The Long Term Investor

HERE is a nice little article with a good simple message:

10 Signs You Are Not a YOLO Trader

https://awealthofcommonsense.com/2021/01/10-signs-you-are-not-a-yolo-trader/

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

"I'm not going to be one of those finance people who wag their finger at all the young people YOLO trading in meme stocks.

I think its great young people are interested in the markets.

Are some of them going to lose money?

Yes, but people have always lost money in the stock market.

Are some of them going to learn bad habits?

Yes, but older, more experienced investors have bad habits as well.

I don’t mind certain investors speculating on stocks like this if they know what they’re doing or have the right mindset. If you’re young, have few financial responsibilities and understand this game, there’s no reason you can’t take some big risks in the stock market.


But you have to go into this stuff with your eyes wide open.

With that in mind, here are 10 signs you are NOT a YOLO trader and are better off sitting this one out:

1. It’s money you can’t afford to lose. This is an easy one. It’s nice to think about stock picks that go to the moon but there are sure to be unsophisticated investors who get into this that are left holding the bag and lose a lot of money they have no business putting at risk.

2. You have no idea what you’re investing in or why. The Wallstreetbets people know more about this than the people who are now jumping on the bandwagon. Their trade was borderline brilliant and many of them have been in this for months.

The people jumping on the bandwagon at this point just see something going up in price and have no idea why this was an investment opportunity in the first place.

3. You’re buying purely based on emotion. There’s nothing wrong with being upset or outraged about the system but that’s not a good reason to invest in something.

4. You have no idea what tendies are. If I have to explain this one, you shouldn’t be following the Wallstreetbets crew into their stock picks.

5. You have a family or other financial responsibilities that are more important than putting on a YOLO trade. I’m all for people doing what they want with their money. But before putting on a YOLO trade ask yourself the following:

• Do I have an emergency fund?
• Am I contributing to a 529 plan for my kids?
• Am I contributing to my 401k or IRA?

Trading stocks is fine but you should have the rest of your financial house in order first.

6. You’re buying a stock because you saw someone talking about it on social media. Now that this story has become a part of popular culture, you’re seeing people talk about stocks that never talk about stocks. Be careful when listening to people who are more worried about social media clout than actually providing useful financial guidance.

7. You’re buying a stock because one of your friends owns it. This one might be even more dangerous than a social media clout recommendation because the FOMO feels even more real when it’s someone you know.

We’ve all been getting text messages about GameStop this week. Just remember, there has never been an investment book titled I Got Rich Investing in Stock Recommendations From My Friend (Who Has No Idea What They Are Doing).

8. You have no idea when you will sell it. Buying a stock that’s going up is easy. The hardest part about investing in individual stocks is knowing when to sell. This is even more true with a stock you are day trading.

9. You’re revenge trading. If only I would have bought that stock when it was $5 a share I would be a millionaire is not a great reason to buy it now. Momentum is a legitimate investment strategy but only if you realize it doesn’t last forever.

10. You don’t understand the risk involved in the stock market. No one can predict what is going to happen in the stock market in the short-term, especially when it comes to highly volatile individual names. GameStop could go to $1,000 a share. Maybe AMC rides the wave to $50 a share.

Stranger things have happened.
But you have to understand these moves can work in both directions.
The stock market won’t hand you gains just because you think you deserve them."

MY COMMENT

I think most people are able to avoid jumping on the bandwagon when something like the GameStop drama and media soap opera is happening. I REALLY like this quote from the article:

"there has never been an investment book titled I Got Rich Investing in Stock Recommendations From My Friend (Who Has No Idea What They Are Doing)."

OR....for that matter.....investing in something because some "guy" on the internet recommended it. NOTHING wrong with getting ideas from the internet. BUT....be sure to do your own research and be wary.....ESPECIALLY when you see a few people making RIDICULOUS money. They may know what they are doing.....but.....do you?

 

I like the little lesson in this article.

