The Long Term Investor

Yes...I am sure having been the location for two world wars and other conflicts and having lived under communism in many areas has also had a big impact on people and their thinking, especially those that are old enough to have lived that experience.....in addition to basic cultural differences

When I was kid living in Germany in 1958-1960......it was an experience of a lifetime. At that time there was little to no Americanization of Germany....and it was only 13 years after the war. It definately impacted my thinking and life view, since at that time few average Americans had even flown on an airplane....much less....lived outside the USA.

We traveled all over Europe, even into East Berlin. To get to West Berlin we had to take the one train that the communists allowed to travel through their territory, under heavy communist security. East Berlin was still a bombed out shell of a city.

I think people here are CRAZY how often they buy a new car and always have a $400 to $800 car payment. Most cars now can easily go to 200,000 to 300,000 miles if you simply do the oil changes and routine maintenance. I have said it on here before....to me cars are just a commodity. We always try to buy a medium size SUV and try to get at least 200K to 300K miles out of them. Although in the past....we have owned a number of Range Rovers and a Defender back in the day when they were not common. Now we just stick with solid SUV's that we can pile on the miles.

My personal record for mileage on a basic vehicle is 420K miles on a very stripped down and basic little Dodge Caravan. The car was so stripped down that it had crank windows, nothing electronic, and the only extra on the sticker was a rear wiper. That little van was my basic everyday vehicle from about 1999 to about 2007. It was a little work-horse.

I am happy to see people all over the world now having access to world wide stock markets and good companies and funds. it is good for the markets and the businesses and it is good for people to have the option to invest and secure their future.

 

The week to come. The headline just about says it all.

Big Tech earnings, a key Fed meeting: What to know this week

https://finance.yahoo.com/news/big-...-office-what-to-know-this-week-123505201.html

"Earnings from more than 100 members of the S&P 500 — highlighted by results from tech heavyweights Meta (META), Microsoft (MSFT), Apple (AAPL), and Tesla (TSLA) — are set for release, with Wednesday serving as the week's busiest. Starbucks (SBUX), Exxon (XOM), and Chevron (CVX) are also set to report."

and

"On Wednesday afternoon, the Federal Reserve will also announce its latest monetary policy decision, with the central bank expected to keep interest rates unchanged and investors focused on what Fed Chair Jay Powell has to say about the balance of 2025."

 

Tech earnings......on deck.

Tech’s $15 Trillion Rally Hinges on High-Stakes Earnings Stretch

https://finance.yahoo.com/news/tech-15-trillion-rally-hinges-130000990.html

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

(Bloomberg) — Investors are heading into yet another pivotal Big Tech earnings cycle with the companies’ shares near record highs and valuations stretched. A key distinction this time: The group’s profit growth is projected to come in at the slowest pace in almost two years.

Shares of Alphabet Inc. (GOOG), Meta Platforms Inc (META). and other technology giants have rallied to start the year, outperforming the broader market amid a risk-on mood and high hopes for the billions of dollars the companies are spending to develop artificial-intelligence services.

But the reporting period that kicks off this week may prove sobering for equities bulls: While earnings from the so-called Magnificent Seven behemoths are still rising — and far outpacing the rest of the market — Wall Street anticipates a marked slowdown in growth relative to prior quarters. What it comes down to is that pressure is mounting on the cohort, which has driven a roughly $15 trillion rally in the Nasdaq 100 Index since the end of 2022.

“This should be a fairly good earnings season, but the bar has been raised and they may not be able to live up to high expectations,” said Dan Taylor, chief investment officer at Man Numeric. “It will be very difficult for the group to perform the way it did last year, especially as valuations have increased.”

The seven companies’ announcements start Wednesday, when Microsoft Corp (MSFT)., Meta and Tesla Inc. (TSLA) are scheduled to report. Apple Inc (AAPL). follows Thursday, while Alphabet and Amazon.com Inc. (AMZN) announce next week, and then chipmaker Nvidia Corp (NVDA). on Feb. 26.

The sector’s superior earnings growth and exuberance around AI have been key drivers for US stocks during the bull market that began more than two years ago. The megacap tech companies have accounted for the bulk of the S&P 500’s roughly 70% advance in that period, but gains have slowed amid expectations for weaker profits and questions about when all the AI investments will pay off more meaningfully.

