The Long Term Investor

YOU better start having your wife post on here oldmanram......we need her investing skills.

 

Way to go Emmett......you did a great job on the markets today.......you make it look effortless.

I had a very good green day today. PLUS....another big beat on the SP500 by 1.20%. A nice end to the week.

 

I had a great week this week. Here is how the averages ended up. The NASDAQ 100 has been running away with the lead lately.

DOW year to date +16.32%
DOW for the week (-1.38%)

SP500 year to date +25.08%
SP500 for the week 0.32%

NASDAQ 100 year to date +28.59%
NASDAQ 100 for the week +2.31%

NASDAQ year to date +24.59%
NASDAQ for the week +1.24%

RUSSELL year to date +18.65%
RUSSELL for the week (-2.85%)

Hare a GREAT weekend everyone.

 

In a recent post RG was joking about my "typo" in my PORTFOLIO MODEL post regarding having "ten" holdings when I now have "eleven" holdings since I added TESLA using funds from a sale of part of my Proctor & Gamble. As I was driving to a show yesterday that got me started thinking about the performance of PG this year and TESLA. I am spending some time this weekend considering selling the rest of my PG holding and moving the funds to TESLA. My primary considerations will be........this would be a lateral move from a STAID old school company to a young BIG CAP growth company.......the financials of PG this year versus the potential for TESLA.......the coming opening of the Berlin and Texas TESLA plants....etc, etc.

If i decide to make this move out of PG it will happen on Monday at the open as is my usual course to NOT wait for some buy point.

 

RG......what I have checked already.

ALL the fundamental data on Proctor & Gamble.........over 5 years....... including.....stock price history, market cap data, Income Statement, Balance sheet, Cash Flow Statement, Key Financial Ratios, Gross Profit date, Operating Income data, EBITDA, Net Income data, EPS data, etc, etc, etc,.....many other metrics and pieces of data. I also looked up what I could find online from those that favor and dont favor PG at the moment to see their analysis.

Actually all the financial data looked good for the company. I did not see any red flags at all...it looked like a solid company. I did not find anything much. The main reason I am.......probably....going to put the rest of the PG into TESLA is the fact that PG is up about 4.25% for the month, about 6.42% for the past 6 months, about 6.53% year to date and about 5.81% over the past year, and a five year return of about 75%. So i think I can pretty easily EQUAL and probably handily BEAT that return in TESLA.....especially over the long term. About the only research I have done on TESLA this weekend is look up everything I can find on their recent plant openings, and the Berlin and Austin future plant openings, current order numbers, etc, etc.

In fact after typing this post.....I have decided to go ahead and put the remaining money that I have in PG into TESLA to beef up that holding. I will put the order in for the open on Monday. I probably should have sold all the PG and put it in TESLA back when I did my partial buy at.....I think the price was......$898......now I am going to have to pay a bit more.

I guess after tomorrow I will have to.....re-edit....my PORTFOLIO MODEL post to put it back to "10" holdings and take out PG.

Here is the primary site I use for FUNDAMENTAL data year to year:

https://www.macrotrends.net/

 

RG you mentioned my factors that I look for in a company:

"(American companies, big caps/blue chips, dominants in their sectors, div payers, with global market etc)."

HERE is how I would put it:

"BIG CAP, AMERICAN, DIVIDEND PAYING, GREAT MANAGEMENT, ICONIC PRODUCT, WORLD WIDE LEADER IN THEIR FIELD, LONG TERM HORIZON, etc, etc, etc."

These are just my initial criteria for what I want in a long term company. I still have to like the FUNDAMENTALS and due diligence info.

 

FUTURES are looking nice and strong at this moment....not that they mean much. Here is what we will face this week.
Inflation data, Black Friday sales: What to know this week

https://finance.yahoo.com/news/infl...y-sales-what-to-know-this-week-205317059.html

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

"This holiday-shortened week, investors will receive a hefty set of new economic data and earnings results. New inflation reports will be especially closely watched, and preliminary data on Black Friday sales will help serve as an early gauge of holiday shopping strength for retailers.

