HI Market View Commentary 10-24-2022
Technically Halloween is NOT a holiday BUT probably rebalancing will happen on Friday or any other big down day this week
INTC is not properly run by management
Earnings affect after market futures but hey rarely mater unless directly related to earnings
OK this webinar is for those of you who are doing investing by yourself, those who have other accounts outside of HI who are down 42%, 63% and 66% respectively
Why would you expect to win every time? Of course not BUTT = I absolutely hate losing, lack of confidence in trading system/methodology (education), Self-doubt clouds the next opportunity or the next run up
Every time the market goes down we hear what?= It will come back & this time is different
Our key is what will we do until it comes back = Wait and hold, churning out of losing funds=more commissions for the broker, trading around the events (HI), day trading, QUIT !!!!
My year = Horrible transition from E*TRADE to Schwab, June son went through traumatic brain injury (2-3yrs if ever), September
7 Navy SEAL Sayings That Will Keep Your Team Motivated
I write about leadership and organizational excellence.
Asleep at your desk? Read this and get going.
Whether you are an entrepreneur, working in corporate America, or building a start-up, it is imperative to continually seek new ways to stay inspired and driven. Being a self-starter is a fantastic quality, but we are all human and get distracted by the minutiae of our day-to-day responsibilities.
Here are seven Navy SEAL sayings I keep top of mind while moving toward achieving my personal and professional goals.
- The only easy day was yesterday.
This is one of the more well-known sayings of the SEALs. When constantly pushing yourself to excel, there will be challenges that make every day a battle.
As an entrepreneur, this concept keeps me motivated, because it puts things into perspective. If you wake up knowing that every day will pose new challenges and that you are ready to face them head-on, you will be well run equipped to achieve any goal you set.
- Get comfortable being uncomfortable.
One exercise in SEAL training is “surf torture.” You link arms with your classmates and stand, sit, or lie in the frigid Pacific Ocean until your body reaches the early stages of hypothermia. During the initial phases of training, you do this daily. Then you cover yourself from head to toe in sand and stay that way for the rest of the day. You might follow this with running the obstacle course, weapons training, or classroom time, but you are expected to push the discomfort aside and stay focused on the task at hand.
There have been many times as a business owner that I have been in very uncomfortable situations. That could be a difficult conversation with a team member, a lawsuit, or dealing with a demanding board member. Discomfort comes in many forms. But the more you embrace that as a reality, the wider your comfort zone becomes. This boosts confidence and provides the tools for facing even larger challenges down the road. So as we like to say, “Embrace the suck.”
- Don’t run to your death.
In the SEAL teams, this is not a metaphor. When conducting raids that put you in close-quarters combat scenarios, restraint is often the best approach. Once you breach and gain entry to the target, being slow and methodical often wins the race. Hence the phrase, “Don’t run to your death.”
Knowing when not to act is as important as knowing when to push forward. Restraint is crucial for business leadership. This is especially important if you are running or managing a rapidly growing business. Growth is fantastic, but smart growth is even better. Have a good plan, slow down, grow intelligently, and never, ever, run to your death.
- Have a shared sense of purpose.
A shared sense of purpose is hard to continually communicate. The economy changes. New technologies emerge. Employees come and go. There are many moving parts, which is why it’s critical for the leadership to always be communicating the reality of the situation and what the “win” will look like when you get there. And, most important, what everyone’s role is in helping the team achieve that goal.
- Move, shoot, communicate. (Work the Problem)
As a SEAL, you must be able to perfectly execute these three functions to ensure mission success. Move: You have to be able to work as one well-maintained mechanism with the ability to have constant fluid motion. Shoot: That’s self-explanatory. Communicate: All good teams have frequent, open, transparent communication. When the bullets start flying, everyone needs to know what the next move is.
The same philosophies apply in the fast-paced world of business and entrepreneurship. The team has to have the ability to communicate effectively to adapt to changing environments. Which takes us to the next saying.
- No plan survives first contact with the enemy.
This is from Helmuth von Moltke, a German field marshal from World War I. Similar is this sentiment from Mike Tyson: “Everyone has a plan until they get punched in the face.” That is why preparation and training are even more critical than planning.
