The Long Term Investor

CELEBRATE.....CELEBRATE.....DANCE TO THE MUSIC.

 

Siting and watching the markets today. Certainly a good open and first hour. I am guessing that today and tomorrow will be positive days for investors.

 

HERE is kind of an all in one article for today.....the markets, inflation data and unemployment data.

Stock market news live updates: Stocks open higher as summer rally continues

https://finance.yahoo.com/news/stock-market-news-live-updates-august-11-114336277.html

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

"Stocks opened higher as traders built on Wednesday's rally and continue summer momentum in the stock market.

Shortly after the opening bell on Wall Street, all three major averages were up about 0.6%.

Following inflation data on Wednesday that showed the consumer price index was unchanged from June to July, the Nasdaq gained 2.9% amid a charge higher across risk assets. From mid-June lows, the Nasdaq is now up more than 20%.

Thursday's rally comes following more inflation data out Thursday morning that suggested pricing pressures are moderating across the U.S. economy.

The producer price index (PPI) for July showed prices fell 0.5% from the prior month, a big surprise relative to expectations that this report would show a 0.2% increase in prices. On Wednesday, the consumer price index showed there was no change in consumer prices from June to July, with prices in July rising 8.5% over the prior year, less than expected.

"Core" producer prices rose 0.2% in July, less than the 0.4% that was expected.

"Producer prices registered an encouraging deceleration in July as energy prices lost steam and core input price pressures moderated after ramping up in June," said Mahir Rasheed, U.S. economist at Oxford Economics. "In annual terms, headline PPI inflation cooled 1.5 percentage points to 9.8%, the slowest pace since October, while core PPI inflation eased 0.6 percentage points to 5.8%, the slowest pace since June 2021."

July's inflation report came as energy prices continue to moderate across the economy with the average price of a gallon of gas in the U.S. falling below $4 a gallon for the first time since March on Thursday, according to data from AAA.

Wednesday's CPI data showed the price of gasoline fell 7.7% from June to July. On June 11, the average price of a gallon of gas topped $5 nationally.
The price of WTI crude oil, the U.S. benchmark, was up about 1% on Thursday morning to trade just below $93 a barrel.

Data on the labor market showed initial jobless claims rose again last week to 262,000. Initial filings for unemployment insurance have been steady rising through the summer, suggesting to some economists the labor market is softening amid the Federal Reserve's interest rate hikes.

The July jobs report, however, surprised last week as 528,000 jobs were added to the economy and the unemployment fell to a new pandemic low of 3.5%.

Elsewhere in markets, cryptocurrencies continue to trade more constructively, with the price of bitcoin up more than 6% early Thursday to north of $24,500, the highest level for the market's largest cryptocurrency since mid-June.

Ethereum was up even more early Thursday, rising 11% to nearly $1,900, the highest since late May.

Traders will also be closely watching the VIX, known as the market's "fear index," which closed below 20 for the first time since early April on Wednesday, as expected volatility declines while the market's rally from mid-June lows continues.

On the earnings side, shares of Disney (DIS) were in focus early Thursday with the stock up more than 8% in early trading following an earnings report out Wednesday that topped expectations.

Notably, the company reported the addition of more Disney+ subscribers in the quarter than expected — adding 14.4 million against estimates for an increase of 10 million — and announced price increases across its streaming offerings, in addition to a new ad-supported tier of its core Disney+ offering in the U.S."

MY COMMENT

Everything is ALL LINED UP for a continuation of this SUMMER RALLY. Funny how this is contrary to much of the opinions that have been out there in the media over the past month or so. The....."experts".....are usually WRONG.....a bunch of empty suits.

The REAL question is.......summer rally or sustained stock market normalization and continuation of the BULL MARKET?

My view.....what is now going on and has been going on over the past three months and especially for the past 7-8 weeks is MORE than a little bear market rally. We are seeing pent up positive pressure turn the markets. We are seeing a PROBABLE end to the bear market. We will continue to see extreme volatility and a media sensitive market.....but.....this does NOT seem like a bear market rally....it seems like a continuation of the long term BULL MARKET. It seems like a market SHIFT.

