The Long Term Investor

Ok....today is a NEW RECORD. Today and the market reaction to a rate cut has got to be the......MOST IDIOTIC....market move and reaction.....since the start of this thread. This is a new....ALL TIME LOW....in.....STUPIDITY.

Here we at historically low rates on the Ten Year. Here we are still looking at 2 or more rate cuts in 2025.

AND....more importantly.....there is absolutely NO REASON that stocks or the markets need any rate cuts next year at all. It is NOT rates and cuts that control the stocks that make up the markets....it is....earnings and fundamentals. This addiction to low rates and rate cuts is INSANITY.

This just shows you how dumb we have become.

 

As for me....a big loss today of course. Every stock RED (edit....I had "RAD"...I do think my stocks are RAD). And a wasted day that started out nicely. BUT...I did beat the SP500 today by 0.60%.

Nice to have market day number NINE out of the way......eight market days to go in 2024.

Moving on to year end....and...hopefully a rational day or two before we get there.

 

We are seeing a little year end.....semi-correction. Lots of.....FURRY and MOTION....but not very significant. With the media and all...it feels much worse than it is.

I like it.....a nice little shake-out. It never hurts to shake the people that are not confident and committed..... out of the market. It is a good thing to see. It really tamps back down any exuberance and in the end will help prolong the BULL MARKET.

AND....dont forget....there can even be full blown corrections in the middle of a BULL MARKET.

 

Well no need to even talk about the past.....especially the very recent past....in terms of market behavior. What we are seeing is totally disconnected from both....fundamentals and the current Goldy-Locks economic data. I have never in my lifetime seen the markets so OBSESSIVE about interest rates......especially.....rates that by historic norms are already LOW.

At lest we are seeing a bit of bounce-back in the markets early today. I dont think it will hold all day....but it is nice to see at least for a while.

 

As I have said many times our market system is based on TRUST. Lose that TRUST and we are done. I am posting this little article for the ECONOMIC content. It has a bit more politics than I like to post.....but.....this is important information in terms of the ability of the markets to TRUST government data.

Stunning new data shows voters were right to question Biden-Harris job numbers

https://www.foxnews.com/opinion/stu...-were-right-question-biden-harris-job-numbers

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

"Numerous polls conducted prior to and following the 2024 presidential election show that one of voters’ top concerns was the state of the economy. This was especially the case among voters who cast their ballot for Donald Trump.

This phenomenon has puzzled countless supporters of the Biden-Harris administration, who have insisted for years that the United States has enjoyed a booming economy under the leadership of Joe Biden.

For proof, the White House and an endless list of left-wing political pundits have often pointed to employment and unemployment figures as proof for the Biden-Harris administration’s economic success.

President Biden and Vice President Kamala Harris arrive to speak about the administration's efforts to lower costs at Prince George's Community College in Largo, Maryland, Aug. 15, 2024. (AP Photo/Susan Walsh)

But voters intuitively knew better. No number of headlines in The New York Times or excited rants on cable news shows could convince them that America’s economy is running strong.

Now, Trump voters have the numbers to back up their suspicions.

A new report by the Federal Reserve Bank of Philadelphia shows that the Biden-Harris administration’s Bureau of Labor Statistics (BLS) overestimated employment in 25 states across the country in the second quarter of 2024. By contrast, the report found that initial employment numbers from BLS were too high in only two states. (The second quarter of 2024 is the most recent period for which the Philadelphia Federal Reserve Bank has updated data.)


According to the Philadelphia Fed, its updated, expanded data reveals second quarter state payroll employment declined by 0.1 percent, suggesting a net jobs loss during that period compared to one year prior.

The preliminary employment data provided by the White House had indicated earlier this year that there had been an increase in states’ employment numbers during the same period. According to the Biden-Harris administration’s original numbers, the sum of states’ employment figures showed a national increase in employment of 1.8%. The national survey data showed an increase of 1.1%.

The Philadelphia Fed’s researchers believe both these figures were wildly wrong.

