The Long Term Investor

It is impossible to ignore the SpaceX launch today. An amazing piece of engineering and business. Elon Musk is NOW.....and has been for a while..... the USA space program. What an amazing Visionary person......plus......he can do more than think or visualize.....he is able to actually PRODUCE in the manufacturing world. Cars, satellites, rockets, boring machines, etc, etc, etc.

Think of what he achieves versus some founder that just puts out a piece of software or creates a software company. The complexity of what Musk achieves DWARFS them all.

Watching the coverage of the launch today I was struck by one thing........the crazy, wild, cheering crowd of employees, friends, and guests at the launch. I have not seen such heartfelt and REAL response from company employees in a long, long, time. That was real emotion, pride, and enthusiasm.......the crowd was actually going wild. It was well DESERVED.

 

I am not surprised by the open today. Fairly typical......all the averages .....minimal to moderate RED.

Obviously the open is not relevant to how we close. Here is the markets today.....make that the short term one day markets.

Stocks sink, Tesla plummets 8%:

https://finance.yahoo.com/news/stock-market-news-today-live-updates-april-20-115343246.html

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

"U.S. stocks traded lower in early trading Thursday morning, as weaker-than-expected quarterly profit at Tesla (TSLA) weighed on electric-vehicle stocks.

The S&P 500 (^GSPC) fell 0.74% at the open, while the Dow Jones Industrial Average (^DJI) dropped nearly 160 points, or 0.47%. The technology-heavy Nasdaq Composite (^IXIC) fell nearly 1%.

Tesla shares sank more than 8% at the open after the company reported first-quarter earnings on Wednesday that fell short of Wall Street’s expectations. Tesla’s recent price cuts weighed on profits as the electric-vehicle maker reported quarterly gross margins of 19.3%, while Wall Street analysts had expected 20.7%.

Shares of traditional automakers making the push into EVs followed Tesla lower with both Ford (F) and General Motors (GM) falling more than 4%. EV focused companies, Rivian (RIVN) and NIO (NIO) also saw declines as Rivian shares fell nearly 5%.

Shares of IBM (IBM) rose more than 2.5% in early trading as the company reported adjusted earnings per share of $1.36 against a Street estimate of $1.25.

American Express (AXP) shares sank more than six percent as the company's missed Wall Street estimates for earnings per share. Though, American Express CEO Stephen Squeri told Yahoo Finance that nothing in the quarter "went really unexpected."

The major averages closed Wednesday largely flat as investors digested corporate earnings from Netflix (NFLX) and Morgan Stanley (MS), among other companies. The Federal Reserve's most recent Beige Book report showed credit conditions tightened in the month following Silicon Valley Bank's collapse.

Oil futures traded lower on Thursday with West Texas Intermediate (CL=F) and Brent (BZ=F) falling more than 2%. Brent Crude has now traded lower in three of the last four trading sessions, with prices dropping below $82 a barrel.

Economic data is also in focus on Thursday morning as weekly jobless claims came in higher than expected. The report said 245,000 jobless claims were filed. Economists surveyed by Bloomberg had been expecting 240,000 claims. Meanwhile, existing home sales retreated 2.4% in March from the month prior. The annualized rate of 4.44 million fell short of the 4.5 million expected by economists, according to Bloomberg data."

MY COMMENT

I am struck by how RIDICULOUS the above data comparisons are.

245,000 jobless claims versus 240,00 expected
Tesla gross margin of 19.3% versus 20.7 expected.
Home sales 4.44 million versus 4.5 million expected.

In all of this data we are talking about HUGE NUMBERS and tiny to microscopic differences between the REAL and the fantasy numbers put up by the armchair experts.

In addition the financial media and others pick and choose what number to use for the comparisons. That is why we often see articles that are directly contradictory......one will claim an earnings BEAT and the other will claim an earnings MISS. Why? Because there are many different....."expectation numbers".....to choose from. There is NO one single number that is the accepted standard. SO.......if you have a BIAS or an AGENDA......you can push it by the number that you use for the "expected result".

Good for financial and other media DRAMA.......with a little bit of fear mongering thrown in for good measure.......but for REAL investors that are NOT day traders......a JOKE.

