The Long Term Investor

This Wednesday through next Wednesday......you guys can run wild and do whatever you want on here......not that I have.....or want..... any say over this thread anyway. I will be gone on another little......ROAD TRIP........from this Wednesday till next Wednesday. About 2000 miles all together.

I dont like to check my account when I am away from my home wifi.........so I will not have any account data for those days. In addition I will probably not have much of a chance to post much. Perhaps a post or two here and there.

My wife is probably happy.....she can relax at home with her dogs and horses in peace for a whole week.

Emmett, Zukodany, and anyone else that is interested can hold down the fort for that time period.

 

Nice to see that we have improved to a mixed market today. I doubt that it is helping me with my very limited portfolio of 10 stocks....I have not looked. But.....any green.....in the major averages is a good thing.

 

OK......a moderate little loss today.......red is red.......but today seemed good compared to some of the big down days we have had this year. I got beat by the SP500 by 0.60% for the day.

I actually had two.....yes two....stocks up today.....Microsoft and Honeywell.

 

Here is the take on today that I have seen in a few places........of all things.....China.

Stock market news live updates: Stocks end mixed as tech shares come under renewed pressure: Nasdaq drops 1.2%

https://finance.yahoo.com/news/stock-market-news-live-updates-may-16-2022-112047893.html

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

"U.S. stocks traded mixed on Monday, with equities struggling for direction as concerns over the growth outlook persisted amid elevated inflation.

The S&P 500 traded flat to slightly higher, shaking off earlier losses. The Nasdaq dropped by more than 0.5%, as mega-cap technology companies including Apple (AAPL) fell. The Dow Jones Industrial Average pushed into positive territory during intraday trading, adding more than 100 points.

U.S. crude oil prices (CL=F) erased earlier losses to trade higher even after new economic data from China came in weaker-than-expected, as the latest wave of virus-related restrictions in the country curbed mobility. China's retail sales dropped by 11.1% in April over last year, marking the worst decline since March 2020, while industrial production unexpectedly dropped by 2.9% compared to the same month last year.

The move lower in risk assets on Monday extended a recent stretch of volatility across markets. Stocks closed out last week with a sixth consecutive weekly loss, bringing the S&P 500 a total of 16.1% below its record high from Jan. 3. This has come, in turn, as investors weighed the risks of a deeper economic downturn as the Federal Reserve looks to curb inflation running near its hottest level in four decades, geopolitical turmoil continues in Ukraine, and China grapples with its largest COVID outbreak since 2020.

And amid these concerns, Wall Street analysts have struck a more cautious tone on stocks. Goldman Sachs slashed its year-end price target on the S&P 500 to 4,300 from 4,700 in a new note. The lowered target reflects "higher interest rates and slower economic growth than we previously assumed," according to David Kostin, Goldman Sachs chief U.S. equity strategist. And in a recession scenario, Kostin added, the S&P 500 would likely fall even further to 3,600.

Other strategists also underscored the plethora of current risks to equities, and cautioned against reading too deeply into one-day bounces.

"We think the turning point is really an open question at this juncture. We're probably between what we would call two repricings: Repricing one is the Federal Reserve-induced repricing," Eric Freedman, U.S. Bank Asset Management chief investment officer, told Yahoo Finance Live. "When the Fed says they're going to raise rates, every other asset class has to move down in price and up in yield. So we're really in the middle of that. There could be a turning point there, depending on what the Fed decides to do in terms of communications."

"But the next repricing — again, the risk of potential more downside — is if we start to see higher commodity costs as well as higher borrowing costs structurally trickle into the real economy and stay there for some time," he added. "So do think that we're in a deeply oversold condition ... but we would still be a bit on the cautious side right now thinking that there's more potential downside ahead.""

10:10 a.m. ET: Empire Manufacturing index unexpectedly posts second negative reading in three months

A closely watched index of business activity in New York State slid into negative territory in May, in another sign of slowing activity across key portions of the U.S. economy.

The Empire State Manufacturing Survey's headline index of general business conditions plunged by 36 points to reach -11.6 in May, according to a new report Monday. Consensus economists had been looking for a reading of 15.0, according to Bloomberg data.

