    Well that wasn’t pretty… what I call the Ouch! factor. But you knew it was coming, right? Sooner or later all markets correct. How much and for how long is the eternal question. Today the Dow was down over 400 intraday and ending up minus 300 points. I see the Dow’s 50 day moving average at about 13,585 and the 200 day moving average at about 12,700. My gut tells me we’ll be heavily testing the 200 day moving average over the next six months, and back again with a lot of volatility. A lot depends on housing and credit issues, consumer spending and what the Fed does. But keep the faith! “Slow and steady wins the race… “ So the saying goes, but it doesn’t make it any more pleasant to see your stocks and funds go negative over the short term. The way I look at it however, I’m not saving and investing for the short term. I don’t trade stocks for a living, or even for fun anymore. I trade, rather I invest, for long-term gains… retirement… someday “in the future”.  On rare occasions I will make short-term trades, but those are the exception, reserved for the times I think I’ve made a mistake or need the money for something else. I will also execute trades to lock in long-term gains, especially if the greater fundamentals of a company or the market warrants it.  Yet that is a judgement call that can be prone to excessive costs, and losing out on returns and positive moves within stocks and sectors. Â
    My primary goal is to look for values… track a few companies I would like to own over time, and when the opportunity presents itself, invest in those companies for the long term. How long? At least 3-5 years or more.  Sooo… what companies? I have no frigin’ idea! Well, I do, but when the market moves this fast, it makes you wonder… is the time right?  Should I buy it now? Umm… uh, ahem… well maybe I’ll wait a few days and see where the market ends up. But I’ve always liked McDonalds (MCD). Good growth, a decent dividend (paid annually, not quarterly like many dividend payers), and decent forward valuation at about 16 times earnings right now, with a trailing P/E of 29. Maybe this is the time… maybe not. Does it matter, as long as I’m going to hold it a few years or more? Probably not. Still, I think I’ll wait a few days and see where the market heads. Lots of questions, lots of doubts, and room to find conviction in between. But that’s what investing is all about.Â
Full Disclosure:Â No Ownership of MCD at time of writing.
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The conventional rule is that you’re not supposed to be emotionally attached to your investments. I hate that. It seems to me one ought to invest in companies you feel great about, because of what they’re contributing to the world.
I very much appreciate your comment. That’s a great point- yet isn’t it a balance, even a challenge, over the long term, for how we apply our values to our lives? If I were totally comitted to my environmental goals, I may not be owning/using this computer, powered by electricity generated by a coal plant in my state. One day I’ll use solar or wind, as it becomes more cost effective and I can afford it. Heck, some of the alternative energy companies have proven to be amazing investments over the past few years… But I see it as a balance between what I can do right now, and how we evolve over time. I am not by any means strictly focused on socially responsible investing per se- but I do want to feel great about the companies I invest in. Although I don’t own MCD, I love taking my six year old there once a month or so… his eyes light up, it’s an adventure… a shared time. We talk about what’s healthy to eat, and what’s not… how choices have to be made in our lives… why we grow a garden at home (his eyes light up when picking tomatoes and cucumbers too), and why we recycle. I think we can achieve many goals along the way, not the least of which is education. No matter how hard I try, at the most basic level I’m emotionally attached to my investments because of how hard I’ve worked to save and invest in them over the long-term. With success over time, I hope to keep focusing on what I can contribute to the world. In many ways, those small successes have led to other goals like charitable gift funds I can use to foster personal goals for giving back. In other ways, helping people learn to manage money achieves financial literacy goals I think are essential for society, especially helping others move out of poverty. I do believe we can align our values with our choices in the market, as we do with other aspects of our lives. And I think society is getting there, conventional rules or not. Thanks for your words… you’ve prompted me to think more deeply about other aspects of investing, as well as writing.
Tell me what MCD is?
I agree that we all do what we can. ANd careful consuming is just as important as investing.
My dream is to over time invest a higher percentage of our money in companies and funds in alignment with my values, but so far we’re just at about 3%. Most is invested in funds about which I know very little, sad to say. Tracking that all would be a full time job by itself.
I’m sorry… MCD is McDonalds Corp. Some consider them to be corporate demons, paying lip-service to sustainability initiatives. I think they do more, and are a pretty good company overall. We’re in a similar situation… seems like almost a full-time job as it is!