The Long Term Investor

Did you get a new camera Emmett?

 

I am correcting my year to date loss to 2.8% for accuracy. Still less than it seemed.....after the past couple of days.

Moving on from the short term focus....to the future.

Apple’s road to $4 trillion starts with its rumored headset and Apple car

https://finance.yahoo.com/news/appl...-rumored-headset-and-apple-car-180910042.html

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


"Apple (AAPL) on Monday made history by becoming the first publicly traded company with a market cap of $3 trillion. It’s now seesawing back and forth between the mark for the thrill of it.

It’s a remarkable feat for a company that needed a cash infusion from rival Microsoft in 1997 to stay afloat. But $3 trillion is Monday’s news. So where does the company go from here?

There’s the obvious — more iPhones that get people into the company’s ecosystem and accessories like the Apple Watch and AirPods to keep them hooked. But the company will also need to take big risks on its way to $4 trillion.

“Apple needs to assume that the sort of market power that they've enjoyed with the App Store and in the price of the iPhones, that's going to disappear,” explained Duke University Fuqua School of Business professor Campbell Harvey.

Thankfully for Apple, it already has a track record of jumping into established device and services categories and outshining its competitors with ease. Need proof? Look no further than the iPhone, Apple Watch, and AirPods to name a few of its products Apple developed by cribbing notes from competitors before leaving them in the dust.

But the company’s most anticipated upcoming products — its mixed reality headset and long-rumored Apple car — will be different from anything Apple has offered before.

Headsets are clunky and uncomfortable, Apple needs to change that

I’ve used headsets ranging from the Oculus Quest 2 to Sony’s PlayStation VR, and besides making me sweat like an animal after 15 minutes, the on-screen content is relatively pixelated.

But Apple has a knack for taking problematic products and making them hits. The iPhone wasn’t the world’s first smartphone when it launched in 2007. And the Apple Watch and AirPods weren’t the first smartwatch and wireless earbuds when they debuted in 2016. But they’ve all gone on to be bestsellers, because Apple improved on the design and capabilities of its competitors.

When it comes to headsets, however, Apple will not only have to improve comfort and image quality — it will also have to ensure plenty of apps can take advantage of the hardware. After all, while current consumer headsets are largely geared towards gamers, Apple is looking for volume sales, and that means offering apps that appeal to non-gamers too.

And even when Apple launches its headset, it might be some time before the mainstream gets on the bandwagon, if it ever does, according to Loup Ventures’ Gene Munster.

“The initial headsets’ demand when they first come out is going to be muted at best,” Munster explained. “I think it will grow into something that we use all the time. But to put that into perspective we're talking about a $2,500 to $3,000 headset that is still going to be uncomfortable for a lot of people to wear.”

However, the headset could evolve into an essential product. Apple has managed this before with the Apple Watch, which had a chilly reception before the company shifted its focus to fitness and saw sales explode. And if Apple can do the same with the headset, Munster explained, it could eventually rival the iPhone’s sales.

Apple’s car will drive its future

While it’s easy to see where Apple’s headset fits into its product portfolio, the rumored Apple car is about as far afield from its base expertise as it gets. But if Apple can pull off a car of its own, it could dictate the company’s future as much as the original iPhone did.

The car’s journey has had its fits and starts with Apple originally opting for its own electric self-driving vehicle, then switching to producing just the self-driving technology to power a car, and back to an electric self-driving car of its own again.

As Tesla has proven, building a car brand is no easy task. What’s more, Apple is entering a crowded space with companies like Rivian (RIVN) bringing its trucks to market and contenders like Vinfast bringing its electric cars to the U.S. Traditional automakers like Ford (F) and GM (GM) have also jumped into the EV space. Even Sony is getting in on the game, revealing a second electric vehicle prototype and plans for an electric vehicle company at CES 2022.

Still, Apple’s own car will immediately be desirable because it’s made by Apple. In October, the company began selling a polishing cloth for $19, which sold out in days. No, a polishing cloth isn’t the same as a car, but brand loyalty can go a long way.

Innovation will be key

For Apple to pull any of this off, and more, it will have to continue to invest heavily in research and development. In 2021, the company spent a staggering $21.9 billion on R&D. For comparison, Microsoft, the closest company to Apple in market cap, spent $5.6 billion.

“I think part of the stock price today being so high, is that investors actually have the confidence that Apple is going to do something really innovative again in the future,” Harvey said.

That, he explained, will be key to preventing Apple from becoming complacent with its current profit drivers, its iPhone and services, and ensure it stays ahead of the competition.

“Do you really believe that in 10 years people will be carrying around a clunky iPhone? Or anything like what we've got today?” Harvey asked.

It’s clear that Apple understands how to change with the times. It successfully pivoted from selling computers to iPods to iPhones to Apple Watches. But its foray into the still-unproved headset market and push into the automotive arena will be its biggest test yet."

