The Long Term Investor

OK.....TRADE DONE.

In fact....I splurged and bought TWO.....YES.....TWO......shares of PLTR and two shares of NVDA.

FIRE-SALE prices.

My plan is to continue doing this each month as a monthly bill. I am doing my part to save the markets.....but....on a tiny scale.

WTF.....after my big purchases above I did not see any impact on the stock price of either. Here I am trying to be a good guy and boost the markets by buying something......and the markets did not care......WOE IS ME.

 

I anticipate that when I am able to invest a good chunk of money later this year....hopefully about $15,000.....I will put it ALL in the SP500 Index. At this point I have plenty of single stock exposure with my nine stocks having grown to just over 70% of the total value of my portfolio.

 

I dont have a lot of TOLERANCE for short term market IDIOCY lately. SO.....for now that is it for me. It is a waste of time to watch anything to do with the markets today.

 

Of course I lied.....I have to point out a nice little unnoticed and ignored story today.

10-year Treasury yield backs up after hitting lowest level since December

https://www.cnbc.com/2025/02/27/us-treasury-yields-investors-await-more-economic-data-.html

The ten year yield is at......4.285%....right not. VERY GOOD.

 

The problem is there is really NOTHING to justify any of this market for most of this year. It is not a bear market, it is not a recession, it is not an earnings collapse, we got some rate cuts, inflation is actually "normal", treasury rates are going down.

That is the problem with what we are seeing now.......and...it is not just a day or two.......it now seems to be the new....short to medium term.... normal.

 

I was RED today.....my single green stock.....my new holding WMT. I got beat by the SP500 today by 2.76%.

NVDA....after a HUGE beat and massive guidance.....down by 8.5%......PLTR down by 5%....and most of the other b ig cap iconic stocks down by 1-3% today.

 

AND....every single explanation for what the market did today.....is simply hindsight in action. No one has a clue.

 

Actually I guess there is simply ZERO explanation for the short term. Time to go into.....turtle mode. Just draw into your long term investor shell and refuse to see the short term. When we come out of this little....bad patch....it will not even be visible as a dot on a long term chart of the SP500.

Too bad we squandered an entire earnings reporting season this quarter. Moving on to next quarter and what will probably be as good or better earnings for the markets in general.

MOVING ON.

 

Good news for me.

Costco announces 9 new stores opening in 2025, starting with 6 in March
6 of 9 Costco locations opening in the US by March 15

https://www.foxbusiness.com/economy/costco-announces-9-new-stores-opening-2025-starting-6-march

"We continue to project 29 openings during fiscal year '25, of which three will be relocations and so 26 net new buildings," Costco CEO and President Ron Vachris said in a December 2024 earnings call. "Ten of those warehouses will be outside of the U.S."

 

The little NASTY correction in the big the big cap market leaders continues. I dont care if it is a technical correction....a drop of 10% or more....it is definately a correction that is happening. For some of them it has been gong on for a month or two.

It is based on the basic negativity of the past couple of months toward these companies. They have had times this year of going up but the down days have been more significant. Earnings did not and do not matter.

We will just have to....TOUGH IT OUT.

Sooner or later the market will turn.....it is just a question of how long....whether we are talking weeks or months. I can actually see this current market continue till at least first quarter earnings.....but....lets hope not.

"Hope" is not a very good stock market strategy....but.....sometimes that is what you have to live with. After all it is not like you have any control over the markets.

 

Yes.....definately good advice.....up or down.

How Are Those “Trump Trades” Doing?
A friendly reminder that acting on possible political actions may be a mistake.

https://www.fisherinvestments.com/en-us/insights/market-commentary/how-are-those-trump-trades-doing

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

"Editors’ note: MarketMinder is nonpartisan, favoring no party nor any politician. We assess political developments for their potential market effects only.

Are the so-called “Trump trades” fading? The prospect of a “pro-business” Trump administration seemingly buoyed certain assets in the lead up to and immediate aftermath of his win last November. But a month-plus after Inauguration Day, some of those areas are already cooling. In our view, this is a reminder: Acting on what politicians say or what they might do frequently amounts to buying into hype—often a mistake.

