The Long Term Investor

I spent yesterday following an auction for the afternoon. There was a painting in the auction that I wanted to bid on so I was checking in on the auction all day to see how it was progressing toward that painting which was about 250 lots in.

This painting is the best example that I have seen from this deceased artist.......who usually sells for moderate prices. When it came up for bid I was the high bid at $720 including buyers premium. I would value the painting at about $1500 to $2000 if it was in a proper art auction. The auction that I bought it in was a general antique auction.

The past 6-7 times that I thought I found a "sleeper bargain" I have been outbid. I tend to be pretty tight with my money when I am bidding on what I think will be a "bargain item". It is also very hard to find a "sleeper" item these days with nearly every auction online and available to buyers all over the world. This time I finally got a win. A very nice quality painting at a very moderate price.

 

Of course....back to stocks....APPLE is one of my few stocks down today.

Apple Faces Worst iPhone Slump Since Covid as Rivals Rise

https://finance.yahoo.com/news/apple-iphone-shipments-plunge-10-001359770.html

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

"(Bloomberg) -- Apple Inc.’s iPhone shipments slid a worse-than-projected nearly 10% in the quarter ended in March, reflecting flagging sales in China despite a broader smartphone industry rebound.

The company shipped 50.1 million iPhones in the first three months of the year, according to market tracker IDC, falling shy of the 51.7 million average analyst estimate compiled by Bloomberg. The 9.6% year-on-year drop is the steepest for Apple since Covid lockdowns snarled supply chains in 2022, the researchers said.

The Cupertino, California-based iPhone maker has struggled to sustain sales in China since the debut of its latest model in September. The resurgence of rivals from Huawei Technologies Co. to Xiaomi Corp. and a Beijing-imposed ban on foreign devices in the workplace have all weighed on sales. The IDC data provides the first snapshot of the global performance of Apple’s most important product ahead of earnings on May 2.

Shares were down less than 1% in premarket trading in New York on Monday.

The drop in iPhone shipments is significant given the overall mobile market registered its best growth in years. Smartphone makers shipped 289.4 million handsets in the period, marking a 7.8% rise from the trough of a year ago, when many manufacturers were grappling with a surfeit of unsold devices. Samsung Electronics Co. regained the top spot in the March quarter, while budget-focused Transsion increased shipments by 85% and Xiaomi bounced back to close the gap on second-place Apple.

“The smartphone market is emerging from the turbulence of the last two years both stronger and changed,” said Nabila Popal, research director at IDC. “While Apple has been super resilient and seen a lot of growth in shipments and share over the last few years, it will be a challenge for it to maintain the pace of growth and the peak share it saw in 2023. As the market recovers further in 2024, IDC expects Android to grow much faster than Apple.”

Prominent Apple suppliers Hon Hai Precision Industry Co., Murata Manufacturing Co. and LG Innotek Co. fell in Asia trading on Monday, amid a broader selloff on fears of escalating conflict in the Middle East.

What Bloomberg Intelligence Says

Xiaomi’s 1Q handset shipments of 40.8 million units, according to IDC, jumped 33.8% year over year while both Apple and Samsung declined. Its strong handset sales were likely driven by a recovery in its overseas market and might lead to high-teens sales growth in the first quarter.

During the pandemic, Apple’s iPhone showed the greatest resilience as consumers pulled back from purchases of smartphones by most of its Android-powered rivals. That inventory buildup led to aggressive pricing by Chinese competitors like Xiaomi, which took months to deplete stocks and are now starting to ramp shipments back up. Huawei’s surprise return to prominence last year — with its own made-in-China chip and HarmonyOS operating system on the Mate 60 series — has been eroding Apple’s share of China’s premium market since August.

“Increased competition in China is a big part of Apple’s decline in Q1,” Popal said. Elsewhere, a number of regions started the year with excess iPhone inventory after heavy shipments in the final months of 2023, she added.

