The Long Term Investor

How TIME FLIES. I had not looked at the markets today since this morning. I just realized that we had closed. So......I looked. A VERY, VERY, TINY gain today. AND.......basically a match to the SP500. Today was a VERY up and down day. We are close to having yet another week in the books. We NEED a good strong finish tomorrow.

For some reason it does not seem like it.....but.......we are UP 3.79% over the last five days. (Friday to Thursday close) It would take a BIG TIME DOWN day tomorrow to screw up another POSITIVE weekly finish. Saying that should REALLY GUARANTEE a big loss tomorrow. Sorry.....

 

Well, well, well.........ANOTHER nice open today. Time will tell if we can hold on to the close. the reasons that are being given in the obscure business media for this nice open are:

"U.S. equity markets surged Friday after a report that China is ready to increase purchases of U.S. farm products in order to meet the requirements of its phase-one trade deal."........."China will buy more corn, soybean and other agricultural products after purchases were derailed earlier this year due to the COVID-19 pandemic, Bloomberg reported, citing two people familiar with the matter."
https://www.foxbusiness.com/markets/us-stocks-june-19-2020

Personally......I dont really care why a particular day is up or down. NOT concerned in the slightest with this sort of micro "stuff". In fact, it seems to me that much of this type of stuff that is reported each day is just business news fantasy anyway.

AND....just to throw some FEAR out there today is..........the dreaded......quadruple witching day:

"Friday is quadruple witching day, meaning stock index futures, stock index options, stock options and single stock futures all expire."

Perhaps 20-30 years ago this WITCHING DAY STUFF would freak out stock market investors and often had the ability to move the markets. I get the feeling over the past ten years that no one cares in the slightest.

Lets POWER ON to a good positive close for the week today.

 

Thanks bigmaix.

Well we did NOT get hit by the quadruple witching today. BUT....we did get hit by the virus fear mongering.

In any event I was in the red.....slightly, so my streak is over. BUT I managed to BEAT the old SP500 by a MASSIVE 0.02%.

Another week in the bag as we slowly slog our way to year end many months from now. Right now:

SP500 year to date (-4.11%)

DOW year to date (-9.14%)

SP500 for the week +1.86%

DOW for the week +1.04%

ANY weekly gain of 1% or more is a GOOD WEEK.

 

An UNDERSTANDABLY sensitive topic for sure with your recent personal losses.

 

A TELLING article.......also.....so true. TYPICAL human nature...the way our brains are wired to deal with this sort of investing environment.

Not Just Coronavirus Winners
The vast majority of US stocks have risen since March 23.

https://www.fisherinvestments.com/en-us/marketminder/not-just-coronavirus-winners

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

"As the S&P 500 hit breakeven for the year last week, nearing its February peak, we heard—and still hear—a common refrain: The rally isn’t real since most US stocks remain negative on the year. Without mass participation, it is a mirage in which only Tech and coronavirus winners are up. One analysis in The Wall Street Journal, which centered on the Wilshire 5000 (an index including every publicly traded US company), observed that 73% of companies still had negative year-to-date returns as June dawned. Many other studies have made similar observations, using year-to-date data. Just one problem: Looking only at year-to-date returns invites skew from companies that underperformed at the end of the last bull market or got hammered hard in the bear. If you look only at the rally since March 23, it becomes clear participation is quite broad—a typical trait of new bull markets.

For our analysis, we used constituent data from the MSCI USA Investable Market Index—not as broad as the Wilshire, but it still covers 99% of total US market capitalization. As of Wednesday’s close, 2,274 of the index’s 2,346 constituents that have traded since March 23 are up. That, to spare you the math, is 96.9% of American companies. A little more than half are beating the index’s 41.2% return over this span—in other words, it isn’t like Tech and coronavirus winners are up gangbusters while everyone else is up 1%.[ii]

The sector breakdown is also largely consistent with what we would expect to see in an actual recovery. Positivity is fairly uniform, with Consumer Staples having the low share of positive constituents (92.3%) and Tech the most (99.4%).[iii] But the traditionally defensive sectors, for the most part, have fewer outperformers than the others. Only 13.6% of Utilities companies and 27.2% of Consumer Staples firms are beating the index—the latter countering the popular notion of long lines at grocery stores creating many stock market winners.[iv] That narrative, widely known by the time the recovery began, likely ran out of steam some time ago. Elsewhere, it may seem surprising that only 42.2% of Communication Services companies are outperforming, given that sector is home to some Tech-like companies in its Internet Media industry.[v] But Communication Services also includes Telecom, which is traditionally defensive like Utilities. Meanwhile, Energy has the greatest concentration of outperformers, with 80.9% ahead of the index, a logical outcome of Energy stocks getting whacked hard as oil prices plunged earlier in the year.

In our view, latching onto year-to-date constituent returns—while ignoring returns since the low—in order to rationalize doubts in the rally is just one more example of what we call the Pessimism of Disbelief. This mentality reigns supreme as a recovery takes hold, and it lasts for a while. People seek any and all evidence, no matter how far-fetched, that the rally is fake. They dwell on bad news. Good news gets overlooked or cast in a negative light. But when you assess what markets have done lately without that bias, it starts looking more and more like a new bull market."

