The Long Term Investor

AMEN....brother Smokie.

 

YEP....PLTR is on quite a run up. I have it as a full position in some of my accounts but not in my two accounts.

As to NVDA today....more of the same....as it is driven down by media coverage of China.

I dont think I have ever seen a time when the largest and most dominant, successful, company in the world is treated like a ....."teetering on the edge penny stock"....by the financial media and all the short term stock market industry. It is just total disrespect for what the company has done.....is doing.....and will do in the future. I have seen some of this with AAPL over the past couple of years.....but not to the extent I see it now with NVDA.

They are not even supposed to be sending their best most recent chips to China. They dont need China in the slightest. It is ridiculous how we allow China.....the most brutal communist dictatorship in the world......to jerk our markets and companies around.

 

Here is WALL STREETS view of the markets in 2025. I dont post this because it is important....it is NOT. These people are WRONG more often than not. It is nearly impossible for them to beat the big.....UN-MANAGED......averages over the long term.

Wall Street's 2025 outlook for stocks

https://www.tker.co/p/wall-street-2025-stock-market-outlook

(BOLD ism y opinion OR what I consider important content)



"

The stock market climbed to all-time highs, with the S&P 500 setting an intraday high of 6,099.97 and a closing high of 6,090.27 on Friday. The index gained 1% last week. It’s now up 27.7%year to date and up 70.3% from its October 12, 2022 closing low of 3,577.03.

It’s that time of year when Wall Street’s top strategists tell clients where they see the stock market heading in the year ahead.

The average forecast for the group tends to predict the S&P 500 climbing by about 10%, which is in line with historical averages. After two years of above-average gains, an average year is what most strategists expect.

The targets range from 6,400 to 7,007. This implies returns between +5% and +15% from Friday’s close. It’s a tighter range than last year’s targets, with many clustering in that 8%-10% return expectation.

Before we move on, I’d once again caution against putting too much weight into one-year targets. It’s extremely difficult to predict short-term moves in the market with any accuracy. Few on Wall Street have ever been able to do this consistently. DataTrek’s Nicholas Colas recently pointed out that the standard deviation around the mean annual total return for the S&P 500 is nearly 20 percentage points! More here.


“The accuracy of Wall Street forecasts has been unreliable,” Truist’s Keith Lerner said. (Source: Truist)
I do however think the research, analysis, and commentary behind these forecasts can be very informative.

That said, here’s what’s driving Wall Street’s views for 2024:

• Policy uncertainty is high… President-elect Donald Trump has proposed some aggressive changes to trade policy and business regulation. Some of these proposals, like new tariffs and tighter immigration, are expected to be headwinds to business, threatening to hinder demand while stoking inflation. This uncertainty has made it unusually difficult to forecast the coming year. Many strategists have been talking up bull-case and bear-case scenarios in addition to their base-case target.
  
  
• … but the downside could be limited. Experts aren’t convinced we’ll get the worst of Trump’s proposals. Rather, they see them as opening bids for what will be much more benign policies. Furthermore, strategists believe the tailwinds that come from lower tax rates and deregulation to offset any potential headwinds.
  
  
• The economy is expected to keep growing. Growth may not be as hot as it was earlier in the recovery as job creation cools and household finances normalize. But growth is still growth, which is good for the top line. A less hawkish Federal Reserve helps.

• Profit margins are expected to rise. Companies have yet to fully realize the actions taken in recent years to make operations more efficient. This includes strategic layoffs and hirings, changes to work-from-home policies, and upgrades to technology. Even modest sales growth could translate into significant margin gains thanks to positive operating leverage. Lower inflation should help on the cost front, but this could change depending on how trade policy evolves.
  
  
• Earnings growth is expected to broaden out. Much of the current bull market has been driven by the Magnificent 7 stocks as those companies’ earnings growth has been white hot. Analysts currently expect the “other 493” names in the S&P to generate better earnings growth as growth from the Mag 7 cools.
  