A Trump trade assumes a given asset, sector or industry stands to benefit from administration policy or the general zeitgeist, which echoes “Biden bump” talk in 2020 and 2021 and Trump trade talk in his first administration. Under former President Joe Biden, experts speculated possible support for “renewable energy” policies would buoy the alternative energy industry (e.g., solar and wind). Back in 2016 and 2017, some thought aerospace and defense stocks as well as the Energy sector (which is almost entirely fossil fuels and largely oil stocks) would lead thanks to a surge in federal defense spending and increased oil drilling, respectively, under the first Trump administration.

Entering the 2024 presidential vote, analysts highlighted numerous assets that would supposedly benefit during Trump’s second round in office. Expectations for higher military spending would benefit defense companies—not just in the US, but even in South Korea. An anticipated deregulation push was poised to boost small cap stocks, big banks, oil drillers—and even crypto. Trump’s win did appear to stoke enthusiasm toward these assets. Bitcoin surged past the $100,000 milestone in early December, reflecting some hope the second Trump administration would be friendly toward the crypto industry.[ii] At one point, bitcoin was up 53% from the election![iii] Other Trump trades looked like big winners in the election’s aftermath, too. (Exhibit 1)

Exhibit 1: Most “Trump Trades” Looked Like Winners Around Election Day


Source: FactSet, as of 2/25/2025. MSCI Index returns for the World, US Small Cap, US Oil, Gas & Consumable Fuels, US Aerospace & Defense and US Banks. US returns include gross dividends, World returns include net dividends, 7/31/2024 – 11/30/2024. Indexed to 1 on 7/31/2024.

But after an initial surge, the enthusiasm has cooled. Bitcoin’s price has fallen from $106,150 at the end of January to $88,923 as of February 25, a -16.2% dive.[iv] Though bank stocks continue to lead global markets since the election, they are merely paralleling a global trend. European banks are even further ahead, especially since the inauguration—US banks are down over that timeframe.[v] Other Trump trades started pulling back even sooner. (Exhibit 2)

Exhibit 2: “Trump Trades” Have Mostly Cooled


Source: FactSet, as of 2/25/2025. MSCI Index returns for the World, US Small Cap, US Oil, Gas & Consumable Fuels, US Aerospace & Defense and US Banks. US returns include gross dividends, World returns include net dividends, 7/31/2024 – 2/21/2024. Indexed to 1 on 7/31/2024.

Now, focusing on short timeframes is myopic—often not the most productive exercise, in our view. But Trump trades reflected a typical misperception: that whatever a politician says about a given sector or industry on the campaign trail dictates future performance. Not true, in our view, since pols tend to moderate once in office and the ideas that stirred excitement (or fear) may not manifest as initially proposed. Take crypto. Many proponents thought the Trump administration’s support would be immediate, especially after promises for a national bitcoin reserve. That initiative has since stalled after a White House official said a working group needed to study a reserve’s feasibility.[vi]

Moreover, what might be considered positive for an industry isn’t always beneficial for that industry’s stock prices. Consider oil drilling. Trump may urge producers to “drill, baby, drill,” but opening up more federal lands for oil companies isn’t necessarily a boon. For one, producers have already been able to tap federal lands—they just have chosen not to for market-driven reasons. The Biden administration’s restrictions were always misunderstood and largely symbolic, in our view. Moreover, in a vacuum, higher supply means lower prices—and price matters more than production volumes to Energy companies’ earnings (and therefore Energy stocks). As Exhibit 3 illustrates, Energy stocks’ leadership tends to track global oil prices—which the president has very limited influence over.

Exhibit 3: Energy Tracks Oil Prices


Source: FactSet, as of 2/25/2025. Crude Oil Brent Global Spot (dollars per barrel) and MSCI World Index returns and MSCI World Energy sector returns with net dividends, 12/31/2020 – 2/24/2025.

