The week to come...although it will be a short one with the markets closed on Monday. The Fed's favored inflation gauge highlights shortened trading week: What to know this week https://finance.yahoo.com/news/the-...ng-week-what-to-know-this-week-113919110.html (BOLD is my opinion OR what I consider important information) "Stocks closed the week with mixed results as debate about when, or if, the Federal Reserve will cut interest rates continued to be top of mind for investors. For the week, the Nasdaq Composite (^IXIC) rose more than 1%, while the S&P 500 (^GSPC) was near flat. The Dow Jones Industrial Average (^DJI) fell more than 2%. All three indexes were still near record highs. After a quiet week on the economic data front, a key reading of the Fed's preferred inflation gauge is set to greet investors in the week ahead. A second update on economic growth in the first quarter and a reading on consumer confidence are also on the economic schedule. On the corporate front, earnings season is officially winding down, with Salesforce (CRM), Costco (COST), Dollar General (DG), and Best Buy (BBY) highlighting a lighter schedule of quarterly reports. Markets will be closed on Monday for the Memorial Day holiday. Rate debate A hotter-than-expected reading on US economic output, combined with a hawkish tone from Fed officials in the minutes of the central bank's May meeting, prompted investors to scale back expectations for interest rate cuts again. Investors are now pricing in fewer than two cuts for the year, and debate has shifted to whether or not the Fed will make its first cut by September. As of Friday, markets were pricing in a 50% chance the Fed doesn't cut in September, a noted shift from the 70% chance investors had priced in a month ago, per the CME FedWatch tool. Goldman Sachs' economics team pushed back its call for the first Fed cut from July to September on Friday but noted the "timing of the first cut remains a difficult question." Goldman's chief US economist David Mericle reasoned that his team still views these cuts as "optional" given the strength of the economy seen in data like last week's hotter-than-expected business activity reading. All else equal, signs of strength in the economy "lessen the urgency" for the Fed to cut, Mericle reasoned. Mericle added that while Goldman expects inflation to be "much improved" by September, it will still likely be above the Fed's 2% target, adding to the optionality. With earnings season largely over, Truist co-chief investment officer Keith Lerner told Yahoo Finance the discussion around the Fed, inflation, and economic data will once again take center stage for markets in the near term. "That just makes for a more volatile market," Lerner said. A fresh check on prices Inflation's trajectory remains crucial to the Fed's rate-cutting timeline, and markets will get an update on any progress on Friday with the release of the Personal Consumption Expenditures (PCE) index. Economists expect April's "core" PCE, the Fed's preferred gauge that excludes the volatile food and energy categories, clocked in at an annual gain of 2.8%, flat from March's increase. Over the prior month, economists expect "core" PCE rose 0.3%, also in line with last month's change. Another economic growth update US economic growth for the first quarter of 2024 came in far weaker than economists had expected. On April 25, the Bureau of Economic Analysis's advance estimate of first quarter US gross domestic product showed the economy grew at an annualized pace of 1.6% during the period, missing the 2.5% growth expected by economists surveyed by Bloomberg. The secondary reading is slated for Thursday, and economists believe after down revisions to retail sales data in February and March, the GDP number will fall to 1.3% in this reading. However, Bank of America US economist Michael Gapen wrote in a note to clients that this shouldn't be an ominous sign about the health of the US economy. "Final sales to domestic purchasers (GDP less trade and inventories) should remain strong." Gapen wrote. "The bottom line is that the economy moderated somewhat in the first quarter, but it remains on a stable footing overall." Earnings scorecard While the highly anticipated earnings release from Nvida (NVDA) did little to move the broader market higher, the AI leader's earnings beat did improve the S&P 500's earnings growth for the first quarter. Entering the week, the S&P 500 had been pacing for growth of 5.7%. After Nvidia's report, the index is now pacing for growth of 6% in the