Average selling prices for handsets are rising, as consumers increasingly opt for premium models that they intend to hold on to for longer, IDC’s researchers found. Apple, which consistently maintains the highest ASP in the industry, has led the way in this, with consumers showing a distinct preference for its higher-tier models. Still, the company has this year resorted to unusual discounts to spur sales, with some retail partners in China taking as much as $180 off the regular price.

In March, Apple opened a large new store in the center of financial hub Shanghai, with Chief Executive Officer Tim Cook in attendance. China is host to the company’s biggest retail network outside the US and accounts for roughly a fifth of sales, largely driven by the iPhone. Many of the attendees who spoke to Bloomberg at the Shanghai event had acquired their iPhones more than two years ago. And while those Apple fans said they intended to remain within the company’s ecosystem, some said they would also consider Huawei’s Mate 60 successor or foldable device options from rivals."

MY COMMENT

China is going to be....a pain in the butt.....a thorn in the side.....of APPLE for a long time. Apple stupidly tied its future to China a long time ago and sat mute while China stole all their tech and manufacturing secrets. They relied on China being a good business partner. Now the Chinese government has turned on them and no longer needs them.

A lesson for anyone that is considering linking their business success to China. They will always SCREW YOU.....after all....they are the worlds most brutal communist dictatorship

 

Most of the early gains have now dissipated. The profit takers have been active. From here on the REAL day for the markets begins.

 

A companion article to my comments about APPLE above:

Apple is no longer the world's largest phone seller

https://finance.yahoo.com/news/apple-no-longer-worlds-largest-134210559.html

 

Some very good basic advice here.

The S&P 500 Is Near Its Record High: The 2 Worst Mistakes Investors Can Make Right Now

https://finance.yahoo.com/news/p-500-near-record-high-091200449.html

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

"The S&P 500 (SNPINDEX: ^GSPC) advanced 24.2% in 2023 as signs of economic resilience made investors increasingly confident in a soft landing, a scenario in which the Federal Reserve successfully brings inflation under control without causing a recession.

That momentum has spilled into 2024. The S&P 500 advanced another 10.2% during the three-month period that ended in March, its second-strongest first-quarter performance of the past decade. Even more impressive, the index has already hit 22 record highs this year, according to Goldman Sachs, and it sits within striking distance of another.

Here are the two worst mistakes investors can make right now.

Mistake 1: Avoiding the stock market or selling stocks without good reason

Isaac Newton once said, "What goes up, must come down." That axiomatic statement is irrefutable where gravity is concerned, but investors should never apply that logic to the financial world. The stock market is not obligated to decline after moving higher.

In fact, investing in the S&P 500 at its peak has historically been a smart decision. Strategists at JPMorgan Chase recently wrote, "Over the last 50-odd years (going back to 1970), if you invested in the S&P 500 at an all-time high, your investment would have been higher a year later 70% of the time, with an average return of 9.4% -- versus the 9% on average when investing at any time."

With that in mind, the worst mistake investors can make right now is avoiding the stock market or selling stocks simply because they are worried about a possible correction. To quote famous investor Peter Lynch, "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves."

To be clear, I am not saying the stock market will definitely go up in the coming months. I am simply pointing out that market peaks are nothing to fear. More importantly, patient investors have historically done quite well. The S&P 500 returned 572% over the last two decades, compounding at 10% annually, despite suffering three bear markets and seven corrections.

Mistake 2: Falling prey to fear of missing out

There is a second mistake, no less dangerous than the first, that investors must avoid: falling prey to fear of missing out (FOMO). Even the most levelheaded investors can be tempted to ignore fundamentals and chase momentum when the stock market is soaring, but purchasing stocks without concern for price will eventually backfire.

The frenetic enthusiasm surrounding artificial intelligence (AI) is an excellent example. I believe AI will change the world in the coming decades, perhaps more so than any technology in human history. In fact, just as you and I take mobile phones and the internet for granted, I bet people in the future will consider self-driving cars and autonomous robots commonplace. But that does not mean every AI stock is a worthwhile investment.