Politicians also aren’t known for their intellectual consistency. They make many promises—some that may help and others that may hurt. Which holds sway? Note, too, markets are efficient discounters of widely known information and pre-price chatter as it occurs. Trump trade expectations percolated throughout last year and ramped up after Biden announced his exit from the race in July.[vii]

While attention-grabbing, the hype for new politicians’ possible policies generally isn’t long-lasting. Back in 2020, “clean energy” stocks soared leading up to Biden’s election and peaked before his Inauguration Day. Since then, they have lurched downward as the industry has struggled with high costs, regulatory hurdles and lack of profitability. (Exhibit 4)

Exhibit 4: Clean Energy Hype Didn’t Hold Up


Source: FactSet, as of 2/24/2025. S&P Global Clean Energy Transition Total Return Index, 7/31/2020 – 12/31/2024.

This echoes a broader trend we have noticed surrounding the new administration: deteriorating sentiment. Trump’s victory did spur excitement, but optimism wasn’t universal. Skepticism arose, especially over possible tariffs. As the post-election glow faded and reality settled in, major “business friendly” changes looked less likely. Congress’s deficit focus countered expectations for broad tax cuts, and tariff and budget cut fears have weighed on defense stocks. Infighting among Trump’s advisers dampened enthusiasm for sweeping deregulation. DOGE escapades have amplified this, with the perceived focus on the size and efficiency of the Federal workforce and departmental budget waste instead of scrapping red tape. While the efforts here could yet lead to deregulation downstream if the endgame is ending mission creep, that remains to be seen. Whether DOGE’s actual approach helps or hurts efficiency is also up for debate.

Just as markets pre-priced pre-election enthusiasm, they also quickly digested the probability major political shifts weren’t around the corner. In our view, that reset sentiment to a degree. Surveys, including the University of Michigan’s widely watched consumer sentiment measure, indicate moods have cooled since November as protectionist trade policy and Federal workforce cuts now weigh heavily on expectations. For investors, that reset can add some bricks to the proverbial wall of worry. Today’s conditions aren’t perfect, but from an investing perspective, dampened political enthusiasm lowers the bar reality must exceed to beat expectations—and that is reason to be bullish, in our view."

MY COMMENT

Add in the typical media response and obstruction to the current government and you have massive headwinds to anything happening. Probably the best hope for the business world is that the current income tax rates are made permanent. Add in cutting regulation....and that is probably what business will get.

One good thing about the negativity and irrational markets is the lack of out of control market enthusiasm....a good sign for the continuation of the BULL MARKET.

 

Here is what is behind the current markets and is actually another BULLISH indicator.

Investor Sentiment Hits Extremely Bearish Levels

https://www.lpl.com/research/blog/investor-sentiment-hits-extremely-bearish-levels.html

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

"The latest weekly sentiment survey data from the American Association of Individual Investors (AAII) released today shows significantly bearish sentiment from investors, marking the fourth consecutive week of predominantly bearish sentiment.

Concerns of an economic slowdown brought on by potential tariffs, stickier inflation, and the possibility of higher-for-longer interest rates, coupled with a meaningful pullback in the technology sector, namely artificial intelligence (AI) related stocks, has dented sentiment in recent weeks.

The percentage of individual investors who are bullish about short-term market expectations is 19.6%, while the percentage of investors who are bearish is 60.6%. The 60.6% bearish reading is the highest since September 2022 and is the third-highest reading over the last 10 years. This puts the statistic that we follow most closely, the spread between the bulls and the bears, at -41.2%, meaningfully below the 10-year average of 1.4%.

As noted in the chart below, investor sentiment, as measured by the spread between bulls and bears in the AAII survey data, appears extreme, more than two standard deviations (SD) below the mean, when compared to history. We generally examine investor sentiment survey data from a contrarian perspective, so when the indicator is near bullish extremes, it acts as a bearish signal for stock price returns, and when it's extremely bearish, the signal turns more supportive for stocks.