In observation of the Thanksgiving Day holiday, both the U.S. stock and bond market will close and no trading will take place Thursday. The stock market will close early at 1 p.m. ET on Friday, and SIFMA also recommended an early bond market close at 2 p.m. ET for the day after Thanksgiving as well.

But before these market holidays, one of the key pieces of economic data will be the Personal Consumption Expenditures (PCE) deflator for October out on Wednesday from the Bureau of Economic Analysis. This will help further show how inflation has evolved in the U.S., and will likely show yet another elevated print on U.S. price pressures.

Consensus economists expect the broadest measure of PCE to have risen by 0.7% in October compared to September, according to Bloomberg-compiled estimates. This would accelerate from September's 0.3% monthly gain. And over last year, the PCE deflator will likely have risen by 5.1%, or by the most since 1990, to further accelerate from September's 4.4% year-over-year gain.

The core PCE, which excludes more volatile food and energy prices and serves as the Federal Reserve's preferred gauge of inflation, is also expected to pick-up in October and rise by 4.1% over last year. This would also represent the fastest rise in about three decades.

These heightened inflationary readings have added to investors' concerns that rising prices could ultimately dampen the economic recovery by curbing consumer spending and prompting a faster-than-expected monetary policy tightening by the Federal Reserve. Though retailers' quarterly results so far have largely reflected better-than-expected sales trends, consumers have been reporting increasing anxiety over the impacts of inflation on their finances. The University of Michigan's preliminary November Surveys of Consumers showed sentiment fell to its lowest level in a decade, mostly due to a spike in inflation expectations.

A number of Federal Reserve officials have maintained that present levels of inflation will ultimately ease over the coming months, especially as the supply chain-related disruptions contributing to rising prices start to unwind. San Francisco Fed President Mary Daly, a voting member of this year's Federal Open Market Committee, said that a preemptive move on raising rates to try and stem inflation now could have unintended consequences down the line.

"Monetary policy is a blunt tool that acts with a considerable lag," Daly said during public remarks at the Commonwealth Club of California last week. "So, raising interest rates today would do little to increase production, fix supply chains, or stop consumers from spending more on goods than on services. But it would curb demand 12 to 18 months from now."

Black Friday sales
The annual Black Friday shopping extravaganza is set to take place this week as the holiday shopping season ramps up.

Many retail analysts are expecting this end-of-year shopping season to jump, compared to last year, and set fresh highs, with pent-up consumer demand and still-elevated savings levels from government stimulus earlier in 2021 helping to fuel spending. However, a major question remains how well retailers will manage to meet this demand, given lingering supply chain disruptions, tight inventory levels and labor shortages heading into the peak holiday shopping period. These supply-side concerns could deter companies from offering major markdowns as they try to pass on higher costs to consumers and preserve margins.

"The discounts aren't as deep as they were in the past. My guess is you're seeing 5 to 10 percentage points less discounting going on in the environment," Steve Sadove, Mastercard senior adviser and former Saks chairman and CEO, told Yahoo Finance last week. "Partly because inventories are in-line and partly because of supply chain issues. You're seeing a lot of key items selling early. People are getting out there and getting the items quickly because they know that they're going to be running out of stock."

Concerns over out-of-stocks may also have pulled forward some spending for the holidays to earlier in November and even October, as consumers raced to avoid shipping delays and unavailable items. A report from the Commerce Department last week showed retail sales grew by a better-than-expected 1.7% in October month-on-month, representing the biggest jump since March.

Still, U.S. retail sales during Thanksgiving week alone are expected to grow by 10% over last year and by 12.2% versus to the same week in 2019, according to Mastercard SpendingPulse projections.

Other firms have also projected strong retail sales for the holiday shopping season as a whole. The National Retail Federation expects combined November and December retail sales will grow between 8.5% and 10.5% over last year to reach a new record of as much as $859 billion.

“There is considerable momentum heading into the holiday shopping season,” said NRF President and CEO Matthew Shay in a press statement late last month. “Consumers are in a very favorable position going into the last few months of the year as income is rising and household balance sheets have never been stronger. Retailers are making significant investments in their supply chains and spending heavily to ensure they have products on their shelves to meet this time of exceptional consumer demand.”

Executives at some of the major retailers have echoed these sentiments in recent remarks.

