October 9, 2025
My Investment Strategy (Warning: My philosophy only; not financial advice!!!)
(The last time I wrote a stock advice column, I proceeded to lose 90% of my portfolio. God taught me a valuable lesson: I'm not good, just lucky. What he has given me he can take away just as easily. I'm reminded of the Parable of the Talents in the Bible.):
First place for funds is cash reserves. You should have at least 3 months reserves. (Suze Orman suggests at least one year.) Depending on the volatility of your job, you may need more than a year especially for temporary jobs such as actors, entertainers, or in construction.
Parallel to this should be saving for retirement such as 401K's or IRA's especially if there is employer matching.
If your job is stable, that is, in one place for at least 4 years, consider building up for a down payment on a house.
After reserves, consider the stock market, especially indices like S&P 500 or NDX. Unless you have only a short lifetime remaining, such as having stage 4 cancer, you should be in the stock market. The main caveat is if you tend to panic when the market goes down. Those people always lose in the market. Long term, S&P 500 or NDX are fairly safe if you don't panic. Note that the S&P 500 and NDX perform better than many, if not most mutual funds, especially after fees. Your horizon should be in years, if not decades. Is a 5% return on a treasury bond or certificate of deposit a good deal? If your horizon of requiring funds is a year or two, then maybe. Just know that in the long term indices like the S&P 500 and NDX may average 10%, which is double.
If you are considering individual stocks, most individuals can only keep track of 10 or fewer stocks, many only 6. You may try more if you're in an investment group.
I tend to consider only large or mega capital stocks that I plan to keep forever or at least three years. I've been burned too often by smaller or short term ones. I tend to buy and hold. Holding also holds back the taxman. I might still sell them in shorter time periods if I don't like them. Facebook (Meta) was an example. It was too volatile. I prefer a P/E less than 100, with possible exceptions for a good startup. Management performance of the CEO and CFO are critical. If they are suspected of fraud, get out. I made that mistake with Worldcom. I prefer technology stocks, because I'm more familiar with them. Healthcare and medical may be good and up and coming but I need a lot more experience before getting into them.
I'm not a proponent of diversification or what I call di-worsification. Would you diversify and bet on all the horses in a race? I don't think so. If you want diversification, try an index fund or several index funds. I'm not in favor of portfolio rebalancing for the same reason. I'd rather reward my winners and punish my losers. Diversification may make your portfolio more stable but that's at the cost of performance.
Similarly, as a long-term investor, I don't change my portfolio for market rotation. It is my twist on "what goes around comes around."
During a periodic review, I may consider selling a stock, especially when I see a more promising one on the market. I did diversify my Apple stock by selling some of it for Google, which I considered of equal quality. That's my brand of diversification and it appears to have been a mistake, except for diversification. Most would not consider trading in one tech for another a form of diversification. And yes, they both go down in unison.
Use dollar cost averaging and don't buy all at once. Why? Dollar cost averaging allows you to buy more when the price is lower. However, during a recession, I might do otherwise and time the market and buy.
In general I refrain on trying to time the market. As they say, it is a fools errand. To me, day trading is like gambling on horses; you better know what you're doing and most don't. Most who try end up missing major up market days. However, there is the proverb of sell in May and go away. May is often high. Maybe tax refunds have something to do with that. Corrections often take place between August and October. I wonder if paying for education is decreasing funds here. After that, there is often an end of the year rally when many mutual funds adjust their portfolios. Also I heard what happens in the first week of January sets the pace for January and what happens in January sets the pace for the year.
I do not buy on margin or do hedges. Buying on margin is gambling and hedges are too complex for me and diminishes gains. I'm not that sophisticated an investor and definitely not a trader.
Contrary to most advisors, I don't like bonds or utilities. When inflation goes up, they crash. I dabbled in both and lost heavily in the 70's. I made lots in the 80's in them as interest rates went down but now I consider them too much of a gamble. I'd rather own indices and mega cap reliable stocks, especially technology.
