The Long Term Investor

NOT going to even bother to post the.....fear mongering......story of the day. Here is an example of a headline below. This story is one BIG......DUHHHHHH. The housing market is so blisteringly HOT right now........and.......there is such a lack of inventory....it is totally a foregone conclusion that pending sales would be down. This SIMPLY reflects the red hot market........and.....the availability of HISTORIC low mortgage rates.

"Pending home sales plunge for the second straight month"

 

At this EARLY point in the day.....here is where we are. YES......we are hitting HISTORIC RECORD HIGHS. How can that be? PLUS......it is the END of the first quarter.....so we will soon have some REAL and CURRENT company financials. The REAL.....mothers-milk......of investing.

Stock market news live updates: S&P 500 reaches record high, traders eye Biden's infrastructure proposal

https://finance.yahoo.com/news/stock-market-news-live-updates-march-31-2021-221233549.html

(BOLD is my opinion OR what I consider important content)
"Stocks jumped to record levels on Wednesday as technology stocks recovered losses from Tuesday's session. Traders digested the contours of President Joe Biden's infrastructure proposal, which would include trillions of dollars in government spending as well as new changes to tax policy.

The S&P 500 rose by 0.6% to reach a fresh record intraday high. The Nasdaq outperformed, gaining 1.7% as technology stocks outperformed. The Dow hovered near the flat line. A day earlier, the Dow dropped for the first time in four sessions, and each of the S&P 500 and Nasdaq also declined. Shares of big bank stocks recovered some declines from earlier this week, though shares of Nomura and Credit Suisse added to losses as the lenders assessed the losses they would incur after the hedge fund Archegos Capital defaulted on significant margin calls last week.

Traders will be eyeing President Joe Biden's latest public address on Wednesday, which is expected to include details around his infrastructure plan for the country. The White House released a statement about the plan ahead of the address, noting that it would involve more than $2 trillion in total spending over eight years to help rehabilitate and build out the country's infrastructure, address the crisis around climate change and curb economic inequality. To pay for the proposal, Biden will propose raising the corporate tax rate to 28% from 21% for 15 years, and implementing other policies to disincentivize offshoring.

Wednesday also marks the final session of both March and the first quarter. For the year-to-date, small cap stocks as well as the cyclical energy, financials and industrials sectors – or the biggest under-performers of 2020 – have outperformed strongly, while last year's leading technology companies have lagged. This rotation has coincided with a faster-than-anticipated vaccination program in the U.S., as well as an influx of estimates-topping economic data. Wednesday morning, ADP reported that private payrolls grew by 517,000 in the U.S. in March, marking the best gain since September.

Still, however, investors have been nervously looking for signs that the stimulus-aided post-pandemic recovery is bringing with it an unwanted rapid rise in inflation. The latest march higher in Treasury yields, with the benchmark 10-year yield rising to more than 1.75% this week, has reinforced these apprehensions. But with these concerns now well-known, some of the next market catalysts will likely be around whether fears around fast-rising prices ultimately come to fruition, some analysts said.

"We’ve been on this ride probably for two quarters now where interest rates are really driving everything … We’re likely to still see interest rates continue to rise, which is healthy and normal and you’d expect to see that in a recovery," Tim Courtney, Exencial Wealth Advisors chief investment officer, told Yahoo Finance.

"But I think there’s going to be something else that’s going to start to take over here within the next month or so, and that is, the market is going to start to pivot from a recovery, say, interest rate story, to [wanting] to see the proof," he added. "So I think that interest rates dictating the market behavior will still be a main factor, but earnings coming up for the first quarter and economic data are going to be top of the list items that investors are going to want to see.""

MY COMMENT

As usual...the POWER of long term investing. My investing horizon is INFINITY. Literally......not because I will be around for that long.....but......because I have no need to EVER pull my stock market money out of the markets. Those funds are DEDICATED to stocks and funds.....for life.