"When [supply chain issues] first began in the fourth quarter of 2020, our teams activated plans to mitigate bottlenecks, and since then, stayed agile and flexible, leveraging our strong networks and relationships with international carriers and brands," Macy's CEO Jeff Gennette said during the company's earnings call last week. "Significantly, as a result, we don't expect to be materially impacted by supply chain issues during the critical holiday shopping season."

Others offered similar commentary.

"We're off to a good start for the holiday season and a good position to continue delivering strong results," Walmart Chief Financial Officer Brett Biggs told analysts on the company's earnings call last week. "Despite the various macro and industry challenges, our inventory position is good, stores and fulfillment centers are well-staffed and our price position remains strong."

Economic calendar

• Monday: Chicago Federal Reserve National Activity Index, October (-0.13 in September); Existing home sales, October (6.20 million expected, 6.29 million in September)
  
  
• Tuesday: Markit U.S. Manufacturing PMI, November preliminary (58.7 expected, 58.4 in October); Markit U.S. Services PMI, November preliminary (59.0 expected, 58.7 in October); Richmond Fed Manufacturing Index, November (12 in October)
  
  
• Wednesday: MBA Mortgage Application, week ended Nov. 19 (-2.8% during prior week); Initial jobless claims, week ended Nov. 20 (268,000 during prior week); Continuing claims, week ended Nov. 13 (2.080 million during prior week); Advance Goods Trade Balance, October (-$94.6 billion expected, -$96.3 billion during prior week); Wholesale Inventories, month-over-month, October preliminary (1.4% expected); GDP annualized, quarter-over-quarter, 3Q second estimate (2.2% expected, 2.0% in 2Q); Personal consumption, 3Q second estimate (1.6% expected, 1.6% in 2Q); Core PCE, quarter-over-quarter, 3Q second estimate (4.5% in 2Q); Durable goods orders, October preliminary (0.2% expected, -0.3% in September); Durable goods orders excluding transportation (0.4% expected, 0.5% in September); Capital goods orders, non-defense excluding aircraft, October preliminary (0.5% expected, 0.8% in prior print); Capital goods shipments, non-defense excluding aircraft, October preliminary (1.4% in prior print); Personal income, October (0.4% expected, -1.0% in September); Personal spending, October (0.9% expected, 0.6% in September); PCE Deflator, month-over-month, October (0.7% expected, 0.3% in September); PCE Deflator, year-over-year, October (5.1% expected, 4.4% in September); PCE Core Deflator, month-over-month, October (0.4% expected, 0.2% in September); PCE Core Deflator, year-over-year, October (4.1% expected, 3.6% in September); University of Michigan Sentiment, November final (66.8 expected, 66.8 in October); New home sales, October (808,000 expected, 800,000 in September); FOMC meeting minutes, November meeting
  
  
• Thursday: No notable reports scheduled for release
  
  
• Friday: No notable reports scheduled for release
  

Earnings calendar

• Monday: Agilent Technologies (A), Zoom Video Communications (ZM) after market close
  
• Tuesday: Dick's Sporting Goods (DKS), Best Buy (BBY), Burlington Stores (BURL), American Eagle Outfitters (AEO), Dollar Tree (DLTR) before market open; Dell Technologies (DELL), Nordstrom (JWN), Autodesk (ADSK), HP Inc (HPQ), VMWare (VMW), The Gap (GPS) after market close
  
• Wednesday: Deere & Co. (DE) before market open
  
  
• Thursday: No notable reports scheduled for release
  
  
• Friday: No notable reports scheduled for release"

MY COMMENT

YES.....we will see a few earnings continue into this week. As I have mentioned on here numerous times.....my expectation is for a BIG holiday shopping season. Lots of pent up demand....lots of money sloshing around....and....lost os people willing to do some celebrating this year.

The economy in general is looking good. The re-opening is progressing.....slowly. The markets are BOOMING. EVERYTHING is in place for a BIG YEAR END RALLY.

 

I will be making three PIEs for Thanksgiving this year as usual. Growing up in Texas.....pecan pie was a constant in our lives for Thanksgiving and Christmas. I have been making them since I was a teen. I use my mom's old Texas recipe that goes back to at least the late 1940's. (probably earlier back to my grandmother) A lot of people think it is difficult to make a pecan pie. It is actually very easy.

