The Long Term Investor

YES.....I do have BIG FAT gains across all my portfolios. And all time highs....again. The all time highs are getting pretty boring. I do have three stocks down right now....COST, PLTR, and AMZN.

 

HERE is the FED.....so far. The real danger to the continued gains today in the markets....is when they start their discussion and remarks. God help us all.

Federal Reserve holds interest rates steady, lowers forecast to 1 rate cut in 2024

https://finance.yahoo.com/news/fede...forecast-to-1-rate-cut-in-2024-180617337.html

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

"The Federal Reserve held interest rates at a 23-year high Wednesday while scaling back its estimate of rate cuts this year to one from three previously.

The central bank voted to keep its benchmark interest rate in a range of 5.25%-5.50% at the conclusion of its two-day policy meeting. The fed funds rate has been in this range since July 2023.

It was a close call on the revised median of rate cuts predicted for this year. Eight officials estimated two cuts this year, while seven officials predicted one cut. Four officials saw no cuts happening this year.

At the same time Fed officials boosted their collective forecast for the number of cuts expected next year. They now see a median of 4 additional rate cuts happening in 2025. That is up from a prior forecast of 3.

Fed officials on Wednesday also raised their 2024 outlook for inflation, seeing prices end the year at 2.8% from 2.6% previously as measured by their preferred inflation measure — the “core” Personal Price Expenditures (PCE) index.

But in a policy statement Fed officials did make a notable change in language reflecting some new optimism.

Instead of stating that "there has been a lack of further progress towards the committee’s 2% inflation objective," the statement asserted that "there has been modest further progress" toward that goal.

Still, officials reiterated in their statement they need to see confirmation in the outlook for inflation returning to the Fed 2% target before cutting rates.

"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," the statement read.

The new projections released Wednesday came in the form of a so-called "dot plot," a chart updated quarterly that shows the prediction of each Fed official about the direction of the federal funds rate.

In March, the dot plot revealed a consensus among Fed officials for three cuts in 2024. That projection came into question following a string of sticky inflation readings during the first quarter and cautious commentary from Fed officials.

The last reading from that index showed the year-over-year change holding at 2.8% in April from March, a confirmation that inflation had stopped accelerating after a sticky first quarter.

More evidence of a moderation on the inflation front came earlier Wednesday when a new reading from the Consumer Price Index (CPI) rose 3.3% over the prior year in May — a deceleration from April's 3.4% annual gain in prices.

The year-over-year change in "core" CPI — which excludes volatile food and energy prices the Fed can’t control — was 3.4% compared with 3.6% in April and 3.8% in March.

Fed Chair Jay Powell has made clear that, before cutting rates, the Fed will need more than a quarter's worth of data to make a judgment on whether inflation is steadily falling toward the central bank's goal of 2%.

The odds of a first cut in September rose following the CPI report Wednesday morning.

The September meeting is viewed by many as an optimistic case for a first cut. For that to happen, two more inflation reports in the coming months would likely need to show improvement for the central bank to pull the trigger.

On Wednesday Fed officials also retained their unemployment outlook at 4% and retained their GDP outlook of 2.1% for the year.

They also raised their outlook for the neutral rate — the rate that neither boosts or slows growth — to 2.8% from 2.6% previously.

The Fed's rate decision was unanimous."

MY COMMENT

GREAT.....I would be very happy to see one rate cut this year. I am ALSO very happy with the fact that we have been done with rate hikes for a good length of time now.

Go ahead......pile most of the rate cuts into 2025. Money in the bank. A nice GUARANTEE that the BULL MARKET has a good....."probability"....to continue for all of 2025 and if we are lucky beyond as a sustained bull market run.

 

RIDING THE WAVE....with a big smile on my face. This wave is so big and so far out....I cant even see land anymore.

 

A little bit of a FADE at the end of the day. BUT....still a very nice gain for me today. I had six of nine stocks UP today. Those that were not up.....COST, AMZN, and PLTR.

I also beat the SP500 today by 1.36%.

