The Long Term Investor

Bigmaix.

The criteria to me would be if it is bothering you to have as much as you do in NVDA.

If it makes you feel better or sleep better....there is nothing wrong with selling out perhaps 1/4 or 1/2 of your NVDA and investing the money into the SP500 or among your other holdings. After all....the money would STILL be working for you in the markets.

I dont think anyone should have ALL their money in just one or two stocks....that is very risky and very aggressive. FOR ME.....the best course is to have at least 1/4 to 1/2 of my money in the SP500 and the rest spread amung10-15 stocks.

Here is my question.......what stocks do you currently own? What funds do you currently own? What percentage of your entire portfolio is in NVDA? Do you feel like you are diversified? How aggressive and how much of a risk taker do you think you are?

How devastated would you be if you saw your account drop by HALF?

 

OK.....a LOSS for me today. BUT....at least I did not lose as much as yesterday. I also got beat by the SP500 by.....0.54%....today.

MOVING ON....TODAY IS THE PAST.

 

THE OTHER QUESTION BIGMAIX........is you stock market money TRULY.....long term money? Is it money you do not need for at least 5-7 years?

 

I guess the markets are taking a pause while they stress out over the CPI and PPI....short term.

Than they will have to get over the FED meeting.

Than they will have to get past the FED rate cut.

Than they will have to get past the Holiday week.

Than they will have to get past the Holiday retail data.

AND....on and on and on....it is never ending stream of events and crisis.....in the short term. It is a wonder that any of us ever make any money....but we do.

 

The story of the day.

November CPI inflation data meets forecasts, cementing Fed rate cut bets

https://finance.yahoo.com/news/nove...ts-cementing-fed-rate-cut-bets-134938502.html

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

"New inflation data out Wednesday showed consumer prices rose as forecast in November, keeping the Federal Reserve on track to lower interest rates again in December.

The latest data from the Bureau of Labor Statistics showed that the Consumer Price Index (CPI) increased 2.7% over the prior year in November, a slight uptick from October's 2.6% annual gain in prices. The yearly increase matched economist expectations.

The index rose 0.3% over the previous month, ahead of the 0.2% increase seen in October and also on par with economists' estimates. This was the largest monthly gain since April after rising 0.2% the previous four months.

On a "core" basis, which strips out the more volatile costs of food and gas, prices in November climbed 0.3% over the prior month, matching October, and 3.3% over last year for the fourth consecutive month.

The sticky nature of the print "is a little disconcerting," Paul Ashworth, chief North America economist at Capital Economics, wrote on Wednesday. "But we don’t expect it to persuade the Fed to skip another 25bp rate cut at next week’s FOMC meeting."

Core inflation has remained stubbornly elevated due to higher costs for shelter and services like insurance and medical care. Used car prices also saw an uptick month over month, rising 2% in November amid a rebound in auction prices.

Although inflation has been slowing, it has remained above the Federal Reserve's 2% target on an annual basis.

The election of Donald Trump as the nation's next president has further complicated the outlook, with some economists arguing the US could face another inflation resurgence if Trump follows through with his key campaign promises.

Trump's proposed policies, such as high tariffs on imported goods, tax cuts for corporations, and curbs on immigration, are considered by economists to be potentially inflationary. Those policies could further complicate the Federal Reserve's path forward for interest rates.

Immediately following the report, markets continued to price in another 25 basis point cut at the central bank's meeting next week, with the odds of a cut increasing to 97% from about a 89% chance one day prior.

"As markets came into today’s figure with fears of an upside surprise, the in-line number is being received very positively," wrote Seema Shah, chief global strategist at Principal Asset Management. "But overall, the Fed will be concerned by the very stubborn nature of inflation and will be increasingly cautious about the upside inflation risks that President-elect Trump’s policies may bring."

"We expect the Fed to move off autopilot in January, adopting a more cautious tone, and slowing its pace of cuts to just every other meeting."

Shelter moderates, food remains sticky

Notable callouts from the inflation print include the shelter index, which rose 4.7% on an unadjusted, annual basis, lower than October's 4.9% increase. The index rose 0.3% month over month after rising 0.4% in October.

Shelter contributed to nearly 40% of the monthly increase in overall inflation, the BLS said. Sticky shelter inflation has largely been blamed for higher core inflation readings, according to economists.

At Yahoo Finance's Invest conference last month, Minneapolis Fed president Neel Kashkari categorized housing inflation as "the big elephant that is still out there" but did say he's confident price increases will slow as new leases are signed at lower rates.