MY COMMENT

It is going to be very difficult to get people to use any sort of headset. I give Apple a good "chance" to pull this off. It will take many years and probably a few failures along the way to do so. Design and function MUST be there for any sort of headset to get mass appeal. I dont see headsets as any sort of long term product or solution.....I see it as more of a transitional step to whatever the future brings. I have no idea what form that will be.

As to the car.....no....I dont see it happening. I do see them linking up and partnering with one or more car companies to provide Apple technology in their cars.......a sort of "Powered by Apple" approach. I see this as a preferred way to do cars anyway. You can dominate the auto market just like Microsoft dominated the PC market....by providing the basic tech for many different car manufacturers. A much BROADER strategy than simply trying to produce your own branded car.

It is interesting that they just hit $3TRILLION and here already there is speculation about $4TRILLION.

 

The markets are WAFFLING around today. NO confirmation in either direction....yet. We were having much more fun when the big "professional" investors were all on vacation a week ago.

I think part of the reason we see the erratic markets lately is the......push-pull.....between wall street.....the "professionals"......and.......main street, the retail "little guy" investors. The so called "professionals" are busy jumping in and out every day....trying to play every little bit of data and news. The "little guys" are simply trying to buy great companies and hold them for the long term.

Guess who usually wins out over the longer term.......yep......the disrespected "little guys". Look at the MOST ICONIC big time investors of all time......Peter Lynch, Warren Buffett, Jack Bogle......what do all of them have in common even though they are "professionals"......they invested in the style of the "little guys"......buying great companies and holding them for the longer term.

 

Here is the....usual.....daily economic release......that no one will care about.

Jobless claims: Another 207,000 Americans filed new claims last week

https://finance.yahoo.com/news/weekly-unemployment-claims-week-ended-jan-1-2022-194734695.html

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

"New unemployment claims rose but remained near a 52-year low last week, with the weekly pace of new claims holding below pre-pandemic levels as the labor market sees job openings near a record high.

The Labor Department released its latest weekly jobless claims report Thursday at 8:30 a.m. ET. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:

• Initial jobless claims, week ended Jan. 1: 207,000 vs. 195,000 expected and a revised 200,000 during the prior week
  
• Continuing claims, week ended Dec. 25: 1.754 million vs. 1.678 million expected and a revised 1.718 million during the prior week
  

The U.S. economy saw another week with new jobless claims coming in below their pre-virus levels, as new claims averaged around 220,000 per week throughout 2019. And though claims came in slightly higher than expected, some economists had warned heading into the report that the timing of this week's data around the holidays might cause some additional distortions.

"Signal-to-noise ratio is high at this time of year, because seasonal adjustment over the holidays is extremely difficult, so all forecasts are tentative," Ian Shepherdson, chief economist for Pantheon Economics, wrote in a note earlier this week. "The trend, though, is falling."

Continuing claims, like new claims, have trended lower, but remained above pre-pandemic levels in the latest data. And in the latest data, they increased slightly by 36,000 to reach a total of nearly 1.8 million, rising from what had been the lowest level since early March 2020 during the prior week.

At 207,000, the tally for new jobless claims for the final days of 2021 came in above the 188,000 reported in early December, which marked the lowest level since 1969.

"Fortunately for workers, employers have not been in a rush to cut jobs. New claims for unemployment benefits remain near decades-low levels," Mark Hamrick, senior economic analyst for Bankrate, wrote in an email.

"The question remains whether there will be sufficient workers to fill available positions and how many individuals will be willing to re-join the labor force, by working or looking for work," he added.

And indeed, while employers have not shown a willingness to remove workers, employees have been voluntarily leaving their jobs in record droves. Some 4.5 million Americans quit their jobs in November, according to the Labor Department's most recent monthly report. And the quits rate edged back up to 3.0% in November to match September's record high, with the higher rate suggesting workers felt more confident about leaving their roles and being able to find new ones.

This week's jobless claims report also comes a day before the Labor Department's latest monthly jobs report for December, due out Friday at 8:30 a.m. ET. During the survey week for that print, new jobless claims came in just over 200,000, in a still-low reading boding favorably for the monthly report.

Consensus economists expect to see the Labor Department report that non-farm payrolls grew by more than 400,000 in December, or doubling the 210,000 job gains seen in November. The unemployment rate is expected to improve to 4.1%, or the lowest level since February 2020's 50-year low of 3.5%."

MY COMMENT

The GREAT labor and employment disruption continues. As usual....it will be a long time till any of this stuff is back to normal and makes any sense. It seems like no one is paying any attention to these DAILY releases....I know I am not in terms of the actual stocks and funds that I own.

 

Here is the other economic data released today......this one MIGHT actually have some use as an indicator for some businesses and stocks.

