The Long Term Investor

COMIC BOOKS.........what a great collecting category. I assume you are familiar with Heritage Auctions. They regularly do comic book auctions, often really high end ones. Some collecting categories are dying out because the collectors are all grey hairs. Now comics, there is a collecting category that will be BIG for many many decades. With all the young collectors in their 20's and 30's that have good jobs and money.......comics are going to really APPRECIATE in value.

What do you do with musicians....besides myself, I know there are some on here.

As to the economy and our country.......BOTH will THRIVE long term as usual. There will be changes slowly over time as usual. I live in a high end neighborhood that has become EXTREMELY INTERNATIONAL over the past five years.

I see people coming here from Asia, India, and all over BECAUSE this is the ONE COUNTRY in the WORLD that they all aspire to come to and live in and raise their children. They are all NOW my neighbors....they came here and raised themselves up, started businesses, or developed skills, and are now very successful.

For some, their kids will be the first generation to go to college. Their kids have no real idea what their parents went through in their own countries and achieved to get here. BUT they all have one thing in common, they are passing on good values about hard work and education to their kids.

The country is going to be MUCH MORE diverse......but it will be in good hands......the kids.....as well as their parents.......are AMERICANS. AND......the second, and third generation descendants of the people fighting and dreaming of coming here......will contribute to the strength of the country going forward.

I look back on what was going on with my generation when we were 18 to 30. Vietnam war protests, the hippie era, drugs, political assassinations, the NIXON resignation, Iran hostage crisis, Stagflation and the oil crisis, WIN.."whip inflation now", etc, etc, etc.......I am sure the people that were my age (70) than must have thought that the country was TOTALLY SCREWED. Well, we somehow survived.

 

HERE is the good news........AND......I agree with the positive view of the markets going forward. If you want the negative short term view, it is easy to find on any of the business sites. No one can predict the short to medium term,.....BUT.....for those that are NOT traders or irrationally focused on the short term the FUTURE will be......NORMAL. That means that this time represents a BIG opportunity for investors. This is NOT the time to swing for the fences and put yourself at risk. However, those that reasonably and logically invest through this little event will be well rewarded........Farther Up The Road. (apologies to Joe Medwick)

In Defense of the Rally: Five Pros Who Say the New Bull Has Legs

https://www.bloomberg.com/news/arti...rally-five-pros-who-say-the-new-bull-has-legs

(BOLD is my opinion OR what I consider important content)

"It’s not hard to find people with a dim view of the stock rally. Just as many or more embrace it, and are happy to explain why.

Conventionally defined, the S&P 500 is in a new bull market, having climbed 28% since mid-March. Indexes are poised to close higher for the third week in four, with two of the advances exceeding 10%, a feat unseen since 1933. Gains in giant tech stocks have turned the Nasdaq 100 green for the year.

Believers are out there, pointing to unprecedented and swift actions by the Federal Reserve and Congress, and the propensity of markets to anticipate negative data and price it in. If earnings are your worry, take heart -- there were many periods when stocks surged while they tanked. Others cite progress on the coronavirus and a hopeful return to normalcy.


So forget the bear case, the view that what’s going on is a mind-boggling instance of irrationality disjointed from the reality on the ground, which is a gradual unfolding toward the worst economic downturn since the Great Depression. While the economy is without a doubt taking a big hit, bullish arguments are winning out for now. Here are five views in the rally’s defense.

A Very Good Time
For anyone but the shortest-term tactical trader, Sean Naughton, senior vice president of U.S. equities at RBC Wealth Management, sees plenty of reasons why the S&P 500 still looks attractive near 2,800.

“If you have a three- to five-year type of time horizon, it’s still a very good time to be getting invested,” he said by phone. “Even at these levels with the rebound.”

After steep corrections like the S&P 500’s record 34% fall, forward returns are typically quite positive, according to his team’s analysis. When the Federal Reserve is aggressive with its actions, as it is now, stocks perform well, Naughton says. Interest rates are also extremely low, allowing for higher valuation multiples, and 2021 should see a more normalized earnings scenario.