Smaller Jump

Profits for the seven giants are projected to increase by 22% in the fourth quarter from a year earlier, the smallest jump since the first quarter of 2023, data compiled by Bloomberg Intelligence show. While that’s still well above the 8% increase anticipated for the S&P 500 Index (^SPX), it’s down from the 51% increase seen in the first quarter and shrinking for a fourth straight quarter.

Bloomberg Intelligence’s Michael Casper sees cause for concern. With the tech sector’s share of the S&P 500’s market value eclipsing its share of profits by about 10 percentage points, the equity strategist worries that either earnings growth has to improve or valuations need to drop.

“We know how stocks react if they miss on what everyone wants them to hit,” Casper said.

When looking at prices relative to anticipated sales, valuations look even more precarious. At nearly eight times revenue projected over the next 12 months, the S&P 500 Information Technology Index trades close to the highest in at least a decade, according to BI data.

Still, to Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management, the valuations are worth paying up for with AI investments expected to generate more revenue in the year ahead.

“While the easy gains in AI may be behind us, we think this rally looks far from over,” she wrote in a note to clients this month.

Microsoft, Alphabet, Amazon and Meta are projected to have spent more than $200 billion combined on capital expenditures in their last fiscal year, and they’ve all pledged to spend more in the current year. In addition to growth in AI-related revenue, investors will be monitoring spending forecasts.

There are few signs that traders are primed for a massive disappointment. Demand for put options that protect against downside moves versus demand for call options in the Magnificent Seven stocks is shrinking after a spike in December.

So far, bulls have been rewarded. Netflix Inc., one of the few tech-related companies that have reported, helped boost the Nasdaq 100 last week after posting a record jump in subscribers.

“Valuations may be extended, and there could be some disappointment over the monetization of AI,” said Man Numeric’s Taylor, but big tech firms “remain great businesses throwing off a ton of cash.”"

MY COMMENT

The above may be true.....but.....we are STILL talking about the greatest companies in the world and we are STILL in the very early stages of the AI REVOLUTION. So I will continue to own the big tech monster companies for the long term.

 

Close.....I did drive a Beetle in High School...a typical 1962 Beetle....with the turn indicator handle that looked like a toothbrush......and the funky window wipers. Top speed 82MPH....I know because I tried many times.

Before that from age 14 to age 16 I had a Lambretta scooter. Like this one:



I drove my parents cars till I was about 21. At that time I got a Dodge Duster with a slant six engine. We had that as our only car till about 1975 when my wife's parents gave us their greatly used little Subaru. After that we always had two cars.

Other early cars we had were a very small little Honda station wagon, a cheap little Mazda sedan, a better Mazda sedan, a Toyota Camry, and, a number of mini-vans when kids were young.

Startling about 1990 or so....we had two Range Rovers. We got the Defender that I mentioned earlier in this thread about 1995. We drove Range Rovers through the 1990's...and about 2000 got the little mini-van that I mentioned above.

From about 2001 we usually had one mini-van and a Dodge Ram Pick Up either 3/4 ton or 1 ton when we lived out in the country on our 20 acre horse farm. We needed the truck to pull our horse trailer and our farm trailer.

Starting about 2012 when we sold the farm and moved to the suburbs of Austin we switched to owning a medium SUV and a mini-van that we use for hauling large antiques, musical equipment, large paintings, and dogs, etc, etc, etc. That is what we have now.....a Hybrid medium size SUV and a ten year old Chrysler Town and Country mini-van.

The Town and Country....only has 45,000 miles at ten years old. When we got it...... Dodge was doing a Lifetime Bumper to Bumper warranty which we have. We only put about 5000 miles a year on the van since we pile all our basic day to day driving miles on the SUV. We want to make that town and country last for our lifetime........ with that great bumper to bumper warranty.

We get a new medium size SUV about every 5-6 years when they get to about 250,000 miles.

By the way....we have paid cash for all vehicles since about 1986

So there you have my "car" history. Nothing fancy except for our Range Rover and Defender years. We owned five different Range Rovers.....three new and two used.

 

Yes....I saw that story impacting the futures last night.

Deep seek is about right for the name......deep seek to infect and steal every bit of data and information about everyone and every country in the world. Talk about tick-Tok on steroids.

Personally I dont let short term media HYSTERIA impact how and what I invest in. Right now I am hearing people talking about....buy, buy, buy....today. This is a 24/48 hour traders story. Longer term it will all be about way more than what this little story is talking about in the AI business world.