More importantly, not even the best AI stock is worth buying at any price. Investors must always consider valuation when putting their money to work in the market. Warren Buffett commented on that topic in his 1982 letter to Berkshire Hathaway shareholders. "A too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments," he wrote.

With that in mind, the S&P 500 currently trades at 20.5 times forward earnings, a significant premium to the 10-year average of 17.7 times forward earnings, according to FactSet Research. That means many stocks are trading at historically elevated valuations, so investors should be especially cautious in the current market environment. To quote Buffett, "Be fearful when others are greedy."

Here's the bottom line: The two worst mistakes investors can make right now are (1) avoiding the stock market or selling stocks without good reason, and (2) falling prey to fear of missing out. The S&P 500 has historically performed quite well from record highs, but not even the best stock is worth purchasing at any price. Investors should always consider valuation when buying stocks, and they should never buy a stock they aren't prepared to hold through a market downturn."

MY COMMENT

Stick with the long term and you will be just fine regardless of market action and short term events. The danger for any human......EMOTION.

 

OK....NASDAQ is now in the RED.....BUMMER.

 

The FED......people continue to be afraid of them either not cutting rates..... or worse....... doing a rate hike some time this year.

At this point the FED is not going to do anything to hike rates. The Ten Year Treasury is taking care of that for them. As long as the Ten Year is moving up on its own there is no need for the FED to hike rates. They can sit back and enjoy the free ride compliments of the Ten Year moving up.

Of course the FED is partly behind the Ten Year action even if the are not hiking rates. They have been on a relentless media campaign lately...... talking the Ten Year rate higher with their MORONIC constant speeches. At the same time what they are doing is creating excess volatility and trashing the stock markets......right on schedule....earnings time.

Of course this works for them....but NOT for everyone else......they are creating turmoil in the economy, disrupting the real estate markets, creating fear, nervousness and skittishness as seen in the price of gold, jerking around the stock markets, etc, etc, etc.

NONE of this is the job of the FED. AND.....they need to be very careful before they unleash something that gets out of control and can not be walked back. The law of unintended consequences.......a big danger when things are being pushed by GOVERNMENT INSIDER IDIOTS.

 

At this point in the day I am in the GREEN with six of nine stocks UP. My down stocks right now.....PLTR, HD, and AAPL.

Poor APPLE being punished for linking themselves to China. BUT....still a great company with a strong future.

 

ALL RED except for SMCI. I hate lunch time on Wall Street.

 

A WORTHLESS day today with stocks hammered due to the Ten Year Yield.

S&P 500 Breaks Below 5,100 as Big Tech Sells Off: Markets Wrap

https://finance.yahoo.com/news/asian-stocks-set-fall-wake-220847015.html

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

"(Bloomberg) -- Tech megacaps dragged down stocks as bond yields jumped after hot retail sales spurred bets the Federal Reserve will be in no rush to cut rates. Oil whipsawed on geopolitical angst.

In a volatile session, the S&P 500 erased an earlier advance and fell over 1%. Microsoft Corp., Apple Inc. and Nvidia Corp. led declines in the rate-sensitive technology space. Volatility perked up, with the premium for one-month put options to protect against a pullback in US equities hitting the highest since October. Wall Street’s “fear gauge” — the VIX — hit levels unseen this year.

“Stocks began to violate uptrends and pull back,” said Craig Johnson at Piper Sandler. “Interest rates are expected to stay higher for longer. A more cautious and tactical approach is favored as earnings season gets underway.”

The S&P 500 broke below 5,100, dropping to the lowest in almost two months. The tech-heavy Nasdaq 100 slid over 1.5%. Both gauges breached their 50-day moving averages — seen as a bearish signal by several chartists. Banks outperformed on a surprise profit from Goldman Sachs Group Inc.

Treasury 10-year yields spiked nine basis points to 4.62%, while those on two-year notes came closer to 5%. Bonds were also under pressure as JPMorgan Chase & Co. and Wells Fargo & Co. tapped the US high-grade bond market, the first in a likely parade of bond sales from banks after results.

