The Long Term Investor

I ended the day and the week with a LOSS. I had two stocks in the green today.....CMG and AAPL. I also lost out to the SP500 today by 1.96%. I have been giving back some of my YTD gains all week.

Seems like the markets are in a little two week soft spot. Not a rare thing for summer...at least in the "old days". Lets see if we can staunch the blood next week or if we continue to head toward a summer correction.

I guess a lot is hanging on the GOOGL and MSFT earnings next Tuesday. I also have CMG reporting next week. They......CMG.....are already well into correction territory over the past month. BUT....I still like the stock.

 

Here is the markets SAD tale of woe this week.

DOW year to date +6.82%
DOW five days +0.37%

SP500 year to date +16.07%
SP500 five days (-2.36%)

NASDAQ 100 year to date +18.05%
NASDAQ 100 five days (-4.35%)

NASDAQ year to date +20.05%
NASDAQ five days (-4.11%)

RUSSELL year to date +8.52%
RUSSELL five days +1.03%

As for my entire portfolio.....at the close today I am year to date.....+41.48%. Last week my entire portfolio was at.....+49.45%. I lost nearly 8% this week. Oh well.....that is what a big gain is for.....a correction cushion.

 

HAVE A GREAT WEEKEND EVERYONE....I KNOW I WILL.

 

THE STORY FOR THE MARKETS THIS WEEK.

Stock market news today: S&P 500, Nasdaq post sharpest weekly losses since April amid tech rout

https://finance.yahoo.com/news/stoc...ses-since-april-amid-tech-rout-200147602.html

Worst loss since April? WTF....that is only 2.5 months ago.

 

I will pose a question.

Do you really think retail investors........starting about 2 weeks ago....... decided to.....suddenly..... start buying big numbers of shares of small cap stocks triggering about a 5-6 day "rotation"?

When I look at a chart of the RUSSELL I see the following:

July 10 was the first upward day.

The RUSSELL than went up from July 10.....at 2051.......to 2263 on July 16.

That time span is made up of MARKET DAYS.....Wednesday-Friday in one week and Monday-Tuesday the next week.

Starting on Wednesday July 17 through Friday July 19.....three MARKET DAYS.....the RUSSELL went DOWN each day from....2263 to 2184.

My COMMENT

The above is the entirety of the so called ROTATION.......so far. First is this really a "rotation"? I dont think so. It is way too early to make such a pronouncement. it is simply MEDIA BS.

Second.....do you really think that retail investors suddenly woke up on July 10 and decided to strongly move into small cap stocks? I dont. What I see is a five day rally in small cap stocks DRIVEN by speed traders and a story-line pushed by the financial media.

In fact.....I would be extremely surprised if ANY retail investors suddenly decided to sell BIG CAP TECH and move into the small cap side of the market. That is NOT normal activity for such investors.

So......I call BS on the whole thing.

Now.....are we going to see a rotation or broadening of the bull market? Possibly. Those stocks have severely lagged the averages. When will we know that it is for real? Well perhaps about 2-4 months from now....looking back at a chart of the markets.

Does it matter to me one way or another? No not really. What others do has nothing to do with what I do. If people want to sell big cap tech and buy small cap....that is their choice. How they want to try to make money is irrelevant to me and how I plan to make money. There is plenty of room for all of us to make money in whatever way we choose. if small cap investors rotate and are successful....GREAT.....it is good for the bull market......and....does not mean I will not ALSO make money in my big cap growth stocks. (It is all about earnings)

Now in terms of.......PROBABILITIES......I choose the big cap growth side of the markets. I dont care to invest in UNPROVEN small cap companies.....many of which make NO PROFITS and never will. Many of them will simply disappear......will fail,....or will be bought out by bigger companies.

I also have no interest in diversification into small cap stocks. I limit my diversification to big cap stocks......and....proven winners that ACTUALLY make money.

BUT......ALL......investing is personal. You have to do what works for you and what makes money for "YOU". That is the glory of the markets. There is NOT a single path that everyone has to take. "YOU" can find and use what works for you.....if you have the GUTS to ignore the constant market FADS and all the commentators trying to tell you how you have to invest.

