The Long Term Investor

Soon.... Roaring TireSmoke.

It's a BEAUTIFUL day. I am basking in the GREEN with 30 minutes to go. I hope we dont see a nasty late day fade. I dont think so.....but I have seen crazier.

 

I like this little article.

Our Kids Have No Economic Immune Systems

https://www.aier.org/article/our-kids-have-no-economic-immune-systems/

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

"The sanitation or “hygiene hypothesis” holds that humans need environmental adversity for our immune systems to mature and function normally. The “Old Friends” corollary holds that a variety of “helminths” — tiny parasitic worms, whose eggs have been found in human feces for the past five thousand years, at least — temper and absorb the ferocity of our immune systems. The absence of schmutz in our lives — an excess of hygiene — has caused an explosion of autoimmune disorders and disabling allergies.

When you think about it, this “adversity causes health” explanation is remarkably powerful. To have a healthy heart and lungs, you have to engage in strenuous, challenging exercise. To build muscle mass, you have to work against heavy resistance, in the form of heavy weights.

A number of analysts have argued that there is a direct analogy to personality and mental health. Jonathan Haidt, the politically center-left NYU psychologist, has persuasively argued that the enormous increase in “mental illness” among young people is largely a product of two factors: “coddling” the mental health of children and young adults by protecting them from any possibility of failure, and then insulating them from trying anything that might confront them with failing to get the artificial, gamified positive feedback of “likes” and “more followers.”

There is some evidence that this “hygiene hypothesis” explains much of the dissatisfaction many young people have with capitalism. While it’s true that America’s education establishment has been taken over by economically illiterate ideologues, something in the mindset of young people of the past two generations has made them think that capitalism is not (just) immoral, but terrifyingly dangerous.

The odd thing is that our children are the among the richest people who have ever turned 5 years old. Since the mid-1990s, with a stumble in 2007-2012 for the “Great Recession,” median family income rose steadily until the government-mandated shutdown of the economy in March 2020. In fact, so-called Millennials stand to become by far “the richest generation” ever. Millennials and Gen Z have never known anything except prosperity, in terms of the level of their income, and their access to things — cell phones, the internet, streaming music and movies on demand, improvements in auto safety — that as recently as 1990 could not be had at any price.

This seems paradoxical. The commercial system has delivered, consistently and broadly shared across the population. Yet having to participate in a system where one plans, saves, invests, and designs an individual “pursuit of happiness” is overwhelming the very people who should be grabbing all the new opportunities that the system has revealed to them.

I think the explanation for the paradox is simple: Everything difficult has been banished. Just as our physiological immune system needs threats to mature and avoid attacking itself, our sense of commercial efficacy has to be confronted with challenges, and surmount those challenges, to mature into effective citizenship.

Kids are told they can do anything, that they are personally mighty and important. But they never have the experience of everyday effort and failure; In fact, they are urged to avoid anything that might “trigger” them, or enable them to play or act on their own, as has been documented by authors ranging from Jonathan Haidt, mentioned above, to Lenore Skenazy. So young people are overwhelmed with anxiety: If they do anything less than cure cancer or become a US Senator, they have failed. But they don’t know how to build a birdhouse from scrap wood. They have no idea how to repair a toilet, or how to change the inner tube on their $6,000 mountain bike. They are helpless, but charged with an inflated sense of destiny and self-importance.

The real danger is that political demagogues, and misguided aspirants who honestly believe in the need for “protection” from market forces, will appeal to this nascent appetite for the nanny state. Sohrab Ahmari, erstwhile conservative limited government advocate, has gone “full Progressive” in his support for broadly expansive state protection of labor from even the gentlest market forces.

Across the board, there is the danger that our young people will have more potential but fewer actual achievements that build a realistic sense of competence and self-worth. The driver’s license — that traditional rite of passage that enables responsibility and independence — has become the exception rather than the rule: as recently as 1983 more than half of all 16-year-olds got their license immediately, but in 2021 that figure was less than one-quarter. The proportion continues to decline, as Uber takes the role of Mom and Dad in the minivan, driving kids to organized sports events and choreographed parties.

