The Long Term Investor

More good news for the economy and FINALLY for home buyers.

Weekly mortgage demand surges 11% higher, as interest rates dropped for the sixth straight week

https://www.cnbc.com/2025/03/12/wee...ercent-higher-as-interest-rates-dropped-.html

 

As the big averages continue to drop from the opening gains.......it is time for me to sit and watch. I will continue to IGNORE it all.

The markets this year.....SQUANDER EVERYTHING.......good earnings, massive business fundamentals, positive economic data, etc, etc, etc. It is a high maintenance market that just wants to bitch, whine, and have a fit over nothing. Much of this behavior is driven by the hedge funds, the AI PROGRAM TRADING, and concern over things like "sentiment".

 

Ok....nice to see that we are hanging in there nicely today. Lets keep it going for the next 1.5 hours. I see that as of....right now....my YTD for my entire portfolio is now (-8%). Not too bad considering the big drops we have had. I am not even in correction territory....AMAZINGLY.

I spit in the face of the markets and this piddly (-8%) drop. (Said with a Russian accent)

BUT....I probably just totally jinxed myself and us all.

 

It is pretty OBVIOUS.....DUH.....that this correction got a little carried away. Most of it was based on "sentiment" and news....nothing more. Earnings were great and the vast majority of big companies continue to hit it out of the park with the money they are bringing in. Many companies as a result are a SCREAMING buy right now.

In my view...."sentiment".....is one of the most worthless indicators there is. Nothing more than a "beauty contest"....often judged by people that have little to no information or background in investing......other than the negative environment that is constantly pushed and created by the media.

Add in that the big Hedge Funds are selling stocks like NVDA, PLTR, and the rest of big tech......and......instant correction.

What has happened recently is the PERFECT reason why "sentiment" is usually seen as a CONTRARY INDICATOR.

 

OK....a very nice day for me. I ended with a nice BIG gain. Plus a beat of the SP500 by....2.20%.

On to the final two days of the week.....we are over the HUMP.....hump day that is not the market hump.

 

I see SENTIMENT as a TOTAL contrary indicator. It is ALWAYS WRONG. Whatever sentiment tells you is never right......at least for me. I simply always consider that sentiment is wrong. Now if I was a short term investor I would say it is.....more likely than not....to be right. But....long term....NOPE....it will end up being wrong.

 

I like this little article from the NY Times.....I think it is the TRUTH. There is some political commentary......not really favorable to Trump.....which I will IGNORE on this board. BUT....the writer has the GUTS to throw water on the recent FED data regarding GDP and the media line of impending recession.

Two Reasons for Optimism About the Economy

https://www.nytimes.com/2025/03/12/opinion/trump-recession.html

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

The air is thick with recession talk, and stocks are cratering. But it just may be a mirage, a refraction of partisan distortions.

So where did this recession talk come from? It started with a projection from the Federal Reserve Bank of Atlanta that the economy is on pace to shrink in the first quarter. You could almost hear people on the left squeal with delight that the data were confirming their concerns about the Trump presidency. Those squeals led to equally absurd counterclaims from the right.

But this projection — which the Atlanta Fed affectionately calls GDPNow — is not a typical economic forecast, and it doesn’t actually tell us much. It’s a mechanical tool used to hoover up economic numbers as they become available, to try to squeeze out underlying signals about the country’s economic health.

It usually works quite well. But in certain circumstances, it can misfire.

That’s what appears to be happening now. The problem is that the GDPNow calculator has been fed the worrying data about a bump in imports, as people bought imported goods in anticipation of a price rise, but it hasn’t yet been fed other, more reassuring data on personal consumption and business investment, which will also get a boost from this surge in import spending. When it does, the calculator will start to give more reliable signals.

This glitch was pretty obvious to many economists, and indeed, late last week, an economist at the Atlanta Fed owned up to it, suggesting — in a somewhat indirect, central-bankerly way — that much of the bump was actually gold imports, and that most people may be better off ignoring this measure for now.

