The Long Term Investor

I thought this was a simple "FLUFF" article.....but....it is actually pretty good. Some good planing advice here.

What's the number one way Americans are becoming millionaires?
The answer might surprise you.

https://finance.yahoo.com/personal-...cans-are-becoming-millionaires-191057199.html

 

I just looked at the market for the first time today. I have been occupied elsewhere this morning. I have our Water Softener guy coming at about 11-12. So it will be an off and on day for me with the markets. I see that it is a very MIXED day right now....especially for what I happen to own.

I dont know how we opened......hopefully we will build from here over the day. At least there is a good mix of red and green in the markets today....not the recent ALL red.

 

Nice little article here.

One of the most misunderstood moments in stock market cycles

https://www.tker.co/p/stock-market-bottoms-before-economy

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

"The stock market fell, with the S&P 500 shedding 2.3% last week to close at 5,638.94. It’s now down9.2% from its February 19 closing high of 6144.15 and up57.6%from its October 12, 2022 closing low of 3,577.03."

"The stock market is a discounting mechanism, which means its price reflects expectations for the future, and its price fluctuations reflect the market’s attempt to factor in changes to those expectations.

Believe it or not, in a given moment, the stock market does not care too much about the present state of things. That’s because expectations for the present will have been priced into the market days, weeks, and months in the past.

That is to say, the stock market reacts to news to the degree the new information 1) is not in line with what the market expected for the present, and 2) changes what the market expects for the future.

There are some more factors that drive stock prices over time. But in the context of digesting major news headlines, these are the two relationships to watch.

Because the stock market is so heavily dependent on expectations for the future, we inevitably get moments when stock market behavior appears to conflict with information about the present. Specifically, we sometimes get stock prices falling amid good news and rising amid bad news.

These are some of the most misunderstood moments in stock market cycles.

That time stocks surged as the economy crashed

One of the more dumbfounding instances of this counterintuitive dynamic came during the spring of 2020 when the economy was reeling from the COVID-19 pandemic lockdowns.

After a sharp 35% drop, the S&P 500 bottomed and inflected upward on March 23 that year.

But we continued to get disastrous economic reports for weeks as the stock market rallied.

This resulted in one of the defining screengrabs of the pandemic. It was from the April 9 episode of “Mad Money with Jim Cramer.” Cramer’s show highlighted how the stock market had its best week in decades while the chyron reported the cumulative three-week tally of unemployment insurance claims ballooned to 16 million.

People were confused.


Many on social media did not take kindly to the stock market’s rally in early 2020. (Source: @JustinAHorwitz)
Yes, the economy was in bad shape in April. But expectations were already extremely low, which meant the bar for developments that could cause stocks to go higher was also very low.

In retrospect, it seems the stock market got it right.

It wasn’t until June that we learned job creation resumed in May. And it wasn’t until July 2021 that we learned that the recession had ended in April 2020.

The stock market, for its part, recovered all of its pandemic losses and reached new record highs in August 2020. (So, if you had dumped stocks as the news was getting bad and you had waited for good news to get back in, then you might’ve actually missed out on considerable gains you could’ve earned by just holding through the crisis.)
This was not just a pandemic recession phenomenon. The stock market usually begins its recovery long before the economy. JPMorgan’s Michael Cembalest reviewed the history in an October 2022 research note.

“There is a remarkable consistency to the patterns shown below: equities tend to bottom several months (at least) before the rest of the victims of a recession,” he wrote.

As you can see in Cembalest’s charts, stock prices (dotted blue line) tend to inflect upwards before we see improvements in earnings (red line), GDP (yellow line), and employment (purple line).



Stocks usually recover before the economy. (Source: JPMorgan)
Historically, the stock market bottomed about five months before the economy. Sometimes the lead time is longer. Sometimes its shorter. On one extremely rare occasion — the Dotcom bubble — the market bottomed after the economy.

The economic news has been getting gloomier

The U.S. economy has been cooling for a while as the major tailwinds early in the recovery normalized.

The good news had been that the economy was nevertheless still growing bolstered by consumers’ ability to spend and businesses’ willingness to invest.