Resilience In Asset Prices
At Pacific Life Fund Advisors, the team upped exposure to roughly 40% risk-on on March 20, three days before the stock-market lows. That helped the firm, which oversees $32 billion, turned around a quarter’s worth of underperformance in a week, as the S&P 500 embarked on a 27% rally.

At the time, the Newport Beach-based money manager believed assets were pricing in a deep recession, but not yet the stimulus unleashed to combat it. Max Gokhman, Pacific Life’s head of asset allocation, has been encouraged by muted market reactions to weak economic data. To up risk exposure even further, he’s eyeing economic data and earnings, the trajectory of the virus, and signs of more stimulus.

“If the market is moving down but not crashing when we get a bad surprise print, that’s a good sign that there’s greater resilience in asset prices,” Gokhman said of reactions to economic data. “Ultimately there will be more stimulus than was necessary which will in turn help growth as we get into the recovery phase in the back half of the year.”

Key Covid Trends
Markets in late February and early March started to anticipate negative economic data. They priced in an average recession and right now are primarily being driven by medical figures, many of which are improving -- including a flattening of the curve in major hot spots, says Deepak Puri, CIO Americas at Deutsche Bank Wealth Management, which had about EUR213 billion ($235 billion) in assets at the end of January.

“The S&P tends to lead GDP and other macro data so I’m not too shocked with the rally,” he said by phone. “The market is sensing that the social distancing measures that have been deployed have made a positive impact.”

To be sure, weak company earnings reports and guidance as well as a deterioration in medical trends could still cloud the outlook over the next couple of weeks. But stocks have already retraced 50% of their losses since the March low, which is a positive development. When that happens, the chance of plumbing new lows goes down “tremendously,” said Puri.

Looking ahead, an emergence out of the lockdown in a slow but normalized manner would be “the best news for the markets.”

Stimulus Support
Economists right now are struggling to project how intense the virus-induced recession will be in the U.S. While data released for March paints a frightful picture, most predict the biggest hit is yet to come. But Matt Lloyd at Advisors Asset Management is finding comfort in the massive Congressional stimulus package aimed at offsetting the declines in growth.

A 25% drop in GDP during the second quarter -- which, to be sure, would be the deepest such contraction on record -- would equal to an output cut of about $1.3 trillion. It’s not insignificant but it’s more than offset by the $2 trillion stabilization package intended to provide support to individuals, businesses and states and supersedes other losses, said the firm’s chief investment strategist in a phone interview.

“If you look historically, markets rebound in defiance of what the data is saying because they’re not looking right now -- they’re looking down the road,” he said. “Markets take uncertainty and price uncertainty usually a little bit greater, which is why we had such an exacerbated sell-off -- but then, conversely, why we rallied from those levels.”

Many fund managers currently have high cash balances they can deploy, said Lloyd. His firm, which had more than $33 billion in assets under management at the end of December, has favored municipal bonds and shorter-term investment-grade credit over the past month, among other things.

No Dichotomy in Reality
To Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management, the stock rally makes perfect sense, and its root cause is the fact that social distancing practices have worked so well to slow the virus’s spread. The way he sees it, the economic data has been so horrible because Americans have been “so good at performing our recommended treatment.” Now that the curve has flattened, dialog can turn to reopening the economy and getting back to work.

“There is no dichotomy in reality,” said Schutte, whose firm manages more than $161 billion. “We’re seeing bad data because good social distancing means a better virus outlook, less social distancing, leading to a rising market on the belief that the data will get better.”"

MY COMMENT

Could not agree more. BEWARE.....the media and politicians trying to make hay from this event will be FULL ON DOOM & GLOOM for at least another 2-6 months. BUT....this does not and will not reflect REALITY and sooner or later reality wins out.

I have not looked, but there has GOT TO BE a massive pile of money siting on the sidelines right now. Sooner or later over the next 8 months all the people managing that money are going to jump back into the markets. I would guess by year end so they can try to placate their clients by showing that they are invested. It is called.....WINDOW DRESSING.

