The Long Term Investor

WELL...that was fun. I BEAT the SP500 today by 2.16%....on a day when I had a single stock in the GREEN. I also ended the day with a strong gain in my account.

A.....WILD AND CRAZY....day

 

I dont have a clue what happened in the markets today or why. It was simply insane. Here it is.

Stock market today: Stocks slide, Dow suffers worst day in a year as Nvidia fails to spur market rally

https://finance.yahoo.com/news/stoc...dia-fails-to-spur-market-rally-133030820.html

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

"Stocks slid from record levels on Thursday as interest rate worries dominated investor sentiment after Nvidia's (NVDA) blockbuster earnings failed to spur a broader market rally.

The tech-heavy Nasdaq Composite (^IXIC) fell about 0.4%, while the S&P 500 (^GSPC) dropped more nearly 0.8%.

The Dow Jones Industrial Average (^DJI) dipped more than 1.5%, or 600 points, for its worst day since March 2023. A 7% drop in Boeing (BA) shares following an announcement of delayed plane deliveries weighed on the Dow.

Nvidia's shares popped more than 9% to top $1,000 for the first time after the AI bellwether blew past Wall Street's sky-high forecasts for first quarter earnings. The chip giant also raised its guidance, easing fears that AI demand might be losing steam.

Other chipmakers and AI-related stocks rode higher on the coattails of the results, with server maker Dell (DELL) up about 4%.

Stocks had slipped on Wednesday after Federal Reserve minutes reignited concerns over the path of interest rates. Economic data on Thursday furthered that narrative. The S&P Global Purchasing Managers Index (PMI) for May came in at 54.4 versus 51.3 last month. The flash reading, which came in higher than economists had expected, showed business activity accelerated at the fastest pace in two years despite the Fed's efforts to quell price pressures.

Stocks started their declines for the day following the report."

MY COMMENT

YOU have got to be kidding.....the S&P Global Purchasing Managers Index caused the drop today. Most investors dont even know what this is...much less....care about it.

Some really CRAZY....AI trading going on today. I dont know what else to use as an excuse. There really is no excuse....it was a total aberration today.

 

Or perhaps the NVDA earnings report was so GREAT......that everyone decided that there was no use owning any other stock and they sold everything to go into NVDA.

WTF....and.....who knows. We are simply into the TWILIGHT ZONE.

Wait and see....NVDA will be down tomorrow and the rest of the market will be up by....thousands of points. (not really)

 

Or is this the reason for the market drop today?

Daily marijuana use surpasses alcohol consumption, new study finds. Here’s what it means for the booze business

https://www.cnbc.com/2024/05/23/dai...sses-alcohol-consumption-new-study-finds.html

 

With the Boeing story about exploding fuel tanks today....I dont think I would be using this word today if I was the CFO.

Boeing sees free cash burn in 2024

https://finance.yahoo.com/news/boeing-now-sees-negative-free-154539788.html

When i first saw that my brain saw.....CRASH BURN.

 

Dont even bother asking me....I GOT NOTHIN.

 

Anyone else got any CLUE what we just saw?

At least Tiresmoke will now be moving into a new BIG house.....which he will buy for ALL CASH.

 

Markets will be closed on Monday....thank God...we will need a break. We get.....arguably..... the greatest earnings report in stock market history....and the markets collapse. WTF times 1000.

As for me....I will be doing a little trip to look at a painting on Monday. I have done a little bit of playing lately with some friends. I still have to get my butt in gear and get moving on a live CD that I am going to produce. I have the Engineers number sitting on my desk and I have been ignoring it.

 

I agree completely tiresmoke. We have had a free and clear house since about 1986. It was a godsend for me as a business owner who funded my own business from personal assets....to not have a house payment. It has made life so much easier in business and in retirement to not have that HUGE hit each month to the check book.

That is a great goal.....and...I am sure you will get there. Good for you.

 

I have been reading and looking since before he open. AND....I GOT NOTHIN. I am still scanning sites....but there is nothing going on today and nothing newsworthy to talk about in the financial world.

At least the averages are ALL green to start the day. BUT....remember....we were also green to start the day yesterday and than the entire day went to crap except for NVDA. And....the crazy thing about yesterday....there was not rational reason for the huge market drop.

Oh well....that is just how the short term works.

 

Well this is all I have right now.

Stocks rise slightly as Dow looks to recover from worst session since March 2023

https://www.cnbc.com/2024/05/23/stock-market-today-live-updates.html

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

"Stocks were slightly higher on Friday, following the worst session in more than a year for the Dow Jones Industrial Average.

