The Long Term Investor

I like what I read from FISHER......I dont know how they do as managers......but.....they certainly talk, write about, and see investing and the markets in the......"OLD"....style. When I hear Ken fisher talk it is like I am back 20-40 years in the past.......a good thing from how I view investing.

Here’s why most investors are dead wrong about China — and what stocks can teach them

https://nypost.com/2024/02/18/busin...g-about-china-and-what-stocks-can-teach-them/

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

"A remarkable number of investors cling to the idea that China – no matter how bad the headlines coming out of the East – is inevitably on the rise and that it’s destined to eclipse America and the West.

Those folks should pay closer attention to the stock market.

In 2023, Chinese stocks extended a three-year bear run while world stocks otherwise rose 22%.

What few fathom, while fearing that China will eclipse the West, is that stocks have been predicting China’s descent for far longer.

It didn’t always look like this. Starting about 1980, Chinese Leader Deng Xiaoping and successors evolved a series of market-oriented reforms called “Socialism with Chinese Characteristics.”

They cracked the door to capitalism — permitting privatization, the profit motive and innovation.

Animal spirits that had been bottled up by communism under Mao escaped — uncorking the “Chinese Miracle.” Ever-growing waves of capitalism enriched China, whose total exports soared from under $200 billion in 1999 to over $1 trillion in 2007.

Stocks, too. From 2000’s end through 2010, the MSCI China rose 276% in dollars, burying the rest of the MSCI All-Country’s 36% return.

Western ivory tower know-it-alls wrongly envisioned that as technocratic expertise. Then President Xi Jinping’s ascent to power began, bottling up those spirits, ringfencing Chinese capitalism bit by bit.

Did you know that, since 2010, Chinese stocks, with voting machine volatility, have ultimately gone nowhere? Since 2012, or 2014, ’16, or ’18 – including dividends — there has been no net return. Adjusted for inflation, Chinese stocks are down approximately 40% in 14 years. That’s even as stocks excluding China returned 200%.

This isn’t like US stocks’ occasional, back-to-back sharp bear markets that temporarily check long-term growth from first market peak to second market trough like 2000 to 2009. This just grinds on — like Japan, whose stocks in 1990 began foretelling the end of its 1960s-1980s global ascent. Stocks “know” China’s problems aren’t temporary. They worsen the longer Xi increasingly, dictatorially strangles capitalism.

Some say China is cheap, but in the long term, stock prices don’t lie. Xi has steadily erected a new Great Wall, thwarting capitalism’s magic with more than 100 new regulations choking basic industry, communications, finance, media, real estate, and tech. He has hobbled innovation, stifled growth – all to create, in his words, a, “new modern socialistic power.”

3
Since 2010, Chinese stocks, with voting machine volatility, have ultimately gone nowhere.
By edict, China’s overseas corporate cash now repatriates home to buttress domestic decline. Meanwhile, private personal capital covertly flees. In seven years, China went from being a top-five investor in America to a third-tier player behind Norway and Qatar.

Now, China flails and fails at buoying stocks through direct government purchases and short-sale restrictions.

These never help. Capitalism helps.

Official data say China grew 5% in 2023, nailing governmental targets. Markets know better. Were that even close to true, global firms’ Chinese sales would be up. They’re not. Most firms – among them Apple, Volkswagen, Procter & Gamble, L’Oreal – have been reporting declining sales in China.

In sum, there’s no middle ground for the Middle Kingdom: Unless it reverses course, re-embracing capitalism’s magic, China’s golden goose is cooked. That goes for its military might, too. (Military capability always follows economic vibrancy.)

Trust stocks’ long-term truth-telling. China’s imagined ascent isn’t to be feared – at all."

MY COMMENT

Ah yes,.....the worlds most brutal communist dictatorship. NO....I will NEVER invest in a Chinese company. It is bad enough that most of my American big cap tech companies are tied to China the way they are.

