The Long Term Investor

I like this little analysis.......yes.....the BULL MARKET is alive and well.

US equities show few bubble signs amid record highs

https://www.ubs.com/global/en/wealt...ce/house-view/daily/2024/latest-03122024.html

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

"Thought of the day

The S&P 500 started the final month of 2024 by hitting a fresh record high, leaving the index up 26.8% so far this year. With the latest Conference Board consumer survey showing confidence that stock prices will increase at a 37-year high, investors may fear that markets are getting frothy.

However, the market's performance so far this year is backed by solid fundamental drivers. We think US stocks are likely to continue grinding higher into next year. In our view, the exuberance synonymous with frothy financial markets is far from widespread.

There is a lack of exuberance about the real economy. While most investors are optimistic about the macro outlook, consumer and business sentiment indicators are well below their peaks in prior cycles. Inflation has been challenging for many consumers, while high input and financing costs are a headwind for small businesses. In fact, the overarching market narrative this year has swung between soft landing, stagflation fears, and hard landing concerns. The policy risks associated with the incoming Trump administration are also keeping investors at least slightly on edge. While this isn’t a necessary condition for market frothiness, investor euphoria is hard to achieve and sustain when public sentiment about the economy is not similarly optimistic.

M&A and IPO activities have remained relatively muted. Mergers and acquisitions (M&A) have increased this year. But the total value of all deals as a percentage of total market capitalization remains below the historical average. Deals are a sign of management confidence in the economy and their own company, and lukewarm M&A activity shows that sentiment is far from overheating. While corporate activity is likely to increase in 2025, we think that it may just improve to levels in line with the historical average.

Investors have not been exhibiting over-optimism over the outlook for the tech sector, in our view. While the growth story of artificial intelligence (AI) has helped drive the stock rally this year, the recent performance doesn’t signal exuberance. The Magnificent 7 have lagged the rest of the market since early July, and the Philadelphia Semiconductor Index has underperformed the S&P 500 by over 20% in the past six months. More telling is that baskets of non-profitable tech stocks, which are at the whim of speculation over future earnings, are still 60% below their peak, after going up 400% in the first year of the pandemic. True market euphoria will return only when investors begin to create narratives to justify extreme valuations for the most speculative companies.

So, while we expect bouts of volatility and corrections in the year ahead, we continue to believe that the S&P 500’s next leg up to our December 2025 target of 6,600 will be fueled by solid economic growth, the Fed’s easing, and AI advancement. Within the US equity market, we favor technology, utilities, and financials.

MY COMMENT

I agree with the above and this simple market analysis.

In fact EVERYTHING is lining up at this moment for a historic rally. We need to pin down the confirmation of the current tax rates with NO expiration date.

I have seen some articles talking about the LACK of investor exuberance......a very good sign for the immediate future in the markets.

 

There is a lot of pent up gain-power in the big cap tech stocks. Much of the good earnings news of the past year has been ignored and disrespected.

Tech stocks hit first all-time high since July

https://www.cnbc.com/2024/12/04/tech-stocks-hit-first-all-time-high-since-july.html

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

"Technology stocks powered to new highs on Wednesday as the tech-heavy Nasdaq Composite rallied 1% and investors poured into key software and megacap players.

The Technology Select Sector SPDR Fund (XLK) advanced 1.5%, rallying for its fourth straight day since mid-October and knocking out its previous high touched in July.

The rally came amid a bounce in key software players, with Salesforce popping more than 9% after reporting strong earnings after the bell Tuesday. Adobe climbed 4%, and ServiceNow jumped more than 5%. GoDaddy, Oracle and Palo Alto Networks
gained about 3% each.

Mainstay megacap technology stocks also rallied, with Apple inching higher by 0.1% to a new record. Amazon outperformed among the Magnificent Seven names, jumping more than 2%, while Nvidia, Alphabet and Microsoft rose at least 1% each, Meta Platforms was the only laggard of the group, dipping about 0.9%.

Marvell Technology was another significant gainer, surging 21% on the heels of a solid quarter. Within the semiconductor space, Broadcom and Arm Holdings added roughly 1%.