This is why it is CRITICAL for any investor to look at the REAL numbers......the reasons behind the numbers......the path of the company in it's business area.......a comparison to other companies and their numbers in the same business area....the company strategy that is behind the numbers.....etc, etc, etc. A comparison to some obscure experts fantasy number......IS MEANINGLESS.

In other words you have to do your own thinking.......if you leave it to others to tell you what to think about your holdings and your businesses........you will usually be eating a big bunch of BALONEY. NEVER.......trust anyone's numbers or opinions.

 

Right, I agree.....TomB16. the launch ultimately failed.......but for a FIRST launch....it was an overwhelming success. Can you imagine if Elon Musk did not exist......our country would basically have NO space program.

 

I am also struck by how skimpy the daily market article above is. It is TRULY a NOTHING day. There is nothing happening of any substance in the financial world other than EARNINGS.

 

EXACTLY....TomB16. In fact....are they the ONLY EV company that is profitable? I have not looked but I would guess so.

BUT.....that is what I like about MUSK......he just powers on and ignores all the BS around him.

For disclosure: I will mention again that my investment in TSLA is extremely small.......ONLY.....about 1.2% of my entire portfolio. I dont care to put more than that into the company. I do NOT like auto companies.....but....I make a small exception for TSLA. I am willing to hold a very small stake in the company because I like the founder.....how he does business....and....the FACT that at this point they are basically the ONLY successful EV company.

I am NOT advocating for this stock....especially for anyone to bet the farm. BUT.....I have no issue owning a small amount.

 

As to your latest post TomB16.......I see it two ways......the financial and other media is usually operating out of very shallow ignorance and self absorbed BIAS. At the same time the "professionals" in their use of the media and their PR releases.....are MANIPULATING the short term markets. One hand washes the other.

I dont TRUST anything to do with the short term day to day markets. Combine everything with the AI trading platforms that are also manipulating and creating markets conditions from the minute to minute news feed......and....you would have to be INSANE to trust the daily stuff.

As to the FED......yep....you see liquidity issues so you CLAMP down on liquidity. MORONS. Kind of like the article that I saw earlier today that was a little too political for me to post on here........Federal agencies ADVOCATING charging high down payment and high credit score borrowers a higher mortgage rate than low down payment and poor credit score borrowers.......turning the entire credit process upside down. IDIOCY.

This sort of stuff turns everything on it's head. BLACK is WHITE......and UP is DOWN.

 

BOTTOM LINE....for any investor.....keep your FOCUS on the long term.

LOL......love Varney in the background.....playing Ike and Tina Turner....."I want to take you higher".....when mentioning the rocket launch and the markets.

I saw Ike and Tina Turner in 1969 at a huge festival......as an audience member. Thirty years later a good musical friend that I played with in multiple bands....mentioned that he had played in that same festival. He said they had large tents set up behind the stage as dressing rooms for the bands. The tent they were in was next to Ike and Tina Turner. Ike and Tina got into a HUGE fight....screaming and yelling..... and it ended with them trashing their tent...... collapsing it on everyone that was inside.

 

Markets are doing OK at the moment although still red......I see a number of BIG CAP earnings BEATS........PM, AT&T, AmEx (disrespected results).

Also the usual misses.....as the early focus on the banks is nearly over. Next week we move into the GUTS of the earnings reports.

PLUS.........YEA......we are soon (April 22) entering the FED blackout period. Those time periods are so nice......freedom for a short time from all the constant blather.

https://marketrebellion.com/news/trading-insights/what-is-a-fed-blackout-2023-fed-blackout-schedule/

 

Since this is a relatively free of politics article on this issue........and......a clear business issue I will post this.


Real estate expert shreds Biden rule punishing homebuyers with good credit: 'It's madness'
A rule forcing good-credit home buyers to subsidize loans to higher-risk borrowers set to go in effect May 1

https://www.foxbusiness.com/real-es...rule-punishing-homebuyers-good-credit-madness

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

"A new rule from the Biden administration will have good-credit home buyers paying more monthly to subsidize costs for high-risk buyers.