But news like this is too hot to be ignored in a polarized environment. For possibly the first time ever, the @AtlantaFed X account went viral. Many critics of President Trump jumped on its forecast; Senator Elissa Slotkin of Michigan added a recession warning in the speech she gave as a Democratic rebuttal to Mr. Trump’s address to a joint session of Congress last Tuesday. The “Trumpcession” was born. Of course, that’s not where the story ends.

Elon Musk seems to have convinced himself that this recession sighting was actually caused by the Department of Government Efficiency, the initiative he leads, cutting so much government spending. The reality is that Mr. Musk’s role in the economy is far smaller than he imagines it to be. The $30 billion in “receipts” claimed by DOGE as cost savings (a number that may be far overstated) is only 0.1 percent of U.S. annual output.

Other pro-Trump forces then pinned the blame for the recession that isn’t yet happening on former President Joe Biden. Scott Bessent, the Treasury secretary, recently falsely claimed to have inherited a private sector in recession. (It’s been growing just as healthily as the public sector.) On Fox Business, instead of celebrating a healthy jobs report, the host Maria Bartiromo instead wondered if it was a sign of “Biden’s recession.”

All of this is happening against the backdrop of Mr. Trump imposing tariffs and tanking the markets, then pausing them, then repeating the cycle.

Obviously, this is no way to run an economy. Perhaps a downturn has started to feel inevitable, as the White House began to describe a recession as necessary medicine. In his address to the joint session of Congress, Mr. Trump dismissed concerns about the impact of tariffs as “a little disturbance.” Mr. Bessent declared the economy would go through a “detox period.” On Sunday, Mr. Trump predicted “a period of transition” and, when asked whether he expected a recession, refused to rule one out, responding, “I hate to predict things like that.”

The uncertainty alone is alarming. But let me share two simple reasons for optimism.

First, the hard numbers tell us that the economy is in very good shape. Unemployment is low, output is growing, and inflation is down close to normal levels. We don’t yet have many hard numbers about the economy since Mr. Trump became president, but we do know that employers have kept adding workers to their payrolls, unemployment claims remain relatively low and there have been no major external economic shocks.

It’s almost impossible to believe the economy is in recession, given that 151,000 jobs were created in February.

Second, the single best determinant of the future health of the economy is its current health. While many factors can buffet the economy, they’re notoriously difficult to forecast. And so in the absence of solid evidence that the future will be worse, it’s usually best to keep predicting more good health.

That simple formula helped me see through a similar mirage in 2022, when a drumbeat of commentary insisted a recession was just around the corner, even as the economic data were much more upbeat. Bloomberg Economics projected a 100 percent chance of a recession — the one that never arrived.

While I’m convinced that our current recession talk is premature, I’m no blind optimist. America’s biggest economic threat is the chaos sown by an unpredictable White House. Tariffs are on except when they’re off; DOGE cuts with a chain saw and keeps hitting arteries; fiscal discipline has gone missing; and rule by executive order has left nearly the entire Trump agenda tied up in court. At the same time, Mr. Trump’s whims are rewiring the postwar world order.

If there’s not something to scare you on that list, you’re not paying attention. Perhaps this is the point in the horror movie when you wake up and realize that the real threat is coming from inside the house. Indeed, that fear may be what catalyzes the next recession. It just hasn’t started yet."

MY COMMENT

Looks like some pretty good economic reasoning above. I think it reflects the TRUTH. As to the politics in the article and in the financial media lately.......it is NOT something I have any interest in when it comes to investing. Mix your politics and your investing........and....in the end you will probably screw yourself. it is impossible to avoid in the media.....but very easy to ignore in your long term investing......if you have the ability to compartmentalize and ignore the MASSIVE amount of day to day NOISE.....which usually reflects OTHER agendas that have NOTHING to do with your financial success or security.

 

Without reading much today....it is obvious that the VOLATILITY and fear based markets continue....just by seeing the early action in the big averages.

I dont expect much change for the next month or two......so....ramp up the MENTAL TOUGHNESS.......and avoid the creeping fear that leads to panic selling.