When you have a team of the right people doing the right things, they will know how to adapt when the you-know-what hits the fan. And they will adapt with composure, not panic. This is why ongoing training and professional development are so important.
- All in, all the time.
I wanted to close with another one of the more well-known SEAL sayings. Just being a good performer won’t cut it to make it into the SEAL teams. You have to give everything you have just to make it to the next day. Just like managing stress, you have to focus on one piece at a time. So don’t worry about the test you have in the afternoon. Your goal is to make it to breakfast. Then lunch, and so on.
Whether you are building a startup, leading a team in a large organization, being an active parent, battling cancer, or training for a triathlon, it’s got to be all or nothing. Mediocrity and moderation won’t get the job done. Give everything you do everything you’ve got.
My heart welled with pride when I heard my 8-year-old son’s flag football coach give the team one last piece of advice in the last couple minutes of its championship Super Bowl game. He said, “Now is the time to dig deep. Leave everything you’ve got on that field. If you do that, win or lose, you will be the champions!” So whether you are 8 or 58, get comfortable being uncomfortable, get well prepared, and be all in, all the time.
AAPL 10/27 AMC
BA 10/26 BMO
BIDU 11/17 est
COST 12/08 AMC
CVS 11/02 BMO
DG 12/01 est
DIS 11/08 AMC
F 10/26 AMC
GM 10/25 BMO
GOOGL 10/25 AMC
KO 10/25 BMO
META 10/26 AMC
MSFT 10/25 AMC
MU 12/20 AMC
PYPL 11/03 AMC
SBUX 11/03 AMC
SQ 11/03 AMC
TGT 11/16 BMO
UAA 11/01 BMO
V 10/25 AMC
The Big Picture
Last Updated: 21-Oct-22 14:43 ET | Archive
Take the stress out with a dollar-cost averaging approach
Are we there yet? This is a common query from kids on a long road trip. That query, however, isn’t exclusive to kids and a road trip. It has become a commonplace question in the stock market, which is desperately looking for some assurance that the bottom is in for this bear market.
That assurance cannot be offered.
High to Low
What we know is that the S&P 500 hit an all-time high of 4,818.62 on January 4. On October 13 it hit a low of 3,491.58.
There have been a lot of changes since January 4, none more meaningful for stocks than the change in the fed funds rate and the correspondent change in market rates.
On January 4 the target range for the fed funds rate stood at 0.00-0.25% while the 10-yr note yield rested at 1.67%. Today the target range for the fed funds rate is 3.00-3.25% and the yield on the 10-yr note sits uneasily at 4.26%.
On these particular fronts “Are we there yet?” reflects a different kind of query. In these instances, market participants are wondering if the high point has been reached.
We can say without hesitation that the high point in the fed funds rate has not been reached. The Fed will be announcing another 75-basis point rate hike at its November 1-2 FOMC meeting, bringing the target range to 3.75-4.00%. The terminal rate is expected to be 5.00% by May 2023, according to the CME’s FedWatch Tool.
It seems unlikely that the 10-yr note yield has hit its high if the Fed keeps moving in the manner the fed funds futures market expects it to move. And if the 10-yr note yield keeps rising, it’s possible that the October 13 low will not be the bottom.
A Long Drive to Key West
The S&P 500 is down 22.3% for the year as of this writing. The Nasdaq Composite is down 31.7%.
Those moves are the equivalent of a road trip from Chicago to Orlando, which is to say it’s a long way from the January 4 high. The question is, will the market ride on to Miami, or perhaps Key West, or will it think Orlando is far enough and turn around for the drive home?
We don’t know.
Orlando is a long way away from Chicago (about 1,150 miles). Key West is a decent drive from Orlando (about 400 miles), but not nearly as far as the drive from Chicago to Orlando. If planning to drive to Key West from Chicago, you are about 75% of the way there when you reach Orlando.
That is, you are closer to the bottom of your road trip than you are to the top of the road trip. That’s the good news. The bad news is that you still have a good jaunt to get from Orlando to Key West if you decide to go there.
Will the stock market decide to “drive to Key West?” Again, we don’t know. Nobody does. We know that a road trip like that will require a lot of gas. Fortunately, the cost of gas is less expensive as you drive south.
