Our 2014 results and looking into 2015

We had our second best year in history during 2014.  But the reason was more about amount of invested capital than about gain in percentage terms.  We will finish 2014 at about a 11 percent gain, which is our annual goal number.  Profits under that percentage means we made bad choices and profits above that number tends to say well we got lucky with capital allocation. However we gained in 2015 because we increased our invested capital by almost 40 percent this year mainly due to our belief we had picked the lock of the Obama risk scheme and decided to get aggressive.   We were proved right and it paid off handsomely.  We look into 2015 and will likely up our risk capital by another 20 percent. 

As we have discussed in several postings some 18 months ago we decided that securities that had regulatory protection from Obama and Congressional Democrats were the way to go.  That came after we gained the knowledge of just which securities met that criteria.  Those securities are mega capitalization technology and financial stocks such as MET. PRU, JPM, AAPL, CSCO, ORCL, MSFT, and GS.  Add in the mega sized telecommunication issues such as T and VZ and anything that prospered with low interest rates forever.  We stuck with those for these many months and up sized our positions in these securities a good bit.  Rarely did we take a less than six figure position and during 2014 we had only one losing trade.  That translates into large gains due to larger positions and with frankly little risk.  Given a choice of owning a small business or dining at the Obama profit table we find the choice easy. 

The financial engineering of the Federal Reserve and the Political Economy being run by Obama means interest rates near zero for as far as the eye can see and that is being backed up with no growth political policies.  So mega cap stocks prosper by taking in all that lovely Fed capital and high deficit spending while small business gets killed with regulations they do not have the political muscle to avoid.  The big cap stocks use the profits to buy back stock and increase dividends since they have no competition and little reason to invest for growth.  It also limits to near zero any risk in downside to their stock prices. Utilities like telecommunications are on Obama's protected list due to the near universal love of mobile devices by his young believers and voters.  Lastly municipal bonds, which are a favorite of the state level Democrats enjoy low interest rates and almost zero risk of default make for smart investing for those needing to avoid taxes, which again tend to be the wealthy who support Obama almost universally too. 

Looking into 2015 we see no change in this investment approach.  Republicans might be in charge of Congress, but Obama has made clear he will not allow his supported classes to get hurt with any legislation.  Our selected securities will likely change little or none at all.  We might look closer at some of the battered petroleum securities since they have been oversold and offer little downsize risk,  but again we will look at the mega sized picks such as XOM.  We will also keep in our portfolio picks like SF and NEWM, which we consider first rate picks for picking up market share even when growth is nowhere to be found.  Smart consolidation here is a great approach when bonds can be sold at less than 3 percent long term even for mid market companies. 

We will be posting our 2015 portfolio sometime near the end of 2014,  but note again it will change little from what we have been trading for many months now.  If you are a retirement investor or long term investor we highly suggest you continue to buy low cost mega cap mutual funds or ETF's.  Vanguard has several choices such as MGC, MGV, and VFIAX.    There seems to be little chance that this approach will change even after 2015 and into 2016 as well.  Add in that we assume Hillary Clinton will be elected in 2016 as President and her close connections to the same mega cap companies like Obama will mean pretty much the same investment environment has at least a decade to run.  It's good to be rich and protected by the ruling Democrat political class. 

Now what this simply means is the rich will continue to get richer and the poor poorer.  The employed will continue to be well served and the unemployed looking for jobs even a decade from now.  That made even more so with the huge influx of cheap labor via Obama's decreed immigration rules.  Those new green card holders will be the ones getting any vacant jobs and will be the very ones serving their new masters the politically rich made richer by lower cost services.  If you have resources or can assemble resources via regular investing you can participate in this wealth transfer and blessed years to be rich.  We find it sad for those who are stuck in this financially engineered political economy jobless and poor are voters, many of which clueless voted for these policies are the very ones suffering the most.  We continue to glee at the opportunity given us and will sit by with less effort and collect more profits.  Until something changes we will sit on the beach and frankly hope for voters to usher in a new Morning in America, which for our posterity we personally prefer to this staying rich easy.