Analysis: A tulip by another name? 'Gamestonk' and the case for investor caution

https://www.reuters.com/article/us-...d-the-case-for-investor-caution-idUSKBN29Z0HG

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

"NEW YORK (Reuters) - It sounds like the start of a parable: Investors stuck inside during a pandemic begin to bid up an asset until its price becomes untethered to reality. The value soars until one day the market runs out of buyers and freezes, causing prices to plummet and some unlucky few to lose fortunes more than ten times their annual incomes in the span of a few hours.

The date: February 3, 1636. On that day, the infamous Dutch tulip bubble burst during an outbreak of the bubonic plague, illustrating that asset prices can plummet just as quickly as they soar, leaving only pain behind.

Now, almost exactly 385 years and another pandemic later, Wall Street waits to see how long it will take for history to repeat itself.

Shares of video game retailer GameStop Corp have soared 1,625% since the start of January. Driving the rally are individual investors who have been stuck at home for the last ten months. Many have turned to online forums like WallStreetBets on Reddit and are buying the stock, some as a form of protest against hedge fund managers who wagered that it would fall.

These amateur investors are buoyed by savings built up over the coronavirus pandemic, two rounds of stimulus payments and near zero interest rates. Some, such as billionaire entrepreneur Elon Musk, have referred to the phenomenon as ‘Gamestonk’, a play on the intentional misspelling of the word ‘stock’ on social media.

The stock price rally to above $300 per share has emboldened some small investors to pour even more money into a company that Wall Street analysts tracked by Refinitiv believe is worth slightly more than $13 per share. The surge increases the risk that individuals will get caught up in the euphoria and look past the warning signs and consequences of an eventual crash.

"I dumped my savings into GME, paid my rent for this month with my credit card, and dumped my rent money into more GME (which for the people here at WSB, I would not recommend)," a Reddit user with the handle ssauron here wrote Thursday on WallStreetBets. "And I'm holding. This is personal for me, and millions of others."

A form of class warfare waged through the shares of a video game retailer is notably different than financial market manias, such as the dotcom bubble in 2000 or the U.S. real estate bubble that culminated in the 2008 financial crisis, both which were fueled by assumptions of broad economic growth.

Yet for those who buy GameStop at the wrong time, the results will likely be the same.

“The reality is that GameStop doesn’t hurt Wall Street. It might hurt a couple of hedge fund managers out there, but no one is going to cry for them. The people who will be losing their life savings are small retail investors,” said Ben Inker, head of asset allocation at GMO.

The total value of short positions in Reddit-favored stocks such as GameStop is about $40 billion, limiting the pain among professional investors to a handful of hedge funds, according to Barclays.

Overall, GameStop shorts were down about $5 billion for the year through Tuesday, according to S3 Partners. By comparison, Tesla Inc, another heavily-shorted stock among professional investors, caused short sellers $245 billion in losses in 2020, the firm noted.

“While we expect some more deleveraging, ultimately the scale of the problem appears quite limited,” Barclays said.

The likelihood that most of the losses from the rally in GameStop will come among the same group of retail investors who prodded it higher is leaving many on Wall Street baffled as the bubble continues to grow. GameStop surged 67.9% higher Friday to close at $325 per share.

“GameStop is not worth $500, not worth $400, not worth $300, not worth $200, not even worth $100, not even worth $50,” billionaire investor Leon Cooperman said on CNBC Thursday. “I’m not damning them. I’m just saying from my experience, this will end in tears,” he added.

BURSTING BUBBLES
The dotcom bubble peaked in March 2000 and over the next two years the tech-heavy Nasdaq Composite Index slid nearly 77% as companies that were touted as can’t miss investments ran out of financing. By the time the Nasdaq bottomed in October 2002, some $6.2 trillion in household wealth had been destroyed, according to Amir Sufi, a professor at the University of Chicago.

The 2008 financial crisis, meanwhile, wiped away approximately $16.4 trillion from American households through a combination of steep stock market losses and plummeting home equity, according to the Federal Reserve.

No one expects that the GameStop bubble will cause anything close to the same levels of economic pain as the financial crisis or dotcom bust before it, in part because the company has a low share count and was not widely held by institutional or retail investors prior to the start of the year. With $6.5 billion in revenues in its last fiscal year and fewer than 53,000 employees worldwide, it does not have an outsized economic impact.

