The Long Term Investor

I just got back. I see that the markets did not need my help today....even though they backed off from the early morning highs.

I ended in the GREEN....a good moderate day. I now am back to having about 3 days of cushion for when the markets decide to move back to the DARK SIDE. I got beat by the SP500 today by 0.04%. My single down stock today was NKE.

 

I see that Netflix had a good earnings beat....as did J&J and others. Earnings are coming in much better than expected.....so far....but it is still early. Of course while I was gong today I saw an article with some expert being quoted that even if this quarter was good.....he is still expecting earnings to drop back in 2023. You just CANT EVER SATISFY those people. They constantly put out these negative calls....just waiting for the one time they happen to be right so they can.....JUMP UP and claim....."see I was right, I predicted that".

Stock market news live updates: Stocks gain for a second day amid busy earnings lineup

https://finance.yahoo.com/news/stock-market-news-live-updates-october-18-2022-102038815.html

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

"U.S. equities charged forward in another session of outsized swings Tuesday, extending a comeback that kicked off a busy week of big-name third-quarter earnings reports.

The S&P 500 (^GSPC) advanced 1.2%, though after paring gains from a sharper move higher earlier in the session, while the Dow Jones Industrial Average (^DJI) added around 340 points, or 1.1%. The technology-heavy Nasdaq Composite (^IXIC) closed up 0.9%.

Sentiment got a boost Tuesday on third-quarter results from Goldman Sachs (GS) — Wall Street's premier investment bank — which posted earnings that beat analyst estimates across the board despite challenging year-over-year comparisons. Shares closed roughly 2% higher.

In an interview with CNBC, CEO David Solomon warned that there was a "good chance" the U.S. economy may enter a recession next year.

“That environment heading into 2023 is one that you’ve got to be cautious and prepared for,” he said.

Goldman Sachs is the last of the country’s six megabanks to unveil results. Despite better-than-feared figures from some names in financials that gave stocks a boost Monday, the banking industry has reported a year-over-year earnings decline of 13% for the third-quarter, driven primarily by increased provisions for loan losses to prepare for a possible recession, according to FactSet Research. Wall Street's big banks are bellwethers of the U.S. economy and typically set the tone for the earnings season.

Elsewhere on the corporate front, shares of Carnival (CCL) bounced nearly 11% after Carnival Holdings, a subsidiary of the cruise operator, announced it will offer $1.25 billion of senior priority notes due 2028 and use proceeds to cover debt and other expenses.

Shares of Colgate-Palmolive Company (CL) were slightly higher, up closing up 1% after a report from CNBC that Daniel Loeb's Third Point has amassed a substantial stake in the company and sees value in a potential spinoff of its Hill's Pet Nutrition business and other brands.

Salesforce (CRM) shares also climbed more than 4% after activist investor Jeffrey Smith said his investment firm Starboard Value has engaged with the company's management on possible ways to bolster its valuation.

The moves on Tuesday cap a second straight positive day on Wall Street after all three major averages rallied in the previous session, with the S&P 500, Dow, and Nasdaq notching gains of 2.7%, 1.9%, and 3.4%, respectively.

“As we continue to remind you, this kind of outsized move is not on its own historically indicative of either a healthy market or an investable low,” DataTrek Research Co-Founder Jessica Rabe said in a note.

The number of days in which the S&P 500 gained more than 1% was 54 last year. Monday’s bounce brings the year-to-date tally of such gains to 100 – an important threshold the benchmark index has only reached seven other years in the past six decades: during the Saudi oil embargo, the 2000 Dotcom Bubble, the 2008 Global Financial Crisis, and 2020’s pandemic crash.

With inflows to stocks near a record last week, investors have been ramping up bets that a market bottom is in. But many Wall Street strategists have argued that the optimism is premature, particularly as what’s expected to be a murky earnings season gets underway.

