The Long Term Investor

A totally FLUFF day.....in the financial media today. It is a good sign that there is ABSOLUTELY NOTHING of any interest in any of the media sources that I follow for investing.

Reminds me of the.....good old days of investing......about all you could find out during the day was what the ACTUAL stock ticker showed at your broker. If you were really into it.....you would subscribe to the Wall Street Journal or Investors Business Daily.

I personally preferred to subscribe to the Investors Business Daily since it was more INTENSIVELY focused on finance, stocks, investing, etc, etc than the WSJ which had news items and other stuff. The IBD was more comprehensive and had some things that the WSJ did not have like detailed quote data on Treasuries and other bonds, etc, etc. Like the WSJ it came every morning.

 

The future of investing?

US stock ownership nears record, will keep climbing
Households will be net buyers of $400B in equities in 2021: Goldman Sachs

https://www.foxbusiness.com/markets/us-stock-ownership-nears-record-will-keep-climbing

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

"Investors can’t seem to get enough of plain old U.S. stocks, and demand, already near an all-time high, shows no signs of slowing down as the S&P 500 sits at a record high.

"Households, foreign investors, mutual funds, and pension funds collectively own 91% of the US equity market," noted Goldman Sachs in a recent research note. "We forecast households will be net buyers of $400 billion in equities in 2021 driven by the buildup of cash in money market funds, anemic credit yields, and a rebound in retail trading activity," the team, led by David Kostin, detailed.

Trading among the retail community has jumped, in part due to firms such as Robinhood, which in a recent campaign touted the ease of investing with just $1.

The other component expected to drive stocks higher, according to Goldman, is buying from big business. "Corporations will be the largest source of equity demand for the remainder of 2021, as we expect buybacks to accelerate and issuance to slow from peak 1Q21 levels," Goldman said.

Big banks could be among the more active buyers. Last week, the Federal Reserve reported 27 of the nation's largest banks passed its stress tests with flying colors, with banks, including JPMorgan, Wells Fargo and Bank of America, now holding more than double the average capital cushion required by the Fed to ensure the stability of the U.S. financial system and the ability to lend to both businesses and consumers.

As a result, restrictions on buybacks and dividends will be lifted officially on June 30.

Bank of America CEO Brian Moynihan indicated to FOX Business last month that he plans to take action.

Bank of America chairman and CEO Brian Moynihan, in an exclusive interview with FOX Business' Maria Bartiromo, said that he expects to increase dividends and share buybacks given 'shareholders ought to benefit' from the bank's profitability.

"We expect to increase our dividend and increase our share buybacks, because frankly, it’s simple, we’re making good money doing a great job for our customers and a great job for society and, therefore, our shareholders ought to benefit too, so that’s what we’ll do," said Moynihan on "Mornings with Maria" last month."

MY COMMENT

YES...my usual comment....increase dividends, yes........grow the business, yes.......acquisitions, yes........add business through acquisitions and mergers, yes......STOCK BUYBACKS......NO, a total waste of money. TOTALLY RIDICULOUS that this garbage is always talked about as a great benefit for shareholders.

As to all the new money and investors.....come on in the waters fine. Just make sure you are NOT diving into a boiling hot spring before you dive in. By this I mean all the various forms of trading that are little more than gambling. If you want to be a short term trader.....GREAT.....learn how to do it the right way.....follow and study some of the great traders.

 

Had to look right away today. I wanted to see what was going on. AND.....it was ALL GOOD. Solidly green today....hitting yet another all time personal high.....isn't everyone? I had 8 of 10 positions in the green today. My BIG winners on a TECH DAY.....AAPL +1.25%....AMZN +1.25%....NVDA +5.01% up by $38....and MSFT +1.4%.

I was happy to get a nice .77% gain over the SP500 today.

 

Today was a very good day.....yesterday in the studio was also a solid day.

We arrived about 11:00......the engineer did the usual set up, isolating all the amps, and running of microphones, headphones, personal mixers, etc, etc, etc......sound checked it all and we took a break about 1:00. The actual recording started about 1:30 and went to about 6:30. Everything went very nicely. Our plan was to get two original songs done that day.

We did four takes of each and the last couple of takes for each song were exceptional. We decided on the best overall take of each song that we would use for the final.....and recorded two alternative vocal tracks for each song and two alternative guitar solo and and guitar riff tracks for each song. Nothing else needed any alteration.

That was it for the day.....in all it was a 10 hour day from door to door. The typical studio experience.....lots of siting around and waiting. Probably 1.5 hours of actual playing....the rest was set up, play back, discussion, etc, etc. The end result EXCEEDED all expectations listening to a rough mix from the board.

