The Long Term Investor

I got my new token in the mail from Schwab today. My old token that I have been using for over 10 years is having issues so I assume the battery is dying.

I started using a token to access my brokerage account about 20 years ago. My account and the various other accounts of family members that I manage, all show up under my log in. Back 20 years ago I got concerned with security of the accounts, the amount of money involved in the accounts,.....plus....the hacking and other things that happen with computers. So I started using a random number generator token that I got from Schwab.

I know a lot of people now use their smart phone to generate numbers to access accounts. I do that with my very small Crypto account that has about 1/30 of a Bitcoin at Coinbase. BUT....for my brokerage accounts I STILL prefer to use the token and keep how I access the Schwab accounts totally isolated from my phone, and everything else. I never access my brokerage account by smart phone....just from my laptop.

Looks like the new token is now working.....although I did have to call technical support at Schwab to get it properly linked to my account.

For security I also use a VERBAL PASSWORD with my accounts at Schwab. Any time I call Schwab or do any sort of business with Schwab by phone.....they request my verbal password before they will give out any information or will do anything.

My wife is aware of the token and knows how to use it. She is also aware of the verbal password. Back during the time when I was touring nationally and internationally she handled all the day to day accounts. So....back than....she got used to using the token and verbal password. I would usually be home about every 7-12 weeks for a week or two so I could check everything going on in the accounts. Of course we had phone contact.....usually daily if she had any questions or issues or if I wanted her to do some transaction.

It was nice when I was gone for extended times to be a long term investor. I would follow the general day to day markets.....but there was no need for me to do anything.....so.....I would never access my accounts while on the road. Out of paranoia.....I considered it too dangerous traveling and staying in hotels every night to carry account information with me and log into accounts when traveling. If I wanted to do something in an account I would just tell her the next time we spoke by phone.

 

I have a big week coming up next week. The FED rate increase will happen mid week. On Thursday or Friday the GDP number for the second quarter will come out.

I also have four stocks reporting next week......Microsoft and Google on Tuesday......and.....Honeywell and Apple on Thursday.

It could be a WILD WEEK with the big TECH earnings next week plus GDP and the FED.

 

Amen to that Zukodany.

 

If you are a long term investor.....than my recent CELEBRATION of the gains last week and over the past month will NOT impact you. BUT.....is you are a short term investor........watch out. REMEMBER.....I believe we are at a "SOFT BOTTOM" with perhaps another 10% drop possible.

If you are a short term investor here is a little article for you.

Bear Market: ‘Don’t be fooled’ by short rallies’, says strategist

https://finance.yahoo.com/news/bear-market-dont-be-fooled-short-rallies-strategist-210041646.html

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

"Update 7/22 - The stock market slumped on the Friday with U.S. media companies shaving off nearly $130 billion market value. The tech-heavy Nasdaq dropped 226 points as Snap crashes 39% due to missed Q2 earning expectation. The Dow and S&P 500 also declined by 0.43% and 0.93%, respectively.

U.S. stocks continued to climb on Thursday for the third consecutive day, recording the best three-day Nasdaq gain since late May.

On Thursday’s closing, the Nasdaq composite (^IXIC) and S&P 500 (^SPX) had raised 14% and 10%, respectively, compared to their 52-week lows. Nasdaq’s heavyweight company, Tesla (TSLA), climbed nearly 10% after it surpassed Q2 earnings estimates.

However, one strategist reminded investors that he believed this is still a bear market.

Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance Live (video above) that, “don’t be fooled. It’s tough. Don’t be seduced by them [rallies],” as he pointed out that this week’s increase was just a part of the market where ’volatility works in both directions.’

“Let’s be honest about it. That’s why I like to call that socially acceptable volatility. The other term, which is not as polite, it was a bear market rally.” Sosnick explained that the 2-3% market bump is a common mathematical calculation, “We are still in a bear market and we still are seeing the fed as a headwind, and so to that extent, that becomes problematic and so we really have to see if this was a one or two day wonder.”

Monetary policy dictates the market.

Sosnick believed that the bearish market will persist longer and decline further as long as the Federal Reserve remains in its monetary policy position, “Right now, you really don’t get bottoms until or unless you see some sort of change in fiscal or monetary policy.”

However, “I don’t see that [new fiscal policy] right now,” he added.

Other indexes, Russell 2000 (^RUT) and Dow Jones Industrial Average (^DJI), closed green going into Friday as investors continued to buy beaten-down shares.

Capitulation

Sosnick agreed with Sanford Bernstein’s recent release note that the market has not yet reached capitulation and that investors have not thrown in the towel. According to him, a simple way to tell when capitulation occurs is when investors have “given up all hope.”