The Philadelphia Fed believes the Biden-Harris administration’s previously reported employment figures were off by 1.2 to 1.9 percentage points, depending on the survey data used. That might seem small, but when applied to employment figures in all 50 states, we are talking about overestimating employment nationally by as many as 3 million jobs.

How could the Biden-Harris administration have been off by so much?

Although it is incredibly difficult to prove, it’s reasonable to suspect that the White House might have rigged the employment surveys to make it appear as though the economy was in better shape.

The biggest reason to believe that the White House could have deliberately deceived Americans is that previous employment figures are rarely revised to the extent that the second quarter 2024 numbers will end up being adjusted, according to the Philadelphia Fed’s other reports.

For example, the Philadelphia Fed estimates preliminary state employment data for the second quarter of 2023 differed by just 0.1 percentage points from more accurate data reported later in the year.

In fact, I couldn’t find a similarly flawed example in all of the Philadelphia Fed’s other 2024 or 2023 reports about state employment data. The state employment figures reported by the Biden-Harris administration in the second quarter of 2024 appear to be off by more than every other quarter in both years.

I did, however, discover similar employment overestimations in some 2022 reports. I am sure it’s only a coincidence that 2022 was yet another important election year.

It is also worth noting that in the 2022 reports showing substantial differences between preliminary state employment numbers and more accurate later reporting, the more accurate numbers revealed much lower employment than previously thought. As I noted previously, this was also the case in the most recent report released by the Philadelphia Fed for the second quarter of 2024.

In other words, over the past three years, when the Biden-Harris administration has dramatically revised its state employment figures, it has most often revised them downward.

Could it be a coincidence that these errors have typically benefited the White House? Or is it possible that the Biden-Harris administration has been deliberately fooling people into thinking employment is much higher than it actually is?"

MY COMMENT

I have BOLDED the important content above. I debated just posting what I have in BOLD and not the rest of the opinion/political content. BUT....I do think it is important in terms of TRUST.....to post this whole thing.

BASICALLY.....ALL.....of our economic data and content comes from GOVERNMENT. If that content can not be TRUSTED......or if it is suspect.....or worthless.....than everything the FED is doing is baseless. If the government data is worthless....most of the basis for short term trading...is worthless. Over the longer term when CYNICISM.....builds and becomes the norm......TRUST will be totally lost and broken.

It reminds me of my earlier days....in the 1950's and 1960's..... when RUSSIA would routinely release mind blowing positive economic data....year after year.....which the RUSSIAN people.....and everyone else..... ALL knew was total BS. It was all one big joke....and everyone knew it.

 

This little story is far more significant than the FED or the rate cut MANIA.

U.S. economy grows at 3.1% pace in third quarter, an upgrade from previous estimate

https://finance.yahoo.com/news/u-ec...f-8jlcqOmp62GxLKMaFT2rEshtmpjFuQTBOCiLZsmL3Lp

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

"WASHINGTON (AP) — The American economy grew at a healthy 3.1% annual clip from July through September, propelled by vigorous consumer spending and an uptick in exports, the government said in an upgrade to its previous estimate.

Third-quarter growth in U.S. gross domestic product — the economy's output of goods and services — accelerated from the April-July rate of 3% and continued to look sturdy despite high interest rates, the Commerce Department said Thursday. GDP growth has now topped 2% in eight of the last nine quarters.

Consumer spending, which accounts for about two-thirds of U.S. economic activity, expanded at a 3.7% pace, fastest since the first quarter of 2023 and an uptick from Commerce’s previous third-quarter estimate of 3.5%.

Exports climbed 9.6%. Business investment grew a lackluster 0.8%, but investment in equipment expanded 10.8%. Spending and investment by the federal government jumped 8.9%, including a 13.9% surge in defense spending.

American voters were unimpressed by the steady growth under Democratic President Joe Biden. Exasperated by prices that remain 20% higher than they were when an inflationary surge began in early 2021, they chose last month to send Donald Trump back to the White House with Republican majorities in the House and Senate.

