The Long Term Investor

YES....you were TireSmoke.....you were and are the CHIP GUY for the board.

I was looking at a chart of NVDA. The current run up basically started in......Lets say January of 2020. Before that for many years the stock......up till the end of 2015......was between $1 and $8. Starting in January of 2016 till about December of 2019....the stock ranged from $9 to $68.

From January of 2020 till now it went up like a rocket. That is one reason I like this stock.....it is relatively YOUNG in terms of becoming a household name and dominating the chip field. As I have said many time on here......I dont try, and do not have, to get in on a stock when it is right out of the gate. I like to wait and get in when the handwriting is on the wall.....but....the company is STILL YOUNG. I see NVDA as at that point right now. I like to minimize risk.

Looking back at a number of my accounts....just now.....I see the earliest purchase of NVDA as September of 2020 for about (EDIT) $122.26. I added shares to various account through 2020 and 2021.....and continue to do so now.

 

OLDMANRAM.....is in the house.

Good to hear from you. Emmett got a big promotion at work so now he is limited in how much time he can be on the board screwing around.....rather than working. Everyone else is still pretty much here.

I am sure everyone misses you. How is the YACHTING?

 

I do see that the markets have now FLIPPED on us today. ALL the averages are....RED, RED, RED.

I dont see why yet....but....I am guessing FED fear mongering over a hotter than expected GDP, good earnings, etc, etc. OMG....they might do another rate hike in September. If so.....no one will care other than the financial writers and the professional traders.....fear mongers all.

 

HERE is what I see....

Dow loses 200 points, on pace to snap historic streak of 13 straight gains

https://www.cnbc.com/2023/07/26/stock-market-today-live-updates.html

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

"The Dow Jones Industrial Average fell Thursday, on pace to snap a historic streak of 13 straight gains.

The 30-stock index fell 210 points, or by 0.6%. Earlier in the day, the benchmark was higher by more than 100 points.

The S&P 500 was lower by 0.5%, and the Nasdaq Composite declined 0.4%.

Honeywell dropped more than 5% after reporting weaker-than-expected revenue. Chipotle Mexican Grill dropped about 9% as sales fell short of estimates.

Meanwhile, Meta Platforms shares popped 5% on better-than-expected results and strong guidance. The company’s numbers were boosted by a rebound in ad revenue.

Earnings results have generally been stronger-than expected. Of the companies that have reported thus far, 81% have beaten analyst expectations, according to FactSet data.

Gross domestic product showed a rise of 2.4% in the second quarter, which was better than the 2% increase expected by economists polled by Dow Jones. The report also suggested price pressures are easing, with the personal consumption expenditures price index rising 2.6% in the second quarter. That’s lower than the 3.2% increase expected by economists, and the 4.1% rise in the prior quarter.

The Federal Reserve hiked rates for an 11th time on Wednesday. Investors took the rate hike in stride as Fed Chair Jerome Powell said after the decision that the central bank could raise rates again or hold them steady at these levels depending on the data. The central bank meets again in September after a batch of new inflation and employment figures and traders are betting that upcoming data will cause the Fed to back off.

“Those very high rates that scared me and the market earlier on in the year don’t seem to be having as much of a negative effect as I had feared,” Wharton School’s Jeremy Siegel told CNBC’s “Squawk Box” on Thursday. “And that, combined with the fact that Powell now is saying I’m going to look at both sides of the equation, I think is very positive for the markets.”

The Dow is coming off an extraordinary run Wednesday, when the index notched its 13th straight day of gains in its best winning streak going back to 1987."

MY COMMENTS

Looks like we are having a little market HISSY-FIT right now over nothing.

 

As to EARNINGS......see above.....NOW the beats are up to 81%. Another poke in the eye with a sharp stick....for all the experts and others......WHINING.......( Imagine Pee Wee Herman snarling in his whinny voice) "well......it is only at 75%......not 80%"

The more they WHINE the worse it gets for them.....they never know when to just give up and shut up.