The Dow rose 51 points, or 0.1%. The S&P 500 gained 0.3%, while the Nasdaq Composite
rose 0.4%.

Shares of Workday fell more than 10% after the company reduced its subscription revenue guidance for the full year. Intuit also fell 8.3% on weak forward guidance. Meanwhile, Deckers Outdoor
surged 11% after posting an earnings and revenue beat.

During Thursday’s session, chipmaker Nvidia added more than 9%, propelled by strong guidance in addition to an earnings beat and a 10-for-1 stock split. Nvidia has become a key bellwether for the broader market, and is the de facto leader of the so-called “Magnificent Seven.” Nvidia was last trading marginally lower Friday.

The rise in the artificial intelligence darling did not help the market, with the three major averages ending Thursday’s session lower. The Dow suffered its worst session since March 2023.

“That NVDA couldn’t support the market underscores that even the most powerful company within the S&P 500 can’t fight the Fed,” said Quincy Krosby, chief global strategist for LPL Financial.

Robust economic data further dented investors’ hopes for rate cuts from the Federal Reserve.

Demand for durable goods was much higher than expected in April, the Commerce Department reported Friday. Orders for long-lasting items such as appliances, cars and airplanes rose 0.7% for the month, slightly below the 0.8% increase in March but far better than the Dow Jones consensus estimate for a 1% decline. Excluding transportation items, orders still accelerated 0.4%. However, new orders were flat, excluding defense.

May services and manufacturing data also surpassed forecasts from economists, according to purchase manager surveys from S&P Global released Thursday. Weekly jobless claims numbers on Thursday also signaled that any weakening in labor market demand may have stalled.

To that end, the S&P 500 is tracking for a weekly loss of 0.7%, while the Dow is on pace to drop about 2.4%. The Nasdaq is the outperformer, with a modest gain of 0.3%.

The Dow is set to snap a five-week winning streak and the S&P 500 to break a four-week positive streak as concern the Fed won’t cut interest rates this summer overshadowed Nvidia’s blockbuster report. After some strong economic and labor data this week, Goldman pushed its forecast for the Fed’s first rate cut back to September from July.

“Inflation is likely to be much improved by September, but hardly perfect, and still at a year-on-year rate that makes cutting a less than obvious decision,” wrote Goldman economist David Mericle."

MY COMMENT

Other than a mention of the averages.....the above comment on the markets "TODAY"....says nothing but a recap of yesterday. I guess they could not find anything to talk about today either.

I do not this INSANE statement above:

"That NVDA couldn’t support the market underscores that even the most powerful company within the S&P 500 can’t fight the Fed"

NVDA has no obligation, or purpose, or job.....to support the markets. This is simply irrelevant BS.

Their only job is to make money as a single business for their company and shareholders. It is not their job to somehow support the general markets. It is not their job to fight the FED.....whatever that means. This is the same BS we saw for days before their earnings.

 

Cut out the political stuff here and you have the BIG ISSUE in the economy right now.....the destruction of the small business system that is......(used to be?)......the guts of the American economy.

Business owners fear they won’t survive another Biden term: ‘We’re all struggling’
49% of business owners say they will 'definitely' or 'probably' not survive another four years of Bidenomics

https://www.foxbusiness.com/economy/business-owners-fear-wont-survive-another-biden-term-struggling

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

"Small business owners nationwide are sounding the alarm over another four years of Bidenomics as inflation chips away at their bottom lines.

"Biden should do something about it, and he should never continue because he only [cares] about himself and his family," Pluto Organic Cafe owner Maher Youssef said on "Fox & Friends" Thursday.

"We're all struggl[ing]. Everybody is struggl[ing]. I don't know how we are going to continue like that."

According to RedBalloon and PublicSq.'s May Freedom Economy Index, 49% of surveyed business owners say they will "definitely" or "probably" not survive if Biden is re-elected in November.

One factor in the rising pessimism from business owners is skyrocketing prices for consumers and small businesses alike.

Since President Biden took office in 2021, prices are up nearly 20%. Just last month, the consumer price index showed the cost of everyday goods was still on the rise, up 3.4% from March.

What's more, grocery prices have risen 21% in the last three years, according to the U.S. Bureau of Labor Statistics.

"So in 2020, when we first opened, we would pay around $15 a case for eggs, which is 15 dozen. Now it's upwards of $50, and sometimes it's $100 for a case of eggs," Just Baked Bakery and Deli co-owner Katlyn Swaffer also told "Fox & Friends" co-host Steve Doocy.