Individual Investors Continue to Sour on Markets


Source: LPL Research, AAII, Bloomberg 2/27/2025
Disclosures: All indexes are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results.

As illustrated below, historically, when the bull-bear spread has been at comparable levels of more than two standard deviations below the average (which has occurred only 4.1% of the time going back to July 1987), S&P 500 returns have been above average. The subsequent three-month, six-month, and one-year returns have been 0.3%, 0.7%, and 0.6% above the average, respectively.

Current Bull-Bear Spread of -41 at Extreme Bearish Levels


Source: LPL Research, AAII, Bloomberg 2/27/2025
Disclosures: AAII Bull-Bear spread brackets are based on one or two standard deviations above/below 10-year rolling average. The 10-year rolling average is 1.4% with a standard deviation of 16.2%.
All indexes are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results. Past performance is no guarantee of future results.

Another survey we follow, the Bank of America (BofA) Global Fund Manager Survey, a monthly survey that solicits the opinions of professional investors and their views on various aspects of the global economy and financial markets, showed a cautiously optimistic stance among fund managers. Contrary to the AAII Sentiment Indicator, which indicates most investors remain bearish on the short-term outlook for stocks, respondents of the BofA survey remain cautiously optimistic, as 82% of respondents believe a global recession is unlikely in the next 12 months. Yet, despite their optimism, fund managers are still very concerned about valuations, with 89% believing U.S. stocks are overvalued — a level reminiscent of the dot-com bubble era. Given that the AAII Sentiment Indicator’s bull-bear spread is bearish and respondents of the BofA survey have conflicting views on the likelihood of a global recession and the valuation of U.S. equities, the consensus on markets appears to be relatively neutral.

Summary
While both surveys convey a recently bearish investor, LPL Research’s Strategic and Tactical Asset Allocation Committee (STAAC) maintains its tactical neutral stance on equities, as a steadily growing economy, strong corporate profits, and likely Fed rate cuts are offset by policy and geopolitical risks, stubborn inflation, and tepid market breadth. Looking at regional exposures specifically, the STAAC’s regional preference remains U.S. over developed international and emerging markets, largely due to superior domestic earnings power and economic growth, although forecasts for economic growth have come down some in recent weeks. The STAAC will continue to monitor upcoming economic releases, investor survey data, and other developments out of the White House and from Capitol Hill to inform tactical asset allocation guidance."

MY COMMENT

This is pretty obvious. Investors are feeling the pain and stocks are not reacting to earnings and other factors as expected. This leads to negative sentiment.

The longer the big cap tech and other companies continue to lag and decline the worse sentiment will get. At some point we will see some investors actually start to bail out. That will BOOST the losses and negative sentiment as a self fulfilling prophesy. The good news......when we hit maximum negativity....that will be when the market turn to the positive is right around the corner. Of course this will only be obvious in......hind-sight.

On the other hand what we are going through now is a MASSIVE buying opportunity.....but....only for long term investors. This negative market might end in weeks or it might go on for months. I am not a fan of dollar cost averaging......but in my view for those with cash stock market money this might be a good time to dollar cost average weekly or bi-weekly into the big cap names over the next few months.

 

Looks like some bargain buying is happening right now....all the averages are now green and I have a gain today. BUT.....some of the big cap tech companies are still red....MSFT, AAPL, and PLTR.

 

The economic news of the day.

Fed’s favorite core inflation measure hits 2.6% in January, as expected

https://www.cnbc.com/2025/02/28/pce-inflation-january-2025-.html

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

"Key Points

• The personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, increased 0.3% for the month and showed a 2.5% annual rate.
• Excluding food and energy, core PCE also rose 0.3% for the month and was at 2.6% annually. Fed officials more closely follow the core measure as a better indicator of longer-term trends.
• Personal income posted rose 0.9% against expectations for a 0.4% increase. However, the higher incomes did not translate into spending, which decreased 0.2%, versus the forecast for a 0.1% gain.