 

Since I dont see anything I am going to say the RED at this moment is simply good old fashioned PROFIT TAKING. Probably driven by computer trading programs.

 

OR.....I guess I could blame the market drop on......OLDMANRAM. Is it a coincidence that he is gone for so long....than when he comes back the market tanks?

 

OK.....I see why.....the Ten Year Treasury JUMPED big today. It is now 4.006%. A short while ago......4.016%.

 

Two adults and EIGHT girls......very brave.

 

As I guessed in a few posts above.

"Markets turned red in Thursday afternoon trading, giving up gains from earlier in the day, as treasury yields leaped.

Investors appeared to take strong economic data as a sign that the Federal Reserve could have more work to do.

Earlier in the day, gross domestic product grew more than expected, while weekly jobless claims arrived lower than expectations, indicating continued strength in the U.S. jobs market.

Yields on the 2-Year treasury note rose to 4.936%, while yields on the 10-Year climbed to 4.014%.

The Dow Jones Industrial Average lost 170 points, or 0.5%, while the S&P 500 dropped 0.4%, and the Nasdaq Composite shed 0.3%."

https://www.barrons.com/livecoverag...ields-drop-3ypGawhj3DMl5QlEeZqE?siteid=yhoof2

 

I ended with a mixed....but....LOSING day today. A medium level loss. I also lagged the SP500 by 0.08% today.

At least it was a fun and interesting day in the markets.....I got my moneys worth.

 

I am definately an Austrian. Keynesian economics is one of the primary reasons for economic failure on a micro and macro level around the world today. My mild opinion......One of the most IDIOTIC economic theories in history.

Keynesian vs. Austrian Economics: 5 Key Differences
Austrian and Keynesian economics are two diametrically opposed theories – yet both are still thriving today.

https://money.usnews.com/investing/articles/keynesian-economics-vs-austrian-economics

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

"The fundamental principles of economics are based on human nature and do not change regardless of how they are interpreted. People behave certain ways on an individual and societal level based on the amount of resources available to them and the ability to freely transact. However, while they may speak the same language, Keynesian and Austrian economists approach the economy from two very different perspectives.

Austrian economics comes from the Austrian Empire in the mid-1800s. Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich Hayek believed the free market was the most efficient means of allocating resources. Keynesian economics comes from economist John Maynard Keynes, author of the 1936 book "The General Theory of Employment, Interest and Money." Keynes believed the government could manage demand to maximize economic growth and employment.

These two radically different schools of thought are still alive and well today. Here's a little more about each philosophy, and the main differences between Keynesian and Austrian economics:

What Is Austrian Economics?

The Austrian school of economics originated around the time of Carl Menger's 1871 book "Principles of Economics." Menger's theory was based on the simple idea that the value of goods and services is subjective based on an individual consumer's perception. Therefore, increasing the supply of goods decreases their perceived value, an idea that later became known as diminishing marginal utility.

Austrian economics can also be used to understand and interpret macroeconomic factors such as money supply, inflation and foreign exchange rates.

The Austrian school of economics emphasizes macroeconomic ideas such as free markets, private property and minimal central bank intervention. Austrian economists make the libertarian argument that government intervention in the economy typically does more harm than good.

Austrian economists also believe economic recessions are caused by credit cycles triggered when central banks keep interest rates too low for too long in an attempt to stimulate economic growth. They argue monetary policy intended to stimulate instead creates economic inefficiency, wasting resources and sacrificing long-term economic stability for short-term economic growth.

The Austrian school is generally critical of the use of fiat currency and prefers money be backed by gold reserves or some other form of tangible resource. They believe the use of inconvertible fiat money encourages governments to devalue currencies, destroy savings and create inflation.

Austrian economists generally rely on logic and critical thinking more than complex statistical models and formulas. They believe maintaining free markets and protecting the money supply are keys to ensuring social progress and civil liberty. As a result, central banks like the U.S. Federal Reserve can be enemy number one for Austrian economists.

Asher Rogovy, chief investment officer at Magnifina, says Austrian economics suggests central banks should take a hands-off approach to the economy.

