The Long Term Investor

The markets to come...this week.

Inflation data, big bank earnings, and Netflix results: What to watch this week

https://finance.yahoo.com/news/infl...esults-what-to-watch-this-week-115103942.html

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

"Stocks are back near record highs, but a flurry of trade announcements, deals, and extensions kept investors on their toes last week. In the week ahead, a busier economic and earnings calendar will offer them more to chew on.

Inflation data out Tuesday morning will set the economic agenda for the week. The Consumer Price Index (CPI) will be a key data point for investors and policymakers to weigh, with the Federal Reserve's next interest rate decision looming less than two weeks away.

On the earnings side, all the major US banks will report results this week, with renewed investor enthusiasm about the IPO and M&A markets, along with Wells Fargo's (WFC) freedom from a decade of more stringent regulatory restrictions, likely to feature.

Results from Netflix (NFLX) will kick off earnings from big US tech firms, with ASML (ASML) and Taiwan Semiconductor Manufacturing (TSM) set to offer key updates on the AI-related chip boom. PepsiCo (PEP), United (UAL), and American Express (AXP) are among the other notable firms set to release their quarterly results.

Data from FactSet published July 3 showed analysts are coming into second quarter earnings season expecting 5% earnings growth for the S&P 500 (^GSPC). Should this forecast come through, it will mark the slowest pace of profit growth since the fourth quarter of 2023.

The second quarter includes the peak of tariff-related uncertainty — Trump's shocking "Liberation Day" announcement took place on the second day of the quarter. But the market's recent rally suggests the backward-looking set of results companies will roll out in the weeks ahead have already been discounted.

In the third quarter, analysts are expecting earnings will grow 7.3% over last year. Full-year profit growth is expected to clock in at 9%, according to FactSet data. In 2026, earnings should grow 13.9%, according to analyst forecasts.

Second quarter earnings, then, appear set to reflect the trough of corporate America's mini-cycle of panic, acceptance, then relief around Trump's tariff goals, the whole of which took about five weeks in April and May.

This week, as Trump again rolled out tariff announcements that left some of America's trading partners surprised, investors largely took the news in stride. The worst, it seems, is past us.

New tariffs announced on Canada late Thursday and Trump's decision to float higher blanket tariffs on all US imports contained echoes of the headlines that shook markets earlier this year. This time, the reverb barely disrupted the market's rhythm."

MY COMMENT

Looks like a typical FED week....with some big earnings mixed in for fun and excitement.

 

Well July 15 and July 16 are the next couple of reports from CPI and PPI.

At the same time the FED continues to sit and passively aggressively do NOTHING. They are screwing people trying to get a good mortgage rate. They are screwing the USA in terms of the interest we are having to pay on government bonds and credit instruments. They are screwing the economy in general. They are screwing investors and the markets.

I have no doubt that this is simply politics. They cut numerous times in 2024 when inflation was MUCH worse and government policy was much more stimulative. They are totally disconnected from the data...now....contrary to what they have said for years. Our interest rates are now MASSIVELY above any other developed country.....all of whom....just like us..... are dealing with the tariff issue.

We are now 7 months into 2025 with inflation lower than ever in the past 2-4 years.....AND.....to date NO cuts.

NOT TO MENTION....that the 2% target is simply an unrealistic made up number out of touch with the historic inflation rate of 3-4%....which we are significantly under.

I am not a fan of government being able to fire the FED chief....but.....we are approaching the point where this refusal to even consider a cut is economic sabotage.

 

Siting and reading, reading, reading.....since the markets open. I never even looked up to see how we were doing till now. I see that we have improved now to a mixed market with the DOW and the NASDAQ now in the green. The SP500 is slightly in the RED.

So....a good basic, normal, start to the day and the week.

 

I like this little article.

Shake the Valuation Fixation
Whatever their level and whichever flavor you prefer, price-to-earnings ratios say little about markets’ future direction.

https://www.fisherinvestments.com/en-us/insights/market-commentary/shake-the-valuation-fixation

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

"In the wake of the S&P 500’s rebound to new highs following this spring’s correction, older fears are back: Now murmurs are surfacing arguing US stocks are now too expensive, with pundits suggesting elevated price-to-earnings ratios (P/Es) signal trouble ahead. But hold on. Valuations aren’t a forecasting easy button. A sober review of history proves they tell you very little about where markets are headed.

