The Long Term Investor

Once in a while I post about my local.........RED HOT........housing market. Much of the country is experiencing the same thing. BUT....as always.....all real estate is local, local, local. Here is a reminder:

For Chicago Homeowners, It’s All Pain, Little Gain

https://www.city-journal.org/pension-costs-property-tax-hikes-hurting-chicago-homeowners

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

"Early in 2019, a real-estate website predicted that Chicago’s housing market would be one of the nation’s worst over the next year. Chicago-area home prices, among the slowest to recover from the 2009 housing recession, were being suppressed by various factors, including escalating property taxes. Now it’s clear from a new study just how much of a burden those taxes have become. Over the past 20 years, they’ve risen about four times faster than the rate of local inflation and more than twice as fast as Chicago-area wages, eating up more and more of the average homeowner’s disposable income. And there’s more to come, thanks to Mayor Lori Lightfoot’s latest budget, which raises Chicago property taxes again. Much of that money, moreover, isn’t targeted to better services but simply to pay off the city’s and Chicago school system’s enormous debt. For local homeowners, it’s all pain, little gain.

The study, by Cook County Treasurer Maria Pappas, found that residential property taxes in Chicago have risen, on average, by 164 percent over the past 20 years, while inflation increased by 36 percent in the greater Chicago area and wages grew by 57 percent during that time. For a home valued at $300,000, the average annual tax bite is now $6,351, according to SmartAsset.com. That’s nearly twice the national average for property taxes on a similarly valued home. Local homeowners have been battered by a few big increases in the last few years, including a $543 million property tax hike in 2015 by the city, and a $224 million boost in 2017 from the Chicago Public Schools, which also has dibs on local property taxes. Now Lightfoot has added $94 million in property taxes in her latest budget, along with a host of other levies, including a “cloud tax” on business computing services.

These increases are driven by city and school system debts, especially in their deeply underfunded pension systems. Chicago’s pension payments have risen from about $500 million in 2015 to $1.2 billion last year. They’re set to grow by another $1 billion by 2023. The pension system alone now consumes all of the city of Chicago’s property tax collection.

The situation is little better at the school system. In 2008, its pension costs were a bit above $200 million, and the state contributed a chunk of that money. In 2021, total costs for school pensions will rise to $885 million. The school system has financed that big increase in large part with a so-called supplemental-pension property-tax levy on top of the real-estate taxes it already collects. That new levy alone will dun Chicago property owners for $490 million next year. The rising pension costs are one reason taxes are soaring even as the size of the school system shrinks. In 2009, city schools enrolled 407,157 students. By 2019, that number had slipped to 355,156. In part because of Covid-19, enrollment fell this school year to 340,658. Even so, local revenues collected by the school system have increased by 58 percent in that time.

Because of the way Chicago tax assessors have valued properties, homeowners have borne the brunt of the tax increases, the Pappas study found. Commercial property taxes have grown at 81 percent over the last 20 years, still faster than inflation or wage growth, but nothing like the impact on homeowners, who pay about half of all real estate taxes collected in the city. Businesses, however, are now bracing for even larger tax increases aimed at them. The Cook County tax assessor has begun hitting local business properties—including apartment buildings and office towers—with double-digit increases in its assessments.

While nearly everyone agrees that the problem is getting out of control, the progressives who run Chicago argue that the solution is not to cut costs but to shift the burden away from homeowners by funding more of the school system through state revenues. They were counting on the state’s new progressive income tax on wealthy individuals in Illinois to produce a windfall for Chicago schools, but voters, wary of claims that a new tax would relieve the pressure on property levies, handily defeated the proposed constitutional amendment that would have permitted the new tax.

If the experience of other states is a standard, Illinois voters were right to entertain suspicions. New Jersey, for instance, instituted an income tax in the 1970s expressly to allow the state to move more funding toward that tax. Nearly 50 years later, New Jersey has one of the nation’s highest state income-tax rates, yet its property taxes have continuing rising and are also among the nation’s highest—even steeper than Illinois. And it has just about as much pension debt as state and local governments do in Illinois.

Skyrocketing property taxes are not only bad news for homeowners now, but also for when they try to sell their properties, because high taxes suppress the value of real estate. A 2019 article in the Journal of Finance and Accountancy found, not surprisingly, that states with low property taxes tend to see house values appreciate more rapidly than in states where real-estate taxes are higher. Appreciation has been a big problem in Chicago. It took a decade for housing prices in the city to recover from the 2009 real-estate bust, and even today, Chicago home prices aren’t growing nearly as much as in other places. The Case-Schiller Index of housing prices in 20 major markets, for instance, ranks Chicago next-to-last in housing appreciation for the last 12 months.

It’s unlikely that yet another property tax increase will help."

MY COMMENT

ALL housing conditions are LOCAL. Those of us in rapidly rising housing markets are LUCKY.....at the moment. Property markets go up AND down as conditions change. For those of us in HOT markets.....take what you are given....take the gains.....in the form of increased wquity and increased net worth. BUT.....be realistic and DO NOT use your home as a piggy bank.......today's hot markets could be tomorrows slow markets.

 

The above post.....IS NOT directed at IsuCyclones.....with his family business ownership, being a long time but young investor, being a super saver........he is probably the exception when it comes to taking your home equity and putting that in the markets.
I think he understands the short term risk. With that sort of strategy.....you need to be MENTALLY prepared if you lose 20-30% of your........former.......home equity in the stock markets in a very short time.

PLUS.......his ISU Cyclones kicked ass on my University Of Oregon Ducks a few days ago in the Fiesta Bowl........Grrrrrrrr.