 

It has been a long time....EMMETT. Are you doing ok? Are you still alive?

 

OK....now that we are past the bank focus of the first few weeks of earnings.....we start for real....with big tech on deck this week.

Inflation and the start of tech earnings: What to know this week

https://finance.yahoo.com/news/infl...arnings-what-to-know-this-week-110011382.html

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


"Stocks pulled back from record highs amid pressure across the technology sector after a global tech outage sent shockwaves throughout the market on Friday.

The S&P 500 (^GSPC) ended the week down nearly 2% while the Nasdaq Composite (^IXIC) dropped more than 3.5% on the week. Both indexes had their worst weekly performance since April. Meanwhile, the Dow Jones Industrial Average (^DJI) rose about 0.7%.

This week, critical readings on economic growth and inflation, as well as the start of Big Tech earnings, will determine if the malaise continues.

On the economic data side, the advanced reading of second quarter economic growth is slated for Thursday, followed by the June reading of the Personal Consumption Expenditures index, the Fed's preferred inflation gauge, on Friday.


In corporate news, a slew of S&P 500 companies are expected to report quarterly results in a week headlined by Alphabet (GOOGL, GOOG), Tesla (TSLA), and Chipotle (CMG).

Inflation outlook

Last week, new data showing a slowdown in inflation prompted markets to put the chances that the Federal Reserve cuts rates by the end of its September meeting at 100%.

The week ahead will bring another look at inflation, this time with the Fed's preferred gauge: The Personal Consumption Expenditures (PCE) index.

Due out on Friday, economists expect "core" PCE increased 2.5% in June from the previous year, down from May's 2.6% annual gain. Over the prior month, economists expect "core" PCE rose 0.2%, slightly above May's 0.1% increase.

The release comes less than a week before the Fed's next monetary policy decision on July 31. Markets are widely expecting the central bank to hold interest rates steady.

Growth check

One key question on investors' minds is whether the economy can remain resilient with rates still at their most restrictive levels in more than two decades.

Thursday will bring the first reading of Gross Domestic Product (GDP) for the second quarter. Economists expect the US economy grew at an annualized pace of 1.9% in the second quarter, up from the 1.4% growth rate seen in the first quarter.

Bank of America Securities head of economics Michael Gapen summed up expectations for the upcoming week's data release in a weekly note, writing," The data should show healthy activity, and that inflation is moving in the right direction."

Signs of a rotation

Since investors have become more optimistic about the likelihood of multiple interest rate cuts this year, a shift has been underway within the stock market.

In the past 10 days, Real Estate (XLRE) and Financials (XLF) have led individual sector action. Meanwhile the market's biggest winners of the past year, Technology (XLK) and Communication Services (XLC) , have recently been the worst-performing sectors in the S&P 500.

And the rotation has finally trickled down in cap size too, with small caps joining the 2024 stock market rally.

The small-cap Russell 2000 (^RUT) is up about 8% over the past month, while the S&P 500 is up less than 1% in the same time period, sparking debate over whether this bout of small-cap outperformance can continue.

"We think there is room for the rotation into low quality to persist if rate cuts remain priced and the Trump 2.0 trade carries on ahead of US elections," UBS Investment Bank US equity derivatives strategist Maxwell Grinacoff wrote in a note to clients on Thursday.

Big Tech earnings on tap

With Big Tech stumbling amid the market rotation, the fundamental story for some of the stock market's largest names will be in focus in the week ahead.

Tesla and Alphabet are slated to report earnings after the bell on Tuesday. Second quarter results from the two Magnificent Seven members will provide an early read on investor appetite for the most popular trade of 2023. Both stocks are up double digits over the past six months despite the recent sell-off.

The question is whether the AI-fueled trajectory upward can continue.

"The biggest risk heading into the next six to eight weeks is, are we setting ourselves up for this AI disappointment [in earnings]?" Ryan Grabinski, Strategas Research Partners managing director of investment strategy, told Yahoo Finance. "Do all of the trades that were associated with AI ultimately begin to unwind themselves?"

