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Y H & C Investments BLog

The blog is a personal commentary by Yale Bock on the specific events which may have occurred in the investment or political world. Specific stocks are mentioned, and many readers find this a good way to gain another perspective on the investment world.

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Examining the Investment World and Munger in the WSJ-


As we begin the lovely months of fall, the investment world has swung into overdrive with a variety of topics taking center stage. From a global perspective, the upcoming vote on Scotland's independence has focused the attention of investors on the continuing fragility of Europe, which led to a large jump in the dollar versus the Euro. The eyes of the world will be looking at the referendum on Thursday, and while the result looks like it will be close, it is expected Scotland will vote no and remain in the United Kingdom universe.


The reverberations of dollar strength spilled over into the oil market as both WTI and Brent crude have seen significant declines during the past week, as well as for the last month or so. In the bond market, after Friday's retail sales number met expectations, ten year treasury yields jumped a bit to a whopping 2.61%, spooking stock market investors. It seems that any hint of a bump off the bottom regarding interest rates brings delusions of the late 1970's to mind, when bond yields approached 15-18%. The investment world remains in a state of expect the worst, so the fear factor constantly gets transferred from “What disaster is going to happen now?” to 'Oh my gosh, the end is neigh.” Not a very healthy approach for people who just want to make a few bucks, let alone think about the future or succeeding generations.


Dollar strength and lower oil prices, if sustained for any meaningful length of time, would certainly have positive implications for consumer spending in the United States. With the average household in better economic shape than it has been at any time in the last five years, a further reduction in expenses would leave more disposable income ready to be sopped up by higher spending. Last year's fourth quarter was dramatically affected by terrible weather, so you would think the rest of the year could see quicker economic expansion. The caveat in this whole equation is how rapidly will the Fed move to end it's quantitative easing, and perish the thought, consider raising interest rates. These are the major issues confronting all domestic investors as we move from one looming disaster to another.



Here in Sin City and the Silver State, much is taking place to encourage the world to take notice of our understated place in the sun. First, a new casino on the Strip, the SLS, opened a few weeks ago. It really is just a replacement of the old Sahara, but it sits on a logistically important corner right on Las Vegas Boulevard. I hope it does well, and it certainly is an improvement to what was previously there.


On a grander scale was the announcement by Tesla Motors and the State of Nevada that the new Tesla Gigafactory will be built in Nevada. Lured here by the promise of nearly 1 billion dollars of tax credits and incentives, a hefty sum far greater than what Elan Musk was originally seeking ($500 million), everybody's favorite auto company believes ultimately they will hire almost 6,000 people in cactusville. Still, at a gazillion times forward or trailing earnings, the stock remains a buy (right).


Last week also saw Apple roll out the long awaited I-phone 6 and 6 plus, along with their entry into the disappointing so far wearable space, the I-watch. With pre-order sales of the phone showing nothing available, the consensus view on Wall Street was to downgrade the stock. It certainly seems to be reminiscent of last year, with the major difference being the stock price. Certainly, buying at 700+ ain't buying at below 390.


There was an interesting article today regarding a study by JP Morgan about the results of concentrating investments in a portfolio. The main point is individual stock selection has typically underperformed index investing and it sites the fact that only 40% of all individual stocks actually had positive returns during the examined time frame. Emphasizing the point that concentration in a portfolio might not be so wise, JP Morgan also notes the small chance an individual stock will perform like Apple, where if you had the foresight to place capital in it twenty years ago you would have experienced potentially life changing returns. So, long story short, those of us trying to pick individual stocks are mucho delusiono.



Unless, of course, we are not. Interestingly enough, in the Wall Street Journal this weekend, there is an interview and profile of Charlie Munger. In it, he discusses at some length some of his thoughts on what is important for investor's in terms of how they approach the market. We have mentioned the loquacious Mr. Munger on many occasions, but I would pay very close attention to his remarks on patience and discipline.


My own thinking on individual stock picking and portfolio management is that everything is subject to an individual's point of view and perspective on the market. You can be aware of how difficult investing is and proceed with a plan to benefit from the stock market, either by index investing, individual stock picking, neither, both, or some combination thereof. If you have neither the time or inclination to do the hard work of researching a company, index funds make perfect sense. You can also own both index funds and individual stocks as a way to get the best of both worlds. Still, the JP Morgan study does point out why investing is so difficult. Given the enormity of the task, does it not make perfect sense to consider how guys like Buffett and Munger succeeded for such a long period of time? Of course it does.


Finally, since it certainly fits into the theme of moving from one disaster to another, Barack Obama made his long awaited speech to the public regarding how the U.S. will degrade and defeat ISIS. He then proceeded to tell the country the next day that ISIS was not Islamic. Right, and XXXX does not stink.


Thanks for reading the blog this week, and if you have any questions or thoughts regarding the blog, please email me at This email address is being protected from spambots. You need JavaScript enabled to view it.  


Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charter holder.

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