The same can be said for the stock market. The S&P 500 started its drive this year at 21.2x forward twelve-month earnings. Having headed south since January 4, it now trades at 15.7x forward twelve-month earnings.
You can’t get to Key West from Chicago on a single tank of gas, so you’ll need to stop and refuel a number of times. That’s necessary to keep the engine running and to ensure you get to your final destination.
What It All Means
Equity investors should be thinking the same way. How do you fill the tank and ensure you get to your final destination? You dollar-cost average.
That is, you stick to a regular investment plan no matter how bumpy the road is, investing a fixed dollar amount on a recurring time frame in a stock, mutual fund, or index fund, for example, no matter what the price is. Sometimes it will be more expensive, and you won’t be able to buy as many shares, and sometimes it will be cheaper, enabling you to buy more shares.
This is not a comfortable stock market right now, but with the sharply reduced stock prices, it is an opportune time to stick with dollar-cost averaging.
Sticking with a regular investment plan will help you steer through the volatility and avoid the stress of wondering when to get into a market that is down big but shows signs every now and then of wanting to drive north again — or at least not go all the way to Key West.
In any case, you won’t have to ask, “Are we there yet?” You might want to know the answer, but you don’t need to know the answer with a dollar-cost averaging approach, and there is some assurance in that.
|WEEK OF OCT. 17 THROUGH OCT. 21, 2022
|The S&P 500 index rose 4.7% last week as investors digested the latest round of Q3 earnings reports, many of which came in better than expected.
The market benchmark ended Friday’s session at 3,752.75, up from last week’s closing level of 3,583.07. The weekly gain pushed the S&P 500 back into the black for the month to date; it is now up 4.7% for October so far with just six sessions remaining. However, the index is still solidly in the red for the year to date with a drop of 21% for 2022 thus far.
Last week’s advance came as more quarterly earnings rolled in above analysts’ mean estimates. While companies are noting challenges such as inflation and supply chain issues, many are showing that they have still managed to surpass Street consensus estimates.
That helped prompt a relief rally after stocks had been sliding in the weeks heading into earnings on worries about the impact of macroeconomic issues including inflation.
All of the S&P 500’s 11 sectors rose last week, led by a 8.1% jump in energy, a 6.5% climb in technology and a 6.1% rise in materials. Other strong gainers included consumer discretionary, up 5.6%, and communication services, up 5%. The smallest advance was logged by utilities, which edged up 1.9%.
The energy sector’s gainers included shares of Baker Hughes (BKR), which rose 16% as the oilfield services company reported stronger-than-expected third-quarter earnings per share and named Nancy Buese, who most recently served as Newmont’s (NEM) chief financial officer, as its new finance chief.
In the technology sector, shares of Lam Research (LRCX) climbed 17% as the supplier of wafer fabrication equipment and services to the semiconductor industry reported results above analysts’ mean estimates for its quarter that ended Sept. 25.
The materials sector’s gainers were led by Freeport-McMoRan (FCX), whose shares jumped 16% as the mining company reported Q3 adjusted earnings per share and revenue above analysts’ mean estimates.
Cruise operators led the climb in the consumer discretionary sector as Tigress Financial Partners said Norwegian Cruise Line (NCLH) and fellow cruise line operator Royal Caribbean Cruises (RCL) are poised to benefit from a “significant” post-pandemic travel recovery. Shares of Norwegian Cruise Line rose 15% on the week while Royal Caribbean Cruises shares added 10%. Shares of peer Carnival (CCL) climbed 15%.
In communication services, shares of Netflix (NFLX) soared 26%. The streaming company reported Q3 earnings and revenue above analysts’ mean estimates as it added new subscribers for the first time this year and handily topped its subscriber addition estimate for the quarter. The company also said it expects to sustain the growth during the holiday season when new sources of revenue will gradually kick in.
The communication services sector also got a big boost from shares of AT&T (T), which rose 14% as the company reported Q3 adjusted earnings per share and operating revenue above analysts’ expectations and raised its guidance for the full year.
Next week’s earnings calendar features companies such as 3M (MMM), United Parcel Service (UPS), General Motors (GM), Microsoft (MSFT), Alphabet (GOOGL), Visa (V), Meta Platforms (META), Boeing (BA), Ford Motor (F), Apple (AAPL), Amazon.com (AMZN), Merck (MRK), McDonald’s (MCD), Exxon Mobil (XOM) and Chevron (CVX).