I heard a guest on Varney today express exactly what I think. He was not buying the current DOOM & GLOOM.......his point.....yes, that piece of paper that is your stock is down......but.....the business results and fundamentals of the underlying busines that that (digital) stock certificate represents are NOT.....in fact many companies, especially in the big cap tech area are BOOMING.

Look at the PRODUCTIVITY that the AI era is going to unleash. In fact what is going on now is going to lead to easier earnings beats in the near future.....as analysts and other SHEEP.......are detached from reality.

(LOL....he was old enough to remember paper stock certificates.....so am I)

 

And to continue......YES...

Invest in the Long Term

https://www.lpl.com/research/blog/invest-for-the-long-term.html

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

"This latest bout of market volatility has been unsettling, especially after such a strong multi-year run for stocks. At times like these, historical perspective can be helpful. Here, we’ve assembled some charts that help make the case for staying invested. While we haven’t seen enough supportive evidence to call for a short-term tactical low in stocks (though we’re getting closer), for investors willing to hold for over a year, the rewards should outweigh the risks. In fact, if you believe, as we do, that recession will be averted this year and a correction (10–19% decline in the S&P 500) is more likely than a bear market decline of 20% or more, then the upside potential over the next nine to 12 months may be as much as double the downside risk. Our year-end fair value S&P 500 target range of 6,275 to 6,375 is about 14% above Tuesday’s close at the midpoint.

Pullbacks Are Common

The S&P 500 has just experienced its first 5% pullback of the year. As we write this, the S&P 500 is 8–9% below its all-time high. On average, the index experiences three drawdowns of between 5% and 10% each year. In fact, the S&P 500 has had at least one 5% pullback in 94% of years going back to 1928 (including its predecessor S&P 90 Index).

S&P 500 Pullbacks of 5–10% Are Quite Common

Source: LPL Research, Bloomberg 03/11/25
Disclosures: Indexes are unmanaged and cannot be invested in directly.
Past performance is no guarantee of future results.

On average, stocks see a correction of over 10% about once per year — with many of them coming in positive years. Expressing this data another way, the S&P 500 has had at least one 10% correction in 64% of years since 1928. With no corrections in 2024, we were probably due for one, especially considering all the good news that was priced into stocks coming into this year (as we wrote about in our Outlook 2025: Pragmatic Optimism). Knowing these corrections tend to come every year may not make you feel that much better in the moment. But when you consider that stocks have averaged a 13% annual return since 1980 despite the volatility along the way, measured by the S&P 500, the message is clear. Be patient, stay invested, and most importantly, don’t panic.

Stocks Drop 10–20% About Once Per Year on Average

Source: LPL Research, Bloomberg 03/11/25
Disclosures: Indexes are unmanaged and cannot be invested in directly.
Past performance is no guarantee of future results.

Volatility Is Like A Toll Investors Pay On The Road To Attractive Long-Term Returns

One of our favorite charts illustrates this point very well. Since the 1980s, the S&P 500 has experienced a maximum intra-year drawdown of 13.9%, on average, while the index has produced an average gain of 13%. Though this latest pullback felt significant, history at this point tells us it hasn’t been anything out of the ordinary. In fact, the large cap index is still five points short of its average annual decline. Even in up years, the average maximum drawdown is nearly 11%, so we are not even there yet. Simply put, volatility is like a toll investors pay along the road to achieving attractive long-term returns.

Volatility is a Cost to Achieve Attractive Long-Term Stock Returns
S&P 500 max pullback per calendar year


Source: LPL Research, Bloomberg 03/11/25
Disclosures: Indexes are unmanaged and cannot be invested in directly.
Past performance is no guarantee of future results.

Patient Investors Are Very Likely to Be Rewarded

Another way to look at the advantage long-term investors possess is to look at the historical probabilities that stocks advance over various time horizons. The odds are compelling, very much in investors’ favor for holding periods beyond one year. In fact, for all rolling one-year periods back to 1980 using monthly data, the S&P 500 Index was higher in 74% of them. Go out to three years — still a very reasonable holding period for the overwhelming majority of investors — and those odds rise to 85%. For those who are younger and can commit to 10 years or longer, the odds go even higher from there. The key takeaway here is investors have an advantage over short-term traders and asset managers benchmarked every quarter. The odds are stacked in favor of long-term investors who are able to ride through the ups and downs and stay invested.