"Central banks can control an economy's money supply, which affects interest rates. Austrian-school economists tend to believe that inflation is simply a function of money supply and therefore it should remain constant to avoid inflation," Rogovy says.

What Is Keynesian Economics?

John Maynard Keynes challenged the idea that a free market would automatically maximize employment. The central principle of Keynes' argument is that aggregate economic demand, which includes household, business and government spending, is the most important factor in determining economic growth. Keynes believed passive free markets have no mechanism in place to maximize employment, but government intervention can help create jobs while also maintaining stable prices.

Keynesian economists believe a free market can produce periods of inadequate demand that can lead to extended periods of high unemployment. During a recession, consumer confidence drops and discretionary spending plummets, which exacerbates the problem. Demand for products and services falls, leading businesses to cut their investments and further weaken the economy.

According to Keynesian economics, it is the role of the government to step in during these periods to modify monetary policy and stimulate the economy to maintain stability.

Keynesian economists generally believe maximizing employment should take priority over minimizing inflation. The idea that the government should expand the money supply during economic downturns is known as expansionary fiscal policy. Expansionary fiscal policy can involve the government implementing subsidies, increasing welfare entitlements or cutting taxes to increase the purchasing power of its citizens. Governments can also reduce unemployment by hiring new government workers or contractors.

Keynesian Economics vs. Austrian Economics: The Biggest Differences

Keynesian and Austrian economists have vastly different takes on a wide range of economic topics. However, their key philosophical disagreement boils down to one main idea: government economic intervention.

"The central idea behind Keynesian economics is that the government has the power to stabilize the economy through strategic intervention," says Jake Hill, CEO of DebtHammer. "This stands in opposition to Austrian economics, a theory that states that government should have zero involvement in economic processes such as stabilizing market prices."

That one main disagreement manifests in several ways:

• Austrian economists believe free markets are efficient and self-regulatory. Keynesian economists believe free markets are inherently inefficient and volatile.
• Austrian economists believe government intervention in free markets makes negative business cycles more severe, while Keynesian economists believe governments can implement policies to stabilize the economy and mitigate recessions.
• Austrian economists believe companies should be allowed to fail during economic downturns to eliminate the least efficient businesses. This process also helps allocate more resources to the most efficient existing businesses, as well as to the creation of new businesses. Many Keynesian economists would argue government investments could help keep major insolvent companies afloat and avoid job losses during recessions.
• Austrian economists believe inflation is a negative event because it destroys savings and devalues currencies. Keynesian economists believe a low, steady inflation rate stimulates economic growth and encourages investment.
• Austrian economists believe in "sound money," convertible currency which is backed by gold or other hard assets. Keynesian economists support fiat currencies, which can be manipulated by central banks to adjust the money supply and stabilize the economy."

MY COMMENT

UNFORTUNATELY......government is full of Keynesians.......naturally.
Also....unfortunately.....government controlling and attempting to manage the economy has always been a total failure.

The basic differences between the two theories are the basic difference between freedom and Socialism.

These people......Keynesians.......with their PHD's in economics and theoretical BS.....are embedded through our banking system, government, the FED, and everywhere else. Little wonder that our economy is often totally screwed up. They are the greatest threat to free market capitalism across the world..

 

A pretty good open today.......(understatement). NOW.....lets see if we can hold on today and not FADE like yesterday.

 

YES IT IS.

2% Inflation Target is Silly

https://ritholtz.com/2023/07/2-inflation-target-dumb/

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

"One of the more foolish arguments1 that seem to be emanating from the Fed about their intention to raise rates another quarter point today: The 2% inflation target that has been in place pretty much the entire post-financial crisis era.

There is no empirical evidence that shows 2% as the optimal long-run inflation target, for a central bank that has a dual mandate of price stability and maximum employment. It is a round number that people kinda made up and stayed with for no apparent reason.