The changes, which will begin in May, have many experts worried about the impacts both on buyers and the economy.

Real estate expert and Madison Ventures+ managing director Mitch Roschelle unpacked the "madness" on "Varney & Co" Thursday.

"It's bizarro world," he said. "That fee that's charged, PMI, which is personal mortgage insurance, that fee that FHA charges is intended to punish those with lower credit scores and riskier loans, so basically level the playing field from a risk perspective. Well, what are we doing? We're doing the opposite."

On "Mornings with Maria" earlier Strategic Wealth Partners CEO Mark Tepper also slammed the measure arguing that it is "socialism for homeowners."

"We mentioned the student loan issue. Cab drivers who never went to college are subsidizing that student loan debt, and in this situation, this Biden administration more and more often, they are making decisions to reward bad decisions," the financial expert said.

Experts believe that borrowers with a credit score of about 680 would pay around $40 more per month on a $400,000 mortgage under rules from the Federal Housing Finance Agency that go into effect May 1 – costs that will help subsidize people with lower credit ratings also looking for a mortgage, according to a Washington Times report Tuesday.

"If you have a high credit score, and 680 is a good credit score, you have to pay more. And we're talking about real money. This could be $100 a month more depending on the size of your loan. So it makes no sense," Roschelle said. "And by the way, this isn't about first-time homebuyers. There's nothing in this rule that says it applies to first-time homebuyers. It applies to anybody borrowing money that's insured by FHA. It's madness."

The Federal Housing Finance Agency, which oversees federally backed home mortgage companies Fannie Mae and Freddie Mac, has long sought to give consumers more affordable housing options.

Under the new rules, consumers with lower credit ratings and less money for a down payment would qualify for better mortgage rates than they otherwise would have.

"That's not the way you grow as a country, as an economy, by essentially saying, hey, if you spent recklessly, you lived above your means and you stopped making your payments on time, have no fear. Someone who's done it the right way is going to pay for you. That's not what capitalism is all about, and it puts us in a situation where there's no consequences when you make bad decisions," Tepper added.

Federal Housing Finance Agency Director Sandra Thompson said the new rules are designed to "increase pricing support for purchase borrowers limited by income or by wealth" and come with "minimal" fee changes.

While Biden's rule change will add another headache for homebuyers, Roschelle conceded complying with the rules, regulations and various documentation when applying for a mortgage is already "brutal."

"They say it's a financial colonoscopy and it's brutal," Roschelle said. "And guess what, if you're borrowing from your local community banks that's under tremendous pressure, it's even harder."

Beyond frustration with the rule, experts are concerned this will further exacerbate the difficult housing market.

Roschelle explained the real estate market is slumping and Biden's rule is "going to slow it more."

"We're down from selling 6 million houses on an annualized basis to 4.4. So realtors are finding it really hard to make a living. But, you know, the supply of homes is still alarmingly low. And on the price side, homes are $100,000 more expensive today than they were in February of 2020. So we still have that affordability problem."

Tepper also said the "real estate market [is] basically at a standstill because sellers… don't want to lower their price because they know what their neighbor sold for nine months ago."

"Buyers don't have the buying power they used to have. So transactions aren't happening. You throw in the fact that existing home inventory is at an all-time low, and then we looked at recent data for building permits and housing starts. There aren't building new homes either," he continued."

MY COMMENT

OK.......whatever. GLAD I am a free and clear owner. In many high price areas this will add $100 to $200 to a family mortgage.

 

I am very surprised today. I never looked at my account ALL DAY....since the day seemed so overwhelmingly negative.

I was in the RED.......but much less than I expected. A moderate loss.....on a day that I was expecting a big one. I even somehow managed to beat the SP500 today by a.....MASSIVE AMOUNT.......0.01%.

I was helped by my three positive holdings....COST, HD, and GOOGL. I was also helped by the SMALL percentage of my account that is TSLA.

 

After today the SP500 is negative for the week by a small amount. Tomorrow will probably decide the week.......red or green?

Next week is my largest earnings week. I will have MSFT and GOOGL on Tuesday........and.....AMZN and HON on Thursday.