When will we know if the above is true? When we look back in about a year.

 

NOTHING going on today that is critical to the markets....at leas on the negative side of things. So....all there is to do today is just....go along for the ride. Of course....that is what I simply do all the time anyway.

 

Here is some housing info....looks like homeowners will be feeling a little less.....well to do.....for a while.

Mortgage rates surpass 5% again

https://finance.yahoo.com/news/mortgage-rates-5-percent-140011104.html

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

"Mortgage rates jumped back above 5%, after briefly and barely falling below that level last week.

The rate on the 30-year fixed mortgage increased to 5.22% from 4.99% the week prior, according to Freddie Mac. While the rate remains lower than the 5.81% registered in June, it’s still 2 percentage points higher than the start of the year.

The jump in rates is discouraging news for sidelined, price-shocked buyers, who are contending with tough affordability conditions. Meanwhile, homeowners are growing wary about selling, as the cooler market has forced some to lower their asking prices.

“The 30-year fixed-rate went back up to well over 5% this week, a reminder that recent volatility remains persistent,” said Freddie Mac Chief Economist Sam Khater, in a statement. “Declines in purchase demand continue to diminish while supply remains fairly tight across most markets. The consequence is that house prices likely will continue to rise, but at a slower pace for the rest of the summer.”
Homebuyers skittish amid higher rates

Rates on mortgages fell below 5% last week for the first time since April, but that short reprieve did little to spur would-be buyers.

Housing sentiment hit its lowest point in a decade in July, according to a Fannie Mae survey. Only 17% of respondents said it’s a good time to purchase a home, down from 20% the month prior, signaling how rising borrowing costs have quickly doused the once-blistering housing market.

The volume on purchase applications also decreased 1% from one week earlier, according to the Mortgage Bankers Association survey for the week ending August 5, and was 19% lower than the same week one year ago. Activity has now fallen in five of the last six weeks, as affordability pressures concern buyers.

“Higher interest rates are impacting home affordability and represent a real drag on those first-time homebuyers,” Jeffrey Ruben, president of WSFS Mortgage, told Yahoo Money. “But they have not yet choked off the man to the point where you don’t see people buying. It just means being a little bit more cautious and measured on what you can afford and what you can buy.”

Those looking to purchase also may have a harder time qualifying for a mortgage. Credit availability for mortgages fell to its lowest level since May 2013 last month — down 9% from the month prior, the MBA reported — an indication that lending standards are tightening.

“Lenders have responded accordingly to the decrease in demand for refinance and purchase loans by reducing loan offerings, including ARMs, cash-out refinances, and investment properties,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a news release.

Home sellers are pricing down listings

To attract buyers, more home sellers are reducing their listing prices.

The percentage of homes with a price reduction increased to 19.1% in July from 14.9% in June and is close to typical 2017 to 2019 levels, according to Realtor.com. The median home price for active listings declined to $449,000 in July, down from a record-high of $450,000 in June.

That’s showing up as dollars lost at closing for sellers, who may feel they missed out on the hot market. The average purchase price among homes being financed fell by another $10,000 (-2.2%) in July and is now down by more than $31,000 (-6.6%) since March, according to Black Knight.

The percentage of homeowners who believe it’s a good time to sell continued to deteriorate, according to Fannie Mae’s confidence index, falling to 67% in July from 76% in May.

“Mortgage rates are really the driving force behind why sellers are having to drop that price,” Daryl Fairweather, chief economist at Redfin, told Yahoo Money. “Buyers oftentimes just can’t keep up with that kind of money and they end up dropping out of the housing market or getting a lot more frugal. That means sellers have to meet buyers where they’re at.”"

MY COMMENT

Lots of data and information in the little article above. All in all it adds up to.......a moderating housing market for sellers. The ONLY thing holding the markets UP at this point is the lack of inventory. If inventory normalizes I expect that we will see a real DROP in housing values. The good news for owners.....at this point we are a long way from a normal level of listings. It is definitely a SOFTENING market regardless.