Trump will inherit an economy that looks healthy overall. The unemployment rate remains low at 4.2% even though it is up from the 53-year low 3.4% reached in April 2023. Inflation hit a four-decade high 9.1% in mid-2002. Eleven interest rate hikes by the Federal Reserve in 2022 and 2023 helped bring it down — to 2.7% last month. That is above the Fed's 2% target. But the central bank still felt comfortable enough with the progress against inflation to cut its benchmark rate Wednesday for the third time this year.

The president-elect has promised sweeping changes in economic policy, including cutting taxes, imposing big tariffs on foreign goods and deporting millions of immigrants who work in the United States illegally. Many economists fear those policies will fuel higher inflation.

“This week’s data show the economy is set to end 2024 on a solid note, which is fortunate since we’ll have to contend with heightened policy uncertainty and possibly greater challenges in 2025,” Oren Klachkin, an economist at Nationwide, wrote in a commentary.

Within the GDP data, a category that measures the economy’s underlying strength rose at a solid 3.4% annual rate from July through September, an upgrade from the previous estimate and up from 2.7% in the April-June quarter. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.

Wednesday’s report also contained some encouraging news on inflation. The Federal Reserve’s favored inflation gauge — called the personal consumption expenditures index, or PCE — rose at just a 1.5% annual pace last quarter, down from 2.5% in the second quarter. Excluding volatile food and energy prices, so-called core PCE inflation was 2.2%, up modestly from the previous estimate but down from 2.8% in the April-June quarter.

Thursday's report was the Commerce Department's third and final look at third-quarter GDP. It will publish its initial estimate of October-December growth on Jan. 30."


MY COMMENT

In the old days......when investors were few and far between......and were hard nosed, cigar smoking, professionals in back rooms......this data would have strongly MOVED the markets up. This type of data is what counts in business and in investing.

NOT.....the ridiculous drama over the FED and rate cuts.

 

Other economic news today....if.....you can trust any of it.

US existing home sales jump to eight-month high in November

https://finance.yahoo.com/news/us-e...JxTvsZZx_KpBkq9IEwiEWeaWEatA-RAkoiEUGZuNL5IAe

 

You know.....just because you are a long term investor or a fully invested all the time investor....does not mean you can never take profits. We have had HUGE GAINS in many stocks this year.

If it suites your thinking and risk tolerance....or if you have hit certain investing goals....there is absolutely nothing wrong with taking some profits and perhaps reallocating that money elsewhere in the markets.

For example......I am not selling any NVDA......although it does somewhat drive me crazy to have a single stock at such a high percentage of my entire portfolio. I want to run with this company for a while and see if it turns out the way I expect. I am trying to simply look at this stock and all my other investments in terms of.....PROBABILITY.

BUT.......that is just me.....at this point in my life.

In the past I have had many times in my life when I have taken profits and reinvested that money elsewhere in my portfolio. My style is to be......fully invested all the time........AND.....that does NOT mean I cant take profits. It just means if or when I take a profit..... I immediately reinvest it elsewhere.....so that money continues to work for me in the markets.

 

This is a backward indicator. I think it is worthless for anything to do with long term investing. BUT...I do see it as an interesting indicator of the FOOLISHNESS of the short term markets......and modern investors and their obsessive (misplaced) media focus..... and what happened on Wednesday.

Wall Street’s fear gauge — the VIX — saw second-biggest spike ever on Wednesday

https://www.cnbc.com/2024/12/19/wal...w-second-biggest-spike-ever-on-wednesday.html

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

"Wall Street’s fear gauge — the VIX — spiked by the second biggest percentage in its history on Wednesday, after the Federal Reserve jolted the stock market by saying it would dial back its rate-cutting campaign.

The CBOE Volatility Index surged 74% to close at 27.62, up from around 15 earlier in the day. That surge is the second-greatest in history, behind a 115% leap to above the 37 handle back in February 2018 when there was a blow-up in funds tracking the volatility index.