Bank of America’s global fund manager survey out Tuesday morning found that 91% of respondents said corporate earnings are unlikely to rise 10% or more in the next year, the highest share of investors in the survey’s history – a sign of further downside for forward earnings-per-share estimates for the S&P 500 index.

As such, BofA analysts deemed any indication that the end of the equity rout is near merely “tasty morsels for another bear rally,” adding that the institution projects a "big low" and subsequent "big rally" in the first half of 2023, when the Federal Reserve is expected to change course and start cutting rates.

This month's survey “screams macro capitulation, investor capitulation, start of policy capitulation,” strategists led by Michael Hartnett wrote."

MY COMMENT

NO ONE wants to click on good news.......so the predictions are usually negative. I am NOT saying that the bear market is over.....but....at the level we hit last Friday I am saying that we have hit a soft bottom.

In the end it is likely that EARNINGS will be just fine.

TODAY.....was another BEAUTIFUL DAY for the markets. Again.....we are seeing the strength of the markets if the FED is not out there constantly brow-beating everyone.

 

HERE is another take on the markets today and EARNINGS.

Dow closes up more than 300 points as strong earnings boost stocks in choppy market

https://www.cnbc.com/2022/10/17/stock-futures-rise-after-nasdaq-notches-best-day-since-july-.html

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

"Stocks rose for a second straight session on Tuesday as strong corporate earnings reports helped extend a rally to start the week.

The Dow Jones Industrial Average gained 337.98 points, or 1.12%, to close at 30,523.80. The S&P 500 climbed 1.14% to 3,719.98. The Nasdaq Composite added 0.90%, finishing at 10,772.40. Those gains built on a bigger upside move from Monday, which saw the Nasdaq rise more than 3% for its best day since July.



CNBC
Goldman Sachs rose 2.3% to boost the Dow after strong trading results helped the investment bank beat quarterly earnings and revenue expectations. That report continued a strong stretch of bank earnings, including beats from Bank of America and Bank of New York Mellon on Monday, and the financial sector as a whole outperformed on Tuesday.

Lockheed Martin also rose 8.7% after its earnings per share topped estimates.

Fears of a recession and overly aggressive central banks have helped push the U.S. markets to their lows of the year in recent weeks, but the solid start to earnings season may signal that the economy is currently in better shape than feared.

“3Q and 4Q earnings should confirm fundamentals remain anchored in resilient labor market and Covid reopening. Equity valuation will likely remain tied to global central bank rhetoric and rates, which is turning incrementally less negative. As such, we see equities primed for upside into year-end on resilient 2H22 earnings, low equity positioning, very negative sentiment and given more reasonable valuation,” Dubravko Lakos-Bujas, JPMorgan’s head of global macro research, said in a note to clients.

“Next year, however, we expect a more challenging earnings backdrop relative to current expectations,” he added.

Trading was choppy on Tuesday, as many investors seem to lack confidence in the rally. The averages hit their highest level in early trading, with the Dow gaining more than 600 points, but lost ground as U.S. Treasury yields moved up. The Nasdaq briefly turned negative at two different points during the session.

Elsewhere, Salesforce rose 4.3% after activist Starboard Value LP revealed a stake in the software giant, making the stock the top performer in the Dow.

Market is ‘not out of the woods yet,’ Alli McCartney says

The Dow is on track to gain roughly 1,000 points for the first two days of this week, but many investment professionals are skeptical that this rally has staying power.

Alli McCartney, UBS Private Wealth Management, said on “Closing Bell” that it is not time yet for investors to jump back in to the market.

“Great that we have some buyers stepping in. I think getting some flow and some sustainability, or at least some support, in this market is really important and we will take it. But we do not think we are out of the woods yet,” McCartney said."

MY COMMENT

Above you have the....GOOD the BAD and the UGLY from the "experts". Not that I really care.....none of them seem to ever have any focus beyond a few days to a few months.

