The Long Term Investor

"Anyway I am still with best of intentions so good luck with your investments cuz everyone deserves happiness and success in their life "

AGREE COMPLETELY......no problem.

WELL......today was a SOLID....medium level.....DROP into the RED. AND I got smoked by the SP500 by 1.20%. I think I only had two positions in the green.

The current markets are.....MEDIA CRAZY. Hanging on every word...trying to see any sort of indication of STIMULUS......real or imagined. THAN.....throwing a hissy-fit at the slightest indication that they are not going to get what they want. The ULTIMATE in short term....irrelevant....market driving "stuff".

 

"at the end of the year; do you take profits, sell and change up your folio, or let it ride"

What I do at year end is.......NOTHING. Big surprise.....right?

There are different ways that people react with their portfolio at year end. Some might re-balance...take profits.....or adjust stock holdings to comply with various criteria or categories that their particular investing style uses. Some might adjust their actual holdings by selling some and adding new ones.....for example....dogs of the DOW strategy. AND.....on and on and on.

I do not.....personally....believe in taking profits EARLY. I will try to hang as long as possible with a holding. I would rather sell too late than too early. So....I take NO profits at year end.....or any other time IF I can RESIST.

I ALSO do not ....re-balance....at year end. I dont care where the money is in my portfolio. All the stock positions started at an equal level and if one grows to double the others....GREAT. I see no reason to sell my most successful company and put the money in some other lesser holding or something new. If I want to buy something new I sell from the SP500 Index Fund portion of the portfolio......or, more often.....sell some of the WORST performing holding.

With ONLY 12 positions I have a very concentrated portfolio. My ONLY concern is.....the anticipation of future performance.....by a holding........along with great PAST performance. Gee.....not too picky am I. BUT....I am usually not too strict. I will put up with poor performance by a holding for a year or even two.....especially if it pays a good dividend......BUT....I have no problem selling a holding. At times in the past I have sold a stock that I held for as short of a time as just a few weeks to a month or two. NOT because it was a short term trade....but....because I lost confidence in the company for various reasons. Even though I am buying something as a long term holding...I will sell it quickly if something happens that I do not like.

I used to keep performance data......lifetime average annual total return. I kept it till about 2004. NOW.....I do not even keep that tiny statistic. I just use the portfolio performance tools on Schwab to look at performance. Or....if I want to go deeper.....I look at the individual stock through Schwab. I am happy to see my stock side of my portfolio....currently at about 60% of total portfolio value,.....versus....the mutual funds side at about 40% of the total portfolio value. That is all I really need to see.....this shows me.....every time I look....that the stock side of my portfolio is BEATING the fund side. (the portfolio started with the two sides at 50/50) AND....since the fund side is the SP500 Index and Contra Fund......which consistently BEATS the SP500.....if I am beating thae fund side of the portfolio by 60% to 40%......it is all good for me.

I just dont care about data. I have a file for each account. In that file is the latest statement for that account. NOTHING else. When the new statement comes.....I put it in the file and.....I shred the old one. That is the TOTALITY of my record keeping and data system. I am a long term investor with a minimal number of holdings......so nothing more for me to do.

SO.......enough......"I", "I", "I"........me, me, me.......EVERY investor should do exactly what they wish. Whatever works best for them. If you are successful just keep doing the same thing, in the same fashion....over and over and over....for as long as it works. ALL investing is PERSONAL. Everyone has to invest in the way that works for them and their risk tolerance and personality.

(I need a photo of Dirty Harry here with the caption)......."THE QUESTION IS....ARE YOU MAKING MONEY?"

 

HERE are the investors that are the ANCHOR of our capitalist system. Like EVERYTHING these days it is the SENSATIONAL that you see and hear in the media. HERE are the people that are the REAL backbone and strength of our economic system.....not the big banks, day traders and speculators.

Millions of Americans, it turns out, are making the right investing moves, according to studies

https://www.marketwatch.com/story/m...ccording-to-studies-11607458791?mod=home-page

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

"It is a truth universally acknowledged that investors in possession of a good fortune must be in want of good judgment.

Apologies, Jane Austen, but it’s true: Those of us in the financial media and punditocracy often take Americans to task for not saving enough for retirement, chasing the hot stock of the moment or other investment fads, and selling at the worst possible time. I, too, plead guilty as charged.

