AND.....right on cue.....the markets have now turned slightly RED. No one wants to be holding short term stock trades overnight while the FINANCIAL EXPERTS are parsing the FED comments today. The usual IDIOCY of the short term markets at work. No doubt some news content or wording triggered the AI SPEED TRADERS to hit the markets hard in mass.
By the time the dust settled today......I closed in the RED. I had three of nine stocks UP today......AAPL, GOOGL, and HD. I also lagged the SP500 by 0.43%. We now move forward into a NEW investing world.....one where rate cuts are the dominant FED default.
As I checked in this evening to see the days end, I must admit I got a bit of a chuckle about it. For all of the fevered pitch about FED day, the ginned up headlines, the speculation, the massive attention and coverage, the baited anticipation, and silly attention…..the markets simply did not give a damn. I find that funny and somewhat comforting at the same time. The whole issue could not have been a bigger DUD when compared to the attention and coverage surrounding it. And I enjoy it when the media face plants so badly.
Smokie, I agree. It's always interesting to see the headlines and hear their justification. All these rate sensitive tech stocks they touted... Since they crushed share prices when rates went up we must see these same stocks rocket up now that rates are dropping, yeah right. I was listening to a podcast on the way home from work yesterday and it was interviewing some sort of fund manager who had a fund for the last 25 years. He had some interesting ideas but my big takeaway was how the S&P beat out his fund for the last 89 years. His justification is that the S&P isn't very personal and that the real importance is compounding, not beating some index fund! The one piece of logic that made a little sense is the people that invest in him are the same people who wouldn't invest or have their money in some super low return account or investment vehicle, so with him they are getting a better return than that and also are less likely to pull out when the markets pull back. The market is for everyone financially but mentally most aren't cut out for it. This goes back to all the great insights W shares about RISK TOLERANCE. Since I don't do any trading but still like to stay in the mix I have been trying to learn more about the psychological aspect of investing and business. I know many people like to know how much money do you have, I am more interested in what moves you make and why. The risks someone takes with a $2000 account vs a $2,000,000 account and when is enough, enough. I see many younger people chasing FIRE and sacrifice early years of their life in hopes of some sort of nirvana at age 45. I get it to a point where through my 20's I saved and invested but still didn't give up going out and having fun and having a couple toys. The same people that say they need $5mil are living on $30k a year for years on end. Do you really think someone that devotes decades to being a saver is going to flip the switch to a spender and be happy? I think some people fall in love with the number in the account or the process of making it get bigger and lose sight that all a dollar is a coupon for time. Work 8 hours, company gives you $XXX coupons. The reality is if they had $1mil they could support their current lifestyle until death (as long as the 4% rule doesn't implode).
Good comments guys. The markets woke up with RATE CUT FEVER this morning. The infection took hold over night with the futures being UP big and carried over to the open today. Now lets see if this HOT market can hold all day. I love that comment above from the fund manager Tiresmoke........that........ "what is really important is compounding, not beating some index fund" What a sales pitch for clients. Well....DUH....the SP500 also compounds if you reinvest all capital gains and dividends and since it is beating....."YOU"....nearly every year it is kicking your ass with compounding. That is such a STUPID sales pitch. I agree that many people are simply not able to handle stock or fund investing due to emotional or psychological impact. It is EXTREMELY difficult for people to invest long term and stay fully invested all the time. Fear and panic are killers and most people will struggle with them as investors. Add in the short term mentality and trading mentality.....that is RAMPANT..... that most inexperienced people think is how you invest in the markets......and....you have a very large barrier to most people getting into the markets and properly investing.
I am nine for nine stocks in the green today.....so far. Of course I am talking about only 25 minutes into the market day.
Do you think anyone cares about some....weekly.....and corrupted economic data today? Weekly applications for US jobless benefits fall to the lowest level in 4 months https://finance.yahoo.com/news/weekly-applications-us-jobless-benefits-124059522.html NO....I dont care. Weekly data is ridiculous and simply has no meaning. Add in the fact that this sort of data is never accurate anymore and you have NOTHING of interest to investors.
