I like this little article.........of course......I agree with it and more importantly it agrees with my view. Why Are Investors So Scared? https://allstarcharts.com/why-are-investors-so-scared/ (BOLD is my opinion OR what I consider important content) "You want to talk about trends? The biggest trend I see is that stocks keep going up in price, but investors are more pessimistic than ever. I don’t understand… What are people so angry about? Why are they so scared? Barron’s latest Big Money poll shows that out of the 130 managers polled only 6% of their clients were bullish. lol 6%? This is comes after less than 1% of J.P. Morgan’s investors think the S&P500 closes higher this year. What’s with these people? Stock prices keep moving higher. That’s what stocks do in bull markets – they go up. This is officially Month #11 of this bull market, and you can see here how Berkshire Hathaway is acting accordingly, closing the week at the highest levels in almost a year: And all this while the United States continues to underperform. Remember, it’s not the bull market’s fault that your country is underperforming. Look at the rest of Developed Markets already making new 52-week highs as the U.S. gets left behind: $EFA is loaded with Japanese and European Equities. We regularly talk about Europe around here as Denmark, France, UK and others have already been making new all-time highs. And now here’s the Japan ETF also making new all-time highs: This is called “Breadth Expansion”. More and more stocks, and more and more countries going up. This is mathematical evidence of accumulation, not distribution. Could we now, all of a sudden, start to see massive distribution and a new bear market kick off this week? Absolutely. But over the past 10+ months have the majority of stocks been going up or have the majority of stocks been going down? The answer is up. So is this just a 10-month long “bear market rally”, or has this been a bull market all along, like I’ve continually said it’s been? Either way, stocks have been going up, not down. So who cares what you call it." MY COMMENT Seems obvious to me. BUT.....I am apparently part of a very small minority.
Yes, we have been quietly, almost sneaky been moving up. I can also relate to the part above about the international side of it. One of the funds I hold has been outperforming for awhile now, which has been a pleasant surprise.
YEP......we are steadily moving UP. It is a BULL MARKET and has been since July of 2022. BUT....today....never mind. We are pretty much locked in to a negative market today as we wait for the BIG TECH earnings this week. That is to be expected. AND....with nothing else impacting the markets in a negative way today....it could turn on a dime as the day progresses. One thing is sure.......at least by my non-scientific count.....companies are racking up EARNINGS BEATS. As I went through many articles today I saw BEAT after BEAT. The big consumer product companies are on fire. Coke, pepsi, etc, etc, etc. It is starting to become a GREAT earnings report.
For home buyers and home owners here si the news of the day. Home prices rose in February, breaking 7-month streak of declines https://finance.yahoo.com/news/home...ing-7-month-streak-of-declines-131504095.html MY COMMENT Some good news here for current home owners. We continue with the slim inventory. AND....of course......when it comes to real property it is as always....local, local, local,.........and location, location, location. the single most important criteria for any buyer in any location........buy the best possible neighborhood with the best possible schools.
