The Long Term Investor

Yeah I was into music and playing music when I was up there. I remember Parkers Ballroom very well. The last show that I saw there was Johnny Winter.

Perhaps before your time....but I also remember very well.....down in the woods outside Olympia....The Evergreen Ballroom. I also was a regular customer at the Eagles Auditorium in the late 1960's and very early 1970's...Seattle's version of the Fillmore Auditorium with a full light show, etc.. And of course many concerts at the Paramount Theater, the Moore Theater, and the 5th Avenue Theater.

Some of my regular places for hanging out......in the old days there......The Comet, The Blue Moon, Fremont Tavern, Beth's Cafe, The Ballard Eagles, and lots of other dive bars in Ballard, Fremont, the U district and on Capital Hill. I remember most of the places in Pioneer Square when it was the place to go for live music. A lot of that is very different now....as you know.

I have not been back to Seattle since about 2008......so my memory of the city is before it became as it is now with all the homeless, etc, etc. I have been elsewhere in Washington a few times since than........but not Seattle.

 

Looking forward to the Home Depot earnings tomorrow before the open. Hoping for some good news. BUT....no doubt as usual......any good news WILL be rewarded by a dip in the stock. Seems to always happen now and for the past few years.

 

NICE....today is one of those CLASSIC herd mentality days in the markets. You have the media and other FECKLESS......."unnamed" people and groups......driving the story of the week.....and you have the GIANT herd of investors running around in circles in panic. It is actually FUNNY. That is the nice thing about being a long term investor. It gives me the ability and leeway to just look at the markets on days like the past week or so and LAUGH at the stupidity. You can just.....FEEL ........the market skittishness and stupidity.

TODAY and the last week or so is EXACTLY why I prefer the SP500 and Contra Fund as my fund choices. They BOTH emphasize the BIG CAP side of the market......and.....in these sorts of semi-panic situations.......and....speculative trading frenzy situations....they BOTH tend to hold up a little better. that does not mean they will not be down, however.

The other averages......NASDAQ 100, NASDAQ, and RUSSELL....tend to be more erratic and reactive.....at least in my opinion and experience. Other than the SP500.....if I HAD to choose one of the other Indexes.....my choice would be the NASDAQ 100......but....I prefer the SP500.

 

NOW....on to my focus of the day.....Home Depot.

Home Depot tops estimates as sales surge 25%, but shares fall on worries pandemic gains won’t last

https://www.cnbc.com/2021/02/23/home-depot-hd-earnings-q4-2020.html

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

"Key Points

• Home Depot’s earnings topped expectations, as the pandemic and real estate market bolstered home improvement sales.
• The retailer did not provide an outlook, however, saying it does not know how long the global health crisis will last and what that will mean for consumer spending.
• The company also announced that its board approved a 10% increase in its quarterly dividend to $1.65 per share.

Home Depot’s fourth-quarter earnings surged past investors’ expectations as consumers poured more money into home improvement due to the pandemic and strength of the real estate market.

Shares were down more than 6% early Tuesday, after the company did not provide an outlook for the year in its earnings report.

Chief Financial Officer Richard McPhail said the retailer is not sure how long the pandemic will last and how that may influence consumer spending. He said if demand from the second half of last year continues, it would lead to flat to slightly positive same-store sales growth and an operating margin of at least 14% this year.

Here’s what the company reported for the fiscal quarter ended Jan. 31 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $2.65 vs. $2.62 expected
• Revenue: $32.26 billion vs. $30.73 billion expected

Home Depot’s net income rose to $2.86 billion, or $2.65 per share, up from $2.48 billion, or $2.28 per share, a year earlier. Analysts surveyed by Refinitiv expected earnings per share of $2.62.

Net sales rose 25% to $32.26 billion from $25.78 billion a year ago, and outpacing estimates of $30.73 billion.

U.S. same-store sales jumped by 25%. Overall same-store sales grew by 24.5%, higher than the 19.2% growth that analysts expected, according to a StreetAccount survey. The growth is in line with what Home Depot reported during the second and third quarter, when it benefited from keeping doors open as an essential retailer.



Customers were spending more when they visited the store. Home Depot said the value of a customer’s average purchase rose nearly 11% to $75.69, from a year earlier. Sales per square foot jumped 24% to $528.01.

Home Depot faces tough comparisons in coming quarters because of the big numbers it put up during the pandemic. It may have to work harder for wallet share, too, as consumers get Covid-19 vaccines and spend weekends out to dinner or on vacation instead of painting or doing repair projects.

One bright spot, however, could be a potential resurgence of home professionals’ businesses, as consumers feel more comfortable inviting people into their houses and paying for projects they put off or couldn’t tackle on their own.

About 45% of Home Depot’s sales come from pros, such as plumbers, electricians and contractors, with the rest coming from do-it-yourself customers. That’s a higher percentage from rival Lowe’s, which gets 20% to 25% of its sales from pros.