 

MUCH better day today. Looks like we are picking up where we left off last year......doing the stock market two step........one step backward......one step forward......with explosive little periods once in a while....hopefully....to the up side of things.

I suspect that most of what we are seeing today is people that feel the same way I do about the Georgia elections at this point in time........who cares....lets just get beyond it and move on.

LOOKING GOOD....right now with ten minutes to go. I am out the door to a rehearsal.......so I will miss the close......but we seem to be getting a little strength into the final ten minutes. I will follow it in the car.

 

"This morning I just ordered some ISU Fiesta Bowl Championship hats for me and a few employees!"

HOW DARE YOU.... yeah, I am a Ducks fan since one of my kids graduated from there and the other went to their first two years of college there before transferring and graduating from Texas Tech. FUNNY how parents end up being fans of the school where their kids went.....it seems to be a common occurrence.

WELL......nice day in the old markets today. I ended up NICELY in the green and had a ........scintillating.......beat of the SP500 by a MASSIVE .01%.

I like this little article about the Robinhood Guys:

Finance Memes and the Collective Influence of Young Retail Investors

https://www.aier.org/article/finance-memes-and-the-collective-influence-of-young-retail-investors/

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

"The past year saw the realization of a new force in the financial sector. It wasn’t a new hedge fund or a billionaire with an innovative strategy; in fact, it wasn’t one single entity but millions of new self-led investors on platforms like Robinhood. Two thousand and twenty saw a massive swell in new users as millions of young people were confined to remote work with plenty of extra cash and nothing else better to do. Finfeed writes

“The pandemic has seen a surge in enthusiastic first time share market investors, with Robinhood outperforming competitors by adding over 3 million new customer accounts in 2020 thus far, and in June having a 4.3 million daily average revenue trades.

September saw the fintech giant’s 4th major venture capital investment this year, raising $460M and bringing their valuation to $11.7B.”

In terms of experience and education, many have none and they are predominantly millennials or younger. Rather than using Wall Street lingo and complicated spreadsheets, they often get their information from social media forums including platforms like Reddit, Barstool Sports, and Instagram meme pages. They buy stocks because of popularity and sentimental value, oftentimes directed by quasi-cultish edicts rather than traditional investing advice. A working paper from the National Bureau of Economic Research elaborates on this phenomenon when it states,

“This evidence suggests that RH investors may have actively added cash to fund purchases of more stocks. Thus, during the March 2020 stock market decline, RH investors collectively acted as a (small) market-stabilizing force. (Because RH investors also buy after stock market increases, they may not be a stabilizing force in other situations. Indeed, they also added funds aggressively after large upswings.)

“RH-type investors may very well have played a role in the active trading of, and the steady-state demand for, cannabis and many other (otherwise) obscure stocks.”

When stocks began to plummet in March of 2020, many traditional investors such as hedge funds began to pull from the market. However, Robinhood investors opted to “buy the dip” which is a popular slogan that illustrates a strategy of almost praxeological importance to many young investors. The sheer number of investors acting in uncoordinated but collective action managed to have a discernible effect on the market and an even greater effect on individual stocks. It also turned out to be the right move.

A Mix of Strategy and Comedy
Mantras like “Buy the Dip” refer to a common practice of aggressively purchasing stocks when the price falls regardless of the context and often without consideration of other factors. Slogans like “Stonks (slang for Stocks) only go up” illustrate the highly optimistic expectations these young traders have as they continue to fuel a raging bull market while the global economy grinds to a halt. Many of these traders fully understand how ridiculous such market performance is as they share comedic videos of Federal Reserve Chair Jerome Powell printing money, disparaging comments about market bears, and sync the rise of indexes like the Dow to electronic music.

Such youthful attitudes also apply to their collective financial practices which were mostly geared towards investing in popular companies. These investors also displayed peculiar interest in cannabis stocks and companies popular with millennials. NBER writes,

“Despite unusual interest in some “experience” stocks, their aggregated consensus portfolio (likely mimicking the household-equal-weighted portfolio) primarily tilted towards stocks with high past share volume and dollar-trading volume. These were mostly big stocks. Both their timing and their consensus portfolio performed well from mid-2018 to mid-2020.”

This mug with a photoshopped picture of Fed Chair Jerome Powell is being sold by a popular financial meme page known as Wall Street Bets which is named after the popular Reddit forum. On the forum and outlets like it, there is much content bragging about making or losing large sums of money as well as quasi-satirical content about making risky stock purchases. NBER writes about the influence of the popular refrain “Buy the Dip” when it notes that during the bear market of March 2020,

“Aggregate RH holdings also increased during this episode. RH investors did not panic or experience margin calls. Their first “purchasing” spike (i.e., an increase in the sum total number of holding investors in all stocks) occurred as early as the next day, presumably reflecting their existing purchasing power in their accounts. A second spike occurred about four days after a large market movement. This is roughly the time required to complete a cash bank transfer.”

Such a practice seems overly simplistic and even dangerous. However, in this case, it paid off handsomely with Robinhood users collectively outperforming professional investors. Part of this was due to sheer collective action; another component was excellent timing combined with a sort of crowd knowledge.

The Power of Cult Investing and David Portnoy
One of the most significant collective abilities of young amateur investors is to generate market movements through sheer activity. Market Insider writes

“As Robinhood traders pile into certain stocks, they help boost performance over the next one week and one month relative to stocks with decreasing popularity, according to a study conducted by JPMorgan.”

Oftentimes these bull runs are sparked by information shared through social media as well as the aforementioned bullish tendencies of young investors sitting at home with nothing else better to do.