Risk-Reward Trade-Off Is Attractive For Patient Investors
Percentage of time S&P 500 rose over various time periods


Source: LPL Research, Bloomberg 03/11/25
Disclosures: Indexes are unmanaged and cannot be invested in directly.
Past performance is no guarantee of future results.

Market Timing is Extremely Difficult

You have probably heard this message before. It’s very difficult to beat the market with “market timing,” or shifting in and out to try to avoid losses and still participate in the upside. A recent study done by Dalbar suggested that the penalty investors pay for trying to time the market may be as much as 5%. In other words, hypothetically, if a diversified portfolio bought and held returned 8% annualized over time, then a typical investor might expect to achieve around 3%. Every investor has a different experience, but in aggregate, this seems like a reasonable estimate of the overall penalty for market timing (this is also a reminder to keep fees for active managers as low as possible).

Another way to illustrate this point is to compare performance for a hypothetical long-term investor in the S&P 500 Index to one who misses the best day(s) of a year. Of course, precise index returns cannot be achieved, but index funds can get close. Missing just the one best day of a year takes annual gains down from 9.8% to 6.1% during the 35-year period analyzed (excluding dividends). Take out the two best days and the annualized gain drops to just 3%, which you can get in bonds.

The Cost of Market Timing: Potentially Missing the Best Days
S&P 500 Index annualized performance (1990–2024)


Source: LPL Research, Bloomberg 03/11/25
Disclosures: Indexes are unmanaged and cannot be invested in directly.
Past performance is no guarantee of future results.

Staying invested is especially important during volatile periods below the 200-day moving average, which is when most of those big up days tend to come. Some of the biggest up days in recent history came during the Great Financial Crisis in 2008 and 2009 and the pandemic in 2020, when investor pessimism was at its highest.

Conclusion

Market volatility can be unsettling, especially after two years of stocks marching steadily higher. In a way, enduring the ups and downs is a price of admission to achieve attractive returns the stock market offers over time. Volatility is normal. The hard part is understanding that in the moment and controlling emotions.

LPL’s Strategic and Tactical Asset Allocation Committee (STAAC) maintains its tactical neutral stance on equities, while actively monitoring progress toward establishing a durable market low. More clarity on tariffs and trade policy, reductions in consensus economic growth and profit expectations, and more technical evidence that sellers have largely washed out are among the necessary ingredients. We don’t think we’re quite there yet, but in terms of levels on the S&P 500, we may be close.

For now, we suggest an element of caution. We will continue to monitor tariff news, economic data, earnings estimates, and various technical indicators to try to identify an attractive entry point to go overweight equities. The risk-reward trade-off has clearly improved, but under a cloud of trade uncertainty, a big move to the upside in the short-term looks unlikely.

LPL Research also suggests exposure to diversifying alternative strategies for both tactical and strategic asset allocations. Products indexed to alternative strategies benchmarks have proven to be a useful tool in mitigating equity market declines this year."

MY COMMENT

The research and commentary above that I have put in BOLD....is the ABSOLUTE simple key to long term success as an investor. It is long term.... DOCUMENTED FACT. Ignore this fact at your peril as an investor.

 

The reaction to the CPI and PPI today....show you have DUMB the short term markets are. Good news......who cares.....bad news.....sell the ranch and run for the hills.

PPI data shows wholesale inflation ticked down in February

https://finance.yahoo.com/news/ppi-...lation-ticked-down-in-february-124516977.html

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

"Wholesale prices rose less than analysts expected in February, according to new data released Thursday. The news comes amid recent investor fears inflation may remain sticky while economic growth slows.

Thursday's report from the Bureau of Labor Statistics showed that its producer price index (PPI) — which tracks the price changes companies see — rose 3.2% from the year prior, down from the 3.5% seen in January and below the 3.3% increase economists had projected. On a monthly basis, prices were unchanged. In January, they rose 0.6%.