As the abbreviation implies, P/E ratios divide an index’s (or stock’s) price by its components’ (or the company’s) earnings. This technically represents how much investors are willing to pay for each dollar of earnings, so a high ratio is theoretically a hefty price tag. So, with three common P/E variations—trailing, forward and the cyclically adjusted P/E (CAPE)—sitting well above their long-term averages, pundits warn “overvalued” stocks are poised to fall.[ii]

But all these various flavors have issues that ding their predictive power. Take the trailing P/E ratio, which divides today’s stock or index price by the company’s or indexes’ aggregate earnings over the past 12 months. Two things here: First, past earnings don’t affect future earnings, and stocks care primarily about how the latter squares with expectations. Second, stocks price in earnings 3 – 30 months ahead, so the past year’s earnings were incorporated into the numerator well before today’s calculation. It is backward looking through and through, sapping its predictive power.

Some look instead to forward P/Es, which compare prices to analysts’ consensus earnings estimates for the next 12 months. This approach is a bit more forward-looking conceptually, but it still has backward-looking aspects. Then, too, over the past five years, an average 77% of constituents beat consensus estimates, suggesting P/Es based on them will skew too high (from an excessively low denominator).[iii] Analysts’ expectations also tend to reflect prevailing sentiment. If dour, as after a correction, analysts tend to lower earnings estimates, potentially skewing the valuation even higher.

Last is CAPE. This gauge has some, umm, special quirks. CAPE was designed to foretell returns over a 10-year period—not cyclical shifts—by eliminating cyclical ups and downs (recessions and expansions) via comparing prices to the 10-year average of inflation-adjusted profits.

But that isn’t really how most users commonly talk about it, in our experience. The gauge rose to fame in late 1996, when then-Fed chair Alan Greenspan cited it as a sign of "irrational exuberance" in markets, popularizing the term and the measure. Markets rose the next three years, naturally. The gauge’s creators published a book on it in early 2000. And, coinciding with this, the Tech bubble burst. Many cast that correlation as a sign CAPE was the bees’ knees. To them, it “predicted” the bubble bursting, even though that isn’t what the gauge is designed to do.

CAPE has several critical flaws, in our view. For one, it uses old earnings to predict returns 10 years ahead. Not only are past returns nonpredictive, but most investors are focused on the much nearer term. Investors in 2001 would likely care far more about how markets moved cyclically in the next 10 years than the raw point-to-point return figure.

Therein lies the rub: Markets move in cycles—but this gauge intentionally obscures that. And in doing so, it adds a further variable: inflation. We can quibble up and down about which measure you use to deflate earnings, but however you do it, this gauge compares that to current prices, a mismatch. In our view, this all results in a broken indicator lacking any real predictive ability. Which makes sense, because stock returns are all about supply and demand for stocks. In the short run, demand dominates. Not so longer term, but nothing about a high or low CAPE really indicates much about 10-year supply trends in stock issuance or destruction.

Now, let us leave the theoretical behind and look at history. Exhibit 1 shows the long-term average P/E (since data start in 1926) plotted against trailing P/Es since 1996. (We shortened this to facilitate viewing the indexes’ wiggles and wobbles, which are hard to discern on long-term graphs.) Note how often valuations top the average recently—but stocks rose most of this span. And look at how crazy high they were in 2009—among history’s best buying opportunities. Why? Earnings were destroyed by the financial crisis. Backward-looking P/Es couldn’t foresee a recovery.

Exhibit 1: S&P 500 Vs. Trailing P/Es


Source: Multpl.com, as of 7/9/2025. S&P 500 price index and 12-month trailing P/E ratio, January 1996 – June 2025.

Exhibit 2 shows US stocks and their forward P/E ratio, with the average since 1996 due to data availability. This reveals a somewhat different issue.

Exhibit 2: S&P 500 vs Forward P/E


Source: FactSet, as of 7/9/2025. S&P 500 price index and 12-month forward P/E ratio, January 1996 – June 2025.

As this shows, forward P/Es have coincided with new bear and bull markets at varying levels and trends. Sure, the P/E was above-average and rising just before 2000 – 2002’s bear market, but it was below average and falling just before 2007 – 2009’s. It was just above its long-term average pre-2020 and, like the trailing P/E, falling ahead of 2022’s bear market. To us, this speaks to forward P/Es’ unreliability as an indicator.

Lastly, Exhibit 3 looks at CAPE’s history.

Exhibit 3: S&P vs CAPE


Source: Multpl.com, as of 7/9/2025. S&P 500 price index and Cyclically Adjusted P/E (CAPE) ratio, January 1996 – June 2025. Average shown is since 1926.