It was a good day MOSTLY because everyone there was very experienced and had much studio experience....so NONE of the DRAMA or turmoil that often happens in a studio. Everyone just knocked it out.

 

Good guess RG7803......but no.......I do not own or play a black 1959 ES 355. Although for many years I did play ES 355's.

 

OK.....we head into July on Thursday and this means......EARNINGS. We will see some earnings trickle in between now and the start of the week of July 12. BUT....starting with the week of July 12 we will start the REAL earnings reporting time. That week we will see the MANY bank and financial earnings that start the process begin. Than during the week of July 19....the BIG rush of earnings begins.

We WILL be able to see what companies have been doing with the escalating re-opening during the second quarter. BUT.......most of the re-opening will have NOT started in the majority of states by July 1.....so the HUGE impact of the re-opening that is going to happen between July 1, 2021 and January 1, 2022.....is YET to come.

I expect that the upcoming earnings will BLOW AWAY the estimates. I expect that they will MAKE FOOLS of all the people and writers that have put forward the view that the first quarter earnings were a.......high water mark. I expect that the major TECH and other BIG CAP GROWTH companies that dominate around the world......WILL....once again DESTROY earnings.

That is my little prediction.

 

This is a nice little commentary that NAILS some of the big failings of the majority of investors.

Weekly Market Pulse: 1984

https://alhambrapartners.com/2021/06/27/weekly-market-pulse-1984/

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


"Freedom is the freedom to say that two plus two make four. If that is granted, all else follows."

George Orwell, 1984

"I have said many times and believe deeply that our job as investors is not to predict the future but merely to interpret the present as accurately as we can. I’ve also said and believe deeply that doing so isn’t nearly as easy as it sounds. We have numerous cognitive biases working against us, way too many to name here. I probably have a cognitive bias that affects my ability to recognize cognitive bias. Our political beliefs – our tribal loyalties – affect our ability to see things clearly. Our hopes and dreams and of course our fears all affect our view of the past, present, and future. For those of us who write about markets regularly, there is the issue of our past observations which will, at some point, make us look foolish. And God knows that is one thing we do not want to do so we tend to find data points that support our past views. Which means we aren’t seeing the present through clear eyes anymore. Egos are a bitch.

What I try to do every week is look at things as they are and forget what I’ve said in previous weeks. That has gotten easier as I’ve gotten older (that’s a joke but one that is based on real-life). I don’t spend a lot of time trying to figure out why things are the way they are because I’ve found over many years of doing this that it isn’t possible with any degree of accuracy. Do we know why, for instance, the quits rate is so high and why there are so many new businesses being started? Not really. We can guess about people’s motives and someday we may have enough data to look back and say, aha, that’s what was going on. But right now? Nah. It’s just guessing and while it is interesting it isn’t particularly relevant for our mission as investors.

The freedom that George Orwell speaks of is the freedom to think for ourselves, to perceive reality on our own terms rather than have one imposed upon us.

There are four lights!

Jean-Luc Picard, Start Trek, Next Generation

As investors, it is hard to tune out the noise, the cacophony of data masquerading as information. Most of what we see and hear on a daily basis lacks context and the people trying to provide it often have an agenda. And sometimes the data just doesn’t capture reality.

These tortillas are the same brand, same packaging, same description, same price for a ten count package. They even claim to be the same weight. They were bought a few weeks apart. The newer one is on top. Inflation is transitory, right?



So, are the inflation statistics we get from the BLS accurate? Does the latest reading of the CPI or the PCE deflator really matter all that much? Or is it just noise? I’ll let you in on a little secret. Inflation has nothing to do with any index produced by the government. It doesn’t matter one whit what the BLS says about inflation. The only thing that matters is how others react or overreact to the data. Inflation is actually about the value of the dollar (or whatever your local currency is). And there are better ways to measure that than the CPI.

As I said last week, most of what goes on day-to-day is just noise. It doesn’t matter and the more you pay attention the more likely you are to make a mistake. Two weeks ago it was the Federal Reserve altering its expected timeline for rate hikes. It moved the markets for part of a day before it was forgotten. If you want to know when the Fed will hike rates, I’d suggest watching the market, not the Fed or the talking heads on CNBC or Bloomberg. The Treasury market will always be better at predicting future Fed moves than the Fed or anyone else. Wisdom of crowds and all that. Just for the record, based on where rates are right now, the market is suggesting tapering by the end of the year and rate hikes in 2022. That is news worthy of the name and most people are still thinking about what Jerome Powell said last week.