 

You are right Emmett.....the key part of your post being......"right now". We are in a total FEEDING FRENZY. The buyer insanity is amazing.......and seems to spreading to the ENTIRE country.

BUT......having lived through a good number of real estate.....booms and collapses......over the past 45+ years....it NEVER goes up forever. SO...buyers...be careful, dont stretch too far. Stay in a price range and payment range that you CAN afford. That gives YOU the POWER to sit and enjoy your home.....with no worry..... even when the market drops in the future. Do what you can to buy a home.....if....the time is right for you. BUT......if possible do it as a long term investment for yourself and your family.....and.....a home is a lifestyle decision.....in addition to a financial decision.

 

I just.......looked.....at my portfolio for the first time today. POP GOES THE WEASEL.......a phrase that anyone young is probably wondering WTF does that mean. My account is now continuing to CLOSE IN on an all time record portfolio high. I am now within about 2.8% of that PERSONAL HIGH.

I LOVE how the markets and investing for the long term is slowly but steadily pushing me towards that personal record......in spite of......the current lingering weakness in my big tech companies. I WILL really ENJOY the.....big bump up....when those tech companies decide to play catch up with their former highs.

I talk about......THE POWER....of long term investing and compounding often on here. We are seeing it NOW. In spite of the past 6 weeks of mini-correction....I suspect that........MANY, MANY,........ investors are at or very near all time personal highs.

 

This little article.....on the current investing media darling of the moment.....pretty much says it all. I am NOT a disciple....but we do share some of the same thinking.

Cathie Wood mentor Arthur Laffer says the ARK CEO’s horizon has always been ‘forever’

https://qz.com/1983404/cathie-wood-...ys-ark-ceo-horizon-is-forever/?utm_source=YPL

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

"Arthur Laffer seldom allowed undergraduates into his graduate-level economics classes at the University of Southern California in the early 1980s. Most of the time they weren’t ready for it. Laffer, whose work has influenced Republican presidents for decades, sensed he should make an exception for an ambitious undergrad named Cathie Wood.

“You don’t want an undergraduate to come in and get beaten up,” says Laffer, a renowned economist who also has been a professor at the University of Chicago. “And I was very certain with her that that would not happen, and it did not happen. She was able to take the pressure and the discipline of a graduate course while being an undergraduate, which is quite exceptional.”

While he couldn’t foresee that she would become a star stock picker whose every trade is dissected by commentators on CNBC, or that she would go on to start ARK Investment, a $50 billion asset management firm that’s disrupting the investing industry itself, Laffer had a feeling Wood would be one of the students who go on to do something really big.

“She was heavily driven, ambitious,” Laffer says in a phone interview. “The thing that’s amazing about Cathie…even back then, her horizon was forever. She wasn’t in it for next week or next month or next year. She was in it for the long haul.”

His recollections make her sound like a person who would ace the marshmallow test—the social science experiment that suggests children who can delay gratification will go on to greater success in life. Laffer says he introduced her to American Funds, where she was hired. She then rose through the industry ranks as equity analyst, portfolio manager, and hedge fund co-founder before starting ARK in 2014 in her late 50s. Laffer says each step was designed to further long-term ambitions, to make her a better economist and money manager. It’s an approach that sounds a lot like the ways she invests, which has made her a star stock picker. “She wasn’t after it for the highest pay this week or next week,” he says.

Wood has said that Laffer, best known for his views that cutting taxes can boost government revenue, was among her most important mentors. Some 40 years after she graduated summa cum laude from USC with a degree in economics and finance, the two are still in touch. Wood was one of the people Laffer invited to the Oval Office when US president Donald Trump awarded him the Medal of Freedom.

Fighting for scraps and ideas nobody wanted
One of Wood’s early jobs was at Jennison Associates, where she wanted to become an equity analyst. Spiros Segalas, one of the company’s founders and another person Wood cites as a mentor, was willing to give her a shot, but with a catch: He wouldn’t reassign stocks to her from the more established analysts. She would have to find her own companies to cover.

