The Long Term Investor

Interesting article:

New Data Suggests Our Fundamental Model of the Universe Is Wrong, And Scientists Are Racing to Solve It

https://dnyuz.com/2022/08/08/new-da...-wrong-and-scientists-are-racing-to-solve-it/

As the article notes:

"What this means, essentially, is that there may be a potentially serious flaw in our basic understanding of the universe and the fabric of reality. In response, scientists around the world are now trying to resolve these tensions."

MY COMMENT

Sounds like the investing universe to me. Many people today have the FLAWED idea that trading, speculation, gambling, etc, etc, is how you invest. Many people simply dont know any better. HOWEVER......the research and data show that LONG TERM INVESTING.....is the way to do it. That is the purpose of this thread.

 

We are continuing to see the markets...."try"....to push back against the negative today. The close today is very much up in the air.

 

Here is some positive reinforcement for investors.

10 reasons to be bullish on stocks right now, according to JP Morgan

https://finance.yahoo.com/news/10-r...ght-now-according-to-jp-morgan-102743824.html

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

"Inflation remains frustratingly elevated. Recession talk still dominates Wall Street despite a surprisingly strong July jobs report. And second quarter earnings season has been anything but great.

But all that's not stopping top JP Morgan strategist Mislav Matejka from being bullish on stocks.

"We believe that risk reward for equities is not all bad as we move into year-end," Matejka said in a new note to clients on Monday. "In fact, we argued that we have entered the phase where the weak dataflow can be seen as good, leading to a [Fed] policy pivot, and the activity slowdown might prove to be less deep than feared."

Matejka listed 10 reasons supporting his call:

1. Valuations appear attractive, both in absolute terms and compared to fixed income.

2. There are elevated cash levels among institutional investors, as well as an appetite to begin putting funds to work.

3. Investor sentiment is currently too bearish (often viewed as bullish indicator for stocks).

4. Federal Reserve hawkishness has likely peaked.

5. The U.S. dollar has likely peaked for the year.

6. The economic slowdown isn't showing signs of a nasty recession.

7. Higher income consumers remain resilient.

8. Earnings estimates on the Street unlikely to be marked down aggressively.

9. Excess savings built during the pandemic are still providing a cushion to consumer spending.

10. The global economy will unlikely see a synchronized downturn.

Matejka's view isn't shared by several of his well-known peers on the Street.

Morgan Stanley's Mike Wilson told Yahoo Finance Live that the overall conditions — ranging from slowing corporate earnings growth to rising rates to bruising inflation — are in place for the S&P 500 to take out the June lows sometime by the fall.

Such a move predicted would see the S&P 500 lose at least 8% from current levels.

Wilson continues to guide clients into more defensive areas of the market and isn't opposed to holding more cash than normal. If the sell-off happens, according to Wilson, we could witness the start of a new bull market in 2023.

Over at Goldman Sachs, David Kostin took a chisel to his 2023 profit estimate. Kostin now sees 2023 EPS for the S&P 500 growing a mere 3% (6% previously), below analyst forecasts of 7%. The downward revision reflect's Kostin's view of continued input cost pressures on companies.

Kostin listed 67 companies as "vulnerable" to downward profit revisions, including household names such as T-Mobile, Lockheed Martin, Honeywell, Electronic Arts, and Yum! Brands.

"We expect limited upside to the S&P 500 through year-end, given our economists’ above-consensus inflation forecast, the prospect for higher real yields, and the constraints on Fed policy from the surge in stock prices that has eased financial conditions since mid-June," explained Kostin."

MY COMMENT

I prefer to favor the positive view. BUT....that is due to my long term investing nature and the FACT that the long term is ALWAYS positive.

I love the little dig at the start of the article that 2nd quarter earnings have been anything but great. They seem just fine to me.

I AM STILL positive for the rest of the year in general....even though I disagree with numbers 8, 9, and 10 above.

 

Stocks have given in to the DARK SIDE today. The markets are acting tired and worn down. I think NVIDIA took a lot of wind out of the markets. When I looked it was down today by about 8%. That is a big one day hit.......and a big weight on the markets especially the tech side of things.

 

NVIDIA was the big drag today. It took the rest of the tech world down with it. My account was no exception. I ended in the red. Five stocks UP and five stocks DOWN. The non-tech side of my portfolio carried me today and held my losses down. Costco, Home Depot, Nike, Honeywell, and Tesla were all positive for me today. I got beat by the SP500 today by 0.52%.

We live to fight another day.

 

Nvida got back a little bit before the close. It ended at (-6.3%). I will take that as my victory for the day.

 

Not much in the investing world news today. This week is probably toast with the media focused on the CPI data and their opinion/speculation. Add in Nvidia and we will have a hard time showing short term gains. These chip companies have always been this way....BOOM or BUST.