The index for rent and owners' equivalent rent (OER) each rose 0.2% from October to November, a deceleration from the prior month's reading and the smallest 1-month increases since July 2021 and April 2021, respectively. Owners' equivalent rent is the hypothetical rent a homeowner would pay for the same property.

The lodging away from home index rose 3.2% after rising a much more modest 0.4% in October.

Meanwhile, the energy index rose 0.2% month over month after holding steady in October. On a yearly basis, the energy index was down 3.2% in November after a 4.9% decline the previous month.

The food index increased 2.4% in November over the last year, with food prices rising 0.4% month over month — proving to be a sticky category for inflation. The index for food at home rose 0.5% in November after prices rose 0.1% from September to October, while food away from home increased 0.3%.

Egg prices were a standout with prices increasing 8.2% month over month after falling 6.4% in October.

Other indexes with notable increases over the last month include recreation, education, personal care, and apparel. In contrast, the index for communication fell 1% in November after falling 0.6% in October and September, according to the BLS."

MY COMMENT

Right in line with expectations. Bring on the next rate cut.

 

Bigmaix.....you must have a big gain in NVDA......and at 37.25%.....that one stock totally dominates your portfolio.

There is nothing wrong at all with doing some diversification. If I was going to do that.......I would sell about HALF of the NVDA and get it down to about 18.5% of my portfolio.

I would probably put the proceeds into the SP500 Index....as you are thinking......up to 50% of the total portfolio. That Index will give you good diversification for the long term with nearly 500 stocks. It will also give you......more exposure to..... ALL the big cap GIANTS in the USA market.

By keeping NVDA at 18.5%.....you will have plenty of exposure for the stocks future gains as a leader in AI chips.

As you go forward you can always work on adding funds to any of the other stocks as needed.....when you have money to invest.....or....if you have left over money from selling half the NVDA and boosting the SP500 up to 50%.

Doing the above would give you a nice BALANCE in your portfolio......good probability for BIG future gains....... with 18.5% STILL in NVDA......but at the same time good diversification in the rest of your portfolio.

My view on living debt free........a VERY GOOD THING.

Let us know what you decide to do.

 

I like this little article.

5 Reasons Stocks Keep Hitting Record Highs
Investors can thank big tech and a resilient economy.

https://www.morningstar.com/markets/5-factors-that-drove-markets-record-highs-2024

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

"2024 was a banner year for equity investors. Stocks have cranked out record highs practically every week despite stretched valuations, political uncertainty, and interest rates remaining high through the fall. The Morningstar US Market Index has returned more than 29% in the year to date, putting it on track for its best year since 2019. Stocks are up around 75% since their last bear market low in October 2022.


Analysts and fund managers point to a slew of elements fueling this big rally:

• The artificial intelligence boom
• Post-US-election clarity
• The resilience of the US economy
• Federal Reserve rate cuts
• A broadening of the stock market rally

Here’s a closer look at these factors.

AI Momentum

Like in 2023, mega-cap technology companies have driven the lion’s share of the market’s returns in 2024. Much of the momentum in these stocks is thanks to ongoing enthusiasm surrounding artificial intelligence, and Morningstar’s analysts don’t expect this trend to slow any time soon.

Nvidia NVDA, a leader in AI technology, has returned more than 187% since the start of the year and is responsible for about 17% of the market’s total gains, according to data from Morningstar Direct. “The biggest boost to Nvidia’s earnings and valuation in the past 18 months has been driven by the significant increase in AI spending by large cloud computing and consumer internet companies,” says equity analyst Brian Colello. “These firms have signaled that they don’t expect AI spending to slow down in 2025.”

AAPL, Microsoft MSFT, and semiconductor firms like Broadcom AVGO, accounts for 39% of the overall gains of the US Market Index.


Election Results Bring Clarity

Donald Trump’s victory in the US presidential election in November ended months of uncertainty. Stocks rallied broadly, with the US Market Index climbing 2.6% on the Wednesday following Election Day. Investors cheered the prospect of looser regulations, lower corporate taxes, and economic growth under a Republican administration and Congress.

Some sectors have seen particularly strong gains since the election. Financial services stocks, which tend to be very sensitive to changes in the regulatory environment, jumped 6.3% following the election. Energy stocks popped 4.3%, while industrials rose 4.2%. Only financial stocks have continued to outperform the market.

Within the Morningstar Stylebox, small-cap stocks soared. These smaller players are expected to benefit from more protectionist trade policies (like tariffs) and an easier regulatory environment for mergers and acquisitions.