One extreme example of this dynamic is the influence of Barstool Sports founder David Portnoy, who began a day trading initiative in 2020. With little to no experience, Portnoy began streaming and tweeting about his wild investments as a small army of young investors followed his lead.


To some, this was simply an amusing tweet exhibiting a sort of frat boy bravado as any stock relating to travel was devastated by global lockdowns. However, thousands of investors either thrill-seeking or calculating, or both bought in. According to data provided by Robintrack.net at the start of May 6th (the day of the tweet), 267,320 Robinhood users owned shares of NCLH. The next day that number increased to 273,276 users. Besides Portnoy’s endorsement, travel stocks such as NCLH and American Airlines became extremely popular with the Robinhood crowd during the pandemic. According to the data, there were only 762 Robinhood users holding shares of NCLH at the beginning of 2020. That number rose to over 100,000 on March 24. The stock is still one of the most popular stocks on the Robinhood app.

A more impressive demonstration was when Portnoy made the following tweet on June 23, 2020


Portnoy made a further comment stating he didn’t know what the company was. SHIP is the ticker symbol for Seanergy, which is a shipping company based in Greece and at the time of this writing is worth 54 cents a share. According to Yahoo Finance SHIP stock opened at $3.36 a share the day Portnoy made the tweet and within 24 hours hit $5.92 a share. That was a 76 percent increase.

Perhaps one of the most miraculous achievements Portnoy has pulled off was his investment in a nanocap stock. The Business of Business writes

“He made a killing off of an obscure US-listed Israeli medical company called InspireMD (NSPR). In a very confident and not-at-all stilted explanation, Portnoy says he got the stock tip on a date, and put $400,000 down on a barely-touched nanocap just to impress the lucky woman.”

Portnoy tweeted about the stock the morning of June 10, 2020. According to Robintrack.net there were 10,108 Robinhood users invested in the stock. The same day that number went as high as 16,330.

Tesla and the Sheer Belief of Investors
Perhaps one of the most consequential investment trends of young retail investors has been their collective affinity for certain stocks and the sheer buying force behind them. To some degree, they have willed the success of certain stocks into existence as in the case of Norwegian Cruise Line and propelled countless more to new heights. It is possible to observe such buying patterns across a multitude of stocks but few compare to the growth of Tesla. Although roughly 75 percent of Tesla stock belongs to large institutional investors, that remaining percentage of stock is held by incredibly enthusiastic retail investors.

Reuters writes that

Tesla shares are among the most popular on U.S. retail investor platforms, such as Robinhood Markets Inc and TD Ameritrade AMTD.O. The number of users holding Tesla stock on the Robinhood trading app increased more than 400% from the first two weeks of July 2018 to the same point this year, according to data from Robintrack.net, which compiles data on the investing platform.

Although Tesla is still barely profitable as a company and is still struggling to put a comparable number of products on the market compared to its peers, investors believe Elon Musk is the future. Tesla stock has increased over 700 percent in the past year. For many investors, that’s all that matters, which when combined with strong buying momentum creates a complementary cycle of investment. CNBC’s Jim Cramer explains Tesla’s popularity with young investors along with other stocks here. He explains that millennials in particular are attracted to tech stocks more so than older investors and those purchasing tendencies have become a real market force.

Key Takeaways
The past year has seen millions of new young retail investors flock to the stock market as lockdowns confined countless people to their homes. In particular, it pushed millions of excited, inexperienced, and aggressive young adults with some disposable income into the market. These investors were free to throw their money at whatever sparked their passions, whether it be from hours of research or seeing a funny meme on an internet forum. However, in the stock market if enough people collectively do something it becomes reality. Many believed that young retail investors on platforms like Robinhood would be a danger to themselves, including the state of Massachusetts which took issue with its youthful appeal. In reality they actually ended up changing the dynamic of the market to benefit them which is why more investors are entering the market, not less.

Much like all other behaviors associated with young retail investors, on their own, they seem reckless but collectively they help shift results in their favor. Sometimes they are simply the right choice despite expert opinion. These trends not only demonstrate an interesting short-term market force but also the permanent introduction of new demand side forces as a result of the growing financial enfranchisement of younger investors."

MY COMMENT

CROWD INVESTING.......I love it and believe it is here to stay.....at least for a while. It will take a pretty NASTY downturn to drive these young traders away and into other forms of amusement. Fine with me......since......I happen to own many of their favorite stocks.

 

A NICE open for TSLA today.....I assume another record high.....although I have not looked. The TECH stocks are NOT happy.....seems odd to me since the candidates that they ALL supported are both elected.

The general averages are looking good.....at least the DOW and SP500. BUT.....this will probably be one of those days that individual investors results will be very specific to what they hold.

Private payrolls are DOWN by 123,000 jobs in December:

Private payrolls unexpectedly drop by 123,000 in December: ADP

https://finance.yahoo.com/news/adp-...mber-2020-coronavirus-pandemic-131557860.html

The "mythical" economists expected a gain of 75,000. I dont know what they were SMOKING.......with the continuation of the LOCK-DOWNS and the election turmoil it is a MIRACLE the numbers are not worse than they are.

The article avoids mention of any other reasons except for the virus.....but.....being a former business owner......with the EXPECTATION of tax increases for business and increased regulation for business.......it is NOT a time that business owners are going to be considering expanding......AT ALL. In fact the business climate at the moment will be one of belt tightening since there is a distinct PROBABILITY of events happening in the near future that will be negative for business owners.