But now, it turns out that many Americans actually are doing the right thing. Several huge studies of Vanguard account holders — retail and defined contribution, with taxable and retirement accounts — show millions of investors are allocating their funds appropriately to stocks while keeping a decent cushion in bonds and cash; trade rarely; own low-cost index funds, some exchange traded funds (ETFs) and target date retirement funds (TDFs); and barely changed their holdings during the recent coronavirus sell-off.

It may be a “dog bites man” story, but it’s comforting that millions of people have paid attention to what some of us and especially the late investing giant John Bogle have been saying for years: Own stocks, diversify, keep costs down, rebalance and reinvest dividends, and don’t panic. If they keep following this advice, they’ll live long and prosper. (Apologies, Mr. Spock.)

The findings come from two reports published by Vanguard and from an academic study by Olivia S. Mitchell of The Wharton School of the University of Pennsylvania, along with Stephen P. Utkus of Vanguard.

One of the Vanguard reports is the annual “How America Saves,” which was published in June and covers five million participants in defined contribution plans administered by the firm.

Studies’ findings
The other, “How America Invests 2020,” examines five million accounts of Vanguard retail investors investing close to $2 trillion over the five years from 2015 through 2019. Mitchell and Utkus’s paper uses a research sample of 1.2 million investors from 880 defined contribution plans to study TDFs offered through Vanguard between January 2003 and June 2015. Altogether, these three studies cover millions of Vanguard investors. They found:

• Generally, people are sensibly allocated, averaging 63% equities, 16% bonds and 21% cash. Stock allocations decline with age, although many younger investors hold a lot of cash. There is, however, a “wide range of risk taking within any given age,” so 29% of Vanguard retail investors have more than 90% of their holdings in stock, and they all aren’t 22.
• U.S. investors have a home bias, with smaller-than-recommended allocations (about 19%) to international stocks and bonds. My MarketWatch colleague Brett Arends calls this the “No. 1 investment mistake” retirement savers are making, but from Jan. 1, 2008, through Dec. 8, 2020, the U.S.-only Vanguard Total Stock Market Index ETF VTI, 0.01% had surged 164%, while the iShares MSCI ACWI ex-U.S. ETF ACWX, 0.43% rose 26%. That’s a lot of catching up to do.
• Retail and 401(k) investors alike trade very infrequently, and when they do, it’s likely because they want to rebalance. “Less than a quarter of households traded each year between 2015 and 2019,” the report said. “Of those households that did trade, the typical household traded on only two days a year.”
• Although trading activity increased sharply during the COVID-19 selloff, stock allocations barely changed from last Dec. 31 through March 31, as the average household-weighted equity allocation remained between 61% and 63%.
• 401(k) investors are invested in default target date retirement funds (TDFs) by large margins — 78% of participants in Vanguard-administered 401(k) plans held TDFs. Nearly two-thirds of them have all their funds invested in a TDF.

Mitchell and Utkus’s study found that for TDF investors, “participants’ equity share rose an average of 24 percentage points for pure investors, and by 13 percentage points for mixed investors” (those who owned investments other than TDFs), they wrote. “Holdings in cash and company stock fell … in our sample of indexed target date funds.”

Power of target-date funds
TDFs are an ideal investment for many, because participants invest automatically with each paycheck, and the funds reinvest dividends and rebalance regularly, reducing stock exposure with age. It thus eliminates emotional decision making and lets inertia work in investors’ favor.

“Our study concluded that adopting low-cost target date funds could enhance retirement wealth by as much as 50% over a 30-year horizon” for people 100% invested in TDFs, Mitchell wrote me in an email, and by up to 30% for people who own TDFs and other investments. Who’s going to argue with that?

Because these are Vanguard clients, the sample may be skewed toward people who believe in its low-cost, passive investing philosophy. But Fidelity Investments said its clients have stayed the course, too.

The reports tell us that millions of people are quietly doing the right thing, building their wealth over time, rather than speculate in bitcoin BTCUSD, -2.29% or trade 17 times a day on Robinhood. In other words, American investors may have better judgment than we think."

MY COMMENT

These long term investors are the REAL owners of American business. They NEVER get any credit or attention. They are the SILENT MAJORITY of investing. They provide the NECESSARY money that drives the long term corporate community. Many....of course....are investing through retirement vehicles. They are DISRESPECTED by the media and the businesses they fund and the ELITES.......they are the "little people". What they do is rarely shocking or sensational.....it is BORING. They.....slowly but surely....build wealth for their family and future.