I don't like dividend stocks, especially high dividend stocks, for several reasons. First, if the value of a stock is going down, you end up paying taxes on dividends even though you're losing money. Second, it ties up money that a company may be able to use elsewhere. Some say that makes the company more conservative in spending money. I say it's opportunity loss. Besides, if it needs to be more conservative, that signals to me possible poor management, in which case I want out. Third, I can't use prior year capital losses against dividends. Finally, just like dollar cost averaging may benefit the buyer, this is akin to dollar cost selling. What buyers gain, sellers lose.
I do not own or care for crypto currencies. As both Warren Buffett and Charlie Munger of Berkshire Hathaway have said, if you don't understand it, don't buy it. I don't understand it and won't buy it. Some even say Bitcoin adds to global warming.
I used to own gold stocks before I realized that, on the long term, they may be on par with the inflation rate, which I feel is not as good as S&P 500. The reason I think gold mirrors inflation on the long term is that gold supply grows slowly just like population growth. Thus the supply of gold per person is stable and that is the demand for gold. Should there be a new use for gold that changes the demand then obviously gold prices will exceed inflation.
In times of economic turmoil, I favor large stable companies flexible enough to pivot as necessary. They are more capable of taking down or taking over their competition at low cost. This reduction of competition feeds their profits over the long term.
Some stocks I may consider are: NVDA, META, MSFT, GOOGL, AAPL, AMZN, AVGO, PANW, PLTR, TSM, AMD, AJG, and GS. Obviously, I like big tech stocks as I think they are long term drivers of the economy. I think AI is the future even though they may be overpriced in the short term. I am a long-term invertor. Notice I included six of the "magnificent seven": Apple, Alphabet, Amazon, Microsoft, Meta, Tesla, and Nvidia. I violated my P/E < 100 principal and bought Nvidia. Apple is having political difficulties with China, Earlier I owned Meta but sold when they made major investments in metadata. They have since realized their mistake and are back on my good list. Tesla is getting stiff competition from China. Without Tesla, is it now the "magnificent six?" Also, electric vehicles may need government support to compete internationally. Since Elon Musk is a genius, don't necessarily count him out even with major mistakes such as Twitter, now X. I used to own emerging market funds until they dropped. People say this may be a good time to pick them back up but I'm not convinced. My main interest has been in technology since the 1980's and I don't plan on changing. Technology will always be a catalyst to efficiency.
Market Correction - a 10% or greater decrease in a major index
Bear Market - a 20% or greater decrease in a major index
Recession - 2 consecutive declining quarters of GDP. Put another way recession when the total of everything we and the government spend or export shrinks for two successive three-month periods. (Old definition)
Depression - a recession lasting longer than three years or resulting in a decline of at least 10% in annual GDP
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I enjoy watching Court TV shows, especially Hot Bench. I learned the following:
Attractive Nuisance doctrine: A landowner may be held liable for injuries to children trespassing on the land if the injury is caused by an object on the land that is likely to attract children.
Consideration: each party of a contract gives up something to get something.
Deliberate ignorance: When knowledge of the existence of a particular fact is an essential part of an offense, such knowledge may be established if the person is aware of a high probability of its existence, unless he actually believes that it does not exist.
Detrimental reliance: When a party is “induced” to rely on another’s promise or commitment resulting in a detrimental outcome to the party.
Generally, in the context of a detrimental reliance claim, the plaintiff will need to show the detriment that resulted in its loss or injury.
Every state has its own rules governing the cause of action based on detrimental reliance.
For example, in Virginia, the courts do not recognize promissory estoppel which is typically the cause of action for detrimental reliance but equitable estoppel.
Equine Rule: Unwritten rules of horsemanship meant to keep us safe around horses. These rules include things like not running, not yelling, no sudden movements, and not walking directly behind the horse. Equine Liability Laws are laws that limit liability for injuries (or even death) related to horses or other farm animals. These laws recognize that horse owners can’t control all horse behavior.
