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Greatest safety – put all your eggs in one basket.

“If someone puts all their eggs in one basket, they put all their effort or resources into doing one thing so that, if it fails, they have no alternatives left.” (Collins dictionary)

Frightening for investors, isn’t it?

But then, from Gerald Loeb, the most quoted man of Wall Street before Warren Buffet:

“The greatest safety for the capable I might say lies in putting all one’s eggs in one basket and watching the basket.”

Loeb’s book The Battle for Investment Survival was published when Buffett was three years old. It has been reprinted countless times; its many pearls I have stood the test of time.

These are arguments for and against diversification.

I once bought a stock the price of which doubled in one day! However, it was such a small percentage of my overall portfolio that the price increase was meaningless. A large price decrease would have been equally meaningless.

Several of our members had more than a hundred different securities in their portfolios when they joined. Many were acquired when commissions were significant. (They no longer are.) Their brokers loved it. To the investor, what possible difference could any security price movement in any direction make to the portfolio, overall?

The Monday Morning program manages this issue in an evidence-based, effective manner.

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Results of members’ asset allocation survey

On Wednesday, September 16, we surveyed our members and subscribers with the following question:

What percentage of your portfolio is in cash or cash-equivalent (money market, bank account, certificate of deposit, credit union account, etc.)?

  1. Less than 50%
  2. 50%
  3. More than 50%

Yesterday, September 17, we tabulated the results as you can see below:

  1. 56.7% have less than 50% in cash or cash-equivalent
  2. 16.7% have 50% in cash
  3. 26.7% have more than 50% in cash or cash equivalent

It is interesting to note that at the end of June, Warren Buffett’s Berkshire Hathaway (symbol BRK) was 60% in cash. It is now 20% in cash. Much of Buffett’s buying was re-purchasing BRK shares. That means that he couldn’t find a better place for the money.

By comparison, note:

  • Apple cash as a percentage of market capitalization is about 30%.
  • Google cash as a percentage of market capitalization is about 14%.
  • Microsoft cash as a percentage of market capitalization is about 25%.

Buffett is an investor like all Monday Morning members. The extent of investments differs but the objectives are similar.

Apple, Google and Microsoft are companies with objectives to build and grow.


The Monday Morning Millionaire Program was designed to offer compressed investment convictions. Over the last two decades, the program has outperformed over 90% of portfolios, including professionally managed ones.

The program does not provide any investment advice or endorsements.

With fewer than 300 words, members can read this post in less than five minutes. Following and studying the links imbedded in these posts would take longer. How members manage a post depends on their level of interest and investing knowledge.

 

How to be practical during ultralow interest rates

Which would you prefer — a lower interest rate on your debt or a higher interest rate on your savings account? Can you have both?

The average recent dental school graduate has a debt of $292,159.00 today, according to the American Dental Education Association estimates. For veterinarians and optometrists, the debt burden is in the same league.

For people with these professionals’ earning capacity, there has never been a better time to be in useful debt regardless of what Shakespeare’s Polonius has to say:

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

Hamlet Act 1, scene 3, 75–77

Useful debt? Dulls the edge of husbandry?

The number of established companies and private businesses which operate without borrowed money today, is much closer to 0% than it is to 5%. The current borrowing environment is the best that it ever has been. Borrowing costs are equal to or less than the rate of inflation. If borrowing is tax-deductible, given today’s rate of inflation, low as it is,  borrowing costs are actually at zero or less.

And husbandry? Established companies and private businesses are husbandry on steroids — working and thinking about the business 24/7!

But what if you are close to retirement or actually retired? The 6% plus interest on your savings which you remember from your youth, is a memory.

Today’s savings accounts can offer 1.05% interest but that will soon go below 1%. Further, lower interest rates will be with us for a long time. Younger people cannot save enough for a comfortable retirement. Retired people living off their savings face a serious longevity risk.

All of us must invest. Today, we can borrow for free. Let us use it to our advantage.

And the best place to invest?

Continue reading “How to be practical during ultralow interest rates”

Unparalleled, shocking bankruptcy. Improving portfolio growth

Exactly 12 years ago today, Lehman Brothers entered the largest bankruptcy protection filing in U.S. history. Why didn’t the Federal Reserve  bail our Lehman like it bailed out AIG, Bear Stearns and other investment banks?

The Federal Reserve Chair Ben Bernanke stated: “A too-big-to-fail firm is one whose size, complexity, interconnectedness, and critical functions are such that, should the firm go unexpectedly into liquidation, the rest of the financial system and the economy would face severe adverse consequences.” Was Lehman not big enough? Many academic papers deal with this issue.