Yet a fall will be concentrated on those who helped upend Wall Street’s notion of what retail investors can do.

“There’s going to be some blood on the floor when this is all over, but that’s going to be some hedge fund blood and a lot of retail blood,” said Donald Langevoort, a professor at Georgetown Law who studies retail investors and securities regulation.

Melvin Capital and Citron Research, two prominent GameStop short-sellers, said earlier this week that they had already closed out their positions.

Securities laws that typically protect smaller investors from fraud may be of little help for investors who buy shares of GameStop at elevated levels, Langevoort said.

“I don’t know if there is an organization or orchestrator that is using deceit and trickery, especially when the motivation seems to be ‘Let’s support GameStop and show them,’” he said. “The SEC has to take a deep breath and ask itself whether it has a strong enough case to put a stop to this.”

‘LIFE OF ITS OWN’

The outsized rally in GameStop is happening at a time when valuations across financial markets appear to be stretched. The S&P 500 index trades at a forward price to earnings ratio of 23.1, near its peak during the dotcom bubble, while the cryptocurrency bitcoin jumped 14% Friday after gaining 265% over the past 12 months.

The rise of commission-free trading platforms such as Robinhood have helped inflate asset market bubbles by lowering the bar for retail investors to trade, said Ronnie Sadka, a finance professor at Boston College.

“Retail investors are becoming a systemic risk,” that the SEC is ill-prepared to handle, he said. “The challenge with regulation is that this is not a case where Wall Street is squeezing the mom and pops, this is a case where the short-sellers are getting squeezed.”

The surging value of GameStop shares is luring investors who will most likely be burned in the end, said Michael Pachter, an analyst at Wedbush Securities who has a $16 price target for the company.

“This is the tulip bubble all over again,” he said, adding that he received a call from a friend who bragged that he put $1,000 into Reddit favorites such as GameStop, AMC Entertainment Holdings Inc and BlackBerry Ltd and was now up $400,000 in two weeks. “He doesn’t even know what GameStop sells,” Pachter said.

How will the GameStop mania end? If it is like the original tulip bubble, it could lead to a “short-term crisis of trust” in financial markets, said Anne Goldgar, a professor at the University of Southern California.

Every jump in the price of GameStop, meanwhile, brings in more short-sellers enticed by ever-growing potential gains and more buyers looking to stick a thumb in the eye of Wall Street, causing the cycle to continue, Pachter said.

“This thing has a life of its own,” Pachter said."

MY COMMENT

YES...it does have a life of its own.....and will just have to run its course. AND....it will. It will be a historical curiosity in the near future.

NEXT WEEK......what really counts is earnings...including......AMAZON...GOOGL.....ALIBABA.....EXXON....FORD.....and many many more

 

Just got back from a little 12 hour road trip.......4 hours there....set up and play 3 hours......tear down.....4 hours back.

I agree....roadtonowhere08.....and....TomB16....and....Zukodany.

I dont see a crash......most likely a minor correction that lasts a week or two......so no big deal. WSB is a great media story....but....has perhaps a week at the most till it is old news. Way OVEREXPOSED. I think EARNINGS will start to regain the upper hand next week.

We have been seeing that dip AFTER earnings for at least 2-5 years now it seems like.

My investing agenda is simple......I just do the same thing over and over.....which usually means doing NOTHING other than siting. Some times what I do is in fashion....other times....not at all.

 

OK....trying....to move on from the current market distraction psychodrama.....I believe this little article pretty well sums up what is IMPORTANT NOW.......and what will be IMPORTANT next week:

7 Earnings Reports To Watch Next Week

https://markets.businessinsider.com/news/stocks/earnings-reports-to-watch-next-week-1028709625

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

"One of the many interesting facets of the GameStop (NYSE:GME) saga is that its epic roller-coaster ride overshadowed an important and newsworthy week for the rest of the market. This week, after all, saw earnings reports from several of the world’s biggest companies.