 

Here we are NOW in the East Coast 11:00 to 12:00 hour and the market gains are softening. Typical.

 

Just looked at my account for the first time today. VERY shallow gains. Five stocks up and five stocks down. A number of the BIG CAP TECH names are currently negative. I am DEFINITELY not as green as the averages would lead you to expect. Looking at my account.....even though the averages are nicely positive....my particular account is what I would call.....MIXED.

 

Markets have been LINGERING since about 11:00 EST. I like this little article.

Mocked by Everyone, Stock Rally Sits at Cusp of a Chart Landmark

https://finance.yahoo.com/news/stock-rally-everyone-mocked-headed-160000636.html

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

"(Bloomberg) -- It’s doomed, it’s a bear-market rally, a rebound that won’t last. All the mud thrown at equities over the last month may well turn out to be true. But it’s getting harder to brush aside the recovery in the S&P 500 as it hovers at a widely watched landmark in charts.

Four straight days of losses were erased in seconds Wednesday after inflation data came in cooler than expected. The S&P 500 climbed 1.9% as of 12:50 p.m. in New York, surpassing the 4,177 level that marked the peak during its May-June rebound. Overcoming the hurdle would produce what chartists refer to as a “higher high,” supposedly a signal that more sustained gains are in store.

“We’ve been cautious all year,” said Jonathan Krinsky, chief market technician at BTIG. “Clearing June’s high on a closing basis would go a long way to suggesting the trend was shifting.”

Wednesday’s inflation data -- the first time since early 2021 that the headline reading was lower than economist forecasts -- prompted traders to quickly pare back bets on the amount of tightening that the Federal Reserve is likely to do, sparking a bounce across risky assets.

More than $5 trillion has been restored in equity values as the S&P 500 staged its strongest rebound this year, jumping 15% from its June trough. Stocks have rallied as better-than-expected earnings and economic data eased concern about an imminent economic recession.

“Stocks have been in rally mode, so if you’ve been buying all along, this will do nothing to dissuade you,” said Steve Sosnick, chief strategist at Interactive Brokers. “While traders are eager for anything that can be interpreted as an all clear, it’s one report,” he added. “But it fits with the newfound bullish narrative.”

Along the way, warnings from strategists at firms like Morgan Stanley and Goldman Sachs Group Inc. have been getting louder. In a client survey conducted last week by Wolfe Research during a webcast, 75% of the participants said the S&P 500 has yet to reach a bottom.

Underpinning the skepticism is the uncertain trajectory of the Fed’s hiking cycle and its impact on the economy. Already, gross domestic product contracted for two straight quarters. And major makers of computer chips warned about slowing demand.

“We’re not yet convinced that the upturn in stock prices we’ve seen is yet a firm trend,” said Lisa Erickson, senior vice president and head of public markets group at US Bank Wealth Management. “Price pressures while they’ve come down in the recent CPI report still have a way to go. And the Fed also wants to see clear and convincing evidence for it to really change its monetary policy approach.”

But the equity resilience has continued. One by one, what used to be resistance in price charts turned into support, and bears were forced to unwind their positions. A Goldman basket of most-shorted stocks has soared 30% since the start of July, burning anyone wagering on share declines.

This month, the June peak has become a battle line between bulls and bears. The index briefly topped that threshold on Monday, only to close below it as selling resumed and stocks wiped out their intraday gains.

“Breaching the 4,177 level on the S&P 500 is important from a trend following perspective because it starts to establish a sequence of higher highs and higher lows, or what is more affectionately known as an uptrend,” Renaissance Macro Research co-founder Jeff deGraaf, wrote in a note last week. He was ranked as the top technical analyst in Institutional Investor’s annual survey for 11 straight years through 2015.

Sam Stovall, chief investment strategist at CFRA, is not ready to call all clear until the S&P 500 recoups half its losses that incurred from January through June. To adherents of Fibonacci analysis, a technical tool based on a number sequence described by Leonardo of Pisa in “Liber Abaci” in 1202, reaching the midpoint is a signal that the market is poised to make a full recovery.