 

I have not looked at my account yet today....but...I know everything is UP at the moment. BUT....considering the STUPIDITY of the markets....I make no assumptions about the close today.

 

Good news if you are a home owner. As I have said often.....when mortgage rates get to the 5% to 6% range....we are going to see explosive increases in prices in many markets as lookers compete for homes in the continued low inventory environment.

Existing home sales rose 3% to start the year, but higher mortgage rates are already hurting

https://www.cnbc.com/2024/02/22/existing-home-sales-rose-3percent-in-january-2024.html

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

"Key Points

• Sales of previously owned homes rose in January, boosted by lower mortgage interest rates of November and December.
• Inventory of homes for sale in January increased to 1.01 million units, up 3.1% from January 2023, but still at a low 3-month supply.
• The median existing-home price for all housing types in January was $379,100, up 5.1% from a year earlier and an all-time high for the month of January.

Sales of previously owned homes rose 3.1% in January to 4 million units on a seasonally adjusted annualized basis, according to the National Association of Realtors. Sales were down 1.7% year over year.

The count is based on closings, so the contracts were likely signed in November and December, when mortgage interest rates backed off their October high of 8%. By mid-December, the rates had hit a recent low of around 6.6%. Today they are back over 7%, according to Mortgage News Daily.

“While home sales remain sizably lower than a couple of years ago, January’s monthly gain is the start of more supply and demand,” said Lawrence Yun, chief economist for the NAR. “Listings were modestly higher, and home buyers are taking advantage of lower mortgage rates compared to late last year.”

Inventory of homes for sale in January increased to 1.01 million units, up 3.1% from January 2023, but still at a low 3-month supply. Six months is considered a balanced market between buyer and seller.

That dynamic is why the market is still seeing pressure on home prices. The median existing home price for all housing types in January was $379,100, up 5.1% from a year earlier and an all-time high for the month of January.

All four U.S. regions saw price increases, and 16% of homes were sold above list price.

“Multiple offers are common on mid-priced homes, and many homes were still sold within a month. The elevated share of cash deals – 32% – indicated a market full of multiple offers and propelled by record-high housing wealth,” Yun said.

The 32% all-cash share was up from 29% in both December and in January 2023. It’s also the highest level in nearly a decade — since June 2014.

First-time buyers made up just 28% of sales. Historically they make up about 40%, but a lack of lower-priced homes for sale is hitting them hardest.

While lower mortgage rates helped boost January sales, today’s higher rates are already once again weighing on the market. A separate report from Redfin showed new listings rose 10% year over year during the four weeks ending February 18, the biggest increase in two months. Signed contracts, however, were down 7% from a year ago, according to the report."

MY COMMENT

What a very difficult time for people looking to buy their first home. What a great time to be an existing home owner.......with even bigger gains to come as rates slowly adjust to normal......5% to 6% range.

 

I heard on business TV in the background that NVDA is now at market cap of $1.92TRILLION and has passed Amazon and Google.

 

ALL you can do on a day like this as an investor is HANG ON......and....enjoy the ride.

RIDING THE WAVE....riding the wave. I am that little guy way out there in the ocean .....on the horizan......with a 100 foot wave behind me. I am laying down on my board and hanging on for dear life.

LOL....my kids actually think I know what I am doing......well not really.

 

Yeah.....roadtonowhere....I had to EDIT that post.

 

We should probably put a ....."ban"....on mention of the "N" stock for the rest of the week. At this point it is simply contributing to the delinquency of investors.

 

I like this little article.......even with all the mention of Vanguard. BUT....SP500 Index Funds and ETF's are ubiquitous.......there are many to choose from....no need to focus only on the Vanguard product.... and they are a great choice for any investor.

Warren Buffett Recommends This Index Fund. It Could Turn $450 per Month Into $983,800.

https://finance.yahoo.com/news/warren-buffett-recommends-index-fund-102200524.html

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

"Billionaire Warren Buffett has guided Berkshire Hathaway to incredible success. The company's share price has grown twice as fast as the S&P 500 since he took control in 1965, due in large part to his abilities as a businessman and investor.