While we might not necessarily be heading for recession, we could be in the midst of a “growth scare,” which has historically come with big stock market sell-offs followed by rapid rallies.
Growth scare-y anecdotes have been accumulating recently. Since the beginning of March:

• Delta Airlines warned that their “outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty.“
  
  
• According to the NFIB’s February Small Business Optimism survey, capital spending plans tumbled to their lowest level since 2020.
  
  
• From the NY Fed’s February Survey of Consumer Expectations: “Households expressed more pessimism about their year-ahead financial situations in February, while unemployment, delinquency, and credit access expectations deteriorated notably.“
  
  
• From the University of Michigan’s March Survey of Consumers: “Consumer sentiment slid another 11% this month, with declines seen consistently across all groups by age, education, income, wealth, political affiliations, and geographic regions. …expectations for the future deteriorated across multiple facets of the economy, including personal finances, labor markets, inflation, business conditions, and stock markets.“
  
  
• Wall Street firms, including Goldman Sachs, Morgan Stanley, and JPMorgan cut their GDP growth forecasts.
  
  
• Even President Trump euphemistically warned that Americans could face “some disturbance” and a “period of transition” as his administration moves forward with costly tariffs. Treasury Secretary Bessent echoed the sentiment, warning of an economic “detox period.”

Because the stock market is a discounting mechanism, you could argue that the current drawdown that began on Feb. 19 was the market pricing in the bad news we’re getting now.

This again speaks to the quandary investors face as they think about making adjustments to their portfolios. The stock market does not price in what’s going on today. It’s pricing in what’s expected in the weeks, months, and years ahead.

And that future is uncertain. It could be worse than what we currently expect. It could be better.

No one can say for sure that the stock market hit its low for the year. However, we also shouldn’t be surprised if we soon experience a sustained rally as incoming news just confirm gloomy expectations that have already been priced into the market.

Zooming out

In hindsight, divergences in the stock market and the economy make sense. But in the moment, it often feels wrong.

What feels right is when the stock market falls as you get information that indicates the present and near future are deteriorating, and vice versa.

However, there is likely to be a moment where the stock market moves higher as it resumes pricing in a better future. And that moment is likely to happen when the economic headlines are bad.

It all speaks to the perils of trying to time the market.

Is it possible we learn that the economic situation proves far worse than what’s priced into the market today? Absolutely.

Can we guarantee that? Absolutely not."

MY COMMENT

As usual the shorter the term the more OPAQUE the markets. Long term.....the PROBABILITIES....say the markets will be UP. BUT...when or how is never apparent except for hindsight. SO....I simply stay fully invested all the time in order to capture the big jumps that come out of nowhere.

 

AND....to continue this little theme.

The Stock Market Doesn’t Care What You Say

https://awealthofcommonsense.com/2025/03/the-stock-market-doesnt-care-what-you-say/

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

"Here’s something I shared on Twitter recently:


Some people thought I was being hyperbolic. Maybe so. That’s the point of social media sometimes.

Then I read the latest Eye on the Market from Michael Cembalest who said what I said only much more eloquently:

Here’s the interesting thing about the stock market: it cannot be indicted, arrested or deported; it cannot be intimidated, threatened or bullied; it has no gender, ethnicity or religion; it cannot be fired, furloughed or defunded; it cannot be primaried before the next midterm elections; and it cannot be seized, nationalized or invaded. It’s the ultimate voting machine, reflecting prospects for earnings growth, stability, liquidity, inflation, taxation and predictable rule of law.

While market consensus assumed the administration would carefully balance inflationary, anti-growth policies with pro-growth policies, it has come storming out of the gate in the first fifty days with more of the former than the latter.

The stock market doesn’t care what you say or how you feel. It doesn’t care about spin, narrative or political posturing. If the stock market doesn’t like how your policies will impact earnings it will let you know about it.

And the stock market is telling the new administration that it does not like tariffs:

Here’s how Ed Yardeni laid it out this week:

The Stock Market Vigilantes have spoken. They don’t like tariffs, and they don’t like mass firings of federal workers. That’s because they don’t like stagflation, and they fear that Trump 2.0’s focus on these measures could cause a recession with higher inflation.