Economic data will include readings earlier in the week on the manufacturing and services sectors for October as well as the October consumer confidence index. However, more attention will likely be placed on the first estimate of Q3 gross domestic product on Thursday and September inflation data due Friday.
Provided by MT Newswires
Where will our markets end this week?
DJIA – Bullish
SPX –technically bullish
COMP – Bearish
Where Will the SPX end October 2022?
09-26-2022 -2.0% or 10%
Mon: PGH, DFS, ZION
Tues: MMM. GLW, GE, GM, HAL, KMB, PAM, UPS, VLO, FFIV, MSFT, MAT, TXN, UHS, KO, GOOG, V
Wed: BSX, BMY, CME, GRMN, HOG, HES, HLT, KHC, COOP, OC, VM, VFC, VMI, BA, F, META
Thur: MO, BUD, ARCH, CAT, HTZ, HON, IP, MA, MCD, MRK, LUV, TWTR, AMZN, COF, FSLR, INTC, SKYW, TMUS, AUY, X, AAPL
Fri: CVS, CL, XOM
Tue FHFA Housing Price Index, Consumer Confidence,
Wed: MBA, New Home Sales,
Thur: Initial Claims, Continuing Claims, GDP, GDP Deflator, Durable Goods, Durable ex-trans
Fri: Personal income, Personal Spending, PCE Prices, Employment Cost Index, Pending Home Sales, Michigan Sentiment
How am I looking to trade?
Currently have protection on for earnings, Bank stocks are running unprotected based on their earnings, SPY puts in accounts for possible earnings disappointment
www.myhurleyinvestment.com = Blogsite
The 60/40 portfolio has been suffering all year, but there are opportunities for long-term investors
PUBLISHED WED, OCT 19 20223:17 PM EDT
The classic diversified portfolio of 60% stocks and 40% bonds is having a terrible year.
The 60/40 strategy, known as a balanced portfolio, has been hit by rising bond yields — which means falling fixed income prices, as well as a sinking stock market. The portfolio’s annualized decline of 32% for 2022, as of Oct. 18, is the worst in the past 100 years, according to Bank of America.
Yet, amid that devastation there may be an opportunity for long-term investors.
“The future is brighter for the 60/40,” said Omar Aguilar, CEO and chief investment officer of Schwab Asset Management.
“When we compare the opportunities we see in a 60/40 today to what we had in the middle of the pandemic, clearly there are more opportunities now than back then,” he added.
One measure of the portfolio’s performance is the iShares Core Growth Allocation ETF, which has a target fixed allocation of 60/40. The ETF is down more than 19% this year, as of Tuesday’s close.
iShares Core Growth Allocation ETF ’s performance this year
The reason for Aguilar’s optimism is his expectation that there will be a decoupling of stocks and bonds, whose prices have been falling. Typically, these two asset classes have an inverse relationship.
“The correlation will come back to the normal levels, or the historical levels that you normally have between equities and fixed income,” Aguilar said. “We hope this will be a result of yields stabilizing and getting to the terminal rate, which hopefully will happen by the first part of 2023.”
For Bank of America Global Research’s chief investment strategist Michael Hartnett, “long 60/40” is one of the most contrarian trades at the 2023 lows, thanks to its performance, past history and anticipated volatility ahead.
“If in 2023 either the inflation becomes more accepted, anticipated and/or it drops because of the unemployment rate, then you have a case for saying actually maybe the Fed can ease up — who knows, maybe even cut rates over the following 12 months,” Hartnett said.
“If that is the case, then just as everyone is abandoning 60/40, the great contrarian trade next year would be 60/40,” he said.
Harnett isn’t advocating a massive outperformance of the 60/40 portfolio and is not convinced the stock market has made its ultimate low yet, or that bond yields have reached their peak.
However, when that turning point occurs, he advises selling the dollar and buying the 30-year Treasury. In equities, he would buy small cap, cyclicals, value, European and emerging markets. “You are long the new leadership,” he said.