AND....here we go.....they can never just give up and go with the flow. Everything is always negative. The Fed's outsized rate cut draws muted reaction in markets, but the calm may not last https://finance.yahoo.com/news/fed-outsized-rate-cut-draws-050542561.html (BOLD is my opinion OR what I consider important content) "NEW YORK (Reuters) — Investors who anticipated furious market swings following the Federal Reserve's bumper rate cut saw more of a muted reaction. That may be fleeting. Traders had been facing high uncertainty as they awaited the expected rate cut on Wednesday, with a split between those expecting 50 basis points and 25 basis points. The Fed cut rates by an unusually large half-percentage-point. But while market reaction was muted, with stocks and the dollar reversing positions to mostly come full circle, there could be another wave of action. Some referred specifically to bond yields being at risk of spiking higher after rising on Wednesday. "The calm, I think is not going to last," said Brian Jacobsen, chief economist at Annex Wealth Management, which oversees $5.5 billion in assets. He pointed to a reversal in equities late in the day that could set the market up for weakness in stocks "unless and until we get some data giving us a clear sense of direction." Jacobsen said the market will be focused on upcoming data such as Thursday's initial jobless claims. "The Fed clearly is in catch-up mode and trying to make up for lost time with the cut it's just made," Jacobsen said. There may also be a knock-on effect as the Fed decision ripples through other markets. "The coming hours could prove dangerous ... with traders exposed to sudden riptides as rate expectations are reinforced in other economies,” said Karl Schamotta, chief market strategist at payments company Corpay, about foreign-exchange markets. "Aftershocks are likely to continue as positioning-related adjustments play out." Muted reaction Stock options had priced in a roughly 1.1% swing, up or down, for the S&P 500 (^GSPC), according to options analytics service ORATS. But by the close of trading, the index had snapped a seven-day winning streak to finish down 0.29%, reversing earlier gains. One reason for the muted market reaction on a close-to-close basis has to do with how asset prices moved in the days leading up to the Fed decision, said Sonu Varghese, global macro strategist at Carson Group. Through Tuesday, the Russell 2000 (^RUT) was up 5% over the previous five sessions and the dollar (^NYICDX) had slipped 0.7%, on expectations for the start of the Fed's long-awaited rate-cutting cycle. "It's a very silly cliche, 'buy the rumor, sell the news', but that's kind of what happened," said Matt Diczok, head of fixed income strategy at Merrill and Bank of America Private Bank. On Wednesday, the dollar index initially fell, but recovered to trade up 0.1% at 100.981. "Since this policy move was mostly telegraphed, there is no outsized move in financial markets," said Jack McIntyre, portfolio manager at Brandywine Global. Bonds did register a significant move, however, with the 10-year yield spiking by seven basis points on the day, while the 2/10 U.S. Treasury yield curve reached its steepest level since July 2022, after the rate cut, signaling long-term expectations of higher inflation and growth. Treasury yields, which move inversely to prices, had tumbled to their lowest levels since mid-2023 in the days ahead of the decision. In a research note, Julian Emanuel, senior managing director at Evercore ISI, recommended positioning for a bounce in yields, and that progress by the Fed on inflation may slow or stall. Small caps, which initially bounced, ended flat. Traders' initial reaction was to lift the small-caps-focused Russell 2000 index by nearly 1% in the minute immediately after the Fed decision, making for the index's largest one-minute percentage gain in at least three months, according to LSEG data. Smaller companies typically rely more on borrowing, and lower interest rates cut their financing costs, bolstering their profitability and growth. "To see the jump in small caps specifically, that's the market buying what the Fed is saying, that they will continue to cut rates next year and that's a potential tailwind to small caps," said Ryan Detrick, chief market strategist at Carson Group. But the Russell index finished up only 0.04% on the day. Fed chair Jerome Powell said in the meeting that the rate cut marked a "strong start" to protecting strength in the economy. Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards Still, the outsized rate cut could be read more alarmingly. "I do think that there will be a lot of profit-taking for investors that came into the day long equity to play this event and we may very well trade lower as the market continues to wonder what is scaring the Fed that we cannot see," said Matthew Rowe, head of portfolio management and cross-asset strategies at Nomura Capital Management. MY COMMENT BROTHER. A lot of hot air above. Really nothing of any substance being argued. If I had to bet on it I would say the PROBABILITY is that the rate cuts happening will trigger a furious BULL MARKET RALLY over the rest of the year. But...."probability"....does not mean certainty. That is why I am fully invested all the time. Short term the markets will take many twists and turns....but long term......the direction is clearly UP.
The market today....one day post-Fed-cut. Dow pops 500 points as Wall Street rallies a day after big Fed rate cut https://www.cnbc.com/2024/09/18/stock-market-today-live-updates.html (BOLD is my opinion OR what I consider important content) "Stocks rose Thursday as traders digested the Federal Reserve’s Wednesday decision to lower interest rates by a half percentage point. The Dow Jones Industrial Average jumped 485 points, or 1.2%. The S&P 500 climbed 1.6%, and the Nasdaq Composite surged 2.4%. Traders got some validation that the Fed was engineering a soft landing for the economy on Thursday as weekly jobless claims fell by 12,000 to 219,000, which was far below estimates. Tech stocks rallied as the rate cut spurred investors to return to a risk-on mood. Nvidia and AMD shares popped around 5% and 4%, respectively. Micron Technology traded more than 2% higher. Other big tech stocks such as Meta and Alphabet advanced 2.4% and 1.9%, respectively. Stocks leveraged to lower rates spurring the economy also jumped Thursday morning. Financial giant JPMorgan Chase rose 0.8%. Industrial stock Caterpillar and Home Depot gained 2.6% and 1.5%, respectively. The Fed slashed its overnight lending rate to a range of 4.75% to 5% from 5.25% to 5.5% on Wednesday, which came as a surprise to some investors who criticized the size of this initial cut. This is the first rate reduction delivered by the Fed in four years. “This was the best news I’ve heard from the Fed in years,” Jeremy Siegel, professor emeritus at University of Pennsylvania’s Wharton School of Business, told CNBC’s “Squawk Box” on Thursday regarding the 50bps interest rate cut. “This is fantastic news for the market, and great news for the economy.” After seesawing for most of Wednesday afternoon, stocks ultimately closed the session lower. Both the S&P 500 and 30-stock Dow initially rallied to new record highs right after the Fed announced its interest rate cut decision." MY COMMENT It will be a fun time for investors going forward to the end of the year. As usual.....I will say the only potential wet blanket for the markets is....the election.
And I say......there is $6TRILLION dollars siting on the sidelines and outside the stock markets. As rates come down....a good chunk of that money will be looking for a new home. i believe that a good portion of it will end up going into stocks and funds. Of course that money will be four years too late........and........some of it will reflect the foolishness of market timing.....but better late than never. AND....it will be a good injection of fuel for the markets and those of us that are long term investors.
I see that the SP500 is now just slightly below my year end prediction of 5800. With the rate cut and with 3.5 months to go I think it will blow past my prediction. At the time I made that prediction at the start of the year I was one of the highest predictions that I could see in the general financial media. i do note that one BULL on Wall Street has now raised their SP500 target to......6100. Shocking....NO. Basically another 6% from where we are right now. I will go out on a........prediction limb.....and say, we will hit 6100 by year end.