FactSet

Wednesday’s move comes after the central bank said it will likely lower interest rates just twice next year, down from the four cuts it projected back in September, alarming investors who wanted low rates to keep fueling the bull market. The Dow Jones Industrial Average tumbled by 1,100 points to its 10th straight loss.

Typically, a value greater than 20 in the VIX indicates a higher level of fear in the market. However, for most of this year, the VIX had been suppressed below that level, worrying investors who believed the market had gotten overly complacent.

The VIX is calculated based on the prices of put and call options on the S&P 500. A spike could indicate a rush by investors to purchase put options for protection in a decline.

Still, there have been one other significant surge in the VIX in 2024. The third-biggest surge in the VIX in history occurred in Aug. 5, 2024, when fears of a U.S. recession, and a major unwind in the yen carry trade, spurred a roughly 65% increase in the VIX to close above 38. On an intraday basis, the VIX briefly topped 65 that day.

On Thursday, the VIX was last floating just above the 20 handle, down more than 25% from the prior day."

MY COMMENT

I dont consider the VIX as an indicator of use to investors.....since my focus is long term.

NOW....as an indicator of behavior...perhaps. Based on the above we did have a little PANIC yesterday that drove the markets irrationally down. BASICALLY.....this was a MEDIA driven event.

The surge in the VIX mentioned above that happened earlier in the year......August 5, 2024....was also a TOTALLY media driven event....as the opinion financial media pushed the US RECESSION story line.....FALSELY..... it turns out.

We have now DEFINITELY reached the point where the media story line has the power to FALSELY tank the markets or boost the markets.

Why this matters and what it indicates to me is that we are now at a point where the average investor is NOT educated or sophisticated in investing....at all. Much of the investing and investor behavior that is happening is simply....herd behavior....in response to the opinion media.

As I said in a post a day ago.....I see a PANIC as a good thing. It is good to shake people out of the markets that should not be there. It makes the markets more stable to clean house once in a while.

 

I am having a nice green day so far. Only two stocks down....COST and HD. An expected reaction after yesterday. BUT...before we get too carried away...lest see how we close.

By the way......we are in.....DAY EIGHT...of the final countdown.

 

OK......lets make a stand today.

We have been in this little market dip for the past week or two. NOW is when we make a stand and break the negativity. Things have gotten way too oversold in the big cap side of the markets. The markets have also gotten way too driven by short term media BS.....that has NOTHING to do with business or business results.

LETS MAKE SOME MONEY TODAY.

 

LOL...yesterday my son-in-law bought a new car. It was the first time in his life that he has had a "brand new" car. It is also the first time in his life that he has not had a car payment. I have no doubt that this car will last him for at least ten years.

He was able to do it with a good trade-in......some cash.....and by selling out $30,000 in his brokerage account. Basically profit taking....taking some of the big gains off the table and putting that money into not having a car payment. Like many investors he has massive gains this year...so the timing was right.

His account has the same stocks and funds that I have. I gave him a list of how many shares of each stock to sell and how much from the SP500. I told him to MAKE THE TRADES.....ASAP. Later in the day I was able to confirm that he did the trades early in the day....before the BIG FED PANIC. Perfect timing......LOL. (makes me seem like I might know what I am doing....but random chance in reality)

The nice thing......even with this use of some of his stock money.....he and his wife STILL are at a dollar amount in their two brokerage accounts that would have been an ALL TIME HIGH a few months ago. The two of them are....STILL.... over $700,000.

Sometimes you simply have to.......REWARD YOURSELF....for all the hard work and success in your financial life. Although this purchase was a necessity. The reward part comes from having a new car with ZERO payment...being debt free...other than a house payment.

Now comes the hard....but fun..... work.....using that ZERO car payment....to save and invest more in the brokerage account going forward.

 

.

 

An early sentiment.....MERRY CHRISTMAS.....HAPPY HOLIDAYS....EVERYONE. It is getting close enough that it is time to start to think about all the progress you made this year and being thankful for family and friends.

And....I am thankful for the STOCKAHOLICS community.