 

Tomorrow (Wednesday).....we will get earnings from TESLA. Curious to see how they do with the challenges they face in China.

 

Markets down to start the day today. I dont think there is much going on really......and.....not much behind the down open. I think there is a good chance we will see the markets move to the green about mid to late morning once we get clear of the open and the traders/sellers taking profits and trading off the past two UP days. At least.....so far....the market action today is MILD.

I heard one of the TV business people a little while ago saying that the markets were down today because of increased FEAR OF RECESSION. You have got to be kidding. We have two down quarters in a row, we have the past TEN MONTHS of ABSOLUTELY DISMAL markets.......and now suddenly.....people are fearing recession. If this is true or even if it is just the usual short term market excuse.......anyone that is suddenly selling or fearing a recession is......I hate to say it......a MORON.

We ARE already in a mild recession.....even though the recession is distorted like everything else post-economic-shut-down. We have just gone through 10 months of economic and market events that are historic going back over FORTY YEARS or more. And NOW suddenly......people are fearing recession. GIVE ME A BREAK.

 

YEP Roadtonowhere08......I NEVER underestimate the ability of the markets to discount earnings.....and go straight to the most negative reaction possible.........even if the particular report is a strong beat. There is ALWAYS something to fear monger.

 

You beat me to it Smokie....I was going to post an article about the PG earnings and comments. A perfect example of what is going on at the moment. The media is in general...... DOWNPLAYING the positive earnings that are coming out.

 

As to the markets today.....the way I see it there is ONE SINGLE issue that is impacting the short term markets. That issue is.....the Ten Year Treasury pushing toward 4.1% today. It is that simple.

 

Here is another little example of the earnings that are doing better than expected......as the media and some of the so called "experts" that they quote......try to talk it down.

Stock market news live updates: Stocks swing as investors pore over corporate earnings

https://finance.yahoo.com/news/stock-market-news-live-updates-october-19-2022-112856309.html

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

Stocks struggled for direction in back-and-forth trading Wednesday as a two-day rally spurred by a better-than-feared start to earnings season faltered.

The S&P 500 (^GSPC) fell 0.3% after the index gained more than 4% in the past two days, while the Dow Jones Industrial Average (^DJI) ticked up 30 points, or 0.1%. The technology-heavy Nasdaq Composite (^IXIC) was off by 0.4%.

Netflix (NFLX) was in the spotlight following a big earnings beat Tuesday afternoon that included 2.41 million new subscribers – a key metric watched by analysts – more than double Wall Street’s estimate of 1 million additions. Executives noted in the earnings statement that the company is “on a path to reaccelerate growth” after a challenging first half of the year. Shares surged 16%.

Elsewhere on the earnings front, shares of United Airlines Holdings (UAL) rose nearly 8% Wednesday morning after the airline reported higher-than-expected third-quarter earnings results due to strong travel demand and a profit forecast for the current quarter that exceeded Wall Street estimates.

Strong reports from Netflix and United Airlines add to a batch of upbeat corporate results rolled out earlier in the week from companies including Goldman Sachs (GS) and Johnson & Johnson (JNJ).

Although figures have so far come in better than anticipated, of companies that have reported results for Q3 to date, only 69% posted actual earnings per share above estimates – below the 5-year average of 77%, according to FactSet Research. And of those that topped estimates, earnings beats have come in 0.1% above estimates, far lower than the 5-year average of 8.7%.

Many Wall Street strategists have emphasized that valuations have yet to fully reflect the lower earnings that are consistent with the slowdown in economic growth underway, pointing to forward earnings projections that remain far too high.

“If, as we expect, Q3 earnings disappoint and forward earnings expectations are guided lower, we may yet see another down leg for equities,” Gargi Chaudhuri, head of iShares investment strategy at BlackRock said in a note. “Don’t be fooled or chase these bear market rallies.”

“The market will, of course, eventually bottom, but until the Fed pivots or earnings are properly marked down, we think that time has yet to arrive,” Chaudhuri said.

