The Long Term Investor

Things are getting very serious for the immediate survival of this company.

OpenAI Staff Threaten to Go to Microsoft If Board Doesn’t Quit

https://finance.yahoo.com/news/openai-staff-threaten-microsoft-board-144547958.html

"(Bloomberg) -- Nearly all of OpenAI’s employees have threatened to quit and follow ousted leader Sam Altman to work at the company’s biggest investor, Microsoft Corp., unless the current board resigns, leaving the future of the high-profile artificial intelligence startup increasingly uncertain.

More than 700 of the AI firm’s roughly 770 employees signed a letter on Monday addressed to OpenAI’s board stating that the signatories are “unable to work for or with people that lack competence, judgment and care for our mission and employees.” The letter called for every member of the board to resign and for Altman to be reinstated, or else employees might jump to Microsoft. The software giant “has assured us there are positions for all OpenAI employees,” the letter said....."

(see article for more)

MY COMMENT

A massively cheap acquisition for Microsoft.

 

What a market.....NVDA....is now at a new all time intra-day high....$504.46.

Unfortunately the higher it goes the higher the odds of a drop back after the earnings report....regardless of how good it is.

 

The OpenAI stuff is very interesting....but....in my view the company is already toast. I find this interesting:

"The employees also warned that they would “imminently” follow Altman to Microsoft unless the board resigns and reinstates Altman and Greg Brockman, the former OpenAI president who was also removed by the board on Friday.

Among the signatories is Mira Murati, who as recently as Friday had been named by the board as Altman’s interim successor, as well as Ilya Sutskever, OpenAI’s co-founder, chief scientist and board member who had been widely reported as having played a role in Altman’s dismissal."

and

"....Sutskever posted an apology on X that acknowledged his contribution to the leadership crisis...."

and

".....members of the board “informed the leadership team that allowing the company to be destroyed ‘would be consistent with the mission’” of OpenAI, which is to “ensure that artificial general intelligence benefits all of humanity.”

(see full article for more)

https://www.cnn.com/2023/11/20/tech/openai-employees-quit-mira-murati-sam-altman/index.html

MY COMMENT

It appears that even some of the "rats" that were in the group that fired Altman....are now on board with jumping ship.

 

So much has been going right lately for the markets.....we might actually get tired of winning.

Treasury yields fall Monday after strong 20-year notes auction

https://www.cnbc.com/2023/11/20/us-treasury-yields-investors-weigh-economic-outlook.html

MY COMMENT

With the collapse of the yield on the Ten Year.....I dont see how the markets can avoid a....YEAR END RALLY. BUT....never underestimate the stupidity of the short term. The Ten Year is even lower right now at.....4.418%.

 

I LOVE IT....I saw one reference to OpenAI today that compared what is going on.....with all the drama and moves and counter moves....to Game Of Thrones.

 

One last little observation...than I will sign off and shut up for a while.

You know....I have hardly seen any reference to BLACK-FRIDAY shopping.....this year in the media. A definite change from years past.

 

Yep....I had a stylish day today. All eight stocks in the green with MSFT and NVDA over 2% for the day. I also got in a good beat on the SP500 today by.....0.55%.

A BIG start to the week. No reason not to follow through tomorrow.

 

So...today we have the fraternal "twins".....MSFT and NVDA at all time high closes.

Nvidia stock closes at all-time high, a day before earnings

https://www.cnbc.com/2023/11/20/nvi...e-investors-peek-into-ai-demand-for-2024.html

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

"Key Points

• Shares of Nvidia closed up 2.3% at an all-time high, topping $504 on Monday.
• The record comes ahead of the company’s fiscal third-quarter results on Tuesday, when analysts are expecting to see revenue growth of over 170%.
• While Nvidia doesn’t typically provide guidance for the upcoming year, any indication of how demand looks for 2024 will be heavily scrutinized.

Shares of Nvidia closed up 2.3% at an all-time high, topping $504 on Monday. The record comes ahead of the company’s fiscal third-quarter results on Tuesday, when analysts are expecting to see revenue growth of over 170%.