first quarter. And, importantly, strategists believe Nvidia's outsized impact on earnings will decline throughout the year, supporting a broadening of the stock market rally. Bank of America US and Canada equity strategist Ohsung Kwon told Yahoo Finance that the first stage of the AI cycle has already been happening, with earnings growing at companies like Nvidia (NVDA) as tech giants like Alphabet (GOOG, GOOGL), Amazon (AMZN), and Microsoft (MSFT) invest in the growing technology. But the rewards are starting to expand, with recent rallies in sectors like Utilities and Energy. "We don't think it's just about Nvidia anymore," Kwon said. "Things are broadening out ... to power, commodities, utilities, things like that." Kwon noted in a recent research note that Nvidia drove 37% of the S&P 500's earnings growth over the past month. In the next 12 months, it's expected to represent just 9%. The case for S&P 6,000 A solid earnings backdrop for the rest of the year is one of several factors many strategists are citing as they revise up their year-end targets for the S&P 500. But Deutsche Bank chief equity strategist Binky Chadha told Yahoo Finance while people are "talking bullish," equity positioning hasn't shifted much in the past three months. Deutsche Bank's measure of positioning shows investors are "overweight" equities but not to the "extreme" levels seen in 2021 and 2018. This is one of several reasons Chadha sees "upside risks" to his updated call for the S&P 500 to end 2024 at 5,500. Chadha believes there could be more room to run for stocks, particularly given that he feels consensus isn't currently pricing in outperformance for the US economy. Chadha highlights that expectations for the US economy have really just shifted from an incoming recession to at or slightly below normal trend growth. If that consensus continues to move higher, and the US economy once again grows more than expected this year amid what some believe could be a productivity boom for the US labor force, it's not hard to see the S&P 500 hitting 6,000, per Chadha. "We've come a long way, but we don't seem to have gone all the way," Chadha said. MY COMMENT With earnings winding down and the insane media focus on FED CUTS......we are going to see a very volatile market. ACTUALLY.....I now believe there will be ZERO rate cuts this year......and....who cares. It is not like the markets are being carried on the back of rate cuts. In fact the market is being hindered by the constant rate cut speculation and schizophrenic coverage. I dont know any longer term investors that are even giving cuts much thought and certainly dont know anyone that is buying or selling a stock based on rate cut anticipation. All the rate cut BS just gives the FED power over the short term markets and is simply DUMB. It is ALL a big media drama that has no impact at all on the normal long term investor...other than to drive us all crazy over the short term. I think it interesting that above we now see the first little prediction of the SP500 hitting 6000 by year end. Remember all the DIRE predictions for a blah year at the start of 2024? WRONG as usual....although we have a long way to go till year end. We would be a lot better off as investors if the financial media focused on long term stock market fundamentals.....and actual investors....NOT speculative traders..... and did not carry the FEDS water. It is also interesting above that the paragraph on "EARNINGS UPDATE".....does not actually give any sort of information or update on how earnings have actually been. WTF.
So.....since the earnings update above does not actually say anything in the way of an earnings update.....I will do so. EARNINGS INSIGHT https://advantage.factset.com/hubfs...k/Earnings Insight/EarningsInsight_052424.pdf "Earnings : 78% of S&P 500 companies reported positive EPS surprise and 61% of S&P 500 companies have reported positive revenue surprise. Earnings Growth: For Q1 2024, earnings growth rate for the S&P 500 is 6.0%. ......the highest year-over-year earnings growth rate reported since Q1 2022 (9.4%). Guidance: For Q2 2024, 60 S&P 500 companies have issued negative EPS guidance and 41 S&P 500 companies have issued positive EPS guidance. Valuation: Forward 12-month P/E ratio for the S&P 500 is 20.5. This P/E ratio is above the 5-year and 10-year average." (above has been edited down to critical info, see article for exact quote) MY COMMMENT Bottom line.....KILLER EARNINGS....this time around. I see nothing standing in the way of earnings the rest of the year.