  
• Valuations are high, but... Strategists across the board acknowledge high valuations don’t necessarily mean weak returns over the next year. Still, they believe they limit upside potential. Price growth in 2025 will be less about valuations expanding and more about earnings growing.
  

In summary: The fundamentals supporting earnings growth are firm. Valuations are above historical averages but are not cause for alarm. As usual, there’s plenty of uncertainty. But on balance, the outlook for stocks is favorable.

The 2025 S&P 500 price targets

Below is a roundup of 14 of these 2025 targets for the S&P 500, including highlights from the strategists’ commentary.

• UBS: 6,400, $257 earnings per share (as of Nov. 18): “After a rally this year through Trump’s cabinet appointments, we see mild downside in equities in H1 next year amid a step down in US growth. Once earnings estimates have fallen to more realistic levels, H2 ’25 should be better.“
  
  
• Morgan Stanley: 6,500, $271 (as of Nov. 18): “Looking forward to 2025, we think it will continue to be important for investors to remain nimble around market leadership changes, particularly given the potential uncertainty that the recent election outcome introduces. This is also a reason why we are maintaining a wider than normal bull versus bear-case skew — base case: 6,500; bull case 7,400; bear case 4,600.”
  
  
• Goldman Sachs: 6,500, $268 (as of Nov. 18): “We estimate net margins will expand by 78 bp to 12.3% in 2025 followed by a further 35 bp increase to 12.6% in 2026. Our economists assume the Trump administration will impose targeted tariffs on imported automobiles and select imports from China. They also assume a 15% corporate tax rate on domestic manufacturers. On net, the impact of these policy changes on our EPS forecasts roughly offset one another.“
  
  
• JPMorgan: 6,500, $270 (Nov. 27): “US equities should remain supported by the expanding business cycle, US Exceptionalism that is helping broaden the AI cycle and earnings growth, ongoing easing by global central banks and the wind-down of Fed’s QT in 1Q. At the same time, US households are benefiting from a tight labor market, sitting on record wealth (+$10T over the past year to ~$165T as of 2Q24, +$50T since Covid), and potentially lower energy prices. Heightened geopolitical uncertainty and the evolving policy agenda are introducing unusual complexity to the outlook, but opportunities are likely to outweigh risks. The benefit of deregulation and a more business-friendly environment are likely underestimated along with potential for unlocking productivity gains and capital deployment.”
  
  
• CFRA: 6,585 (as of Nov. 20): “This new target incorporates fundamental, technical, and historical considerations, influenced by a 2.4% projected growth in U.S. real GDP and a 13% rise in S&P 500 operating earnings, supported by a continued decline in inflation readings and interest rates. Historical returns during the third year of bull markets following two successive years of double-digit increases, combined with stretched valuations relative to 10-year averages (using the current forward P/E ratio, market-cap to total revenue, and total enterprise value to forward EBITDA metrics), temper our optimism, leading to the below-average projected full-year price gain.“

• RBC: 6,600, $271 (as of Nov. 25): “The story the data tells us is that another year of solid economic and earnings growth, some political tailwinds, and some additional relief on inflation (which should keep the S&P 500’s P/E elevated) can keep stocks moving higher in the year ahead.“
  
  
• Barclays: 6,600, $271 (as of Nov. 25): “For U.S. equities, we think macro positives outweigh the negatives heading into next year. … We expect most sectors to be impacted by disinflationary margin pressure and slowing ex-US growth in 2025, while Big Tech continues offsetting to the upside.“
  
  
• BofA: 6,666, $275 (as of Nov. 26): “Get ready for a cyclical inferno. Nine reasons: (1) Red sweep, (2) Fed cuts, (3) accelerating profits, (4) re-shoring, (5) productivity cycle, (6) shift from everyone spending on Tech to Tech spending on everything, (7) municipalities refurbishing to court corporates, (8) tight capacity / decades of underspend in manufacturing, and (9) lightest positioning in cyclical sectors since at least the GFC.“
  