Nasdaq falls for third straight day as chip stocks weigh on market

https://www.cnbc.com/2022/08/08/stock-market-futures-open-to-close-news.html

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

"The S&P 500 slipped slightly on Tuesday as investors navigated a batch of disappointing company reports ahead of a key inflation reading.

The S&P 500 fell 0.2%, while the Nasdaq Composite dipped nearly 0.8%. The Dow Jones Industrial Average was little changed.

Memory chipmaker Micron warned that revenue may fall short of its prior guidance because of “macroeconomic factors and supply chain constraints.” The stock fell more than 3% in early trading.

It’s been a rough week for chipmakers. On Monday, weaker-than-expected revenue guidance from Nvidia weighed on the group. Nvidia was lower again on Tuesday, shedding another 3% after a 6% decline on Monday. The iShares Semiconductor ETF lost 3% on Tuesday after falling 1.5% on Monday.

The S&P 500 has climbed for three straight weeks, but earnings season has featured demand warnings from executives of major companies. Investors are watching closely to determine how the Federal Reserve’s fight against inflation is rippling through the economy.

“In our view, Fed rate hikes are impacting the economy on cue. We believe that tightening has just started to broadly hit the economy, and that our intermediate-term bearish base case remains intact,” Chris Senyek of Wolfe Research said in a note to clients on Tuesday.

Outside of chips, a pair of Nasdaq-listed stocks were also taking early hits. Novavax slumped 27% after slashing full-year revenue guidance because of poor demand for its Covid vaccines. Upstart declined nearly 10% after the consumer lending company reported second quarter results that missed both profit and revenue expectations.

On the economic front, investors are awaiting the latest reading of the July consumer price index, due Wednesday, to find some clarity on the path of interest rate hikes from the Fed as it works to stamp out inflation, or at least slow it.

Energy stocks lead in early trading

The energy sector is outperforming in early trading, with the Energy Select Sector SPDR Fund rising 2.6%.

Chevron has also gained more than 2%, making it the top stock in the Dow.

The stocks could be getting a boost from oil prices. U.S. benchmark West Texas Intermediate crude climbed back above $91 per barrel on Tuesday.

Stocks open lower

Stocks opened lower on Tuesday, as the chip sector is proving to be a headwind for the market this week.

The S&P 500 fell 0.3%, while the Nasdaq Composite dipped 0.9%. The Dow Jones Industrial Average shed 30 points, or 0.1%.

Investors looking ahead to CPI report

Many investors are watching Wednesday’s inflation report as a potential pivot point for the market. Economists surveyed by Dow Jones are expecting the July consumer price index report to show a moderation in inflation.

Expectations are for CPI to rise 0.2% month over month, and for core CPI to rise 0.5%. That would be a slowdown from the increases 1.3% and 0.7%, respectively, in June.

“If you get good abatement of inflation, in combination with this historically strong labor market, you can make a case that the June 16 low was a bottom for the market,” Kevin Simpson of Capital Wealth Planning said on “Squawk Box.” “And I know it sounds crazy, but there’s even a possibility that the Fed could thread this needle.”

Productivity declines again in second quarter

Productivity declined and labor costs jumped in the second quarter, the Labor Department said Tuesday.

Nonfarm productivity fell at an annual rate of 4.6% during the second quarter, slightly better than the 5.0% decline expected.

Unit labor costs grew at annualized rate of 10.8%, which was higher than the 9.5% expected.

Labor costs are now up 9.5% over the past four quarters, which is the biggest four-quarter increase since 1982.

The decline in productivity and the jump in labor costs were both smaller than revised numbers of -7.4% and 12.7%, respectively.

Bank of America says clients piled into tech stocks last week

Last week, Bank of America Securities clients were net buyers of US stocks for the sixth consecutive week, the firm said Tuesday. Total inflows were $1.8 billion.

The tech sector saw the biggest inflows of the week, with the highest weekly flows since at least 2008, Bank of America said. Overall, buying was concentrated in large cap stocks.

However, the firm did say that hedge funds were net sellers during the period.

Analysts are unusually bullish, Citi says

Despite some high-profile earnings misses and signs of slowing growth in the economy, Wall Street analysts are unusually optimistic about the stocks they cover, according to Citi.

“Our index of global sell-side stock calls is back at peak bullishness, so triggering a red flag in our Bear Market Checklist,” Citi strategist Robert Buckland said in a note to clients. “Analysts are most bullish in the US and, increasingly, EM. They are less bullish in Europe and Japan, but not by much. There are few signs they see a global recession coming.”

Citi’s sell-side index previously reached this peak bullish level in 2007 and 2000, before steep market drawdowns."

MY COMMENT

As I said.....actually....nothing going on today. The same old, same old. Chip companies are moving the markets DOWN. Inflation MANIA is also holding the markets down.