From the perspective of Monday Morning Program member, 12 years ago today was a great time to buy an exchange-traded fund tracking the S&P 500.

Time to remember.

On another note, our September 1 post told how, over several weeks, writing covered calls on Novavax (NVAX), an aggressive member lost just over $200,000 on $500,000 worth of the stock. However, her total premium income of about $118,000 brought her loss down to about $82,000.

Her portfolio growth, negative for now, continues to improve. How?

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Daring member’s portfolio adventure. Good or bad? Followup

Please note that the Monday Morning Program recommends passive investing. What follows is active investing.

Describing an aggressive member‘s Novavax (NVAX) derivatives adventure with $500,000 worth of the stock, our  September 1 post told how, over several weeks, she lost just over $200,000 on the stock. However, her total premium income of about $118,000 brought her loss down to about $82,000.

What did she do after that? Is she headed towards a winning position?

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For proven best investing results

What can investors expect by following the Monday Morning approach to investing?

Based on the history of this approach, over the course of the next decade, MM investors will outperform over 90% of portfolios including professionally managed ones. (Over the short term — several months, other approaches to investing could outperform the MM program.)

For proven best results follow the steps below.

  1. Complete the scorecard exercise.
  2. Complete the risk tolerance exercise.
  3. Determine the asset allocation that you feel best about.
  4. Keep your cash and cash-equivalents in US dollars. (Money market funds, certificates of deposit, savings accounts)
  5. Save and invest in the US economy, the strongest in history.
  6. Confine investing to index investing.

Keep in mind that money will be needed in the next five years does not belong in the stock market.

With the Habits of Highly Effective Investors, luck hardly matters. Good luck!


The Monday Morning Millionaire Program was designed to offer compressed investment convictions. Over the last two decades, the program has outperformed over 90% of portfolios, including professionally managed ones.

The program does not provide any investment advice or endorsements.

With fewer than 300 words, members can read this post in less than five minutes. Following and studying the links imbedded in these posts would take longer. How members manage a post depends on their level of interest and investing knowledge.

Daring member’s portfolio adventure. Good or bad?

Describing an aggressive member‘s Novavax (NVAX) derivatives adventure with $500,000 worth of the stock, our  September 1 post stated:

“She lost about $170,000 on the NVAX stock. Writing covered calls for five weeks in a row, she earned about $100,000 in premiums bringing her loss is down to about $70,000. She plans to continue writing covered calls every Monday with expiry date of Friday of the same week, hoping ultimately, to come out ahead.

“I will keep you posted.”

Monday, September 7, Labor Day, was a market holiday. Here is her position before the market opens today, Tuesday, September 8, in round numbers:

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The harder I work the luckier I get.

Thomas Jefferson? Stephen Leacock? Samuel Goldwin? Regardless of who first said it, most understand the meaning.

However, there is a great deal of evidence that index investing, practically effortless, outperforms active, hard work investing.

Some of our retired members and subscribers spend 10 hours a day managing their investments, thinking that hard work will improve their performance. Polls show that between 30% and 60%  of investors surveyed feel that way.

In most other aspects of life, the harder we work, the better our results. When it comes to stock market investing, the Monday Morning way is as effective as it is straightforward and easy.

In the stock market, the lazier, the luckier. Sloth matters.

Does spending 10 hours a day managing investments slow down or prevent cognitive decline? Could it be a form of cognitive training? Likely yes! Does doing so improve investment performance? No, emphatically no, for most investors!

Generally, active investing underperforms significantly. Some feel that regulatory policy regarding actively managed funds should carry warnings!*

So how do we invest for predictable, positive results?

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Failure is the destiny of empires.

The third of the six habits of Monday Morning Millionaires is index investing. That is, investing in the entire American economy and not picking individual stocks.  Investors do so by buying and exchange-traded fund which tracks the S&P 500 which itself tracks that economy quite well.

The success of that approach is predicated on the continued global economic dominance of America, the American empire, if you will.

The 15th century belonged to Portugal, the 16th to Spain, the 17th to the Dutch, the 18th to France, the 19th to Britain and the 20th to America.

And the 21st? Consider:

  • 50 years ago, with 6% of the world’s population, America controlled 50% of the world’s wealth.
  • Today, With 8.5% of the world’s population, America controls 30% of the world’s wealth.
  • Every three years, China pours more cement than America did in all of the 20th century!
  • Chinese airports, railroads, highways, bridges make their American equivalents look like they belong to a Third World country. Rosi and I have seen this personally.

China has no democracy and no fear of work. That allows achievement.

Given this unmistakeable trend, what is the best way for us to invest?

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