Schwab’s Aguilar advises not chasing yields in fixed income, but instead maintaining a balanced approach between credit and duration. He also believes valuation in stocks is starting to become attractive.
Thinking outside 60/40
There are also those who aren’t necessarily buying back into the 60/40 strategy.
Michael Dow, chief investment officer at Beacon Pointe Advisors, shifted to a 55% stocks, 25% fixed income and 15% alternative investments split — and he’s not looking back.
He’s overweight value stocks. His alternative investments are primarily in private equity, private credit and private real estate, as well as in real assets and hedge funds. In fixed income, the firm currently has a bond duration of four years, down from its previous seven-year duration. However, it is contemplating shifting back to around six years in anticipation of a recession.
He suggests not straying too far from your strategic allocations.
“Volatility is the price you pay for building wealth,” Dow said.
‘Once in a generation opportunity’
Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments, fashions her clients’ portfolios based on their needs and risk profiles, and has recently been making some changes. After moving into alternatives and convertible securities from bonds in the summer of 2020, she is now shifting back into bonds.
However, she’s sticking with short-duration assets in corporate, municipal and Treasury bonds and laddering them. A bond ladder involves purchasing issues with different maturities and then reinvesting the proceeds as near-dated bonds mature. By doing this, you’re spreading interest rate risk.
“Our duration is two to three years. You will have the ability to generate a decent yield … but you will mitigate risk so you are laddering your holdings,” Tengler said. “The best thing to do in this environment is to ladder because you don’t know how far the Fed is going to go.”
While she’s not predicting a bottom in equities, she doesn’t think investors should sit on the sidelines.
“This is a once in a generation opportunity to buy really high quality companies at reasonable multiples,” Tengler said.
“You have to be willing to step in against the sentiment,” she added. “Three years from now, will I be happy I bought at this time? Yes, absolutely.”
Taking cover in government bonds ahead of a recession? BlackRock says that’s now an ‘obsolete’ strategy
PUBLISHED WED, OCT 19 20228:31 PM EDTUPDATED WED, OCT 19 202210:36 PM EDT
One important part of the recession playbook is “obsolete” — and that’s seeking shelter in bonds, according to BlackRock, the world’s largest asset manager.
“Recession fears are roiling markets. Investors traditionally take cover in sovereign bonds, but we see this recession playbook as obsolete,” strategists from BlackRock Investment Institute, led by Jean Boivin, wrote in a note earlier this week.
Central banks have been hiking interest rates to control inflation, “causing recessions” in the process. But they haven’t been cutting rates like they typically do in recessions because of how persistent inflation has been, BlackRock said.
In addition, BlackRock expects investors to “demand more compensation for the risk of holding government bonds amid high debt loads.”
That’s why the firm is of the view that Treasurys are less attractive right now.
“We’re underweight government bonds because yields have room to move higher, and we don’t think they can be a safe haven when recession comes,” BlackRock wrote. Bond yields move inversely to prices.
Interest rates would need to hold steady or fall for Treasury returns to turn positive, the firm added.
‘Bond vigilantes are back’
Long-term yields are rising across developing markets as a result of tighter monetary policy, inflation and debt, BlackRock said.
“Central banks in the new regime face a sharper trade-off between growth and inflation than in the past,” the firm’s strategists wrote. “We think central banks will eventually halt rate hikes. But they won’t have done enough to get inflation all the way back down to target, implying they won’t be able to start easing policy, in our view.”
Higher rates and inflation will create a “ripe environment” for investors to demand higher term premiums for long-term bonds, BlackRock said. A term premium is the amount by which the yield on a long-term bond is greater than the yield on shorter-term bonds — reflecting the amount investors expect to be compensated for lending for longer periods.
“All of this underscores why the old recession safe-haven playbook doesn’t apply,” the firm wrote. “That’s no mere musing: We see it playing out in the UK in real time.”
BlackRock cited the recent crisis in the U.K. and its central bank’s ensuing plan to buy bonds. The U.K. government had announced a radical economic plan — a so-called “mini budget” which included unfunded tax cuts — on Sept. 23. The move sent financial markets into a tailspin, as investors ditched U.K. bonds and sold off the pound.
In a bid to stem the sell-off, the Bank of England in late September said it would delay its plan to sell U.K. government bonds and buy long-dated bonds for two weeks as part of emergency measures to calm the market.