CAPE exceeded its long-term average at the beginning of the past four bear markets (despite ranging widely from 44.0 in 2000 to 25.7 in 2008). But it was also above average for the vast majority of the intervening bull markets. And again, CAPE was designed to project 10-year returns—not cyclical turning points. Look at the history since 2010. For all this span, CAPE was above average—often WAY above average. Yet overall returns have been great, with few periods even approaching below average 10-year returns. Even at its stated purpose, CAPE hasn’t been working.

There is simply no level or trend where P/E ratios reliably indicate an upcoming bear or bull market—no matter which method you choose."

MY COMMENT

You dont hear much about P/E anymore. Once in an extreme example like PLTR....although so far it has not made much difference with the stock.

Personally....I tend to NOT invest based on single data points or factors. I prefer the BIG PICTURE fundamentals as a WHOLE. I prefer to look at the totality of fundamentals compared to the prior five or more years....in conjunction with....momentum.

For me a big factor in thee BIG PICTURE......is if a company is ICONIC and a WORLD LEADER in their business. Something I can easily see with my own eyes. BUT.....as a long time investor and a business-person for many years.....my process and investing is also intuitive and very personal to "ME". As it should be for any of us.

 

Here is another good little article.

Checking in on the unluckiest market timer I know

https://www.tker.co/p/checking-in-on-the-unluckiest-market-timer

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

"The stock market rallied to all-time highs last week, with the S&P 500 setting an intraday high of 6,290.22 and a closing high of 6,280.46 on Thursday. The index is now up 6.4%year-to-date. For more on how the market moves, read: Stocks usually look past geopolitical events

I recently wrote about the unluckiest market timer I know. This unfortunate fellow has a history of making big, lump-sum purchases near market tops.

Unfortunately, that unlucky market timer is me.

After doing my 2024 tax returns in February, I learned I had some extra cash to put to work. So, I tossed it into my self-employed 401(k) plan and made a lump sum purchase of an S&P 500 index fund on Feb. 18.

The market climbed to a new record high the very next day. That ended up being a top, and from there the S&P 500 proceeded to fall by around 20% before bottoming on April 7.

But was I as unlucky as I felt in the moment? As unpleasant as that experience was, I knew I had the luxury of time and that I shouldn’t let my emotions get near my portfolio. Because as TKer Stock Market Truth No. 2 reminds us, double-digit, intra-year drawdowns are typical even in upward-trending markets.


“Despite average intra-year drops of 14.1%, annual returns were positive in 34 of 45 years,” JPMorgan observed. (Source: JPMorgan)
That self-counsel proved wise. The stock market surged from its April lows and set a new record high on June 27. It was a quicker recovery than usual and what I would’ve expected. But that’s the stock market for you.


It took just over four months to return to all-time highs. (Source: Yahoo Finance)
As I wrote back in March, “Time is the unlucky market timer’s best friend.”

All-time highs have been a great time to buy

The stock market usually goes up. Over 6-month, 1-year, 2-year, 3-year, and 5-year periods, the S&P 500 on average has generated positive returns.

That trend even applies to record market highs. As data from JP Morgan Asset Management shows, investing specifically at all-time highs generated even higher average returns over these time horizons.


Buying at all-time highs is as good as or better than buying at any other level. (Source: JPMorgan)
“Investors usually use all-time highs as a reason to stay in cash or on the sidelines,” JP Morgan analysts wrote. “However, history suggests that investing at all-time highs is not a bad strategy because new highs are typically clustered together. In other words, market strength begets more market strength.”

If you have money to put to work in the stock market, it’s reasonable first to ask if market conditions are attractive.

Unfortunately, it’s impossible to know if or when prices will fall before climbing again. And waiting for lower prices risks missing out on important gains.

The key question is whether you are willing and able to put in the time. The longer your investment timeframe, the better your odds of generating a positive return.

The best thing about all this is knowing that you don’t have to be a good market timer to be a successful investor."

MY COMMENT

I have known for a long time now that market timing does not matter. Neither does entry points. What is important to me is getting my money into the market as soon as possible and holding it there for the long term. That to me and according to the academic research is where the best.....PROBABILITY....is for me as a long term investor.

 

Bitcoin is on a TEAR. WOW...at this rate my little 1/100 of one bitcoin will be worth about $2000 in 5-10 years. I am NOT holding my breath.

Bitcoin soars to new all-time high as US lawmakers focus on pro-crypto legislation

https://finance.yahoo.com/news/bitcoin-soars-time-high-us-141906535.html

 

Out of ALL the big cap tech companies.....AAPL.....has been the WORST in AI. YES....they have totally fumbled a historic opportunity. Much of their problem is messaging.....but...there is also a management failure to understand and incorporate AI into their company and products. They need to WAKE UP....although I have ZERO plans to sell any of their stock.