Gratuitous Promises: A naked promise (nudum pactum) or promise made without consideration is not enforceable. Promissory Estoppel is a related principle which can act as the exception to one of the main rules of consideration – that for consideration to be valid, it must have economic value and involve an exchange of benefit/detriment between the parties. It states that an injured party can recover damages if those damages were the result of a promise made by a promisor and the promise was significant enough to move the promisee to act on it.
Illegal Agreements: Illegal agreements are not binding. One cannot collect wages or promissory notes from an illegal agreement. If it is already paid it will not be reversed.
"Last Clear Chance" Doctrine: A negligent plaintiff must prove that the defendant was the one who had the last opportunity to change course and avoid injuring the plaintiff.
Respondeat superior (or master-servant rule): doctrine that a party is responsible for (and has vicarious liability for) acts of his agents.
Quantum Meruit: a person should not be obliged to pay, nor should the other party receive, more than the value of the services exchanged
Quiet Enjoyment: right to the undisturbed use and enjoyment of real property by a tenant or landowner
Specific Performance: Specific performance grants the plaintiff what he actually bargained for in the contract rather than damages for not receiving it; thus specific performance is an equitable rather than legal remedy.
Dog Bite "Strict Liability" : Most states have “ strict liability” laws that make owners automatically liable for most dog-bite injuries; there’s no need to prove the owner was negligent or knew the dog was dangerous. Other states have a "One Bite Rule" allowing for the first bite or attack by their dog, unless they had prior knowledge or reason to believe that their dog was dangerous or had aggressive tendencies. States having some form of a "One Bite Rule" include, but not limited to, Colorado, Idaho, Indiana, Kansas, Mississippi, Pennsylvania, and Wisconsin.
Time is of the Essence: The contract is void if not performed within a particular period of time. “Time is of the essence” is not required to be enforceable, so long as there is a clear stipulation that the contract is void if not performed within a particular period of time. It is not enough to simply include a time period in which a contractual obligation must be performed, however.
Neighbors Tree / Branch Damage: If a neighbor's tree or tree branch overhangs your property you may cut that branch but not the tree. If it damages your property as an "act of God" such as a storm, most jurisdictions will not hold the tree owner liable and simply request that you file a claim with your insurance. If the branch is known to be dead then the owner of the tree is responsible.
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Entrepreneur Gurus I admire:
Warren Edward Buffett (born August 30, 1930) - Berkshire Hathaway
Marcus Anthony Lemonis (born November 16, 1973) - The Profit
Jonathan Peter Taffer (born November 7, 1954) - Bar Rescue
Suze Orman
Shark Tank -
Barbara Corcoran. Shark.
Mark Cuban. Shark.
Lori Greiner. Shark.
Robert Herjavec. Shark.
Daymond John. Shark.
(Shark Tank's Kevin O'Leary is now off my list after promoting FTX, which filed for bankruptcy.)
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Still learning at my age
On April 24, 2020 I just finished watching "Second Act" staring Jennifer Lopez and realized a fundamental rule: "you are the sum of your mistakes." It was through making mistakes in statistics at work that I learned my craft. It was through programing in the wrong computer language that I learned it is better to program in a language that is easier to update than one that processes faster. It is through poor planning at work that I learned how to make a schedule and keep to it. It was through speaking poorly that I learned to make speeches, be it still poorly. It is through investing poorly that I learned how to invest. It is through dancing poorly on stage that I learned dancing and loving every minute of it. It is through singing poorly on mountain tops that enabled me to improve my voice. I may be getting old, but, apparently, I still have much to learn.
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My thoughts on reducing the debt and paying for medicare, medicaid, and Obamacare:
I propose to start a federal sales tax with offsets (or VAT). Proceeds from this tax should be confined exclusively to reducing the debt and paying for medicare, medicaid, and Obamacare. This way the Republicans can keep their reduced tax rates for the wealthy, reduce the corporate tax down to 20%, reduce tax on dividends to 0%, maintain current estate tax rates and put healthcare and debt on a much better footing. Democrats would get additional funding for their poverty programs. Although this is adding a Value Added Tax, I am not opposed to using it to replace the entire income tax.