Excluding food and energy, "core" prices rose 3.4% year-over-year, below January's 3.6% gain. Economists had expected an increase of 3.5%. Meanwhile, month-over-month core prices declined 0.1%. Economists had expected a 0.3% increase. In January, prices gained 0.5% from the previous month.

"After hotter readings in December and January, flat producer prices for February should provide some assurances that inflation isn’t taking off again,” Nationwide senior economist Ben Ayers wrote in an note following the report. “But one month does not make a trend and the upward pressure for goods costs (even excluding the outsized increase for eggs) is a warning sign that imposed tariffs could drive prices higher in coming months.”

Thursday's PPI reading follows a cooler-than-expected reading of consumer prices for the month of February. On Wednesday, the latest data from the Bureau of Labor Statistics showed that the "core" Consumer Price Index (CPI) — which strips out the more volatile costs of food and gas — rose 3.1% in February, down from 3.3% seen the month prior. This marked the lowest yearly increase in core CPI since April 2021.

Economists use both the CPI and PPI reports to estimate a reading on the Federal Reserve's preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, which is released at the end of each month. The components from CPI and PPI that pass through to PCE likely show the closely followed inflation gauge remained elevated in February.

Bank of America economists, and several other Wall Street research teams, believe this would mean that "core" PCE, which excludes food and energy, will show prices increased 2.7% in February, up from the 2.6% increase seen in January.

"This would indicate progress on inflation continues to stall and reinforces our call for the Fed to remain on hold," Bank of America US economist Stephen Juneau wrote in a note to clients.

MY COMMENT

YES.....inflation right now is ABSOLUTELY NORMAL. BUT......who cares......we live in the era of distraction, distortion, and dishonesty......all for CLICKS. Of course for the pushers of the BS.....CLICKS = MONEY. They dont care about YOUR money. YOU.....are simply cannon fodder for them.....the little people.....that dont matter....after all THEY are the educated ELITES.

 

AND....

JPMorgan Strategists Say US Stocks Overplay Recession Risk

https://finance.yahoo.com/news/worst-us-equity-correction-likely-043427717.html

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

"(Bloomberg) -- US equities are pricing in a recession risk much bigger than credit markets, leaving room for a positive surprise, according to JPMorgan Chase & Co. strategists.

Stock volatility and credit spreads typically move in tandem but have started diverging this year as the S&P 500 slides over fears that President Donald Trump’s policies will derail economic growth. The S&P 500 is currently pricing a 33% probability of a US recession while credit is pricing in 9% to 12% odds, strategists including Nikolaos Panigirtzoglou and Mika Inkinen wrote in a note.

“While there is clearly elevated uncertainty in the near term as the Trump Administration has at least initially prioritized more disruptive polices, the risk is that credit markets are proven right,” they said.

US equities have slid this quarter amid concerns that Trump’s policies on trade and government jobs will hurt the economy. Markets are particularly suffering from the lack of clarity about the timeline and scale of tariffs. That’s prompting some of the biggest market voices to temper their optimism.

Goldman Sachs Group Inc. and Yardeni Research reduced their S&P 500 targets this week. Teams at Citigroup Inc. and HSBC Holdings Plc downgraded their recommendation on US equities while Morgan Stanley’s Michael Wilson expects the benchmark to drop a near 2% more to 5,500 in the first half of the year.

The S&P 500 moved into its fourth week of selling in a decline that has quickly morphed into a flight from all of last year’s winning bets. Mechanical selling flows, deleveraging from hedge funds and a collapse in sentiment saw stocks since struggling to find a floor so far.

The Nasdaq 100 has underperformed this year as investors dump expensive technology stocks amid concerns about competition and high costs in the artificial intelligence space.

There is at least one tracker of tech stocks that suggests the bout of selling may have reached a peak. Volume on the Nasdaq 100 ETF Invesco QQQ Trust Series exceeded 75 million shares this week, a threshold that was indicative of a bottom in the previous three occurrences over the past 20 months.

Equities could also be buoyed by potential buying from month or quarter-end rebalancing by mutual funds and US defined benefit pension funds as well as some sovereign wealth investors that could amount to around $135 billion, the JPMorgan strategists said.