My students don’t get summer jobs. They get internships, cozy little ersatz work experiences that have neither responsibility nor any chance of achievement or failure. They want their student loans “forgiven” —they didn’t really mean to sign that contract, so why should they be responsible? I worry that we are creating unreachable expectations, confronted with people who have never learned how to fail. Our kids have no economic immune systems, and they are fast becoming allergic to capitalism."

MY COMMENT

ABSOLUTELY.....AMEN.

At some point it is likely down the road that they will railroad themselves and our country into Socialism or some other dictatorship. They will throw away their own constitutional rights.

My kids avoided this baloney. First they were just on the cusp of the computer era in High School. Second they both were very involved with sports. They know how to lose and they know how to win.

They also grew up for their entire lives in a home where the economy, investing, money, and all other topics were openly discussed. They had many advantages due to our income and net worth......but they learned how to work hard and take responsibility for themselves.

For the future generations that will determine if we survive as a capitalist and free country with any Constitutional rights....it is all up to the parents of today. It is a big responsibility.

 

As "Road" said above.

Nvidia stock crosses $3 trillion market cap, overtakes Apple as second-largest co. in US market

https://finance.yahoo.com/news/nvid...second-largest-co-in-us-market-191207506.html

"Nvidia (NVDA) stock rose as much as 5% on Wednesday, a record high, a market cap above $3 trillion and making it the third stock to reach this milestone, with Apple (AAPL) and Microsoft (MSFT).

The company overtook Apple as the second-most-valuable company in the US stock market. Microsoft is currently number one."

MY COMMENT

Look out MICROSOFT. You are next.

 

AND to continue.

After $2 Trillion Gain, Nvidia Is Still Irresistible to Many

https://finance.yahoo.com/news/2-trillion-later-nvidia-stock-100050954.html

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

"(Bloomberg) — Its business is massive, its profits are booming and everyone already knows Nvidia Corp. is the hottest stock on Wall Street.

And yet many investors are betting the rally in the world’s most valuable chipmaker still has room to run.

For more than a year, Nvidia has sailed past earnings and share-price expectations. On Sunday, the company announced plans for new chips to stay ahead of the competition. On Monday, Bank of America analysts lifted their price target, once again, to a Street-wide high of $1,500, saying Nvidia’s premium is justified by its growth outlook. On Wednesday, its stock pushed deeper into record territory.

“It’s like trying to catch a marathon runner that’s running at full speed,” said Adam Gold, founder and chief investment officer at Katam Hill LLC. “They’ve been in the race for a long time. At the moment they’ve got a big lead and they’re poised to extend it this year and next year.”

Gold has owned Nvidia shares since 2016. It is now his largest position, and he keeps adding to it.

Gold is part of a Wall Street consensus that Nvidia’s lead is unassailable, at least for now. Rivals haven’t been able to catch up to Nvidia with chips that power artificial intelligence workloads, known as accelerators.

Its rapid growth in that space has transformed Nvidia from a niche maker of graphics processing units used for gaming to the third-most valuable company in the world. It is now worth nearly $3 trillion, having added more than $2 trillion of that since a landmark earnings report sent its stock into the stratosphere last year.


The day after Nvidia unveiled its latest chip plans, Advanced Micro Devices Inc. said it’s speeding up introductions of its own. On Tuesday, Intel Corp.’s chief executive spoke about new products as well. But none of Nvidia’s competitors are close to its dominance in AI.

Its recent earnings report showed customers are still snapping up its current H100 chips despite a more advanced chip called Blackwell coming later this year. Capital spending forecasts from major technology companies revealed that they plan to spend even more than previously anticipated on AI computing infrastructure.

“The only thing stopping them from selling any more is supply,” said Michael Kirkbride, partner and portfolio manager at Evercore Wealth Management.

Visibility from Nvidia’s biggest customers and rising demand from other industries makes its valuation “really reasonable,” he said. “We continue to be buyers.”

Few Naysayers

The scale and pace of Nvidia’s rise has generated some caution and even skepticism. But so far the naysayers keep being proven wrong.