Racking up the gains so far this week. NOW....we are done with the FED. BUT....we still face all the media parsing and analysis of the Powell comments tomorrow.

 

Looks like the SP500 right now is at 5421. My prediction at the start of the year (2024) was for 5800 at year end. All it will take for it to hit my prediction is another 7.4%. TOTALLY doable over the remaining time of 6.5 months.

As of the close today the SP500 is at +14.30% year to date. I know this does not seem like much when you get used to talking about and seeing the gains in the BIG CAP TECH world....but in reality...the SP500 is ON FIRE.

A KILLER year so far for the average investor that is smart enough to simply put their money into the SP500 every year for their 401K or IRA. Nothing wrong with.....slow and steady wins the race. In fact I am not sure doubling your money every SEVEN YEARS......which the average long term....total return.... on the SP500 will give you.....should be considered "slow".

 

HEY.....LET DO IT ALL OVER AGAIN TOMORROW.

 

Lori....RG.....and...others that are outside the USA.

I am curious....... is NVIDIA a big thing in your country and with what you see in the outside the USA media? Is it talked about all the time? Do many people you know own the stock? Do you own the stock? What is being said about the company in your area of the world...if anything?

I am curious if this is a world wide thing or just a USA thing.

 

Thanks EVERYONE for the above info. Sounds like all the NVDA insanity in the media every day is just a USA thing.

Good to have you all and any others that are outside the USA on here.......a different perspective.

LORI.....glad you are seeing the power of compounding in your account. Like everyone always says on here.....growing your account to that first $100,000 is the slowest and hardest part of being a long term investor. It seems like you will never get there....but..... just just keep plugging away and adding to your account regularly and you WILL get there. ALL OF US....have been where you are right now.

My son in law just hit that magic $100,000 account balance this week. He is very excited about it

 

We just keep RACKING UP the good news. Good news being....bad news....that is. The FED should love this data.

Wholesale prices unexpectedly fell 0.2% in May

https://www.cnbc.com/2024/06/13/ppi...-unexpectedly-fell-0point2percent-in-may.html

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

"Key Points

• The producer price index, a gauge of prices that producers get for their goods and services in the open market, declined 0.2% for the month against expectations for a 0.1% increase.
• PPI was held back by a 0.8% decrease in final demand goods prices, which was the largest decline since October 2023.
• In other economic news, initial claims for unemployment insurance jumped to 242,000 for the week ended June 8. That’s the highest level since August 2023.

A measure of wholesale prices unexpectedly decreased in May, adding another piece of evidence that inflation is pulling back.

The producer price index, a gauge of prices that producers get for their goods and services in the open market, declined 0.2% for the month, the Labor Department’s Bureau of Labor Statistics reported Thursday. That reversed a 0.5% increase in April and compared with the Dow Jones estimate for a 0.1% rise.

Excluding food, energy and trade services, the PPI was unchanged, compared with expectations for a 0.3% increase.

On an annual basis, the all-items PPI rose 2.2%.

Stock market futures saw some modest gains following the report while Treasury yields moved lower.

The release comes a day after the BLS reported that the consumer price index, a widely watched gauge of inflation that measures what consumers actually pay for goods and services, was unchanged on the month.

From the wholesale perspective, the PPI was held back by a 0.8% decrease in final demand goods prices, which was the largest decline since October 2023. Within the category, the energy index tumbled 4.8%. Food prices fell 0.1%.

On the services side, fuels and lubricants retailing margins surged 12.2%, but that was offset in part by a 4.3% plunge in airline passenger services prices."

The release comes a day after the Federal Reserve noted “modest further progress” in bringing inflation back down to its 2% target, but not enough for the central bank to start lowering interest rates. The Fed has held its benchmark borrowing rate in a targeted range of 5.25%-5.5% since July 2023 as it awaits more evidence that inflation is heading back to the central bank’s 2% target.

In other economic news Thursday, the Labor Department reported that initial claims for unemployment insurance jumped to 242,000 for the week ended June 8. That’s the highest level since August 2023 and an increase of 13,000 from the previous period. Economists surveyed by Dow Jones had been looking for 225,000.