“I was like a little dog under the table looking around for scraps, and I really mean that,” she said in an interview with Goldman Sachs. “I was willing to buy into ideas nobody wanted. I think that’s a big part of success generally.”

Those scraps were companies like the news and financial data concern Reuters. Back in the 1980s, she says, analysts didn’t get it because it wasn’t a pure tech company, and it wasn’t a pure publisher. That left an opening for her to become an analyst, and shares in the company rose from $8.25 in 1984 to about $29 in 1991—a 250% return that edges out the S&P 500’s return of roughly 230%, including dividends, during that span.

Wood still analyzes stocks that way and says it’s one of the things that makes ARK different. Take Tesla, for example, one of the company’s biggest and most famous bets: “The analysts following this stock don’t know how to analyze it,” she said in April 2019 when she went head-to-head with the hosts on CNBC to defend her call that Tesla shares, changing hands at about $55 at the time, would rise to $4,000.

Like Reuters in the 1980s, she said Wall Street analysts didn’t quite know what to do with the electric car company, which Wood says is really a technology company, car maker, robotics firm (automated driving), energy storage company, artificial intelligence pioneer, and transportation-as-a-service enterprise. As Wood and her colleagues see it, Tesla is the automated taxi service of the future—a much more lucrative business than car manufacturing—and its data collected from 30 billion miles of real-world driving will make it the leader in self-driving vehicles.

“We have four analysts collaborating on this,” she said in 2019. “I don’t think research departments out there are set up to analyze this stock.”

ARK’s call on Tesla shares
Laffer says Wood’s approach gives her special insight to the role that a company will play in the economy years into the future. Again, electric cars provide some insight into the cost curves that Wood and her colleagues use to analyze markets. They say these technology trends can be steady and predictable. Moore’s Law, which posits that the number of transistors on a chip would double every two years, is among the best known. Wood and her analysts then try to gauge how much demand will increase as a technology’s cost goes down.

Based on ARK’s analysis, electric vehicles will be “sticker-price competitive” with gasoline-powered cars in about two years, says ARK research director Brett Winton. “We think the median car sold in the US, the Toyota Camry, is going to cost roughly the same as the 350-mile-range electric vehicle,” Winton told Quartz in February. “And two years later, the electric car is going to be much cheaper. So it would be a really tremendous surprise if people kept buying the old technology that costs them more money out of pocket and costs them more money over time.”

It remains to be seen whether Tesla can come good on such lofty hopes. In January, shares blew well past the $4,000 mark she called for earlier but have since retreated to around $3,000, after accounting for a five-to-one share split in August. In March, ARK became even more bullish—the firm’s analysts think its stock will more than quadruple in the next four years. It shows that if you want to invest with Wood you better buckle up.

An investor with high conviction
Laffer thinks one of the best things Wood did in her career was to reject his advice. When she started her investment management business, stock-picking portfolio managers, who hardly ever beat the indexes they are gauged against, were out of fashion, and billions of dollars of funds were flowing into passive investment strategies that robotically track those indexes.

Wood was shaking things up by creating the first actively managed ETF—an idea she had at AllianceBernstein that didn’t go anywhere. She told Forbes in 2014 that the experience inspired her to try to disrupt her own industry: “I have been watching disruptive innovation for my entire career—why don’t I help my own sector along?”

ETFs were seen as pretty similar to index funds that are linked to a benchmark, with the main the difference being that you can trade them during the day like a stock. (Some people use the SPDR S&P 500 ETF Trust to make rapid-fire bets on the movement of the entire US stock market, for example.) But there are some advantages to sticking an active fund in an ETF wrapper, such as lower tax expenses than a mutual fund.

The recent boom in commission-free retail trading has also been a tailwind for her funds, as it means armchair investors can easily and cheaply access her ETFs through their trading apps. Some people actively trade her active ETF, like active management squared. There’s a burgeoning options market linked to ARK’s ETF, giving traders yet another way to speculate on ARK’s bets.