Take Rob Arnott, who’s been warning of a Nvidia bubble since at least September. He compares its rise to other tech darlings that shot to glory only to see their products’ relevance evaporate: the PalmPilot overshadowed by the BlackBerry, which, in turn, was annihilated by the iPhone. Arnott views Nvidia as no different.

“When narratives get ahead of themselves is when they extrapolate recent trends into the future,” Arnott, founder and chairman of Research Affiliates LLC, said in an interview. “Nvidia’s sales doubled in 12 months. Fantastic. How long does that persist?”

Others express a mixture of worry and surprise at Nvidia’s success, but say they cannot help but be buyers of the stock. For instance, JP Scandalios, senior vice president and portfolio manager at Franklin Equity Group, gets a little rattled when friends or Uber drivers or barbers want to talk to him about Nvidia — that type of enthusiasm usually puts him on guard. Nonetheless, he remains bullish because of the eye-popping numbers on his screens.

“That kind of hype always makes me a little nervous,” he said. “But I come back to my model and look at the discounted cash flow and you go, they have a dominant share and if anything seem to be accelerating the pace of innovation. The numbers have just become staggering very quickly.”


Climbing Estimates

Analysts expect Nvidia’s net income to jump to $65 billion, on average, in the current fiscal year from $30 billion the year before, according to estimates compiled by Bloomberg. Those projections have risen 10% in just the past month.

Importantly, Nvidia is not just growing profits but profit margins, showing its pricing power as revenue shoots higher. Analysts expect Nvidia’s gross margin — the percentage of revenue that remains after production costs — to rise to 76% this fiscal year, up from 59% two years ago.

While Nvidia shares are relatively pricey at 39 times profits expected over the next 12 months, they are much less expensive than the multiple of 60 they were trading at before its May 2023 earnings report.

The ratio change is a function of analysts’ profit estimates rising even faster than the stock. That makes Nvidia attractive compared with other big tech names like Microsoft Corp., which is priced at 32 times future earnings, said Michael O’Rourke, chief market strategist at Jonestrading.

“For a similar valuation, you’re getting so much greater growth with Nvidia,” he said. “There’s no competition for that kind of fundamental growth in a megacap company.”

Of the 72 analysts tracked by Bloomberg who cover Nvidia’s stock, 65 rate it a buy and none rate it a sell.

Even Arnott, the Nvidia bear, describes it as “a wonderful company with phenomenal products.” He just can’t help feeling like he’s seen this movie before.

“Bubbles continue until they don’t,” he said. “The best thing to do in a bubble is stay the course, ride with the herd as long as you know when the bull is going to signal. There’s the challenge: it’s almost impossible to know when a bubble will have run its course.”

MY COMMENT

I will ride this wave for as long as it lasts. I will not take profits or redistribute any of my NVDA money. I see their DOMINANCE lasting for at least 2-3 years and probably longer.

To make the BIG LIFE CHANGING GAINS......I will have to be on that wave for as long as possible.

I have seen this sort of thing once before in my life. At that time.....1990-2002..... an initial investment of $80,000.....1000 shares....turned into $3-4MILLION over the course of ten years.

I am amazed that I am now seeing a similar opportunity with NVDA during my lifetime. I never expected to see another event like what I captured with MSFT all those years ago.

 

The above does NOT mean that I will lose focus. I will try to remain VERY CLINICAL about where NVDA is headed.....as usual.

BUT....everyone is different with different goals and risk tolerance. It is important for EVERYONE to be true to themselves with this or any stock. If that means that selling early or taking money off the table is the right thing for....."YOU"....do it.

 

YIPPEE KI-YEA.

I hit a new milestone and a new all time high today. ALL stocks GREEN. AND....a nice beat on the SP500 by 1.71%.

What a barn-burner of a day.

HAPPY DAYS ARE HERE AGAIN......

 

Should be a good clean market day today. Not much in terms of outside factors going on. So I am expecting a continuation of yesterday…….today.

I am at the lab for a routine blood draw right now. I will post more later.

