4/10/2015

We have owned GE since at least 2009 in most of our accounts. The stock has been stuck around $25 for almost 2 years now and there have been many occasions where a client or friend has tried to talk me into selling because "the stock isn't going anywhere."
I resisted the temptation to dump the company and here is why. I like the business. The world needs more and more electricity and most methods of generating electricity involve using a turbine. GE makes turbines for electricity and jet planes and anything else that uses a turbine engine. I also liked the dividend. I was happy to get paid 3.5% while I waited for the stock to go up.

But the biggest reason was the "Al Slotnick Rule". Al was an early client of mine at EF Hutton and one of the smartest investors I have ever met and he had a rule: "never sell anything." When you think about it, it is not a bad rule. Most investors hurt themselves by trading too frequently. They give up the huge compounded returns that can only be earned over years if not decades.
I will be honest, I break the Al Slotnick Rule from time to time. Last year I took a fairly large profit in Merck and the year before I did the same with Verizon. And, this year I took a loss on IBM. In each case I thought the money could be better invested and I DID NOT make the decision to sell lightly.
If you start out with a default rule that you will never sell you tend to be more selective when you buy something (a good thing) and you tend to think long and hard before you sell (another good thing).
Today, General Electric jumped over 11%. We think the stock will go higher. Patience is a virtue!