  
• BMO: 6,700, $275 (as of Nov. 18): “Bull markets can, will, and should slow their pace from time to time, a period of digestion that in turn only accentuates the health of the underlying secular bull. So, we believe 2025 will likely be defined by a more normalized return environment with more balanced performance across sectors, sizes, and styles.“
  
  
• HSBC: 6,700 (as of Dec. 6): “We expect next year's equity returns to be focused on earnings growth as valuations are more stretched… Overall, we expect earnings to grow by 9% incorporating a slower but still resilient U.S. economy and some margin expansion.“
  
  
• Deutsche Bank: 7,000, $282 (as of Nov. 25): “Attention is focused on late cycle indicators, while early cycle indicators have been turning up. We see various aspects of the cycle yet to kick in, including de- to re-stocking; capex outside Tech; capital markets and M&A; loan growth; and rest of the world growth. With potential policy changes by the incoming administration having both positive and negative implications for growth, sequencing will be key, but we expect growth to remain the priority. Over several rounds of the last trade war, escalations saw equity selloffs which then prompted de-escalations.“
  
  
• Yardeni Research: 7,000, $290 (as of Nov. 10): “Just after Donald Trump won the presidential race on November 8, 2016, we observed that the economy and stock market were charged up with "animal spirits," a term coined by John Maynard Keynes meaning spontaneous optimism. Animal spirits are back now that Trump won a second term on November 5…“
  
  
• Capital Economics: 7,000 (as of Nov. 7): “These projections, which rest on the assumption that the US economy will not stand in the way of a bubble in the stock market inflating amid hype around AI, are looking much less bold than they once did. But we aren’t minded to push up the forecasts just because the index has risen and reacted very favorably to the news of Trump’s victory. A key reason is our view that his policies would be a net negative for growth in the US and elsewhere. What’s more, if we’re right to exclude a major fiscal expansion from our list of working assumptions, US firms’ profits probably won’t get a boost from a further cut in corporation tax. Nonetheless, we are sticking to our existing projections for the S&P 500 because we don’t see Trump’s election derailing the economy or preventing the bubble in AI from inflating.“
  
  
• Wells Fargo: 7,007, $274 (as of Dec. 3): “On balance, we expect the Trump Administration to usher in a macro environment that is increasingly favorable for stocks at a time when the Fed will be slowly reducing rates. In short, a backdrop where equities continue to rally.“
  

Two things about one-year price targets

Most of the equity strategists TKer follows produce incredibly rigorous, high-quality research that reflects a deep understanding of what drives markets. Consequently, the most valuable things these pros have to offer have little to do with one-year targets. (And in my years of interacting with many of these folks, at least a few of them don’t care for the exercise of publishing one-year targets. They do it because it’s popular with clients.)

So first off, don’t dismiss their work just because a one-year target is off the mark.

Second, I’ll repeat what I always say when discussing short-term forecasts for the stock market:

⚠️ It’s incredibly difficult to predict with any accuracy where the stock market will be in a year. In addition to the countless number of variables to consider, there are also the totally unpredictable developments that occur along the way.

Strategists will often revise their targets as new information comes in. In fact, some of the numbers you see above represent revisions from prior forecasts.

For most of y’all, it’s probably ill-advised to overhaul your entire investment strategy based on a one-year stock market forecast.

Nevertheless, it can be fun to follow these targets. It helps you get a sense of the various Wall Street firms’ level of bullishness or bearishness.

I think RBC’s Lori Calvasina said it best in her outlook report: The price target “should be viewed as a compass as opposed to a GPS. It is a construct that helps to articulate whether we believe stocks will move higher and why.“

Good luck in 2025!"

MY COMMENT

Even this little article admits that the ability of these....."experts".....to predict annual markets is DISMAL. In fact for 2024 they were predicting the SP500 gaining about 8-10%.......a MASSIVE miss from where we are in REALITY.