The ONLY thing I do NOT agree with......personally......in this little article is the use of this research to PUSH Target Date Funds. I have......LONG.....been a critic of target date funds as way too conservative, having way too high of a percentage in bonds at too low of an age, and having way too high of an allocation in International stocks. BUT....all in all....if these vehicles appeal to investors and lead them to invest for their future.....GOOD......good for the country, good for business, good for the economy and MOST IMPORTANTLY....good for the actual investors.

 

I was very surprised to look at my account a few minutes ago and see that......I had made up all of yesterdays loss PLUS more. I have not been anywhere near the markets since the DOWN open. So....a pleasant surprise........although......with it ONLY being mid morning........not exactly a done deal.

Speaking of Target Date Funds above......a few other issues that I have with them are:

I think they decrease the stock allocation too soon and too much for most people. This SEVERELY impacts the long term total return.....especially.......when you add in the......in my opinion.....over allocation in bonds for EVERY age.

I have ALSO seen many of these types of funds.....even those run by some of the BIG BOYS......LAG the market averages and produce under-whelming returns.

BUT.......anything that gets people invested and into the markets is a GOOD THING.

My personal preference to a Target Date Fund would be simply......as usual.....a SP500 Index Fund. If you want some percentage of bonds than put 5% or 10% or 15% or 20% or whatever percent you want into a high quality long term bond fund.

As to International......as usual....my allocation would be ZERO. I have no need or desire to invest in FOREIGN companies when I have the CREAM OF THE CROP in the business world in the SP500. Emerging markets....ZERO......companies from Third World countries, Communist dictatorships.......ZERO. ALL of these categories are going to LAG and present increased risk.......they are more speculative....at least that is my view. And......SPECULATION is not my thing with my money. My goal in investing is to try to make my money as secure and profitable as possible.....at the same time. The more an investment is a SURE THING......to me, the better. I dont care about EGO, or the thrill of trading or speculating.......gambling........I will take the SURE THING every time.

NOW....nothing about investing is a sure thing....obviously. But I try to make it so by how I invest and what I invest in. That is why my mantra is......AMERICAN, BIG CAP, ICONIC PRODUCT, WORLD WIDE MARKETING, DOMINANT WORLD WIDE, GREAT MANAGEMENT.......companies as my TARGET investment. Big Cap Growth companies. Of course......there is no such thing as perfection.....and....there are many companies that fit in the above group.....in many many business categories. A good thing.....something for everyone.

 

Some BIG IPO's hitting the markets lately and today. I think the ONLY IPO stock that I have bought over the past 20-30 years....at least that I can remember......is SNOW.

 

In the green today....by a little bit.....every little bit counts and adds up over time. ALSO....beat the SP500 by .29% today. ANOTHER mixed market day.

Here is a pretty good article about Robinhood. Most of this is known already.....but this is a very nice comprehensive article about this ADDICTIVE software and the customers that are their product:

Pandemic Villains: Robinhood

https://taibbi.substack.com/p/pandemic-villains-robinhood

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

"As the world went into lockdown and the global economy into a spiral last spring, one company struck gold. A phone-based trading app called Robinhood began wiping the floor with more celebrated online brokerage rivals like Charles Schwab, TD Ameritrade, and E-Trade. The moment the pandemic began, it seemed, the world started trading stocks on Robinhood.

The numbers were staggering. Robinhood’s average daily trading volume tripled in the first quarter of this year, compared with the last quarter of 2019, and saw a tenfold increase in net deposits as millions were losing their jobs. The New York Times reported that the firm in the first quarter traded nine times as many shares as E-Trade, and an incredible 40 times as many as Schwab. It added 3 million new customer accounts, and by June was doing 4.3 million daily average revenue trades, or DARTS, more than any other online firm and more than Schwab and E-Trade combined.

Backed by a string of venture capital firms, including Kleiner Perkins, NEA, Sequoia, Thrive Capital, Ribbit Capital, and Google’s VC arm, GV, the firm received four major cash injections. Investors poured $200 million into the firm in April, $320 million more in July, another $200 million in August, and finally in November, another $460 million. Through this brief time, the company’s valuation jumped from $8.2 billion to $11.7 billion, by which time word leaked out that the firm had “asked banks to pitch for roles” for a possible IPO next year.