“The real capitulation happens when people say, oh, god, i don’t even - don’t talk to me about this anymore,” Sosnick told Yahoo FInance, “None of us want that to happen. That’s not good for any of us at this table and watching. But that’s real capitulation.” and “I think we are away from that.” he said."

MY COMMENT

With all the new investors, all the free money sloshing around, the economy, markets, and everything else screwed up by the economic shutdown......I dont think we are going to see CLASSIC CAPITULATION....this time around. I think we are at a "soft bottom". In other words touching the mud at the bottom of the river......but there is still room to sink into that mud by 10-15% more.

If you are a long term investors like me.....it does not matter. If you are a short term investor playing hunches and guesswork.....it can matter big time.

I CELEBRATE what I believe is a soft bottom and also the last week and the last month of market GAINS. BUT......I am betting NOTHING......I am fully invested all the time. So right or wrong.......I dont care.

 

I am sure we will see MASSIVE HYPE and FEAR MONGERING in the media about next week. My view based on what I see as "probability".

The FED......will do what everyone knows.....a 0.75% rate increase. Totally expected and NOT a big factor once it happens. In fact if it happens as expected this should be a positive event.

Earnings....by Microsoft, Google, and Apple.......If they beat, which I think they will ( these companies are masters of lowering expectations, or at least they should be)......it is another "who cares" event. In fact it would be positive for the markets. The wild card is the guidance they issue and how the media latches onto the guidance and runs with it.......with their hair on fire screaming that it is the end of the world.

GDP......Is there anyone left in the entire world that does NOT expect negative GDP and that we are in a recession? Once again the expected negative GDP is totally anticipated and should NOT be a big factor. BUT.....once again.....blah, blah, blah.....the media....hair on fire....etc, etc, etc.

In other words......next week.....WHATEVER.

 

Well Professor Emmett..........registrar of the School Of Long Term Investing..... is right.......You have passed all the various steps......you are now a JOURNEYMAN INVESTOR. Good job....we are all proud of you.

As to the issue you talk about above......no one here is qualified in the slightest to help with that......at least none of the males.

 

I have been seeing articles like this most of my life. NOTHING will ever be done......but there are some easy solutions.

Stock-Market Woes Exacerbate State Pension Problems

https://www.realclearmarkets.com/ar...exacerbate_state_pension_problems_844063.html

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

"One of the biggest festering problems in American politics in recent years has been the long-term struggles of states to maintain the fiscal solvency of their publicly-funded pension programs. That problem was able to take a backseat during the pandemic, especially when markets were bullish. But now that that trend has been reversed and public pension investments are struggling along with the rest of the stock market, the underlying crisis is only becoming worse.

Unfunded pension liabilities represent commitments that states have made to public employees. Since they are not due immediately, states often defer figuring out how to pay for them to future generations and legislators. Just as the average American knows that they need to start putting funds in a 401(k) or other retirement savings plan long before they begin withdrawing from it, states know they can’t wait until the bill is due to start figuring out how to pay for it.

Unfortunately, that’s often what they do anyway. A recent report by the Reason Foundation finds that total unfunded state pension liabilities are set to rise back above $1 trillion this year, assuming a negative annual growth rate for the 2022 fiscal year that ended June 30. With early projections anticipating a negative 6 percent growth rate for the fiscal year, unfunded state pension liabilities will jump from $783 billion last year to $1.3 trillion.

According to the Reason Foundation’s numbers, just seven states are set to have 90 percent or more of their pension liabilities funded given a negative 6 percent return on their pension funds. Meanwhile, twenty states are set to have a funding ratio below 70 percent. The worst of these are Connecticut, Kentucky, and New Jersey, each set to fund less than half of their pension liabilities.

And it’s not just pensions that states are struggling to figure out how to pay for. States also face a second crisis of unfunded liabilities in the form of retiree health care benefits for state employees. A recent report by the American Legislative Exchange Council found that state Other Post-Employment Benefits (OPEB) liabilities added up to just under $1 trillion, with an average funding ratio of just 12 percent.

The growing costs of pension plans and OPEB benefits at the state level are mirrored at the federal level, where spending on Social Security and major health insurance programs (including Medicare and Medicaid) are set to rise from a total of 10.8 percent of GDP this year to 14.9 percent of GDP thirty years from now. For context, the difference between 10.8 percent of GDP and 14.9 percent of GDP this year is about $930 billion.

It’s worse than just a parallel, however, as the bills will start to come due at around the same times. That means that as states are trying to figure out how to pay for the pensions and OPEB benefits they put off for years, so too will the federal government. When that happens, states and the federal government will each be looking at taxpayers to bail them out for their irresponsibility.

