The Long Term Investor

WELCOME.....Shubharora734. PLEASE....feel free to post on any investing topic whenever you wish. Anyone is welcome to post on this thread.

As T0rm3ted said....there are actually many longer term investors on here. BUT.......many do not post every day.....and many...myself included...talk about short term events and economics and company news.....just to have something to talk about.......and.......because the markets and economy and business are STILL interesting day to day....even if we are not making any investing moves.

I see you are Canadian. I have traveled all over Canada.......Vancouver, Toronto, Quebec, Winnipeg, Ottawa, Montreal, Thunder Bay, Kitchener, etc. We actually have a fair number of investors that post in this thread once in a while that are from countries all over the world.

 

Talk about a....slow, dull and boring day in the markets. My typical review of sources......came up with NOTHING of any merit today...so far. Of course.....finished in the red today. AND....got beat by the SP500 by .20%. I continue to be.....hovering and languishing....just below my all time account high...after a small loss today.

The ONLY positive I can come up with for myself......is having ended with 4 positions green versus.....2.....earlier in the day. Those businesses were......COST, GOOGL, NVDA, and PG.

Everyone is distracted by the weather....or the FED comments on Wednesday.....or whatever. There was ABSOLUTELY no energy to the markets today......DULL and BORING.

 

WELL......I had to do some trades today.......in one of the accounts that I manage for a family member. They have a GOOD PROBLEM......they are going to owe significantly more in taxes in April than they thought.......their income was much higher than anticipated in 2020. So at the open today I executed trades in their taxable account to cover the taxes that will be due.

Being a CONSERVATIVE money manager when it comes to cash needs in the NEAR future.....and....realizing that it is impossible to anticipate the short term.......ie: where the markets will be in mid April..........I elected to SELL NOW and raise cash for the taxes that will be due in April. Those trade orders were placed BEFORE the open....so they executed right at the open......the high of the day.....so far.

I would rather leave some potential gains on that money on the table.....between now and April 15....versus....having to sell into a correction or down market in April. I am not anticipating a correction or down market in March or April.....but....I am not going to GUESS at short term market action.

 

HERE....are the stories that will be fighting for the soul of the stock market today in the media.....the battle of the good news....RETAIL SALES....versus.....the inflation BOGEYMAN......producer prices jump. HERE is the first data.....retail sales:

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

Retail sales burst higher in January as consumers use stimulus checks to spend heavily

https://www.cnbc.com/2021/02/17/us-retail-sales-january-2021.html

"Key Points

• Retail sales jumped 5.3% to start 2021, well ahead of the 1.2% expectation.
• The big move came as millions of consumers received $600 stimulus checks.
• Every major category of spending, including food and drinking establishments, saw gains.

Consumers flocked to spend their stimulus checks in January, sending retail sales for the month up 5.3% in a blockbuster start to 2021, according to a government report Wednesday.

Economists surveyed by Dow Jones were expecting a rise of just 1.2%.

Excluding autos, sales rose 5.9%, also far ahead of the 1% estimate in a display of unexpected strength from the consumer.

A month after Congress approved a $900 billion additional stimulus package on top of the $2.2 trillion approved earlier in 2020 to counteract the Covid-19 impact, shoppers were armed with $600 checks they used to buy a variety of goods.

The jump in consumer spending came at a time when expectations for growth in the early part of 2021 were muted as the economy continued to shake off the pandemic-induced slowdown.

Spending gains were broad-based, with every major category showing increases.

Electronics and appliances saw the biggest increase, up 14.7% for the month, while furniture and home furnishing stores were up 12% and online spending at nonstore retailers jumped 11%. Even food and drinking places, which suffered the worst during the pandemic, saw a 6.9% rise.

From a year ago, bars and restaurants continued to see damage as sales there are down 16.6%. Clothing and accessories are also off 11.1% while electronics and appliances saw a 3.5% decline.

Online shopping is the biggest gainer since January 2020, up 28.7%, while building materials rose 19% and sporting goods increased 22.5%,

While most economists see the year off to a slow start, they expect the pace to pick up later in the year as vaccination efforts spread and the Covid-19 albatross fades.

One of the main concerns for the recovery has become inflation, and a separate data point showed those pressures continuing to build.

The producer price index, which measures the prices that domestic producers receive for their goods, surged 1.3%, the largest monthly gain since the measure began in December 2009."

MY COMMENT

WELL.....this is GREAT NEWS......and......as usual the feckless economists......miss the boat AGAIN. WHAT a dismal record of anticipating ANYTHING that is going to happen in the economy. It is a good thing they are not running anything.......of yeah, wait.....they are all tied in with government and ARE providing our political hero's with their flawed, biased, and manipulated data....every day. (this applies to ALL politicians of ALL parties)

This news shows the GREAT STRENGTH of the recovery. Yet another POWERFUL indicator of the future over the next 6-18 months.