The bond-buying program ended last week, but yields spiked anew after, BlackRock noted.
The sell-off may not ease, with “bond vigilantes” returning, the asset manager said. The term refers to bond traders who threaten to or actually sell a large amount of bonds to signal their protest with the issuer.
“In this environment, bond vigilantes are back and heralding term premium’s return,” BlackRock said.
“The upshot: We’re broadly underweight government bonds. U.S. bond returns are the most positively correlated to stocks in two decades on a 90-day rolling basis. We expect that correlation to stay positive, erasing bonds’ role as portfolio diversifiers,” it added.
Additionally, higher short-term bond yields are making long-dated bonds less attractive as investors can get decent returns for the former with less interest rate risk, the firm added. The yield on 2-year U.S. Treasurys surged recently, in tandem with the U.S. Federal Reserve’s rate hikes. It has since stayed elevated at 4.45%.
What to buy
Investors still looking to buy bonds should prefer inflation-linked ones as they are “not pricing in persistent inflation,” BlackRock said.
The asset manager also likes high quality credit — strong corporate balance sheets should limit default risks even in a recession, it said.
LEADER, SIMPLIFY THE BATTLEFIELD — WHAT YOU BEHOLD YOU BECOME
January 19, 2021 Corey Towe
What do you do when your plans go sideways? When chaos and clutter are prevalent and the fog rolls in?
We’ve all been there. Some of us are there now.
We’ve all had moments or seasons where chaos reigns and we struggle to maintain focus and forward momentum. Stress rises. Things break. We freak out. Blood pressure rises. Distraction settles in and we feel stuck.
I love what President Eisenhower said about plans and planning. He said, “In preparing for battle I have always found that plans are useless, but planning is indispensable.” In other words, once the bullets start flying, chaos ensues and we’re left to regroup, pivot or persevere.
How we frame up our circumstances is of utmost importance when we face times like this. What we behold is what we become. The lens through which we view our circumstances shape how we think, feel and act in the midst of the chaos. What we choose to focus on will define the person we become.
“What we behold is what we become.”
It reminds me of the infomercial that seems to always be on while I’m watching something on TV. You know the one. It’s the on promoting the Tac Glasses and their light-filtering technology. They show you a white screen, but when you put on the glasses you see an eagle with the American flag. The lens through which we view our circumstances directly impacts what we see and how we see it. What we behold we will become.
The Navy SEALs have another way of framing up situations like this. When chaos is encountered in a combat scenario and plans go out the widow, SEALs are trained to pivot to this mindset so they can accomplish the goals of the mission.
Mark Divine, the author of The Way Of The Seal, speaks about how in the chaos of war, elite SEALs are taught to “simplify the battlefield.” That means we need to identify the next most important target and then put all of our energy into successfully executing that mission as we maintain what he calls “front-sight” focus. This requires defining the WIN — What’s Important Now and narrowing our focus.
Divine says, “Simplifying the battlefield is SEAL-speak for eliminating distractions. When we eliminate distractions, we can better see the simple, elegant solutions and remain front-sight focused on the right way forward”
Front-sight focus is the key ability to focus on “ONE” thing until victory is achieved. This is the ability to focus on the right things at the right time so you get the right results. This requires honing in to do what only you can do and de-cluttering the noise around you.
In the midst of chaos, it’s vital we learn to shrink our focus to the things that really matter and eliminate the clutter that surrounds us. The clutter could be in our minds or physical environments, but removing the clutter allows us to simplify our focus and eliminate distraction.
What is the ONE thing you need to focus on today that is the most important? What tactic do you need to implement and activate when sense chaos surrounding you and feel your anxiety increase? Do you need to change the lens through which you view everything going on inside and outside you?
Driving it to action:
Here is an example of something I do when I feel anxious or sense my mind is becoming cluttered. I use this to re-center my mind and help me simplify my battlefield.
Thank You Walks
I go on a 5–10 minute walk where I think about all the things I’m thankful for. These are big or little things and I just express my gratitude verbally. It’s hard for me to be stressed or anxious when I’m reminded of how much I am truly blessed.