The story of the day......at least on the economic front, which no one will care about......is the BIG drop in productivity noted above. YES.....we are in a recession.....not that labels mean anything.

On the Nvidia and chip industry issues.....yes....I have seen many articles linking this to another CRYPTO WINTER.

 

BOTTOM LINE at the moment......the economy is a BIG MESS. Of course the economy is not the stock markets and not individual business. Supply chain.....still a disaster. Demand destruction and the FED.....still happening and as far as I can see the FED.....as usual....WILL simply push the economy till it collapses. How hard that collapse is will be seen later as it happens.

We are STILL far from recovering from the economic shut-down.......probably at least 1-2 years. In hind-sight shutting down the economy was simply a disaster and IDIOCY. This is the perfect example of obvious consequences from an IDIOTIC act. Government, the FED, whoever.......does NOT control the economy. You cant just turn it on and off. Once you disrupt this sort of complex system......there is no guarantee that you can simply buck it back on. We are paying the price....and how long we will pay that price is unknown.

 

Chip stock warnings and inflation.....twin market killers this week. At the minimum for another 2 days....but probably all week. We were due for a little pull-back anyway after the BIG run up we have had over the past 7 weeks.

Markets are a total waste of time today. It makes it much easier to simply put up with......and ignore...... days and weeks like this.....being a long term investor. It gives me confidence in the future.

HERE are some REAL NUMBERS, compliments of Schwab.....from my "cleanest" account.......average annual total return:

Twelve years +15.54% versus +14.10% for the SP500.

Five year +11.69% versus +12.83% for the SP500.

Three year +14.29% versus +13.96 for the SP500

Below three years I.......LAG.......the SP500 for every time period, including one year and year to date. This is due to my current LOSS of (-17.90%). I anticipate that as I come back and recover from this loss over the next few years.....I will probably once again beat the SP500 for five years and shorter time periods.

ANYWAY.....How can I bitch about these numbers......over the LONG TERM (12 years) I am doubling my money every 4.6 years. SIGNIFICANTLY better than my long term aspirational goal of averaging a minimum of 10%.

 

I dont have "clean" numbers before this time since I dont keep data and before that time money would come and go into the account at various times that I dont have data for. Schwab also screwed me by changing their performance data, I much preferred their old system of performance data that showed much more detail. I know that long term prior to about 12 years ago.....I was averaging a return of 14% to 15%......going back into the early 1990's.

 

Playing with more numbers from my account in Schwab. HERE are some real numbers for the EIGHT stocks that I have held at least five years.

Apple year to date (-16.98), one year +13.3%, three year +219%, five year +319%.

Amazon year to date (-19,21%), one year (-17.15%), three year +33.48%, five year 187%.

Nike year to date (-33.15%), one year (-36,11%), three year +57.11%, five year +100.33%.

Microsoft year to date (-15.75%, one year (-1.58%), three year +107%, five year +289%

Costco year to date (-5.30%), one year +21.14%, three year +100.93%, five year +250%.

Home Depot year to date (-25.27%), one year (-7.87%), three year +49.96%, five year +107%.

Honeywell year to date (-6.06%), one year (-16.22%), three year +17.72%, five year +50.36%.

Google year to date (-19.20%), one year (-14.35%), three year +98.76%, five year +153%.

I personally consider FIVE YEARS as the minimum holding period for an investment to be considered LONG TERM. The above represent the POWER of long term investing over the past FIVE YEARS. BUT.....this last five years......is an extreme time period both UP and DOWN.

 

Just for fun....stocks that I own and did NOT own for the past five years:

Nvidia year to date (-43.13%), one year (14.08%), three years +329%, five years +324%.

Tesla year to date (-29.27%), one year +19.53%, three years +1829%, five years +1120%.

Being GREEDY.....I wish I had owned these two for the past five years.....but....I am happy to own them now.

 

As we head to the close the averages are doing about the same as they have for most of the day....perhaps a slight bit better....but not much. No doubt a DOWN day for the markets. Understandable with the CHIP stocks hammering the markets and the tech side of things......plus.....the dreaded inflation data coming out tomorrow.

Basically a worthless day today. The best I can say is that my loss slightly moderated into the close. Still.....a medium LOSS day. I also lost out to the SP500 today by 0.72%. I am dipping into some of my recent gains this week.....but am still way above my low for the year.

I had SEVEN stocks down today.....and....THREE up........Apple, Microsoft, and Honeywell.

Looking forward to getting some of the inflation data out of the way tomorrow. That should take some of the attention off the CHIP stocks.

 

Rayak......well it only took me 595 pages.

By the way welcome to the thread. Please feel free to share your investing opinions and experiences. No need to agree with me or anyone else.