BUT.....that is just me. I dont do investing advice so anyone else.....do what you have to do based on your own analysis.

 

Here is what the market is OBSESSING over today.

Nvidia plummets 12% to lead global tech sell-off as China’s DeepSeek raises questions about AI chip spending

https://www.cnbc.com/2025/01/27/nvi...s-deepseek-triggers-global-tech-sell-off.html

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

"Key Points

• U.S. technology firms plunged in premarket trading, as Chinese startup DeepSeek sparked concerns over competitiveness in AI and America’s lead in the sector, triggering a global sell-off.
• DeepSeek launched a free, open-source large language model in late December, claiming it was developed in just two months at a cost of under $6 million.
• The developments have stoked questions about the large amounts of money big tech companies have been investing in artificial intelligence models and data centers.

Nvidia and other U.S. technology firms plunged on Monday, part of a global sell-off as Chinese startup DeepSeek sparked concerns over competitiveness in artificial intelligence and America’s leadership in the sector.

Shares of chip designer Nvidia, a major beneficiary of the AI hype, slid more than 12%. This rout extended to other AI trades like Micron and Arm Holdings, which both dropped more than 7%. Broadcom and Advanced Micro Devices
lost around 11% and 4%, respectively.

Constellation Energy and Vistra, two of the best-known derivative plays tied to the power buildout, each plummeted about 16%.

International markets also felt the impacts. Netherlands-based chip companies ASML and ASM International tumbled more than 8% and 12%, respectively, in European trading. In Asia, Japanese chip-related stocks including Advantest and Tokyo Electron
were broadly lower.

DeepSeek launched a free, open-source large language model in late December, claiming it was developed in just two months at a cost of under $6 million — a much smaller expense than the one called for by Western counterparts. Last week, the company released a reasoning model that also reportedly outperformed OpenAI’s latest in many third-party tests.



DeepSeek rattles tech, but there’s a lot we still don’t know, says EIU analyst

These developments have stoked concerns about the amount of money big tech companies have been investing in AI models and data centers, and raised alarm that the U.S. is not leading the sector as much as previously believed.

“DeepSeek clearly doesn’t have access to as much compute as U.S. hyperscalers and somehow managed to develop a model that appears highly competitive,” said Srini Pajjuri, semiconductor analyst at Raymond James, in a Monday note.

Pajjuri said DeepSeek could “drive even more urgency among U.S. hyperscalers,” a group of large computing infrastructure players like Amazon and Microsoft. Specifically, the analyst said these companies can leverage their advantage from access to graphics processing units to set themselves apart from cheaper options.

GPUs are a key part of the infrastructure required to train huge AI models. Nvidia is the market leader in GPUs.

The cost of computing has become a key topic of conversation following the DeepSeek news, according to Citi analysts.

While the dominance of U.S. companies on the most advanced AI models may be threatened, they said, a key barrier for competitors is access to the best chips. Because of this, leading AI companies likely won’t move away from the more-advanced GPUs, the analysts said.

The recent announcement of President Donald Trump’s $500 billion Stargate AI project is a “nod to the need for advanced chips,” they added.

To be sure, Bernstein analysts expressed doubt over whether the DeepSeek tool was actually built for less than $6 million. They questioned if that figure left out other costs from prior research and experiments to get the technology to where it is today.

Despite stressing that DeepSeek’s models “look fantastic,” the team said they shouldn’t be thought of as “miracles.” And panic about the “death-knell of the AI infrastructure complex as we know it,” the Bernstein analysts said, was “overblown.”"

MY COMMENT

We are just at the very start of the AI wars and AI development. Advances will beget advances.

As I said I personally have ZERO plans to change anything in terms of how ANY of my portfolios are structured. AND....that definately includes any and all of my big TECH holdings. I am comfortable with what I own and will NOT sell or change anything based on single day HYSTERIA........over a media story about China.

I am not disputing this story since I dont have the expertise and because it is too new.....but.....I dont trust ANYTHING out of china and never will.

 

Now....if I was going to do anything today....or over the rest of the week....I would be buying MSFT, AAPL, AMZN, GOOGL PLTR, and AMZN. I would probably sit tight and NOT buy any more NVDA because I own enough already.....it is my largest position.