For anyone that wants to give it a try.....here is my mom's recipe that I will be using. It is IMPORTANT to use the EXACT BRAND of ingredients.....it does make a BIG difference in the flavor. Guys, if you want to impress some lady friend or your family....knock out one of these pies and show up with it for Thanksgiving. Believe me, they will be impressed. Dont tell them how easy it actually is. One tip....make it the day before so it can sit in the refrigerator overnight....it makes a BIG difference.

TEXAS PECAN PIE (a 9inch pie)

1 Pillsbury Pet-Ritz frozen deep dish pie shell (do not bake the shell before filling)(this brand is important and can usually be found at Walmart or other grocery stores) (You can make your own shell if you wish...but for this particular pie this shell works very nicely, and is better than a thicker, flour/butter home-made pie shell)

3 large eggs.

2/3 cup of sugar

1/3 teaspoon of salt

1/3 cup of melted BUTTER (not margarine)

1 cup DARK KARO corn syrup ( yes, DARK and KARO)

Preheat oven to 375.

Put the three eggs, salt, and the sugar in a mixing bowl. Melt the butter in the microwave and add it (use a small spatula to get it all) to the sugar, salt, and eggs. Measure out a full cup of DARK KARO corn syrup and add it to the other ingredients. Use a small spatula to scrape all the DARK KARO syrup out of the measuring cup. Stir all the ingredients in the bowl with a fork till they are totally mixed together.

Add a cup of good quality pecan HALVES to the mixture and stir them in to coat them all with the mixture.

Pour the entire mixture into the frozen (uncooked) pie shell. Use your spatula to get it all. Gently nudge the mixture around with your fork (dont poke a hole in the bottom of the pie shell) and the pecans will float to the top. Add additional pecans HALVES to fill in any areas so that the entire top of the mixture is covered.....just the top.

Cook at 375 degrees for 40-50 minutes. Check periodically. If the edge of the crust is getting too brown, cover just the edge with foil or a pie crust edge protector. As you approach 40-50 minutes use a pot holder to gently shake the pie pan. The pie is done when just the center 1-2 inches barley moves when the pan is shaken. Dont over cook......dont under cook.

When done remove from the oven and let the pie sit on a rack for about an hour......than move it into the refrigerator. It will be better if you let it sit overnight in the refrigerator.

So that is it. My THANKSGIVING GIFT to the thread.

 

YEP....PG does have a nice dividend and reinvesting that dividend so it compounds over time is a great feature of owning this old school CONGLOMERATE. I do think that PG is the BEST of the BIG CAP old time consumer conglomerate companies.

At the recent auto shows that I have seen talked about.....the EV cars and trucks are TOTALLY DOMINATING. The change over is starting to happen quickly even though it will take at least another 20-30 years. In addition I like and respect MUSK as an iconic business manager and leader. I like to keep up with the times. This BUY will be a LONG TERM holding.

I will be adding $20,000 to $30,000 to my account in 2022.....so....if I get sentimental and miss my old PG......I will have a chance to buy some. ( I doubt that I will)

Since I dont use any of my stock market money for living expenses....my time horizan for the stock accounts is my and my wife's LIFETIME.

 

You have done a very nice job with your wife's account oldmanram. It just shows how easy investing can be if you dont want to spend time and effort screwing around and in the end probably will not beat the index funds anyway. That VGT adds a nice kicker to the index funds in your group. Of course....you are tripling or quadrupling up on the BIG CAP TECH names with that list of funds.

I LIKE IT.

 

Hi Dax.

I will let oldmanram answer your question. I dont follow or know anything about VGT. Anyone else that follows that fund can also chime in.

 

I just heard MARIA saying that Biden will announce his choice for head of the FED.......today. No mention on when. It will be interesting to see how the markets react.....or.....if they react at all.

 

As we wait for the FED news......I like this little article and what it predicts for the future of the BIG BULL MARKET.

!!!!!!NEWS FLASH......POWELL will stay as the head of the FED!!!!!!