 

HERE is the VILLAIN.....in the media story line today.....producer prices. I can ALREADY see that the media is going to use INFLATION......as the BIG DOOM&GLOOM.....FEAR&PANIC.....theme of the next year or so. They will beat it......like a dead horse..... for all it is worth as the pandemic and other story lines lose their impact. Got to keep those clicks up there.

U.S. producer prices post biggest gain since 2009

https://www.cnbc.com/2021/02/17/us-producer-price-index-january-2021.html

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

Key Points

• U.S. producer prices increased by the most since 2009 in January as the cost of goods and services surged, suggesting inflation at the factory gate was starting to creep up.
• The producer price index for final demand jumped 1.3% last month, the biggest gain since December 2009 when the government revamped the series, the Labor Department said on Wednesday.

"U.S. producer prices increased by the most since 2009 in January as the cost of goods and services surged, suggesting inflation at the factory gate was starting to creep up.

The producer price index for final demand jumped 1.3% last month, the biggest gain since December 2009 when the government revamped the series, the Labor Department said on Wednesday. That followed a 0.3% rise in December. In the 12 months through January, the PPI accelerated 1.7% after rising 0.8% in December.

A 1.3% rise in the prices of services accounted for two-thirds of the increase in the PPI. That was the biggest gain since December 2009 and followed a 0.1% drop in December.

The cost of goods surged 1.4% after gaining 1.0% in December. Economists polled by Reuters had forecast the PPI would rise 0.4% in January and gain 0.9% on a year-on-year basis.

Inflation is under focus this year amid concerns from some quarters that President Joe Biden’s $1.9 trillion recovery plan could lead to the overheating of the economy. The package, which would follow on the heels of nearly $900 billion in additional COVID-19 pandemic relief from the government in late December, is working its way thorough the U.S. Congress.

Higher inflation is anticipated by the spring as price declines early in the coronavirus crisis wash out of the calculations, but there is no consensus among economists on whether it would stick beyond the so-called base effects.

Federal Reserve Chair Jerome Powell said last week he expected the rise in price pressures would be transitory, citing three decades of lower and stable inflation.

Slack in the labor market remains excessive, with at least 20 million Americans on unemployment benefits.

The government last week reported a moderate rise in consumer prices in January.

Excluding the volatile food, energy and trade services components, producer prices accelerated 1.2% in January. The so-called core PPI increased 0.4% in December. In the 12 months through January, the core PPI rose jumped 2.0% after gaining 1.1% in December.

The Fed tracks the core personal consumption expenditures (PCE) price index for its 2% inflation target, a flexible average. The U.S. central bank has signaled it would tolerate higher prices after inflation persistently undershot its target. The core PCE price index is at 1.5%.

Wholesale energy prices surged 5.1% after rising 4.9% in December. Food prices gained 0.2%. Core goods prices increased 0.8%. A 1.4% jump in prices for final demand services less trade, transportation, and warehousing accounted for more than 70% of the increase in services last month.

Healthcare costs accelerated 1.2%, while portfolio fees soared 9.4%. Those healthcare and portfolio management costs feed into the core PCE price index."

MY COMMENT

YES.....first.....the POOR economists once again take it in the shorts.....totally missing the numbers.....as usual. Their predictive power.....TOTALLY......blows away statistical CHANCE. THEY are virtually.....always......100% WRONG.

Second.....YES...there is no inflation. One month data is meaningless. As noted in the article.....and.....usually ignored by everyone....we have seen....THREE DECADES of.....lower and stable inflation. This trend is NOT going to change now.

We will see this sort of data over the next 6-12 months because we will be reopening the economy. The data is just as......artificial....as the closure of the economy. Consumer prices are not rising to any extent.....and we STILL have massive unemployment and are in a the middle of a small business disaster. In addition the country is at the start of a time period of a FLOOD of cheap skilled and unskilled labor being imported....legally and illegally..... to compete with Americans for jobs.....and....past experience tells us who will win that competition. We are currently BELOW what would be considered a HEALTHY level of inflation......2-3%.

Of course.....the impact of this inflation HARPING on stocks will be somewhat of a drag on the markets..probably for the next 6-12 months.....and...when we do get to the time when the FED starts to normalize rates...that is ALSO going to create volatility and a very erratic SHORT TERM market. Treasury rates are obscenely low....and....WILL go up as the economy re-opens.

ONCE AGAIN.....more and more reason to be very long term in investing.