If that’s not astounding enough, the company’s forecast for the fiscal fourth quarter, according to LSEG estimates, is likely to show an even bigger number: almost 200% growth.

Heading into the Thanksgiving holiday, Wall Street will be closely scrutinizing the company that’s been at the heart of this year’s artificial intelligence boom.

Nvidia’s stock price has ballooned 245% in 2023, far outpacing any other member of the S&P 500. Its market cap now sits at $1.2 trillion, well above Meta or Tesla. Any indication on the earnings call that generative AI enthusiasm is cooling, or that some big customers are moving over to AMD’s processors, or that China restrictions are having a detrimental effect on the business could spell trouble for a stock that’s been on such a tear.

“Expectations are high leading into NVDA’s FQ3′24 earnings call on Nov-21,” Bank of America analysts wrote in a report last week. They have a buy rating on the stock and said they “expect a beat/raise.”

However, they flagged China restrictions and competitive concerns as two issues that will capture investor attention. In particular, the emergence of AMD in the generative AI market presents a new dynamic for Nvidia, which has mostly had the AI graphics processing unit (GPU) market to itself.

AMD CEO Lisa Su said late last month that the company expects GPU revenue of about $400 million during the fourth quarter, and more than $2 billion in 2024. The company said in June that the MI300X, its most advanced GPU for AI, would start shipping to some customers this year.

Nvidia is still by far the market leader in GPUs for AI, but high prices are an issue.

“NVDA needs to forcefully counter the narrative its products are too expensive for generative AI inference,” the Bank of America analysts wrote.

Last week, Nvidia unveiled the H200, a GPU designed for training and deploying the kinds of AI models that are powering the generative AI explosion, allowing companies to develop smarter chatbots and convert simple text into creative graphical designs.

The new GPU is an upgrade from the H100, the chip OpenAI used to train its most-advanced large language model, GPT-4 Turbo. H100 chips cost between $25,000 and $40,000, according to an estimate from Raymond James, and thousands of them working together are needed to create the biggest models in a process called “training.”

The H100 chips are part of Nvidia’s data center group, which saw revenue in the fiscal second quarter surge 171% to $10.32 billion. That accounted for about three-quarters of Nvidia’s total revenue.

For the fiscal third quarter, analysts expect data center growth to almost quadruple to $13.02 billion from $3.83 billion a year earlier, according to FactSet. Total revenue is projected to rise 172% to $16.2 billion, according to analysts surveyed by LSEG, formerly Refinitiv.

Based on current estimates, growth will peak in the fiscal fourth quarter at about 195%, LSEG estimates show. Expansion will remain robust throughout 2024 but is expected to decelerate each quarter of the year.

Executives can expect to field questions on the earnings call related to the massive shake-up at OpenAI, the creator of the chatbot ChatGPT, which was a major catalyst of Nvidia’s growth this year. On Friday, OpenAI’s board announced the sudden firing of CEO Sam Altman over disputes about the company’s speed of product development and where it’s focusing its efforts.

OpenAI is a big buyer of Nvidia’s GPUs, as is Microsoft, OpenAI’s top backer. Following a chaotic weekend, OpenAI on Sunday night said former Twitch CEO Emmett Shear would be leading the company on an interim basis, and soon after that Microsoft CEO Satya Nadella said Altman and ousted OpenAI Chairman Greg Brockman would be joining to lead a new advanced AI research team.

Nvidia investors have so far brushed off China-related concerns despite the potential significance to the company’s business. The H100 and A100 AI chips were the first to be hit by new U.S. restrictions last year that aimed to curb sales to China. Nvidia said in September 2022 that the U.S. government would still allow it to develop the H100 in China, which accounts for 20% to 25% of its data center business.

The company has reportedly found a way to keep selling into the world’s second-biggest economy while keeping compliant with U.S. rules. The company is set to deliver three new chips, based on the H100, to Chinese manufacturers, Chinese financial media Cailian Press reported last week, citing sources.