Other technology funds notching new highs included the First Trust Cloud Computing ETF (SKYY)
and iShares Expanded Tech-Software Sector ETF (IGV)."

MY COMMENT

We are all set up for a BIG TECH rally. Investors and markets and the financial media have disrespected and ignored much of the big cap tech earnings over the past year. There is a lot of pent up ammunition in these stocks for gains over the next 6-12 months.

The foolish and wrong....argument that has been the story line for years now about these companies being interest rate sensitive is going to disappear and become irrelevant as the FED continues to cut rates.

In addition....the new government will likely remove much of the ANTI-TRUST exposure and demonetization of these companies.

AI will continue to advance and will continue to drive these companies and all aspects of their business.

 

NOTHING else going on today.....time to sit and wait for the markets to mature further into the day.

The PRIMARY behavior of a long term investor......siting and waiting.

 

I dont have any issue with her buying of AMD. BUT.....she buys and sells like a maniac. She will probably sell those shares way too soon and jump into something else.

I have never seen someone that is supposedly a long term investor.....trade like she does.

 

Well....well....the markets have certainly matured into the day today nicely. We are seeing an escalating RALLY today and over the past couple of days.

There is a really strong "feel" to the markets right now.

Looks like Powell and the FED.....are not going to buck the current good feelings and throw a wet blanket on the party.

Nasdaq leads gains as tech surges, Fed's Powell keeps December rate cut on track

https://finance.yahoo.com/news/live...eps-december-rate-cut-on-track-143325872.html

"Powell touted a US economy in "remarkably good shape" as a reason he feels the Fed can be "afford to be a little more cautious" in its interest rate cutting path."

 

A new all time high for "ME" today so far. AND also the SP500 and NASDQ.

It has been a long time since we had a FURIOUS SANTA RALLY at year end. This might be the year. Such a rally can add......4-8% by year end.

The SP500 has already gone up by 1.16% over the past five days.

Today the word of the day for the markets is......BOOM.

SHOW ME THE MONEY.....SHOW US THE MONEY. In fact........MONEY FOR EVERYONE.

 

I could not resist checking my account......a really BIG gain. My YTD entire portfolio is now over +71%....for the year.

Lets see if I am now PUNISHED for counting my chickens way to early for the end of the week and the end of the year.

If I am at this level.......I bet there are some aggressive risk takers on this board that are over +100% for the year.

 

A very good day for me today. Only two stocks.....HD and PLTR....down. I had a big gain and beat the SP500 today by 1.45%.

 

EIGHTEEN......market days left in 2024. We are quickly closing in on the end of the year. Only one thing left to do.....

LETS GET OUT THERE AND MAKE SOME MONEY.

 

While we wait for the markets to settle a bit today. It is well known on here that my retirement income is primarily two items......Social Security and Six Income Annuities that will pay a lifetime income to me and/or my spouse. I am EXTREMELY happy with how this has worked out for us. Here is some info for others that might be considering an ANNUITY.

Pros and Cons of Annuities
Annuities offer guaranteed income and tax-deferred growth, but downsides may include high fees and opportunity costs.

https://money.usnews.com/money/retirement/401ks/articles/the-pros-and-cons-of-immediate-annuities

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

"Annuities spark plenty of debate between investors and financial advisors.

These retirement savings vehicles are insurance products, and, like any other financial instrument, they have advantages and disadvantages.

Annuities are contracts that offer income or growth benefits. Retirees or pre-retirees who are skittish about risking money in the stock market often turn to annuities to preserve principal, although growth may be limited.

Some advisors object to these products, often because an advisor who sells an annuity receives a commission, which is forbidden in fee-only financial planning. There’s genuine concern in the financial planning industry that some advisors put clients into annuities mainly for the commission when investing directly in the market would have been a better course of action.

The suitability of annuities depends on an individual’s or couple’s financial goals. Here are some pros and cons to be aware of.

Pros of Annuities

An annuity can be a versatile retirement planning tool that provides guaranteed income, tax-deferred growth and legal protections.