Somewhat surprisingly, Buffett does not recommend Berkshire stock. Instead, he has consistently told investors to buy an S&P 500 index fund. "I recommend the S&P 500 index fund, and have for a long, long time to people. And I've never recommended Berkshire to anybody," Buffett said at Berkshire's annual shareholder meeting in 2021.

That investment strategy may not be exciting, but it has been a surefire moneymaker for patient investors. Here's how the Vanguard S&P 500 ETF (NYSEMKT: VOO) could turn $450 per month into $983,800 over three decades.

The Vanguard S&P 500 ETF tracks hundreds of influential U.S. stocks

The Vanguard S&P 500 ETF measures the performance of 500 large U.S. companies. The index fund provides exposure to value stocks and growth stocks from every market sector, and its constituents account for about 80% of U.S. equities and 50% of global equities by market capitalization. The top 10 holdings are detailed below.

1. Microsoft: 7.2%
   
   
2. Apple: 6.6%
   
   
3. Alphabet: 3.7%
   
   
4. Nvidia: 3.7%
   
   
5. Amazon: 3.5%
   
   
6. Meta Platforms: 2.1%
   
   
7. Berkshire Hathaway: 1.7%
   
   
8. Tesla: 1.3%
   
   
9. Broadcom: 1.3%
   
   
10. Eli Lilly: 1.3%

As detailed, the Vanguard S&P 500 ETF lets investors spread money across many of the most influential American businesses. Buffett finds that compelling. "American business -- and consequently a basket of stocks -- is virtually certain to be worth far more in the years ahead," he wrote in his 2016 shareholder letter.

The S&P 500 has consistently made money for patient investors

Buffett once said, "I do not think the average person can pick stocks." That has nothing to do with intelligence. Instead, Buffett believes most people lack the patience and dedication required to pick good stocks. Analyzing businesses is a skill that takes time to develop and there is simply no substitute for experience.

And even with time and practice, beating the S&P 500 is difficult. Even professional money managers struggle to overcome the odds and beat the market. Just 14% of large-cap funds outperformed the S&P 500 over the last five years, and only 8% outperformed the S&P 500 over the last 15 years, according to S&P Global.

Patience is the secret to making money in the S&P 500. The index may go up or down in any given year, but the odds of a positive return improve dramatically as the holding period lengthens. The S&P 500 has been a profitable investment over every rolling 20-year period since the index was created in 1957. In other words, buying and holding an S&P 500 index fund for at least 20 years has historically been a surefire path to profit.

The Vanguard S&P 500 ETF could turn $450 per month into $983,800 over three decades

The S&P 500 returned 1,800% over the last three decades, increasing at 10.3% annually. That period encompasses enough different market environments -- from economic booms to recessions -- that investors can reasonably assume similar results in the future.

In that scenario, $450 invested monthly would grow into $91,300 in one decade, $334,800 in two decades, and $983,800 in three decades, assuming an annual return of 10.3%.

Of course, some readers may not be able to save $450 per month and others may want to save more. To accommodate those situations, the chart below shows how different monthly contribution amounts would grow over time, assuming an annual return of 10.3%.

(see article for chart)

The last item of consequence is the expense ratio. The Vanguard S&P 500 ETF bears an ultra-low expense ratio of 0.03%, meaning the annual fee would be just $0.30 for every $1,000 invested in the fund. For context, the average expense ratio across mutual funds and ETFs was 0.47% in 2022.

That's just one more reason the Vanguard S&P 500 ETF is a compelling option. Investors would be hard-pressed to find cheaper alternatives with similar risk-reward profiles. Buffett is well aware of that, and it's why he has consistently recommended an S&P 500 index fund."

MY COMMENT

There are a huge number of SP500 options available for investors.

For the average investor with a long term horizan...this is a no-brainier. I have a little bit of the Vanguard SP500 Index fund left over from the old days in one account....but I no longer use that particular fund since Schwab hits me with a fee if I want to add to it. So I use the Schwab SP500 Index fund instead. There is basically ZERO difference.