At that point I will be done with five of my ten earnings reports. Four of the remaining five will filter in over the next.....four weeks.....AAPL, HD, NVDA, and COST.

NKE......I dont know whether to call it the last one.......or the first one of the next round of earnings......will happen on June 26.

 

Here is the close today.

Nasdaq closes lower Thursday, dragged by Tesla shares

https://www.cnbc.com/2023/04/19/stock-market-today-live-updates.html

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

"Stocks dropped Thursday as Wall Street reacted to a mixed bag of corporate earnings, including disappointing results from Tesla. Investors also assessed fresh data that signaled a contracting economy.

The Nasdaq Composite slipped 0.8% to settle at 12,059.56. The Dow Jones Industrial Average lost 110.39 points, or 0.33%, to close at 33,786.62, while the S&P 500 dropped 0.6% to finish at 4,129.79.

All the major averages are on track for a week of losses, and the worst weekly performances for the Dow and the S&P 500 since March. The S&P is down about 0.2%, while the Nasdaq has lost roughly 0.5%. The Dow is down about 0.3% and on pace to snap a four-week win streak.

“Though, so far, it seems that equities have rallied, sentiment has been okay, and you’re seeing equity volatility continue to grind lower, the story from corporates is that margins are under pressure and we continue to see that decline,” said Anna Han, equity strategist at Wells Fargo Securities.

The mounting concern over downward pressure on profit margins hurt Tesla shares as the electric vehicle maker cut prices on some of its cars during the recent quarterly period. The company posted a more than 20% decline in net income from a year ago after the bell Wednesday. Shares fell nearly 10%.

Other technology stocks showed signs of weakness. Nvidia , Microsoft, Meta Platforms and Apple all finished lower. Seagate Technology shares lost more than 9% after missing estimates and issuing disappointing guidance, citing weak demand.

Energy marked another area of market weakness as oil prices declined more than 2%. Some laggards included APA, Marathon Oil and Phillips 66.

Disappointing results from both AT&T and American Express did little to alleviate some of the market concern. The payments company, offering another look at the health of the U.S. consumer, lost 1% as earnings per share fell short of estimates. AT&T fell 10.4% on slowing subscriber growth fears.

So far this earnings season, about 16% of companies in the S&P 500 have reported results, with about 76% beating EPS expectations, according to FactSet data as of Thursday. Many on Wall Street this season are bracing for an earnings decline. A general lack of profit forecasts, however, has begun to concern some investors.

The real test may come next week as earnings season ramps up with a slate of results from big technology companies, said Art Hogan, chief market strategist at B. Riley Financial.

“If we see a lot of degradation over the course of next week because of guidance ... that might cause a multiple contraction and we might see some of the S&P 500 sell off,” he said. “But that just hasn’t been the case yet.”

He added that despite the incoming economic data, slowdown fears and a banking crisis that rattled the broader financial sector last month, markets have traded sideways in recent weeks.

“We haven’t found something that’s breaking the back in this market and we’ve given it plenty of chances,” Hogan said.

Elsewhere, a raft of fresh of economic data seemed to signal a contracting economy and the potential for a much bigger slowdown than anticipated. The Philadelphia Fed manufacturing index fell more than expected, to its lowest level since May 2020, while jobless claims rose over the previous week.

Thursday also marked an action-packed day for central bank speakers ahead of the Fed’s May policy meeting. That included Cleveland Fed President Loretta Mester, who said that higher interest rates likely loom ahead."

MY COMMENT

SO....a slowing or contracting economy according to the above. ACTUALLY.....a good signal that the FED will stop hiking rates after the next one......and....perhaps two hikes. This is good news for investors. Although it bounces back and forth from the good news column to bad news column...... depending on the day. Why I have no idea.......it is IRRATIONAL.

ALSO....earnings are doing JUST FINE. With 16% of companies in the S&P 500 having reported results, about 76% are beating EPS expectations, according to FactSet data as of Thursday. This is right on track with what would be expected for a NORMAL and SUCCESSFUL earnings reporting season. So we have about 84% of companies left to report now. So far......another BUMMER......for those pushing for disastrous earnings.

ANOTHER GREAT BIG SHOW TOMORROW.......in the markets.