In fact if we see a general....good size market drop I would also be buying more of my non-tech stocks....HD, COST, and CMG.

That is my answer to LORI and others. This is a HYSTERICAL story at the moment. I am personally certainly not going to react in any way.

BUT others.......this is a RISK EVALUATION moment. Others.....need to evaluate how risky their portfolio is and realize the impact of holding only a few stocks. I like to hold 10-15 stocks ideally. I also have my two funds to balance that our. I am very good with the risk reflected in my portfolio......since....it is very long term and NOT shorter term money money that is critical to me when it comes to life, income, retirement, or income.

This is a good time for......ANY investor....to consider the risk they are taking and what sort of money they are using to take that risk.

 

Yes....I understand.....T0rm3nted......exactly what these stories are all about.......on the surface. It is not difficult to understand the basics of this open source AI and how it.....could....have some SHORT TERM impact on the AI niche.

BUT....longer term.....whether or not this little story has any real legs and whether or not this development has any legs or impact.......is UNKNOWN.

With this coming out of China....it is impossible to know the back story to this whole thing. The real cost? How it was actually achieved? How much of it is simply....Chinese spyware, even if it works. Etc, etc, etc.

Basically the way I look at it is.....if true.......A HUGE IF......this and how it was achieved will quickly be ABSORBED into the tech world and will be used by all the big tech companies to leverage massive benefits and increases in their business going forward.

The real word here.......ASSUMING TRUTH......a big assumption.....is long term LEVERAGE. That leverage to AI will be spread and used by ALL big tech gong forward. This is supposedly an....open source product......so every company will know everything about it and how it might be used.

Personally I see this as more of a story about.....the economic war between China and the USA. I see this as a shot back at our new government as much as anything.

 

This is what you call a short term....BLACK SWAN. A market event that comes out of nowhere and tanks the market. It is the DRAMA and the TALK of the day.

It is timed perfectly to impact all the big tech earnings that are going to be released in the next 2-4 weeks.

As of today....those earnings are now irrelevant. it is not fair...but that is how it is. We should be used to this by now. We have seen big tech earnings IGNORED and DISRESPECTED for years now.

EDIT....I do agree that this impact on the markets......justified or not....will be more than a day or two. This may trigger a correction that lasts for weeks or even months.

Depending on the amount of FEAR and PANIC today.......I am sure.....people selling stocks will drive the markets down and will to some extent create a snowballing affect. This will lead to additional selling in waves....like we often see when PANIC takes hold. The question will be.....the extent of the PANIC and selling. Of course....this has nothing to do with whether any of it is actually justified.

It will take on a life of its own and will just have to run its course....whether it is days....weeks...or ....months.

 

Basically......the free market and free businesses.....will move forward and deal with what they have to deal with. I doubt that all the big tech companies were caught clueless on this issue. BUT.....today is RAMPANT SPECULATION.......MASS HYSTERIA in the markets. AND....we know how mass hysteria spreads and moves HUMANS to see, believe, and do all sorts of CRAZY things.

So....moving on.....since I have said about all I have for now.

 

A perfect topic for today....supporting American business and investors and indirectly the whole country.

President Trump: Cut The Capital Gains Tax!

https://www.forbes.com/sites/steveforbes/2025/01/23/president-trump-cut-the-capital-gains-tax/

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

"The capital gains tax is destructive. By lowering the rewards of successful risk-taking—essential to innovation and a higher standard of living—the cap gains tax needlessly hobbles progress. It also hurts people’s retirement incomes. Equity prices would be higher with a lower rate or, even better, without it altogether.

This is why President Trump and his tax-writing team should include a sizable reduction in the capital gains levy in the bill they’re cobbling together with various members of Congress. Such a cut would not only help the economy but also instantly raise more revenue for Uncle Sam. This should appeal to so-called deficit hawks.

Of course, critical to getting out of our fiscal mess is sizable economic growth, and a lower cap gains tax would be very helpful.

Today, that tax is too high. On the federal level, it’s 20% plus an additional 3.8% Medicare surtax, for a total of almost 24%. Then there are additional state taxes. Knocking down the rate on the federal level would set a positive example for the states to do the same.