Having lived through the late 1970's and early to mid 1980's and seeing first hand the impact of the REGAN tax cuts and economic policies.....I TOTALLY agree with this little article.....and always will. Tax cuts, lowering regulation, and all the other Regan economic policies WORK......and....at the same time they unleash free market capitalism and as a result MORE government income from the reduced taxes. The Regan BOOM lasted all the way into the late 1990's. Nvidia’s Unlikely Ascent Is An Enemy of Stalked-by-Fallacy ‘Economics’ https://www.forbes.com/sites/johnta...stalked-by-fallacy-economics/?sh=4e5c39f24265 (BOLD is my opinion OR what I consider important content) "Henry Hazlitt long ago observed that economics is stalked by fallacy. He published Economics In One Lesson in 1946. The bet here is that if around today, he would begin his most important book the same way. Nvidia shows why. Consider that the Santa Clara-based company nearly went under in the 1990s. As Ben Cohen wrote in the Wall Street Journal, Nvidia’s “first chip was a flop. Its next chip was doomed to fail.” He adds that founder Jensen Huang knew the failures amounted to “an existential moment for his nascent company.” This is notable simply because Nvidia nearly died in a stretch of what economists and pundits have long characterized as “easy money.” Supposedly the Fed can decree credit cheap just by fiddling with the Fed funds rate. We know this because economists and pundits have claimed more recently that from 2009 to 2022, credit was “costless.” Evidently Huang and Nvidia didn’t the get the memo. Neither did Elon Musk as evidenced by the myriad times throughout the 1990s, early 2000s, and 2010s when his various entrepreneurial ventures were on the doorstep of bankruptcy. To this day, Nvidia keeps a sign warning “Our company is thirty days from going out of business” not because money is ever easy, but precisely because it’s always incredibly difficult to access. Entrepreneurs and businesses are routinely in need of capital, but the immense power of compound returns makes accession of the capital incredibly difficult. Nvidia is yet another piece of evidence that “easy money” is the stuff of economists and theories that are rather distant from reality. Economists also believe near-monolithically that government spending powers growth. Don’t you know, GDP rises the more that government spends? More fallacy. See Nvidia again, and its routine struggles to find investors willing to match it with cash. Stop and think about that while contemplating the trillions our federal government will spend in 2024, but also the trillions it’s spent over the decades. How many promising businesses have died over those same decades thanks to politicians arrogating to themselves so much of the wealth that is always and everywhere produced in the private sector? The unseen of government spending is staggering. Think countless cancer cures, private jets affordable to the masses, think the Nvidias of the world who didn’t happen upon a rich benefactor and corporation. Oh yes, in Cohen’s latest column about Nvidia, he writes that when Nvidia was running out of money Huang “asked one of the top executives at the videogame giant Sega for a $5 million lifeline to keep his company afloat.” Thank goodness Shoichiro Irimajiri came through. Yes, a rich man saved Nvidia. This is crucial. To see why, consider the lefty Keynesians who decry “tax cuts for the rich” or “tax breaks for big corporations.” Not only do they disdain lower rates for rich people and the businesses they form or are part of, they claim there’s no “stimulus” because the rich will be less likely to consume the fruits of their tax cuts. And before Republicans nod their heads about the foolishness of lefty Keynesians, check out the defenses of the much-vaunted “Trump tax cuts” that, by the admission of alleged supply-siders, didn’t reduce tax rates for the rich. No, they didn’t. They raised them. Corporations endured higher taxes amid lower headline rates too. Yet as we see with the man Huang refers to as Irimajiri-san, growth is borne of reducing the burden placed on those with the greatest ability to save and invest the most. Yes, the rich. Yes, corporations. Republicans and Democrats might choose reason over politics one of these days and seriously reduce taxes levied on the rich, along with the companies they work for or create. Nvidia instructs." Ultimately Sega directed $5 million to Nvidia, and the near-death company had a lifeline that would keep it afloat for another six months. Think about that. Six months to figure out a way to survive. Nvidia ultimately survived, but as evidenced by the company’s soaring valuation over the past two years (amid rate hikes from the Fed that economists claim against all evidence depress stocks), money never became “easy” for Nvidia after Shoichiro Irimajiri kept it afloat in the 1990s. Though great for the economy, Nvidia’s success embarrasses an economics profession drowning in theories that Nvidia’s unlikely ascent thoroughly rejects." MY COMMENT As we continue to drift toward Socialism....following the EU and the majority of the rest of the world....most people remain ignorant of anything to do with economics. The lessons of the times when reason actually prevails are soon forgotten. YES....money fuels the private economy.....yes that money comes from investors. YES...much of that money comes from the.....dreaded...."rich". I will say it....anyone that believes government spending is good spending or productive....is either blind or a fool or both. The...."rich"....are not like Scrouge McDuck. They dont have some giant vault with all their money siting there in gold and jewels. Their money is constantly being invested and circulating in the economy and producing good for everyone. That money funds business....provides funds for mortgages and loans.....and supplies what makes business and the private economy work. Government spending on the other hand.....is just about always misdirected....foolish....corrupt or semi-corrupt. More taxes....more regulation.....more government spending.....is always counter-productive. HAPPY MEMORIAL DAY.