The decline coincided with drops in both new orders and shipments, which each reversed after growing in April. Businesses' assessments of present conditions also deteriorated, with 32% of respondents reporting conditions had worsened over the past month while 20% said conditions had improved."

MY COMMENT

This Manufacturing Index reading is perhaps the start of dta that is going to show that we are in a recession.

The China data seems to have been part of the.....excuse of the day.....today. I saw it mentioned in a number of articles today.

The short term trend continues to be NEGATIVE. The good news......the long term trend is always POSITIVE......especially with this correction/drop now being nearly five months old.

 

I will use this little article as a jumping off point.

Boeing needs to get its 's*** together,' Ryanair CEO says

https://www.cnn.com/2022/05/16/business/ryanair-ceo-boeing-attack/index.html

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

""New York (CNN Business)The CEO of Ryanair let loose a scathing, obscenity-laden attack on Boeing management Monday, saying company executives need either an immediate "reboot, or a boot up the a**."

"At the moment we think Boeing management is running around like headless chickens, not able to sell aircraft, and then even the aircraft they deliver, they're not able to deliver them on time," said Michael O'Leary, CEO of Ryanair, Europe's largest discount carrier, which has ordered nearly 400 jets from Boeing since 2010.

O'Leary and Boeing had an unusually public dispute last fall about negotiations on a possible order for the next generation of the 737 Max, with Ireland-based Ryanair breaking off talks because of a pricing squabble.

The CEO's unusually blunt comments Monday were focused on Boeing's delayed deliveries of planes. O'Leary said Ryanair had to scale back its spring and summer schedules because planes it had expected the aircraft maker to deliver by the end of April probably won't arrive until the end of June.

He was livid about the delays, especially because Ryanair is purchasing planes known as white tails, which Boeing had built for other airlines. The original purchaser of those planes canceled the order during a prolonged 20-month grounding of the 737 Max that followed two fatal crashes.

"I can understand why there may be various challenges manufacturing new aircraft, but aircraft that you built and made two years ago that all you had ... to do was put petrol in them and f***ing fly them to Dublin, really I don't understand why you're taking two to three month delays on that," he said on a conference call with investors about the airline's financial results. "It is redolent of very poor management performance in Seattle."

Boeing declined to comment on O'Leary's remarks.

Criticizing management

O'Leary said Boeing makes great planes, but it might be time to change management.
"Either the existing management needs to up its game, or they need to change the existing management, would be our view of life," he said. "We're very happy to work with existing management but they need to bloody well improve on what they've been doing delivering to us over the last 12 months. ... We're a willing customer, but we're struggling with slow deliveries and an inability to do a deal on new aircraft despite the number of white tails they have sitting on the f***ing ground in Seattle."

Boeing has faced numerous problems in recent years, including the 737 Max crisis that cost it more than $20 billion. The company also was hit with an FAA-ordered halt of deliveries of its 787 Dreamliner last June due to quality control problems. And it faced delays winning approval for its next-generation widebody jet, the 777X, that forced Boeing to push back the first deliveries of the plane by two years to at least 2025.

Boeing also took substantial losses in its military and space businesses, including a recent $660 million charge on the two planes it is completing that will be used as the new Air Force Ones. It's also combating delays in building a spacecraft to carry US astronauts to the International Space Station.

"If they get their s*** together, we'd be willing to take more aircraft for summer '23 and summer '24," O'Leary said. "There's growth there to be won."

He also said the airline is willing to restart negotiations on an order for the new generation of the 737 Max, although he pointed out that has yet to win FAA approval, making it risky to depend upon. So Ryanair is also looking at possibly purchasing 50 jets on the second hand market instead. And he had choice words for Boeing's sales staff.

"You wonder what the hell their sales team has done in the last two years," O'Leary said. "Frankly most of them seem to sitting at home in their f***ing jimjams working from home instead of being out there selling planes to customers."

O'Leary also criticized Boeing's recently announced plan to move its corporate headquarters from Chicago to Arlington, Virginia, a suburb of Washington.

"Moving the headquarters to Virginia from Chicago, while it may be good for the defense side of the business, doesn't fix the fundamental underlying problems on the civilian aircraft side in Seattle," he said.