When I CLOSED my business in 2019.....the PRIMARY reason was the ever increasing taxes, regulation, and dealing with out of touch bureaucracy. As a SUCCESSFUL business owner there is a point where you just say.....screw it.

The OTHER news today........the ten year treasury is now above a 1% yield. This may be a temporary event....but the ten year is the cornerstone of mortgage rates as well as other financial instruments. Time will tell where we are headed with rates.....at the moment.....not a big issue....yet.

It would be nice to see the NASDAQ join the other two big averages by the end of the day.......seems like a pretty good chance.......but.....I am talking the ultimate in short term commentary.....one market day.

For long term investors......this little DRAMA should be over and fully digested by the end of the week. One thing is sure........it is going to be a long, very erratic, year. The.....saving grace......for those that are long term will be the fact that the markets will SMOOTH OUT all these short term events over the long term.......AND......just because a year is erratic....DOES NOT......mean that it will be a bad year for investors.

 

A DEFINITE red day for me today. I could tell this morning that my particular portfolio mix was NOT going going to fit what the market wanted to favor today. Got beat by the SP500 by 1.92% today. ALL the tech stocks that I own got solidly beat down today. Not a ROUT but a solid beat down across the board. Tesla was my STAR today.

I dont understand the reaction of the markets.......the NASDAQ....today. ALL of the major tech companies strongly supported the winners in Georgia.....yet.....the media was pushing the story line today that the Tech companies would not like the outcome.......ridiculous. ALL of the big tech companies have filled up the new administration with former employees and former lobbyists. I dont buy the media story line today. If there is any industry that is going to do well........and.....have the ear of the politicians........it is the big tech business.

 

HERE is a little article regarding the markets........possible...... response to the situation we have now in DC. All in all.......not based on this article, based on my opinion.....we will be fine. It is good to keep in mind that the political climate now and political views held now are very different than in the past......so...no comparison means much.

We Looked At How The Stock Market Might Perform If Democrats Sweep Georgia—And The Results Aren’t What You Think

https://www.forbes.com/sites/sergei...gn=dailydozen&cdlcid=5d01057f1802c8c524bb7dcd

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

"Markets have been bracing for what investors could view as alarming results in two U.S. Senate runoff elections in Georgia. Democrats already appear to have won one seat, with Rev. Raphael Warnock defeating incumbent Sen. Kelly Loeffler; if they take both, giving Vice President-elect Kamala Harris a tie-breaking vote and Democrats control of the Senate, it could get ugly—albeit briefly.

That’s because most equity investors haven’t seriously considered the impact (on taxes, new regulations and more) of unified Democratic control since just before the November presidential election, which, of course, failed to produce a much-hyped and anticipated blue wave. The result is that a surprise Democratic double win could spark a sharp short-term selloff of as much as 10%, Oppenheimer chief investment strategist John Stoltzfus predicted before election day. And then? Investors will get over their shock and start licking their lips over all that stimulus—including $2,000-a-person checks and infrastructure spending—that Democrats promise to pump into the economy.

“If Democrats win both seats, there will be a short-term negative reaction on Wall Street but it will come back because we’ll see more spending pretty quickly,” says famous bull Jeremy Siegel, the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania.

Make no mistake: Based solely on historical market performance, the best-case scenario for investors appears to be if the GOP retains at least one seat and control of the Senate; if Republican Sen. David Perdue manages to hold on to his seat (right now, Democratic challenger Jon Ossoff holds a razor-thin lead), it sets the stage for a split Congress under a Democratic White House. There’s only been one period since 1944 with a Democrat in the White House and a split Congress and the S&P 500 averaged a hefty 13.6% return each of those years—which just happened to be the four years during the middle of President Obama’s tenure. By comparison, during the ten years a Republican president held office with a split Congress (including, of course, the last two under President Trump), the market only rose by an average of 7.3%.

Interestingly, the second-best performance—a 13% average gain—has come during the 10 post-1944 years when a Democratic President had to contend with both a House and Senate under Republican control. “The market appears to like its (Democratic) government handcuffed,” says Doug Witte, a finance professor at Missouri State University.

But it turns out that even if Ossoff, in addition to Warnock, pulls off an upset, investors should be okay—going by historical data, the popular belief that unfettered Democrats are terrible for stocks simply isn’t true in the long run. “Even if we do end up with a Democratic trifecta, the returns aren’t bad,” says Sam Stovall, chief investment strategist for CFRA Research, a New York City-based investment research firm, who dubbed the prospect of both Ossoff and Warnock winning the “blue ripple.” The S&P 500 average return in years where Democrats have simultaneously held the Oval Office and both houses of Congress is roughly 10%. For comparison’s sake, during the eight years Republicans had sole control of the White House and Congress, the S&P 500 rose by an average of 12.9%.

What about 2021? There have been six instances since 1944 when there was a new Democratic president in his first year of office backed by a unified blue Congress, Stovall notes. The average S&P 500 return for those six calendar years was 10.3%, he calculates, with the market advancing five times out of six. (Jimmy Carter’s first calendar year was the notable exception, dragging down the average with an 11% loss.) What about a new, first-term Democratic President immediately facing a split Congress or even one controlled by the opposite party? That simply hasn’t happened in the post-WWII period, meaning the market would be entering uncharted territory, so to speak.