MY COMMENT

So TRUE.....and typical of this sort of situation. In EVERY situation where the markets take a hit......it is absolutely typical to see this sort of behavior and thinking.

 

FUTURES are up +151 as I post this. I dont know why I bother to post about "futures".......they are not really accurate when it comes to what will happen the next day or why. They ALSO have no relevance to me as a long term investor since they do not impact my account.........only what happens during the actual market hours is REAL for me.

Now what is REAL for the next few weeks will be the constant "virus" stuff being put out there by the MEDIA.......at this point......much of it for obvious political gain. Than, the attention will turn to earnings........again.

As to the........"virus"......a topic that is all about....NOTHING. NO....we can NOT shut down the economy again. NO.....we can NOT delay reopening. NO......we can NOT avoid whatever the virus is going to do over the next six months or so till the vaccine comes out. NO......like any similar event we will NOT be free of this virus till we hit herd immunity. In other words there is NOTHING to be done........EXCEPT.......get on with NORMAL life. We achieved the flattening of the curve and we have MASSIVE hospital capability. We are also getting to have more and more of an idea how to treat the symptoms. There is NOTHING we can do to make the virus go away.......at the moment. SO.......I will go about my NORMAL LIFE......as I have been doing since my state reopened. I will wear a mask and use chemicals as needed for safety or to make others feel safe. I will continue to go out and do my normal routine as I have been doing for the past month or two.

I WILL do my NORMAL long term investing. I will be fully invested all the time as usual in my stocks and funds. I REFUSE to sit around and wait for the world to end. (it is not going to happen) WHAT IT IS..........IT IS.

 

What do I see with the BIG PICTURE:

SP500 gain or loss:

5 days +1.86%
1 month +4.81%
3 month +34.40%
6 month (-3.83%)
YTD (-4.12%)
1 year +5.85%
3 years +27.83%
5 years +46.81%

I see a six month time period that over the long term will be a little BLIP on a chart of the SP500. EMPHASIS on LONG TERM.

 

I put this in TomB16's thread....bu tI am riposting it here since it is very relevant to this thread dealing with long term investing

As you know I DO NOT BELIEVE in the silghtest in .......Market Timing....Technical Analysis......or short term Trading. The ONLY strategy that the VAST majority of the data, analysis, and academic research supports as being successful.....especially for the typical investor is.......long term investing based on Fundamental Analysis. Therefore that is what "I" do. I ALSO know from the data that the SP500 will be positive 70% of the time long term and will return 10-11% long term. I ALSO know that the average investor........trading and trying to market time and doing all the things that investors do based on human emotion and human behavior........will SEVERELY UNDER-PERFORM the long term averages.

I find it funny to see and watch the current WAVE of new TRADERS coming into the investing world. For MOST......nearly ALL.....it will be an exercise in futility when it comes to what really counts......can you beat the averages long term and accumulate REAL long term wealth. I find it very instructive that nearly NO ONE actively trades in their 401K or other critical money.

To ME......it is all about PROBABILITY......NOT trying to get RICH QUICK.

NOW......I DO talk about a lot of short term stuff in this thread. I like business, I like investing, I like to talk about and think about these topics.....short term....medium term.....and long term. It is fun to see if you can make correct calls and understand what is going on accurately. BUT.....that is not where I put my MONEY. I put it....LONG TERM. I get just as much satisfaction as a trader......talking, and looking at, and analyzing the markets WITHOUT playing with REAL money.......MY money. I can understand the challenge and thrill of trading.......but.....I dont care to risk ANY of MY money doing it versus the relatively SURE THING of long term REASONABLE investing behavior.

 

Good comment Brontide.

 

On the subject of........the virus. I will RARELY now post about the virus. BUT.....there is a media focus on this topic that is impacting a lot of people in their investing and their thinking. On an INDIVIDUAL level this can be a very TRAGIC situation. BUT....for investors.....lets get back to REALITY as it applies OUTSIDE the TRAGIC, personal, level.

MOST RECENT DATA:

Out of a population of about 350,000,000 people in the USA

26,079 new cases in the last 24 hours.......over the entire country.
267 new deaths in the last 24 hours.......over the entire country.
369 deaths per 1,000,000 of population.......for the entire country......for the entire course of this virus.

https://www.worldometers.info/coronavirus/

 

What was your cruise stock? I NEVER hesitate to sell when necessary to stop the bleeding. I personally would not want to own any of the cruise stocks right now. I STILL would not want to own BOEING.......yet. Perhaps in a year or two. BUT, It would depend on what they are doing at that time.

No real suggestions other than the 11 stocks that I hold in my portfolio model.

I AM PERSONALLY.......starting........to think about TESLA. They are pretty high right now....BUT....they are showing signs of becoming one of those companies that is owned by a visionary........WHO.............is ABLE to get things done. There is a good chance that I will put a little money into TESLA some time over the next 2-8 months. I now believe they are going to survive and with the history that Musk has with SpaceX, the boring company, Tesla, battery technology, solar panel technology, etc, etc, he is looking like one of those VERY RARE business leaders that produces. I STILL consider TESLA early in its business life as a company. Pretty impressive when you consider that the company has only been a public company for 10 years.