Other customer criticism

In addition to O'Leary, several other airlines have complained on recent conference calls — although in far less colorful language — about the problems they face from the 787 or 777X delays.

Domhnal Slattery, the CEO of Avolon, one of the world's leading aircraft leasing companies, suggested earlier this month that Boeing needs a change in culture — and maybe leadership.

"I think it's fair to say that Boeing has lost its way," Slattery said at the Airfinance Journal conference, in comments first reported by Reuters and confirmed by Avolon. "Boeing has a storied history ... They build great airplanes. But it's said that culture eats strategy for breakfast and that is what has happened at Boeing.""

MY COMMENT

This is a perfect case study in management and company culture. The old time Boeing company culture and management......engineering based....in Seattle kicked ass. Now.....it is a total dumpster fire at Boeing.

The company needs to clean house and get new management in there as soon as possible. AND.....not some big name celebrity CEO. They need someone that understands sales, marketing, and engineering in the airplane business. They need to change their company culture back to what it was in the past.

This little story is a BIG LESSON for all the companies that think they can........buckle in to employee demands to.......work from home. The ONLY way to develop and create a company culture is to work at the company......not from home in your pajamas isolated from everyone else.

Business is TOUGH......and....you have to go to work and mix with the people in your company......in person..... to get the management and other skills that are needed. CULTURE is a killer for companies. Everyone is......in my opinion....totally out to lunch with this work from home stuff. No company is going to create any sort of company culture of success with their employees scattered around the world working from home.

For a country CULTURE is critical.....for a business CULTURE is critical.

 

YES.....I noticed that people were talking about the old big consumer giants like PG lately as safe investments. It has been a long time since I heard much being said about the old BIG CAP consumer conglomerates.

I really dont get it though.......the NEW BIG CAP consumer conglomerates are Amazon, Microsoft, Apple, Google, etc, etc. These are not young new tech companies......these are 25-30-35 year old mature companies that dominate the business world. But......we live and invest in strange times.

 

It is nice to see all the green at the open today. I have no expectations for the close.....there is no way to predict what is going to happen over even a single day.

We will have some clue about an hour from now......10:30 Central time.......when we get into the mid morning FLUX time.

 

here is the story of the day.....for me.....since I am a long time owner of Home Depot.

Home Depot raises full-year outlook as shoppers trade up to premium products and fuel record Q1 sales

https://www.cnbc.com/2022/05/17/home-depot-hd-q1-2022-earnings.html

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

"Key Points

• Home Depot on Tuesday raised its full-year outlook after reporting strong quarterly earnings, fueled by the company’s strongest first-quarter sales on record.
• For 2022, Home Depot is now expecting sales growth of about 3% and earnings per share growth in the mid-single digits.
• This marks Ted Decker’s first quarter at the helm of the company.

Home Depot on Tuesday raised its full-year outlook and reported strong quarterly earnings, fueled by the company’s strongest first-quarter sales on record, an early signal that the retailer is so far weathering inflation.

Home Depot executives said they haven’t seen shoppers trading down in the face of higher prices, and don’t expect them to start.

For the fiscal year, the retailer is now expecting sales growth of about 3% and earnings per share growth in the mid-single digits. The company previously forecast “slightly positive” sales growth and earnings per share growth in the low-single digits. Wall Street was expecting revenue growth of 1.8% and earnings per share growth of 3.6% for fiscal 2022.

Here’s what Home Depot reported for the quarter ended May 1 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $4.09 vs. $3.68 expected
• Revenue: $38.91 billion vs. $36.72 billion expected

The home improvement retailer reported fiscal first-quarter net income of $4.23 billion, or $4.09 per share, up from $4.15 billion, or $3.86 per share, a year earlier. Analysts surveyed by Refinitiv were expecting the company to earn $3.68 per share.

Net sales rose 3.8% to $38.91 billion, topping expectations of $36.72 billion. Same-store sales increased 2.2% in the quarter.

U.S. same-store sales rose 1.7%, despite domestic same-store sales declines in March and April as the company faced tougher comparisons against last year’s stimulus-check sales boost and an earlier spring. A year ago, the company reported U.S. same-store sales growth of 29.9%.

“The strong performance in the quarter is even more impressive given the robust performance we were comparing against last year,” CEO Ted Decker said on the company’s conference call with analysts.