I don’t know why the market believes rate hikes are coming next year. It could be that inflation won’t prove transitory which, based on the recent action in the dollar, doesn’t seem likely. Of course, the dollar could – probably will – change, and with it my views on inflation. Maybe the market is focused on growth. As I said, all we can really do is try to figure out where we are right now. For economic growth, one pretty good way to do that is the Chicago Fed National Activity Index which is a weighted average of 85 monthly economic indicators. If you want to know what the data actually says about the economy – no agenda, no political spin – you can look at this one number every month and get a pretty good idea. I actually monitor the 3-month moving average to smooth out the month-to-month changes. A CFNAI reading of 0 means the economy is growing at trend, a positive reading is above trend and a negative one is below trend. Generally, a 3-month average of -0.75 is consistent with recession. At the nadir of the virus recession, the 3-month average fell to -7.32 which was, by far, the worst reading ever (-2.54 in January 2009). The rebound was pretty spectacular too, rising to 4.36 last July (peak rate of change). The latest release was last week and currently, the 3-month average is 0.81. That sounds puny compared to the peak in July but it is actually a pretty extraordinary reading. Outside of the pandemic plunge and recovery, you have to go back to 1984 to find a comparable reading.

There are certainly reasons to doubt the current level as being artificial and highly temporary. After all, we did just have another round of government checks go out a few months ago. So it will probably fall back in the coming months. Or maybe not. We can’t say for sure since there is so much we don’t know. Maybe all those new companies being formed is important. Maybe the end of extended unemployment benefits is important. Maybe the changes wrought by the virus will have a lasting and positive effect. We just can’t know. What we do know right now is that the economy is growing well above trend. How long that lasts and what happens afterward is not something we can know right now. The only thing I know for sure about the future is that the markets will see it before I do. If you want to become a better investor, turn off the TV, get off of Twitter and watch the market in silence. In fact, I’d suggest that you stop reading all market commentary, too. Except ours of course."

MY COMMENT

NOISE, noise, noise. As investors we are surrounded by NOISE....every day...all day long. The glory of long term investing....you can just ignore it all. The problem.....as humans it is nearly IMPOSSIBLE for us to ignore the day to day stuff.

ADD in EGO and BIAS and our capacity to fool ourwelves and you have the reason for the returns of the average investor severely under-performing the unmanaged averages.

It ALL comes down to ABSOLUTELY CLINICAL FOCUS on the long term and IGNORING the short term.......for your long term investments and money. Easy to say....hard to do. BUT.....it does get easier to do.......the longer an investor has been investing. Past success doing a long term investing strategy gives the CONFIDENCE to buck the trends and the short term FADS.

 

I have not looked at my accounts today....yet. But it does seem like another day.....with a TYPICAL open that we have been seeing for the past month or two. A typical BLAH open.....nothing spectacular in either direction. I can live with that....especially since those slow, blah, opens have produced some nice GAINS over the past month or two. A typical slow summer market. AND....at the same time....a little stealth summer rally.

 

HERE is more of the....irrelevant.....economic data that no one will care about. Not too shocking....and.....pretty obvious with the pandemic coming to an end.

U.S. consumer confidence races to more than one-year high in June

https://finance.yahoo.com/news/u-consumer-confidence-races-more-142001678.html

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

"WASHINGTON (Reuters) - U.S. consumer confidence increased in June to its highest level since the COVID-19 pandemic started more than a year ago, bolstering expectations for strong economic growth in the second quarter.

The Conference Board said on Tuesday its consumer confidence index jumped to a reading of 127.3 this month, the highest level since February 2020, from 120.0 in May. Economists polled by Reuters had forecast the index at 119.0. The survey places more emphasis on the labor market.

"Consumers assessment of current conditions improved again, suggesting economic growth has strengthened further in the second quarter," said Lynn Franco, senior director of economic indicators at The Conference Board. "Consumers’ short-term optimism rebounded, buoyed by expectations that business conditions and their own financial prospects will continue improving in the months ahead.""

MY COMMENT

No surprise here. TOTAL common sense. Remember all the commentary and financial articles a few weeks ago about PEAK RECOVERY? How we hit it at the end of the first quarter and that the first quarter earnings represented a PEAK or aTOP. Do you think you will hear anything about this as we head into earnings and see the....ACTUAL.....earnings over the next 6 weeks?

It will be MAJOR SILENCE by all the writers and commentators and put out this "stuff" over the past month or two.