“This remains a bear market rally until we close above the 4,232 level on the S&P,” Stovall said. “After that, history reminds us that no bear market ever recovered 50% of its decline only to set an even lower low. It would be an early signal that the bear is behind us.”"

MY COMMENT

I am NOT a chart reader or Technician....since I dont believe in them as an investor. But I do agree with the general positive tone of those in this little article.

I ACTUALLY LOVE to see that data that 75% of clients dont think we are at a bottom. The longer we can keep this little rally under wraps the better. We dont want to see EXUBERANCE.

At this moment the SP500 is at 4221. Above or at the levels mentioned in this little article.

 

I have now turned red in my account.....but very mildly. It is a very shallow market today with not a lot of energy. I have 8 of 10 stocks negative at the moment....yet....my loss is very small. I have not looked but based on my gains and losses in my stocks it looks like a low volume day. Everyone must be on vacation.

 

Rayak

I refer you to the rest of the thread from page 1 to now. I am a former business person and I am interested in anything business related including the daily markets and economic data. I am also interested in creating a RUNNING record in this thread so myself....and others......can read it as a day to day market diary in the context of seeing how that translates to the LONG TERM.

NO......I dont have to spend any time researching companies since I have ten long term holdings and have NO plans to make any changes any time soon. I am very familiar with what I need to know about my companies. I am not into investing BUSY WORK or complexity.

As to leisure....I have been retired since I was 49 years old. I do this thread as a small hobby and a way to stay connected to the business world. I have plenty of time for leisure outside of the small amount of time that I spend on this thread daily. What I post here is part of my daily reading routine anyway....so I would be doing it regardless of this thread.

You know the other reason that I post here often is to create a record. One problem with internet investor "stuff" is the FACT that you never know if someone is simply BS'ing about their experiences and results. By putting EVERY transaction that I have made plus everything else....including daily results....on here it gives some verification that what I am posting is ACTUALLY the truth.

Often there is NOTHING in my daily reading that is relevant to long term investing. Whatever I find that is....I post. I would guess that......70% or more.....of the "stuff" on here is in fact....related to long term investing.

As i said.....I refer you to the past 500+ pages.

 

NOW....today. I had a moderate loss today. We started with a BOOM and ended with a whimper in the markets. The weakness seemed to grow as the day went on. BUMMER.

I ended the day in the red. I had two holdings that were UP today....Honeywell and Nike. I managed to LOSE OUT to the SP500 by 0.56% today.

Basically a BORING day....nothing new nothing going on.

 

I have no plans to sell anything or do anything. As a long term....fully invested all the time investor......I will do nothing in response to the current short term events and environment.

AS USUAL.........HERE is my current PORTFOLIO MODEL.

I am once again posting my PORTFOLIO MODEL. My initial criteria to start the process to consider a business are.......BIG CAP, AMERICAN, DIVIDEND PAYING, GREAT MANAGEMENT, ICONIC PRODUCT, WORLD WIDE LEADER IN THEIR FIELD, LONG TERM HORIZON, etc, etc, etc.

PORTFOLIO MODEL

"Here is my "PORTFOLIO MODEL" for all accounts managed which is the basis for MUCH of my discussion in this thread. I am re-posting this since I often talk in this thread about my portfolio model. My custom in the past on this sort of thread was to re-post my portfolio model every once in a while since I will tend to talk about it once in a while. I "manage" six portfolios for various family including a trust. ALL are set up in this fashion. If I was starting this portfolio today, lets say with $200,000. I would put half the money into the stock side of the portfolio, with an equal amount going into each stock. The other half of the money would go into the fund side of the portfolio, with an equal amount going into each fund. As is my long time custom, I would than let the portfolio run as it wished with NO re-balancing, in other words, I would let the winners run. Over the LONG TERM of investing in this style (at least in my actual portfolios), the stock side seems to reach and settle in at about 59% of the total portfolio and the fund side at about 41% of the total portfolio over time. That is a GOOD THING since it tells me that my stock picks are generally beating the funds over the longer term. AND....since the funds in the account generally meet or beat the SP500, that is a VERY good thing.