NO.......government has nothing to do with this. Wall Street is getting even more bullish on stocks https://finance.yahoo.com/news/wall-street-is-getting-even-more-bullish-on-stocks-100309330.html (BOLD is my opinion OR what I consider important content) "Nearly five months through 2024, the major stock indexes are near record highs. Wall Street doesn't think this rally is over, either, as the outlooks for earnings and economic growth have steadily risen throughout the year. In the past two weeks, three equity strategists tracked by Yahoo Finance have boosted their year-end targets for the S&P 500. The median target on Wall Street for the benchmark index now sits at 5,250, up from the median target of 4,850 on Dec. 30, per Bloomberg data. The Street-high target has moved up to 5,600 from 5,200 to start the year too. "The current environment is basically what the bulls were hoping for, and they are getting it," Bank of America US and Canada equity strategist Ohsung Kwon told Yahoo Finance. "It's basically a soft landing." Kwon explained that while inflation data has come in hotter than expected to start the year, it still hasn't indicated that price increases are reaccelerating. Meanwhile, other data has signaled a slowing but strong economy, easing fears that red-hot growth could spark another inflation spike. In essence, this has fueled the soft landing narrative Wall Street bulls hoped for entering the year, per Kwon. BMO Capital Markets chief investment strategist Brian Belski noted that markets have made an important shift as this data has come in. Markets are now pricing in about two rate cuts this year, down from a peak of nearly seven to start the year, per Bloomberg data. This aligns with the Fed's most recent projections, in which officials favored two or three rate cuts this year. "It has become clear to us that we underestimated the strength of the market momentum, particularly considering that investor expectations and Fed policy guidance have become essentially aligned vs. the significant disconnect that existed at the beginning of the year," Belski wrote in a research note on May 15. In that note, Belski boosted his year-end target from 5,100 to 5,600 — a new high on Wall Street. He noted that with the level of strength seen in stocks to start the year, history says further gains are likely ahead. In years where the S&P 500 rallies more than 8% in the first five months of the year, as it just did, the index gains more than 7% to finish the year 70% of the time, per Belski's analysis of historical data. Belski and other strategists who boosted their outlook for stocks this year did warn, however, that stocks' move upward likely won't come without more pullbacks. Belski noted that April's 5% retreat was meager in comparison to the usual more than 9% seen in the second year of bull markets. But given the rally in stocks to start the year, "should a more severe pullback happen, it will likely occur at higher index levels than we previously anticipated," Belski stated, providing a higher landing spot for the S&P 500 after a rebound. 'Talking bullish' Entering the year, bullish strategists on Wall Street were adamant that a key to the market rally this year would be a continued rebound in corporate earnings. And thus far, that has played out. Earnings grew 6% in the first quarter of 2024, the highest rate of growth seen in nearly two years. Thus far, what's driving earnings hasn't changed significantly. Tech earnings, like Nvidia's blowout quarter from last Wednesday, are driving the lion's share of earnings growth in the S&P 500. But strategists think the seeds are still in place for a broadening to end 2024. Kwon noted that the first stage of the AI cycle has already been happening with earnings growing at companies like Nvidia (NVDA) as tech giants like Alphabet (GOOG, GOOGL), Amazon (AMZN), and Microsoft (MSFT) invest in the growing technology. But the rewards are starting to expand with recent rallies in sectors like Utilities and Energy. "We don't think it's just about Nvidia anymore," Kwon said. "Things are broadening out. ... To power, commodities, utilities, things like that." Kwon noted in a recent research note that Nvidia drove 37% of the S&P 500's earnings growth over the past month. In the next 12 months, it's expected to represent just 9%. Deutsche Bank's chief equity strategist Binky Chadha also believes other areas of the S&P 500 are set to contribute to robust earnings growth through the end of the year. He recently boosted his S&P 500 target to 5,500 from a prior target of 5,100 but told Yahoo Finance that target has clear "risks to the upside." For one, Chadha notes that while people are "talking bullish," equity positioning hasn't shifted much in the past three months. Deutsche Bank's measure of positioning shows investors are "overweight" equities but not to the "extreme" levels seen in 2021 and 2018. To Chadha, this shows there could be more room to run for stocks, particularly given that he feels consensus isn't currently pricing in outperformance for the US economy. Chadha highlights that expectations for the US economy have really just shifted from an incoming recession to at or below normal trend growth. If that consensus continues to move higher, and the US economy once again grows more than expected this year amid what some believe could be a productivity boom for the US labor force, it's not hard to see the S&P 500 hitting 6,000, per Chadha. "We've come a long way, but we don't seem to have gone all the way," Chadha said." MY COMMENT As I say......ENDURE.....PATIENCE.....COURAGE. BUT I will add to that you have to....BELIEVE. So the mantra is: ENDURE....PATIENCE....COURAGE....BELIEVE. That is what it takes to have success as an investor....of course it also takes.....vision to pick rational and realistic stocks and funds. A very difficult thing to do for the majority of people. It also takes discipline. and long term focus. Fortunately....there is much commentary out there over the past 10-20 years about the benefits of BIG INDEX PASSIVE INVESTING and LONG TERM INVESTING. Slow and steady does win the race.