Never before in history has the government thrown this much money into the economy in such a short time. We have the added benefit that the world.....before this event....was in a deflationary environment. This will help to tamp down inflation from the stimulus.

Earnings impacted by this event will be discounted.......as they should........as an aberration and NOT reality. What will count going forward and will determine the REAL situation will be earnings in the 3rd and 4th quarters of this year and the first couple of quarters next year.

We are at the start of the economy reopening and the AMERICAN people demanding that the politicians and bureaucrats STOP this insane closure of the economy. As various states reopen and start to pick up steam the remainder of states will be under enormous financial and political pressure to do the same. If a FEW choose to lag behind and.....drag out, drag out, reopening.......SCREW THEM......that will be their problem as the rest of the country moves forward.

People KNOW how to social distance, wear masks, avoid crowds, etc, etc, etc. We are now trained. There is plenty of hospital capacity if needed. For those that are not comfortable, no one is making you leave your home. The rest of us are entitled to make our OWN informed decision about our health and the risks we are willing to take without the government telling us what to do. The point of "stay at home" was to give us a chance to get ahead of the virus some for hospital capacity, etc, etc. The point WAS NOT to avoid all deaths and new cases and kill the economy doing it.

I CONTINUE to see BIG CORPORATIONS.....Boeing is an example.....announcing reopening for business in their plants and facilities. They seem to be able to just do what they want. There is NO REASON for the "little people" to not have the same right to make the same decision AS THEY SEE FIT.

With the GAINS we have made to date, I dont see any REALISTIC probability that we will retest the March 23 low. We have already retested the lows to the extent we are going to. There will STILL be down weeks and perhaps even months......BUT....my opinion is that the potential is still for 10-15% on the down side. Not near enough to test the prior low.

I am and will continue to be fully invested for the long term as usual going forward. A new week is coming up....we have two positive weeks in a row. Will we be able to make it three in a row?

 

I was just looking at some REAL ESTATE data for my development. Of course, all this real property stuff is....location, location, location. AND......local, local, local. BUT, I find it interesting that over the past week the very high end of the market in our development has exploded with sales. There are 10 listings from $1MIL to $4.5MIL. Over the past week 4 of those homes have gone "PENDING".

We are still in an extreme sellers market with ONLY 43 homes for sale in a neighborhood of about 3000 homes. We have a total of about 20 homes pending right now. REALTORS that are smart and know how to market and sell homes seem to be doing just fine in our area right now. I am sure this little event will SHAKE OUT many realtors that are borderline.

It will be interesting to watch the local property sales data over rest of this month and May and June the traditional BEST moving, selling and buying season in this sort of neighborhood.

 

I thought you might be in the rehersal/studio room business when you said you owned 2 commercial properties and were in the music business. All of those sorts of places I have been in seem like great businesses. Most were old warehouses that were divided up into 50-100 or more rooms that rent by the month. A great way to make monthly income and at the same time LAND-BANK the buildings or land for future sale.

Kind of like the storage unit business. I knew a bunch of guys that would build storage units on the edge of town and had really great monthly cash flow as the suburbs expanded around them. At the same time, they always tried to build the units in up and coming areas and down the road would sell the land and make big money once the city had built out around them and the land became too valuable for that type of use.

 

It is NICE when your portfolio is positive for the day.........did NOT happen for me today....probably did not happen for most people. So I have to be satisfied with a.....consolation prize. At least, I was able to BEAT the SP500 today by .4% today. All in all......I will take it.

 

NO........I dont ever do penny stocks. Perhaps someone else will.

 

SORRY......cant resist:

LA Study: Virus May Be More Widespread, Less Deadly Than Thought

https://www.newsmax.com/us/los-angeles-california-usc-stanford/2020/04/21/id/963868/

(BOLD is my opinion OR what I consider important content)

"The number of people infected with the coronavirus in Los Angeles County may be upward of hundreds of thousands, far more than the official tally reflects.