And JP Morgan’s David Kelly:

The trouble with tariffs, to be succinct, is that they raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions. Other than that, they’re fine.

To see this, consider what would happen if the U.S. imposed a blanket 20% tariff on all imported goods.

The immediate effect would be to raise prices for American consumers and cut output, profits, wages and employment for those who export to us, whether they be foreign farmers, manufacturers or commodity producers. We can argue about how the full cost of the tariffs would be distributed between these two groups but both would be hurt.

However, our tariffs would immediately be met by retaliatory tariffs on our exports by other countries. These would increase prices for foreign consumers and cut output, profits, wages and employment for U.S. farmers, manufacturers and commodity producers.

The stock market knows all of this and is re-pricing risk accordingly. Maybe the market is overreacting. The stock market is not infallible. It’s possible the tariffs are walked back or things don’t look nearly as bad as they feel at the moment.

But the stock market cares about margins and earnings. If they are hurt by government policy, it will let them know.

This is not a political stance I’m taking here. I don’t have a political party. The stock market is my party. Market forces don’t pick a side either.

A lot of people are concerned about government debt levels. The market provides checks and balances there too.

One of the only reasons we could borrow so much money during the pandemic is because interest rates and inflation were so low. Guess what happened after trillions of dollars were spent?

Rates shot up and inflation reached a four-decade high. The Biden administration would have loved to keep spending money, but the market stepped in and made it much harder to justify. The market spoke and it told the administration it did not like unchecked spending indefinitely.

Stocks got killed. Bonds got killed.

In the spring of 2021, I asked if inflation could give us a wonderful buying opportunity. It did. The S&P 500 dropped 25%. The Nasdaq 100 was down 34%. If you bought stocks in 2022 you were very happy in 2023 and 2024.

Could the Tariff Tantrum be offering us another wonderful buying opportunity in 2025?

My general stance is the more bearish things feel in the short-run the more bullish you should be over the long-run. Maybe things will get worse from here, maybe not.

Whatever the reason, buying stocks when they are going down is typically a winning strategy as long as you can hold on for the ride."

MY COMMENT

My view is that we have been seeing a HUGE over-reaction amplified by the media lately driving the markets. BUT.....as said above....the markets dont care what I think.

WHAT....you mean we have done over a thousand pages here and the markets dont care?

Thats about right.

 

Of course....once again....it is FED week. It seems to never end anymore.

Trump's tariffs, stock sell-off loom over cautious Fed as markets raise bets on rate cuts in 2025

https://finance.yahoo.com/news/trum...aise-bets-on-rate-cuts-in-2025-080035156.html

 

I guess this is the market today.....assuming any of this stuff is accurate or possible for anyone to know.....which I strongly DOUBT.

Dow, S&P 500, Nasdaq attempt climb as Bessent dismisses sell-off, retail sales miss

https://finance.yahoo.com/news/live...ses-sell-off-retail-sales-miss-133145587.html

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

"US stocks were mixed on Monday as downbeat data and comments from Treasury Secretary Scott Bessent added to worries about the economy ahead of this week's Federal Reserve policy meeting.

The S&P 500 (^GSPC) was just above the flat line, while the Dow Jones Industrial Average (^DJI) gained 0.4%. The tech-heavy Nasdaq Composite (^IXIC) fell about 0.5%.

The gauges attempted to climb after a sell-off that saw the S&P 500 (^GSPC) enter correction territory and the Dow book its worst weekly performance since March 2023. Markets have been buffeted by economic slowdown fears and uncertainty over Trump's unpredictable tariff policy.

Bessent inflamed those worries on Sunday when he told NBC that he's not worried about the recent slump in stocks, saying "corrections are healthy." He added that there are "no guarantees" the US will avoid recession.

Stocks were trading higher on Monday as bets of rate cuts this year rose after a fresh print showed retail sales rose less than expected in February, while January's reading was revised lower.

Monthly retail sales were up 0.2%, versus estimates of a 0.6% rise, while the previous month's 0.9% drop was revised to a fall of 1.2%.

Meanwhile, the New York Fed's reading on manufacturing activity in New York state showed a sharp pullback in March, with the headline business conditions index falling to -20 from a reading of 5.7 in February.