Continuing claims, which run a week behind, totaled 1.82 million, up 30,000 from the previous week."

MY COMMENT

Good news for the FED on both the PPI and the unemployment claims. As we rack up this sort of data....it is money in the bank for investors once the FED cuts start to happen. I expect a single cut this year and perhaps 3-4 next year.....depending on future data.

What is really nice is this data is yet another nail in the coffin of any more rate hikes.

 

AND....more good news for investors today.

Treasury yields continue to tumble after PPI fell in May

https://www.cnbc.com/2024/06/13/us-...us-as-fed-signals-one-rate-cut-this-year.html

 

This is just getting ASININE for BOEING.....what a P.O.S. company......and I dont mean "point of sale".. It is a miracle that this stock is anywhere near the current price. This is OBVIOUSLY a company wide problem with culture, management, and everything else.

Exclusive-Boeing investigates quality problem on undelivered 787s -sources

https://finance.yahoo.com/news/exclusive-boeing-investigates-quality-problem-140558851.html

 

So true....just part of the normal market process.

When Markets Are Tranquil
Remember, when market volatility returns, turbulence is normal.

https://www.fisherinvestments.com/en-us/insights/market-commentary/when-markets-are-tranquil

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

"Nearly halfway through, 2024 is becoming known for a lack of big, broad market swings. But we will inevitably see bigger swings at some unpredictable point. When that happens, how should investors approach it? In our view, now is the time to prepare mentally for bigger swings’ eventual return.

First, understand what volatility is. It isn’t just when markets tumble fast. Volatility is simply short-term market moves—up and down. What makes this disconcerting for many is it often comes out of the blue—volatility is inherently unpredictable. This is because sentiment drives volatility. People’s attitudes can change for any or no reason, driving big daily, weekly or monthly moves that follow no pattern and come with no warning.

So far this year, volatility is unusually quiescent—about half the average. Year to date, the MSCI World Index has seen 10 daily moves greater than 1%, up or down, which is only 8.8% of trading days in this stretch versus 17.9% over the span since 1980. For just -1% down days, there have been only 3, or 2.6% of year-to-date trading days, against history’s 8.6%. As for bigger daily moves, 2% or more (up or down), there haven’t been any for global stocks, which is also relatively uncommon given they occur 3.4% of the time. (America’s S&P 500 saw one 2% up day, but that is it.) Looking at longer negative periods, April’s -5.1% pullback was this year’s biggest point-to-point decline.[ii] But that was only about half last August to October’s -10.4% correction, which is itself on the small end of bull market corrections.[iii] History’s longest bull market, 2009 – 2020’s, had six larger than this.[iv]

Market watchers are beginning to notice volatility’s absence. Some say it is merely hidden, that individual stocks are experiencing higher-than-average volatility, but because some zig while others zag, it doesn’t manifest at the broad index level. Some see that fearfully, noting it is a matter of time until the zigging and zagging don’t cancel. Folks, this is overthinking it, in our view. Volatility can’t be timed. Low-volatility periods don’t beget high ones—and vice versa. Past price moves, after all, never predict.

Instead of deep diving for meaning, we find it is much more helpful to prepare mentally for volatility during calm times. Start by reminding yourself that some degree of gyration is unavoidable if you own stocks. Of course it can be uncomfortable. Even big up days may seem unsettling when it feels like stocks are rising too far, too fast. Or when it invites press coverage saying such.

Markets often appear riskier when they are swinging wildly, prompting emotional swings in response—and calls for attendant portfolio moves to compensate. But we find reacting to past price movements, just to do something, is nearly always counterproductive. Unless you detect a bear market developing (when identifiable fundamentals few others see suggest a high probability of a prolonged drop exceeding -20%), steeling yourself to weather near-term chop is usually the wisest course of action.