In fact, of the six U.S.-listed companies with the highest market capitalization, four released earnings this week. Apple (NASDAQ:AAPL), the world’s most valuable company, fell 3.5% after earnings. Microsoft (NASDAQ:MSFT), the second-most valuable, rose to new highs. Tesla (NASDAQ:TSLA) and Facebook (NASDAQ:FB) too posted solid quarters, yet both stocks fell in regular trading Thursday.

Those releases seemingly didn’t get all that much attention. Neither did volatility that extended beyond GameStop, AMC Entertainment (NYSE:AMC) and other names, with major indices falling sharply on Wednesday and seeing a rebound fade late on Thursday.

At any other time, investors likely would be laser-focused on earnings, given valuation concerns and the still-raging novel coronavirus pandemic. That may turn out to be the case with earnings next week.

We’ll get releases from two more of the so-called “FAANG stocks.” A pair of energy giants report. Social media leaders Snap (NYSE:SNAP) and Pinterest (NYSE:PINS) are on the earnings calendar.

So are video game developers Electronic Arts (NASDAQ:EA) and Activision Blizzard (NASDAQ:ATVI), as well as leaders in a number of other sectors. Yet these aren’t even the biggest names to report earnings next week.

These companies are. In a key week, these are the seven earnings reports to watch:

• Alibaba (NYSE:BABA)
• Exxon Mobil (NYSE:XOM)
• United Parcel Service (NYSE:UPS)
• Amazon (NASDAQ:AMZN)
• Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)
• PayPal (NASDAQ:PYPL)
• Qualcomm (NASDAQ:QCOM)

Alibaba (BABA)

Earnings Report Date: Tuesday, Feb. 2, before market open

BABA stock has weathered the storm. Regulatory worries rose following an antitrust investigation and the suspension of the Ant Financial initial public offering. The whereabouts of co-founder Jack Ma were even a source of speculation until Ma appeared in public last week.

The worries sent BABA stock down as much as 30% from late October highs, but the stock has regained over one-third of its losses. That creates an interesting situation ahead of Tuesday morning’s earnings report.

After all, earnings are likely to impress. Alibaba’s combination of scale and growth is almost without precedent. Meanwhile, even after the rally of the past three weeks, at 21x forward earnings BABA hardly looks expensive.

There’s certainly the potential for more upside if Alibaba can deliver blowout earnings next week. History suggests it will.

Exxon Mobil (XOM)

Earnings Report Date: Tuesday, Feb. 2, before market open

As far as investors are concerned, Exxon Mobil simply isn’t what it once was. As recently as July 2013, Exxon was the most valuable company in the world. It’s now barely in the top 40. Apple’s market capitalization has risen more than sevenfold since that company passed Exxon for the top spot less than eight years ago.

But, of late, investors have been buying the stock anyway: XOM has rallied 50% from late October lows. Modestly strengthened crude prices and a sense that the stock was “too cheap” from a long-term standpoint have been the likely catalysts.

The rebound puts some pressure on Tuesday’s report, which means Exxon will need to deliver. But the numbers almost certainly won’t be the focus. Exxon Mobil still is dealing with pandemic-driven pressures on the demand side, and realized prices in Q4 likely remained low.

Rather, Exxon needs to inspire confidence in its long-term outlook. Under chief executive officer Darren Woods, it hasn’t been able to do so. In May, Bloomberg even cited the company’s “much diminished reputation” amid an unfocused exploration strategy and questionable acquisitions.

The rally in XOM suggests that investors project not only normalizing crude prices, but an improvement in the way Exxon does business. Woods and his company need to give those investors reason to believe they’re right.

United Parcel Service (UPS)

Earnings Report Date: Tuesday, Feb. 2, before market open

A year ago, UPS probably wouldn’t have made this list. And it’s not just because UPS stock was struggling at the time.

Rather, it’s because of why UPS stock was struggling: the company seemed like it was getting left behind. Amazon’s fulfillment strategy was pulling package business away. The shift to e-signatures was pressuring the high-margin document business. UPS stock was cheap, yes, but it looked like a value trap.

A year later, UPS stock has rallied some 36%. The pandemic boosted e-commerce businesses of all kinds, many of which were and remain UPS customers. Broad industry growth suggests that Amazon’s predicted dominance may not materialize.