I consider this INDEX as the ULTIMATE investment for long term investors that want exposure to the BEST of the markets and the top 500+ American companies. You will.....as a bonus.....get good exposure to ALL the big cap tech giants that you hear about every day in the news.

 

I am excited....no not the markets.....art.

A bronze sculpture that I have been waiting for is now complete at the foundry. I am waiting to see the shipping cost and get it onto a truck and headed to Austin. Hopefully we will have it here in about 7-10 days.

It does violate one of my art buying "rules"....to only buy dead artists that have market values established by the actual market.

This particular artist is age 82 and this particular sculpture is one of his most iconic items. Surprisingly I routinely see smaller versions of this particular sculpture sell at auction for a higher price than the larger copy that I purchased. Most people in the art world.....buying older and smaller copies at auction.....are not aware of about 20 copies this size being currently available. I imagine they will all sell out over the next year or two.

Basically my auction sales research confirms that I am getting a very good deal.....with good future appreciation potential. Although....is art an investment? Sometimes. But even with good price increases...... it is difficult for a piece of art to meet or beat stock market returns.

This particular sculpture is Western Art. Right now Western art is BOOMING.....and that is an understatement. My sculpture is 20 inches and I purchased at $15,000....directly from the artist. The sold out smaller version, at about 15 inches, sells routinely at auction for......$15,000 to $18,000. This is not a "size" issue. The larger version WILL be worth more. It is simply an issue of people not being aware of this issue being available.

 

ENJOY THE DAY EVERYONE....payback for having to endure the past couple of days.

CELEBRATE......and bask in the current market. You have to give yourself PSYCHIC REWARD on days like this. it reinforces your commitment to investing for the long term.

 

Ok but......this is just one account today. AND....I have calculated and added in the current gain for the two funds in the account since they will not post their gain till market close.

At this moment.....+$197,000.00

Keep in mind that I manage.....6 accounts. Two for myself, two for my kids, one for my sibling, and one for a family trust. This is NOT the "clean account" that I use for daily posting of results. BUT...it is invested the same way with the same holdings in about the same percentages. Any moves that I list on here have also been made in this account.

I dont know what this is going to show to anyone. What really counts is the percentage of gain you are achieving.....not the dollar figure. The bottom line.....are you beating the SP500.

 

One lesson that I would draw from the above.....as your account grows so does the fear of screwing up. I am basically fearless at this point in my life as an investor. It does not bother me to deal with BIG sums of money. I see it as no difference....compared to a small account.

BUT.....as account values grow many people DO have issues dealing with and managing that amount of money. It can be very stressful. Especially when you are dealing with your LIFE and your RETIREMENT.....and for some people there is no second chance.

ALSO......I had a lot of experience dealing with large sums of money in my business. After a while you just get immune to it.

I remember in my business I had a young intern/helper that did errands and things for me at one time. I would send them to the bank to do deposits for me. One day they came back and they were all freaked out....they had looked in the envelope and seen..... that the deposit was a single check of about $100,000. It made them really nervous to be carrying that deposit. I was surprised at how....."I"...had become so used to dealing with sums like that. it was a reality lesson to me.

At one time I was also managing my parents brokerage account as well as my in-laws brokerage account. NO PRESSURE....right....to be responsible for the entire savings of your extended family.....especially the in-laws. BUT...I can honestly say it did not bother me. I followed the same approach for those accounts also.....my BIG CAP long term investing strategy.

BUT in investing......the percentage gain or loss is all the SAME regardless of the amount involved.....obviously.

 

I would be doing a lot better today if I had not tied up $1.8MILLION into my two annuities 10 years ago. Probably another $4MILLION to $6MILLION in Net Worth. BUT.....I would do the same thing now if I had to do it again. Having an income that is guaranteed and outside my investments....allows me to be fearless and to be a 100% invested person for life.