If the Senate should remain in Republican hands, it would obviously (among other limitations) reduce the Biden Administration’s ability to roll back Trump-era corporate tax rate cuts or raise taxes on the rich, as the president-elect proposed during the campaign. Yet even with Democrats in full control of Congress, Biden (and more centrist Democrats) might be disinclined to raise taxes when the economy is still weak. Instead, Democrats might spend freely without raising taxes—at least at first. A straw in the wind: Last week, at the behest of progressives, the House passed a new rules package including “pay as you go” exceptions for spending related to either the health or economic effects of the Covid-19 pandemic or to climate change, meaning that any increase in federal government outlays in those areas no longer needs to be offset by tax increases or other budget cuts. You can cram a lot of deficit-financed spending into those broad areas.

More stimulus would likely come in the form of $2,000 checks to Americans—a promise that Biden echoed on Monday while campaigning for Ossoff and Warnock in Atlanta—but also a large infrastructure spending package, which has potential for bipartisan support. Investment giant Goldman Sachs is predicting another $600 billion in federal stimulus spending alone this year, on top of the recently passed $900 billion package, in the event of a Democratic sweep in Georgia. That might include more aid for state and local governments (which the Republican Senate has steadfastly blocked), enhanced federal unemployment benefits and perhaps even student debt relief, Goldman says.

As for sector performance, if Democrats prevail, renewable energy and industrials could benefit from a new focus on infrastructure in Washington, while pharmaceutical companies and especially Big Tech will likely take a hit from increased government regulation through congressional legislation.

As consequential as Georgia’s runoffs may be for national politics and policy, they could be just a small bump in the road for long-term investors. Interest rates, inflation and a return to normal economic activity—whatever that looks like in a post-pandemic world—will write the markets story of 2021.

This year’s stock performance “is more likely to come from underlying economic pressures and how well we navigate exiting this Covid pandemic,” says James Stack, the CEO of Stack Financial Management, a Montana-based wealth advisory. But that won’t keep market timers and investors prone to overreaction from making short-term moves. Stack figures the Dow Jones industrial average could immediately sell off up to 1,000 points in a “knee-jerk” reaction if Georgia turns the Senate blue, and gain 1,000 points if Republicans retain Senate control.

“If I were a trader, I would be sitting on the sidelines right now—with a bag of popcorn,” he says."

MY COMMENT

CONTRARY to the headline......the results are EXACTLY as I would expect....having invested for the long term through many, many, different administrations. HOPEFULLY.....after this week we will be back to a somewhat normal investing year. Who knows? As a long term investor.......you have no control over politics. BETTER....to focus on the investing and let the political hero's flail around in DC as they always do. As long term investors......what we do is ALWAYS.....in spite of the politicians.

 

Markets......movin on up......today. An EXTREMELY strong open. This helps the markets today:

Jobless claims: Another 787,000 Americans filed new unemployment claims last week

https://finance.yahoo.com/news/init...an-2-2021-coronavirus-pandemic-191630119.html

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

"New jobless claims unexpectedly steadied below 800,000 at the turn of the new year but still held at a historically elevated level, as the labor market struggled to regain traction amid the ongoing pandemic.

The U.S. Department of Labor released its weekly report on new jobless claims Thursday morning at 8:30 a.m. ET. Here were the main results in the report, compared to consensus estimates compiled by Bloomberg:

• Initial jobless claims, week ended Jan 2: 787,000 vs. 800,000 expected and a revised 790,000 during the prior week
• Continuing claims, week ended Dec. 26: 5.072 million vs. 5.200 million expected and a revised 5.198 million during the prior week

The labor market saw back-to-back weeks with new jobless claims below 800,000, following three consecutive weeks above that level in December. Last week, some economists attributed the improvement to a quirk in adjusting for seasonality factors around the holidays rather than the start of a down-trend, given the weakness displayed throughout the month in the labor market.

“The underlying story here is clear. A combination of COVID fear and state-mandated restrictions on activity in the services sector is squeezing businesses, and no real relief is likely until a sustained decline in pressure on hospitals emerges,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in an email Thursday. “That’s probably a story for late February at the earliest.”

By state, Colorado and Kansas reported the greatest increase in new claims last week, with these rising by more than 18,800 and 15,000, respectively. Illinois saw by far the greatest drop in new claims with a decrease of nearly 63,000, followed by Florida with a drop of 5,000.

Continuing claims, measuring the total number of Americans still receiving state unemployment benefits, also improved more than expected to nearly 5.1 million during the last full week of December.

And alongside those counted as continuing claimants, an additional 4.5 million Americans were also claiming benefits on the Pandemic Emergency Unemployment Compensation program, which offers extended insurances for those who exhausted their six months of regular state benefits. The passage of Congress’s $900 billion virus-relief package extended both Pandemic Emergency Unemployment Compensation and Pandemic Unemployment Assistance — which had nearly 8.4 million claimants as of late December — until at least March.

The Labor Department’s latest jobless claims report comes a day before the agency’s monthly non-farm payrolls report. The most recent weekly unemployment claims reports will not be reflected in the monthly data, given that the survey week for the report takes place around the 12th of the month. Concerningly, however, new jobless claims during the survey week spiked to a three-month high of nearly 900,000.

ADP’s closely watched monthly release on private sector employment already disappointed for December. That report showed the first negative private payrolls print since April, as new lockdown measures weighed most heavily on leisure and hospitality employment. Though ADP’s results have been an imperfect indicator of employment changes reported in the Labor Department’s monthly non-farm payrolls print, it has typically aligned at least directionally with the government report.

Though consensus economists still expect to see the Labor Department’s official non-farm payrolls print reflect modest net payroll gains for December, some individual economists are forecasting declines.

“Momentum has weakened in recent months, a trend that will likely persist in the near term,” High Frequency Economists economist Rubeela Farooqi said in a note Wednesday. “Risks to the labor market are skewed to the downside from a deteriorating health backdrop that will impact business activity.”"