For next year their average prediction is right at the long term historical average for the SP500....+10%. WOW.....that is a scintillating prediction.

It is also noted that they usually....."adjust"...their predictions as the year progresses. Well yeah......to try to hide their dismal failure to be able to predict with any accuracy at all.

IGNORE IT ALL......if you are an actual long term investor. These people dont care about....."you"....or your money.

 

To return to NVDA and China......here is the issue being HYPED in the media today. YOU HAVE GOT TO BE KIDDING:

".....its 2020 acquisition of Mellanox, a purchase that was approved by China's State Administration for Market Regulation under the condition that the chipmaker would avoid discriminating against Chinese companies.".....

"According to a Chinese media report, the government believes Nvidia’s $7 billion purchase of the Israeli computer networking equipment maker may have violated Beijing's anti-monopoly rules."

https://finance.yahoo.com/news/nvid...be-against-ai-chip-heavyweight-143114381.html

MY COMMENT

You have got to be kidding. This is a joke....right?

China bitching about the acquisition of a minor company worth only $7BILLION is the big story of the day? What a joke on investors and NVDA. This is not even a back page story. The BROAD and overdone headlines on this are....CRAZY.

I have said it for many years......screw China. They need us a lot more than we need them. We are the greatest SUCKERS in the world as we continue to let them STEAL our tech and business secrets.

As the article notes:

"Nvidia shares have not participated in the overall Trump post-election rally over the past month. The stock is up slightly more than 1% since Trump's win."

This is what I was talking about in the post above.

 

Other than the NVDA BS....there is nothing going on in the financial news. NOTHING.

We continue in the BULL MARKET. We continue to move toward year end with 15 market days to go after today. We continue to make money in the markets as long term investors.

 

HERE.....is the other view of the market we are currently seeing.

The mother of all bubbles’ in the US is sucking money away from the rest of the world, market expert says

https://finance.yahoo.com/news/mother-bubbles-us-sucking-money-215345592.html

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

"U.S. dominance over global financial markets has reached extreme levels, pointing to a bubble of epic proportions, according to Ruchir Sharma, chair of Rockefeller International.

In a column in the Financial Times last week, the market expert said investors around the world are putting more money in a single country than ever before.

"Awe of 'American exceptionalism' in markets has now gone too far," Sharma, who authored the recent book What Went Wrong With Capitalism, warned.

For example, U.S. companies now account for 70% of the leading global stock index, up from 30% in the 1980s, while the U.S. economy's share of global GDP is just 27%, he noted.

To be sure, U.S. growth has been more robust than elsewhere lately, and American companies are among the most profitable. But Sharma pointed to other metrics that indicate how out of whack markets have become, even after factoring out the AI boom that has sent a handful of U.S. tech stocks to stratospheric levels.

Indices that weight stocks by price instead of market cap and adjust for the leading tech giants show that the U.S. has outperformed the rest of the world by more than 4-to-1 since 2009, he explained.

And such outperformance isn't restricted to stocks either. In 2024 alone, $1 trillion in foreign capital has poured into U.S. debt markets, nearly double what the eurozone has attracted. And America controls more than 70% of the global market for private equity and credit.

"In the past, including the roaring 1920s and the dotcom era, a rising US market would lift other markets," Sharma wrote. "Today, a booming US market is sucking money out of the others."

A mania in market sentiment can impact the real economy, he warned. For instance, investors abandoning smaller markets can weaken currencies and force central banks to hike rates—slowing those economies and worsening their fundamentals.

"Talk of bubbles in tech or AI, or in investment strategies focused on growth and momentum, obscures the mother of all bubbles in US markets," Sharma added. "Thoroughly dominating the mind space of global investors, America is over-owned, overvalued and overhyped to a degree never seen before."