Perhaps use some of those BILLIONS that go to stock buy-backs....to actually grow and improve the company.....by acquiring businesses and people that understand AI and can move it forward in APPLE products. At the same time....get out of China and learn something about PR and messaging.

It might be time to evaluate ALL management positions....it seems like the company has gotten a little STODGY and is losing a bit of its HUGE competitive EDGE. BUT....this is not a crisis...yet....it is simply a warning to the company. There is still plenty of time to wake up and learn how to use and incorporate AI in a way that has consumers cheering APPLE products.

Apple Faces Calls to Reboot AI Strategy With Shares Slumping

https://finance.yahoo.com/news/apple-faces-calls-reboot-ai-123108385.html

 

OH NO....we have now lost the DOW to the dark side......RED. WHATEVER.

 

It is too early for me to bother to look at my account today. BUT I am doing ok according to what the ticker is showing me on my nine stocks. I have five UP and four DOWN. The down are.....MSFT, NVDA, HD,......and.....AAPL which I mentioned above.

PLTR is up BIG.....$4.26.....or....+3%. NVDA is slightly down.

 

What a shame.

Wildfire destroys historic Grand Canyon Lodge, forces North Rim closure for the season

https://www.cnbc.com/2025/07/13/wil...-grand-canyon-lodge-and-other-structures.html

"The Grand Canyon Lodge, the only lodging inside the park at the North Rim, was consumed by the flames, park Superintendent Ed Keable told park residents, staff and others in a meeting Sunday morning. He said the visitor center, the gas station, a wastewater treatment plant, an administrative building and some employee housing were among the 50 to 80 structures lost. “Numerous” historic cabins in the area also were destroyed, the park said."

MY COMMENT

FIRE....is the destroyer of physical history and culture......as are other sorts of natural and unnatural disasters. At least there were NO injuries.

 

Another MILD market day today. It is nice to be back to a relatively NORMAL market. As has been the case lately...even the financial media...seems to be taking a break from all the DRAMA and fear-mongering. Have they finally worn themselves out? I hope so but I doubt it.

This appears to be a TYPICAL.....OLD TIME.....summer doldrum. Although that does not mean the markets are doing nothing.....they are just doing it in stealth mode and with low volume and ow volatility. I have seen some good gains lately even though the day to day markets are.....BORINGLY NORMAL.

I consider.....BORINGLY NORMAL....a nice thing.

 

YEA...I have a small gain for the day...so far.....in my nine stocks. It is compliments of PLTR and four other stocks. Although....it is early in the day and basically meaningless.

At least there is....as usual...some vague but positive....general news...... for NVDA today.

Zuckerberg says Meta will invest hundreds of billions in superintelligence

https://finance.yahoo.com/news/zuckerberg-says-meta-invest-hundreds-151312800.html

 

A FUNNY little article. I will make a prediction.....THE SP500 WILL HIT 10,000. DUH.....the question is when and why. The article calls this prediction a...."BOLD BET". LOL.....no...it is a sure thing......sooner or later. As to when...I have no idea. Do I really care....no.

As an OLD-TIME investor over 5 or more decades.....it is AMAZING but not unexpected over the long term....to see the DOW over FORTY FOUR THOUSAND.

Why the S&P 500 could reach 10,000

https://finance.yahoo.com/news/why-the-sp-500-could-reach-10000-140324953.html

 

No wonder the price of GOLD is UP.



LOL....the White House is awash in GOLD. We have moved ALL the gold in Ft Knox to Washington DC to create gold leaf.

Although I cant really talk....we dont have any gold trim or furniture.....but we have plenty of gold-leaf picture frames in our house. We also have a lot of art covering walls...... like this photo. Although our art tends to be different subject matter. Looks like the White House decorators are being kept very busy.

 

A nice small gain for me today. Much of thanks to PLTR kicking butt today. I also beat the SP500 by 0.11% today. My down stocks were....MSFT, NVDA, and....AAPL.

 

PLTR....a new ALL TIME HIGH today. it closed at $149.15.....a gain of....+4.96%. If this keeps going we will soon be talking about a potential PLTR split. Well....perhaps not too soon.

 

Sounds like MORE good news for NVDA in the works.

Trump to unveil $70B in AI and energy investments

https://finance.yahoo.com/news/trum...NjkhKeeD921JNsfT7Iwaj_I5aN1VhcSltGk41SkL6KN6I