Preliminary results from a study of Los Angeles County residents show 4.1% of adults have antibodies to the virus in their blood, which means they have been exposed to the coronavirus, the Los Angeles Times reports.

Researchers conducting the study say that translates into 221,000 to 442,000 adults who have recovered from the virus, once margin of error is taken into account. LA County had reported less than the nearly 8,000 cases at the time, according to the newspaper. That means the infection numbers are 28 to 55 times higher than reported.

The initial study findings released Monday also indicate the death rate may be much lower than previously expected.

The University of Southern California and the Los Angeles County Department of Public Health teamed up for the study, which conducted antibody testing on 863 people.

The early results from LA County come several days after Stanford researchers reported that the coronavirus appears to have circulated more in Santa Clara County than previously thought.

That study estimates the number of infections ranges between 48,000 and 81,000, but the county only reported 1,000 cases earlier this month.

Both studies estimate a mortality rate of 0.1% to 0.2%, which is closer to the death rate associated with the seasonal flu.

The studies also show that a large population of people are carrying the virus without symptoms and could be spreading it without knowing.

The LA County study shows that men were more likely to be infected than women."

MY COMMENT

The author of the article apparently could not being themselves to simply say that is the SAME death rate of the FLU.....they had to qualify it with "closer".

BUT....at this point debating the death rate or anything else is a waste of time. We are in the middle of an EMOTION driven, FEAR&PANIC event. We NEED to get the economy back open......NOW. AND....apparently we are well on the way to HERD IMMUNITY according to all the new data that is showing antibodies in a far larger portion of the population than expected.

I saw a quote from a small business owner yesterday.......his store sold children's clothing. Something like........."Why can Walmart and Target be open and sell children's cloths and I cant?" REALLY.........why? I continue to see more and more reports of BIG COMPANIES planing to reopen facilities, stores, etc, etc, over the next week or three. APPARENTLY big companies can just do whatever they wish regardless of all the state prohibitions that apply to the "little businesses" and the "little people" that NEED the protection of the government and the direction of state bureaucrats to control and direct their lives and decisions.

HERE is a plan to help deal with the financial impact of this situation.........ALL government workers and politicians.......except for fire, police and medical emergency aid.....should during this crisis:

1. Have ALL benefits eliminated, including pension contributions.
2. Have their salary reduced to the amount of the average unemployment weekly benefit in their state.
3. NO payback of those items when the economy reopens.

ALL that money saved could be used to help those out of work and out of business. Of course, this is just fantasy......it could not, and, never will happen.

 

I have NEVER seen a scientific study......a real study with statistical validity, published, verified,.....that validates closing the entire economy. Just because some government health bureaucrat says/advises something does not make it a peer reviewed, verified, situation either.

AT LEAST we are making progress.......since most of the "science deniers".......at least from MY standpoint....have now come down to about a 1% death rate and off their predictions of millions of deaths in this country.. AND....there is NO DOUBT in my mind that in the end it will be much lower as the.......scientific....... data is showing, in BOTH of the scientific studies above.

YOUR definition of science as REQUIRING a published study, with peer review, verification, etc, etc, is NOT........MY....... definition of science or scientific fact. This is one of those issues we will just NOT agree on.

 

NOW......as an investor......the sort of info above is what I consider VERY RELEVANT information to be aware of. One piece of many, many, data points that ........might....have relevance to investing in the current environment.

 

WELL...... I learned a long time ago NOT to argue on the internet about things that have political overtones.....which this entire virus issue now does.......at the moment. I ALSO learned NOT to argue over and over about opinions. I will.....obviously....post opinions on here AND dont mind in the least when others port their opinions in response....agree or disagree.

SO......on to the markets:

NOT a single holding UP today.......although......I did not expect any. So, it is consolation prize time......again. I will take my beat of the SP500 today by .2%.......and say......"yes sir, can I have another". ACTUALLY.....I will take as many as I can get. That is about the only bright spot during this little virus adventure.....the fact that I am beating the SP500 about 70% of the time.