 

What I sold in the account mentioned above.....to raise money for taxes for a family member? Some SNOW....some NVIDIA..... and.....some Fidelity Contra fund.....and.....some....SP500 Index Fund. They STILL have significant positions in all of those after the sales......as well as ALL the other holdings that are in my portfolio model.

It is nice that we did these sales when the markets are at record highs.

 

Half the country is dealing with weather.....so.....not able to think about investments.

 

On.....what will be....the media topic of the next many months.......a RARE occasion when I actually agree.....somewhat...... with the NY Times:

Inflation Isn’t Lurking Around the Corner. This Isn’t the 1970s.

https://www.nytimes.com/2021/02/16/opinion/democrats-biden-inflation.html

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

"The fear of inflation has become a greater threat to the American economy than inflation itself.

The Biden administration wants to spend $1.9 trillion to combat the coronavirus and its economic effects. Congress is grappling with the details, some of which certainly could be improved. But the plan also faces opposition on the grounds that spending so much could revive inflation.

“This would not be overheating; it would be starting a fire,” tweeted Olivier Blanchard, formerly the chief economist of the International Monetary Fund. Lawrence Summers, a senior figure in each of the previous two Democratic administrations, warned in The Washington Post of “inflationary pressures of a kind we have not seen in a generation.”

These warnings should sound familiar because we’ve been hearing them for 40 years. The threat of inflation has been invoked repeatedly as the justification for placing limits on federal spending, for restraining the pursuit of full employment and for limiting the economic power of workers.

It is a tired refrain that seems to be sung mostly by those whose views were forged during the stagflationary 1970s. But we live in an era of anemic inflation, and changes in the economic landscape since the ’70s have significantly reduced the chances of a revival, including the watchfulness of the Federal Reserve, workers’ loss of bargaining power and the effects of globalization.
Indeed, in recent decades, the Fed and other central banks have devoted considerable effort to generating inflation.

The inflation alarmists, moreover, aren’t just reaching the wrong conclusion. They’re asking the wrong question. They are focused on the impact on economic aggregates rather than the lives of individual Americans.

During the Great Depression, the British economist John Maynard Keynes argued that downturns in private-sector spending could be remedied by increases in government spending. A generation later, as American policymakers sought to carry out his ideas, they answered the obvious question of how much spending was required by developing the concept of an “output gap.”

Fail to fill the gap, and people would suffer. But too much spending was also a problem: not just wasteful, but inflationary.

The concerns about the inflationary potential of the Biden plan are based on a judgment that the administration is proposing to spend an amount larger than the current output gap.

The Biden plan, however, is not a traditional stimulus. It is not calibrated to fill the output gap. Rather, it is a set of proposals to meet specific needs, including arresting the pandemic, plugging holes in the budgets of state and local governments, providing financial aid to workers and reopening schools.

Aggregate measures of economic growth, like gross domestic product, get the headlines. But the rise of G.D.P. in recent decades has not lifted all boats, and the restoration of G.D.P. growth is not the same thing as helping those who have suffered during the pandemic. Telecommuters with their retirement savings in the stock market are doing fine, at least in financial terms. Meanwhile, the Fed estimates the unemployment rate for the bottom quarter of households is more than 20 percent.

My colleague Paul Krugman has aptly described this legislation as “disaster relief.” Perhaps fewer people should get $1,400 checks. Perhaps the government should keep shipping out unemployment checks until hiring rebounds, instead of setting an arbitrary deadline. But the right amount of spending is the amount necessary to get the pandemic under control and to get people back on their feet.

The necessary spending would stimulate the economy, of course. But even on those terms, it’s hardly clear that it would raise inflation to uncomfortable heights. The output gap is an elegant concept, but nobody knows how to measure it precisely, nor is its relationship to inflation clearly understood. Guesses by educated people are not the same thing as educated guesses. And there are plenty of smart people who don’t see inflation coming over the horizon. The most recent Survey of Professional Forecasters, published Friday, anticipates an annual average inflation rate of 2.03 percent over the next 10 years.

This is not meant to license profligacy, nor to ignore inflation. It is meant to put the spotlight where it belongs: on the merits of the plan.

The boldness of the Biden administration, and of the Fed, shows that many in the government understand the need to stop fighting the last war. It’s not the 1970s anymore. But Democrats hold the Senate by a single vote. The fate of the Biden plan rests on all of their willingness to shoo away the ghosts of stagflation."

MY COMMENT

NO....I have......NO COMMENT on the guts of the article....pushing the Biden agenda. BUT....the basic parts of the article that are in BOLD.....BEFORE....the blatant political content........are TOTALLY in line with my thinking. NO....it is NOT the 1970's and early 1980's....we do need to stop the insane chasing of the old ghosts of STAGFLATION.