Implement an “Activation Trigger”
Find a trigger you can leverage when you start to feel out of control and anxiety rises. You need a practical way to reframe the chaos. The one I’ve learned about lately and implemented is the Five Second Rule from Mel Robbins (great book). It’s simple, just count backwards 5,4,3,2,1 and make a decision to act or reframe your thoughts. Take control of the narrative being told in your mind.
Rule your mind or your mind will rule you. You will become what you behold.
Parenting expert: The No. 1 soft skill that predicts kids’ success more than IQ—and how to teach it
Published Sat, Oct 22 202210:19 AM EDTUpdated Sat, Oct 22 20227:32 PM EDT
Through my research as a child psychologist, I’ve found that perseverance is the No. 1 soft skill that sets kids who are highly motivated apart from those who give up easily. In fact, studies have supported that it is a stronger predictor of success than IQ.
Kids who have perseverance don’t give up in the face of setbacks. They believe their efforts will pay off, so they stay motivated to work hard and finish what they start, despite any barriers that arise.
Here are nine ways parents can help kids build perseverance:
1. Fight the factors that discourage kids.
The first step is to fight the four factors that derail perseverance. I like to use the acronym “FAIL” as a helpful reminder:
- Fatigue: Safeguard your child’s concentration abilitiesby sticking to regular sleep routines. Turn devices off one hour before bedtime and keep screens outside of the bedroom at night.
- Anxiety:The pressure to succeed can cause overwhelming feelings. Express to your child that your love is not contingent on their success.
- Identity solely based on fast achievements:Instill a growth mindset so your child understands that success is not fixed. Praise them for their efforts, not their results.
- Learning expectations that don’t match abilities:Set expectations just slightly above your child’s skill level. Expectations that are too high can cause anxiety, while ones that are too low can lead to boredom.
2. Teach that mistakes are growth opportunities.
Remind your kids that mistakes can be a positive thing, even if a situation doesn’t turn out they way they expected. Accept their errors and tell them: “It’s okay to mess up. What matters is that you tried.”
Admit to your own missteps, too. This will help them recognize that everyone makes mistakes, and that success happens when you don’t let setbacks define you.
3. “Chunk” tasks.
Teaching your kids to divide big tasks into smaller, more manageable chunks will help them feel more confident about completing things over time.
If they’re feeling frustrated with a math worksheet, for example, have them take a separate sheet of paper and cover all the math problems except the top row. Then continue lowering the paper down to the next row as they finish each one.
Or, if they are feeling overwhelmed by the sheer amount of homework they have, they can write down each assignment on a sticky note, stack them by difficulty, and do one task at a time.
4. Celebrate small wins.
Repeated failure can destroy perseverance, but the smallest success can encourage a child to keep going, so help them identify their little wins.
For example: “Last time, you spelled six words correctly. Today you got eight! That’s a gain. You’re improving because of your hard work!”
5. Stretch their focus.
If your child wants to give up on an assignment, put a timer on their desk and set it for an appropriate length of time, tailored to their attention span.
Explain that they just need to keep at it until the bell goes off. Then they can take a quick break and reset the timer.
Encourage them to see how many problems they can complete before the bell dings so that they see they are succeeding. Over time, focusing will get easier.
6. Correct “stumblers.”
When kids give up, it might be because they can’t see their way out of a challenge. Start by acknowledging their frustration and express that it’s a normal feeling. Try doing a breathing exercise or taking a break.
Then when they return to the task, see if you can help them identify one small stumbler that’s getting in their way.
For example: “It looks like you’re getting the addition and multiplication symbols mixed up.” Once the issue is clear, practice focusing on the stumbler until they slowly overcome it.
7. Praise effort.
Stanford psychologist Carol Dweck discovered that when kids are praised for their intelligence (e.g., “You’re so smart!”), they are less likely to persevere.
But when praised for their effort (e.g., “You worked so hard on that! Nice job.”), they are more motivated and work harder.
To stretch perseverance, praise your child’s effort, not their grades or scores. The goal is for them to be driven to succeed without extraneous motivators, which is why I’m not big on stickers and gold stars. Research finds that superficial reinforcers can actually reduce children’s perseverance.