His admonition echoes what Allianz chief economic advisor Mohamed El-Erian said last month, when he told Bloomberg TV to expect a "huge sucking sound" of foreign capital flooding into the U.S.

The rest of the world may have more trouble coping with a period of faster growth and hotter inflation, adding to America’s relative edge, he predicted.

“This is a period in which U.S. dominance of the global system is going to increase, both for positive reasons and for negative reasons in the short term,” El-Erian said.

Meanwhile, "black swan" investor Mark Spitznagel, founder and chief investment officer of the hedge fund Universa Investments, has been warning about a bubble for a while now.

Last year, he said the "greatest credit bubble in human history" was set to pop, and said again in June that the bubble was about to burst. In September, he said markets had already entered black swan territory.

After massive stock gains in 2023 and this year, Wall Street expects the good times to keep rolling in 2025. Bank of America sees the S&P 500 reaching 6,666 by the end of next year, and CFRA sees it hitting 6,585, with both representing upside of about 8%. And market guru Ed Yardeni has a target of 7,000 by then, indicating a 15% surge."

MY COMMENT

Welcome to....CRAZY TOWN. All I can say to the above is.....BUMMER.......and.....DUH.

Lets see.......if I am buying bonds for safety...where am I going to buy? If I want to own the greatest companies in the world...where am I going to go?

In fact......some of the content highlighted above....REFUTES....the thesis of the article.

I will mention as a side note.....anything I see coming from.......Mohamed El-Erian.....just makes me roll my eyes. This guy has been irrelevant for decades. In my opinion.....he is the prefect contrary indicator for the markets.

 

I like to make fun of al the IDIOCY and STUPIDITY that I see in the short term markets and the short term opinion financial media. BUT.......there is a real danger to all this "stuff".

We have now reached the point where this "stuff" does have the ability to control and drive the markets. We have also reached the point where this "stuff" has the ability to influence and impact younger and less experienced investors.

 

A bit into the markets today........and......a WASTED day so far. A market being driven down by......."nothing".

An interesting little day so far.

I see market weakness increasing since the open. NO DOUBT.....we are seeing the markets manipulated by AI PROGRAM TRADING today.

 

LOL....remember this headline just a few days ago.

Nvidia crushes expectations, more than doubling its profit amid a 94% surge in revenue as AI demand booms

https://finance.yahoo.com/news/nvidia-crushes-expectations-more-doubling-225313632.html

 

I personally consider this a much more important story than NVDA today.

Although.......this is a long way from happening. Mondelez is another company that I used to own back in the older days when my long term portfolio held many of the big cap CONSUMER names. I got the stock when KRAFT split up into two companies.

Some of the BIG brands owned by Mondelez as a food conglomerate are.......CADBURY....CHIPS AHOY.....HONEY MAID....OREO....RITZ....TANG....SOUR PATCH KIDS....TRISCUIT....WHEAT THINS......and many more.

Cadbury-owner Mondelez exploring Hershey acquisition, Bloomberg News reports

https://finance.yahoo.com/news/cadbury-owner-mondelez-exploring-hershey-152304347.html

 

With the BABY BOOM in full-on retirement mode.......IRA required minimum distributions......are a big issue. Many of us baby boomers have old-school IRA accounts that were put in place before the ROTH IRA became the norm......at least I am assuming that the ROTH is now the norm....I know it would be for me.

Here’s what to know before taking your first required minimum distribution

https://www.cnbc.com/2024/12/06/first-required-minimum-distribution.html

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

"Key Points

• Since 2023, most retirees must start taking required minimum distributions, or RMDs, from pre-tax retirement accounts at age 73.
• The first deadline is April 1 after turning age 73, and Dec. 31 for future withdrawals.
• But you need to consider the tax consequences when timing your first RMD, according to financial experts.

After decades of building your nest egg, you will eventually have to start taking required minimum distributions, or RMDs, from pretax retirement accounts. The first RMD can be tricky, according to financial experts.