If you look at the TOP holdings of what I would call the greatest HEDGE FUND.....Bridgewater.....you will see that there is really NO magic involved. Here is the top 50 holdings. Basically the greatest AMERICAN companies. How many of these are HOUSEHOLD NAMES? Of course this is just a portion of what they own......and, of course......simply having a list of their top stocks does not lead the way to....anyone else..... having investing success. ISHARES TR (IVV) ISHARES INC (IEMG) ALPHABET INC PROCTER AND GAMBLE CO NVIDIA CORPORATION META PLATFORMS INC JOHNSON & JOHNSON WALMART INC COSTCO WHSL CORP NEW COCA COLA CO PEPSICO INC SPDR S&P 500 ETF TR (SPY) MCDONALDS CORP APPLE INC MERCK & CO INC VISA INC MICROSOFT CORP ELI LILLY & CO VANGUARD INTL EQUITY INDEX F (VWO) ABBOTT LABS 1 CVS HEALTH CORP AMAZON COM INC PDD HOLDINGS INC STARBUCKS CORP COMCAST CORP NEW MASTERCARD INCORPORATED MCKESSON CORP CHIPOTLE MEXICAN GRILL INC ISHARES INC (EWZ) MONDELEZ INTL INC TARGET CORP ISHARES TR (MBB) THE CIGNA GROUP PAYPAL HLDGS INC ADVANCED MICRO DEVICES INC FISERV INC STRYKER CORPORATION UBER TECHNOLOGIES INC COLGATE PALMOLIVE CO HCA HEALTHCARE INC ISHARES TR (LQD) BOOKING HOLDINGS INC BOSTON SCIENTIFIC CORP VEEVA SYS INC INTUITIVE SURGICAL INC APPLIED MATLS INC ABBVIE INC DOORDASH INC KLA CORP KROGER CO
OK....you know me and Cathie Woods. Cathie Wood's Ark Invest has destroyed $14 billion in wealth over the past decade, Morningstar says https://finance.yahoo.com/news/cathie-woods-ark-invest-destroyed-223315637.html (BOLD is my opinion OR what I consider important content) "Cathie Wood's Ark Invest has destroyed an estimated $14.3 billion in wealth over the past decade, according to a recent Morningstar analysis. Ark Invest was all the rage in 2020 and 2021, when its concentrated bets on highly speculative technology companies paid off in a big way thanks to low interest rates and a boom in risk appetite among retail investors. Ark's flagship innovation ETF, ARKK, soared nearly 150% in 2020, and that massive outperformance helped drive a surge of inflows into its funds right near its peak. The firm attracted nearly $30 billion in assets in 2020 and 2021, which were then decimated during the 2022 bear market when its flagship fund plunged 67%. The ARKK ETF destroyed $7.1 billion in wealth, while its healthcare-focused ARK Genomic ETF destroyed $4.2 billion in wealth, according to Morningstar. Across all fund families that have destroyed wealth over the past decade, Ark Invest topped the list — and its losses were more than double the next firm on the list. What's striking is that Ark's massive wealth destruction occurred during a favorable time for the stock market. "These funds managed to lose value for shareholders even during a generally bullish market," Morningstar analyst Amy Arnott said. The ARKK ETF has generated a total positive return of 121.8% since its inception in 2014, which is less than half the Nasdaq 100's gain of 329.5% over the same time period. Meanwhile, the ARKK ETF is still down 71% from its record high. Despite the massive wealth destruction, ARK Invest as a business is doing just fine. The investment company still has more than $13 billion in assets across its suite of ETFs, signaling that not all investors have abandoned Wood's investment strategy. But in an investment world that is shifting to valuing profits over growth, it is unclear when Ark Invest's investment strategy might pay off again for investors. The firm's top holdings currently include Coinbase, Tesla, Roku, and Zoom Video, all of which have had a rough start to 2024. "The biggest value destroyers in the fund industry illustrate that there's no guarantee of success, even during a generally favorable market environment. They also provide a valuable case study in how not to invest," Arnott said." MY COMMENT How not to invest.....yep about right. Do not jump on the hot fund that has no prior record of success based on a single year performance. No matter how much the media HYPES the fund manager. Avoid a fund manager that claims to be finding the hidden gems in tech and holding them for the long term.....but in reality....constantly trades in and out of some of the largest tech companies in the world in a fashion that seems to have no rhyme or reason. I dont get it with Cathie Woods. She seems to make very erratic buy and sell decisions that are random and totally off the cuff......and.....she certainly is not holding anything for the long term. She is constantly trading in and out of stocks and churning her own portfolio. In my mind she is a perfect example of how long you can ride a HYPED REPUTATION....years and years. Some investors are always looking for that next big score. Dreaming of hitting that one big year again. Even if it happens....at this point....it will not make up for all the losses since 2020. AND....I very strongly doubt it is ever going to happen again.