Nvidia has historically avoided providing annual guidance, preferring to look ahead only to the next quarter. But given how much money investors have poured into the company this year and how little else there is for them to follow this week, they’ll be listening closely to CEO Jensen Huang’s tone on the conference call for any sign that the buzz in generative AI may be wearing off."

MY COMMENT

We will know how things are going with NVDA at the close tomorrow. More importantly will be 2024 and 2025 earnings....which will be competing with the banner year this year.

Regardless of market reaction.......as long as the current management stays in place at NVDA....the company is in good hands.

Investors need to just keep from being spoiled and keep expectations realistic for the future quarters.

 

I see and hear people today saying that the market open in the red is because the markets are awaiting the FED minute release today.

Can you imagine this? Can you imagine that there could be anything in the minutes that we have not seen and heard a thousand times over the last 12 months?

I dont doubt that this might be true. I never underestimate the stupidity of the short term markets......and...the ability of the professional traders to ramp up the drama on some ridiculous news item to trade off of.

As I have said before.....the FED is done.....they have no power to do or move anything. The only power they have is the power that people allow them to have by fearing this toothless tiger. Nothing but HOT AIR at this time in history. the FED is probably the last thing I think about as an investor.....make that....a long term investor.

BUT....do I think there will be rate cuts soon or even next year......NO. I dont know who the crazy people are that believe this.....nor do I care.

 

Like the FED stuff....I dont know who these people are that are supposedly worried about all this stuff......at least I dont know or have any contact with anyone in this category.

Stocks, debt and Gaza: Here are answers to the 6 biggest ‘yeah, but’ questions worrying investors

https://nypost.com/2023/11/19/busin...o-the-6-biggest-questions-worrying-investors/

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

"Worries abound. Sentiment ain’t rosy. It’s pretty skeptical. “Yeah, but what about…?” questions from my firm’s 140,000-plus global clients arrive daily. That sweeping sample suggests you may have similar concerns. Here are the most common six I hear now — and my responses.

Yeah, but why risk stocks when T-Bills yield 5%?

This is the Numero Uno most often asked “what about” question now. After 2022’s bear market, many fear stocks’ “roller coaster,” augmented by current Treasury yields. A natural feeling—but financially hazardous.

Why? Inflation, currently at 3.7% year-over-year, erodes nearly four-fifths of the yield. And that’s before taxes if not in a tax-deferred or tax-free status. By contrast, US stocks are up over 17% in 2023 — even after recent wobbles! Inflation has averaged 3.0% annually since 1926. Meanwhile, stocks annualized 10.1%. Most folks need stocks to finance long-term goals — to outpace inflation and taxes.

Uncle Sam taxes Treasury interest as regular income. (Uncle Sam giveth, and senselessly taketh away.) High earners at high tax rates (Any semi-prosperous New Yorkers who are reading) lag inflation now with Treasuries. Capital gains with lower long-term tax rates—and the ability to manage realized gains—give stocks another big edge. Interest rates may rise. Or they could fall. If so, you would need longer-term bonds to lock in today’s rates. Relatedly, our next question wonders:

Yeah, but can’t I lock in bond rates and win off falling future long-term interest rates?

Yes, bond prices and yields move inversely, always. Hence, buying long-term bonds isn’t “risk free.” Note, in 2022 bond prices fell largely in parallel and almost as much as stocks. But if you didn’t predict in 2021 that rates would rise in 2022, how can you be so sure they fall now? If you’re wrong and long-term rates don’t fall, you’re back to Numero Uno versus stocks. Risky long-term choice.

Yeah, but won’t the “earnings recession” sink stocks?

Just the reverse! Earnings started falling in 2022, triggering “earnings recession” fears slamming stocks. But with 88% of S&P 500 firms having now reported, third quarter earnings rose 4.1% year-over-year. Only three of 11 sectors suffered sagging profits. This isn’t just cost-cutting: Sales rose, too.