Analysts saw nothing but conquest ahead. “Competing versus Robinhood will be difficult,” said Larry Tabb, head of market structure research for Bloomberg Intelligence.

Robinhood seemed a new prodigal son of 21st-century capitalism, an awesome hybrid of Wall Street and Silicon Valley. The firm combined the pure greed of a Goldman, Sachs or JP Morgan Chase with the cheery, youth-friendly user-engagement strategies of Instagram or TikTok. The firm was founded in 2013 by two perma-smiling Stanford grads named Baiju Bhatt and Vlad Tenev, who wore khakis and Monkees haircuts and never seemed more than a moment away from bro-hugging one another.

These harmless-looking eggheads sounded genuinely excited to bring their product to the world, explaining they had a mission to “democratize finance for all.”

The app is perfectly designed for such “democratization.” It’s free, charging no commissions for trades. It also has an alluring, Joe Camel-like marketing campaign, featuring a host of bells and whistles in the form of free sample share giveaways, “scratch-off” rewards, and video confetti to celebrate transactions. “Even the most skeptical investor can be drawn in,” is how Jason Zweig of the Wall Street Journal justput it, describing how an assignment to learn more about the Robinhood experience led to something like addiction in less than a week.

Small-time customers who can’t afford a whole share of, say, Amazon stock can buy fractional stocks, and can also engage right away in complex options bets, just like the pros! What Bloomberg called “stock trading on a fun gamelike phone app” brings hordes of rookies into the markets: half of Robinhood’s customers this year were first-time traders, and 80% of its assets under management belong to millennials.

The firm is an icon of success in the pandemic age, finance’s answer to Netflix and Amazon Prime. Without sports to bet on, or bars to crawl, a whole new generation of “investors” are making Robinhood the destination for the ultimate new Covid-19 addiction: binge-trading. What could possibly go wrong with bringing more people into the stock market?

A lot, as it turns out. “Every time someone says they want to ‘democratize access,’” says Joe Saluzzi of Themis Trading, “I get very scared.”

On June 12th, a 20-year-old University of Nebraska student named Alexander Kearns looked at his app and saw what he thought was a negative balance of $730,000. Misunderstanding the readout, which only showed part of a series of options trades he’d made, Kearns mistakenly believed he’d been ruined financially. He killed himself by stepping in front of a train, leaving behind a note asking, “How was a 20-year-old with no income able to get assigned almost a million dollar’s worth of leverage?”


Kearns appears to have been an otherwise happy young man. “At Thanksgiving, I could leave my kids with Alex, and he’d entertain them all day while I talked to his Dad,” says Bill Brewster, a relative. “He was a great kid.”

Brewster says the last time he talked to Alex was in March. “The sad thing is, he was really excited about finance, and for the right reasons. It wasn’t just about money. He was really interested in how it all works.”

The death of Kearns prompted predictable outrage, with critics focusing on a lack of controls and guidance for new users seeking to rush straight into complex trades, and, worse, a near-total absence of human customer service options. The Consumer Financial Protection Bureau database has many complaints from customers claiming an inability to contact the firm in timely fashion. If you have an urgent question, like for instance thinking you owe three-quarters of a million dollars, too bad: Robinhood’s chief feedback option is email, with response times of up to a week.

The company says that “while historically we’ve found we can best serve customers over email,” it’s also “exploring new channels for critical issues.” In the meantime, however, email those questions.

“All the other companies have people you can call,” says Brewster.

Soon, observers began asking deeper questions. Why is the company so game for customers to get into options trades? Why the emphasis on young, inexperienced users? How does a company that doesn’t charge fees make money?

The last question is key. In what the press accounts describe euphemistically using terms like a “controversial but legal practice,” Robinhood makes the bulk of its money on “payment for order flow.” It sells its data to high-frequency traders like Citadel and Virtu, market makers who ostensibly are paying for the honor of executing trades for Robinhood investors. These firms, using the technology that’s the subject of the celebrated Michael Lewis book Flash Boys, hunt out tiny price differences and gauge market sentiment and supply and demand before other traders, using sophisticated algorithms to jump ahead of the pack.

A Robinhood investor typing in a trade is just beginning a series of transactions that might result in a string of actors being compensated. Robinhood does not and can not post orders directly to exchanges like the NASDAQ; for a fee, it sends all of its orders to market maker firms like Citadel or Virtu. Those firms in turn have what amounts to a free option on the Robinhood trader’s order. They can execute the trade themselves, or they can offload it to an exchange, which in turn posts the order and compensates the market maker firm in the form of rebates, while earning money itself by charging fees for “data feed” that include information about such retail orders.