As an owner of the stocks cited in this little article it is nice to get some confirmation. Investing legend Peter Lynch on the investments he regrets not making in recent years https://www.cnbc.com/2023/04/25/inv...ts-he-regrets-not-making-in-recent-years.html (BOLD is my opinion OR what I consider important content) "Legendary investor Peter Lynch has one of the best investing records under his belt, but he still has regrets for not buying into some of the biggest tech companies in recent years. The former Fidelity Magellan fund manager revealed Tuesday that he wished he hadn’t missed out on the explosive growth in Apple. “Apple was not that hard to understand. I mean, how dumb was I?” Lynch, vice chairman of Fidelity Management & Research, said on CNBC’s “Squawk Box.” Apple has a “nice balance sheet. I should have done some work on Apple ... it’s not a complicated company.” Lynch recounted how his daughter had bought an iPod for $250 at the time and how he recalled thinking Apple was making a high margin on it. Yet he didn’t buy the stock. Lynch, 79, acknowledged that Warren Buffett saw Apple’s potential and capitalized on it. The “Oracle of Omaha” had shied away from tech stocks for decades, claiming they were outside of his expertise. But under the influence of his investing lieutenants, he bought into Apple in 2016 and made it his single biggest holding in his portfolio. Apple Inc RT Quote | Last NYSE, VOL From CTA | USD 165.41+0.07 (+0.05%) Last | 11:10 AM EDT Apple stock - long term The tech giant turned out to be one of Buffett’s most successful bets in his career, making him more than $100 billion on paper in just a few years. Buffett still views Apple as a consumer product company for its loyal customer base and strong brand effect. Other than Apple, Lynch expressed regret for not buying into chip giant Nvidia, one of the biggest gainers in the semiconductor space in the past few years and a big enabler in artificial intelligence. “Nvidia has been a huge stock I wish I could pronounce it,” Lynch joked. NVIDIA Corp RT Quote | Last NASDAQ LS, VOL From CTA | USD 266.41-4.01 (-1.48%) Last | 11:10 AM EDT Nvidia long term Lynch made his name for managing Fidelity’s Magellan Fund from 1977 to 1990. Under his 13-year management, the fund earned an annualized return of 29.2%, consistently more than doubling the S&P 500′s performance. He also increased Magellan’s assets under management from $20 million to $14 billion during his tenure. The outstanding record made Lynch a renowned figure on Wall Street, who later wrote investment books including “One Up on Wall Street.”" MY COMMENT I owned MAGELLAN FUND till the very end when Lynch left the fund. He racked up arguably the greatest record EVER while running the fund. He achieved what he did by using BASIC investing concepts combining fundamental research with very astute observations of society, consumers, and business. The above is easy hindsight analysis....but....so true. I believe these two companies are STILL great buys for any investor. They are also mainstays for anyone that owns the SP500 Index. Great companies with great products and most importantly great management.
Currently kind of on a downhill skid today it appears. I guess the beatings will continue until morale has improved...LOL.
YES......an IRRATIONAL MARKET FREAKOUT today. "IMF".......an investing term of art. EVERY one of my stocks is down today.
In conjunction with the above we are seeing a nine month low in consumer confidence. Typical. US consumer confidence hits nine-month low; housing market bottoming out https://finance.yahoo.com/news/us-consumer-confidence-hits-nine-171225606.html (BOLD is my opinion OR what i consider important content) "WASHINGTON (Reuters) - U.S. consumer confidence dropped to a nine-month low in April as worries about the future mounted, further heightening the risk that the economy could fall into recession this year. The consumer confidence survey from the Conference Board on Tuesday also suggested that Americans were getting ready to hunker down as dark clouds gather, with the share of them planning to buy major household appliances over the next six months falling to the lowest level since 2011. Vacations were also not in the cards for many. Consumers have shown resilience despite high inflation and a rise in interest rates, keeping the economy afloat, thanks to a strong labor market. The tide could be turning as the effects of the Federal Reserve's fastest rate hiking campaign since the 1980s to tame inflation begin to have a broader impact. Consumers are also growing more sensitive to higher prices. "Rates have been on the rise for over a year, and we're seeing the effects," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. "Despite a still-tight jobs market, which is still a good thing, sticky inflation does have its consequences." The Conference