If there was something magical about 2% as the ideal balance between prices and jobs, that would be avery different thing. But the 2% inflation target is LITERALLY a random number that originated in New Zealand in the 1980s.2 Roger W. Ferguson Jr., former Vice Chairman of the Federal Reserve observed in a recent CFR note, “Surprisingly, it came not from any academic study, but rather from an offhand comment during a television interview.” For reasons no one has intelligently articulated, other countries subsequently adopted it as their target.

Laurence Ball, Professor of Economics at Johns Hopkins and Research Associate at the National Bureau Of Economic Research, made the case in 2013 that 4% was a more rational target. “Raising inflation targets to 4% would have little cost, and it would make it easier for central banks to end future recessions,” he noted.3

The Federal Open Market Committee has justified the 2% inflation based on inflation expectations. The Board of Governors stated, “When households and businesses can reasonably expect inflation to remain low and stable, they are able to make sound decisions regarding saving, borrowing, and investment, which contributes to a well-functioning economy.”

The problem with this approach (as we have repeatedly shown, is that it is utterly useless. Inflation expectations are typically at their lowest right before a surge in inflation occurs; they are at their highest levels just as inflation rolls over and heads downwards. People’s inflation expectations mimic the typical overenthusiastic investor, piling in at the top of the market and panic selling near the bottom.

Expectations are no way to run monetary policy and are more fit for a Monty Python film.4

Consider: We had 2% inflation expectations the entire post-GFC era. The economy was sluggish, job creation as weak, consumer spending was soft. ZIRP and QE had driven rates to zero (or negative in some parts of the world), and 2% seemed a reasonable albeit arbitrary upside target. But after $6 trillion in fiscal stimulus, mortgage rates at 7.5%, perhaps 3% makes much more sense as a downside inflation target.

I have noted in the past that the Fed was late to get off its emergency footing, late to recognize inflation pierced its 2% target to the upside (March 2021), late to begin raising rates (March 2022), late to recognize inflation had peaked (June 2022), late to recognize that they have already beaten inflation in (July 2023).

I have a pet theory as to why they have been consistently so late: Many economists have misunderstood this entire economic cycle, including inflation. These older school economists – who demanded vigilance against rising prices, declared inflation to be persistent, sticky, and non-transitory or even stagflationary – all made their bones in the 1970s/80s. They are haunted by a very different type of economy that had very different inflation drivers. Their PTSD is palpable.

They are taking the wrong lesson from that era. As Professor Ball wryly observed to the NYT’s Jeff Sommers, “If 4% was good enough for Volcker, it should be good enough for us.”"

MY COMMENT

Economists.......theoretical MORONS. The FED is full of them on the various committees and on their staff. Of course the vast majority of them either work for or with government and rely on government for their income and funding.

I remember very well the REGAN BOOM.....which lasted all the way to the Clinton era. What was considered GOOD inflation back than was......3-4%.

YES....unproven economic theory and IDIOCY.....has a HUGE real world impact on all of us.

 

And to continue the IDIOCY of Economics discussion.

An inflation gauge that is closely tracked by the Fed falls to its lowest level in more than 2 years

https://finance.yahoo.com/news/inflation-gauge-closely-tracked-fed-123753429.html

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

"WASHINGTON (AP) — A measure of consumer prices that is closely monitored by the Federal Reserve fell last month to its lowest level since March 2021, the latest sign that inflation in the United States is steadily cooling from its once-painful highs.

Prices rose just 3% in June from 12 months earlier, down from a 3.8% annual increase in May, though still above the Fed’s 2% inflation target. On a monthly basis, prices rose 0.2% from May to June, up slightly from 0.1% the previous month. Last month's sharp slowdown in year-over-year inflation largely reflected falling gas prices, as well as milder increases in grocery costs.

Still, a measure of “core” prices, which excludes volatile food and energy costs, remained elevated even though it also eased last month. Those still-high underlying inflation pressures are a key reason why the Fed raised its short-term interest rate Wednesday to a 22-year high.