Guaranteed Income

A dependable source of income is one reason that investors turn to annuities. For example, a retiree might have living expenses of $6,000 a month, with income of $3,000 from Social Security and $1,000 from a pension.

"You might want to purchase an annuity that will provide that $2,000 a month guaranteed payment stream," said Ryan Cravitz, president of Cravitz Financial & Insurance Solutions in Orange, California, in an email.

"This income stream can last as long as you live, or if married, it can last for as long as at least one of you live," Cravitz said, adding that annuities’ guarantees are backed by insurance companies.

That’s a reason, he said, to shop around for a highly rated company and understand the applicable fees and surrender charges as well as how an annuity will function within your financial plan.

Safe Withdrawal Rates

Many advisors will reference what's known as a safe withdrawal rate of 3% to 5% of an investor’s portfolio annually.

"Annuities are one of the best tools to maximize safe income and can have guaranteed withdrawal rates that are higher," said Carman Kubanda, a certified financial planner at Innovative Wealth Building in Fort Worth, Texas, in an email.

Kubanda noted that several variables determine what rate is paid out. Those include the annuitant’s age and the amount of time before payouts begin.

Retirement savers may want to compare the available withdrawal rates of various annuities versus typical portfolio withdrawal rates.

Legal Protections

Annuities are often judgment-proof, meaning they can’t be used as a legal settlement or to pay off debts.

"In most states, most of the time, annuities cannot be seized by creditors," said Dale Hershman, an author and principal at Sick Advisory Services in Boca Raton, Florida, in an email.

Often, funds in an annuity are off-limits regardless of their value.

"This is how O.J. Simpson wound up owing tens of millions to the Goldman family but still enjoyed an untouchable six-figure income during the last years of his life," Hershman said.

He added that it’s very difficult to steal annuity funds, as sometimes happens when an unscrupulous relative or caregiver siphons money from an investment account.

Tax-Deferred Growth

A key feature of annuities is tax-deferred growth. Because earnings are not taxed until the annuitant makes a withdrawal, there’s more opportunity for compound growth.

This feature is particularly advantageous for retirement planning, as it helps maximize accumulated value before taxes are due.

The flexibility of annuities is also a valuable feature, Kubanda said.

"There are many different types of annuities designed for different purposes," he said. Those include products designed for income, growth and accumulation, legacy or long-term care.

Cons of Annuities

Annuities offer retirement benefits but come with drawbacks like high fees, limited liquidity and opportunity costs. Investors should understand these risks before buying.

High Fees and Complexity

As with any investment, high fees erode the account owner’s return.

The fee amount can depend on the type of annuity. Variable annuities, which invest in securities and offer returns based on market performance, generally have higher fees than other types. "That is because the insurance company charges a fee, and then the subaccounts also charge fees," Kubanda said.

Fixed annuities guarantee a set interest rate and regular, predictable income payments. Another type of product, a fixed-index annuity, links growth to a market index while protecting the principal.

Limited Liquidity

When you purchase an annuity, you’re locking up your money for a set period, often six to eight years but sometimes longer, in exchange for growth. Withdrawals before the specified term may trigger a surrender charge.

That makes annuities unsuitable for short-term cash needs.

"It is very important that you understand how the annuity fits into your specific situation and liquidity needs," Kubanda said.

He added that most fixed index annuities offer a free withdrawal amount of about 10% or the ability to take a required minimum distribution if it’s an individual retirement account annuity.

Opportunity Costs

There’s a trade-off between locking money into an annuity versus pursuing other investments.

Say you decide to purchase an annuity for $100,000 to get account growth and guaranteed income at a later date.

If you’d put that money into the stock market instead, you might see higher returns, especially in strong market years. However, investing in the market also comes with more risk and no guaranteed income.

Making an Informed Decision

Annuities can serve a purpose in many retirement portfolios, but it’s imperative to understand how the advantages balance with the disadvantages.

"If the client shops around, asks the right questions and fully understands what she is getting, the pros can often outweigh the drawbacks," Hershman said."

MY COMMENT

I retired at age 49. From that point on I was responsible for providing my own income from personal assets. I had 21 years to see what it was like funding your own retirement from stock market and other funds. At age 70....my income annuities kicked in for life.