Fed’s favorite core inflation measure hits 2.6% in January, as expected

Inflation eased slightly in January as worries accelerated over President Donald Trump’s tariff plans, according to a Commerce Department report Friday.

The personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, increased 0.3% for the month and showed a 2.5% annual rate.

Excluding food and energy, the core PCE also rose 0.3% for the month and was at 2.6% annually. Fed officials more closely follow the core measure as a better indicator of longer-term trends. The 12-month core measure showed a step down from the upwardly revised 2.9% level in December. Headline inflation eased by 0.1 percentage point.

The numbers all were in line with Dow Jones consensus estimates and likely keep Fed Chair Jerome Powell and his colleagues on hold for the time being regarding interest rates.

The inflation report was “good, but we’re not done,” said Jose Rasco, chief investment officer for the Americas at HSBC Global Private Banking and Wealth Management. “So that prudent patient Powell, as I call him, is going to remain in play, and I think he’s going to wait.”

Elsewhere in the report, income and spending numbers showed some surprises.

Personal income posted a much sharper increase than expected, up 0.9% on the month against expectations for a 0.4% increase. However, the higher incomes did not translate into spending, which decreased 0.2%, versus the forecast for a 0.1% gain.

The personal savings rate also spiked higher, rising to 4.6%.

Stock market futures pointed higher following the report while Treasury yields were mostly lower.

The report comes as Fed policymakers weigh their next move for interest rates. In recent weeks, officials mostly have expressed hopes that inflation will continue to gravitate lower. However, they have indicated they want more evidence that inflation is headed sustainably back to their 2% goal before they will lower interest rates further.

Goods prices rose 0.5% on the month, pushed by a 0.9% increase in motor vehicles and parts as well as a 2% jump in gasoline. Services increased just 0.2% and housing rose 0.3%.

Following the report, futures traders slightly raised the odds of a June quarter percentage point rate cut, with the market-implied probability now just above 70%, according to the CME Group’s FedWatch gauge. Markets expect two cuts by the end of the year, though the odds for a third reduction have risen in recent days.

Though the public more closely follows the consumer price index, released earlier in the month by the Bureau of Labor Statistics, the Fed prefers the PCE measure because it is broader based, adjusts for changes in consumer behavior and places considerably less emphasis on housing costs.

The CPI for January showed an all-items inflation rate of 3% and 3.3% at the core."

MY COMMENT

Inflation over the past year at 2.5% by this measure. This is certainly a good reading and good news for the FED. AND.....this level of inflation is BELOW the historic norm of inflation between about 3-4% in a good economy.

 

The yield on the Ten Year Treasury.....down to.....4.25%. Who needs Fed cuts?

 

That is it for me at this moment. I am not going to post any of the CRAZY....click bait articles that dominate the financial media today and every day. I am REFUSING to contribute to spreading that sort of GARBAGE and giving them money for clicks.

At least at this moment the green seems to be slowly growing in the markets so far today.

BUT.....it is a perfect day for a late day.....FRIDAY FADE. That is basically what I expect to happen at the close today. COME ON MARKETS.....PROVE ME WRONG.

 

COST was on fire today....ALL my stocks were GREEN.....and I made a big gain. About time. Perhaps the start of something....or....a random UP day. Either way I will take it.

Plus I also beat the SP500 today by 0.89%.

 

The week that was.

DOW year to date +3.42%
DOW five days +0.80%

SP500 year to date +1.46%
SP500 five days (-1.20%)

NASDAQ 100 year to date (-0.42%)
NASDAQ 100 five days (-3.74%)

NASDAQ year to date (-2.25%)
NASDAQ five days (-3.80%)

RUSSELL year to date (-3.07%)
RUSSELL five days (-1.71%)

OK for me I ended the week with my entire portfolio at a year to date of.....(-1.41%). I am now negative YTD. Last week I was at a year to date for my entire portfolio of........+2.31%.

ONWARD AND UPWARD.....NO GUTS NO GLORY.