That alone makes UPS earnings important to many investors — because its results may be a harbinger of what’s to come for e-commerce retailers that report earnings in coming weeks. The likes of Wayfair (NYSE:W), Overstock.com (NASDAQ:OSTK), and even Shopify (NYSE:SHOP) could move on UPS results.

It’s a big quarter for UPS stock as well. For that stock, the good news has appeared priced in for quite a while. The stock has been rangebound for nearly six months now, underperforming rival FedEx (NYSE:FDX) over that stretch. Tuesday’s report gives the company a chance to jumpstart another rally — or to raise concerns that pre-pandemic problems may return in the post-pandemic environment.

Amazon.com (AMZN)

Earnings Report Date: Tuesday, Feb. 2, after market close

One of the more interesting and surprising developments of this market is the fact that that Amazon stock now has done nothing for more than six months. This has been a market that prizes growth, after all, yet perhaps the biggest growth stock of them all has been left on the sidelines of the rally.

It’s difficult to pin down an exact cause of what has been steep underperformance (the Nasdaq Composite has gained 24% since July 20; AMZN barely 1%.). The resilience of e-commerce rivals may be one factor. Growing competition for Amazon Web Services — notably from Microsoft’s Azure — is another. Amazon has its own antitrust issues to deal with as well.

And, of course, the stock still looks expensive relative to earnings. Six months of flat trading doesn’t make AMZN a value play.

All that said, there’s an intriguing case here for growth investors. And Amazon, like other stocks with earnings next week, has a real chance to re-ignite optimism. Obviously, the holiday season is key for the e-commerce business. AWS continues to post impressive growth, with revenue rising 30% in the first nine months of 2020. Another strong quarter should further strengthen the bull case for that part of the business.

Though I’ve long argued AMZN’s valuation is less stretched than it appears at first glance, I get the broader skepticism toward the stock. But I also believe AMZN has at least one more rally in it, and that rally could arrive next week.

Alphabet (GOOG, GOOGL)

Earnings Report Date: Tuesday, Feb. 2, after market close

GOOG stock just keeps chugging along. It’s rarely the best stock in the market, or even the best stock in large-cap tech. But GOOG returned 31% in 2020, on top of a 29% rally the year before.

Admittedly, both annual performances were weaker than that of the Nasdaq. Investors have done well in Alphabet stock, but could have done better elsewhere in tech.

That said, no matter what the market does, Alphabet seems well-positioned. The strong numbers from Facebook suggest that online advertising demand remains strong. Valuation is reasonable.

Alphabet probably needs another catalyst, perhaps from its Other Bets businesses, to separate itself from the rest of the market. But a solid report on Tuesday afternoon should at least keep recent trends going — while the Nasdaq seems unlikely to repeat its performance of the last couple of years.

Paypal (PYPL)

Earnings Report Date: Wednesday, Feb. 3, after market close

PayPal’s earnings report may be more interesting for how investors react than how the numbers look. PayPal has a long history of topping Wall Street estimates; even with the pandemic, a significant miss relative to consensus seems unlikely.

But at 52x forward earnings, PYPL stock seems to price in that history, and then some. Meanwhile, a number of smaller, niche-focused rivals are taking aim at their share of the payments industry. Many have raised capital through recent SPAC (special purpose acquisition company) mergers. Even Square (NYSE:SQ) seems to be taking market share with its Cash App against PayPal’s Venmo.

None of this is to say that PayPal is not a wonderful business. It is. PYPL has been one of the best stocks in history for good reason.

The risk, however, might be that perfection (or something close) already is priced in. Assuming another strong quarter, trading in PYPL during the regular session Thursday should show whether the market is starting to see that risk.

Qualcomm (QCOM)

Earnings Report Date: Wednesday, Feb. 3, after market close

QCOM has been one of the best large-cap stocks in the market of late, rising 76% over the past year. Earnings reports have been a big reason why. Shares rose 15% after a fiscal third quarter beat in July, and another 13% following a strong fourth quarter in November.