I like this little article. Why Launch Angles Are of Little Use in Long-Term Investing Some thoughts on technology. https://www.fisherinvestments.com/e...ngles-are-of-little-use-in-longterm-investing (BOLD is my opinion OR what I consider important content) "There is a lot going on in the world these days, but from a stock market standpoint, it is a bit of a slow-news stretch. Data releases are sparse ahead of the long weekend. Q2 earnings season is done. The pullback is over and stocks are back to clocking all-time highs. So shall we go a bit left field and apply some observations about baseball to the market? You see, I love baseball. It is a lifelong relationship that will never end. But baseball is sleeping on the sofa right now. It has strayed and needs to figure things out. I have faith it will, but I might have to wait a while. Like most sports, it was seduced by that tempting mistress, analytics. It all started with Bill James and advanced statistics in the 20th century. That segued into the Moneyball phenomenon, whereby the Oakland A’s scouted hitters who excelled in certain narrow statistics in order to maximize the amount of runs they could buy with league-minimum salaries. But like all widely known information in a market, it got priced in, leading teams to go deeper and deeper for the next statistical edge. As time passed, the collision of ever-powerful computers and clever front office nerds brought the game to where it is now: a myopic focus on pitchers’ speed, vertical rise and spin rates and hitters’ launch angles. Players optimize for this in order to win fat contracts. So now where we live in a world where Greg Maddux perhaps wouldn’t get drafted, pitchers hurl their elbows into oblivion, hitters swing with exaggerated upper cuts that would give my old little league coach a coronary, and at-bats are generally a two-outcome situation. Homerun or strikeout. To me, this makes most games boring no matter how much the league tries to speed things up. Oh, and with algorithms selecting relief pitchers, far less spontaneous. These are, of course, just my views. You may agree or disagree. I am sure there are many in both camps or possible third camps that agree and disagree. This is kind of a thing in sports these days, with fierce debate about whether it is for the better. Basketball is all about the almighty three-pointer. Tennis is about spin rates and Ben Shelton’s 150 mph serve. Formula 1 and IndyCar drivers scrutinize charts of their corner entry speeds compared to rivals and how many centimeters they were from the apex. Test drivers pull all-nighters in racing sims to find the optimal car setup. Data, data, data. For an analogue gal like me, it is all a bit soulless and empty. I want scrappy middle infielders who bang doubles to the right field gap. The 1986 Astros playing small ball. Shawn Green’s diving catches and Ken Griffey, Jr.’s beautiful swing. I want Ayrton Senna mashing an H-pattern stick shift and keeping his foot on the gas while he brushes the wall. I want Roger Federer serving and volleying. I don’t want computers predicting and picking everything that happens. There is a large school of thought saying markets have gone the same way. One MarketWatch piece we addressed in the What We’re Reading section last week delved into the vast universe of data younger investors seem to think they must tap to get an edge. And then there is the chorus of investors who have lamented for years that algorithmic traders hog all the opportunities, leaving no profits for investors who can’t automate trades. Aaaaaaand, in my opinion, neither of those things is true. Investing is that rare arena where you don’t need supercomputers and reams of data to compete and do well. Technology hasn’t ruined anything. Let us start with the obsession with data—including real-time market data, satellite data and other logistical-related information, options pricing, alternative economic data and many more. The MarketWatch piece we covered observed more investors leaning on this information for their research and decision making, implying every successful buy and sell decision relies on a boatload of number crunching.[ii] Hogwash! Don’t get me wrong, I love downloading and playing with data. But I—and all your friendly MarketMinder editors—do it to put things in context and assess whether the financial commentary world is broadly telling the right story about what the market and economy are doing. It is all in service to evaluating theses and narratives. What won’t do me much good: poring over options pricing or a feed of minute-by-minute stock prices looking for patterns. Nor will studying container ship movement or other alternative economic feeds. One, all of this stuff is too noisy. Two, it is all widely used and therefore likely to be priced in. All of this data is something anyone can use, which in markets means it becomes powerless. Once a broad swath of investors uses something, as they draw and base trades on the common conclusions, it all gets incorporated into stock prices. This happened to Fisher Investments founder and Executive Chairman Ken Fisher with the price-to-sales ratio back in the 1980s. He pioneered its use in his early Forbes columns and classic book, Super Stocks. It was a simple calculation enabling him to find undervalued companies using a metric no one else used, exploit the inefficiency, and reap returns. Moneyball! But then the rest of the investing world saw that it worked and started using it … and it didn’t work anymore. It got priced in. He moved on. So it is with all the new popular data. It is all past performance and widely known stuff. Whatever niche feed you scrutinize, you