AND.......good news for one of my holdings......a long time favorite of mine:

Costco’s December Sales Slowdown But Beat Estimates; Street Stays Bullish

https://www.nasdaq.com/articles/cos...eat-estimates-street-stays-bullish-2021-01-07

"Warehouse giant Costco reported a 10.7% rise in its December comparable sales, while overall sales grew 12.3% year-over-year to $19.1 billion.

Costco’s (COST) December comparable sales exceeded analysts’ consensus estimate of 9.5%, but the figure reflected a slowdown compared to comps growth of 13.4% and 14.4% in November and October, respectively. Looking at the regionwise growth, Costco’s comparable sales in the US, Canada and other international markets were up 9.6%, 8% and 19.4%, respectively. E-commerce comps rose 62.5% in December.
Costco has been experiencing strong trends in groceries and items like furniture and mattresses as people are spending more time at home to prevent the spread of COVID-19. Last month, Costco reported better-than-expected results for the first quarter of fiscal 2021 (ended Nov. 22), with revenue rising about 17% to $43.2 billion and EPS increasing 38% to $2.62.

Following the December sales report, Robert W. Baird analyst Peter Benedict maintained a Buy rating on Costco and a price target of $410. The analyst noted that while December core comps marked the 7th consecutive month of double-digit growth, it was a deceleration from November.

The 5-star analyst stated that softer traffic was the main reason for the slowdown, along with less robust growth in food and sundries amid smaller holiday gatherings. That said, Benedict remains positive on Costco's loyal membership base and structural cost advantages.

Overall, 16 Buys and 4 Holds add up to a Strong Buy analyst consensus on Costco. Shares have risen 26.8% over the past year. The average price target of $404.11 indicates further upside potential of 9.2% from current levels."

MY COMMENT

A very strong day.....so far.

HERE is the understatement of the day:

"Tesla Call Was Completely Wrong, RBC Says After 1,200% Rally"

 

HERE are some pretty good new years resolutions. I DO NOT.....personally.....follow some of them ESPECIALLY the one about re-balancing.......I generally DO NOT re-balance.......I let winners run. BUT:

Financial and Investing Resolutions for 2021

https://www.aaii.com/investor-updat...al-and-investing-resolutions-for-2021-part-1?

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

(EDITED from original)

"......here is this year’s updated list of New Year’s financial and investing resolutions for investors:

1. Only follow strategies you can stick with no matter how good or bad market conditions are. All too often, investors misperceive the optimal strategy as being the one with the highest return (and often the one with the highest recent returns). This is a big mistake; if you can’t stick to the strategy, then it’s not optimal for you. Better long-term results come to those investors who can stick with a good long-term strategy in all market environments rather than chasing the hot strategy only to abandon it when market conditions change.

One way to tell if your strategy is optimal is to look at the portfolio actions you took this past year. Did you sell stocks during the coronavirus-related first-quarter bear market? If so, you may be taking on more risk than you can actually tolerate. Alternatively, you may need to develop more clearly defined rules about when you will make changes to your portfolio.

2. Focus on your process, not on your goals. Mr. Market couldn’t care less about how much you need to fund retirement, pay for a child’s college education or fulfill a different financial goal you may have. He does as he pleases. The only thing you can control is your process for allocating your portfolio, choosing investments to buy and determining when it’s time to sell. Focus on getting the process right for these three things and you will get the best possible return relative to the returns of the financial markets and your personal tolerance for risk.

3. Write down the reasons you are buying an investment. One of the most fundamental rules of investing is to sell a security when the reasons you bought it no longer apply. Review your current holdings and ask yourself the exact reasons you bought them. Do you remember? I personally maintain notes, so I don’t have to rely on my memory to cite the exact characteristics of a stock or a fund that attracted me to the investment.

4. Write down the reasons you would sell the investments you own. Just as you should write down the reasons you bought an investment, jot down the reasons you would sell an investment, ideally before you buy it. Economic conditions and business attributes change over time, so even long-term holdings may overstay their welcome. A preset list of criteria for selling a stock, bond or fund can be particularly helpful in identifying when a negative trend has emerged.

5. Have a set schedule for reviewing your portfolio holdings. If you own individual securities, consider reviewing the headlines and other relevant criteria weekly. (Daily can work, if doing so won’t cause you to trade too frequently.) If you own mutual funds, exchange-traded funds (ETFs) or bonds, monitor them quarterly or monthly.

6. Rebalance your portfolio back to your allocation targets. Check your portfolio allocations and adjust them if they are off target. For example, if your strategy calls for holding 40% large-cap stocks, 30% small-cap stocks and 30% bonds, but your portfolio is now composed of 45% large-cap stocks, 35% small-cap stocks and 20% bonds, adjust it. Move 5% of your portfolio out of large-cap stocks, move 5% out of small-cap stocks and put the money into bonds to bring your allocation back to 40%/30%/30%. How often should you rebalance? Vanguard suggests rebalancing annually or semiannually when your allocations are off target by five percentage points or more.

7. Review your investment expenses. Every dollar you spend on fees is an extra dollar you need to earn in investment performance just to break even. Higher expenses can be justified if you receive enough value for them. An example would be a financial adviser who keeps you on track to reach your financial goals. Review your expenses annually.

8. Automate when possible. A good way to avoid unintentional and behavioral errors is to automate certain investment actions. Contributions to savings, retirement and brokerage accounts can be directly taken from your paycheck or from your checking account. (If the latter, have the money pulled on the same day you get paid or the following business day.) Most mutual funds will automatically invest the contributions for you. Required minimum distributions (RMDs) can be automated to avoid missing deadlines and provide a monthly stream of income. You can also have bills set up to be paid automatically to avoid incurring late fees.