As mentioned in a post in this thread, I include the funds in the portfolio as a counter-balance to my investing BIAS and stock picking BIAS and to add a top active management fund that often beats the SP500 (Fidelity Contra Fund) and a SP500 Index Fund to get broad exposure to the best 500 companies in AMERICAN business and economy. The funds also give me broad diversification as a counter-balance to my very concentrated 10 stock portfolio. At the same time the funds double and triple up on my individual stock holdings............that I consider the BEST individual businesses in the WORLD.

STOCKS:

Alphabet Inc
Amazon
Apple
Costco
Home Depot
Honeywell
Microsoft
Nike
Nvidia
Tesla

MUTUAL FUNDS:

SP500 Index Fund
Fidelity Contra Fund

CAUTION: This is a moderate aggressive to aggressive portfolio on the stock side with the small concentration of stocks and the mix of stocks that I hold and with the concentration of big name tech stocks. Especially for my age group. (72). So for anyone considering this sort of portfolio, be careful and consider your risk tolerance and where you are in your life and financial needs. I am able to do this sort of portfolio since my stock market account is NOT needed for my retirement income AND I have a fairly HIGH RISK TOLERANCE. In addition I am a fully invested, all the time, LONG TERM investor. (LONG TERM meaning many years, 5, 10, 20, years or more)"

MY COMMENT

This portfolio is HIGHLY CONCENTRATED on the big cap side of things. OBVIOUSLY between the funds and my ten stock holdings there is MUCH doubling and tripling up on the stocks. THAT is INTENTIONAL. I strongly subscribe to the view of Buffett and some others that TOO MUCH diversification kills returns. I do NOT believe in the current diversification FAD that most people seem to now follow.......or think they are following. I DO NOT do bonds and think the current level of bonds held by younger investors.....those under age 50.....is extremely foolish.I DO NOT do market timing or Technical Analysis.

 

I say this to anyone. I DO STRONGLY refer anyone to look at the posts in this thread from start to finish. There is MUCH long term investing content in the entire thread that NEVER goes out of date.

For anyone......I do welcome questions or comments. They serve to kick off discussion by myself and others. My answers are simply my view and how I personally do what I do......what works for me may not work for you. Others will obviously have different experiences and opinions. That is a good thing since.....ALL investing is personal.

 

Rayak.

Sounds like we have some things in common....I am also a husband and a father......LOL. My grandparents lived in North Carolina........on the edge of the Great Smoky Mountains at a time when that was the extreme backwoods.

I grew up in the Army since my father was a career military officer. Reading between the lines I get the feeling that you are retired military.

I ALSO have spent my entire investing life...50+ years....managing my own money. I was lucky to be exposed to investing as a child by my mom during a time period....the 1950's and 1960's and 1970's....when VERY FEW people in the USA did any sort of investing or owned a stock or fund.

I encourage anyone to post their portfolio on this thread and discuss their holdings, investing strategy, results, goals,etc, etc, etc. This is a relatively JUDGEMENT FREE thread. I operate on the view that investing is NOT a competition. The success of others does not diminish my success or decrease my potential for success. I definately DO NOT see investing or life as a ZERO SUM GAME. The possibilities are endless for anyone and everyone.

 

OK....another day another dollar.....hopefully. Day by day, week by week, month by month, year by year......and before you know it.....it becomes the long term. People like me.....there are many of us......perform the most difficult thing in the investing universe. We sit day after day and....DO NOTHING. A near impossibility for most people.....compliments of the human brain and genetic human behavior. Add in all the constant media and investment industry focus on TRADING....and the pressure is intolerable for many.

Today.....we start out nicely positive again. We will have more of a clue where we are headed in about 2-3 hours. We NEED to close out the week with a solid and positive day.