Weathering inflation

Decker said that the company hasn’t seen the sensitivity to inflation that was initially expected.

Customer transactions fell 8.2% but were offset by higher sales amid inflationary pricing. The company’s average ticket climbed 11.4%, and customers were still willing to trade up for premium products. Transactions of at least $1,000 increased 12.4% in the quarter.

Sales to professionals outpaced those for do-it-yourself projects. Kitchen and bathroom installation and building materials were among the categories that saw double-digit growth, likely thanks to that trend.

“While we don’t know how inflation might impact consumer behavior going forward, we are closely monitoring elasticities and customer trends across our respective categories and geographies and remain encouraged by the underlying strength we see in the business,” he said.

This marks Decker’s first quarter at the helm of the company. Decker, a longtime Home Depot veteran, previously served as chief operating officer and inherited the top job at a tough time for home improvement.

Many consumers spent the early days of the pandemic painting their walls, buying new patio furniture and taking care of other do-it-yourself projects that won’t need to be repeated for at least a few years. Persistent inflation may lead consumers to put off renovation projects.

Additionally, rising interest rates could result in a slowdown in the hot housing market. So far, however, Home Depot executives said consumers who are considering a move are now more tempted to stay in their current low fixed-rate mortgages and remodel their homes instead.

“We believe that the medium-to-longer term underpinnings of demand for home improvement have never been stronger,” Decker said."

MY COMMENT

This is a world class business. It is also a perfect example of great management and promoting management from long time employees that worked their way up in the company and know the business.

Earnings per share and revenue showed MASSIVE beats.

BRAVO.....Home Depot......and the people that work there and drive the business results.

 

I have never owned Walmart.....but post this since it is very relevant to the USA economy and markets.

Walmart shares fall as higher costs, supply chain problems and inventories eat into profits

https://www.cnbc.com/2022/05/17/walmart-wmt-earnings-q1-2023.html

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

Key Points

• Walmart missed earnings expectations for the fiscal first quarter, as the retailer felt cost pressure from fuel prices, higher inventory levels and overstaffing.
• The nation’s largest retailer on Tuesday raised its sales outlook for the year, but lowered its profit expectations.
• CEO Doug McMillon said the discounter’s bottom line results “were unexpected and reflect the unusual environment,” as inflation in the U.S. is at a nearly four-decade high.

Walmart on Tuesday reported quarterly earnings that missed Wall Street’s expectations by a wide margin, as the nation’s largest retailer felt pressure from rising fuel costs and higher levels of inventory.

Shares were down about 9% early Tuesday.

Walmart is a much-watched company as investors and economists look for clues about how the American consumer is weathering inflation.

The discounter’s bottom line results for the quarter “were unexpected and reflect the unusual environment,” CEO Doug McMillon said in a release Tuesday morning. Inflation in the U.S. is at a nearly four-decade high. The consumer price index, a broad measure of prices for goods and services, increased 8.3% in April compared with a year ago, according to the Bureau of Labor Statistics.

The significant jump in fuel prices, elevated labor costs and aggressive inventory levels weighed on the company, Chief Financial Officer Brett Biggs told CNBC in an interview. He said some merchandise arrived late and other items, such as grills, plants and pool chemicals, didn’t sell due to “unseasonably cool weather in the U.S.”

Plus, he said, Walmart employees returned from Covid leave quicker than expected and caused the company to become overstaffed during part of the quarter. He said those scheduling challenges have been resolved.

The company raised its outlook for sales this year, saying it expects net sales to increase about 4% in constant currency for the full year. It previously anticipated a 3% increase. But Walmart also lowered profit expectations. Earnings per share for the year will decrease by about 1% compared with the mid single-digit increase it previously expected, the company projected.

Here’s what Walmart reported for the fiscal first quarter ended April 30, compared with Refinitiv consensus estimates:

• Earnings per share: $1.30 adjusted vs. $1.48 expected
• Revenue: $141.57 billion reported vs. $138.94 billion expected

In the quarter, Walmart’s net income fell to $2.05billion, or 74 cents per share, from $2.73 billion, or 97 cents per share, a year ago. Excluding items, the company earned $1.30 per share. That’s lower than the $1.48 that analysts were expecting, according to Refinitiv.