Wall Street is also bracing for the Federal Reserve's two-day meeting starting Tuesday, where it is widely expected to stand pat on interest rates. Investors will look for any sign that Trump's policies are changing the central bank’s views of the future of the economy."

MY COMMENT

A CRAZY contradiction above.....Wall Street is supposedly "BRACING" for the FED this week while......at the same time....it is widely expected they will do nothing. Sounds pretty DUMB to me.

Anyone with much of a BRAIN that I am hearing is not concerned about this little semi-corrrection at all.

If I was an EXPERT....I would probably be more concerned that just about ALL the economic data including the points above....are now coming in a little bit soft....good news for inflation and the FED. I would be more concerned that the FED needs to get off their little ass and continue with a bit of their rate cuts before they sit mute, sucking their thumb.....while we move into a little mild recession.

ACTUALLY.....I dont think there is more than about a 1-5% odds of any sort of recession. This is simply a correction over.....NOTHING. TOTALLY....media driven and the story line in the media is WRONG as usual.

 

Here is more on Retail Sales.

Retail sales rise less than expected in February

https://finance.yahoo.com/news/retail-sales-rise-less-than-expected-in-february-123534269.html

 

My question.....what happened to all the NVDA BLACKWELL PANIC and FEAR mongering? It turned out to be simply....NOISE. BLACKWELL and NVDA is booming. BUT...apparently no one cares.

NOW the Blackwell reach, and power is being expanded and monetized even further by NVDA.

Details of Nvidia's fastest video card ever leak; RTX Pro 6000 Blackwell GPU will have 96GB GDDR7 ECC memory

https://www.techradar.com/pro/detai...blackwell-gpu-will-have-96gb-gddr7-ecc-memory

 

Speaking about Retail Sales above......MASSIVE numbers of headlines fear-mongering this today. DUMB, dumb, dumb.

 

Ok...you heard it here first. The next GREATEST fear-mongering to soon come regarding NVDA.

"The ramp of Blackwell Ultra is likely on track for second-half 2025, he said. But Chatterjee anticipates investor skepticism about the launch timing for Rubin chips. Rubin is due out in 2026."

https://www.investors.com/news/technology/nvidia-stock-falls-ahead-of-gtc-2025/

MY COMMENT

REALLY.....REALLY....does anyone think that any ACTUAL investors are really thinking about Rubin at this point and having concerns about its roll-out in 2026. I highly doubt it.

This little story line will be copied and pasted everywhere as usual and will become the next dramatic negative media hit on NVDA...no doubt.

 

A mild loss for me today thanks to GOOGL, NVDA, and AMZN. I also lost out to the SP500 today by....1.15%.

 

OK......nice to see the RED is back as is normal lately.......well not really....but I have no control over it.

I am not seeing any SCINTILLATING reason for the RED today. Of course today is the start of the FED this week.......and we continue in the fear driven market environment over tariffs that the vast majority of which will.....not even happen till April 2.....if they even happen at all.

 

Of course here is the current market environment.....not much new here.....as the FEAR MARKETS continue.

After 2-day rally, Wall Street strategists say stock sell-off has 'further to go' as Fed, tariff deadlines loom

https://finance.yahoo.com/news/afte...o-as-fed-tariff-deadlines-loom-100059261.html

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

"After falling more than 10% in less than a month, the S&P 500 (^GSPC) has risen for two straight sessions. But many on Wall Street don't think the recent 3% bump in the index is a sign that the market has clearly bottomed for the year.

"We see the selloff in US equities as having further to go," Deutsche Bank chief strategist Bankhim Chadha, who predicts the S&P 500 will eventually rally 24% from current levels, wrote in a note to clients on Sunday.

Morgan Stanley chief investment officer Mike Wilson told clients, also on Sunday, that "a tradable rally" is possible in markets. But Wilson doesn't see a sustainable rally to new record highs "until the numerous growth headwinds are reversed" or the Fed resumes interest rate cuts.

The market's main issues as stocks declined? Growing uncertainty around President Trump's policies, how those might impact a weakening economic growth outlook — and fears over the artificial intelligence boom disappointing. In the past week, there's been little evidence that those fears were overblown.