The mechanics of all of this are not absolutely necessary for Robinhood customers to understand, but it is worth asking the question of whether all of these actors in between the Robinhood client and his or her trades withdraw more or less value than, say, traditional broker fees. The HFT firms that handle the bulk of Robinhood’s business have always maintained that what they do is socially beneficial, because their trades “add liquidity” and make markets more efficient. Critics say the opposite, that high-speed algorithmic trading is just using advance peeks at market intelligence to turn trading into a low-risk arbitrage-like activity.

At any rate, “payment for order flow” isn’t unique to Robinhood. E-Trade, Schwab, and others also do it. Because it’s not clear in all cases how purchasers use their information, it’s hard sometimes to make a concrete determination about the ethics of these transactions. In the case of Robinhood, however, three facts are worth noting:

1. Whatever HFT firms are paying for order flow, it’s worth it to them financially. If they’re paying 50 cents for your trade, they’re making more than 50 cents.
2. Robinhood is getting gargantuan sums for its flow. In the first quarter of 2020, firms like Citadel, Virtu, and Wolverine paid them $91 million. In the second quarter, that number jumped to $180 million.
3. These firms pay more significantly more for Robinhood’s order flow than they do for the order flow of other firms: an average of 17% more, according to a Bloomberg analysis.

One might add a few other details, like that Tenev and Bhatt, prior to founding Robinhood, designed algorithmic software for high-frequency traders. As Saluzzi puts it, “these guys know how the plumbing works.”

Also, Robinhood’s compensation model differs from E-Trade and other firms. As an analysis by the investment bank Piper Sandler put it this summer, “Robinhood receives a fixed rate per spread (vs. a fixed rate per share by the other eBrokers).” Rather than receiving simple payment by volume, Robinhood receives a percentage of the spread between the bid and the ask in each trade.

This is interesting because while HFT proponents insist their practices narrow spreads, some critics maintain that high-frequency trading ends up widening spreads. In Saluzzi’s book “Broken Markets,” for instance, he estimates that while spreads are narrower in “perhaps 5% of the most actively traded names,” they’re wider in “the other 95% of the market.”

A cynical person might take all this in and hypothesize that engineers trained in building high-frequency trading software could reverse-engineer a retail stock-trading app that would serve two purposes. On the one hand, it would provide sophisticated traders with the most valuable kind of order flow in the form of inexperienced “dumb money” investors, while designing a compensation model best equipped to take advantage of how HFT traders operate.

Robinhood obviously has a different take on all of these issues. It argues, and market maker firms agree, that the primary reason it’s paid more for its flow than other firms has to do with the relatively small size of its customers’ trades. “For a market maker,” the firm told TK, “executing a smaller order is lower risk compared to a 10,000 share order, which is baked into the compensation model.” In other words, a firm like Citadel or Wolverine would rather deal with a kid in Oklahoma trading a hundred shares out of his basement, as opposed to an experienced broker that might dangle one small trade, but be backed by enough money to impact the market in unpredictable ways with the next one. The Robinhood investor, they say, is just safer business.

Whatever you believe about the efficacy of commission-free trading, the revenue potential of a phone-based trading app marketed to millennials in the middle of a pandemic is obvious. As the New York Times and others reported, one of Robinhood’s investors is the actor Ashton Kutcher, who attended a Zoom meeting for the firm in June. In that meeting, he reportedly gushed about the company’s potential by comparing it to gambling websites. Kutcher put out a statement that he was “not insinuating that Robinhood is a gambling platform,” but rather referring to the company’s “current growth metrics.”

Robinhood says the same thing, that it built its platform to “make investing more accessible to a new generation and to make first-time investors into long-term investors.” Adding, “it’s important to distinguish between accessible, modern design and gamification,” the company insists its research shows that over time, “most of our customers use a buy-and-hold strategy.”

Brewster isn’t buying it. “Everything is designed to make investing look like DraftKings,” he says. Moreover, the company’s practice of offering push notifications when customers’ stocks move up or down 5% or 10% could trigger an endless cycle of dopamine-generating responses, combining FOMO/clickbait psychology with the betting urge. Customers think, “if it’s down, I gotta get out. If it’s up, I gotta buy more,” says Brewster.