A separate report Friday from the Labor Department showed that a gauge of wages and salaries grew at a slower pace in the April-June quarter, suggesting that employers were feeling less pressure to boost pay as the job market cools. Employee pay, excluding government workers, rose 1% last quarter, down from 1.2% in the first three months of 2023. Compared with a year ago, wages and salaries grew 4.6%, down from 5.1% in the first quarter.

The Fed is closely watching the pay gauge, known as the employment cost index. Smaller wage increases should slow inflation over time, because companies are less likely to need to raise prices to cover their higher labor costs.

The inflation report that the Commerce Department issued Friday also showed that Americans' willingness to keep spending, despite two years of high inflation and 11 Fed rate hikes over 17 months, remains a powerful driver of the economy. Consumer spending rose 0.5% from May to June, up from 0.2% the previous month.

The U.S. economy is in a hopeful but precarious place: A solid job market is bolstering hiring, lifting wages and keeping unemployment near a half-century low. Yet inflation is weakening rather than rising, as it typically does when unemployment is low. That suggests that the Fed may be able to achieve a difficult “soft landing” for the economy, in which inflation falls toward the Fed’s 2% target without triggering a deep recession.

The Fed’s policymakers, though, are concerned that the steadily growing economy could help perpetuate inflation. This can occur as persistent consumer demand enables more companies to raise prices, thereby keeping inflation above the Fed’s target and potentially causing the central bank to raise rates even higher.

The latest evidence of the economy’s resilience came Thursday, when the government reported that it grew at a 2.4% annual rate in the April-June quarter — faster than analysts had forecast and an acceleration from a 2% growth rate in the first three months of the year.

At a news conference Wednesday, Chair Jerome Powell suggested that the Fed’s benchmark short-term rate, now at about 5.3%, was high enough to restrain the overall economy and likely tame inflation over time. But Powell added that the Fed would need to see more evidence that inflation has been sustainably subdued before it would consider ending its rate hikes.

Powell declined to offer any signal of the central bank’s likely next moves. In June, Fed officials had forecast two more rate hikes this year, including Wednesday’s.

Even as overall inflation has eased, “core inflation,” which excludes volatile food and energy costs, remains high. The Fed’s policymakers consider core prices a better measure of where inflation might be headed."

MY COMMENT

The economy is in a very GOOD PLACE.....if the economists can just sit still and do nothing. BUT.....for them.....siting and simply doing nothing.....is as hard as it is for most investors. Contrary to basic human behavior and urges.

This DOES however....show that investors are probably going to be in for a GREAT ride for a year or two going forward. It should be good times for business.....if government can just keep their dirty little hands off.

 

The above is probably the primary driver of the short term market today. HERE is the open today.

Stocks gain as PCE data shows inflation cooling

https://finance.yahoo.com/news/stoc...ooling-stock-market-news-today-133635563.html

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

"Stocks rebounded early Friday, with the Federal Reserve's preferred inflation measure showing a continued cooling in pricing pressures in the US economy.

The Personal Consumption Expenditures (PCE) Price Index out Friday morning showed that on a "core" basis — which strips out food and energy — prices rose 4.1% over the prior year in June, the least since September 2021.

The data follows CPI numbers earlier this month that showed core inflation rose 4.8% over the prior year. On a "headline" basis — which includes food and energy — both PCE and CPI showed prices rose 3% over last year.

Earlier in the morning, a surprise Bank of Japan rate shift rattled markets.

At the open, the Dow Jones Industrial Average (^DJI) was up 0.4%, after the benchmark failed on Thursday to add to its longest run of wins since 1987. The S&P 500 (^GSPC) added 0.7%, while tech-heavy Nasdaq Composite (^IXIC) futures climbed 1.2% after all the major gauges closed in the red on Thursday."

MY COMMENT

NOT a single word about what really counts......the STERLING EARNINGS that are coming in every day.

NO WONDER.....most investors today have little to no real understanding of how to invest and how to evaluate what is going on around them. It is all about EARNINGS......and.....FUNDAMENTALS which reflect earnings. It is all about the ability to evaluate an actual BUSINESS and their long term prospects. It is all about the ability to sit, wait, stay invested, and do nothing.