 

Well I am back from the lab. AND....I just added 26 shares of NVDA to one of my kids accounts that I manage. I got the shares at $1202.82.

 

The particular kid and their spouse above is in the process of buying a new house.

The two of them are age 40-42 and over their short adult lives will have owned five houses when this latest sale closes next Friday. They seem to always have amazing LUCK when buying and selling houses....especially selling...they have never had a house that took more than a few weeks to sell.

They were going to list their old house for sale after the new one closes. They are able to do this compliments of family mortgage financing and not having to have the funds out of the old house before buying the new house.

WELL.....their luck continues to hold....they just got a contract on their old house without even being on the market yet. A neighbor heard they were going to list their house later in June and told a friend of theirs that is a small bank CEO about it.....and.....now they have a signed and accepted deal to sell the old house with NO real estate commission. I can never believe their luck buying and selling houses.

I told them....they need to quit moving up and live in this house for at least ten years. I think they will since it in their desired neighborhood and is a beautiful brand new house. It was the Model home in the neighborhood and has tons of great upgrades.

I dont know what it is with my kids and buying and selling houses....my other kid and their spouse...ages 40-43......are on their third house. They just completed a $160,000 mini-remodel.

I STRONGLY told them both.....please....no more house moving. You both have beautiful homes in very desirable neighborhoods....dont move again for at least 10 years. I doubt that the one that did the remodel will move again soon since they are basically priced out of moving up in their area.....that is why they did the remodel.

Of course I know where my kids get the house buying and selling genes.....since my wife and I have owned 11 houses over our married lives.

 

The first kid above buying the Model Home......after setting money aside for property taxes next January, and building an outdoor kitchen, and doing some new furniture, and paying their down payment of $130,000 to the family member that is funding the mortgage....will still clear $150,000 when their old house closes. ALL that money will go into their brokerage accounts.

This money will be added to the stock side of their two brokerage accounts. It will allow me to bring the stock side of the account basically in line with my Model Portfolio....fund versus stock....percentages.

 

OK.....this does not seem smart to me....but it is your money do what you need to do.

People are exiting the stock market in droves

https://www.cnn.com/2024/06/05/investing/premarket-stocks-trading/index.html

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

"New York CNN —
The summer months are usually relatively benign for markets as investors opt for sandbars in lieu of bar charts, but that’s not happening this year.

The US stock market is shrinking, and investors are pulling their money out at a near-record pace as storm clouds gather over the US economy.

That means the titans of Wall Street may have to contend with choppy water as they cruise toward their Nantucket getaways this year.

What’s happening: “Sell in May and go away” is a popular Wall Street-ism that describes the trend of investors closing up shop and sorting out their portfolios ahead of vacations. It also alludes to the historical underperformance of stocks during the summer months.

But recent trading flows show that something larger is at play this year.

Bank of America analysts said on Tuesday that their clients have now been large net sellers of US stocks for five weeks in a row. Just last week, they sold off $5.7 billion more in stocks than they purchased, the highest outflow since last July.

Bank of America recorded the second largest sell-off of tech stocks in their history last week. And while one week does not a trend make, it does stand in stark contrast with the Magnificent Seven fervor that ensnared Wall Street mere months ago.

Low volumes, eventful markets: The tides appear to have shifted and the usual summer doldrums are nowhere to be found.

“Summer 2024 may prove volatile, with momentum stalling amid policy uncertainty,” wrote Morgan Stanley Wealth Management Chief Investment Officer Lisa Shatlett in a note this week.

“Economic crosscurrents have left the [Federal Reserve] more tentative regarding rate cuts, amplifying the potential significance of each data point as debate continues over the degree of policy restriction,” she said.

A series of weak Treasury auctions could also roil markets, not to mention the ongoing and closely contested upcoming presidential election. Market volatility in an election year tends to pick up in October, but low trading volume and large potential catalysts could mean big swings in the weeks to come.

We’ve already seen whiplash-inducing moves in the Dow over the past two weeks as traders reacted to unexpected economic data.

A shrinking market: The stock market isn’t the economy (for the most part). And its influence over the macro environment has been fading for some time.