In commodities markets, oil pushed higher amid concerns that fresh European sanctions on Russia may further squeeze supply. The Biden administration is expected to announce a plan Wednesday to release 15 million barrels from U.S. strategic reserves to quell gas prices. West Texas Intermediate (WTI) crude futures were up roughly 1.5% to trade around $84 per barrel.

Across the Atlantic, the U.K. extended a volatile stretch as investors assessed a double-digit inflation print for September of 10.1%, putting a recent emergency move by the Bank of England to sell government bonds into question. The pound weakened and gilts moved lower."

MY COMMENT

FUNNY how the "69% above estimates" figure cited in this article NEVER changes in spite of the escalation of positive earnings reports coming in daily. Why is that? Well it is because of the FACT that the human brain sees the figure of "69%" as significantly less than using a figure of "70%"......even though there is in reality no difference between the two

This is an intentional play on negative psychology. Same thing with the use of the word "only" in the sentence above with the "69%".........even if something is positive like the 70% of earnings beats that we are seeing ( I refuse to play the 69% game).......it will be reported with the phrasing that......"only 69% of the earnings are beats".

I HATE these little psychological games that the media plays.

 

Those of us that ACTUALLY lived through the past bad times and remember them.........know that what is going on now is NOTHING.

It was tough, scary times': Baby-boomer financial experts who lived through the Great Inflation recount ways to ride out a recession

https://finance.yahoo.com/news/bear-down-frugal-baby-boomer-130000334.html

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

"It was a time of big hair, shoulder pads and the Cold War. But something often less thought of when feeling nostalgic about the ‘80s, was the interest rates that were high enough to make you dizzy.

“The interest rates started the decade around 20%,” says Brad Lyons, a certified financial planner and an investment manager at Wiser Wealth Management based in Georgia. “They had [raised] them dramatically in the late 70s… trying to deal with inflation.”

Lyons was in his early 20s at the start of the 1980s. And though today’s interest rates still look small in comparison, there’s a lot that can be learned from people who’ve been through it.

Consumer prices are 8.3% higher than they were a year ago, according to August’s inflation numbers. In July, it was 8.5%. Rates like these haven’t been seen in decades.

And people who remember the ridiculously high interest rates that followed the high inflation of the 70s say buckle down and be prudent, because we’re in for a long haul.

The Great Inflation of the 1970s and 80s

Experts have drawn parallels between the high inflation of five decades ago and what’s happening today.

Back then, there were several factors that played into it, low unemployment, the removal of the gold standard (the monetary system in which a currency is backed by gold), but energy prices pushed things to their limit.

In 1973 the price of oil nearly quadrupled when the Organization of the Petroleum Exporting Countries’ (OPEC) enforced an oil embargo on the west for supporting Israel in the Yom Kippur War. There was a series of knock-on effects that caused inflation and stagnation to swell. Then, the Iranian Revolution at the end of the decade sent oil prices surging again.

By 1980, inflation was at 14.5% and unemployment hit 7%. The Federal Reserve hiked its federal funds rate to a whopping 17% (for comparison, it’s currently at 2.25-2.5%).

The high interest rate made getting ahead almost impossible, says Mike Drak, who was a banker at the time. He remembers his mortgage rate was 17.5% at the time.

“Rates were going up, it was almost monthly, they were increasing,” Drak says. “So it seemed like it was something that that didn't seem like it was ever going to stop. And I remember saying at one point, ‘if I could ever find one day where I could find a mortgage rate for 10%, I'd be the happiest person in the world.”

Drak is the author of Victory Lap Retirement and Retirement Heaven or Hell: Which Will You Choose and a senior contributor at Booming Encore, a finance blog focused on the baby boomer generation.

Pay down debt

Debt at that time rose quickly, says Drak – on houses, on credit cards and on vehicles.