Board said its consumer confidence index fell to 101.3, the lowest reading since July 2022, from 104.0 in March. Economists polled by Reuters had expected the index to be unchanged at 104.0 in April. The drop reflected a deterioration in expectations for consumers under 55 years and households earning $50,000 and over annually, suggesting a broadening in concerns about the economy beyond low income households. Though consumers' assessment of current conditions improved, their short-term outlook deteriorated. The short-term outlook measure has dropped below the level associated with a recession in the next year in 13 of the last 14 months. The risks of a downturn have risen following the collapse of two regional U.S. banks in March, which tightened credit conditions. A looming fight to increase the federal government's $31.4 trillion borrowing cap also poses a threat to the economy. Consumers remained upbeat on the labor market, with the share of them viewing jobs as "plentiful" rising, while the proportion of those saying jobs were "hard to get" dipped. The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, rose to 37.3 from 36.5 in March, consistent with a tight labor market. This measure correlates to the unemployment rate from the U.S. Labor Department. The jobless rate was 3.5% in March. U.S. stocks were trading lower. The dollar rose against a basket of currencies. U.S. Treasury yields fell. BUYING PLANS WEAKEN Consumers' 12-month inflation expectations slipped to 6.2% from 6.3% last month. The share of those planning to buy household appliances over the next six months dropped to 41%, the smallest since September 2011, from 44.8 in March. The proportion planning to buy motor vehicles was the smallest in nine months. The share of those planning to go on vacation was the smallest since last June. Fewer consumers intended to purchase a home. Some economists, however, cautioned against reading too much into the drop in buying plans. "Take consumer purchase plans with a grain of salt," said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina. "This (drop in plans to take a vacation) stands in contrast to reports of record-long wait times for passport application processing and airline ticket bookings that are already close to filling up for the summer." That skepticism also extended to home purchase plans. A separate report from the Commerce Department on Tuesday showed new home sales surged 9.6% to a seasonally adjusted annual rate of 683,000 units in March, the highest level since March 2022. New home sales are counted at the signing of a contract, making them a leading indicator of the housing market, though they can be volatile on a month-to-month basis. Buyers have been taking advantage of any dip in mortgage rates to purchase homes. The average rate on the popular 30-year mortgage, which hit a peak of 7.03% in late 2022, was mostly lower in March, according to data from mortgage finance agency Freddie Mac. (Graphic: New home sales - https://www.reuters.com/graphics/USA-STOCKS/egpbyqoekvq/nhs.png) Signs that the housing market was stabilizing at lower levels were reinforced by other data on Tuesday showing single-family home prices increased in February after seven straight monthly declines. The S&P CoreLogic Case-Shiller national home price index, covering all nine U.S. census divisions, rose 0.2% month-on-month in February after adjusting for seasonal fluctuations. That followed a 0.2% fall in January. "The housing markets continue to vary across regions and price tiers, but lower mortgage rates and low inventories have been helpful in providing the floor for prices in markets where prices seemed to have nosedived following mortgage rate surge," said Selma Hepp, chief economist at CoreLogic. "Home prices nationally have bottomed out."" MY COMMENT Consumer confidence....perhaps the greatest hindsight indicator that is totally divorced from the current and near future REALITY. this is probably better thought of as an indicator of......media negativity. We are constantly on a daily basis being reminded of the coming recession. Although....reality is that there is really not much of an indication of a recession at the moment. Reminds me of what we are constantly told about stock earnings. I see this as a GREAT lagging contrary-indicator. A sure sign of a massive BULL MARKET.
A nice SOLID LOSS for me today. Every stock down...no exceptions. PLUS....a loss to the SP500 by .44%. Just a worthless day as we wait for the dreaded BIG TECH earnings. It is actually pretty funny how worked up the markets get over the earnings that are to come from the most dominant companies in the world. There is little to no doubt about the superiority of these companies regardless of earnings. there is also little doubt that regardless of the big tech earnings.....earnings reports have been GOLDEN this time around.