At their peak in 1996, there were 7,300 publicly traded companies in the US. Today there are about 4,300.

Nearly 90% of all firms with revenues greater than $100 million are now private, said Torsten Slok, chief economist at Apollo Global Management. Privately-owned firms also account for nearly 80% of all US jobs openings.

“Bottom line: Public markets are a small part of the overall economy,” he said.

Putting it together: A shrinking market and retreating investors indicate that the appetite for risk in the US is quickly fading.

Fear is currently driving the US market, according to CNN’s Fear and Greed Index.

Years of elevated interest and inflation rates, a chaotic political and geopolitical environment and general economic uncertainty may be sending both executives and shareholders into retreat.

What it means: That’s worrisome, according to JPMorgan CEO Jamie Dimon.

“The total [of public companies] should have grown dramatically, not shrunk,” wrote Dimon in his annual shareholder letter earlier this spring.

The number of private companies in the US backed by private equity firms, meanwhile, has grown from 1,900 to 11,200 over the last two decades, according to JPMorgan data.

Dimon’s company, of course, makes a huge amount of money from taking companies public, so he’s not exactly an impartial observer. But Dimon said his concerns are broader than JPMorgan’s bottom line: If this trend continues, our understanding of the US economy could become hazier, he argued.

“This trend is serious,” warned Dimon on Monday. “We really need to consider: Is this the outcome we want?"

MY COMMENT

I dont see this as very smart in the middle of a HUGE BULL MARKET......but perhaps it reflects some profit taking by people that got a little stretched out in the markets. Or.....perhaps it is people taking some money out to live with inflation or family needs.

Seems odd to me....but perhaps it is the leading edge of a trend for the summer.

 

As you can see above I continue to put my own money and my families money where my mouth is....NVDA.

 

I have been very busy with my kids house yesterday evening and today. I was their negotiator on the sale of their house....yesterday.... since they dont have a realtor (no commission). I have been reviewing Earnest Money contracts, etc, last night and today......besides doing some account management of their brokerage account.

It is like I actually have a job.

I have everything all lined up for now....except I have to wire the funds for the new house next Monday for the closing on Friday.

 

As to NVDA.....I suspect we will see a bit of a dip in the share price after the split. We have had such a big run up over the last few weeks....I believe it will need to consolidate for a short while....perhaps a week or two. This is often TYPICAL following a split.

 

OK...I finally had time to sit for a while and actually look at my account today. five of nine stocks in the green....but at the moment I have a net, medium loss, for the day. My UP stocks are....PLTR, COST, AMZN, GOOGL, and CMG.

Of course with NVDA being in the red that is the primary reason for my being in the RED right now.

I am hoping for a strong afternoon to either limit my loses or even pull me into the green.

 

I am trying to avoid making this thread the....ALL NVDA...thread. so here is a bit on the state of the markets today.

S&P 500 is little changed as traders look ahead to jobs report

https://www.cnbc.com/2024/06/05/stock-market-today-live-updates.html

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

"The S&P 500 was little changed on Thursday, taking a pause a day after the S&P 500 notched a fresh record close, while traders awaited a key U.S. economic report.

The broad market index ticked down 0.04%, while the Dow Jones Industrial Average rose 52 points. The Nasdaq Composite
traded 0.1% lower.

Lululemon jumped 3% as the sportswear manufacturer beat expectations in its fiscal first quarter. Five Below sank 11% on lackluster results and guidance. Chipmaker Nvidia traded marginally lower and cooled from record highs seen earlier in the week.

Wall Street is looking ahead to Friday’s nonfarm payrolls report for May, with investors on the hunt for signs of a weakening labor market, which could support rate cuts from the Federal Reserve. Economists polled by Dow Jones expect a jobs gain of 190,000.

“To me, the market is still saying the economy is fine and not printing anything recessionary,” said Ross Mayfield, investment strategy analyst at Baird. “But it could be the case that the Fed has already been too tight for too long and the momentum of a cooling job market will be hard to stop once it starts.”