Why? The flipside of greater volatility is higher long-term returns. The reason stocks can deliver high long-term returns is because they swing more in the short run. The returns you enjoy are the compensation for their risks. Think of enduring volatility as the price to pay for stocks’ returns. Those, in turn, can help defray the risk of outliving your retirement assets or otherwise failing to reach your financial goals. Keeping your eyes on the prize—why you are invested in the first place—goes a long way toward staying the course when the going gets tough.

Now, this may seem like cold comfort when your portfolio actually hits a rough patch. But volatility says nothing about a bull market’s end—or bear market’s beginning. The latter rarely start with a “bang” anyway. Successful investing isn’t about timing short-term swings. It is about owing stocks vastly more often than not to capture bull markets. Trying to outdance volatility makes you less likely to capture rallies, taking you further away from your financial goals.

Stocks generally experience positive volatility during bull markets. The S&P 500’s long-term returns are roughly 10% annualized, but the average return isn’t normal—it includes bear markets.[v] Stocks have climbed in three-fourths of calendar years. During bull markets, excluding the current one, the S&P 500 averaged 23% annualized. This means, by definition, volatility is working in your favor much more often than not. If you need equity-like returns or something approaching them to finance your goals, this is a point to embrace.

Sharp wobbles average into stocks’ long-term returns over time. If you are investing for long-term growth, the goal is to harvest this. Staying disciplined in the face of volatility—not yielding to fear or greed—is key. So when sharper swings return, have a plan. If it drives your emotions up, step away from coverage or the financial news (but stick with MarketMinder). Exercise, call a friend, engage in a hobby—take some non-investment-related action that distracts your mind. This, in our view, is the healthy way to dodge the pitfalls volatility can bring."

MY COMMENT

Some classic long term investing advice above. You have to be able to sit through all the day to day insanity and the market drops and corrections that are NORMAL.

Yes......celebrate and have fun with the big gain times in the markets. BUT....dont let yourself get spoiled.....where you forget that there will always be some market weakness or correction around the corner. Dont let your brain fool you into being fearful of what is part of the normal market process. Long term market gains are NEVER a smooth process....they are the result of very erratic UP and DOWN time periods.

 

I like this little article.

Market Morsel: How “The Market” Is Really Doing

https://alhambrapartners.com/2024/06/12/how-the-market-is-really-doing/

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

"When people talk about “the market” they are usually referring the big indexes – the S&P 500 or the NASDAQ. For more casual observers, “the market” is the Dow which is a lousy index for a lot of reasons but has the advantage of history. But are any those really representative of how “the market” is doing? Not really.

All markets – stocks, bonds, currencies, commodities – provide us with valuable information about the economy. The stock market generally reflects corporate profit growth and interest rates which provides us with important feedback about economic growth and inflation. The broader the index, the more representative of the economy as a whole.

The way indexes are constructed makes a big difference in the information you can extract about the economy. The S&P 500 and the NASDAQ are capitalization weighted, meaning the companies with the highest market value get a bigger weighting. As a company’s stock rises in value the index is forced to buy more to keep the index properly ordered. In short, cap weighed indexes are momentum indexes, with the index continually adding to the stocks that perform the best. That means the index’s performance is more a reflection of the largest and best performing stocks in the index. Everyone by now has heard about the Magnificent 7 so I won’t rehash all that but the fact is that the performance of these two indexes is distorted because in the US we have a small group of very successful companies.

The Dow is price weighted which means that the stocks with highest per share price get the highest weights. That means that United Health Group has the largest weighting in the Dow but only ranks 14th in the S&P 500. In the case of the Dow, companies are rewarded for not splitting their stock (which has no impact on the value of the company) and it also means that some great companies get excluded because they would make up too large a part of the index. It also means the index has to sell shares of companies that split their stock, which make no sense. In some ways, the index does act like the S&P in that the best performing stocks make up ever larger parts of the index – as long as they don’t split their stock.