In other words, other than some stocks being "cheaper" than they were a month ago, when the S&P 500 hit its most recent high, there haven't been a lot of compelling cases to convince investors — who didn't buy stocks last week — to pile in now.

Plenty of survey data has cited concerns about how tariffs could impact both consumer and business spending. But there haven't been enough hard data points, like significantly softening consumer spending numbers, weak labor reports, or a swath of earnings guidance cuts, to complete the story.

"The vibes have helped us understand why the stock market has been getting hit so hard, and why concerns about the direction of the economy are rising," RBC Capital Markets head of US equity strategy Lori Calvasina wrote. "But the vibes aren't sending us a clear signal about whether, even with the S&P 500 down 10% from all time highs, a contrarian buying opportunity is at hand."

To be clear, even with strategists cutting their end-year targets for the S&P 500, many still see a rebound for the benchmark index sometime this year. For now, they just haven't seen the catalyst that will drive the charge higher.

From a company-specific level, the looming question around tariffs remains how much they'd truly weigh on corporate profits. Small hints have sprinkled out thus far. For example: Delta Air Lines (DAL) warning profits will rise less than initially thought due to softening domestic demand amid "macro uncertainty." But a full look at how corporations are feeling about the current environment is nearly a month away, with first quarter earnings reports kicking off in earnest on April 11.

Wednesday's Federal Reserve meeting could also be a market catalyst as investors search for more clues over whether the central bank will cut interest rates this year.

On a more technical level, strategists point out many signs the stock market rally was stretched entering 2025 have scaled back to normal levels — not levels that indicate it's time to buy the dip.

Deutsche Bank's Chadha points out that investor allocation to stocks has declined materially over the past month but hasn't hit the bottoming-out level seen during President Trump's recent trade war. If investor allocation to stocks drops that far this time around, Chadha estimates the S&P 500 would fall about 7% more to 5,250.

But with an April 2 deadline on Trump's next wave of tariffs, Chadha hopes for the removal of the political uncertainty that's been weighing on markets.

Chadha wrote that if the souring mood about the president's tariff plans prompts a "credible plan to resolve tariff uncertainty, it will allow the business cycle to continue." If so, Chadha believes the S&P 500 could hit 7,000 this year.

On the flip side, if tariffs aren't scaled back and the recent fears about the slowing of the US economy intensify, strategists argue the stock market has more unwinding to do. For instance, the S&P 500's forward 12-month price-to-earnings ratio, a valuation metric investors use to discuss how "expensive" the index is at any given time, has only fallen to its five-year average amid the sell-off.

After hitting a price-to-earnings ratio rarely seen over the past 30 years entering 2025, the S&P 500's forward price-to-earnings ratio is at 19.9, about in line with the five-year average of 19.8 but below the 10-year average of 18.3, per FactSet data.

"Equity valuations still do not reflect much genuine concern about either economic policy or possibly weakening fundamentals," DataTrek co-founder Nicholas Colas wrote in a note to clients. "We'd love to tell you that last Monday was the low, but the data says otherwise. [But] we remain positive on US large caps and look forward to a truly investable low in the coming weeks."

MY COMMENT

I think the above is a pretty good view of where we are right now. We will have much more clarity by April 2 on tariffs and later in April when we get earnings.

I dont expect any sort of real comment or clarity from the FED this week.....just more stalling with "wait and see" ...... and vague comments.

Right now I see the market environment as a very slow glacier of fear driven trading..........creeping slowly along.....and slowly picking up investors on the sell side as they bail and capitulate. I dont see much of a FLOOD of capitulation right now....but am sure part of what we are seeing now in the dropping market environment is being contributed to by some level of capitulation daily or weekly.

In other words what we already know......a CORRECTION....happening in a BULL MARKET.

 

A couple of little articles that I think are about right.....for where we are at the moment.

Weekly Market Pulse: A Discounting Mechanism

https://alhambrapartners.com/weekly-market-pulse-a-discounting-mechanism/?src=news

Why Awful Consumer Sentiment Data Makes Us Excited About Stocks
It’s always darkest before dawn…

https://investorplace.com/smartmoney/2025/03/consumer-data-makes-us-excited-about-stocks/

 

The above pretty much says it all for today. Individual company story-lines dont matter. We are simply being blown around short term by the BROAD THEMES mentioned above.