The obvious problem is that a lot of these younger customers have no clue what they’re doing. “Retail investors don’t understand stocks, let alone options,” sighs Saluzzi. He compares the service to bringing amateur poker players to Vegas and seating them not at a table with old ladies and tourists, but with the best players in town. “It’s throwing them right in with the sharks,” he says.

Even some of the firm’s detractors are conflicted, however, not wanting to argue against anyone’s freedom to jump in the deep end right away. Some take an even more positive view. Barry Ritholtz, author of Bailout Nation and Chairman and Chief Investment Officer of Ritholtz Wealth Management, thinks Robinhood is just the modern incarnation of the original online trading platforms that became pop culture hits by similarly promising to “democratize” brokerage.” He recalls the famed “Let’s light this candle” ads for Ameritrade in the nineties:

Ritholtz thinks Robinhood is great, so long as young investors are fully prepared to get decked in the face. It’s crucial, he says, that they only risk “fun money,” and enter into the activity being comfortable with their balance going to zero. There may even be value in that, he says.

“If they get their asses handed to them, that’s a lesson that’s much better to learn early in life than later,” Ritholtz says. He adds that some talent might even rise from the Robinhood ranks. “A handful of people will discover, ‘Hey, I can hit a three-point jumper,’” is how he puts it.

It’s often speculated that part of Robinhood’s success is that it appeals to a millennial demographic that, because of a shrinking economy, is politically concerned with the question of whether or not it can or will have any stake in the future. “They have more of an ownership mentality than my generation did,” Ritholtz says. “It’s, ‘I want to be a partner in the upside of the economics of society.’”

Which is great, he thinks, although he and other old-school investors do worry what will happen to Robinhood’s customers when the markets go down. “It’s been famously said, ‘Never confuse a bull market with brains,’” he says, noting the S&P 500 is up nearly 64% since lows on March 23, right around the time the Robinhood’s numbers began zooming skyward.

Others are more pessimistic. “This isn’t going to end well,” is how one investment advisor puts it. “There are tons of these new investors who think they’re doing great, but they’re like Wile E. Coyote — probably off the cliff already, but thanks to the Fed, they just haven’t gone splat yet.”

Robinhood is under investigation by the SEC, ostensibly for failure to fully disclose its practice of selling order flow. The Wall Street Journal said last month the firm “could have to pay a fine exceeding $10 million,” which doesn’t sound like much given the amount of money the firm has already made, and the El Dorado it still stands to win in a potential IPO. Robinhood was also fined by the Financial Industry Regulatory Authority (FINRA) last year for failure to abide by “best execution” rules, which require member firms to take reasonable measures to find the best prices for customers.

If and when IPO money comes, Robinhood will be on its way to becoming a finance version of Facebook: a free platform that keeps a sea of customers engaged with a hyper-stimulating user experience, while making money selling intelligence about those customers’ behaviors to expert wealth extractors on the other end.

It’s the perfect mousetrap, among other things because of its name. “That’s the other thing,” says Brewster. “They call it Robin Hood.” Instead of stealing from the rich and giving to the poor, the American version takes in the young and sells them to computer-powered hedge funds; this Robin Hood is the house that always wins. If there’s a more brilliant metaphor for capitalism in the Covid age, it’s hard to imagine."

MY COMMENT

WELL.....you get what you deserve. I dont really care.....how or if........people trade options or gamble with their money.

I mentioned IPO's above. I just about NEVER buy them. BUT.....this is one company that I will HAVE to consider when it goes to IPO. Perhaps as a long term holding.....but.....more likely, as a short to medium term holding (9-24 months) to take advantage of the MASSIVE momentum that will power this company when it goes public.....probably mostly from Robinhood traders themselves.

NOW....that IPO:

"sources, who requested anonymity to discuss the plans, said the IPO would come in 2021, cautioning that the exact timing and valuation will be subject to market conditions."

and

"Stock trading app Robinhood Markets Inc has picked Goldman Sachs to lead preparations for an initial public offering (IPO) which could come next year and value it at more than $20 billion, people familiar with the matter said on Tuesday."

