The Long Term Investor

Strathmore.

I.....would NOT say that bull markets die from euphoria......(sentiment). I would say they die from poor earnings reports and/or bad economic news.

I know that over the past ten year or so....euphoria....has become a thing with the media and commentators. But I dont think it means much at all. I dont care how much euphoria there is....if the fundamentals are good in the markets.......and......the economy is not going down...... stocks will generally go up.

Even the economy going down sometimes does not impact stocks. The markets are not the economy and I have seen times in the past where the economy was poor but stocks still did just fine.

The other thing that can kill a bull market is some big BLACK SWAN event that is severe enough to have a medium term impact.

EDIT: I will add that as a long term fully invested all the time investor.....I dont really care when or if a bull market is going to end. I ride them all til the very end and than I hunker down and sit in the markets till the next one starts. AND....often even during corrections and bear markets I might make some money. In the end it all depends on what you own...which for me is a very concentrated small group of BIG CAP stocks.

 

Thank you tiresmoke for contributing to the success of my CMG.

 

I will join Tiresmoke with a new all time high today in my acccount.

I had eight of nine stocks GREEN today. My only RED stock was COST.

PLUS....I had two stocks over +2% gain today....NVDA and PLTR. I had five stocks between +2% and +1% gain today. My only GREEN stock today that was not at least +1% was AMZN.

I also beat the SP500 today by 0.70%.

 

The big boy story of the markets today.

Big Tech surges as S&P 500 crosses 5,600 for first time

https://finance.yahoo.com/news/stoc...00-crosses-5600-for-first-time-162155252.html

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

"US stocks again soared to fresh all-time highs on Wednesday as Jerome Powell's remarks on Capitol Hill buoyed rate-cut hopes and Big Tech stocks piled on the gains.

The S&P 500 (^GSPC) rose 1% for a 37th record close this year, breaching 5,600 for the first time. The Dow Jones Industrial Average (^DJI) jumped 1.1%, while the tech-heavy Nasdaq Composite (^IXIC) gained 1.2%. The S&P and Nasdaq were each higher for the seventh straight session.

Tech's biggest names continued to rise, powering the gains of the broader market. The AI darling Nvidia (NVDA) advanced more than 2%, while Apple, (AAPL), Microsoft (MSFT), and Google (GOOG, GOOGL) each gained more than 1%.

Bets on interest rate cuts have helped keep stocks roaring as signs of slowing in the US economy pile up.

Wall Street also looked to Washington for more optimism. In his semiannual testimony to Congress, Powell hinted the stage is almost set for lowering interest rates from two-decade highs, pointing to a cooling in inflation and in the jobs market. He also cautioned that keeping rates elevated for too long could weaken the economy, giving hope to rate-cut-hungry investors.

But a key test for stocks and rate-easing prospects lies ahead in the crucial consumer inflation report due Thursday. While a cooler reading will cement the likelihood of a Fed policy shift in September, a too-cool print could revive concerns about a recession and the labor market."

MY COMMENT

The way the markets are racking up gains....who needs rate cuts. I am just happy to be done with rate hikes and oversize emphasis on the FED every single day of the week.

I have noticed that most of the financial media sites are pretty mute these days. They really have nothing to fear monger.

 

So......the SP500 closed over 5600 for the first time. We are making history.

 

I will be playing a show this Friday evening. Outdoor of course....in the July Texas heat. I am now playing with a group of friends regularly. I have never played any of their material so I am in the process of becoming familiar with 30 songs that I have not heard or played before.

We have a regular....every Friday....show going on in Austin. We will use this show to fine tune the group and get me locked in with the material. After that we will expand booking and shows.

 

This is HUGE news for COST shareholders. NO....not a stock split.....but....the next best thing.

Costco Hikes Annual Membership Fee for First Time Since 2017

https://finance.yahoo.com/news/costco-raises-annual-membership-fee-202829281.html

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

"(Bloomberg) -- Costco Wholesale Corp. is boosting its membership fees for the first time since 2017, raising the charge for a basic membership to $65 a year from $60.

The 8% price increase for US and Canadian members will take effect Sept. 1, Costco said in a statement Wednesday. The price of the retailer’s premium membership will rise to $130 from $120. The move will affect about 52 million memberships.

Costco shares rose 2.4% at 5:40 p.m. in extended trading in New York. The stock has gained 34% this year through Wednesday’s close, outpacing the advance of the S&P 500 Index.