Any establishment would be allowed to offset sales taxes collected by them for their products and services with any sales taxes they paid for goods and services used to produce their products or services.
To make the tax palatable to the poor, all medical products and services and would be exempted up to a reasonable amount, and all items under $10 would be exempt. The $10 exemption should cover most reasonable food items. Health improvement items such as exercise facilities would be exempt up to a reasonable amount. House sales under $1 million would be exempt as well as the first $20,000 of car purchases. The first $2,000 of monthly apartment rentals would be exempt. Clothing under $100 would be exempt. Reasonable education costs and utility bills would be exempt. (Obviously, I do not consider a $300/month cellphone bill reasonable unless it is for medical reasons.) Instead of the above amounts and reasonableness, we can peg them to 1.5 times the local area CPI for that product/service. Thus the impact on poor and middle income people would be minimized. Of course, the rates and amounts are negotiable and probably should be indexed to corresponding indices.
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My thoughts on improving our economy:
To improve the economy in the short term, is it better to cut taxes and stimulate the private sector or increase government spending? Alan Greenspan indicated that a (IMF?) study showed that cutting taxes may be more effective. But which then is more effective, cutting a lot of taxes for a few, namely the rich, or a small tax cut for many? Further, does this stimulate the local economy or the global economy? E.g., are we stimulating China at our expense? Also, it assumes that the banking industry will assist. Another positive is many of our corporations are international so the DJI may go up regardless. The Government spending method has a better ability to target US industries and US employment. The down side is that government takes much longer to implement a stimulus that the private sector. Its actions are often too little too late. Fareed Zakaria did a documentary on how Singapore reengineered its economy using government research funding. On the other hand there are many anecdotes of red tape blocking private enterprise. Texas Governor Rick Perry is running pn a platform of having captured 38% of last years national employment increase in Texas.
I think another method of stimulating the economy may be useful. Note that banks are more likely to grant student loans than other loans because they remain after bankruptcy. Should we tap into this idea more? For those with underwater houses, should we legislate that banks can grant bankruptcy immune loans for any amount up to the amount underwater provided that amount plus mortgages does not exceed 80% of the latest valuation prior to 2008. This idea of bankruptcy immune loans can be broadened to other classifications such as small enterprise loans.
Another type of loan can be legislated: Tax rate increase loans. The government will back these private sector loans by imposing a x% (say 10%) income surtax on the borrower. Since this is a tax, it is immune from bankruptcy.
How about changing the tax rates based on the unemployment rate? If the unemployment rate is greater than 8% for the October thru end of September year, the income taxes for that calendar year shall be cut 5%. That is, calculate your taxes and take 95% of the final tax amount. If the annual unemployment rate thru September falls below 6%, then the income tax for that year shall be increased by 5%. Based on the graph on: http://www.davemanuel.com/historical-unemployment-rates-in-the-united-states.php , this should easily pay for itself in the long run. Anything left over can either be used to tweak the rates or to help balance the budget or reduce the national debt.
Like the last idea, how about increasing the employee deduction based on the unemployment rate? If the unemployment rate is greater than 8% for the October thru end of September year, the employer can increase his employment cost deduction by 10% for next four quarter’s or calendar year taxes. If the annual unemployment rate thru September falls below 6%, then the employment cost deduction is cut 10%. Again, based on the graph on: http://www.davemanuel.com/historical-unemployment-rates-in-the-united-states.php , this should easily pay for itself in the long run.
In the sixties, under President JFK, we had the cold war with Russia. Today, under President BHO, we have a economic war with China, and I think they are winning. Present weapons in this fight include cyber warfare which could wipe out our banks, industries, and defenses, if we’re not careful.