The report also comes after the European Central Bank cut rates for the first time since 2019 on Thursday, raising the pressure on the Federal Reserve to potentially lighten its policy that many see as too restrictive. The Fed next decides on rates next week and is likely to keep rates the same, though bets that they will cut in September are rising.

Stocks are coming off a winning session. The S&P 500 jumped 1.2% to close at a record, while the Nasdaq also hit an all-time high.

Nvidia powered those gains to top a $3 trillion market valuation and surpass Apple in value. Earlier this week, the company announced its next generation of artificial intelligence chips, known as “Rubin.”"

MY COMMENT

All the above sounds pretty NORMAL to me for a random, single market day. Even though I post daily....at this moment I am EXTREMELY focused on the next 3-5 years.

I feel good about what I am holding right now and have ZERO plans to change anything the rest of this year.....and....hopefully for many years to come. I am definately NOT taking any profits off the table or re-balancing anything......I continue to be fully invested for the long term as usual

 

I dont really care about economic data on the day it is released....much less, the day before. BUT...I am tired of NVDA all day long, all the time.

May jobs report expected to show more signs of cooling labor market

https://finance.yahoo.com/news/may-...-signs-of-cooling-labor-market-164923667.html

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

"The May jobs report is expected to show further signs of cooling in the labor market.

The monthly report from the Bureau of Labor Statistics, slated for release at 8:30 a.m. ET on Friday, is expected to show nonfarm payrolls rose by 185,000 in May while the unemployment rate remained flat at 3.9% from the previous month, according to consensus estimates compiled by Bloomberg. In April, the US economy added 175,000 jobs, while the unemployment rate unexpectedly rose to 3.9%.

Here are the key numbers Wall Street will be looking at compared to the previous month, according to data from Bloomberg:

• Nonfarm payrolls: +185,000 vs. +175,000 previously
  
  
• Unemployment rate: 3.9% vs. 3.9% previously
  
  
• Average hourly earnings, month over month: +0.3% vs. +0.2% previously
  
  
• Average hourly earnings, year over year: +3.9% vs. +3.9% previously
  
  
• Average weekly hours worked: 34.3 vs. 34.3 previously
  

The report comes as the stock market has hit record highs amid a slew of softer-than-expected economic data, which increased investor confidence that the Federal Reserve could cut interest rates as of September. Entering Friday's print, markets are pricing in a 67% chance the Fed cuts rates in September, up from a roughly 50% chance seen a week ago, per the CME FedWatch Tool.

The key question in Friday's report and throughout the rest of 2024 will be whether slowing monthly job growth is merely a sign of normalization in the labor market or the early signs of a broader economic slowdown. For now, economists believe Friday's print will support the former.

"The May payrolls print is likely to show a healthy but better-balanced labor market," Bank of America US economist Michael Gapen wrote in a research note previewing the release. "Also, the report will likely provide evidence that the 'catch-up' effect in hiring is fading. Whether the Fed can ease policy this year will depend on its confidence on inflation."

Broadly, other data out this week has reflected a still-resilient labor market that's showing further signs of normalizing to pre-pandemic levels. The latest Job Openings and Labor Turnover Survey (JOLTS), released Tuesday, showed job openings fell in April to their lowest level since February 2021.

Notably, the ratio between the number of job openings and unemployed people returned to 1.2 in May, which is in line with pre-pandemic levels.

Wage data will once again be a closely tracked part of Friday's release, as consistently high wage growth could contribute to sticky inflation. In April, year-over-year wage growth fell below 4% for the first time in nearly three years.

Economists expect that wage growth picked up slightly on a monthly basis in May, rising 0.3% compared to April's 0.2% increase. Expectations are for year-over-year wage growth to remain flat at 3.9%.

"A gradual slowing in trend job growth and a deceleration in nominal wage growth is what the Fed is aiming for," Oxford Economics chief US economist Ryan Sweet wrote in a note to clients."

MY COMMENT

Whatever.....just the sort of article you see in the financial media when there is nothing else to talk about. Not much new here.....since we are still looking at the earliest rate cuts being in September or beyond.