8. Come up with “stick-to-it” statements.
Remind them to repeat that statement out loud several times for a few days until they can remember to use it on their own: “Things don’t have to be perfect. I will get better and better if I keep trying.”
9. Step back and let them figure it out.
One of my top parenting rules is: Never do something for your children that they can do on their own.
Each time you fix your child’s errors or do something for them, they increasingly learn to depend on you. There goes the opportunity to develop perseverance.
Once you know that your child can complete a task alone, take a step back. Allow them to embrace that feeling of accomplishment.
Michele Borba, EdD, is an educational psychologist, parenting expert, and author of “Thrivers: The Surprising Reasons Why Some Kids Struggle and Others Shine” and “UnSelfie: Why Empathetic Kids Succeed in Our All-About Me World.”
Warren Buffett Finally Throws In The Towel On 4 Lousy Stocks
- 08:00 AM ET 08/17/2022
Warren Buffett likes to say his favorite holding period for an S&P 500 stock is forever. But that’s definitely not the case as he unloads some of his worst dogs.
Buffett’s Berkshire Hathaway (BRKB) sold off a least a portion of its four worst performers this year: Verizon (VZ), Store Capital (STOR), General Motors (GM) and U.S. Bancorp (USB). That’s according to an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. Berkshire Hathaway retains a portion of the stocks (except Verizon), but now all the positions are below 10% of the companies’ shares outstanding.
When you see Buffett dump a stock, that’s about the closest thing to him ringing a sell bell. “There is very low portfolio turnover. Buffett didn’t buy a single new stock in the second quarter,” said Whitney Tilson of Empire Financial Research. “Almost all of his trading is generally among his existing positions.”
Remember: Buffett is an avowed value investor. When stocks he believes in fall in price, he often buys more. So if you see him dumping them instead, that should tell you something.
Plenty Of S&P 500 Dogs To Choose From
Berkshire Hathaway itself is having a decent year. Shares of Buffett’s conglomerate are up 2.4% this year. That’s a solid showing in a year that the S&P 500 is down nearly 10%.
But make no mistake, the Oracle of Omaha is struggling too with his investments. Just look at the massive $40 billion loss the company took in the second quarter. And 36 out of Berkshire Hathaway’s 49 U.S.-listed positions, or nearly three-quarters, are down for the year.
And some of the losses are enormous. Apple (AAPL), Berkshire Hathaway’s largest position, is down 2.7% this year, erasing more than $4 billion in value for Berkshire Hathaway’s portfolio. Berkshire Hathaway owns nearly 6% of the smartphone maker.
Buffett, though, isn’t giving up on Apple. Berkshire Hathaway actually boosted its position in the smartphone maker’s shares by nearly 1% to 894 million shares in the second quarter. And yet, as with other losers, he’s willing to part ways.
Hanging Up On Verizon
With shares of Verizon down nearly 12% this year, Berkshire Hathaway completely unloaded its remaining 1.4 million shares of the company in the second quarter. The great Verizon sell-off started in the first quarter, when Berkshire Hathaway dumped roughly 99% of its 158 million shares. So much for forever.
Another dog Berkshire Hathaway is selling off is Store Capital. With shares of the consumer discretionary stock still down nearly 15% this year, Berkshire Hathaway didn’t buy more. Just the opposite: It dumped more than half its position. Now it only owns 2.5% of the company.
No Love For GM
Shares of GM lost more than a third of their value this year. But rather than buying more, as is Buffett’s typical style, he sold off nearly 15% of it. Now Berkshire Hathaway owns just 3.6% of the company. Meanwhile, Buffett also took 5% off the table in his U.S. Bancorp position. Shares of the bank are down more than 12% this year. It’s important to note, though, that Buffett still owns 8% of the bank.
Is it possible Buffett will change his mind on some of these stocks later? Absolutely. Berkshire Hathaway has been adding to its Occidental Petroleum (OXY) position and now owns 20% of the company. But keep in mind, it dumped the position to zero as of the end of 2021.
So when you see Buffett running from a falling S&P 500 stock, that’s not a signal you should ignore.
Losing Stocks Buffett Is Dumping This Year
Berkshire Hathaway reduced its position in these stocks that are down this year
|YTD price change
|Cut in Berkshire position in Q2
Sources: IBD, S&P Global Market Intelligence