Most of the indexes in the world are capitalization weighted but there are now a lot of indexes that are weighted based on a factor, like quality or value or growth. You can invest in just about any way you want by purchasing the proper index but I think that, in some ways, distorts the purpose of index or passive investing. In its simplest form – and simple is almost always better – indexing should give you exposure to the broad market. You don’t get that with capitalization weighted indexes and you don’t get it with factor indexes. But cap weighted is the standard so it’s what most people use.

If what you want is information about the economy though, I think it makes sense to look at a variety of indexes and when you do that for 2024 YTD, you get an interesting result. The S&P 500 and the NASDAQ 100 have produced the best result by far which isn’t surprising when you see their top 10 holdings:

NASDAQ 100 (QQQ): Microsoft, Nvidia, Apple, Amazon, Meta, Broadcom, Alphabet (Google) class A and B, Costco and Tesla
S&P 500: Microsoft, Nvidia, Apple, Amazon, Meta, Alphabet (Google) class A and B, Berkshire Hathaway, Eli Lilly and Broadcom
8 of the top 10 holdings are the same so the performance of the two is very similar. The top 10 make up 35% of the S&P 500 and 49% of the NASDAQ. If you want a better comparison you can use the S&P 100 which is the top 100 of the S&P 500. The top 10 in that case makes up 50% of the index.

I don’t think one can make a good argument that these 12 companies represent the US or global economy. If we equal weight the members of each index we get a much different result. While the cap weighted indexes are up in the mid-teens percent range, the equal weight versions are up a lot less: S&P 500 equal weight +4.56% and NASDAQ 100 equal weight +4.3%. Outside the top 12 the rest of the market is not performing nearly as well. Although not really representative of the economy as a whole either – arguably I suppose – the Dow is also drastically underperforming the largest companies, +3.62%.

We get similar results if we look at mid and small sized companies in the US and indexes outside the US: Midcap +5.41%, Small Cap -1.75%, Europe +7.22% and International Developed markets (EAFE) +6.57%.

“The market” is still doing pretty good this year, with the exception of the smallest company stocks, but the 12 largest companies are doing a lot better. And that, in a microcosm, represents the US economy with a few companies doing really well and the rest of the economy doing a lot worse but still okay. Is that a problem? I think so but that doesn’t mean I think we need a big push on antitrust to break up these big companies. I’m not generally in favor of government intervention because the market will take care of this eventually, There is considerable turnover in the top 10 holdings of the S&P and the NASDAQ as successful companies with high margins get lots of competition. And sometimes they just don’t perform well themselves – see Tesla, down by roughly half since the beginning of 2022.

But that is different than deciding whether you should invest in these indexes. There is plenty of evidence that the S&P 500 has been even more concentrated in the past than it is today. But people weren’t buying the SPDRs or the Qs in 1960. The warning sign for me in the S&P 500 is its similarity with the NASDAQ. If I wanted to invest in the biggest, riskiest – and arguably most innovative – companies in the US I would buy the QQQ. Today the S&P 500 and the NASDAQ are nearly indistinguishable.

The US and global economy is doing pretty well right now with the US slowing some and the rest of the world, in general, getting a bit better. “The market” reflects that. The S&P 500 and the NASDAQ 100 reflect how the biggest companies in the world are doing. It was once said that what’s good for GM is good for America. I’m not sure you can say the same thing about Microsoft, Nvidia, Amazon, Google and Meta."

MY COMMENT

My preference for a basic INDEX is either the SP500 or if someone is willing to take a bit more risk....the QQQ. If I had to describe my single most important investing goal.....it is...to hold the greatest companies in the world. BOTH the SP500 and QQQ will give you that.

 

We are seeing a little bit of market weakness today.

Both the DOW and the SP500 are in the red right now. NASDAQ is doing ok....but is also under selling pressure. This is normal short term volatility. Simply part of the normal up and down of the day to day markets.

Some times the markets simply have to take a breather....and....CONSOLIDATE prior gains. A long term chart of the markets looks like a smooth line.....but....that line is made up of tens of thousands of points representing EXTREME day to day volatility.

 

I am looking forward to the ELON MUSK pay package vote results. I personally believe he is worth every penny. BUT....I dont own any TSLA shares.