West Texas Intermediate reclaimed its $85 mark — after briefly falling below it — and gold climbed on fears of escalating tensions in the Middle East. Top Israeli military officials reiterated the country has no choice but to answer Iran’s weekend attack.

US retail sales rose by more than forecast in March and the prior month was revised higher, showcasing resilient consumer demand that keeps fueling a surprisingly strong economy. As long as a robust labor market supports household demand, there’s a risk that inflation will become entrenched.

“If the S&P 500 is going to avoid its first three-week losing streak since last September, investors will need to move past concerns that rate cuts will be delayed because of sticky inflation,” said Chris Larkin at E*Trade from Morgan Stanley. “In the near-term, that could come down to the tone set by the first full week of earnings season, but geopolitical tensions in the Middle East remain a wild card.”

The strong tailwind from easy financial conditions continues to boost inflation and growth, including consumer spending in March, said Torsten Slok at Apollo Global Management, who continues to bet the Fed will not cut interest rates in 2024.

“The markets have been buoyed by strong corporate profits and the elixir of lower rates, but it seems like those two things are increasingly at odds with each other, so we would exercise some caution in the near term,” said Chris Zaccarelli at Independent Advisor Alliance.

Expectations for monetary policy have been shifting toward a later start to Fed rate cuts, which officials have said requires a higher degree of confidence that inflation is on a sustainable path back toward their 2% target. Traders are no longer fully pricing in a rate cut before November.

“In our view it’s not about ‘higher for longer’ when it comes to the Fed’s rate regime rather, it’s a continuation of the ‘pause for now’ until inflation gives up its stickiness,” said John Stoltzfus at Oppenheimer Asset Management.

Due to the heightened concern that the Fed will be “slower to lower” interest rates, investors now worry that these sticky inflation readings will be viewed as a catalyst for correction, said Sam Stovall at CFRA.

For all 24 corrections since World War II, it took the S&P 500 only four months to recover all that was lost in the decline, he added. Better yet, since 1990, the market got back to breakeven in only three months.

“Therefore, history once again reminds us that, for long-term investors, it has typically been better to buy than bail,” Stovall said.

Stubborn inflation, a robust economy and signals from Fed officials that interest rates will remain higher for longer have derailed traders’ optimism for an interest rate cut by summer. But that doesn’t mean they’re necessarily worried about the stock market.

Soothsayers at Jefferies JPMorgan Chase & Co., Citigroup Inc. and State Street Corp. agree that the strength in economic data and corporate earnings is enough to keep this year’s stock market rally going — whether or not interest rates are dialed back.

Stickier inflation stemming from strong economic momentum is better for US equities than stagflation, according to Bank of America Corp. strategists led by Ohsung Kwon.

“If inflation is sticky because of momentum in the economy, that’s not necessarily bad for stocks,” they wrote, adding “but stagflation is.”

“Recent inflation data has laid to rest the notion of a Goldilocks US economy. Instead, investors and the Fed will have to put up with a bumpier disinflation path than they assumed at the start of the year,” said Jason Draho at UBS Global Wealth Management. “But overall macro conditions of trend-level growth, slow and bumpy disinflation, and a Fed ready to exercise its put of rate cuts is still supportive for risk assets.”

Don’t bank on an upbeat corporate earnings season to drive equities higher as much of the optimism is already priced in following the record-breaking rally this year, according to JPMorgan Chase & Co. strategists led by Mislav Matejka wrote.

“Equities have already had a good run into the results, suggesting that investors are more optimistic than the downbeat earnings projections by sell-side analysts convey,” they said. “We need to see clear earnings acceleration in order to justify current equity valuations, which we fear might not come through.”

Strategists at BlackRock’s Investment Institute see signs of earnings growth broadening beyond US technology behemoths to other sectors like industrials and materials in this reporting period.

Strong economic data and corporate earnings have supported risk appetite so far this year despite a jump in bond yields, but “earnings will need to deliver on high expectations,” team led by global chief investment strategist Wei Li said Monday in a weekly commentary note.