Total revenue rose to $141.57 billion from $138.31 billion a year earlier, aboveWall Street’s expectations of $138.94 billion.

Same-store sales for Walmart U.S. grew 3% compared with the year-ago period or 9% on a two-year basis. E-commerce sales rose 1% or 38% on a two-year basis.

Walmart-owned warehouse club, Sam’s Club, saw same-store sales increase 10.2% year over year or 17.4% on a two-year basis.

Higher food sales, lower profits
Grocery, Walmart’s top sales category, is one of the company’s hard-hit categories. Food costs rose 9.4% in April on a 12-month basis, according to unadjusted data from the BLS.

As shoppers look for value, Walmart is gaining market share in grocery, Biggs said in an interview with CNBC. However, that has come at a price. Sales of food are pressuring profits, since the retailer is selling more low-margin items like eggs and bread and less higher-margin merchandise like apparel and electronics.

Elevated inventory levels and higher supply chain costs took a bite out of Walmart’s earnings, too, McMillon said on an earnings call.

Inventory increased about 33% as the retailer made aggressive buys to get ahead of inflation and make sure items stayed in stock. Some merchandise also arrived late or lingered in warehouses, especially seasonal items like landscaping supplies as spring weather was cold and rainy in much of the country.

To improve the mix of merchandise, McMillon said the company stepped up the number of rollbacks, or price markdowns, on apparel in the first quarter.

McMillon and Biggs said on the earnings call that they expect Walmart to sell through the higher inventory levels in the coming quarters, particularly as warm weather arrives and inspires shoppers to spring for patio furniture and new outfits.

Biggs told CNBC that the second quarter is “off to a good start from a sales perspective.”

Budget-strapped customers
Along with the drop in general merchandise sales, Walmart is seeing other signs some households feel budget strapped. The average ticket for customers in the U.S. rose 3% due to inflation, but the number of items in baskets has fallen, McMillon said on the earnings call.

Sales of half-gallons of milk and Walmart’s private brand of deli meat have jumped, Biggs told CNBC.

The discounter is trying to strike a balance between keep prices low, while not letting profits slip further, McMillon told analysts on the earnings call.

“Price leadership is especially important right now and one-stop shopping becomes more than just convenience when people are paying over $4 a gallon for fuel,” he said.

He said Walmart especially pays attention to “opening price-point food items” that low-income households must buy to feed their families, such as loaves of bread, gallons of milk, cans of tuna and mac and cheese.

“Given that stimulus checks happened last year, there was some benefit to some of those folks that is eroding overtime and as we look at the rest of the year, that’s something that’s on our mind,” he said.

Shares of Walmart closed Monday at $148.21. The stock has risen about 2.5% so far this year, outperforming the broader market as investors seek out consumer staples among economic uncertainty. The company’s market cap is nearly $408 billion."

MY COMMENT

BUMMER for Walmart. Not great earnings for a company that used to be so DOMINANT. Obviously they have been very severely hurt by Amazon and the current modern business and shopping trends.

We are in Walmart all the time......and on an anecdotal level.....have some observations on their business. Our store just rearranged the entire store. It is a TOTAL MESS. It is confusing, departments are split up, you cant see across the store, the sections of the store are confusing and make ZERO sense. The women's clothing styles and designs simply SUCK. Men's styles also have deteriorated but not as much as women's. Their garden center cant begin to compare with Lowes or Home Depot and there are very few check stands open with most of the people doing self check out. The number of customers seems way down.

We are also in Target all the time.....I can see why they are a rising star. The amount of traffic that I see in our Target store is way up. The store is exceptionally clean, departments make sense and are all together, merchandise is displayed very nicely, plenty of check out workers. A very clean, bright, exceptional retail experience. Of course.....the customer base is young, more upscale and suburban than Walmart, and seems to mostly be suburban young women and mom's.

 

Here is a little general article that hits all the high points for long term investing success.....at the moment.

Don't panic! What experts say to do in a volatile market

https://theweek.com/business/101353...=email&refid=10E92AB193F4857411E414DAFABEE91E

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

"What is the market doing?

Things are incredibly volatile right now.