My wife and I own six INCOME ANNUITIES. When we bought them they were deferred for five years. We bought them at age 65 and they began paying at age 70. This allowed for additional growth inside the annuities and raised the amount of income payments.

The six income annuities are spread between three insurance companies and three are in my name as the primary owner and three are in my wife's name as primary owner. It is very important in any annuity to research the safety and financial strength of the insurance company since these are insurance contracts. We also structured the number of annuities that we own and how they are owned to get the maximum protection under the Texas Insurance Guarantee Program that covers insurance contracts in the event a company defaults.

Our annuities are simple INCOME ANNUITIES. At age 65 we gave the insurance companies $1.8MILLION dollars. In return....starting at age 70.....we will receive a set lifetime income which will last for as long as one of us is alive. The amount of the income does not go up or down....it is locked in. It is paid monthly. Since both of us come from families with many people living to age 90 and beyond.....I believe we will exceed the life expectancy that the annuities are based on.....but our payments will last for life no matter how long either of us lives.. Of course the insurance companies take all this into consideration in their underwriting.

I am EXTREMELY happy with having the annuities. I lived from stock market money for 21 years till age 70. It is extremely difficult to live from personal assets for the long term. I am very happy to have a guaranteed income that is not subject to the markets.

In addition to INCOME ANNUITIES,....there are many, many, types of annuities that are often called VARIABLE ANNUITIES. Many of these sorts of annuities have very high fees and are very complex. If you are considering any sort of annuity....YOU HAVE TO DO YOUR HOMEWORK.

Personally I had ZERO interest in any sort of annuity other than a simple income annuity.

With our annuities we basically purchased a lifetime pension. Between them and Social Security we have a guaranteed lifetime income that easily covers ALL our needs and expenses. Our annuities are NOT indexed to inflation. We count on Social Security cost of living increases to give us some inflation protection.....in our retirement.

We have four horses that we board and pay expenses for. Probably about $35,000 per year. They are all "Senior" horses between ages 20 and 27. As they reach the end of their life....these expenses will gradually go away.....this is another factor that we consider INFLATION PROTECTION.....since ultimately we will NOT have that $35,000 per year expense.

Our guaranteed income has given us the ability to consider our stock market money as invested for life. We do not need to use ANY of those funds in retirement. So....we can be fully invested all the time for life.

Our annuities also contribute to our LOW INCOME for INCOME TAX PURPOSES. Our taxable income is extremely low since the majority of the payments that we get from the annuities each year are considered return of principal and is not subject to income tax. Our average Income Tax is about $8000 per year on our GROSS INCOME of about $200,000 per year. Our taxable income is far less. As a result we are in a VERY LOW tax bracket for capital gains......usually the ZERO BRACKET.

In conjunction with the annuities we are debt free.....no house payment, no debts. So we have no problem living on our income.

I consider the "present value" of the annuities as part of our NET WORTH.

 

Some random thoughts above.

Meanwhile back at the markets......a mild red day so far for the big averages. Not much going on today....a little bit of CONSOLIDATION.

 

Bitcoin over $100,000 is the big......but mostly irrelevant.....story of the day today. Here is the markets today.

Nasdaq, Dow, S&P 500 hit pause on rally as jobs data looms, bitcoin tops $100,000

https://finance.yahoo.com/news/live...data-looms-bitcoin-tops-100000-105954551.html

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

"US stocks floated higher on Thursday as investors waited for Friday's crucial jobs report and bitcoin (BTC-USD) posted new all-time highs above the key $100,000 milestone.

After all three major averages closed at records on Wednesday, the Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) traded on both sides of the flat line. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) was up more than 0.1%.

Investors are counting down to Friday's monthly jobs report for a reality check on Jerome Powell's upbeat take on the strength of the US economy. While the Federal Reserve Chair said that means policymakers can move cautiously, he stopped short of challenging the market's belief in a December rate cut.

Traders have slightly pared their bets on easing, pricing in a 74% chance the Fed will cut by 25 basis points on Dec. 18, per the CME FedWatch tool. That compares to around 77% on Wednesday and 67% a week ago.