U.S. factory orders increase strongly in November

https://finance.yahoo.com/news/u-factory-orders-increase-strongly-153426082.html

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

"WASHINGTON (Reuters) - New orders for U.S.-manufactured goods accelerated in November, but business spending on equipment likely struggled to rebound in the fourth quarter.

The Commerce Department said on Thursday that factory orders rose 1.6% in November. Data for October was revised higher to show orders rising 1.2% instead of 1.0% as previously reported.

Economists polled by Reuters had forecast factory orders advancing 1.5%. Orders increased 12.9% on a year-on-year basis.

Manufacturing, which accounts for 11.9% of the economy, is being supported by businesses replenishing depleted inventories.

There were increases in orders for computers and electronic products as well as transportation equipment. But orders for machinery fell as did those for electrical equipment, appliances and components.

There are tentative signs that raw material and labor shortages are starting to abate. An Institute for Supply Management survey on Tuesday showed its measure of prices paid for inputs by factories fell by the most in a decade in December.

Shipments of manufactured goods increased 0.7% in November after surging 2.0% in October. Inventories at factories rose 0.7%. Unfilled orders increased 0.7% after gaining 0.3% in the prior month.

The Commerce Department also reported that orders for non-defense capital goods, excluding aircraft, which are seen as a measure of business spending plans on equipment, were unchanged changed in November instead of falling 0.1% as reported last month.

Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, rose 0.3% in November as previously reported.

Business spending on equipment contracted in the third quarter after four straight quarters of double-digit growth."

MY COMMENT

A mixed report since we are STILL in the middle of the big mess created by the closure of the economy. We will learn a lot more when the earnings reports begin in a few weeks. It is going to be a company by company situation.

 

I hate to pick on someone too much.....but I cant resist putting this little article up. It is a great lesson in media behavior in the modern world.......as well as a lesson to investors.....about jumping on the latest and greatest bandwagon.

Cathie Wood’s flagship Ark ETF off to a rough start in 2022 — down 45% from its peak

https://finance.yahoo.com/news/cathie-wood-flagship-ark-etf-has-a-rough-start-to-2022-151841061.html

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

"With every new year comes a clean slate. For Cathie Wood’s Ark Invest, that doesn’t seem to be the case.

The firm’s beaten-down Ark Innovation Fund (ARKK) has hit a new low in 2022 — already. After shedding 7% in Wednesday’s sell-off, the fund is down 9% this week so far and 45% from its peak in February 2021, with the decline marking its worst drawdown since inception in 2014.

A rout in growth-oriented stocks that has battered ARKK was made worse on Wednesday as investors mulled the likelihood of sooner-than-expected rate hikes after minutes from the Federal Open Market Committee's (FOMC) December meeting reflected concerns from policymakers about worsening inflation, signaling more imminent intervention by the central bank.

Losses in Ark’s beleaguered exchange-traded fund come amid the renewed pressures in technology stocks that sent the Nasdaq tumbling 3.1% and the S&P 500 down 1.9% in Wednesday’s trading session. The benchmark 10-year Treasury yield topped 1.7% to yield its highest since April, deepening the downturn in high-growth stocks.

Bespoke Investment Group pointed out that ARKK’s 2022 declines place it only 6.66 percentage points above the S&P 500 since the ETF’s pre-COVID high and 17.9 percentage points below the Nasdaq 100 (QQQ) as of Wednesday. At its February 2021 peak, the fund was significantly outperforming both benchmarks — beating SPY by 143% since its pre-COVID peak and the more tech-heavy QQQ by 117%.

Wood, whose prescient stock picks made her a star on Wall Street after ARKK returned 150% in 2020, promised investors just one month ago that her strategy could deliver a 40% compound annual rate of return during the next five years — a projection she later updated to a lower but still ambitious 30%-40% after some rebuke.

All 20 of ARKK's top holdings were in the red at Wednesday's close. Losses were led by Roku (ROKU), down 11.72%; UiPath Inc. (PATH) down 10.33%; and Intellia Therapeutics (NTLA), down 8.97%. Of the 20 holdings, all except Tesla (TSLA) are down 20% or more from recent highs.



All 20 of Ark Innovation's top holdings except Tesla are down 20% or more from recent highs."

MY COMMENT

This story is a lesson in following and jumping on the latest HOT fund. It is a SURE losing strategy to jump around from the latest media darling to the next media darling. It is also a lesson in RISK and RISK TOLERANCE. This fund is OBVIOUSLY a high risk fund. Many investors simply IGNORE....or dont fully appreciate...... the risk factor when they bail into the latest and greatest investment.

I have no idea how this fund will do over the long term.....but......I am personally very hesitant to jump on a HOT......"MANAGED".....fund. The odds of a manager being a STAR for the longer term are very slim. Add in the fact that the BIG year for this fund occurred during an ABERRANT year (the economic closure and pandemic) and you have a perfect recipe for a one trick pony. At best......in my view......this sort of HIGH RISK managed fund should only be a small percentage of a total portfolio.