Home Depot is looking to build on that advantage with HD Supply. It acquired the former unit of the company and large industrial products distributor in a deal valued at $8 billion.

It said its fourth-quarter results were hurt by pretax expenses of $110 million, or 9 cents per share, tied to the deal.

As of Monday’s close, Home Depot’s shares are up more than 12% from a year ago. The company’s market value is $296.98 billion.

Home Depot also announced Tuesday that its board approved a 10% increase in its quarterly dividend to $1.65 per share.

MY COMMENT

REALLY good earnings....especially net income and same-store sales. A picture of a great company operating on all cylinders.

BUT.....as usual....nothing reported matters....because....those that get to decide things....have decided that what was not reported.....and probably does not even exist..... should hurt the stock. SO.....since they did not give any forward looking statements......well.....we have to punish the stock for a few days to a week. SO...as usual....we will ALL just assume and speculate that there must be some negative....monster under the bed.

Of course......there is NOT one there and NOTHING negative was reported by the company......it is ALL simply made up by the same "analysts" that seem to ALWAYS get the data WRONG when you read earnings reports........their track record is nearly....but not quite....as inherently wrong and flawed as the....ECONOMISTS.

As a long term holder.....I am very pleased and look forward to a nice future for this well run company.

 

HERE is the second.....ACTUAL.....news that should matter today but will not......money in the bank for the future.

Consumer Confidence Rises for Second Straight Month

https://www.usnews.com/news/busines...er-confidence-rises-for-second-straight-month

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

"SILVER SPRING, Md. (AP) — U.S. consumer confidence rose again in February as an accelerating COVID-19 vaccine push provides hope for Americans who have lived through a year of unprecedented restrictions.

The Conference Board reported Tuesday that its consumer confidence index rose to 91.3, up from 88.9 in January.

The present situation index, which is based on consumers' assessment of current business and labor market conditions, rose to 92 from 85.5 last month. The expectations index — based on consumers' near-term outlook for income, business, and labor conditions — ticked down slightly to 90.8 this month from 91.2 in January."

MY COMMENT

You wont see much about this little story in the media. NOTHING sexy here and nothing that is going to get people excited to look at the story. Another general economic and business positive for the near future.....6-12 months. I have ZERO expectation that this data will have any impact....good or bad....today or this week.

 

The NEXT event of the day.....which will not matter in the slightest.....Chairman Powell's comments. I think it is reallly funny that 21 hours ago the headline on this topic was......."the Market Is Getting Nervous About Powell's Testimony this Week". Simply INSANITY.

HERE is the REALITY:

Treasury yields fall slightly after Fed Chair Powell says inflation is still ‘soft’

https://www.cnbc.com/2021/02/23/us-...ise-ahead-of-fed-chair-powells-testimony.html

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

Key Points

• Federal Reserve Chairman Jerome Powell is expected to speak at 10 a.m. ET on Tuesday.
• Powell’s speeches this week will likely be closely watched for how he views the recent run-up in bond yields and for any comments on inflation.

U.S. Treasury yields slipped on Tuesday after Fed Chair Jerome Powell indicated in prepared testimony that the central bank was not moving toward changing its dovish policy stance.

The yield on the benchmark 10-year Treasury note fell slightly 1.357% at 10:35 a.m. ET, while the yield on the 30-year Treasury bond climbed to 2.179%. Yields move inversely to prices.

Powell began his hearing with Senators at 10 a.m. ET. While the semiannual testimonies are normally nonevents for the market, Powell’s speeches this week will likely be closely watched for how he views the recent run-up in bond yields and for any comments on inflation.

The Fed chief said in prepared testimony that ”“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved.” Yields traded higher briefly after the remarks were released before settling back near the flat line.

Additionally, December data for the S&P CoreLogic Case-Schiller home price index showed the biggest price gain since 2013.

Auctions will be held Tuesday for $34 billion of 52-week bills, $30 billion of 42-day bills and $60 billion of 2-year notes.

MY COMMENT

NO.....the FED is not going to do anything. NO...the FED is not going to say there is any inflation. NO....the FED is nowhere near where they want inflation to be. There will be......NOTHING.....in his prepared remarks of answers that is a negative for the economy for the next 6-12 months......at all. Will any of it matter......no......the herd is off and running around like a bunch of lemmings....as usual.

The thing that is ALWAYS funny to me....is the fact that it is always the so called professionals that run around like a bunch of idiots day to day reacting to EVERY imaginary market event that is anticipated but usually never happens. In the meantime....the old average investor....just sits and plugs away with their investments. Of course....now we have all the AMATEUR...traders and speculators.......also....running around like maniacs.

There is going to be some REALLY bad WHIPSAW action over the course of the next year.....with many different types of assets. Human behavior.........you gotta love it.