Trying to micro-manage or micro-research the current drop is a waste of time.

The current correction is all about BROAD THEMES.....and broad themes tend to be indiscriminate and often produce IRRATIONAL individual results.

 

Looking ahead at BROAD THEMES....we are going to have to sit through tariff issues till at least April 2. We are going to have to sit through earnings in April and May. We are going to have to sit through the typical erratic markets of.....May, June and perhaps into July.

Probably the best bet for the markets in the shorter term will....in fact....be the second half of the year. this is what many of the so called.....market experts....were calling before the year started. Weakness in the first half of the year sn strength in the second half of the year. A self fulfilling prophesy? Perhaps.....bet it does not matter. Whatever the markets do in the short term......and.....I am calling the entirety of 2025 as......short term....we will just have to sit through it and wait.

We will NEVER really know why the markets are doing what they are doing. In fact it really does not matter why the markets are doing anything short term. It just.....Is.

It does not change anything for me as a long term........fully invested all the time..... investor

 

One thing relative to the post above.....lets talk briefly about what is short term and what is long term.

For me in the context of being a long term investor.....long term means.....at the minimum 3-5 years.......and better.......7 years. Short term is 1-3 years and at times even a bit more than 3 years.

I do NOT consider it long term investing if someone has a horizan of only 1 or 2 or 3 years. Over these time spans there is SIGNIFICANT risk and LUCK involved in having money in the stock markets. I suspect that there is MUCH money like this......with a horizan of 1 to 3 years.....that is now in the stock markets.

I also suspect that with the FLOOD of young and inexperienced investors that are now in the markets.....there is little understanding of the REALITY of what is actually short term and what is long term money.

It is irritating to not get the stock market returns.....but....for me personally I would NOT have money in the markets that I was going to need for some critical purpose in only 1-2 years....perhaps even 3 years depending on how critical that money was.

The exception would be......If I did not care......if I lost 10% to 20%....or worst case even 25%.... of the funds by the time I needed to use them...if they got caught up in a market correction or a bear market. (Of course everyone thinks they would not care until the money is lost.....than they suddenly care)

In the past when it was necessary for me to manage my personal assets for living expenses yearly......before I was on Social Security and my Income Annuities.....I tried to keep at the minimum 3 years of cash or cash equivalent funds.

In general people dont realize how quickly your money can disappear......I will call it....REVERSE COMPOUNDING.....in a correction, a bear market, or a multi-year bear market.

I went through a couple of very nasty bear markets in my early years of retirement.....the 2001/2002...bear market......and.....the 2007 -2009....bear market. I know what it is like to see your money disappear. This is why for short term 1-3 year money my investment of choice is 1 year, 2 year, and 3 year CD's. At least CD rates are generally nice right now.

 

As to the above and......what I will call....REVERSE COMPOUNDING......here is a little made up example of the danger of having short term money in the markets.

Lets say you retired in January 1 2025....with a pot of $1.5MILLION......and....you figure you can take the heat and simply keep it in the stock markets. Your plan is to take $50,000 out per year for retirement.....you are age 70.

for 2025 on January 1 you take out your $50,000.

BUMMER....bad luck....the market goes into a correction and you hang in there for the entire year as it turns into a bear market going down by 18%. You are down by $261,000. (ACTUALLY...probably more as the losses compound over the year....but I will use simple percentages and math for this example)

In 2026, on January 1, you take out your $50,000.

At this point you are now DOWN to $1,139,000.

In 2026 the bear market continues and the market goes down another 15% over the year....another $170,850....lost.

On January 1 2027 you take out your $50,000.

You get the idea....here you are with bad luck having been invested in a little two year bear market and in only TWO YEARS from January 1 of 2025 to January 1 of 2027.....your $1.5MILLION has now quickly shrunk to......$918,150.

BINGO you have lost or used over ONE THIRD of your money in only two years.

THIS....is why one to three year money....in my view is NOT stock market money.

 

WELL......so far today and at this moment.....I am ALL RED. Every stock down for me today.

NOT too shocking as the recent market continues.