The Shocking Truth About Today’s P/E Ratios
P/Es don’t fit the narrative of a wildly overpriced stock market.

https://www.fisherinvestments.com/en-us/marketminder/the-shocking-truth-about-todas-pe-ratios

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

""Have you heard the one about stocks being really expensive? We sure have, with most of the chatter centering on the S&P 500’s above-average price-to-earnings (P/E) ratio. Some pundits argue this sets up a weak 2022. The Fed got in on the action this week, warning in its semiannual Financial Stability Report that high valuations make stocks “vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall.” While the Fed’s analysis was measured, some pundits took the headline and ran, taking it on faith that surging valuations pose a risk. So it might interest you to know that valuations are, well, down over the past year-plus. Mind you, we don’t think valuations are predictive, but we think this is a shining example of pundits ignoring the denominator—earnings—and drawing off-base conclusions as a result.

Exhibit 1 shows the S&P 500’s trailing P/E—that is, price divided by the past 12 months’ earnings—since the end of 2018. In our view, this metric is inherently backward-looking, as stocks move on expectations for profits and fundamentals over the next 3 – 30 months. Markets today are pricing in next year’s profitability, not last year’s. Yet trailing P/Es are oft cited as evidence of stocks’ being overvalued, so let us take a look.

Exhibit 1: Checking In on Trailing P/Es


Source: FactSet, as of 11/19/2021.

Errr … some surge. Yes, P/Es exceed pre-pandemic levels, but they are down by over 10 percentage points since peaking on May 7—even though the S&P 500 is up 12.0% since then through yesterday’s (record-high) close.[ii] The reason for this is quite simple: The E improved relatively faster than the P over the past six months. Earnings tanked last year as lockdowns took their toll, which inflated valuations as stocks recovered—a natural byproduct of stocks moving ahead of earnings, which is normal. But they bounced high this year, as reopening fueled sky-high growth from a lockdown-depressed base. Look closely at the chart, and you will see three vertical drops in mid-May, mid-August and mid-November, all coinciding with earnings season coming in hot. So when it came to P/Es, as the denominator (earnings) grew faster than the numerator (price), the ratio dropped. Given all of this backward-looking pandemic skew, we think it is fruitless to draw any big conclusions—good or bad.

Forward P/Es, which compare stocks’ prices to expected earnings over the next year, show a similar—if more muted—trend. As Exhibit 2 shows, the S&P 500’s forward P/E peaked on September 2, 2020. It is down from 23.4 then to 21.4 as of yesterday’s close, despite the S&P 500’s 33.8% total return over this span.[iii]

Exhibit 2: Checking In on Forward P/Es


Source: FactSet, as of 11/19/2021.

You can thank earnings for falling forward P/Es, too. As it became clear that sentiment overshot to the downside late last summer, analysts started raising their earnings outlooks. That trend has continued this year as earnings have smashed expectations. So even as investors have bid stock prices higher, they are actually paying a bit less for expected future earnings growth than they were over a year ago.

While we don’t think P/Es are predictive, we do think this is telling from a sentiment standpoint, as P/Es can indicate expectations getting out of hand. Not the level of P/Es, but the rate of change. A big spike could be one indication of euphoria and has often preceded bull market peaks. The past 14-plus months’ slow drift lower is, well, not a spike. So in our view, this is one indication sentiment has room to run and stocks have more wall of worry to climb.

We also think this serves as a friendly reminder about how stocks and valuations work. Pundits often talk about “expensive” and “cheap” markets as if high P/Es predict weak gains and low P/Es predict big ones. But that focuses on price only, ignoring earnings. It also ignores that pricey stocks can get pricier and cheap markets can get cheaper. There are no magic thresholds or signals in P/Es. So take them for what they are: a loose sentiment gauge that doesn’t automatically tell you what will happen next week, next month or next year."

MY COMMENT

Just another example that if you look at the REAL data and REAL information that is out there the LINE that is PUSHED in the media does not usually match up with REALITY.

With the reappointment of POWELL......the markets are set for a BIG year end rally. Things are lining up nicely for a 4-8%........BIG POP.....by year end. If this happens 2021 will end as an......EPIC....year for investors.