How Big Tech companies perform will likely determine the trajectory of earnings growth for the broader S&P 500. Four companies — Alphabet, Nvidia (NVDA), Meta (META), and Amazon (AMZN) — are expected to grow earnings by 56.4% compared to the same period a year prior, according to FactSet senior earnings analyst John Butters. The other 496 are expected to grow earnings by just 5.7%.

When combining the two groups, the S&P is currently on pace to produce year-over-year earnings growth of 9.7%. This would mark the best quarter for earnings growth since the fourth quarter of 2021."

MY COMMENT

I like the person above describing the small cap end of the market as........"low quality". That is about right. This end of the markets is a traders paradise....especially the AI SPEED TRADING PLATFORMS.

Looks like MSFT will now report on July 30th. I had them there initially and than switched them to this coming Tuesday. Now they are back to next Tuesday. Meta will also report next week.

So all in all.....SIX of the big cap tech SEVEN.....will be reporting this week and next.

The BIG ONE, the......."one ring to rule them all".......NVDA.....will wait and report last on August 28th. A nice way to extend the anticipation....even though the markets seem to be ignoring the stock lately.

"One Ring to rule them all, One Ring to find them, One Ring to bring them all, and in the darkness bind them"

 

If you are curious about the 19 rings plus "the one"......here is a pretty good explanation.

'Lord of the Rings': The Rings of Power, Explained

https://collider.com/lord-of-the-rings-the-rings-of-power-explained/

 

You can hardly go wrong simply investing in the SP500 Index using an ETF. That is all it takes to get started as an investor.....or....even as a life long investor.

The Biggest Winners in the Stock Market

https://awealthofcommonsense.com/2024/07/the-biggest-winners-in-the-stock-market/

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

"Hendrik Bessimbinder has produced some of my favorite stock market research.

Bessimbinder discovered that four out of every seven stocks in the U.S. have underperformed cash (one-month T-bills) since 1926. And just 4% of companies accounted for all the wealth gains for the entire stock market in that time.



The stock market runs on power laws over the long run.

Of course, there are stocks that do well over short time frames, but Bessimbinder’s research highlights the benefits of diversification to ensure you take part in those big winners over time.

In a newly released research paper, Bessimbinder goes deeper into the individual stocks that have experienced the biggest gains in market history.

This was the stat that stuck out to me the most from this research:



The average cumulative return going back to 1926 was nearly 23,000%, just a gargantuan number. But the median stock in that time experienced a cumulative return of -7.4%.

That’s a massive spread.

Remember, the median is simply the middle number of a group, which means more than half of all stocks have experienced negative returns.

The fact that the average return is so high reinforces Bessimbinder’s earlier work about the *jargon alert* positive skew in the stock market. This tells you the best-performing stocks have experienced outsized returns relative to the rest of the market.

Most stocks are crap over the very long-run but the biggest gainers more than make up for the losers.

Some more data that stood out:

• 17 stocks had cumulative returns of more than 5 million percent.
• The annual returns of these mega-winners were lower than you would expect, with an average of 13.5% annualized. Time in the market, etc, etc.
• Altria was the best-performing stock over the entire period, with annual returns of 16.3% from 1926 to 2023.
• Nvidia had the highest annualized return of any stock with at least 20 years of data at 33.4% per year.
• Just 38 stocks survived the entire 98 year period studied.

Here’s a look at the biggest winners over the long haul:



There are some surprises on the list, but mostly blue chip names, which I suppose is how they became blue chips in the first place.

Now for some takeaways:

Index funds are hard to beat for a reason. The SPIVA annual scorecard provides a nice proof of concept for Bessimbinder’s data:



The stock market is hard to beat because picking the winning stocks is hard. Index funds own them regardless.

Winners > losers. Index funds also own the losers, of which there are many.

But the winners more than make up for the losers.

That’s the beauty of the stock market.

Compounding over decade-long periods is like magic. There are no stocks for the long run with crazy 20% or 30% annual returns over 8-9 decades.

From 1926-2023 the S&P 500 was up 10.3% per year so it’s not like the best-performing survivors crushed the market by leaps and bounds.