9. Create and use a checklist. An easy way to ensure you are following all of your investing rules is to have a checklist. It will both take the emotions out of your decisions and ensure you’re not overlooking something important.

10. Write and maintain emergency instructions on how to manage your portfolio. Typically, one person in a household pays the bills and manages the portfolio. If that person is you and something suddenly happened to you, how easy would it be for your spouse or one of your children to step in and take care of your financial affairs? For many families, the answer is ‘not easily’ given the probable level of stress in addition to their lack of familiarity with your accounts. A written plan better equips them to manage your finances in the manner you would like them to. It’s also a good idea to contact all of your financial institutions and give them a trusted contact they can reach out to, if needed.

Even Warren Buffett sees the value of this resolution. In his 2013 Berkshire Hathaway shareholder letter, he wrote, “What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit … My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.” Considering the probability of Mrs. Buffett having learned a thing or two about investing over the years, it speaks volumes that Warren Buffett still sees the importance of including simple and easy-to-follow instructions in his estate documents.

11. Share your insights about investing with your family. If you’re reading this, you likely have some passion for, or at least interest in, investing. Share it with your family members by having a conversation with them. Talk about how you invest, what you’ve learned and even the mistakes you’ve made. It’s a great way to pass along a legacy to those younger than you and to maintain a strong bond with those older than you. You might even learn something new by doing so.

If a family member isn’t ready to talk, don’t push them. Rather, write down what you want to say, give the letter to them and tell them you’ll be ready to talk when they are. "

MY COMMENT

A lot of.....very simple.....yet....very good advice in the above for most investors. As I said I DO NOT....personally......follow what is said above about re-balancing. As a long term investor....I prefer to let winners run for as long as possible.

I LIKE the part about sharing your investing insights and plan with family. BUT.......I will say......

HOWEVER.......I do NOT share THIS SITE with family or friends or others that KNOW ME. I want the freedom of........TOTAL ANONYMITY......to post honestly and forthrightly on this site. I want the freedom to be able to post my portfolio and ALL portfolio moves.......as they are made.....on this site. I want the freedom to be able to post intimate investing insights and thoughts on this site without having to worry about family or friends. ONE REASON that I post my portfolio and investment moves as they happen is so others reading here WILL know.......in general....that what I am posting is TRUE........and reflects REAL LIFE. By posting ACTUAL RESULTS and prices of purchases and sales.....people reading this site can CHECK what I am saying about my investing experiences......over time.

I DO share investing numbers and holdings with family......wife and children.......outside of this site. Probably more than they want to know.....BUT.....it is important of them to have this information in case of an emergency. My wife has pretty good day to day knowledge of our investments and our lifetime investing plan. I ALSO have detailed instructions written out for her to follow if needed.

 

ONE of those days today.....where stocks just EXPLODE upward. A GREAT green day for me today. I got my ass kicked by the SP500 yesterday......and.......today I got my revenge.......I beat the SP500 by 1.30% today. The BIG winners for me today were NVDA +5.78% and SNOW +13.5% and.......of course.....TSLA at +7.94%. Most of my other holdings ALSO did very nicely.

INTERESTINGLY..........With the record price on TSLA today.......my purchase on June 23, 2020 is NOW up by 306% in less than 7 months. My additional purchase of TSLA on July 10, 2020 is now up by 194%.......INSANE.......I imagine that TomB16 is in hog heaven.

GREAT that you are invested for the long term Zukodany.......you NEVER know when these EXPLOSIVE UP days are going to hit......and yes.....we ALL need a break from the politics in our daily lives.

 

OK.....well lets build on what we did today as the basis for a BIG gain tomorrow. The futures are certainly indicating a nice open.

In fact.....the ONLY day this week.....so far.....that was negative for the SP500 was Monday. A NICE WIN tomorrow could take the SP500 up to 2% year to date. Not too bad for the first full week of the year. DOW is in the SAME situation.......all up days except for Monday and nice potential to go to 2% for the year tomorrow.

So......that should pretty well JINX us for tomorrow........if I was superstitious......BUT I am not.

I had an interesting 2 hours listening to elevator music today while on hold with the IRS.

First I got a past due notice in the mail today saying that I missed paying them $1021 that I owed them on my 2019 taxes. The notice said that the payment date that I missed was December 14. In TYPICAL IRS fashion.....the notice was dated November 13, 2020.......with a Due date of December 14, 2020......and.....I received it today, January 7, 2021. The notice said that they got my return a month late and the amount due was penalties and interest.

Of course.....I mailed my return and check on July 14, 2020....right on time. So....the lady went into research and comes back on the phone saying....well your check was cashed by us on July 24, 2020. So I reply..."well it sounds like you DID get my return in a timely manor". She goes away again to research and comes back with......."well we had some issues around that time (obviously the virus).....but since you have a good record, I will back the charges out.....THIS TIME".

They would NOT admit that they had made a mistake....again....in typical IRS fashion. So than I ask her........"your notice has a slightly different total for the tax due for 2019 compared to what Turbo tax generated on my return....it looks like you actually owe me over $1000 in refund". Her reply....."well I have backed out your penalty and interest.......I wouldn't know about any refund.....you will be notified later".

At that point I just gave up and said thanks.....got her employee number and hung up. I told my wife she probably hit a big red button on her computer keyboard......."AUDIT IMMEDIATELY"....as soon as I hung up. At least I stayed polite on the phone. NOW....I am probably going to be stuck in IRS HELL for months.....getting past due notices while employees tell me to just ignore them. BUMMER.