"Even great companies are going to be suffering with the market," said Greg Swenson, founding partner of a London-based investment bank.

The market has been in a funk for months, "starting with high-growth unprofitable tech stocks late last year and spreading to even companies with healthy cash flows stocks in recent weeks," CNBC adds. And the decline has eliminated much of the "rapid gains stocks enjoyed off their pandemic lows in March 2020." In short, there hasn't been much good news as of late, and markets are consequently "bouncy and on edge," Voxexplains.

Why are investors so squeamish?

A few different reasons.

For one thing, the Federal Reserve's recent interest rate hike has investors worried that a recession is on its way. AsThe New York Times put it, markets have become so used to the "loose monetary policy of the past two decades" that they don't know how to react to such a monumental change.

And that's without mentioning the COVID-19 lockdowns in China, rampant levels of inflation, surging oil prices, and ongoing supply chain issues, the Times notes.

The Fed has been hopeful it can bring down inflation without pushing the U.S. into an economic downturn — a difficult maneuver referred to as a "soft landing," per the Journal. But investors are growing skeptical that the central bank can pull it off. Newly-reconfirmed Fed Chair Jerome Powell has even appeared a bit unsure himself, having admitted Thursday that "the process of getting inflation down to 2 percent will also include some pain," per the Journal.

Are certain companies being hurt more than others?

Tech companies have felt the burn especially hard, Vox notes, citing embattled fitness company Peloton as an example. Trading platform Robinhood also recently announced layoffs, and, in April, streaming giant Netflix's reports of dwindling subscribers for the first time in a decade sent its share price plummeting. Meta, Amazon, and Alphabet have been struggling as of late, too.

Cryptocurrencies have also been having a difficult time. Last Monday, Bitcoin hit its lowest level since July 2021, per the Times. Luna, meanwhile, took a dramatic plunge at the end of last week, "trading at half a penny, down from more than $60" on May 9, the Journal wrote Friday. Some strategists are projecting prices to fall until they reach pre-pandemic levels.

Should I be worried?

It's scary, sure, but it's not the end of the world; the stock market has always gone back up.

"While we are seeing this broad-based sell-off in the market, and it does seem like you cannot avoid it, this isn't exactly a time for panic," Kristin Myers, editor-in-chief of finance website Balance, told Vox.

Though "unsettling," market volatility is "historically not unusual," added financial services company Charles Schwab. If long-term investors have aptly diversified and personalized their portfolios, "it's likely the recent market drop will be a mere blip in [their] long-term investing plan."

"I think investors need to remind themselves that market declines are pretty common," said Sam Stovall, chief investment strategist at CFRA Research, per Vox.

With the Fed continuing to push up interest rates (two more half-point hikes are expected in June and July), these ups and downs are likely to continue for the foreseeable future, Schwab estimates.

So, what can I do?

For the brave young investor, right now could actually be a decent time to buy, especially if stocks or assets on your wishlist are trading lower than they were in the past, Vox writes, per Balance's Myers. "Think of this as everything is on sale," she added.

You might also treat the current plunge as a nudge to check in on your 401K more often (though maybe hold off on that for the time being). Myers suggests taking a peek once a quarter, "just to see what's going on and reevaluate," summarizes Vox.

Further, "don't try to time the markets," Schwab recommends. A plunge can be nerve wracking, but it's often better for your portfolio to just stay the course."

MY COMMENT

Some simple yet good advice above. And.....as usual.....the simple way is the best.

 

LOL.....I just looked at my account. In spite of the BIG earnings BEAT by Home Depot......and....the absolutely GLOWING forward looking statements......the stock is.........you guessed it.....DOWN.

Typical insanity.

 

ACTUALLY.....on most levels.....I agree with this little article.

If You Think 'Pain' Is Needed to Beat Inflation, Go Back to School

https://www.realclearmarkets.com/ar...heres_no_pain_to_ending_inflation_832607.html

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

"Last week Federal Reserve Chairman Jerome Powell warned of looming "pain" from the Fed's fight against inflation. Such an assertion, or observation, or excuse is foolish (and wrongheaded) on too many levels to count. What makes it sad is the consensus from Left and Right about the alleged truth of Powell’s comments. The Paul Volcker myth just won’t die.