But those above-average returns compounded over 98 years added up to incredible growth over that time.

That compounding has been magic for the stock market."

MY COMMENT

The above is the ultimate buy and hold.......98 years. It is also a reflection and confirmation of the extreme power of compounding.

 

Well.....well.....a big rally in the NASDAQ and the SP500 to start the day. Although the gains have started to back off. Lets see what happens once the early morning orders are filled.

Stock market news today: Nasdaq leads stocks higher after Biden backs out

https://finance.yahoo.com/news/stoc...s-higher-after-biden-backs-out-133037752.html

MY COMMENT

NOTHING new here.....massive amount of political speculation and talk......plus....notation of the big earnings on deck this week....CMG, GOOGL, and TSLA.

 

Management at this company is exquisite. This is a perfect example of how they are always on top of everything.

Exclusive: Nvidia preparing version of new flagship AI chip for Chinese market, sources say

https://finance.yahoo.com/news/nvid...for-chinese-market-sources-say-040220913.html

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

"SINGAPORE (Reuters) -Nvidia (NVDA) is working on a version of its new flagship AI chips for the China market that would be compatible with current U.S. export controls, four sources familiar with the matter said.

The AI chip giant in March unveiled its "Blackwell" chip series, which is due to be mass-produced later in the year. The new processors combine two squares of silicon the size of the company's previous offering. Within the series, the B200 is 30 times speedier than its predecessor at some tasks like serving up answers from chatbots.

Nvidia will work with Inspur, one of its major distributor partners in China, on the launch and distribution of the chip which is tentatively named the "B20", two of the sources said. Shipments of the "B20" are planned to start in the second quarter of 2025, a separate source told Reuters.

The sources declined to be identified as Nvidia has yet to make a public announcement.

A spokesperson for Nvidia declined to comment. Inspur did not respond to requests for comment.

Shares of Nvidia rose 4% in U.S. trading after publication of the Reuters story.

Washington tightened its controls on exports of cutting-edge semiconductors to China in 2023, seeking to prevent breakthroughs in supercomputing that would aid China's military.

Since then, Nvidia has developed three chips tailored specifically for the Chinese market.

The advent of tighter export U.S. controls has helped Chinese technology giant Huawei and startups like Tencent-backed Enflame make some inroads into the domestic market for advanced AI processors.

A version of a chip from Nvidia's Blackwell series for the Chinese market would boost the U.S. firm's efforts to fend off those challenges.

China accounted for around 17% of Nvidia's revenue in the year to end-January in the wake of U.S. sanctions, sliding from 26% two years earlier.

Nvidia's most advanced chip for the China market, the H20, initially got off to a weak start when deliveries began this year and the U.S. firm priced it below a rival chip from Huawei, Reuters reported in May.

But sales are now growing rapidly, two of the sources said.

Nvidia is on track to sell over 1 million of its H20 chips in China this year, worth upwards of $12 billion, according to an estimate from research group SemiAnalysis.

Expectations are high that the U.S. will continue to keep up the pressure on semiconductor-related export controls.

The U.S. wants the Netherlands and Japan to further restrict chipmaking equipment to China, sources have said.

The Biden administration also has preliminary plans to place guardrails around the most advanced AI Models, the core software of artificial intelligence systems like ChatGPT, sources have said.

Chip stocks globally tumbled last week after Bloomberg News reported that Biden's administration was weighing a measure called the foreign direct product rule that would allow the U.S. to stop a product from being sold if it was made using American technology."

MY COMMENT

What an amazing company. They seem to be on top of everything....all the time. Great business execution.....over and over and over. The stock is up by about 4.2% right now.

 

In my world....we eat out every day. I see more and more restaurants doing deals and bundle type options as well as discounted lunch menus. It is obvious from what we see every day that they hit the wall of consumer resistance to their now HIGH PRICES. This is a very good move for MCD.

McDonald's extends $5 meal deal at most US outlets into August

https://finance.yahoo.com/news/mcdonalds-extend-5-value-meal-130007340.html

 

The above is the full extent of about what is going on today......not much. The SP500 and NASDAQ are doing nicely and have now moved up a bit. Even the DOW is now up too. Looking good to start the new day and the new week.