Investors and analysts have long waited for the Issaquah, Washington-based company to raise its membership price. Costco has typically increased fees every five years or so, prompting analysts in recent quarters to ask about the company’s thinking on the timing.

Executives had said an increase was only a matter of time, and that the company has experienced strong renewal rates, new sign-ups and customer loyalty. On earnings calls, they have acknowledged that an increase has taken longer than usual to materialize.

Jennifer Bartashus, a Bloomberg Intelligence analyst, wrote in a Wednesday note that the fee increase was expected and overdue from Costco’s usual five-year cadence.

“The company delayed an increase amid consumer concerns about inflation and the economic outlook, which have eased some,” she wrote, adding that she expects renewal rates to stay steady after the increase.

US consumers have faced surging prices across the economy in recent years, though increases have started to moderate. Retailers are anticipating inflation will return to more normalized levels of low single digits this year, and have reported drops in some areas, including general merchandise.

Costco’s customer base tends to be more affluent given the company’s membership model, and it has been relatively insulated from the broader pullback in sales growth and discretionary spending across the sector. The company said Wednesday that US comparable sales, excluding gasoline, grew 6.3% in June from a year ago.

Membership income is especially important for Costco, which has used the proceeds to invest in its operations and keep the price of goods down. The higher fees will provide a profit tailwind for Costco, which tries to entice shoppers with low prices on bulk amounts for a relatively narrow assortment of goods. Premium memberships have driven growth, and make up just over half of Costco’s total paid members.

Costco appointed a new chief financial officer earlier this year, hiring Gary Millerchip from Kroger Co. Ron Vachris has served as chief executive officer since January. The company has been adding more stores in the US and overseas, while investing in e-commerce.

The company is following Sam’s Club, owned by Walmart Inc., in raising the price of its membership as US consumers flock to warehouse stores that offer wholesale quantities of goods. Sam’s Club boosted its annual fee to $50 for basic and $110 for premium in 2022, although it used its rewards program to return the extra cost to members during the first year."

MY COMMENT

Just using the regular membership increase of $5.....this move will bring in $260MILLION per year for the company. BUT....with the executive membership going up by $10.....I am guessing more like $300 MILLION per year.

A huge payday for the company and shareholders. Plus......this is basically 100% profit.

After hours shares are up by +$22.39......or.....+2.53%.

 

OK....may as well get this one out of the way.

Inflation falls 0.1% in June from prior month, helping case for lower rates

https://www.cnbc.com/2024/07/11/cpi-inflation-report-june-2024.html

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

"Key Points

• The CPI, a broad measure of costs for goods and services, declined 0.1% from May, putting the 12-month rate at 3%, around its lowest level in more than three years.
• Excluding volatile food and energy costs, the so-called core CPI increased 0.1% monthly and 3.3% from a year ago. The annual increase for the core rate was the smallest since April 2021.
• A 3.8% slide in gasoline prices held back inflation for the month, offsetting 0.2% increases in both food prices and shelter.

The monthly inflation rate dipped in June for the first time in more than four years, providing further cover for the Federal Reserve to start lowering interest rates later this year.

The consumer price index, a broad measure of costs for goods and services across the U.S. economy, declined 0.1% from May, putting the 12-month rate at 3%, around its lowest level in more than three years, the Labor Department reported Thursday. The all-items index rate fell from 3.3% in May, when it was flat on a monthly basis.

This was the first time since May 2020 that the monthly rate showed a decrease.

Excluding volatile food and energy costs, so-called core CPI increased 0.1% monthly and 3.3% from a year ago, compared with respective forecasts for 0.2% and 3.4%, according to the report from the Bureau of Labor Statistics.

The annual increase for the core rate was the smallest since April 2021.

A 3.8% slide in gasoline prices held back inflation for the month, offsetting 0.2% increases in both food prices and shelter. Housing-related costs have been one of the most stubborn components of inflation and make up about one-third of the weighting in the CPI, so a pullback in the rate of increase is another positive sign.

Stock market futures rose following the release while Treasury yields tumbled.

The June inflation report means the Fed is “one step closer to a September rate cut,” said Chris Larkin, managing director of trading and Investing at E-Trade from Morgan Stanley. “A lot can happen between now and September 18, but unless most of the numbers pivot back into ‘hot’ territory, the Fed’s reasoning for not cutting rates may no longer be justified.”