"When you go buy little things, like salsa or bread or toast or anything, everything becomes very expensive. We can't put the prices too high because people can't afford to buy from you," Youssef added, also pointing to high gas prices.

Customers are also dwindling as business owners are faced with passing on costs.

"We have a lot of our regular customers who [are] no longer regular customers. They maybe come once a month instead of once a week, or they're not buying their cakes from us anymore because we have to charge more than the grocery store," Swaffer shared.

As Biden campaigns for re-election, inflation and the economy remain a top-of-mind issue for Americans, with business owners and households fearing the consequences of four more years of Bidenomics."

MY COMMENT

As a former small business owner.......I have no doubt that these small business are closing their doors in droves. They are basically screwed. t

Their suppliers are constantly raising prices which they have to pay to get what they need for their business. At the same time if they raise prices beyond the huge price increases to date....they will lose more and more customers.

In my opinion this is the greatest danger to the economy....the destruction of small business.

 

SO.....here we are one day after what I would call the greatest quarterly earnings report in market history....and....the company that put up the numbers is struggling to be positive in their share price today.

Today at this moment NVDA is up by.....0.34%. It is a very FICKLE market. It is a market that is for the most part disconnected from positive fundamentals.

Earnings this time around have been stellar. Yet at the same time we see these daily and weekly irrational market moves.

CRAZY STUFF.

 

At last it appears that some rationality and reason is returning to the markets at the moment.

I have to say the day to day markets are more CRAZY than I have ever seen them. The short term used to be the domain of the professional traders. NOW....I have no clue what or who is driving the daily markets. Probably computers and the media.

I will continue to .....HIDE OUT....in the long term.

 

Since there is absolutely NOTHING going on today.....I will turn to a beaten to death topic.

Nvidia's stock split isn't something for investors to ignore

https://finance.yahoo.com/news/nvid...estors-to-ignore-morning-brief-100008746.html

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

"Nvidia (NVDA) stock closed at a record high of $1,038 on Thursday.

In less than a month, that closing price will be closer to 104.

That's because, alongside its blockbuster earnings report on Wednesday, the company announced plans to split its stock 10-for-1, meaning existing shareholders will receive 10 shares of Nvidia for every 1 they own at a price that is 10% of the market value.

On the surface, this is just division.

The number of Nvidia shares outstanding goes up and the per-share price goes down; there is no change in the value of the business.

But, as TKer's Sam Ro noted back in February after Walmart (WMT) announced its own 3-for-1 stock split, market history isn't quite so neutral on the matter.

Data from Bank of America cited by TKer showed the average 12-month return for any stock after a split is 25.4%, more than double the average annual return for the overall market.

In other words, companies are more likely to split their stock in good times than bad. Notable, given that Nvidia's stock split also came alongside a 150% increase in its dividend.

And while commentary from its CEO, Jensen Huang, that demand for its chips remains robust while profits and sales rose more than 400% and 200%, respectively, would suggest Nvidia remains in good standing, business cycles often ebb and flow more quickly than the rate at which companies change how they reward shareholders.

Nvidia's new dividend will see its annual payment to shareholders rise from $395 million in its most recent fiscal year to nearly $1 billion annually. A pittance, some might say, for a company that had free cash flow of nearly $15 billion in its most recent quarter.

And given the performance of Nvidia's stock in recent history — shares are up over 2,600% in the last five years against a 120% gain for the Nasdaq — the company appears to have little trouble incentivizing investors to own its stock.

But no level of shareholder return goes unnoticed by investors.

The dividend hike is a notable increase in how much Nvidia has committed to regularly pay out to shareholders.

A commitment that typically only reverses during a company's most dire moments — indicating Nvidia is moving further away from contemplating any downsides of the present AI boom."

MY COMMENT

OK......I like this little article.

AND....I will say it....the constant statement......that stock splits are neutral events.....is BS. I can say that probably 80-90% of the stock splits that I have gotten as an investor during my life have lead to amazing gains.

Stock split announcements....ALSO.... often lead to good gains in anticipation of the split even if the amount of gain after the split is muted.

Stock splits happen when companies are successful and their fundamentals and fundamental business are BOOMING. Is there any surprise that a booming company sees stock gains following a split?

AND....there are many more reasons why the typical.....economic and investing academic, ivory tower statement.....that stock splits are a neutral event....is BS. HERE is the one single reason that matters most:

"Data from Bank of America cited by TKer showed the average 12-month return for any stock after a split is 25.4%, more than double the average annual return for the overall market."