But in the early days, starting ARK was a big, risky bet. There was no guarantee that the US Securities and Exchange Commission would allow Wood to start an actively traded ETF, and Wood burned through her own savings to pay her staff. Laffer’s advice was to be careful and not to risk blowing her nest egg. “I was very worried that she’d go under,” he says.

Laffer may have been worried, but he doesn’t think Wood, who declined to be interviewed for this article, was. “She rejected my advice quite well,” Laffer says. Partly, he thinks, it was a sign of Wood-esque conviction. It also showed she looks at things differently than other people. “She has an infinite horizon,” he says. “She doesn’t look at her life savings the way you and I do.”

Over time investors began to take note of ARK’s eye-popping returns—her flagship innovation fund has gained more than 400% since it was created in 2014. And as money pours in, ARK has gone from burning through Wood’s cash to generating lots of its own. The company’s portfolios have sucked in about $47 billion of assets as of March 10, according to FactSet data. ARK charges about 0.7% to manage that money, which suggests her firm could be making around $330 million or so in annual revenue.

Wood loves a good debate
Investment companies aren’t always the easiest places to work. SAC Capital founder Steve Cohen reportedly kept the trading floor at 69°F to make sure people stayed alert, and often yelled: “Do you even know how to do this fucking job?” Bill Gross, the former bond king, was said to be a control freak on the trading floor, requiring absolute silence and issuing “demerits” to traders who fell out of line.

By contrast, Laffer says Wood is remarkably normal, the kind of person you’d want to talk to at a cocktail party—and if you did, she’d be unlikely to talk about herself. He describes her as a devout Christian (ARK’s acronym stands for Active Research Knowledge, but is also a reference to the gold-covered chest containing the tablets inscribed with the 10 Commandments) whose faith infuses the way she treats people and does business. He says she relishes debate, especially when it comes to her investing ideas, but she doesn’t let those arguments become nasty, and doesn’t consider other people to be her enemies. She’s not above firing people, but she doesn’t bad-mouth them on their way out.

“She’s very capable of making very hard, tough decisions that are unpopular,” Laffer says. “She can do that and does it all the time. But she does it nicely.”

That zest for debate is evident just about everywhere. You could see it when she defended her views on Tesla on television, and it is baked into ARK’s methods. In the early days, the company’s weekly brainstorming sessions took place in a conference room with Wood on her feet in the middle and her analysts surrounding her, according to a Forbes article in 2014. Wood says social media is a way of crowdsourcing to further interrogate ARK’s ideas, and she has likened the process to open-source investing.

“People have no reluctance to criticize research when they don’t know the people,” she says. “We like that. We want to know when we are making a mistake.”

Wood’s iconoclastic style isn’t for everyone
Money managers live and die by their reputations. Wood has tied hers to risky bets like bitcoin, which has, so far, proven to be a speculative asset par excellence but has a long way to go before it establishes itself as digital gold or the internet’s native currency.

Then there is the piece of her reputation she has staked on Tesla, which is run by Elon Musk—who is, depending whom you ask, either a brilliant visionary or a self-destructive CEO, or perhaps both. Meanwhile, executives at powerful companies from Apple (reportedly) to German automakers like Volkswagen have set their sights on Musk’s market.

ARK made at least one bad bet even though warnings lights were clearly flashing. ARK’s ETF focused on fintech had a position in Wirecard, a German payment company that turned out to be a fraud. According to FactSet data, ARK increased its position in Wirecard even after the Financial Times began publishing articles about irregularities at the company, which soon collapsed.

Wood’s investing style isn’t for everyone. Her flagship ETF is down about 10% this year, showing the ARK rollercoaster doesn’t just go up. Some of her bets will take years to pay off, if they ever do. They may go out of fashion, for a while at least, if they miss their marks. Winton, ARK’s research director, has already forecast the company’s own backlash. “I think it’s likely that at some point, people will think that ARK was a scam, and that we don’t know our left from our right,” he told Bloomberg in February.