Trading app Robinhood hires Goldman Sachs to lead its IPO, sources say

https://www.cnbc.com/2020/12/09/tra...ldman-sachs-to-lead-its-ipo-sources-say-.html

 

This market OBSESSION with a stimulus bill and Brexit is messing up my Santa Rally. I NEED another 3.6% on the SP500 to get to my minimum year end prediction of 17%......BUMMER. BUT....still 13 market days to go till year end.

Another day where I have been gone ALL day until just after the close. I ended BARELY red.....and got beat by the SP500 by .13%. Seven of twelve positions were green......but still not quite enough to put me over the top today.

 

On the PLUS SIDE......Costco came in with really nice earnings yesterday:

Costco Earnings Review: Record Sales, Affordable Stock

https://seekingalpha.com/article/4394166-costco-earnings-review-record-sales-affordable-stock

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

"Summary:

Costco's fiscal first-quarter results set records on the back of strong demand and gains of scale, boosting the bottom line.

It is hard to find a better retailer than Costco: customer loyalty, predictability of membership model and nascent e-commerce opportunities.

Don't be afraid of valuations: the fundamentals of the business are rock-solid, and the company's P/E has risen the least compared to the peer group.

Costco (COST) has wowed once again. The retailer's fiscal first-quarter results set records, both on the top (comps, in particular) and bottom lines.

Merchandise sales of $42.3 billion had already been pre-announced, while membership revenue growth of about 7% looked solid enough. Adjusted EPS of $2.29, which excludes a couple of tax benefits, was the largest earnings figure for a fiscal first quarter as far back as I can verify - and probably ever.

After-hours action suggested little investor enthusiasm towards the results, as shares remained largely flat despite the earnings beat. However, I continue to think that Costco, while not a bargain, remains at least affordable relative to its closest peers.

A quarter to be remembered
When it comes to comparable sales, it is hard to imagine better performance than what the company managed to deliver. Comps ex-fuel and FX, which has historically been bound within a 2-8% range (see graph below), reached a record high 17.1%. Each of the main geographic segments - US, Canada and other international - reported strong double-digit growth in each of the three months in the quarter.

The top line numbers could have been even better, if not for a few factors. First, ancillary products and services, particularly travel, continue to struggle during the pandemic. Second, Costco's e-commerce channel has been growing fast (86% YOY in the first quarter and over 100% if third-party sales are included), but the retailer is still ramping up its digital channel. Third, the management team admittedly planned a bit too conservatively for a couple of festive dates, including Halloween. And lastly, certain high-demand products continue to find some supply chain constraints.



(Source: D.M. Martins Research, using multiple company reports)

Driven by the massive gain of scale, Costco managed to expand GAAP merchandise margin YOY by a healthy 50 bps, despite heavier mix of the less-profitable digital channel. More efficiency and less spoilage on the fresh product side also helped to support profitability.

The graph below shows the margin trends since 2018. The direction has been up and to the right very consistently, when analyzing comparable quarters. Despite improving anyway, Costco's op margin suffered from rich COVID-19-related costs in the most recent quarter, including bonus payments that are scheduled to end in January (but could, and likely will, be extended further).



(Source: D.M. Martins Research, using multiple company reports)

Not a bargain, but affordable
Many investors may feel uneasy about owning COST when the stock trades at a fiscal 2021 P/E of about 38x. And to be fair, now does not seem to be the best time to put money behind safe, cycle-agnostic stocks. The market seems more willing to reward value and cyclical names, and the theme is likely to continue into at least the early weeks of the new year.

But I would point out that COST's valuation has expanded the least within its direct peer group in the past year (see chart below). Investors concerned about rampant valuations should be more concerned about Target (TGT) or BJ's Wholesale (BJ), in my opinion, both of which have seen earnings multiples skyrocket since 2019.

Data by YCharts
When it comes to the fundamentals, it is hard to find a better retailer than Costco – maybe Dollar General (DG), at most. Customer loyalty is about as strong as it gets. The membership model offers stable and predictable earnings. The e-commerce opportunity is still nascent, as only 7% of Costco's sales are online and the company has yet to optimize the digital channel.

Given this combination of strong execution and valuations that have expanded, but not as much as its peers', I remain highly bullish on COST as a "buy and tuck away" stock."

MY COMMENT

I LOVE this stock. A GREAT company....a great business model.....great management.....and HUGE costumer loyalty. Costco and Nike are probably my longest holdings.......well over 20 years. Next would probably be Home Depot......probably also over 20 years. Microsoft and PG would be in there too.....but I sold MSFT in 2002 after buying in 1990 and than repurchased after the Balmer era..........what HORRIBLE management during that time..........and also sold PG a few years back than reinvested later.