can bank on armies of similarly minded investors doing the same, probably coming to similar conclusions as you—and making the same decisions. Whatever trading insight you think you can glean, there is a high likelihood others have already traded on it. Meaning the market has already chewed over it, incorporated it into prices, and moved on. I say this not to demoralize you, but to encourage you. Investing for the long term isn’t about finding the perfect thesis for the moment and the perfect moment to trade on it. That is traders’ stuff. Long-term investing is very much more about the simple, timeless questions: Are we in a bull market or a bear market? Are stocks likelier to be up or down over the next 12 – 18 months? Do people seem broadly too optimistic or pessimistic about the world around them, based on your objective reading of what companies and the economy are doing? You can figure this out with some mental elbow grease (aka basic reasoning skills) and a quick look at flagship economic indicators. No Excel spreadsheets and formulae required. You will also get the benefits of seasonally adjusted indicators that filter out the noise—a bit stumbling block with all the cute real-time stuff. And when you decide to buy or sell, it makes little difference to longer-term investors that some traders are out there with their high-frequency trades and algorithms. Their goal isn’t to get a better long-term entry point than you, but to make tiny spreads (we are talking pennies here) by getting in and out in a flash. By trading so frequently, they add liquidity to the marketplace, which has helped make trading cheaper and easier for the rest of us. They give the masses tiny bid-ask spreads and confidence that the price you see on your computer screen is the price you will get. Which is really the coolest thing, to me. Technology may be negatively affecting some sports (again, in my view!). But it is making investing better, for big and small investors. Trades used to take five business days to settle. Next week, thanks to technology, they will take one day. Paperwork and physical stock certificates are of the past.[iii] Technological advancements also played a giant role in the journey toward zero-commission trades. And it lets retail investors who manage their own accounts bypass brokers who want to pitch products, and instead enter their buys and sells on their own. Freedom is a beautiful thing." MY COMMENT In the end it is all....garbage in....garbage out. In the end.....massive data leads to needless complexity. In the end....simply being in the markets long term is all that matters.....at least to me.
Talk about garbage in....garbage out. Economic data is just about WORTHLESS to the long term investor. The criteria used in the data are being constantly adjusted and changed by government. The results are constantly being changed and adjusted. AND....the big one...there is really ZERO indication that economic data has anything to do with long term business success and fundamental results. Here is the irrelevant economic data today.....as often happens a "surprise". WOW.....who cares. What makes this data supremely irrelevant is the constant comparison of the "supposed" results to what was.......GASP...."expected". US consumer confidence unexpectedly improves in May https://finance.yahoo.com/news/us-consumer-confidence-unexpectedly-improves-141648258.html
Good news for APPLE and their shareholders. Apple’s China iPhone Shipments Up 52% as Rebound Gains Steam https://finance.yahoo.com/news/apple-china-iphone-shipments-52-082637690.html MY COMMENT They are cutting prices in....CHINA. "Apple and its Chinese resellers have been cutting prices since the start of 2024, and those deals are extending into the sale season that accompanies the June 18th shopping festival in the country" and "...a Bloomberg Intelligence poll of consumers in China showed the iPhone returning as the most favored mobile device and an uptick in interest in upgrading to new devices." The ebb and flow of business in the worlds must brutal communist dictatorship. APPLE stock is up so far today. If the china market strengthens and is able to sustain this....a good indicator for APPLE earnings going forward.
Looks like a very nice market day today. NVDA up by about $55 per share or.....+5.10%. A perfectly NORMAL market day today to start the week. NOTHING going on at all today....so far. BUT....watch out....the FED MORONS will no doubt pop up somewhere in the world to talk the markets down. Our best hope today is that all the FED ELITES are on vacation all week for the Memorial Day holiday.
What a nice little STEALTH RALLY we have been having. Here is an unusual measure of what has been happening. On March 15 one of my kids had their old....12 year....car die. So we pulled $52,000 out of their stock account to buy a new car for cash. As of today......the account since March 15.....has gained back $34,000....of those funds. The account is now down by.....ONLY..... $18,000 over the past three months. The account is quickly pushing back to where it was prior to the withdrawal of March 15......and....my kid and their spouse are quickly pushing back toward a new all time high for their combined two accounts....which I expect they will hit within about 4-5 weeks. ($500,000) I would bet that many people dont even know that these sort of gains have been happening. AND.....my kids account is now large enough that they can use their funds to do things like this car.....and NOT have a car payment for the next 6-7 years. EXQUISITE timing of this car purchase.....compliments of a nice little stealth market rally....combined with a great BULL MARKET.