 

AND...speaking about stock splits.

Nvidia Stock Split Looks to Be First of Many in Tech, BofA Says

https://finance.yahoo.com/news/nvidia-stock-split-looks-first-150811843.html

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

"(Bloomberg) -- Nvidia Corp. delighted investors when it announced a 10-for-1 stock split earlier this week. The move may be the start of a trend, as several prominent tech companies trade at prices high enough to tip the scales toward similar splits, according to a note from Bank of America.

The bank highlights 36 S&P 500 companies with stock prices above $500, a level suggesting they may be candidates for splits. Two members of the Magnificent Seven — Microsoft Corp. and Meta Platforms Inc. — approach that threshold.

“Stocks with high share prices are typically prime candidates for split announcements,” the note’s authors, led by Jared Woodard, wrote. “Management teams might feel that lower stock prices broaden access to the stock.”

Broadcom Inc., Super Micro Computer Inc., ServiceNow Inc., and Netflix Inc. are also among the companies BofA suggested could be candidates for splits, given their share prices. Booking Holdings Inc. could be high on the list as well, as one share of the online travel agency goes for more than $3,500. Earlier this year, Booking initiated a dividend, another move seen as shareholder-friendly.

BofA’s list includes companies from a variety of sectors, with AutoZone Inc., Regeneron Pharmaceuticals Inc. and Eli Lilly & Co. also coming with hefty price tags. Earlier this year, Chipotle Mexican Grill Inc. announced a historic 50-to-1 split.

The significance of stock splits is more psychological than fundamental, as the value of an investor’s stake won’t change, even as the number of shares they own does. In Nvidia’s case, one share — currently valued around $1,000, making it among the ten highest priced in the S&P 500 Index — is slated to turn into 10 with a value of about $100 each.

While a high price doesn’t necessarily translate to a high valuation, a lower price could make a stock look more appealing, especially for retail investors. Nvidia is already the top holding among retail investors, according to a May 22 Vanda Research report, which touted the chipmaker’s “exceptional share price performance” for its popularity. Nvidia has more than doubled this year, building on last year’s surge of almost 240%.

BofA sees splits as “a sign of strength,” and notes that companies that split their stocks tend to see strong returns in the subsequent year.

“Historically, stocks have notched 25% total returns in the 12 months after a split is announced, compared to 12% for the broad index,” it wrote, adding that outperformance “is no guarantee,” as while a split can signify strong momentum, companies can also struggle in challenging environments.

Nvidia’s split was the second time it’s made such a move in recent years, following a 4-for-1 split announced three years ago. Other megacap tech stocks with splits in recent years include Apple Inc. and Tesla Inc."

MY COMMENT

ADD in COSTCO. I am moderately expecting them to announce a stock split when they report their earnings on May 30.

I hope they do not wimp out and let the share price continue to linger at the current high level.

I am NOT a fan of what we have seen with company management in the last 5-15 years. The emphasis on breaking up companies....supposedly....creating "shareholder value". The emphasis on buying back your own shares rather than investing free cash in the business or returning it to shareholders as dividends. The irrational refusal of companies to split their stock.

 

I just did my mid day look at my account. I have nine of ten stocks GREEN.....at this moment. My single RED stock....HD.

Poor HD has been having a little bit of a hard time YTD. They are red for that time span. I have NO ISSUE with this company and will definately continue to be a shareholder. I love their dominance and their management. Unfortunately they are way too honest in their guidance and they suffer every time some retail company takes a hit.

All in all I dont mind......I LOVE HD as a holding. Every stock does not need or have to be a go-go tech company and I am very happy to own this one.

 

YEP....I am with you goldendad. There are probably not many of us on here that remember investing in the "round lot" era. You had to pick up the phone or go in person to buy or sell a stock.

I thought I was in heaven....back in the old days (late 1980's I believe?) when Schwab put in a system to buy and sell stocks using your phone keypad with a series of prompts and key strokes to input the stock symbol. AND....when I say phone I mean an old fashioned land line.

In my business I was an early adapter of cell phones. I had the "slim" version of the "brick" phone. When I got one of the the first flip phones....a STAR TAC....it was the height of tech. I got mine right when they were released in 1996...and it cost a fortune...for the time. If my memory is right about $800. I still have that old STAR TAC phone siting in my bottom desk drawer. That phone got service EVERYWHERE.....it was amazing.

There is a lot that I miss about those old days as an investor. Of course....there is much that is nice in the modern investing era too. AND....I guess I cant complain.....since the markets have been very good to me and my family.