 

Thanks Jwalker......I believe I solved the issue yesterday since the rep said that the issue was resolved. BUT....time will tell.

HERE is the news of the day......that will not matter in the slightest to the markets today and will not be considered as relevant......it is an indicator of the economy in about 9-12 months.

December jobs report: Payrolls drop for the first time since April, unemployment rate steadies at 6.7%

newshttps://finance.yahoo.com/news/december-jobs-report-payrolls-coronavirus-pandemic-2020-labor-200212779.html

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

"U.S. job growth turned negative for the first time since April in the final month of 2020, as the pandemic that rocked the economy over the past year dealt yet another blow to the labor market.

The Labor Department released its December jobs report Friday morning at 8:30 a.m. ET. Here were the main results from the report, compared to consensus estimates compiled by Bloomberg:

• Change in non-farm payrolls: -140,000 vs. +50,000 expected and a revised +336,000 in November
• Unemployment rate: 6.7% vs. 6.8% expected and 6.7% in November
• Average hourly earnings, month-over-month: 0.8% vs. 0.2% expected and 0.3% in November
• Average hourly earnings, year-over-year: 5.1% vs. 4.5% expected and 4.4% in November

December’s drop in payrolls widened the employment deficit in the labor market from before the pandemic, bringing the economy still more than 9.8 million payrolls short of its February levels. This came even as the payroll gains for each of October and November were upwardly revised by a combined 135,000.

Heading into Friday’s report, consensus economists had braced for a further deceleration in job growth at the end of the year, with employment trends weakening as new virus-related restrictions dampened employment and businesses awaited support from Congress’s latest stimulus package.

“The decline in payroll employment reflects the recent increase in coronavirus (COVID-19) cases and efforts to contain the pandemic,” the Labor Department said in its report Friday.

The survey week for the December jobs report took place over the 12th of the month, during a record surge in national coronavirus cases and before lawmakers approved the $900 billion virus-relief package, which extended federal unemployment programs and offered augmented jobless benefits and small-business aid. That week, initial jobless claims surged to a three-month high of nearly 900,000, suggesting a jump in layoffs in the final month of the year.

“Today's report is a harsh reminder that the pandemic controls our economic trajectory,” Daniel Zhao, Glassdoor senior economist, said in an email Friday. “Though the end-of-year relief bill offered temporary reprieve and the start of vaccine distribution offers light at the end of the tunnel, we’re not out of the woods yet.”

Service-sector jobs especially bore the brunt of the job losses in December, unwinding some of their recent recovery. Leisure and hospitality employment sank by 498,000 jobs during the month after gaining 340,000 between October and November, and the industry group remains nearly 4 million payrolls short of its February levels. Education and health services payrolls dropped by 31,000 in December.

Modest job gains in other industries did little to offset these sharp declines. Professional and business services jobs increased by 161,000 in December, and manufacturing jobs increased by 38,000 to come in at more than double the consensus estimate.

Both the unemployment rate and labor force participation rate remained unchanged in December from November, at 6.7% and 61.5%, respectively. Of those unemployed, those classified as being on a temporary layoff rose by 277,000 to 3.0 million in December, holding higher by 2.3 million compared to February. And as of the end of the year, nearly 4 million fewer Americans were working or looking for a job compared to February as the pandemic continued to constrain the size of the U.S. workforce.

“Health concerns about contracting COVID and the need to quarantine or take care of someone else who is sick has kept millions out of the workforce at any given time since the pandemic, particularly older workers,” Wells Fargo economist Jay Bryson said in a note Tuesday. “Parents juggling remote-learning and daycare closures have also found it difficult to continue working or searching for a job. Nearly 1 million parents with children under the age of 18 were not in the labor force in November specifically because of the pandemic.”

“And of course, a lack of job opportunities—as there are nearly 10 million fewer jobs today than back in February— has also contributed to millions of workers remaining on the sidelines of the labor market,” Bryson said.

MY COMMENT

I dont buy the pandemic reasoning in this and many similar articles. The vaccine has eliminated that as a.....forward looking event. I did see a couple of articles in other sources that mentioned what I believe is the TRUE cause of this drop.....the SHAKY business environment created by the unknown future. Business people....I was one for many years.....HATE uncertainty. Business....especially small business....is NOT going to hire or retain employees if they are facing the threat of increased taxes and regulation. AND....of course.....increased regulation ALWAYS ends up involving increased fees and taxes. The simple reason for this drop is fear and uncertainty on the part of business as to what the business environment will be in the future.

I DO NOT think anyone will pay attention to this data today. I believe we will see the markets RISE today. BUT.....this data is a CLUE as to where the economy and employment situation will be in 9-12 months. BUT........another BUT.........we know from many other times in history that negative employment DOES NOT necessarily mean a bad time for stock and and investors. Corporations have been shedding millions of workers for the past 12-16 years. Cuts to employment increase productivity and shareholder value.......it increases profits.

SO.......an interesting piece of irrelevant data.....today......I believe we will continue with the positive market over the short term. As a long term investor....I will GLADLY.....take any gain I can get for any reason it is given.

YES.....I continue to be fully invested for the long term as usual.

 

Post any time Jwalker.....good info above for any that might be in those income and tax situations.

"Other than that I have no interest in talking taxes on this board."

I can agree with that statement from your post.....TOTALLY. I prefer to talk about making money.....NOT......paying it to the government.......or.....trying to avoid paying it to the government.