But taxpayers shouldn’t wait for that to happen. Rather than accepting that ballooning retirement costs are tomorrow’s problem, they should demand real reform from their lawmakers at every level of government. After all, if taxpayers don’t demand that legislators solve the problem now, legislators will be the ones demanding that taxpayers fix it later on."

MY COMMENT

This issue is a DISASTER waiting to happen. BUT......this is not a financial issue or an investing issue.....as the first sentence says.....it is a problem in AMERICAN POLITICS.

In the old days voters were told that the government pensions and health care given to employees were necessary to get people to take less pay to work for the government. NOW.....everything is flipped on its head......government jobs pay massively. In addition you get virtual lifetime job security, regular raises , and the BIG pension and retirement health benefits.

The ONLY people in society that have a pension......and.....health care benefits paid for life are government workers. The SIMPLE solution......eliminate government pensions and lifetime health care. Let government workers pay into a 401K style system with a match just like everyone else. If that system is good enough for everyone else.......the taxpayers that fund government.....it is good enough for government workers and ESPECIALLY the politicians. It would be easy to phase in this change without impacting existing workers.......after all we did this in private business.

As to Social Security......dont even try to compare that to government pension funding. The simple truth about Social Security is that the government simply STOLE the money to fund Social Security and replaced it with worthless special treasury debt. This system is not underfunded......the money is simply stolen every year and NEVER invested at all.

BUT.....I am wasting my time even typing any of this.....we all know that this system will NOT change.

 

YEP.....the SP500 is very nicely positive over the last 30 days. You would not know it from the articles and commentary you often see.

Why the stock market has defied the odds in July (so far)

https://finance.yahoo.com/news/stock-market-surprise-july-103731470.html

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

"Investors have breathed a sigh of relief up to this point in July as worst-case scenarios for the economy have failed to materialize.

The Nasdaq Composite and S&P 500 are up an impressive 7.5% and 4.8%, respectively, so far this month. Shares of meme stock darlings GameStop and AMC have jumped 17% and 14.5%, respectively, as traders embrace the risk-on backdrop. Even 2022 laggard Netflix has seen its stock rise 25% month to date, even after another lackluster earnings report on July 19.

Pros point to several reasons for the summer rally.

"Odds of a deep recession eased last week as weak PMI data reinforced that 1) growth is slowing, 2) pricing pressures are coming down," explained 22V Research founder Dennis Debusschere in a client note. "While prices are easing, the Fed can afford to be patient with data. That does NOT mean a policy pivot is coming this week, but it does mean there is little need for the FOMC to adjust their policy path higher either. Growth will continue to slow and the recession risks remain elevated, as evidenced by the further collapse in the 10yr-3 month curve over the past week. But, a deep recession should not be a base case yet, and the case for a slowdown/mild recession has improved."

Debusschere added that "the worst fears about second quarter earnings have not been realized" as another positive catalyst the markets have jumped on.

"We're acquiring spending and we see future travel bookings [strong] so I don't see it [a recession] in my numbers at all," American Express CEO Stephen Squeri told Yahoo Finance.

Despite the feel good vibes in markets thus far in July, storm clouds are a brewing.

For starters, the Federal Reserve is likely to hike interest rates by an aggressive 75 basis points later this week. Hawkish comments by Fed chief Jerome Powell may ensue amid still surging inflation, much to the surprise of a market in rally mode pros say.

"We expect something of a disconnect between the abruptly more optimistic tone in markets on the inflation outlook and the posture the Fed will take at the meeting," Evercore ISI strategist Krisna Guhu warned in a note to clients. "We think Powell will strike a stern tone on recent price developments and – while acknowledging some more positive forward-looking developments – will pour cold water on the notion that we are anywhere close to accumulating clear and convincing evidence that inflation is moderating."

Furthermore, this week's second quarter GDP print may show growth contracted once again to follow a 1.6% first quarter GDP drop. Two quarters of negative growth are generally indicative of a recession, and that would run counter to the upbeat tone currently playing out in markets.
"I'd say all businesses, large and small, are being more cautious right now," Goldman Sachs chairman and CEO David Solomon told Yahoo Finance Live. "There's more uncertainty around the economic trajectory of the country. Inflation is a big, big headwind."

And while corporate earnings haven't been recession-like, they have hardly been strong enough to encourage a more sustained move higher in stocks. It's pretty clear that companies are having difficulty passing along high levels of inflation and are turning to hiring slowdowns and layoffs to protect profits.

FactSet estimates that 68% of S&P 500 companies have reported a positive earnings surprise for the second quarter, below the five-year average of 77%. S&P 500 companies are beating estimates by a paltry 3.6%, also shy of the five-year average of 8.8%."