 

A nice GREEN day to start the week for me and the markets. I had five of nine stocks UP today.....NVDA, GOOGL, MSFT, COST, and CMG. I also beat the SP500 today by 1.30%.

I will get my GOOGL earnings tomorrow after the bell.

 

The markets today.

Tech roars back as S&P 500, Nasdaq surge ahead of earnings

https://finance.yahoo.com/news/stoc...nasdaq-surge-ahead-of-earnings-200038261.html

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

"US tech stocks ripped higher on Monday as investors assessed the political landscape following President Joe Biden's exit from the presidential race.

The S&P 500 (^GSPC) gained more than 1% while the tech-heavy Nasdaq Composite (^IXIC) rose roughly 1.6%, both coming off their worst weekly losses since April. The Dow Jones Industrial Average (^DJI) increased 0.3%.

Chip heavyweight Nvidia (NVDA) led a broad-based tech rebound following heavy losses last week as investors rotated out of big cap names.

The moves Monday came after a huge shakeup in the race for president in the US. Democratic leaders continued to rally around Vice President Kamala Harris in the wake of Biden's exit, with former House Speaker Nancy Pelosi the latest big name to endorse Harris as the party's presidential nominee.

Still, the political shock could inject more volatility into an already battered stock market, distracting focus from this week's flood of earnings and key inflation release.

That could prompt a light unwinding of recent "Trump trade" bets on assets seen as benefiting from a second Trump presidency, such as bitcoin, bank stocks, and higher US bond yields. The yield on the benchmark 10-year Treasury (^TNX) slipped on Monday.

Meanwhile, a stream of S&P 500 companies are expected to report this week including tech giant Alphabet (GOOGL, GOOG), EV maker Tesla (TSLA), and fast foods chain Chipotle (CMG).

Those results will give insight into the economy and the consumer ahead of Thursday's report on second quarter GDP and Friday's update on the Federal Reserve's preferred inflation metric, the Personal Consumption Expenditures (PCE) index."

MY COMMENT

I have not looked at it.....but....I suspect that much of the big cap tech losses during the five day "rotation" have now been restored. Probably not all but at least a big chunk of them.

The RUSSELL was also up nicely today......so the best of all worlds for investors.

 

I like the start to the day today. I think I have seven or eight stocks up so far. The focus of the markets right now should be on one thing.....EARNINGS.

S&P 500 rises as traders await key tech earnings:

https://www.cnbc.com/2024/07/22/stock-market-today-live-updates.html

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

"The S&P 500 edged higher Tuesday, with traders readying for earnings reports from major companies after the benchmark posted its best day in more than a month.

The S&P 500 rose 0.2%, while the Nasdaq Composite gained 0.3%. The Dow Jones Industrial Average
added 78 points, or 0.2%.

Wall Street continued assessing the latest second-quarter earnings reports, with Google-parent Alphabet and Tesla due to report after the bell. Those reports will mark the Street’s first look at how major tech-related names fared during the second quarter.

“It’s all about the micro as the Q2 earnings season kicks into high gear and investors sift through a multitude of reports from the U.S. and Europe,” wrote Vital Knowledge’s Adam Crisafulli.

General Motors posted second-quarter results that easily beat analyst expectations but shares dipped 4%. UPS missed on the top and bottom lines, sending the stock down more than 12%.

Earnings season is off to a strong start. About 20% of S&P 500 companies have posted second-quarter results, with 80% of those names beating expectations, FactSet data shows.

Those moves follow a winning day on Wall Street, as technology stocks rebounded from last week’s sell-off. The small cap-focused Russell 2000 also rose on Monday, adding to last week’s gain, which was seen as a sign of traders moving money to this cohort from Big Tech names that have seen monster gains this year.

The shift to small caps also comes as investors grow increasingly excited that the Federal Reserve will soon begin lowering interest rates, a move seen as particularly helpful for smaller and more cyclically oriented companies."

MY COMMENT

Finally.....a little bit of focus on earnings.