In addition to the pullback in energy prices and the modest increase for shelter, used vehicle prices decreased 1.5% on the month and were down 10.1% from a year ago. The item was one of the main drivers in the initial surge in inflation back in 2021.

The tame inflation report meant that real average hourly earnings for workers increased 0.4% monthly, though they were still up just 0.8% from a year ago, according to a separate BLS report.

While Fed policymakers target inflation at 2% annually, the June CPI report provides further ammunition that the trend in prices is headed in the right direction.

The CPI peaked above 9% in June 2022, prompting the Fed to respond with a flurry of interest rate hikes that concluded in July 2023. Since then, the central bank has held its benchmark borrowing rate in a range between 5.25%-5.50%, even as inflation has fallen sharply over the past few years.

Following the report, traders in the fed funds futures market increased their bets that the central bank would lower rates starting in September.

“The latest inflation numbers put us firmly on the path for a September Fed rate cut,” said Seema Shah, chief global strategist at Principal Asset Management. “The smallest gain in core CPI since 2021 surely gives the Fed confidence that Q1′s hot CPI readings were a bump in the road and builds momentum for multiple rate cuts this year.”

Though Fed officials at their June meeting indicated the likelihood of one quarter percentage point decrease this year, markets now are pricing in an initial cut in September followed by at least one by the end of the year, according to the CME Group’s FedWatch tracker of futures contracts. Moreover, traders were even pricing in about a 40% probability of a third cut by December.

In other economic news Thursday, the Labor Department reported that weekly jobless claims fell to 222,000, a decrease of 17,000 from the previous week and the lowest level since June 1. Continuing claims, which run a week behind, nudged lower to 1.85 million."

MY COMMENT

Yet another economic report that supports rate cuts and a slowing economy. Good news.....since the sooner we get the FED out of the markets the better for all investors. They are a moronic distraction to stocks and stock investors.

Imagine the FED being out of the financial news and stocks and funds being primarily driven by fundamental business data. At that point we will be back to a purely "normal" market. Ok....I can dream.

 

BUT....regarding the above....watch out what you wish for. The BIG CAP tech companies are ALL in the RED today. Even COST with the membership fee boost is down in the red weeds right now.

We have been told for so long how the rate cuts will PROPEL stocks by all the experts and financial media....yet....this CPI report....a big indicator of rate cuts happening soon......has triggered a big sell off for the big cap NASDAQ and SP500.

NEVER....underestimate the insanity of the short term markets. AND.....never underestimate the experts and financial media having no clue how or why anything will happen in their predictions of how the financial world will react to some future event.

I have no idea why all the BIG CAP stocks are in the red right now. I assume it is anticipation of economic weakness and probably a huge overreaction in that regard.

 

Just wait and see.....NOW....we will be inundated with stories and commentary about the coming recessions and coming economic drop.

That is the GLORY of the media......there is always something to fear monger.

BUT....dont worry.....in the end this is good economic data and the coming rate cuts WILL be good for the markets and is money in the bank for investors. of course I am assuming that the FED does not delay the rate cuts too long and they end up tanking the economy.

At this point I consider it realistic and rational to do the first rate cut in September. I also consider it realistic and rational to do the first rate cut in November.

For those poor souls that are trying to buy a first house......we will hopefully see some relief in the mortgage rates some time after the first of the year. if we can get the 30 year rate into the 5% - 6% range....the housing market will explode.

Of course....that will lead to price jumps and probably bidding wars....so perhaps it will not be so good for those that have to wait for better mortgage rates. Possibly the best strategy if you are a first time buyer and can afford to buy right now would be to bite the bullet...buy now...and refinance later if the rates come down a bit.

 

LOL....I hate to lose money even short term. BUT.....with all the RED in the markets today....I guess the BIG BOY traders and BIG BANKS are not fans of dropping inflation and lower interest rates.

 

You know I can never resist a good Cathie Wood story.

ARK Investment's Cathie Wood defends strategy in letter to investors

https://finance.yahoo.com/news/ark-investments-cathie-wood-defends-224504411.html

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

"(Reuters) - Cathie Wood, founder and CEO of ARK Investment Management, defended the strategy of the firm's money-losing flagship fund, telling investors in a letter released late on Wednesday that its fortunes will reverse when interest rates fall.