“It was tough, scary times. But we were lucky because we could work. So our wages kept increasing – not at the same pace – but it necessitated both people working to help pay down debt.”

One of the most important things you can do during times of high interest is pay down debt, he says. His goal then, was to pay down his mortgage, which wasn’t easy.

“You have to have a lot of discipline, you'd have to say I want to make lump sum additions annually on it, because the interest rate was crushing and I didn't want to be trapped.”

Brad Lyons suggests people stay away from credit card debt especially.

“Pay off debt as much as [you] can, to the extent that [you’re] able to do so,” he said.

Paying down debt, especially now, might sound daunting, but there are a couple different tactics you can use, the avalanche method and the snowball method.

Stay invested

As tempting as it is to take out money from your investment accounts, especially as you watch numbers take a dive, Lyons says don’t fall for that temptation.

“During periods where you have decreased valuations in the stock markets, nobody likes to see their valuations in their accounts go down, their retirement plan accounts that they have become accustomed to seeing going up and up and up year after year after year,” Lyons says. “And now they're seeing it go down some, but it's going to come back over time.”

For younger generations, he says, this is an opportunity to invest at a lower price, if you can afford it.

“What we're suggesting is that people remain invested, maintain their asset allocation that was designed in order to achieve their goals and objectives in the timeframes that they have set for themselves and continue to add to their investment portfolio through their retirement account savings.”



Dollar cost averaging is one of the most trusted strategies. It’s investing the same amount of money at regular intervals, regardless of what the market is doing.

"By taking advantage of lower valuations you’re effectively buying more shares at a lower price,” says Lyons.

Save your pennies

Although it can be hard when every trip to the grocery store is costing you more, and the price of everything is going up, both Drak and Lyons say saving is hugely important, and it can also be advantageous.

“As interest rates continue to rise, we will begin to see interest rates higher in our savings accounts, and newly issued fixed income securities,” says Lyons.

If you stick your money in a high yield savings account, it’s going to grow faster than it would have just a few months ago. And although that probably won’t keep pace with current inflation, it helps to build a safety net.

Get settled in for the long haul

The 1980s was a long decade. There were two recessions and it was years before inflation was under control and interest rates began to drop. And although our current situation is a little different, if there’s anything to be learned from the past, it’s that inflation and higher interest rates will be here for a while yet.

“Bear down,” Drak tells younger generations going through a similar financial landscape. “Try to work as hard as [you] can and make as much money as [you] can, and be as frugal as [you] can. That's the key. And there's no way around it. You have to be prudent. You have to pull back and you have to watch your pennies.”"

MY COMMENT

So....when you read the daily doom and gloom....realize that the current environment is a walk in the park compared to what some of us went through in the past. We invested through it all and came out way ahead. You can do the same NOW.

 

The siren call of MARKET TIMING. It all seems so logical and makes so much sense. It all seems so easy in theory.....why not do it. Well the main reason is IT DOES NOT WORK.....It is nearly IMPOSSIBLE to pull off. Yes....the academic research shows this but....people being human.....it is easy to give in to the temptation.

This Common Investing Strategy Is Almost Certain to Fail

https://finance.yahoo.com/news/youre-using-common-investing-tactic-210536391.html

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

"After a particularly strong 2021, the three major stock market indexes have gotten off to a rocky start in 2022. While the S&P 500 and Dow Jones Industrial Average are down 5.92% and 3.43% this year, respectively, the Nasdaq Composite Index has dropped more than 10% in 2022.

The recent volatility may have some investors reevaluating their strategies and considering how they can better time the market to capitalize on periods of growth and avoid inevitable downturns. This concept, known as market timing, sounds great in theory, but is virtually impossible to put into practice, according to one expert.

Bob French, a chartered financial analyst (CFA) and director of investment analysis for Retirement Research, found that market timing strategies are hypersensitive and can easily underperform compared to buy-and-hold tactics. Mistiming your exit or reentry into the market by even one month can drastically alter an investor’s long-term outcomes.