MY COMMENT

In my view earnings have been coming in very nicely. If we can average about 70% positive earnings surprizes that is great news. We are HANDILY beating the expectations at this moment. Although there are some big important earnings that will happen this week.

The reason we are seeing a more normal market at the moment is simple......the drop in share prices got out of whack with reality. There is simply ZERO rational basis for many of the companies that have seen big share drops. Based on fundamentals the losses are irrational.

Earnings and fundamentals are the TRUE foundation of stock prices and company value. At current prices.......many great stocks are cheap. On the other hand many CRAP stocks are not cheap.

The beaten down markets are now NORMALIZING. The day to day and week to week action we are seeing now is much more normal.

 

So after nearly a half hour of the markets being open.....the Dow and SP500 are both positive. Not a bad start to what could be a WILD WEEK. Or......it is just as likely......the week will be one of massive MEDIA HYPE.....and..... the reality will be boring or even positive.

 

Here is one take on the markets today and this week.

Stock market live updates: Stocks open the week little-changed

https://finance.yahoo.com/news/stock-market-live-updates-july-25-103250650.html

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

"U.S. stocks opened Monday's trading session little-changed to kick off the busiest week of the year for corporate earnings and economic data.

About 20 minutes after the opening bell, the S&P 500 was flat, the Dow was up about 0.2%, and the Nasdaq was down by about the same amount.

Last week, all three major indexes logged weekly advances with the S&P 500's advance since mid-June lows coming in at about 8%. The Nasdaq has gained over 10% during this period.

In the week ahead, quarterly results from over 170 companies in the S&P 500 are expected, with Wednesday's policy announcement from the Federal Reserve and Thursday's GDP data also expected to move markets.

As always happens in markets, surprise announcements had stocks on the move early Monday.

Shares of Weber (WEBR) were down over as much as 16% in early trade after the company announced the departure of its CEO and offered preliminary results for its most recent quarter that disappointed. The grill maker cited slower retail traffic in-store and online, as well as forex pressures, in cutting its outlook.

Weber also said it is, "pursuing a number of financial transformation initiatives, which may include workforce reductions, reducing other COGS and SG&A expenses, as well as tightening its global inventory levels and working capital positions." Weber also suspended its dividend.

Tesla (TSLA) was also making headlines Monday morning after the company disclosed in its most recent 10-Q it received a second subpoena from the SEC related to Elon Musk's tweets about the company going private back in 2018.

Musk and Tesla were also in the news over the weekend after the Wall Street Journal reported an affair between Musk and the ex-wife of Google co-founder Sergey Brin spurred Brin's divorce, which was disclosed earlier this year.

Tesla shares were little-changed early Monday.

Another bear market rally?

"Whether it’s a rally from an established bottom by the market or a 'bear market rally,' there’s fodder for argument between bulls and bears in any given moment in day to day market action," said John Stoltzfus, chief market strategist at Oppenheimer Asset Management in a note to clients on Monday.

Looking at sector-level performance since June 16, Stoltzfus and his team note the rally since June 16 has been almost a mirror image of the market's performance this year.

Ten of 11 S&P 500 sectors are higher since the mid-June lows, with only Energy (XLE) seeing losses over this period, falling over 7%. On a year-to-date basis, Energy remains the only S&P 500 sector higher in 2022 through Friday's close, up some 28%.

The Consumer Discretionary (XLY) has led the market since mid-June, rising over 15% in the last five weeks. Year-to-date, this has been the second-worst performing sector in the S&P 500, falling 24% through Friday, with only Communication Services (XLC) — down almost 30% in 2022 — faring worse.


The market rally since mid-June has seen Energy lag and Consumer Discretionary lead, a reversal from what had held so far this year in markets. (Source: Oppenheimer Asset Management)"
MY COMMENT

I am looking forward to this week. We will get earnings from three of the TECH GIANTS. We will get the next rate increase of 0.75% by the FED out of the way.......and move another month into their rate increasing. We will also get the GDP number and will be able to see that we have been in a recession for some time......even if government refuses to admit it.

I see ALL of these events are positive for the markets.

 

At least all the media is focused on Elon Musk and his personal life today. GOOD.....while they are chasing after gossip and sensationalism.....they are NOT focused on other issues. The more we can keep the media focused on these sorts of issues....the better.

 

Considering.....that eight of my ten stocks are negative at the moment today.....my loss is minimal. So....I am actually satisfied that I am doing well today. With the DOW and SP500 positive at the moment and the NASDAQ reasonably down.....I still have hope to end in the green today.

There is actually NOTHING going on this week other than the events that everyone in the world knows about.