“If US equity ETFs continue to see mostly inflows as they have thus far, there is a good chance that most of the current US equity market correction is behind us,” they wrote."

MY COMMENT

Lower away analysts.......play the short term "follow the media game"......and move your projections down. Fine with me.....since your projections and predictions....are NOT the actual markets. In fact they will make any positive "surprise" even more.....POSITIVE.

Remember one of the simple keys to investing.....the so called EXPERTS....usually end up being WRONG. They actually dont know any more than you do if you simply....GUESS. In fact their negativity usually DEFIES ALL PROBABILITY.....in terms of how often it is WRONG.

 

The above is about it for today if you FILTER out all the media BS. The fear mongering continues....but I refuse to amplify it on here.

I find it AMAZING that over the past year or two we were flooded with CONSTANT....DAILY....commentary from members of the FED.....constantly HARPED on by the financial media. Now.....apparently the FED has been abducted by aliens.......not a peep from the FED in any of the short term news.

I think two things are happening......the media.....our day to day guardians of what we get to see and know....have cut out coverage of the FED as a topic of interest.......and.....the FED is siting MUTE....a passive lesson in FED politics.

I really dont care much for or about the FED.....but I do think their disappearance from the media is interesting.

 

A RED day for me so far today with a single GREEN stock....NVDA. And....even with NVDA there is not much going on as it is just very slightly in the green.

Time to just.....IGNORE......RELAX......and enjoy the world outside the markets.

 

HERE is something....I am not seeing much comment about right now.

Egg prices are rapidly falling so far in March

https://www.cnbc.com/2025/03/13/egg-prices-are-rapidly-falling-so-far-in-march.html

"Egg prices have fallen sharply so far in March on some progress in ending a shortage, giving consumers some much-needed relief with the supermarket staple.

The cost of white large shell eggs declined to $6.85 per dozen, on average, last week, according to data from the U.S. Department of Agriculture. That represents a decline of $1.20 per dozen, and a 15% pull back the USDA’s prior update on Feb. 28.

“Demand for shell eggs continues to fade into the new month as no significant outbreaks of HPAI [highly pathogenic avian influenza]have been detected in nearly two weeks,” the USDA wrote in its March 7 weekly update. “This respite has provided an opportunity for production to make progress in reducing recent shell egg shortages.”"

MY COMMENT

Just a little drop of REALITY versus media driven "sentiment".

AND....if you think about actual ECONOMICS.....you cant kill ZILLIONS of egg producing chickens.....without driving up the price of the final product.....eggs. It is simple economics....NOT....inflation.

 

Well....I am continuing to work at promoting the art that I happen to own.....and....at the same time make good art available to the public. I have submitted five oil paintings to be considered for a museum exhibition to be held in mid 2026. I will find out in about 1-2 months if one or more of my items have been selected for inclusion.

I expect at least one to be included......I will be very happy if I get two or three in the exhibition.

 

Ok....I have now progressed into the day.....I am now ALL RED. Yawn.......who cares.

I dont have any expectation for the markets till mid April at best.......the summer at worst.

 

At least my little HOARD of gold and silver is kicking ass right now. Not that is matters as a....non-compounding....asset. it just sits in the dark in my siblings big safe.

Gold touches new record as latest Wall Street prediction sees prices reaching $3,500

https://finance.yahoo.com/news/gold...tion-sees-prices-reaching-3500-170903882.html

 

Here is the other......forgotten....story.

US household wealth eked out record high in fourth quarter on stock gains

https://finance.yahoo.com/news/us-stock-market-pushed-household-164934746.html

AND.....if I am any indication.....these gains went even higher in January and February......in a very erratic way.

 

OK......,a perfect day for me.....EVERY stock ended in the red. No surprise there.....with the recent market. I also lost out to the SP500 today by.....0.64%.

As usual....moving on....it is not like I have any choice. Lets get this week over with and out of the way. Every day we mark off the calendar is another day in the process to getting back to a little bit of FUNDAMENTAL sanity in the markets.