Of course......a BEAT for MSFT. Microsoft Q3 earnings: Cloud strength powers beat on revenue and EPS https://finance.yahoo.com/news/micr...powers-beat-on-revenue-and-eps-200610420.html (BOLD is my opinion OR what I consider important content) "Microsoft (MSFT) reported its fiscal third quarter earnings on Tuesday, beating Wall Street's expectations, as the company's cloud services revenue jumped 27% year-over-year. Here are the most important numbers from the report compared to what analysts were expecting, as compiled by Bloomberg. Revenue: $52.9 billion vs. $51.1 billion expected Adj. EPS: $2.45 vs. $2.23 expected Productivity and Business processes: $17.5 billion vs. $17.1 billion expected Intelligent Cloud: $22.1 billion vs. $21.9 billion expected More Personal Computing: $13.3 billion vs. $12.3 billion expected Shares of Microsoft were up more than 4% following the announcement. Microsoft helped kick off Big Tech's AI obsession with its multi-year, multi-billion dollar investment in ChatGPT developer OpenAI. The Windows maker has since implemented versions of OpenAI's technology in its Edge browser, Bing search engine, Microsoft 365 productivity software, and cybersecurity offerings. That's given Microsoft a perceived leadership position in the AI wars, leaving rival Alphabet's Google (GOOG, GOOGL) playing catch up. Amazon (AMZN), meanwhile, is working to bring generative AI to its services, while Facebook parent Meta (META) is cobbling together teams to kick start its own efforts. And while Microsoft’s stock has seemingly benefited from both the AI hype and overall market rebound after a rough 2022, the company's main growth driver continues to be its cloud computing efforts in its Azure unit. But that growth has slowed markedly over the last year. In Q2 2022, Microsoft reported year-over-year server products and cloud services revenue growth touched 29%. But as of Q2 2023, revenue growth fell to 20% when including the impact of currency fluctuations. Part of the reason for this decline was large customers pulling back on spending as higher interest rates challenged global growth. Microsoft is also contending with flagging PC sales, as demand from consumers and business customers falls from pandemic-era highs." MY COMMENT A HUGE BEAT in every single category above. I like how the article can not resist cranking up the negativity in the last couple of paragraphs.....WTF. These earnings are a dagger to the heart of the negative analysts that predicted dismal earnings.
And now for GOOGL......yes.....you already know the story. Alphabet earnings: First quarter results top estimates, announces $70B stock buyback https://finance.yahoo.com/news/alph...es-announces-70b-stock-buyback-200904941.html (BOLD is my opinion OR what I consider important content) "Alphabet (GOOG, GOOGL) reported first quarter earnings on Tuesday that showed revenue and EPS beats, while authorizing a massive $70 billion stock buyback. The parent company of Google and YouTube reported a number of key revenue beats, especially in its advertising segments – a notable win for the company, which has previously struggled amid the sector-wide digital ad slowdown of the last year. Here are the key numbers from Alphabet's earnings today, compared to analysts' estimates compiled by Bloomberg: Revenue: $69.7 billionactual versus $68.96 billion expected EPS: $1.17 actual versus $1.08 expected Google Ad Revenue: $54.55 billion actual versus $53.75 billion expected YouTube Ad Revenue: $6.69 billion actual versus $6.64 billion expected Google Cloud also became profitable for the first time." MY COMMENT Just like MSFT......a BEAT for GOOGLE in every single category above. Plus their coud segment became profitable for the first time. The advertising numbers were a HUGE BEAT.....there has been much media negativity about advertising models in tech lately. that might be a real story-line for poor META......but not for a real GIANT of the tech world like GOOGL. BRAVO......and in your face Mr Stock Market.
HERE are the markets today.....not that this story about the close has any relevance now that earnings have come in as BEATS.....perhaps borderline historic BEATS....for MSFT and GOOGL. Stocks close lower Tuesday as investors’ bank fears return, Dow sheds more than 300 points https://www.cnbc.com/2023/04/24/stock-market-today-live-updates.html MY COMMENT No need to even discuss this....it was made entirely irrelevant by the after hours earnings reported above.