If Laffer’s impressions of her are any guide, Wood isn’t worried about the troughs that follow the peaks. Had ARK failed in its early days, he thinks she would have taken it in stride because the point was to use her time and money to chase a dream. Likewise, he says ARK is a vehicle for her do something she loves: “She likes risk in the sense of investing for big payouts over long periods of time,” Laffer says. “And she doesn’t take money off the table quickly.”"

MY COMMENT

Even though I would NOT buy this ETF......I totally agree with Wood's basic thinking when it comes to investing.......and.....the long term. I had NO IDEA that this little article had discussion of an....."infinite horizan"......when I posted it. BUT....I am not surprised considering how this up and coming......"potential".....investing star thinks.

It will be interesting to see if she is STILL the.....media darling......in a few years down the road.

 

Off and about now. HOPE we ALL enjoy a great investing day. LETS GET OUT THERE AND MAKE SOME MONEY!!!!!

 

I see that the SP500 is at a record HIGH today. I heard this morning that the general market averages are on track today to end with their SECOND monthly gain in a row. Many investors.......myself included are at or just a "tad" (investing term of art) under their personal all time portfolio high.

WTF......how can this possibly be?

After all....we have been in a lingering, up and down market, since Fedruary 12. Inflation is a big concern......at least in the media......and as a manipulation for day-traders. Interest rates for mortgages and the ten year yield are.....SURGING.....according to the media. AND......worst of all.....somehow...the Ten Year Treasury is now KRYPTONITE to the big cap and big tech stocks.

HOW.......and why...I have no idea. If any type of company has SURELY (dont call me Shirley).....taken advantage already......and LOCKED IN...... the historic.......100 year low interest rates.....it would be the BIG CAP universe with their highly paid management teams......and.......unlimited resources......and...... unlimited access to banking and banking products.

I have NEVER yet seen any sort of explanation how or why the Ten Year Treasury yield increasing from a 100 year low.......to a little bit higher.....100 year low.....yield........should have even the slightest impact on BIG CAP GROWTH companies. Especially considering that this has NEVER been shown to be true up to now........when you look at stock and business results over the past 30 years in conjunction with yields.

WELL.......WHO CARES. It is all good.....we are on the way to a really strong close today for the VAST MAJORITY of investors.

ONE good thing about being a long term investor.......I dont care why anything is happening short term. I dont have to have an explanation or reason. I just sit and take what I am given......and.....the markets tend to be.....very giving.

 

SO.....I see we backed off a little bit in the last 30 minutes today as we headed to the close. BUT.....still a very nice green day for me. And a good beat of the SP500 by .74%.

We just ended a record day for the old SP500. I suspect that this is the most held INDEX in the USA. A perfect vehicle for long term.....regular....people. In spite of all the constant mania and focus on the short term and trading......the VAST majority of investors are in it for the long term.

 

I like this little article.....even though I have never watched Cramer.

Cramer: Invest for long haul to avoid going bust in short-term Archegos, GameStop-type chaos

https://www.cnbc.com/2021/03/29/cra...t-for-long-haul-to-avoid-short-term-risk.html

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

"Key Points

• CNBC’s Jim Cramer advises young investors to “stay in the game” despite recent market turbulence.
• “We don’t want it to be 2000 when we lost a quarter of the people who were in,” the “Mad Money” host said.
• The comments come after the forced liquidation of positions held by family office Archegos Capital Management and the volatility in the GameStop saga.

CNBC’s Jim Cramer implored younger investors on Monday to stay in the market for the long term, despite recent turbulent events, including the forced liquidation of positions held by multibillion-dollar family office Archegos Capital Management.

“We don’t want it to be 2000 when we lost a quarter of the people who were in,” Cramer said on “Squawk Box,” referring to the bursting of the dot-com bubble and a sense of disillusionment among those who lost money. “It just can’t be like that.”