A Resilient Economy

Stocks have also been boosted by continued health in the US economy, which has defied any expectations for a recession in 2024, even as interest rates remained higher than many in the markets anticipated. Critically, despite some bumps in the road, inflation has trended lower and worries about major damage to the labor market failed to materialize. Consumers continue to spend. This has all added up to the economy posting healthy growth, with GDP rising 2.8% in the third quarter.

Analysts say the current situation has all the makings of a rare soft landing, wherein inflation returns to healthy levels without damaging the economy. “We continue to expect a soft landing, with GDP growth remaining well above recessionary territory, even while inflation returns to the Fed’s 2% target,” wrote Morningstar chief US economist Preston Caldwell in his fourth-quarter outlook.

Rate Cuts at Last

Progress on inflation brought about the end of one of the most aggressive interest-rate-hiking cycles in history. The Fed began easing policy by reducing its benchmark interest rate in September. The move was widely anticipated by the stock market when it was implemented, but the Fed’s signal that it was confident in the inflation’s downward trajectory still reassured investors.

Falling interest rates are generally seen to benefit the stock market because they make it cheaper to borrow money and conduct business, though some sectors tend to fare better than others.

Perhaps more important than the cut itself is the reasoning behind it. “You need to think about why the Fed is cutting rates,” Lara Castleton, US head of portfolio construction and strategy at Janus Henderson Investors, said in September. A central bank methodically reducing interest rates with a soft landing in sight will support stocks more than a reactionary one slashing rates to fend off a recession.

The Fed is widely expected to continue cutting rates in 2025 as inflation moves toward its target, though the pace and scope of those cuts are up for debate.

A Broadening Market

Even as AI-fueled stocks like Nvidia have surged, worries about an overly concentrated market have eased over the year. When the tech sector stumbled in August, small caps and value stocks took the lead, in a rotation many investors saw as long overdue. Tech stocks have recovered, but Morningstar chief US market strategist Dave Sekera believes the rotation has “room to run.”

Stocks covered by Morningstar analysts posted earnings growth of about 6% in the third-quarter reporting season, according to data from Morningstar Direct and FactSet. But those gains weren’t limited to big tech. Consumer cyclical stocks saw 20% earnings growth, while healthcare stocks saw their earnings rise 15%.

In the year ahead, Morningstar strategists recommend overweighting small-cap and value stocks, which are trading at discounts relative to their fair value estimates on average and could benefit from the market dynamics at play in 2025. On the other hand, large-cap stocks and growth stocks have more limited upside and look expensive.

On a sector basis, Sekera sees upside potential for energy stocks, basic materials, and healthcare. “In a market that is edging into an overvalued territory yet has strong tailwinds, we think portfolio positioning has become increasingly important,” he wrote in his 2025 outlook. “Investors should look to underweight those areas that are not only overvalued but also at greater downside risk.”"

MY COMMENT

I agree that ALL the above are very positive for the markets in 2025.

BUT....the main drive of the BULL MARKET in 2025 will be.....drum roll please......EARNINGS. They will continue to BOOM over next year.....in particular the BIG CAP TECH world.

 

A good market response so far to the CPI data. The big averages that count.....SP500 and NASDAQ..... are both green right now.

 

As to....yes.....NVDA. I am seeing some "chatter lately about the next chip to come after Blackwell......RUBIN PLATFORM. There is some educated speculation that this chip might be heading to be released a little early.

"Nvidia is also working to hold off competition with its Blackwell GPU (graphics processing units) architecture launch this year and is already announcing the Rubin platform to succeed Blackwell. Explaining the company's development plans, Huang has stated, "Our company has a one-year rhythm. Our basic philosophy is very simple: Build the entire data center scale, disaggregate and sell to [customers] parts on a one-year rhythm, and push everything to technology limits.""

https://finance.yahoo.com/news/ceo-jensen-huang-just-delivered-110000401.html

If you can read Chinese......we all can right?......here is the quote and the source.

""According to reports in the industry, as servers equipped with NVIDIA’s latest Blackwell platform GB200 and other AI chips are put into mass production this season, NVIDIA is working with supply chains such as TSMC (2330) to launch the next generation Rubin platform chips originally scheduled to be unveiled in 2026. development, it is expected that the next generation of chips will be available half a year ahead of schedule.""

https://money.udn.com/money/story/5612/8401944?from=edn_maintab_index

Of course this is TYPICAL....speculative....journalism. SO......I would not take any of this as actually....TRUE......on top of the fact that I have no idea what the article actually says since I cant read Chinese. For all I know this article is simply a recipe for dumplings.