I am REALLY happy with my portfolio at the moment and anticipate NO changes for a long time......hopefully.

 

Good for you Zukodany. Looking for great companies.....finding and buying DIS because you believed in it......and.....now seeing the pay-off. AND....as an extra bonus you STILL have the stock as a nice long term holding.

That is the definition of LONG TERM INVESTING. TODAY....that stock earned you 13.59%.....or....in dollar terms $21.03 per share.

 

So......how did we end the week. PRETTY MINIMAL LOSS actually. For the week the SP500 was down by .96%......less than one percent.

The week seemed like a real down week. Although.........the REAL story of the week was.....mixed markets. Many of us.......myself included.....made account gains even on the down days.

So at weeks end we stand:

SP500 for the week -.96%
SP500 year to date +13.39%

DOW for the week -.57%
DOW year to date +5.28%

AND....to make myself FEEL BETTER.....the TOTAL RETURN of the SP500, including dividends is.........15.61% as of today. SO....actually.....I STILL have a pretty good shot at my thinking that we will hit 17% to 22% return for 2020. AFTER everything that we have been through in 2020 we are LIKELY to end the year with a BIG positive return. AND.....many of us will end the year well above the SP500 total return.

I STILL think we will get to 17% to 22% by year end. At least that is my ASPIRATIONAL GOAL.

 

HERE are the GUTS of long term investing. SO SIMPLE:

THE POWER OF ACTIVE, LONG-TERM INVESTING

https://www.baronfunds.com/sites/default/files/The-Power-of-Active-Long-Term-Investing-9.30.20_0.pdf

NOTE: I am NOT advocating for these particular funds....I know nothing about them and do NOT follow them. What I am supporting in the presentation above is:

"Staying invested in equities over longer periods increases the likelihood of positive returns. Historically, our economy has grown on average 6%-7% nominally per year, or doubling every 10 or 12 years, and the stock markets have closely reflected that growth."

"An investor in a product that tracks the S&P 500 Index would have had a 69% chance of generating a positive return during any given quarter between 1926 and 2020. Increasing the investment horizon to 10 years would have resulted in a 95% chance of a positive return. And investing over any 20-year or 30-year period would have produced positive returns 100% of the time."

"A Few Missed Days May Be Costly Since we cannot predict when economic and market cycles start or end, there is no good time to time the market. Over the past four market cycles, missing the best five days would have resulted in a 36.7% lower value of a hypothetical $10,000 investment, and missing the best 10 days would have resulted in a 53.6% lower value. As big down days are often closely followed by big up days, those who panic and sell on the down days are likely to miss out on the ensuing up days."

"Inflation and the Power of Compounding The purchasing power of the dollar has fallen about 50% every 17 years over the past 50 years. While inflation causes currencies to lose value over time, it has a positive impact on tangible assets, businesses, and economic growth. This means stocks are the best hedge against the devaluation of your money.While the simple answer to combat inflation is to invest your money over the long term, the concept of compounding tells us why."

"When your savings earn returns (e.g., bank interest, dividends), compounding allows these returns to earn even more returns. Over time, this effect snowballs, and earnings grow at an increasingly fast rate. Given a small initial investment, in year one the amount you earn on your investments will not be a lot. However, in year 10...or 20...or 30... you will not believe the impact of the “power of compounding.”If you earn 6.5% on an investment, which is the approximate historic annual growth rate of the U.S. economy and stock market (excluding dividends) for the past 60 years, the growth of your investment over a lifetime will be exponential. You will have nearly 7 times your initial amount in 30 years, 12 times in 40 years, and more than 23 times in 50 years"

MY COMMENT

THESE basic concepts are the GUTS of long term investing. This year....2020.....is a poster child year for the power of long term investing and thinking. ADD to the above....buying SUPERIOR MAINSTREAM COMPANIES and funds to these concepts.....and you have the potential to SUPERCHARGE your long term returns and ACTUALLY decrease risk.

 

Emmett.....yes, I saw that the other day...it was big news here. Others that moved here recently:

Schwab HQ
Tesla
Oracle HQ
Hewlett Packard HQ
CBRE HQ
etc, etc, etc.

No wonder housing prices are SKYROCKETING. This has now been going on for years. CRAZY.