 

As I said.......I am enjoying the SHOW......it is just funny to watch.

THIS week is EXACTLY what being long term gives me.......the ability to NOT CARE. I enjoy very much watching all the market timers, and traders, and young guy speculators, crazy Technicians, the chat room or message board people, and system traders.......trying to justify what they are doing......and trying to somehow explain the short term RANDOMNESS of the markets.

WELL....we have come back a lot in the averages from the open now......it is going to ruin my......perverse......enjoyment and entertainment of watching all the very human behavior in the markets today.

 

SO GLAD....that I took my initial investment plus a 50% profit off the table in TESLA....near the high. ALSO....so glad that I sold the items that I sold in my family members account when i did the other day to raise cash for taxes.....near the high. I LOVE the market and business environment going forward for the next 6-12 months. I HATE......the media take on things and their pushing of DOOM&GLOOM. BUT....what is new.

 

You know.....investing should be FUN. If someone is WHITE KNUCKLING it all the time.....something is wrong. Usually how they are invested for their risk tolerance. Or....second......something with their expectations and goals.

There is NO substitute for the PEACE OF MIND that comes with long term investing. If you can look at the averages and daily action and laugh....even when it is crazy down....actually ESPECIALLY when it is crazy down.....you are doing something right as an investor. You have balance and rationality. The TRUE test for ALL investors is the.....inevitable and normal.....bear market type year or two. Long term success with a plan and investing style.....SNOWBALLS....into more success over time. It may not count for stock prices.....but......past investor behavior IS a good indicator of future success.

 

WELL oldmanram.....that is one reason that I post.......ALL......the moves that I make on here in REAL TIME. So others can enjoy the show and see if any of it actually works like the academic research says it should. I can NOT remember a single.....all in all at once..... BUY......... that is posted on this thread that has turned out....BADLY. MOST if not all are definitely in the green......and most if not all....are usually in the green within a few days to a week.

The bottom line.....I BELIEVE in what I am doing and even more important....I BELIEVE in the power of compounding, reinvesting ALL dividends and capital gains.....and....long term investing. I have ZERO interest in being a market timer....whether with an entire portfolio or keeping some amount of cash siting on the sidelines. I KNOW that over any realistic time period the market reality and....DEFAULT POSITION.....is to the UP side by about 70% versus 30%.....at least for the SP500.

I like...."MY"....money always exposed to the markets.....I REFUSE to try to guess the short term. I NEVER want to miss the TOTALLY IMPOSSIBLE TO PREDICT.......EXPLOSIVE market moves UP. IF....I see some short term opportunity....like my 3-4 week trade of the Apple split.....documented on this thread.....I just do it on margin. Those are RARE opportunities and have to be REALLY special situations.....so I am not going to do this very often. It HAS to be a very very RARE situation......I have no interest in being a trader.

I remember MANY times over the past 40 years....the most recent being after the 2008/2009 near economic collapse....when I saw investors waiting and waiting and waiting...keeping their powder dry...for the right time to come back in. I watched as people were STILL siting there two, three, even four years later....waiting and waiting and waiting. What a waste. BUT.....that is their choice.

 

I guess the bottom line....for me.....the long term markets are ALWAYS positive. I am a long term investor. SO....why do I want to hold some part of my "long term" capital back....in order to try to be a market timer and do some trade based on short term conditions.

My "long term" capital...stock market money...is TRULY long term. It will NOT be needed for retirement or anything else. My annual income is set...more than I need...to live on for the rest of my life. There are NO "needs" that could cause me to have to sell any holding in my investment accounts. My other....OLD..... family members are ALSO set up in this way. They have total financial security with pensions, Social Security, mortgage interest income from family member mortgage loans, annuities, etc, etc. So...we are ALL able to be invested without any concern for what the markets are doing short to medium term....and...the long term will take care of itself.

It helps that we are a very small very cohesive family......3 older adults.....4 younger adults.....and 3 kids under age 18. We have a long family history of helping the young generation get started successfully. This is just they way it has been in our family for 5 generations now. Over the years....ALL....of the assets of the adults will funnel down to those 3 kids.....and...hopefully we have instilled them with the values to continue as the 6th generation. As I said....."HOPEFULLY"....I have no illusions that this is guaranteed.....but the values and thinking that I see in the "kids" makes me positive that they will do just fine for themselves and future kids.

If a particular company or business has good enough fundamentals for me to invest in it....if I am seeing my ENTIRE portfolio that way....why do I want to NOT follow my view and put my money at risk. I TRUST myself.

My view.....EVERY investor should TRUST themselves. Be confident in what you do, how you do it. As long as it works...do it over and over and over. If it does not work....reevaluate....and move on.

 

I WILL mention what I am not seeing anywhere else.....TESLA.....down about 23% from the high of about $883 on January 26.

I will also mention....today.....Chairman Powell....in his testimony....no concerns with inflation or rates.