Yeah, but what About Israel-Gaza?

Tragic though it is, this is much more a humanitarian concern than a market event—echoing most Middle East wars. Israel, Gaza and Lebanon total roughly 0.5% of global GDP—tiny. Middle Eastern wars always spur oil fears—initially. But major oil players aren’t involved, likely why oil prices have fallen below pre-war levels. Even if it slams Iran, rising output in North America and elsewhere will cover potential lost Iranian output.

Yeah, but aren’t consumers overindebted?

Credit card debt topping $1 trillion spurs “tapped-out consumer” fears. But “scale” it! The New York Fed’s third-quarter data show that totals just 5.3% of after-tax income, matching pre-pandemic norms and far below early-2000s highs over 8%. Delinquency rates rose but remain well below 2021 and early-2010s levels. Overall household financial health is stunningly strong. Just 1.6% of total credit is 90-plus days delinquent, barely above Q4 2022’s record low.

Yeah, but what about politics—aren’t they all just drunken captains at the ship’s helm?

Last November I showed you just why hardcore gridlock helps stocks (2022 midterm results disappointed GOP — but were good for stocks). Further: Stocks rose in 83.3% of election years since 1925. Only one election year ever (1932) declined after a negative midterm year, like 2022. That doesn’t ensure gains. But betting against it? Wise-acre-ish!

Looking broadly, my mailbag reveals one key: Greed is rare. As Warren Buffett noted, “The time to be fearful is when others are greedy.” The “Yeah Buts” bolster bullishness."

MY COMMENT

With the 24/7 NEGATIVE news media there is constant fear mongering....including in the investing world. I really dont care about sentiment....unless it is very negative....and...I consider that a positive sign.

Much of this "fear news" is also used by the SI Trading platforms....for short term profits.

Long term....NONE....of this stuff matters or is important. IGNORE it all and have a nice day.

 

I am waiting for the NVDA earnings after the close.....that is all I care about today.

 

I think this is some of the short term market driver today. Although I have not even looked at any of these earnings since I dont own any of them.

"Retail earnings disappointed with shares of companies like Lowe's (LOW), Best Buy (BBY), American Eagle Outfitters (AEO), and Khol's (KSS) dropping on Tuesday as a pullback in consumer spending clouded forecasts and registered a hit to sales."

In fact.....last time I looked....NONE of these companies were really big retail drivers of our economy.

At least the yield of the Ten Year Treasury is DOWN so far today.

So what we are seeing today is actually a NO NEWS day......with some side drama being manufactured on the side.

 

Being a home owner.....free and clear....I am happy to see this story.

Home prices kept climbing even as existing home sales tanked last month

https://finance.yahoo.com/news/home...g-home-sales-tanked-last-month-150116659.html

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

"Many homebuyers abandoned the resale housing market last month, as elevated rates and rising home prices crushed affordability.

Sales of previously owned homes dropped 4.1% in October from the month before to an annualized rate of 3.79 million, the National Association of Realtors (NAR) reported on Tuesday. That was 14.6% lower than a year ago and below the 3.90 million units predicted by economists polled by Bloomberg.

The median home price jumped 3.4% year over year, marking the fourth straight month of annual gains and the largest increase since November 2022. The median price of $391,800 was the highest for the month of October.

"Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” said NAR chief economist Lawrence Yun in a press statement. “Multiple offers, however, are still occurring, especially on starter and mid-priced homes."

Still, the NAR anticipates that existing home sales will climb 15% in 2024 after declining 18% this year, with expectations that mortgage rates will fall to between 6% and 7% by the spring selling season. Other experts expect the worst may soon be over.

"Existing home sales are likely to underwhelm again for October. How low can they go?” Mark Fleming, chief economist at First American, told Yahoo Finance ahead of the release. “Probably not much lower as more recently mortgage rates have fallen from the high point of 8% and mortgage applications are on the rise again."