Republican tax writers should emblazon on their minds and ceaselessly remind their colleagues that cutting the capital gains tax immediately means more revenue—not a year or two down the road, but right away. Instantly. It’s bipartisan: When this exaction was reduced in 1997 under Democrat Bill Clinton, tax receipts went up nicely in 1998; when this tax was cut under Republican George W. Bush in 2003, it meant more revenue in 2004.

People more readily realize gains on their securities when there’s a lower tax penalty for doing so. Whacking the current 23.8% to 15% would render such a delightful impact. Investors are sitting on mammoth stock market gains. They would love the chance to pocket some of those profits and redeploy the rest to other opportunities. Remember, you want this kind of mobility in capital for new investments instead of its being frozen in existing ones.

Democrats will naturally label any easing of this levy as a giveaway to the rich. So what? Just about anything the GOP proposes on taxes is criticized as such. The key for Republicans to keep in mind is whether a cut grows the economy and helps people. This one does, big time.

The case for a low cap gains tax—or eliminating it—is overwhelming. It harms capital formation by reducing after-tax returns. Along the same lines, it’s double taxation, since profits have already been taxed at the corporate level and are taxed again when distributed. Capital is the essential fuel for progress.

The effective tax rate is higher than the nominal one because gains aren’t indexed for inflation. All too often investors with stocks that have been held for a long time end up paying a tax on fake gains."

MY COMMENT

As a free market capitalist I agree completely. In a FANTASY world there would be NO capital gains tax. We would encourage people to invest money and spread that money and the compounding impact of that money through the business and banking world.

 

I will also say......I am not a market timer....but if I was going to use this as a buying opportunity....I would probably try to time the markets a little bit by figuring we are probably looking at dropping markets for a week or two.

So....... the best prices to buy at....MIGHT....come in a few days or a week or two down the road. I think this is the....PROBABILITY.

BUT.....I dont have to think about this since I will not be buying anything......no money....no fun. I will simply sit and do nothing as usual....and...watch others have all the fun.

 

One good thing.......I dont think anyone will be paying much attention to the FED this week. There is always a silver lining.

LOL...sorry...these kind of panics just make me see things in a funny way. I am a lifelong observer of HUMAN BEHAVIOR....and I am enjoying the day as a result.

It was the same back when we had the BIG MARKET DROP in 1987. The PANIC was very similar to this little story today. the impact lasted for a few months. By year end most of the market gains were made back. BUT......as a HUMAN WATCHING EVENT....it was epic.


Black Monday (1987)

https://en.wikipedia.org/wiki/Black_Monday_(1987)

"Black Monday (also known as Black Tuesday in some parts of the world due to time zone differences) was the global, severe and largely unexpected[1] stock market crash on Monday, October 19, 1987. Worldwide losses were estimated at US$1.71 trillion.[2] The severity of the crash sparked fears of extended economic instability[3] or even a reprise of the Great Depression.[4]

Possible explanations for the initial fall in stock prices include a nervous fear that stocks were significantly overvalued and were certain to undergo a correction, persistent US trade and budget deficits, and rising interest rates. Another explanation for Black Monday comes from the decline of the dollar, followed by a lack of faith in governmental attempts to stop that decline. In February 1987, leading industrial countries had signed the Louvre Accord, hoping that monetary policy coordination would stabilize international money markets, but doubts about the viability of the accord created a crisis of confidence. The fall may have been accelerated by portfolio insurance hedging (using computer-based models to buy or sell index futures in various stock market conditions) or a self-reinforcing contagion of fear."

MY COMMENT

Sound familiar to what is happening right now and the media and market reaction? Totally different cause as what is happening today....but....what is NEVER different is......HUMAN BEHAVIOR.

 

When the market crash above started I was driving to Seattle and listening to the business radio. It was surreal listening to the markets drop and snowball.....as mentioned above it was........a self-reinforcing contagion of fear".

I listened and watched that event with the same total detachment that I am feeling right now. Kind of a....bemused.....view of an interesting event and little experiment in market psychology and human behavior. Something new to watch and observe.

SO....dont expect any sympathy....OR......DRAMATIC whining and teeth gnashing from me.

Number one I am very CLINICAL.....especially when others are all in speculative panic mode. And number two....I have lived through many short term panic driven events.

To quote....Gone With The Wind......"FRANKLY MY DEAR, I DONT GIVE A DAMN"......and......"AFTER ALL, TOMORROW IS ANOTHER DAY".

Sorry for throwing a wet blanket on the drama and panic.