The stage seems set for another rally, even if another double-digit move might be unlikely. A recent pullback leaves the stock only modestly above where it traded after the November jump. Earnings elsewhere in the chip space have been strong, with Taiwan Semi (NYSE:TSM) and Advanced Micro Devices (NASDAQ:AMD) giving optimistic commentary.

The one catch might be that investors suddenly have turned cautious toward the sector: the Philadelphia Semiconductor Index has pulled back more than 6% over the past week. Qualcomm earnings next week could be enough to reverse that trend — or confirm it."

MY COMMENT

SO....there you have it....the REAL guts of the market next week.

I think the comment above about AMAZON having....done nothing....for six months now is interesting. Especially.....in light of the great numbers they continue to hit with earnings. My opinion.......management is SEVERELY punishing current shareholders with their REFUSAL to SPLIT the stock. I believe the price has gotten to the point that many investors.....even those with access to fractional shares.....WILL NOT buy the stock. It is just TOO discouraging for a small investor to invest money and not be anywhere near having.......even.......ONE SHARE.

I just DO NOT AGREE.....in the slightest.....with the current....10-15 year RELUCTANCE on the part of companies to split their stock. Those that have.......APPLE and TESLA....being two of the big ones.......have seen great share price success in response and great BUZZ as a result for their businesses. I just think it is some sort of.......WEIRD PERVERSE....thinking that causes companies like AMAZON to basically screw their shareholders with a fanatical reluctance to split their stock.

YES....a split is......supposed......to be a neutral event. BUT....I call BALONEY.....I have seen way too many splits that kick start a companies share price to the benefit of ALL the small shareholders. If it is a NEUTRAL EVENT.....than there is absolutely no reason to NOT split the stock.

 

Actually......the main topic for any venue is.......what is the food like.......and.....is there a bar tab? Fortunately.......or.....unfortunately.....a pretty sedate group.

 

YOU too....roadtonowhere08......I have that tattooed across my chest over the top of a GIANT BLACK SWAN. The whole band has them......we all woke up years ago in a penthouse suite in Las Vegas......and there they were......no one had any memory of how or where we all got them.

 

You want the reality of touring.....I mean REAL touring. We would tour continuously....year after year. Most of the national level bands were doing about the same process.

We would meet in Austin......load up everything.......personal belongings, suitcases, and amps, drums, etc. We did not carry any sound equipment. We had a place where we could leave our cars in Austin and they were watched. We would than drive non-stop to the location of the first show. We would be out for 6-10 weeks. Than, drive non-stop back to Austin from wherever we ended up. Be home for 1-2 weeks. Repeat over and over and over. Most of the national touring bands....at least in our genre......would go home for Thanksgiving and would be home through Christmas. Than we would start over again in January.

From Austin the first gig might be in Seattle or Vancouver Canada......at the end we might be driving back from Chicago, or Tampa, or anywhere in the USA or Canada. Of course.......the booking agency had a bad......intentional?.......habit of booking us in Vermont or Maine or Eastern Canada or Fargo in January and February. Or they would give us a little gift with a show in Vancouver Canada and the next show in Tampa Florida and three days to get there.

A typical day........wake up and eat at the hotel if it was free. Get loaded up......get your mind out of the gutter....I am talking about suitcases....well.....mostly. Drive for 150 to 400 miles. Go to the venue and load in and do a sound check. Go to the hotel and check in. When it was time...get dressed and go back to the venue. Eat.....do the show......pack back up and go back to the hotel. REPEAT 5-6 times per week....sometimes 7-8 days in a row. Rarely would be be in one place more than one day once in a while 2 days. The rare times we were off for 2-4 days....stuck in one place were the worst.....very boring.

The show venue provided the hotel rooms and a meal. If they did not want to do a meal they could "buy it out" for cash to each band member. When we did not have a show band management paid for the hotel rooms.....usually in the absolute cheapest motels in the ghetto.....they also provided one meal a day on non-show days.

All in all it is a real GRIND. Many people just cant take it. It does get in your blood once you do it long enough. We would do about 400,000 miles in 2-3 years.