A few lessons above. ONE....it is great and a BIG HELP to your finances to not have a car payment. TWO....it is nice to have options when a life emergency happens.....a big brokerage account gives you that. THREE....some time you simply have to bite the bullet and use some of those hard earned gains. FOUR.....it is nice to get lucky with your timing.....bad luck becomes good luck. FIVE....a lifestyle that is debt free is much easier to sustain and frees up money to invest. My kids only debt.....a family financed house payment.
YES......the FED F'ers.....are already out there today in the media. Fed’s Kashkari wants to see ‘many more months’ of positive inflation data before a rate cut https://www.cnbc.com/2024/05/28/fed...ositive-inflation-data-before-a-rate-cut.html MY COMMENT Just shut up and go away. No one should care about what you think or have to say....especially long term investors at this point. YOU....the FED....are done. Rate hikes are over. Sooner or later you will have to cut rates. Plus...people that are smart know that you have ZERO ability to control the economy. It is all illusion, delusion, and myth.....the "science" of Economics.
Speaking of...SHOW ME THE MONEY. Housing prices soar to a new all-time high in March US housing prices hit a fresh record in March as affordability crisis deepens https://www.foxbusiness.com/economy/housing-prices-soar-new-all-time-high-march MY COMMENT "Prices increased 6.5% nationally in March when compared with the previous year, the S&P CoreLogic Case-Shiller index showed on Tuesday, the same as the previous month. It marks the fastest pace of growth since November 2022. On a monthly basis, prices climbed 0.3%, according to the index." Every single city in this measure had higher home prices. For me as a free and clear owner....great. Like everything in life you have to put yourself in position to benefit....over the longer term. Owning a home is a critical component of any family financial plan. For example....how many people of home buying age......did not take advantage of the extreme LOW interest rates of a year or two ago? Yes.....it was and is a crazy market.....but....you have to be proactive and determined.
As to the above....some times it takes a FAMILY. First-time homeowners are starting to ask parents for help to make buying property a reality: report Some Gen Z Americans are signaling interest in buying a home with friends, per Credit Karma https://www.foxbusiness.com/media/f...k-parents-help-buying-property-reality-report MY COMMENT "As a mother, I want to do all I can to give my children a better future," mother Lizet Rodriguez said of helping her son buy a home. "We are first-generation immigrants in this country, and we have to stick together and help each other if we want to get ahead."" The above has been the norm in our little family for many generations now. I DO know that many people do not have this kind of support.....and....that is a BIG shame. If you are one of those people...it is up to you to make the effort to establish a new way of long term thinking in your family.....for your kids and grand-kids....or....your "future" kids and grand-kids. YOU can do this by being a long term investor and doing some long term thinking about the future of your family.
As I mentioned in a prior post....we went and looked at a painting yesterday. It was a good one at a fair price ($21,000) with a size unframed of 16 X 20. We already have two much nicer, larger, paintings by this artist and dont need another one. Plus, it was not a time for us to buy art with cash flow needs we have coming up soon.....so I sent my sibling the photos of the painting and all the info that I got from the seller.....and took them to see the painting. It is now hanging on their wall. The seller is a long time art dealer that recently closed their business...but....they still get many past clients and others wanting them to sell their paintings. This particular painting was in an estate that wanted to liquidate it. I think at the minimum it will hold its value over the longer term....but with art....you never know. YOU CAN NOT COUNT ON IT AS AN INVESTMENT. At worst it will always have some....decent.... value as an 85+ year old painting by a significant American Impressionist artist with a good auction record. It is interesting that this painting had an old gallery tag from the early 1970's with the price of $250. That gallery is now long gone....but was a significant gallery here in Texas back in the old days from about 1945 to 1985. I am glad we were able to keep this in the family.
Someone continues to......POUR GASOLINE....on the NVDA fire. NOW up by $78....or....+7.31%. We are seeing a nice pre-split price jump. This often happens with good companies leading up to a split. BUT.....it also often happens that after the split there will be some weakness as profit takers are tempted to take some money off the table and the euphoria of the coming split dissipates.
Very good couple days for the old chip stocks. The move from AMD to NVDA so far was a good one. Alot of positive movement going into the June 6th split. The last split did wonders for my account and I'm hoping this will do the same. Sitting and letting my account do all the work.