'Multiple-offer situations'

But for now, the muted activity is pervasive, while pricing remains up — thanks to persistent competition. All four regions of the country recorded year-over-year declines in the resale activity in October, the NAR found.

In the West, sales declined 1.4% from a month ago to an annualized rate of 690,000 in October, down 14.8% from a year prior. The median price in the West was $602,200, up 2.3% from last year at this time.

Sales in the South fell 7.1% from September to an annual rate of 1.69 million in October, down 14.6% from a year ago. The median price in the South was $357,700, an increase of 3.5% from October 2022.

In the Midwest, home sales were unchanged from one month ago at an annual rate of 930,000 in October, but were still 13.9% lower from one year ago. The median price in the Midwest was $285,100, up 4.2% annually.

Sales in the Northeast dropped 4% from the annual rate of 480,000 in October, down 15.8% compared to last October. The median price in the Northeast was $439,200, up 7.5% from a year earlier.

“In fact, 28% of homes that were sold in the month of October sold above list price. Interestingly, one year ago when mortgage rates were meaningfully lower 24% of the homes sold above list price,” NAR chief economist Lawrence Yun said in a press call Tuesday. “It shows somewhat [more] multiple-offer situations compared to one year ago, despite the higher mortgage rate condition.”

'Buyers are likely caught in the tug of war'

It’s no secret that rates have been a thorn in buyers' sides.

That was evident in October, when the 30-year fixed rate mortgage surged by nearly a full point from the month prior to 7.76%, hitting its highest point since September 2000, according to Freddie Mac.

“Housing affordability continues to be a major headwind,” Danielle Hale, Realtor.com chief economist, said in a statement. “And many potential buyers are likely caught in the tug of war between holding out and waiting for better pricing and mortgage rate conditions or rushing to beat potentially worse conditions.”

High rates have created a double-whammy for buyers: increasing their monthly mortgage payment and further discouraging homeowners to sell. The vast majority of homeowners with a mortgage have a rate below 5% that they would lose if they sold their house.

That lack of inventory has caused prices to go up even though rates have also increased.

“The factors limiting sales are the same two important factors, which is mortgage rates can drain affordability for the buyers, but those who can handle affordability, inventory is simply not there,” said NAR chief economist Lawrence Yun in a press call Tuesday. “So [it’s a] strange story. Lack of inventory along with higher mortgage rates are really hindering home sales.”

'An unusual gain' in inventory

Still, there are signs that “lock-in” effect is waning.

The share of homes for sale at the end of October was 1.15 million units, up 1.8% compared to a month ago, NAR data showed. Still, that's the lowest inventory count going back to 1999. There was a 3.6 month supply of unsold inventory at the current sales pace, up from 3.4 months in September. At least six months of inventory is considered a healthy market.

But early November data from real estate analytics firm Altos Research has shown an unusual uptick in new listings. Just under 570,000 single-family homes sit unsold on the market, up a half-percent from last week.

“It’s not a lot, but normally in November inventory is declining each week. So this is an unseasonal gain,” Mike Simonsen, founder and president of Altos Research, wrote in a blog on Monday. Still, “there are fewer sellers now each week than normal years. There is no flood of sellers. We’re not anywhere close to a market with a glut of homes for sale.”"

MY COMMENT

In my little local area of 4200 homes prices are holding firm. We only have about 30 active listings. I have not seen any drop in prices since the housing frenzy in my particular neighborhood......and....there is nothing for sale. Most sales in my area continue to be....ALL CASH.

I would not want to be a buyer.

I am content to sit on my home value......which is still near an all time high.....and wait for the next BIG bump up in prices....which I believe will happen in 2024. Owning a house is......money in the bank....if you buy in the best possible neighborhood with the best schools.

 

Speaking of retail earnings reports above.....

US retailers stuck with excess stock offer bargains as holiday season nears

https://finance.yahoo.com/news/us-retailers-stuck-excess-stock-125003644.html

 

My.....basic....view of today is that with the markets and some companies hitting records and all time highs......we are seeing some profit taking.