Powell’s inflation solution, one embraced by both sides, is to raise interest rates. It raises an innocent question: what about the Fed raising the short rate for credit would shrink inflation? If your answer is that the rate hike would raise the cost of borrowing and reduce lending, please go back to school. Or better yet, don’t return to school where they teach the fiction that the U.S. economy, or any economy for that matter, is a walled off island of autarkic economic activity. Also, throw out your economics textbooks that you paid way too much for in school.

In the real world defined by a global economy populated by myriad sources of credit, the price controls vainly attempted by the Fed logically won’t and don't work. The lending that the Fed will allegedly shrink stateside will, if economic activity rates it, be made up for by endless sources of non-bank credit domestically and around the world. As the late Robert Mundell used to say, “the only closed economy is the world economy.” To pretend that the Fed controls the amount of credit in the world’s most dynamic economy vandalizes any traditional measure of stupidity.

So is the notion that Fed attempts to control the price of credit won’t be maneuvered around by market actors. Really, when have price controls of any kind dictated actual market prices? This question in particular begs response from members of the Right who really should know better. For seemingly forever they’ve properly bemoaned apartment rent controls as the drivers of scarcity, but when the Fed targets low rates, supposedly settled economic laws go out the window. Supposedly the Fed can “decree” easy credit with artificially low prices. No, it can’t. Credit is resources, which means it’s produced. The Fed can decree neither easy nor tight credit. Don’t worry, dumb begets dumber.

Think about lending. What are we borrowing when we borrow, and what are we lending when we lend? We’re either borrowing near-term access to resources at a price, or we’re delaying access to resources in order to access resources in greater amounts in the future. Looked at through the prism of inflation, who readily lends dollars (or name your currency) in abundance when the value of the currency loaned is in decline? Inflation is a decline in the value of the unit (in our case, the dollar), yet we’re supposed to believe the Fed must step in to stop the rampant lending of something for something less. Yes, you read that right. Without the purportedly wise minds at the Fed (present and past) with names like Bernanke, Yellen, and Powell, we would lend wildly without regard to our wellbeing, or not lend enough such that central bankers must step in and save the economy (with lower rates!) from us. You can’t make this up!

The main thing is that inflation is said to be rampant which, if true, would on its own bring on a reduction of lending, or more expensive lending. Think higher interest rates arrived at in the marketplace. No central bank needed. If not, as in if lending remains abundant, that it’s abundant is a sign that inflation isn’t much of a problem as is. Markets are wise, and exponentially wiser than central bankers.

Assuming there is inflation, what about reducing it would cause pain? Inflation is once again a devaluation of the currency, which means when inflation rears its ugly head those of us who earn dollars see the value of them shrunk. Which means our savings are worth less, the money we earn is worth less, and then let’s not forget that there are no companies, and no jobs without investment. When investors put wealth to work, they're aiming to generate future returns in – yes – dollars. Which means inflation is a tax on the very investment that powers progress and opportunity. How then, would a less devalued dollar or a revived dollar or a dollar with a fixed standard of value be 'painful'? Looked at historically, was the pain for Germans the end of the hyperinflation, or the hyperinflation that erased so much wealth? The question hopefully answers itself.

But wait, some will say: inflation is caused by “too much economic growth,” by the economy “overheating,” so the “pain” Chairman Powell and Volcker hagiographers on the Right are referring to is the necessary contraction of the economy that the Powell Fed must engineer in order to “sweat out” the inflation. This is the Phillips Curve at work; the fork-in-the-eye idiot notion that says too much success is bad for the economy, and will cause demand to outstrip supply. No, all demand is instigated by supply, after which all economic growth is a consequence of investment in ways to produce more and more for less and less. In other words, economic growth is the surest sign of cheaper everything, not more expensive everything.

Furthermore, if you really believe an economy of individuals can "overheat," and that the best way to help individuals is to cut them off at the knees, no amount of schooling can help you. You're just a moron. "

MY COMMENT

When I see the words....."FED".....and....."moron" in the same article I know it is something that I will probably agree with.

Personally I dont think the FED has the ability to do anything or to change anything. I dont think they have any history of successfully guiding the economy.

