Investing Philosophy

Since some new clients have come aboard since the last time I wrote on this topic, I thought it important to write about it once again. I need to state up-front that I can not predict the future and can not predict a short term move in an investment. What I can do is understand major events and the potential impact.

Investing is done by a strategy knows as business cycle investing and investment cycle investing. To execute a business cycle investing strategy, I watch the US Treasury yield curve that shows the interest rate for all US debt as well as follow the information published by the US Federal Reserve and Warren Buffet/Berkshire Hathaway. The reason Warren Buffet is selected is because of the number and diversity of businesses that are owned by Berkshire Hathaway.

Investment cycle investing looks at the amount of fear by investors as tracked by the Volatility Index, ^VIX. This is a coincidental indicator and confirms a major market move. If investors get afraid, they move from risky securities and purchase safe investments. The ^VIX measures the shift in emotion and rises when investors are afraid.

When the economy is growing, as it is now, it is in the growth phase of the economic business cycle. An analysis of historical data tells us which investments do well in this phase and which to avoid. Investors want to own mutual funds that invest in stocks and corporate bonds and avoid mutual funds that invest in long term US Treasury bonds. This strategy is maintained unless an event occurs that scares investors as shown by a rising ^VIX.

So here we are in May and the stock market has gone down a little. A few weeks ago, I said to avoid timing the stock market and not follow the saying sell in May and Go Away. The reasons for making this statement is because of the reasons mentioned above: growth phase of the business cycle, comments by the US Federal Reserve, comments by Warren Buffet/Berkshire Hathaway, and a low ^VIX.

One thing that I have found is that it is not possible to make money playing short term moves in the stock, bond, or commodity market. By the time one realizes the top or bottom has arrived and can make the appropriate investment changes the majority of the move is over and the individual investor is left paying transaction fees.

My philosophy is to understand the major moves, avoid playing the minor moves, and minimize the amount of transaction fees. Please let me know if you have a question on this topic.

Memorial Day History

By 1865 the practice of decorating soldiers' graves had become widespread in the North. The first known observance was in Waterloo, New York on May 5, 1866, and each year thereafter. The friendship between General John Murray, a distinguished citizen of Waterloo, and General John A. Logan, who helped bring attention to the event nationwide, was likely a factor in the holiday's growth. On May 5, 1868, in his capacity as commander-in-chief of the Grand Army of the Republic – the organization for Northern Civil War veterans – Logan issued a proclamation that "Decoration Day" should be observed nationwide. It was observed for the first time on May 30 of the same year; the date was chosen because it was not the anniversary of a battle.

There were events in 183 cemeteries in 27 states in 1868, and 336 in 1869. The northern states quickly adopted the holiday; Michigan made "Decoration Day" an official state holiday in 1871 and by 1890 every northern state followed suit. The ceremonies were sponsored by the Women's Relief Corps, which had 100,000 members. By 1870, the remains of nearly 300,000 Union dead had been buried in 73 national cemeteries, located mostly in the South, near the battlefields. The most famous are Gettysburg National Cemetery in Pennsylvania and Arlington National Cemetery, near Washington.

The Memorial Day speech became an occasion for veterans, politicians and ministers to commemorate the war – and at first to recall the atrocities of the enemy. They mixed religion and celebratory nationalism and provided a means for the people to make sense of their history in terms of sacrifice for a better nation, one closer to their God. People of all religious beliefs joined together, and the point was often made that the German and Irish soldiers had become true Americans in the "baptism of blood" on the battlefield. By the end of the 1870s the rancor was gone and the speeches praised the soldiers of both the Union and Confederacy. By the 1950s, the theme was American exceptionalism and duty to uphold freedom in the world. Ironton, Ohio lays claim to the nation's oldest continuously running Memorial Day parade, since 1869.

In Charleston, South Carolina in 1865, freedmen (freed enslaved Africans) celebrated at the Washington Race Course, today the location of Hampton Park. The site had been used as a temporary Confederate prison camp for captured Union soldiers in 1865, as well as a mass grave for Union soldiers who died there. Immediately after the cessation of hostilities, freedmen exhumed the bodies from the mass grave and reinterred them in individual graves. They built a fence around the graveyard with an entry arch and declared it a Union graveyard. On May 1, 1865, a crowd of up to ten thousand, mainly black residents, including 2800 children, proceeded to the location for events that included sermons, singing, and a picnic on the grounds, thereby creating the first Decoration Day-type celebration.

Beginning in 1866 the Southern states had their own Memorial Days, ranging from April 26 to mid June. The birthday of Confederate President Jefferson Davis, June 3, became a state holiday in 10 states by 1916. Across the South associations were founded after the war to establish and care for permanent cemeteries for Confederate soldiers, organize commemorative ceremonies, and sponsor impressive monuments as a permanent way of remembering the Confederate tradition. Women provided the leadership in these associations, paving the way to establish themselves as capable of public leadership.

The earliest Confederate Memorial Day celebrations were simple, somber occasions for veterans and their families to honor the day and attend to local cemeteries. Around 1890, there was a shift from this consolatory emphasis on honoring specific soldiers to public commemoration of the Confederate "Lost Cause". Changes in the ceremony's hymns and speeches reflect an evolution of the ritual into a symbol of cultural renewal and conservatism in the South. By 1913, however, the theme of American nationalism shared equal time with the Lost Cause. Columbus, Mississippi at its Decoration Day on April 25, 1866, commemorated both the Union and Confederate casualties buried in its cemetery.