AND.....I am all good with the original release date in 2026. Nothing wrong with maximizing the sales of Blackwell for about a year before moving on to the next MONSTER CHIP product.

Here is a bit of background on Rubin:

NVIDIA's Rubin Platform: A Game-Changer for AI and Beyond
Discover how NVIDIA's Rubin platform is set to revolutionize AI with 16x performance improvements, reshaping industries and driving exponential growth.


https://felixprehn.substack.com/p/n...game-changer?utm_campaign=post&utm_medium=web

 

I dont really trust the short term markets today......I dont think there is really a lot of enthusiasm out there right now in spite of the gains.

I also see a bit of slippage slowly happening in some areas of the market. We need to get past the early morning......"buying the dip"......and see what the markets really want to do.

In spite of the massive gains we have seen this year.....there is STILL a lot of investor skittishness and unease out there. It is amazing that the HUGE gains of 2024 have not fueled more EXUBERANCE. This is....of course....a good indicator for the bull market going forward.

 

In the end all we can do is sit and watch.

Short term market action is not real.....for long term investors. It is ALL noise.

I am feeling very positive for 2025 and 2026. BUT.....as usual there will be periods of correction and market weakness....perhaps months long. The price we pay for trying to capture the long term gains.

 

PLTR.....in the red again today. We continue to be in dip-mode.......after hitting $80.27 on Monday around 9:30AM. Since that moment the stock has gone down by about $10.

A little......12.4% drop in less than 3 days. Not unexpected since the stock took off on an EPIC run up over the past few weeks.

In spite of this drop.....the stock is STILL positive for the past.....5 days.

it is called....profit taking and consolidation.

 

A good little article.

Nobody Knows Anything
The season of sell side year-ahead investment outlook reports

https://rupakghose.substack.com/p/nobody-knows-anything

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

"The screenwriter William Goldman wrote Butch Cassidy and the Sundance Kid, the Princess Bride, All the President’s Men, and many other hits. But he is remembered today for his critique of the Hollywood studio system and their ability to pick winners. He famously said, “Nobody Knows Anything,” which is just as relevant to any creative or innovative endeavour as it is to the movie industry. If only a major investment bank would publish a one-pager with those three words

One of my pet frustrations around this time of year, when I was a research analyst was the congestion caused by the year-ahead outlook pieces. This is also the time of year when you realize how many strategists and economists the investment bank you work for has. There would be hundreds of pages from the multi-asset strategist, equity strategist, economists of every jurisdiction under the sun, and eager stock research industry coverage teams. The editorial team is more of a back-office function in research departments and not like a newspaper where they are picking and shaping the content, but they would still be jammed up and unable to edit anything else apart from year-ahead pieces. The morning meeting with the salesforce would get jammed with all these year-ahead pieces and the inboxes of clients would be spammed full of them.

Full disclosure it has been more than a decade since my last sell-side research report and industries change. But some things never change!

Only a few days ago, Forbes published their annual 30 under 30 list. Hard to know if they are brave or just tone deaf as this is the list that was home to Sam Bankman-Fried, Caroline Ellison, Elizabeth Holmes, Martin Shkreli, Charlie Javice, and most recently Joanna Smith-Griffin who was caught by the authorities a few days ago for having defrauded her investors to the tune of $10 million of funds that were supposed to go to her startup. At least the Forbes list throws off useful signals i.e. if these were CEOs of listed companies, hedge funds could go and short them.

But working your way through the forest of sell-side year-ahead outlook pieces is messy. It is a little like the inverse Cramer meme. CNBC’s talking head Jim Cramer once said to Forbes 30 under 30 winner Theranos founder Elizabeth Holmes “I compare you to Steve Jobs and what he did for computing. I regard you as a Visionary Next Generation person.” He is also known for his bad stock recommendations so much so that the curse of Jim Cramer is like the curse of Forbes 30 under 30. The inverse Cramer (i.e. you should sell stocks that Cramer is buying and vice versa) became so much of a social media phenomenon that an ETF was created to track it. However, what the ETF managers found was the huge number of recommendations Cramer was making, and sometimes with different language was making it hard to create a model portfolio that was accurately tracking this. In the end, the inverse Cramer fund struggled to create alpha albeit neither did a long Cramer fund.

So, what are the main challenges with year-ahead outlooks?

There is just so much of it.