Here is more info for anyone that wants to.....GLOAT. Alphabet reports revenue beat for first quarter https://www.cnbc.com/2023/04/25/alphabet-googl-q1-earnings-report-2023.html Microsoft earnings beat as cloud growth comes in better than feared https://www.cnbc.com/2023/04/25/microsoft-msft-q3-earnings-report-2023.html Google’s cloud business turns profitable for the first time on record https://www.cnbc.com/2023/04/25/goo...-profitable-for-the-first-time-on-record.html Alphabet authorizes $70 billion buyback https://www.cnbc.com/2023/04/25/google-authorizes-70-billion-buyback.html Alphabet stock rises following Q1 earnings beat, revenue beat across business segments https://finance.yahoo.com/video/alphabet-stock-rises-following-q1-202203935.html Microsoft stock boosted on Q3 earnings beat, cloud revenue growth https://finance.yahoo.com/video/microsoft-stock-boosted-q3-earnings-201650208.html
You know as I was posting the various stories above....something kept running through my mind. If you went back though this thread....no I am not recommending it.......and added up my calls for the last EIGHT earnings reporting time periods......I am probably totally KICKING ASS on all the "experts" and their predictions. Here I am a small time anonymous stock market poster on a small (but magnificent) message board......with no real expertise.......no computing power or team of analysts....no big AI system, etc, etc.. Just posting from the seat of my pants a stream of consciousness line of stock market blather every day. YET......if my memory is right I am killing the "experts" and the financial media.....when it comes to calling the past EIGHT earnings. How can this be? Well one thing I have no preconceived BIAS in favor of the media line and/or the New York, Wall Street, story-line. It simply defies all probability that "those people" can be so totally wrong time after time. It makes me wonder if their incorrect predictions are INTENTIONAL. Are they putting this information out there to drive short term trading results? Or perhaps some other reason. OR.....perhaps the people that everyone thinks are the EXPERTS.....are simply MORONS. Dont get me started on that.....
Just wait and see....by the time the markets open tomorrow....the "experts" will be claiming that they predicted the above all along. In addition they will quickly PIVOT to a new story-line about how none of this matters and that the economy is in BIG TROUBLE. You can bet they are madly searching for anything that can use to claim that the MSFT and GOOGL earnings are really NOT that good. I would put the odds at about 50/50 that one or both stocks will be down tomorrow. That is what is fun about being an investor and the markets.....it makes you LAUGH.....if you have the ability to step back and look at the foolishness of it all. With our money on the line.....it is difficult for people to step back and see how funny much of this stuff is. It is all a GIANT lesson in human nature....herd behavior.....clique behavior.....human emotion......etc, etc, etc. I love it. In a lot of ways it is just like being back in High School. (But being able to stay above it all and simply observe all the drama and self absorbed narcissism and self-doubt that seems so important when you are a teen in High School)
This above. And fear, negativity, and pessimistic outlooks.....always on the brink of disaster....gets attention and viewers. A total faceplant for them from this morning. And yes, I enjoy it very much.
