David, one of my walking partners, came by yesterday evening to return a couple of backpacks he had borrowed for his hunting trip to Crested Butte. They had elk tags, but only saw mule deer, so they didn't need serious packs for carrying out field dressed elk after all. They had good weather, saw beautiful terrain, enjoyed comraderie, and had no injuries, so it was a good trip except for not getting what they went for - elk. He indicated they had not been able to walk as far as I did on my trip about the same time in New Mexico, since they had returned to their cabin each day. Perhaps he will go with my group next time - we know walking is all we are going to do.

I realized during that conversation that I had not taken a walk since returning from the wilderness a few weeks ago. I am conscientious about training before high altitude treks, but lackadaisical about conditioning otherwise. So tonight I took a little walk in the neighborhood. Since I was walking alone, I was able to increase the pace without worrying if other folks would/could keep up. I covered my normal route in 45 minutes. Granted, I didn't carry a pack or wear my hiking boots tonight, but I usually take an hour to walk that circuit, so I feel good about not being completely back to couch potato status. And I wasn't breathing hard at any point, either.

Now I just need to get with a weight training program and work on overall strength. I set of goal of getting my weight under control in 2006, and I lost 50 pounds in six months. This year is the year I was supposed to work on strength and endurance. I feel pretty good about my endurance, but it is time to get after strength now. And maybe get my weight back to where it should be, since I have gained back half of what I lost. It turns out that eating vegetarian doesn't insure weight loss if the calories are supplemented with Fritos and pie. I sure do like Fritos. And did I tell you about the lady selling homemade pie to raise money for missions at her church. I mean, don't you have to support a good cause like that? Last week was pumpkin pie and this week was pecan pie. I was just trying to do my part to help out. One pie per week is all she asks. I wonder what kind next week is? Maybe I should go do another lap through the neighborhood.

I need to start with a disclaimer so I don't give the impression that I didn't play as a child, because I did. Dudley Mitchell and I dug to China. Alex Lewis and I had a tree house. I had a swing set, and a fort in the woods and rode my bicycle down the street to Bill Ailor's house. Tony Spiva (Economics professor from UT Knoxville) brought a live cheetah to our Y Indian Guide meeting when it was at our house. I caught a kitten in the hayloft at Grandma's house and it was my cat for many years. I played little league and all that stuff. Dad pitched to me in the yard, but I had to field my own home runs if we didn't have anybody fielding. And I joined Boy Scouts when I was 12 which led to a life-long hobby of backpacking which is still how I play.

That said, adult discussions at home more often involved the stock market and business opportunities than children's stories, but everyone could participate. After I was 8 years old, every fall I offered and got a fixed price contract to remove snow from the driveway and sidewalk for the winter season - and some years got paid for doing not much and other winters I knew I was working way too cheap, but I always had money to spend on Christmas presents.

When I was nine years old I had about $85 from birthday and Christmas money that I wanted to invest. There were always discussions of stocks and the market at home. I had a relative that had worked the Texas oilfields for Occidental Petroleum during the oil boom days decades before. He spoke highly of them and continued to follow their stock. I decided to buy 3 shares of Occidental Petroleum at $27. That would have worked except commissions on odd-lot trades in those days would have eaten the whole amount, so my dad said he would be my broker. I watched the stock go up sometimes but down a lot over the next several years. 

When I was 12 I told dad that OXY wasn't working for me and I wanted to take my losses and get out. I had some more money by then that I wanted to add to my acount. He asked what I wanted in, so I did some studying for my next stock pick. I was surprised and relieved when he told me that since he was my broker and hadn't executed the prior trade that what I really had in "my account" was the money I had given him three years before, plus some interest. 

Skip ahead ten years to graduate business school finance classes in securities analysis, portfolio management, management of financial institutions, and two semesters on the student-run Educational Investment Fund (EIF) at TCU. We learned all about the efficient market hypothesis, random walks, portfolio management, fundamental analysis, technical analysis, and the inability of an individual investor to consistently "beat the market" on a risk-adjusted basis. I retreated to investing in mutual funds and abandoned a dream of becoming a portfolio manager. 

Skip ahead another twenty years or so to the present. Dad died two years ago. Mom is still managing her own portfolio, and although she adeptly gets updates online throughout the trading day, she is less confident at age 85 that her down days aren't a product of her poor picking ability than the gyrations of a fickle market. So now she wants some help managing her trading account. Her plan is to split the portfolio and hand off part of it to a new account that has me set up as manager. So now - how to manage the portfolio for her? 

I have to start with an understanding of her risk tolerance, but she is as risk tolerant as they come and she views this money as "your inheritance" and not something she needs "to live on". So maybe I have to temper this by my own risk aversion. Also, she has losses she can take against gains or dividends I can generate, so I don't have to manage it in a way to minimize her taxes. 

In looking for investment opportunities I like to start with a broad view. I evaluate the overall state of the global economy, first with the US economic business cycle, pressures on inflation, interest rates, money supply, GDP growth, and comparison to other countries. Then I look at industries and sectors for opportunities, and finally drill down to companies to evaluate. Company evaluation almost always resembles a case study. If you are interested, I will be adding presentations and maybe more blog entries as I get into this project. 

update:

1. Investing - data sources: Federal Reserve Bank of St. Louis
2. File: Monetary Growth Rates
3. File: Monetary Growth Rates
4. File: MZM Money Stock
5. File: GDP
6. File: Fed Funds Rate

When Ben speaks, Wall Street listens. Federal Reserve Chairman Ben Bernake spoke Monday in New York and reported slowing in economic growth in 5 of the 12 regions measured by the Federal Reserve Bank.  This supports the position for further cuts in interest rates.  The slowing crosses industry lines, but is perhaps most pronounced in housing, which will impact many industries and regions. Bernake said "further contraction in housing is likely to be a significant drag on growth in the current quarter and through early next year." And the market spent the week in a decline.

http://finance.google.com/finance?chdnp=1&chdd=1&chds=1&a

So, fellow investors, where are the investment opportunities? How will consumers and businesses behave in coming months and years? How will the market anticipate and respond to this and coming news? Uncertainty of outcome is the definition of risk. Uncertainty creates opportunity. Great uncertainty creates great opportunity.