A strong print in November's nonfarm payrolls report on Friday could upend those bets. On Thursday, fresh data from the Department of Labor showed 224,000 initial jobless claims were filed in the week ending Nov. 30, up from 215,000 the week prior. The previous reading had been the lowest total of weekly claims since April.

Meanwhile, bitcoin (BTC-USD) rose to around $103,000 after breaking through the key $100,000 level late on Wednesday to continue a stunning rally driven by hopes for a crypto-friendly Trump administration. The token's latest surge came after President-elect Trump picked Paul Atkins to chair the Securities and Exchange Commission."

MY COMMENT

Really NOTHING going on today or this week in the stock market world. So....we are left with a drifting market with a strong upward BIAS.

 

It will be nice to be playing a show this Sunday afternoon.

I am also in some preliminary talks with some other musicians about putting something new together. I continue to be busy weekly with music and music related business.....usually about 5-10 hours per week.

 

It is very relaxing in the investing world right now....especially as a long term investor.

I have nothing going on. I sit and watch my portfolio and do nothing. There is really nothing in the news lately now that the election is over. My YTD gains are over 70% at this moment and I am in count-down mode to year end.

We are in a strange political Vacuum right now with effectively....no President or government.....as the current government has given up and is doing nothing and the new government will not take power for another 40+ days. I like it......it is refreshing to be in this little VACUUM with NOTHING being done.

I have completed my news and article scan today and.......I GOT NOTHING.

 

I can tell that I am making money today. My only red stocks right now are GOOGL, AAPL, and COST. NVDA and all my others are UP. I have not looked at my account.....but I can see what is happening by seeing my stocks on the ticker.

 

GOOD for CMG. ALL my shares in every account are now green.

It took a while since right after getting into the stock they were hit by a Social Media Hate Campaign over portion size and the stock took a hit by 10-15%.

I like the company and just consider that the....short term......impact of how I invest....all in all at once.

Once in a while I buy a stock and it immediately goes down. NO....I dont care in the slightest. As long as I think the fundamentals for the long term look good I have no problem being patient.

With this being a new position....I will continue to look at it for the next 1-2 years. However....I am very happy how it worked its way back into the green after being down by 10-15%.

NOW......is when my time with CMG starts. I have high expectations that this stock will be a long term holding for me. In a couple of accounts I have now established it as a full size position.....but not in my largest accounts.

The problem with taking a 15% hit on a stock right after buying it is that it takes a gain of "about".....18%....to be back to ZERO......and....that just takes time. Time....which I am more than willing to give a company like this....that is what it means to be a long term investor. I NEVER let a short term loss or correction shake me out of a new stock....as long as the thesis for buying the stock remains true.

 

It is taking a little time to get started today....but I have a good "feeling" about the markets. I am in the green with my total stock portfolio and the NASDAQ is now positive. The SP500 is holding at basically FLAT and I believe WILL be positive by the close. It reminds me of the markets yesterday....although milder.

This is how BIG RALLIES happen....in spurts, dribs and drabs, light consolidation,......and....next thing you know a month or two later.....BAM..... you have a nice FAT gain......in hindsight.

I STILL say we are in a SANTA RALLY....even if it is not dramatic on a day to day basis.

 

A very small gain for me today. BUT....I will take it....money is money. I also beat the SP500 today by 0.21%.

I dont mind treading water as we move toward year end.....17 days to go. I have such a nice gain YTD.....as long as I can stay in the general neighborhood of where I am right now.......It is all good. If I can tack on another 2-8%....before year end........a BONUS.

 

COME ON PEOPLE.....this is just stupid. I dont believe ANYONE that is a real person is siting around today....worrying about the jobs report. I also dont believe that anyone that is a grizzled veteran of Wall Street is saying this either.

Stock Rally Stalls as Anxiety Brews in Jobs Run-Up

https://finance.yahoo.com/news/global-stocks-hit-peak-powell-223922324.html

MEDIA BS....pure and simple.

NOW....if anyone that is a financial person or a money manager is spouting this BS.....I dont want them anywhere near my money.....just my personal opinion.