HERE is the ULTIMATE IDIOCY and self fulfilling prophesy. ChatGPT Can Predict Stock Market Moves? New Study Shows ChatGPT Surprisingly Accurate in Predicting Stock Moves And Could Even Replace Investment Analysts https://finance.yahoo.com/news/chatgpt-predict-stock-market-moves-185307674.html (BOLD is my opinion OR what I consider important content) "A new study conducted by finance professors from the University of Florida shows the potential value of ChatGPT in predicting stock market movements. In the study, over 50,000 news headlines about companies dating back to October 2021 were fed to the chatbot, which evaluated whether the news was good, bad or irrelevant to the company's stock prices. Using sentiment analysis, the chatbot generated a "ChatGPT score," which was then analyzed to determine whether it was predictive of the companies' stock market performance the following day. The study found a significant positive correlation between the ChatGPT scores and the next-day stock performance for the analyzed companies. Companies with higher scores tended to have better returns than those with lower scores. ChatGPT outperformed traditional sentiment analysis methods that also used data from headlines and social media to predict stock movements. The researchers concluded that incorporating advanced language models such as ChatGPT into investment decision-making processes can lead to more accurate predictions and enhance the performance of quantitative trading strategies. The study demonstrated that traditional models did not provide any additional predictive power over ChatGPT-derived sentiment scores. These findings suggest that ChatGPT may hold promise for investors seeking to anticipate future stock market movements. While the potential use case for ChatGPT and other advanced language models in predicting stock market returns is promising, there are apprehensions in the market regarding the risks it could pose if it does not provide the expected accuracy and assistance. Despite this caution, Bloomberg recently released a new GPT-based language model called BloombergGPT, which is trained on a dataset consisting of English-language financial documents, news, filings, press releases and social media. The company claims that this new model will improve existing natural language processing tasks such as sentiment analysis, news classification, headline generation, question-answering and other query-related tasks. Bloomberg isn’t the only company innovating. Businesses around the globe are desperate to integrate AI into their existing business models, but supply is scarce. That’s why GenesisAI is building a marketplace made to help any business integrate AI into their existing model, and it’s raising millions from retail investors to make it happen. Jim Simons of Renaissance Technologies was a pioneer decades ago in using machine learning to create algorithms that allowed computers to make investment decisions using past data with minimal human input. But these firms have not fully transitioned to automated operations using cutting-edge artificial intelligence (AI) methods such as self-learning or reinforcement learning. Instead, they continue to rely on advanced statistics and a “theory-first” approach. Regardless of any concerns, the use of AI in the financial industry is rapidly growing and could become a real game-changer in the industry." MY COMMENT Notice that they only fed the "headlines" into the AI. The actual TRUTH and the actual data and fundamentals dont matter. The result......it was able to predict the TRADING BEHAVIOR of the next day. BIG WOW........negative and other headlines drive short term....AI trading. The problem will come when this AI STUFF stops calculating the headlines and starts manipulating the markets.....it WILL definately happen over the short term. If this spreads to the long term it will destroy our market system.
Speaking of ChatGPT.... NVIDIA is doing some "safety" work. https://blogs.nvidia.com/blog/2023/04/25/ai-chatbot-guardrails-nemo/
I like this little article. Influencers are Not the Problem https://www.safalniveshak.com/influencers-are-not-the-problem/ (BOLD is my opinion OR what I consider important content) "This story dates to September 2008. I remember this clearly because it happened on the day Lehman went bust. The event is more vivid for me because, when the news broke out, I was less than a mile away from Lehman’s headquarters, with a school friend. My friend, who was working in the tech division of another investment bank in the city, met me to discuss his India investments. His portfolio had already taken a beating in the financial crisis that had started at the beginning of 2008. It was a messy portfolio, loaded with bad businesses – mostly from the power and infra sectors – and so I advised him to take his losses and sell most of it. At the end of our clean-up exercise, we were left with just two FMCG stocks. My friend was not happy with the thought of converting his ‘paper’ losses to real ones, but I convinced him to do so. Anyways, as I had expected, my friend laid the blame of his ‘bad portfolio’ on his ‘bad financial advisor friend’. It took me a while to explain to him that the problem was not his advisor friend but he himself. What did him in was his greed to earn quick money and the fear of missing out on hot stocks that his colleagues and other friends made money on before the crisis unravelled. And so he willingly listened to whatever his advisor advised him, not questioning him once. That conversation has repeated in several of my interactions with other friends and relatives over the years, who have blamed the ‘system’ and ‘advisors’ for causing them financial troubles. Some were sold bad insurance policies, some bad mutual funds, some were stuck in bad portfolio management services, and some saw their wealth evaporate at the advice of their friendly, neighbourhood financial advisors. In short, all of them were unhappy with the hand they were dealt with by ‘others.’ Almost no one took ownership of the mistakes that caused them financial troubles. Seth Godin, a noted American author, says, we blame the system because that lets us off the hook. We refuse to take responsibility for our mistakes. It is always a problem caused by ‘someone else.’ Godin also says, “…but when the system is broken, we wonder why you were relying in the system in the first place.” Do not get me wrong here. Our financial system is not broken. It is well-regulated and sound. But one part that is broken, is the part about incentives and how they are mis-aligned between the receivers of financial advice, and the givers, which now also include social media (mis)influencers that our finance minister recently called a ‘growing concern’. A quick explanation. The incentives of the giver of financial advice depends on increased activity from the receiver of financial advice. More stocks you – the receiver of advice – buy, more you trade, more mutual funds you own, more insurance policies you buy, more your advisor, broker, and agent benefit. However, the truth is that ‘more,’ in most cases, is bad for you. You need ‘less’ of activity, trading, and number of stocks, mutual funds, and insurance policies. Less is manageable. Less requires reflection. But then, Matt Haig wrote in his book Reasons to Stay Alive – The world is increasingly designed to depress us. Happiness isn’t very good for the economy. If we were happy with what we had, why would we need more? How do you sell an anti-ageing moisturiser? You make someone worry about ageing. How do you get people to vote for a political party? You make them worry about immigration. How do you get them to buy insurance? By making them worry about everything. How do you get them to have plastic surgery? By highlighting their physical flaws. How do you get them to watch a TV show? By making them worry about missing out. How do you get them to buy a new smartphone? By making them feel like they are being left behind. To be calm becomes a kind of revolutionary act. To be happy with your own non-upgraded existence. To be comfortable with our messy, human selves, would not be good for business. Investing is not away from the reality Haig has talked about in his book. The things we read or watch in business and social media, or what we hear most advisors, experts, and influencers speak, are designed to depress us. Happiness (of their customers, prospects, and viewers) isn’t very good thing for them, for how else would they peddle their bad, often toxic, financial advice? We are sold insurance policies, mutual funds, stock ideas, and other get rich quick schemes, as if our lives depended on them. And that if we don’t buy those products or advice, we would end up in poverty and despair, even as our friends and all those friends we know on Twitter and Facebook would get rich. People are led to make financial plans for 20-30 years ahead, while not many are taught to deal in the present with the behavioural aspects of taking care of their money, like simplicity, frugality, and patience. But…but the problem is not ‘them.’ The problem is ‘us.’ Reinhold Niebuhr’s Serenity Prayer reads – God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference. What others advice me to do in life and investing is never in my control, and so I cannot change what they advise. But what advice I apply to my life and investing is in my control, and so I must ensure that I play just that part well. So, the problem is not the advisor or influencer peddling wrong financial advice. The problem is ‘I’ not understanding what is wrong for me and what is not. Yes, that is the problem. The more you are willing to get influenced with the idea of getting rich quick, the more there will be influencers telling you the secrets – and to millions of their other followers – of how to get rich quick. My grandmother often advised me this – “सुनो सब की, करो मन की.” It means, I may listen to others, but must do what my mind tells me to do. She must have known about ‘confirmation bias’ in her own way, but what she meant was that even after listening to the advice of many others, I must do what I believe to be the right thing to do, after putting in careful thought behind my actions. And that is exactly what I tell young and other investors who are worried about what to trust from the plethora of financial advice – often about how to get rich quick – from the multitude of financial and other influencers – “सुनो सब की, करो मन की.” Influencers will not cause you any problems. Your fears, and greed to succeed and get rich faster, certainly will. So, take care of what you think and how you act, not how others want you to. Life would be quieter, and simpler, then. Influencers will cease to be ‘the’ problem." MY COMMENT We now live in a world of INFLUENCERS. They are everywhere. Some are in your face......some are very subtle. Investing "stuff" is a big part of this world. That is why in my view sticking to the very simple age old investing knowledge and proven probabilities is the best way to invest. Human nature has NOT changed.....I dont care how advanced we think we are. GREED is still the danger for any and all investors. That is why I often repeat various articles that deal with all the HUMAN IMPACT on investing. that is why I always discount the talk of some NEW NORMAL. Everything can change.....but human nature and behavior doses not.