“Unless you can predict the future (or are substantially better at extrapolating trends than pretty much anyone else), there’s no way to tell how the markets will move in the short to medium term,” French wrote in a recent piece for Retirement Researcher. “As you can imagine, this makes it incredibly difficult to successfully time the markets.”

Benefits of Market Timing

To illustrate the potential benefits of being able to perfectly time the market, French calculated the hypothetical growth of just $1 invested in the S&P 500 in 1926. Had the money simply been left to grow over the next 90 year, the $1 would have been worth $5,799.53 in 2016.

But had an investor been able to perfectly time the market during those 90 years and avoid all market downturns, that $1 would have grown to an eye-popping $356 billion by 2016.

Yes, billion with a B.

This "perfect timing strategy" involves staying invested in the S&P 500 during months when the index produces a positive return. Otherwise, the investor holds his money in one-month Treasury Bills.

Of course, accurately predicting every market drop over a decades-long period is virtually impossible. But even if the investor was able to avoid the worst 5% of months during the 90-year stretch, his $1 would have grown to $7.5 million by 2016. In fact, by only missing the worst month during that time (September 1931), the hypothetical investor’s $1 would be worth 42% more than a buy-and-hold investor who rode all of the market’s ups and downs.

Why You Can’t Time Markets

Successfully timing the market would theoretically produce astronomical returns. But the problem remains: even minor miscalculations can upend an investor’s long-term plan.

Mistiming the market can mean forgoing the best months for growth. While a buy-and-hold investor would have nearly $5,800 in 2016 for every dollar invested in the S&P 500 nine decades earlier, an investor who missed out on the best month during that time span in an attempt to time the market would have 30% less.

The gap between the two strategies gets significantly larger when you miss out on multiple growth months. A hypothetical investor who exited the market and missed the best 5% of months between 1926 and 2016 would have only $2,937 for every dollar invested in the S&P 500 – nearly half as much as the buy-and-hold investor. And if timing the market means missing out on the best 10% of months, an investor would actually lose money. His $1 investment in 1926 would only be worth $0.31 in 2016.

Meanwhile, timing the market doesn’t just mean exiting at the right moment. It also requires reentering at the optimal time. In other words, you have to be right twice. If our hypothetical investor mistimed either his exit or reentry by just one month, he would still have a large sum by 2016. However, his return would be a mere fraction of what the perfect timing strategy would produce.

“In the best of these examples, we only captured 0.022% of the perfect timing strategy. In other words, these strategies are hypersensitive to any errors,” French wrote. “Even when you are almost perfect, you lose nearly all of the benefit. To hammer this home one more time, no one can actually be this good. Timing the market is pure chance, which I am not willing to bet my portfolio on.”

Bottom Line

Timing the market to remain invested in the stock markets only during periods of growth is virtually impossible to achieve. While this strategy would hypothetically produce astronomical returns, minor miscalculations like mistiming your exit by just one month can significantly reduce the potential benefits. Bob French of Retirement Researcher writes that you’re better off building a portfolio based on your risk tolerance, and remaining disciplined throughout different market cycles.

Tips for New Investors

• A financial advisor can be a valuable asset, especially for a new investor. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  
  
• There’s a saying in investing: it’s about time in the market, not timing the market. Rather than trying to anticipate when stocks will go up and down, methodically investing over a long period of time is typically a safer and more effective way to build wealth. A person who begins contributing just $300 per month to her 401(k) (generating an average annual return of 7%) would have nearly $1 million by the time they are 62."

MY COMMENT

I prefer....even as a lifelong investor.....to go with the probabilities. Those PROBABILITIES are strongly in my favor if I am fully invested all the time. As a market timer......based on the academic research....my PROBABILITY of beating the long term investing strategy are MINUSCULE.

Like many things in life......the one that seems EASY and tempting.....is a trap.