An improving outlook for the US economy and continued easy financial-market conditions have prompted Wells Fargo Investment Institute to boost its outlook for the US stock market and corporate earnings estimates.

The investment adviser raised its S&P 500 Index 2024 year-end forecast to range of 5,100 to 5,300.

“A point of emphasis is that these year-end targets allow for potential market disappointments related to the track of inflation and the federal funds rate,” strategists at WII wrote."

MY COMMENT

Just a crappy day for stocks today.

I wish someone would point me to the reason that we constantly hear about......"the rate-sensitive technology space"....especially in regards to the largest market cap, most profitable companies in the world......other than the fact that it is said over and over in the media with NO explanation ever given as to why or if it is even true. With the free cash flow and reserves these companies have there is NO WAY this is even remotely fact.

BUT....fact or not we are stuck with a market that is mostly based on perceptions rather than fact.

Earnings are probably TRASH for at least the next week or two.......since every company will be giving very conservative guidance in light of the current conditions. So.....in spite of good earnings.....we are going to get nothing.

We will see how long this little drop lasts. I suspect it will last at least a few more weeks with perhaps a few big UP days once in a while as market overreaction drives bargain hunters to pick up big name stocks.

I am sure.....considering the emotional level of modern investors.....that there will be a lot of PANIC SELLING that will also prolong the little drop. Whether we get to an ACTUAL REAL CORRECTION is up in the air.....I would say the probability is that we will end up with a technical correction some time over the next 2-4 weeks.

The bond markets are in full on panic mode and that will drive rates even higher....compliments of those markets being driven by the short term and short term trading.

All in all a series of events coming together right now that are going to create a challenging short term......2-4 weeks....for the markets.

If you are a REAL long term investor that is positioned properly with your risk tolerance.....and.....did not go out on a limb and ivnest short term money in the markets.....YOU will be just fine. Simply IGNORE IT ALL. That is what I will be doing....since....I dont depend on any of my stock market money for anything outside of creating family wealth.

 

A clean sweep for me today....EVERY stock in the red. I also got beat by the SP500 by 0.83%.

Some of the drop today is justified by data and events but much of it is investors talking themselves into a panic. Any good earnings today were WASTED.

What I say to fellow investors:

RELAX.....COURAGE....PATIENCE. Enjoy the CIRCUS.....and..... dont end up being one of the CLOWNS.

 

I dont have a lot of funds free to invest right now.....but If I get a chance I will put a few hundred to a few thousand to work in the markets this week or next. Every penny invested in a little market drop pays off big dividends later.

 

No.....he has not posted anything in a long time.

 

YEP.....rg......nearly every artist that we collect is American. Although we do have one European painting from the early 1900's and a couple of early Australian Aboriginal Dreaming paintings.....one by Clifford Possum Tjapaltjarri and one by Eunice Napangardi.

Although......since many of the Impressionistic and Western paintings that we collect are from the late 1800's to the mid 1900's.....a good number of the artists are either immigrants........ that came here from Europe....or children of immigrants.

The majority of the artists that we own....even if American.....studied in Paris at the Académie Julian and in the Paris teaching ateliers. Many also studied at the Art Students League in New York and a number studied with William Merritt Chase in New York.

We do own a few paintings from one artist that was part of the original group of artists to start the Art colony in Giverny, France......home to Claude Monet.

 

Speaking of art.....I missed the entire market day today driving to San Antonio and picking up the painting that we bought at auction on Sunday. Looks like the markets did not need any help from me.....at least my portfolio.

I ended the day with a good medium gain. Compliments of MSFT, SMCI and NVDA. I also beat the SP500 today by 0.95%.

 

Oh yes.....I did find a little bit of cash this morning before leaving for San Antonio......so.....I put in orders to buy 2 shares....YES two whole shares...... of NVDA and 10 shares of APPLE.

I like the current prices and every little bit helps to lower my cost basis. I now have about $7,500. in cash.....that I hope to put into the markets this year. But.....it will happen late in the year....if at all.....since I need to manage cash flow till than. If we both end up getting hearing aids this year....that would drop to $0,00.