Since 2023, most retirees must begin RMDs at age 73. The first deadline is April 1 of the year after you turn 73, and Dec. 31 for future withdrawals. This applies to tax-deferred individual retirement accounts, most 401(k) and 403(b) plans.

“You want to be tactical and savvy when you take the [first] distribution,” said certified financial planner Jim Guarino, managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a certified public accountant.

Pre-tax retirement withdrawals incur regular income taxes. By comparison, you’ll pay long-term capital gains taxes of 0%, 15% or 20% on profitable assets owed for more than one year in a brokerage account.

Two required withdrawals in one year

If you wait until April 1 after turning 73 to take your first RMD, you’ll still owe the second one by Dec. 31. That means you’ll take two RMDs in the same year, which can significantly boost your adjusted gross income.

That can trigger unexpected tax consequences, according to CFP Abrin Berkemeyer, a senior financial advisor with Goodman Financial in Houston.

For example, boosting AGI can lead to income-related monthly adjustment amounts, or IRMAA, for Medicare Part B and Part D premiums. For 2024, IRMAA kicks in once modified adjusted gross income, or MAGI, exceeds $103,000 for single filers or $206,000 for married couples filing together.

“That’s the biggest one that catches retirees off guard,” Berkemeyer said.

With a higher AGI, lower-earning retirees could also incur higher Social Security taxes or increase their long-term capital gains bracket from 0% to 15%, he said.

When to defer your first distribution

If you’re age 73 and just retired in 2024, it could make sense to delay your first RMD until April 1, because 2025 could be a lower-income year, experts say.

However, your RMD is calculated using your pre-tax retirement balance as of Dec. 31 from the prior year, meaning 2025 RMDs are based on year-end 2024 balances. The calculation divides your previous year-end pretax balance by an IRS life expectancy factor.

That could mean a larger-than-expected RMD for 2025 “if your [2024] portfolio went through the roof,” Guarino warned.

“You really have to run the numbers” to see if it makes sense to incur more income in 2024 or 2025, based on account balances and tax projections, he said"

MY COMMENT

I have seen both of the issues above happen. It is a killer in retirement to suddenly be booted out of the "0%" capital gains bracket.....or if you were in a bracket above "0%"....to be kicked into a higher bracket. It is also a killer in retirement to have your Medicare parts B and D premiums....boosted to higher brackets.

As a married couple we ENJOY greatly paying the minimum Medicare premiums. We also...."sometimes"...... enjoy the "0%" long term capital gains tax bracket. To get that bracket we need to keep our taxable income below $96,700 for 2025 . We were able to achieve "0%" long term capital gains for our 2023 and 2022 taxes. I anticipate that we will also be able to do it for 2024 taxes....but....will not know for sure till I do the return.

As I approached retirement....I did a lot of thinking and planing regarding when to take IRA distributions. In the end I decided to use up my IRA account as quickly as possible early in retirement....before my annuities kicked in at age 70. Starting at age 70 we have been paying ONLY about $8000 per year in income taxes as a result of good planing.

NOW....my sister.....she is in the opposite situation. She is paying the highest income taxes of her life in retirement. She is also paying EXTRA.....sometimes a lot extra....premiums for Medicare parts B and D.......and she is NEVER in the "0%" bracket for long term capital gains.

 

I actually ADDED 100 shares of PLTR to one of the accounts that I manage today.

 

YEP.....I dont anticipate doing anything else this year.....in any of the accounts that I manage or in my own.

 

A wasted day today.....as the markets wimped out from the very start.

I was no better as I ended with a LOSS. I only had 3 stocks in the green today....MSFT, AAPL, and GOOGL. I also got beat by the SP500 by.....0.45%.

Day 16 over with and we move on to day 15 of the remaining market days of 2024.

 

LOL......I was lucky today.....I missed the whole day. It saved me a lot of aggravation.

This week is not starting out as a banner week. Lets RESOLVE to do better to close the week.