Year-ahead pieces were common when I started in the business in the late nineties, and a few major Wall Street banks were producing them as far back as the seventies. But the sure quantity continues to increase. Given the collapse of demand from the buy side to pay up for stock research, sell-side research is even more of a marketing tool for the whole bank including wealth management, investment banking, and other divisions and these year-ahead big picture pieces tick that box. With consolidation on the buy side and in the advisory space, the trillion-dollar asset and wealth managers are also producing more glossy year-ahead pieces themselves. Bloomberg estimated that last year Wall Street analysts produced more than 650 different year-ahead outlook pieces.

They are not clear and concise.

Wall Street analysts love writing tomes for their outlook pieces with lots of verbose language to illustrate how they are intellectuals and not salespeople. When these reports convey a simple point, it is often too generic to be actionable for an investor like some broad murmuring about the government debt levels, inflation risks, or geopolitical tensions that lie ahead without specificity. There are even firms that cover their bases with bull and bear cases. I have a good friend who went to quant research, did a PhD in natural language processing, and spent the last decade training algorithms to look for buzzwords in these reports (as well as company transcripts) and he struggled with the low signal to noise ratio

Thematic research is eating the world.

Everyone is now a thematic expert. Given the way that technology and many themes go across industries, it makes sense that thematic research has risen in importance. In recent years the mega-trends whether it was Generative AI, crypto, or private credit were huge. Hence, don’t just expect strategists to make predictions of year-end 2025 target levels for the S&P500, FTSE100, and other indexes but expect tomes of colourful language and random assumptions on the impact of the AI boom. At least the ESG grifters are gone for now. The value added with themes is of course how and when to play them and predicting where we are in the Gartner hype cycle of technology adoption can be a fool’s errand. The two great thematic investing gods Masa Son of SoftBank and Cathie Wood of ARK after all saw the AI boom and owned Nvidia years ahead of the current boom and sold the stock cheaply, while it was the macro trader Stanley Druckenmiller who bought Nvidia shares just as the AI boom was picking up.

Finally, does the world change on December 31st?

Many of these year-ahead outlook pieces are so long that they were written long before the year-end and things can shape up differently. The last Federal Reserve meeting in mid-December has often been an important one. More importantly, look at recent years and your library of year-ahead pieces would have been irrelevant when Covid 19 hit or after Russia invaded Ukraine. A different year-ahead piece would be needed almost immediately.

Next year, Wall Street should get ChatGPT to do their year-ahead outlook pieces. That is assuming some junior analysts didn’t use it this year without telling their bosses that put their name on the top of the reports but probably only wrote the introductions and main section."

MY COMMENT

There are now so many year end predictions for the new year that they are basically worthless. You can find hundreds to support whatever your market view happens to be.

We live in the era where anyone with a computer.....is an EXPERT.

There are so many predictions and different views that .....even those that are right....are buried in the NOISE.

The only use this "stuff" has to me in the REAL WORLD....is for "fun". It is interesting to see what is being said.....BUT.....I would NEVER rely on any new year market prediction to ACTUALLY invest my money.

 

So far today....I am making back some of the money I lost earlier this week. COST, GOOGL, NVDA, MSFT and AMZN.....are ALL.....up nicely today. For me....only PLTR is in the red right now.

A perfect trend for.....HUMP DAY. Lets get over the "hump" of the dismal markets of Monday and Tuesday.......today. Than the markets can try to end with the final two days of the week as money-makers.

COME ON MARKETS......SHAKE YOUR MONEY MAKER.

 

Keep on SHAKING.....markets. I see that my lone red stock today....PLTR....is red no more. It just decided to.....go green.

 

Whole Lotta Shakin.....going on in the markets today. Like shaking a money tree. I made back all the money that I lost on Monday and Tuesday. Tomorrow I start fresh for the final two days of the week.

I had two stocks in the RED today.....HD and AAPL. The rest were GREEN....with my best gainers being, GOOGL up by.....+5.52%......NVDA up by.....+3.14%......AMZN up by.....+2.32%....and +PLTR up by.....2.29%.

I also beat the SP500 today by.....1.26%.

MOVING ON......to COST earnings tomorrow.....and....if we are lucky we will soon see a stock split.......it is way past due.

 

Looks like a MILESTONE day for the NASDAQ.

Nasdaq tops 20,000 for first time as Big Tech surges, Tesla hits first record in 3 years

https://finance.yahoo.com/news/live...a-hits-first-record-in-3-years-210654737.html

Also a new record high for TSLA.