This is natural and normal. The markets do not just shoot straight up like a rocket.....they go up in spurts. A single down day early in the day.....does not concern me at all.

In fact if the market was flat for the rest of the year I would not care......simply because.....I am currently sitting on a +41.4% gain year to date.

I dont expect this to happen....however...the bull market is alive and well and will take care of itself. In fact as usual....I welcome any and all bad sentiment and fear mongering.....the markets love to have a big wall of worry to climb. It guarantees that the bull market has a long way to go.

 

I saw this headline a minute ago.

HISTORY SHOWS STOCKS DONT NEED RATE CUTS TO DO WELL....THEY JUST NEED THE FED TO STOP TIGHTENING.

I could not read the article because I am not a paid subscriber of "pro content".

BUT.....I dont need to read the article....this is basic TRUTH. Stocks will do just fine with the current rates.

AND....actually.....the current rates are simply in the NORMAL range of historic rates. The ten year is actually on the low end of normal right now.

What stocks really would like to see is for the FED (government) to simply step aside and get out of the way. We dont need a bunch of irrational morons trying to constantly trash the markets.

 

For those on here that are collectors.

Meet the vintage toy collectors that have turned their hobby into an investment opportunity

https://www.cnbc.com/2023/11/21/toy-collectors-turn-hobby-into-an-investment-opportunity.html

 

I see little OpenAI news today. This is certainly the TRUTH.

If OpenAI's board was trying to save humanity from Sam Altman, it failed. So it's time to come clean.

https://www.businessinsider.com/openai-turmoil-sam-altman-will-be-in-charge-no-matter-what-2023-11

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

"The bizarre soap opera that is OpenAI has entered its fifth day.

As yet, there is no formal resolution, but as Microsoft CEO Satya Nadella said on TV, the practical outcome is known:

OpenAI employees will continue to build OpenAI's products, and Sam Altman will continue to lead them.

Altman will either manage the OpenAI team from his new role at Microsoft or from his old role at OpenAI. And he'll have more control over the product and team than he did before the OpenAI Board's botched attempted coup.

So it's time for the three remaining members of the OpenAI board to end the distraction, tell us what really motivated them, and move on.

It's still not clear why the OpenAI board fired Altman. The stated reason — that he lied to them — has not held up under scrutiny. As Business Insider's Kali Hays reported, when asked for specifics about Altman's alleged dishonesty, one of the board members who ousted him gave two vague and flimsy examples, neither of which — even if fairly represented — seems like a firing offense.

That board member, moreover, has since recanted, saying he regrets ousting Altman and wants him back.

That leaves the other three board members in an even stranger and more tenuous position.

There seem to be two main theories about the real reason the board fired Altman:

• First, that OpenAI rolled out a new feature that competes directly with a new feature of Quora, the question-and-answer site helmed by OpenAI board member Adam D'Angelo. Maybe Altman didn't give D'Angelo, a heads-up, and D'Angelo was pissed about this.
  
• Second, that the board fears that OpenAI is moving too fast and recklessly and that it will invent (or already has invented) a sentient AI that will have no use for meat-based life forms and will therefore exterminate all life in the universe.
  

This second reason would certainly be a valid reason for trying to hit the brakes at OpenAI, even if it is unpopular within the tech community.

But, as Business Insider's Alistair Barr has argued, if the goal of the three remaining OpenAI Board members is to save humans from OpenAI's product, it's time for those board members to say so.

Personally, I don't think the three remaining OpenAI board members have as much control over the future of AI and the fate of the universe as they may think. If it's so easy to build a Cylon empire, then one of the dozens of other companies that are racing to advance AI will probably do it, even if OpenAI doesn't.

So, if that's the issue, regardless of what the OpenAI board does next, humanity's probably toast.

As a member of humanity, I do thank the three remaining OpenAI members for maybe looking out for us.

But, regardless, it's time for them to tell us what they're thinking!

Because Sam Altman is going to be leading the OpenAI team and continuing its product development either way."

MY COMMENT

YEP.