In the sixties and early seventies, we accumulated a substantial debt due to the Vietnam War, the Cold War, and the War on Poverty. We got out of it thru a period of hyperinflation. Now we have the Iraqi wars, the Afghanistan war, and gross overspending. Keeping the Federal Funds rate low doesn’t seem to loosen up our money supply. The well appears to have run dry. What is wrong with increasing the rate steadily and dramatically. If we get inflation going, housing prices will rise (I don’t know when) and the problem with underwater mortgages will dramatically decline. This strategy was successful in the seventies; why shouldn’t we repeat it? Former Director of OMB, David Stockman, agrees with me on raising the rate. Note that three members of the FOMC - Dallas Fed President Richard Fisher, Charles Plosser of Philadelphia and Narayana Kocherlakota of Minneapolis - disagreed with Ben Bernacke on keeping the rate down thru mid-2013.
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My Guiding Principles:
The aging of America along the lines of Japan is causing a relative decrease in production and increase in social consumption.
The growth trajectory of our social programs is unsustainable. As Alan Greenspan addressed in his interview on Bloomberg TV on December 6, 2012 and in his new book.
Increasing immigration can slow the aging of America.
Corporate tax rates are higher than in most countries and driving our corporations abroad.
What is taxed is reduced. Why are we taxing production and investment (income) and not consumption? It should be reversed. In this vein sales or VAT (Value Added Taxes) are more efficient than income taxes. Both, however, pose collection problems.
If the U.S. is to regain our history of high paying jobs, the education system needs to be redesigned toward employing people and innovation. One of the goals of education must be employment. Vocational education should be emphasized and just getting a "college" education de-emphasized or forced to require future employment as a condition of graduation. That is why Germany has been able to weather the recession better than the U.S. Many, if not most, college graduates cannot get a job related to their education and thus end up with beginning salaries under $50,000. Many of Germany's vocational school graduates earn six digit salaries. Perhaps government spending on education, such as grants and loans, needs to be tied to employment in the U.S. Why should we be paying to educate people in our competition countries? Also, shouldn't government pay for education result in productive citizens?
Productivity needs to be encouraged in social programs. If one is getting unemployment insurance, food stamps, or other remunerations, it should be tied to production or at least increased future potential.
The training of America needs to be continuous. Otherwise we lose our skills or they became antiquated.
The government should be employer of last resort. Perhaps any extension to UI benefits should be tied to new training or government employment in a similar job at say 2/3 of the lower of their past salary or current market salary. This has the added benefit of yielding cheaper labor for government projects.
A potential earthquake prediction system:
I saw on a Barbara Walters show that animals specifically apes or chimps and sometimes dogs can detect an earthquake 15 minutes before it happens. the program also said that a city/village in China saw strange behavior in animals and warned its citizens before it occured. I think we can create such a system here. Many zoos in the US have videotapes of their animal behavior. Someone can request thse tapes for the period of one hour or less before the Tuesday earthquake from numerous zoos. We then study these tapes to determine what strange behavior we can detect and which animals. we can then create an automated warning system based on this behavior. If, for example they hid in certan corners and stayed there and such behavior was deemed unusual, We can put electronic sensors there. If multiple sensors are triggered (say for 10 separate animals) that alert then goes to a human monitor. If a human verifies it, we can then send out an alert for a potential earthquake. To execute this we need to obtain the videos in a timely fashion before they are written over. Just a thought.
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Some Economic Data Sources:
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Credentials:
Bill Wong has dual M.S. degrees in Mathematics and Statistics from Purdue University. He has accumulated over 30 years of experience as a survey design Mathematical Statistician at both the Bureau of Labor Statistics (BLS) and the Statistics of Income of the Internal Revenue Service. His experience includes design and maintaining the Employment Cost Index and its variance estimation system at BLS. At IRS he was on the team producing individual income tax publications and analysis databases for both the Treasury and Congress. He assisted IRS research in designing statistical systems to produce lists of returns to audit. These systems resulted in numerous coauthored American Statistics Association presentations and papers including an international paper. He then worked for the IRS CFO in the GAO audit of IRS. He retired in 2008 and was active in the American Statistics Association in two officer capacities. He was a member of American Statistics Association and the National Economists Club.
Homepages prepared by: Bill Wong