Over my lifetime we have had a SINGLE event of hyper-inflation.....way back in the late 1970's and early 1980's. Did the FED cure the issue......no not at all. They cranked up interest rates till long term treasuries were paying 13% and sent every other rate to the moon. Basically what they did was CRASH the economy by doing their rate increases and it was the CRASHING of the economy that cured inflation.....NOT....the rate increases.

Other than that one time period way back in the 1970's and 1980's.....I have NEVER seen any other time period of hyper or even high inflation here in the USA.....till now. So the FED has ZERO history of fighting inflation.....successfully or otherwise.

I do happen to believe that current rates are too low and need to be normalized......but......I dont believe that will have any impact on inflation at all. The ONLY thing that will have an impact is when they CRASH the economy.........and.....crashing the economy is not what they are trying to do.

SO.....if they tamp down inflation it is not going to be by raising rates.....it will be because they CRASH the economy accidentally.

 

A great way for me to start out my little 8 day road trip tomorrow. I will be out of touch for the next 8 days.......covering 2000 miles.

So......I will not be posting much or seeing any account results till late next Wednesday. I will take off with a nice GREEN day behind me and some nice gains in my account. Plus I got in a 0.38% beat on the SP500 on a day when it was way up.

I had a single stock down today.....Costco. Plus I was able to reduce my year to date loss to (-21%).

 

I have time to put up a quick post.

WOW....that was a nasty day yesterday. I will not be checking my accounts till I am back next Wednesday. No doubt I was BIG RED yesterday. AND.....no doubt I was plain old red today....although I did have three stocks that were green....Nvidia, Home Depot, and Amazon.

Here is my view......and.....probably people are not going to like it......but I try to be honest on here. I say this with my usual VERY CLINICAL view of the business and investing world. I believe there is a....."probability"........not a strong probability.....but still a "probability" that:

1. We are already in a RECESSION.

2. There is little chance of a positive end to this year for investors and the major Indexes.....like the SP500, Nasdaq, and DOW.

3. That the markets are going to end up between (-35%) and (-50%) before this extended BEAR MARKET and RECESSION are over with. In other words we have another..........15% to 25%.....down side with the likely down side being 20% to 25%.....on top of the losses to date.

4. That there is a pretty good likelihood of the modern equivalent of STAGFLATION. It will not be exactly like the late 1970's and early 1980's......but it will be a time period of high inflation and economic stagnation.

5. That much of the above will be caused by our totally incompetent government and their policies.....in conjunction with....the FED crashing the economy.

6. We are probably looking at the rest of 2022 and well into 2023....if not all of 2023.....for this to end.

7. WORST CASE......this event.......the BEAR MARKET and RECESSION/STAGFLATION......will last for the remainder of the current Presidential term.

LOL.....how is that for a quick hit and run post. Hopefully it generates some discussion.

NOW......what to do....I intend to actually.....do nothing.

1. I will ride it out since I am long term for LIFE and have no need of any of my stock market money. Everyone in my family that I manage their money will do the same since they are also not in need of any of their stock market money.

2. Any time along the way that I get any extra cash I will put it into the markets....either into the SP500....or.....scattered among my ten stocks.

3. I will only know it is over when it is clearly over.

This will be a BIG wake up call for anyone that has a short term definition of....long term investing. It will also be a RISK TOLERANCE wake up call for EVERY younger investor........as to holdings.......lack of diversification......and......timeline. It will be a HUGE event for the retiring baby boomer generation.

It is likely to be one of those times when it seems like the negativity will never end and it is a......."new normal". A few times I have talked about a......soul sucking market.....on here in the past. Unfortunately I see all the elements coming into place for such a time over the next 12-32 months.

BUMMER.......I hope I am very wrong in my view.....but in any event.

I will continue to be fully invested for the long term as usual.......and......will add money as I have it over the next 1-2 years.

If the above happens.....I will continue to post my usual articles and long term investing "STUFF" on here with a POSITIVE view of the long term. It is a waste of time to simply be a......nattering nabob of negativism (thank you Spiro Agnew)....day after day after day after day. I will just stay positive and hang in there and try to help others do the same.....for the long term.

ENDURE WITH STRENGTH.......and.....CONFIDENCE IN THE LONG TERM FUTURE.