The ARK Innovation ETF fund has taken investors on a rollercoaster ride in recent years. After a 67.6% gain in 2023, the ETF is down more than 12% so far this year. That compares to a gain of 16.9% for the S&P 500 index so far in 2024, closing above 5,600 for the first time Wednesday.

ARK's ETF, meanwhile, has seen net outflows of more than $1.8 billion in the last six months, according to data from VettaFi.

In a letter posted on ARK's website, Wood wrote she fully acknowledged "the macro environment and some stock picks have challenged our recent performance." Nonetheless, she added, "our conviction in and commitment to investing in disruptive innovation have not wavered."

ARK's top investments as of May 31 were Tesla, Coinbase and Roku, according to LSEG data.

Wood argued many of the fund's holdings were now in "rare, deep value territory" and poised to benefit disproportionately once interest rate cuts begin. She anticipated another blockbuster period for returns that would resemble the fund's 152.8% gains during the initial stages of the coronavirus pandemic.

"Exiting our strategies now would crystallize losses that lower interest rates and reversions to the mean should transform into meaningful profits during the next few years," Wood wrote. "We are resolute!"

ARK did not respond immediately to a request for further comment on the letter.

Morningstar, the Chicago-based investment analysis company, earlier this year calculated that ARK's losses had destroyed $14.3 billion in shareholder value in the 10 years ended December 31, 2023. ARK and Wood did not respond to requests for comment on that report.

Wood believes a key to future returns will lie in artificial intelligence-related investments - but not necessarily in market darling Nvidia and other megacaps.

In the letter, she said she expected to see "a more diverse set of winners to which the current equity market concentration should give way.""

MY COMMENT

I dont think her "strategy" is flawed. Basically being a tech value investor.

The problem is they do not follow their own strategy. They constantly seem to trade in and out of companies. They do not seem to hold long term to achieve the gains that will come from their value strategy. They just seem to flail around and trade in and out of companies based on short term news and other short term factors.

No I will never own this FAD FUND.

They had one good year and they are still riding that old horse. Their greatest success.....they are geniuses at manipulating the media for free PR and coverage. Basically the same as all the past.....MEDIA DARLING and STAR fund managers......we have seen in the past that were able to ride one good year or one good call for many years.

 

The ancillary story of the day.

10-year Treasury yield dives after June CPI unexpectedly decreases

https://www.cnbc.com/2024/07/11/us-treasurys-ahead-of-june-consumer-inflation-data.html

CURRENTLY at 4.188%.

GOSH....remember all the stories over the past couple of years about how the BIG TECH companies are so interest rate sensitive? I guess....not so much....according to the market reaction today.

WHAT? You mean the media and all the experts that spouted that nonsense did not know what they were talking about? How can that be.

 

BUMMER....for me.

As inflation cools, estimate for 2025 Social Security cost-of-living adjustment goes down

https://www.cnbc.com/2024/07/11/inf...curity-cost-of-living-adjustment-in-2025.html

 

HERE is the reality today.....but I dont buy the reason.

S&P 500 falls from record as investors rotate out of 2024 tech winners

https://www.cnbc.com/2024/07/10/stock-market-today-live-updates.html

MY COMMENT

Yes this is happening today. ALL the big cap tech companies are down today.

BUT....this is NOT "investors" rotating. This is "TRADERS"....short term traders rotating and trading the short term news and economic conditions. With this sort of one day drop....I have no doubt that we are also seeing massive.....lock-step....AI Trading Platform activity.

SO......bottom line...a good day to just ignore the short term as usual. I will be interested to see if the longer term market wakes up and where we end up by the close today and tomorrow.

LOL.....you can NEVER anticipate....why or what....the markets will do short term. So....I dont even try to do so. This is why I am fully invested all the time.

 

DO these people ever work? This is why I HATE celebrity CEO's.

Sun Valley conference has started with many big names showing up
Conference has been nicknamed 'Summer Camp for Billionaires'

https://www.foxbusiness.com/business-leaders/sun-valley-conference-started-many-big-names-showing-up

 

I have one stock to CHEER today.....HD. My only stock in the green today. UP by over +2.5%.

 

The FUN continues today. I am down over 3% for the day so far....in my nine stocks. As earlier, a single stock in the GREEN.......HD.

It is a classic....watch out what you wish for....day in the markets. The good news is that nothing about today is fundamental or significant. It is a "traders" dip in the markets. Classic herd behavior on the part of the big Wall Street trading army.