A wave of young people during the coronavirus pandemic has been buying stocks for the first time, and Cramer acknowledged they may not want to take advice about navigating tumultuous trading from longtime Wall Street figures.

“But the only thing that we really have for them is history, and they need to hear it: Stay in the game. Don’t get blown out,” said the “Mad Money” host, whose Wall Street career began in the mid-1980s at Goldman Sachs. He later managed a hedge fund before becoming a financial journalist, reporting on the stock market’s ability to create long-term wealth and the risks of short-term trading to retail investors.

After running higher for weeks, ViacomCBS and Discovery, along with multiple Chinese internet stocks, came under intense selling pressure late last week — partly connected to forced sales by Archegos, founded and run by Bill Hwang, a former equity analyst at Julian Robertson’s Tiger Management.

On Monday, two investment banks — Switzerland’s Credit Suisse and Japan’s Nomura — warned of “significant” financial hits in connection with the Archegos situation, although the firms did not call out the fund by name.

Archegos is hardly the first fund to end up on the wrong side of a trade, Cramer said, noting that some took big losses during the Reddit-fueled trading frenzy involving GameStop.

“I think a lot of the non-boomers should be asking themselves, ’Well, what did you think happened with GME? What did you think happened? It’s the same thing as what happened to this fund,” Cramer said, referring to how another hedge fund, Melvin Capital, was caught in a short squeeze that sent GameStop soaring before later collapsing. Many retail investors were left with big losses after buying at the top.

“It is regarded as sinister by this younger cohort, and they’ll go home and what a shame but they’ll go home. They don’t stick around. They’re short timers. It’s really a shame because they got smoked.”

MY COMMENT

I remember very well the 2000 to 2002 time span. The dot com collapse and the end of the 1990's day trading era. Many new investors left and many never came back. It is a hard lesson to learn and a big ego hit to see your account devastated. Out of control investing HUBRIS combined with a bad market stretch is a killer for those that get caught up in the mania and the short term game.

Keeping expectations REALISTIC is critical for investors. This is why I keep my PRIMARY GOAL reasonable. That goal is:

"Average a total return of 10% or more for the long term"

I am sure a lot of people see this and think.....wow that is nothing....I can do 15% or 20% in one year.......no sweat. Ok....but....can you EQUAL or BEAT the SP500 over the long term? Over a lifetime? That is what my goal basically means.

 

A nice little news item for investors like me that own Microsoft stock.

Microsoft wins $21.9 billion contract with U.S. Army to supply augmented reality headsets

https://www.reuters.com/article/us-...pply-augmented-reality-headsets-idUSKBN2BN36B

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

"Microsoft Corp on Wednesday said it has won a deal to sell the U.S. Army augmented reality headsets based on its HoloLens product and backed by Azure cloud computing services.

The contract could be worth up to $21.88 billion over 10 years, a Microsoft spokesman told Reuters.

Over the past two years, Microsoft has worked with the Army to on the prototyping phase of what is called the Integrated Visual Augmentation System, or IVAS. The company said Wednesday that the Army had moved into the production phase of the project.

In a blog post, Microsoft Technical Fellow Alex Kipman said the headsets are designed to deliver “enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios.”

The headsets will be manufactured in the United States, a Microsoft spokesman told Reuters.

Microsoft was also in line to win the $10 billion JEDI cloud computing contract with the Pentagon, but the contract remains in dispute in a lawsuit filed by Amazon.com Inc. Pentagon officials told U.S. lawmakers in February that the Defense Department may jettison the contract if the dispute lingers in the courts.

After Microsoft announced a $480 million contract in 2018 to supply prototypes to the Army, at least 94 workers petitioned the company to cancel the deal and stop developing “any and all weapons technologies,” Reuters reported at the time. A worker involved in that petition declined to comment Wednesday."

MY COMMENT

Microsoft is really developing a good relationship with the Pentagon. These deals add up to some real money. It is nice to see the company commit to manufacturing these items in the USA. Pile up a few deals like this......and....pretty soon your stock price goes up.