As a business person I find this story very disturbing. First Republic handed out billions in ultra-low-rate mortgages to the wealthy. It backfired horribly. https://finance.yahoo.com/news/first-republic-handed-billions-ultra-023833711.html (BOLD is my opinion OR what I consider important content) "First Republic is teetering, with the stock down 93% in 2023 and the bank exploring strategic options. The bank won wealthy clients with the offer of jumbo mortgage loans that required no principal payments for a decade. The bank is now reversing course as it fights for survival." "First Republic is racing to strengthen itself. The bank said Monday that it will cut as much as 25% of staff, and is pursuing strategic options after revealing that deposits plunged by more than $100 billion in the first three months of the year. That sent the stock as much as 48% lower on the day, with First Republic now down 93% for the year to date. Gillian Tan and Matthew Monks at Bloomberg subsequently reported that the bank is exploring an asset sale in the range of $50 billion to $100 billion. First Republic first moved into focus back in the March banking crisis that claimed Silicon Valley Bank, Signature Bank, and Silvergate. Like SVB and Signature, a large percentage of First Republic deposits were not insured by the FDIC, making it especially susceptible to deposit flight. Like SVB, First Republic had seen deposits boom in the low-rate pandemic era. And like SVB, First Republic has been sitting on large unrealized losses, as the value of the bonds it's marked as being held-to-maturity has dropped as rates have gone up. But while the FDIC seized SVB and Signature, a group of major banks parked $30 billion in deposits with First Republic, helping to shore it up in a period of where depositors opted to move their money to the biggest banks. One of the causes of First Republic's troubles is a strategy to woo rich clients with huge mortgages that offer sweet terms, as detailed in this story from Noah Buhayar, Jennifer Surane, Max Reyes, and Ann Choi at Bloomberg. In particular, First Republic would offer interest-only mortgages, where the borrower didn't have to pay back any principal for the first decade of the loan. In 2020 and 2021, it extended close to $20 billion of these loans in San Francisco, Los Angeles, and New York alone, per Bloomberg's analysis. Many of these loans went to ultra wealthy types in finance, tech, and media. For example, one of the most senior executives at Goldman Sachs took out an $11.2 million mortgage with First Republic with no principal payments in the first 10 years and an interest rate below 3%, per Bloomberg. The quality of these loans isn't in question, as the borrowers are extremely safe bets. But the loans are worth a lot less now than when First Republic wrote these deals, with the average mortgage rate on a thirty-year fixed rate loan now at around 6.3%. (Bond prices go down as interest rates go up, and vice versa.) Wealthy clients can easily move their deposits away from First Republic while keeping their mortgage with the firm, which creates a liquidity challenge. And these loans are hard to sell to other lenders, given Fannie Mae and Freddie Mac are limited to only purchasing mortgages up to just over $1 million. Should they successfully sell, it would also create a hole in First Republic's balance sheet. The bank would be forced to recognize the current value of these loans, and what are currently unrealized losses could suddenly wipe out the bank's capital. First Republic is now backtracking from this strategy, saying it will focus on writing loans that are guaranteed by Fannie and Freddie. More immediately, the bank is trying to find a way to convince buyers to take on some of its assets, including finding ways to sweeten the deal with equity-like instruments so buyers pay a higher price for the loans, according to Tan and Monks at Bloomberg. The coming days will show whether First Republic was successful." MY COMMENT Companies like this NEED to fail. They NEED to be cleaned out of the financial system. This stuff might be legal BUT it is management IDIOCY. Bail out a company or a bank like this one and you are simply rewarding incompetence. I talked about using basic investing concepts in the post above this one......DITTO.....to basic business concepts and basic management concepts.
