The Long Term Investor

So continue the discussion....I am off to see what else is going on today.

 

Back for a quick hit and and run post....I have been reading other stories and about NFL and college football. After this post I need to go and do some work on my guitar amp.....for my rehearsal/audition that I have this Wednesday.

What we are seeing today is a BIG reason why.....MANAGEMENT....is so important in the companies that you invest in. I have complete confidence in the management of the companies that I own. In the end.....they will deal with this little story today and will move their companies on.......as ICONIC, DOMINANT businesses.

Since I am simply a share holder and not part of that management.....I have nothing to do other than....TRUST them to do their job and take care of my investment.

 

Here is the other view of what we are seeing today....not that it matters when the lemmings are running in panic toward the cliff.

"What Analysts Were Saying
Wall Street analysts were mostly skeptical about DeepSeek and the sell-off it prompted, though their commentary often reflected uncertainty about the effects DeepSeek could have on the market.

Citi analysts expressed doubt that DeepSeek had achieved its results without the most advanced chips. They maintained their "buy" rating on Nvidia stock and said they don't expect major U.S. AI companies to move away from using its advanced GPUs."

https://www.investopedia.com/why-nvidia-stock-is-plummeting-today-deepseek-ai-wall-street-8780814

AND

"Jordan Klein, a trading desk analyst with Mizuho Securities, said the DeepSeek news has created a "Sell first and ask questions later" type reaction among investors. On the other hand, he would avoid buying AI stocks on the pullback.
"When AI trade and narrative is this crowded and up this much, the damage could take a while to fully play out," Klein said in a client note Monday.

He said there was misinformation about the cost to develop DeepSeek's AI model and what it accomplished.".......
.........

"Bernstein analyst Stacy Rasgon said the DeepSeek news does not spell doomsday for AI buildouts.

"The resulting Twitterverse panic over the weekend seems overblown," Rasgon said in a client note Monday. "According to the many (occasionally hysterical) hot takes we saw, the implications range anywhere from 'That's really interesting' to 'This is the death-knell of the AI infrastructure complex as we know it.'"

Meanwhile, demand for AI chips and data centers is still increasing, Rasgon said.

"Investments are still accelerating," he said. "Right on top of all the DeepSeek news flow last week we got Meta substantially increasing their capex for the year. We got the Stargate announcement. And China announced a trillion yuan (about $140 billion) AI spending plan. We are still going to need, and get, a lot of chips.""

https://www.investors.com/news/technology/nvidia-stock-ai-chipmakers-tumble-on-deepseek-news/

MY COMMENT

WHATEVER.....

 

The West Coast is fully awake now.....so we are perhaps at the peak of the drop today.

If it makes you feel any better I have a dip today of (-5.6%) right now. In my largest two accounts I have a loss of MULTIPLE hundreds of thousands of dollars.....not that it matters to me. This is probably the largest one day drop for me in many, many years.

What I like is that I have four stocks in the green today.....AAPL, HD, COSt, and CMG. I also have AMZN at a loss of less than 1%.

NVDA is at (-17%) and PLTR is at (-6.5%)

As usual I will....ENDURE with COURAGE and PATIENCE.

 

Here is what Smokie reported above.

DeepSeek limits registrations due to cyber attack
'Currently, only registration with a mainland China mobile phone number is supported,' DeepSeek posted on its status page

https://www.moneycontrol.com/news/w...gistrations-due-to-cyber-attack-12920811.html

"Chinese startup DeepSeek was on Monday hit by outages on its website after its AI assistant became the top-rated free application available on Apple's App Store in the United States.'"

MY COMMENT

Yes...this Chinese spyware is now probably embedded in half the computers, phones and other devises around the world. Mission accomplished. We are so stupid.....oh well......never-mind.

 

I found some spare money siting in one account and added.....TWO BIG SHARES.....of NVDA to the account.

 

Having just looked a few minutes ago....this little dip has taken my account back about......4.6 MONTHS....in the good old market time machine. I am now back where I was about early September.

That is the reality of today........if you want real world context.

 

AND.....in the end this little story freaking out the markets today........will probably........mean even more business for NVDA and the big chip companies. We are STILL only at the very start of the AI/CHIP era.

Nvidia Calls DeepSeek ‘Excellent’ AI Advance, Dismisses Concerns

https://finance.yahoo.com/news/nvidia-calls-deepseek-excellent-ai-195254768.html

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

"(Bloomberg) -- Nvidia Corp., the biggest provider of chips used to train artificial intelligence software, said a new model released by Chinese startup DeepSeek is an “excellent AI advancement” that complies with US technology export controls.

“DeepSeek’s work illustrates how new models can be created” using the Test Time Scaling technique, the company said in an emailed statement, “leveraging widely available models and compute that is fully export control compliant.”

Nvidia’s statement indicates that it believes that the Chinese company didn’t violate US restrictions that limit access to advanced US chips in the creation of its technology. Most of Nvidia’s best products can’t be sold to Chinese companies without licenses from Washington — permits that are not typically granted.

The statement also appears to dismiss some analysts’ and experts’ suspicions that the Chinese startup couldn’t have made the breakthrough it has claimed.

After more than quintupling in the past two years, Nvidia’s shares plummeted Monday in one of the biggest selloffs in history, on concern that DeepSeek’s offering reduces the need for the expensive type of hardware that the US chip company offers. Nvidia’s statement, though, points out that inference, the work of running AI models, nonetheless requires a lot of its products.

“Inference requires significant numbers of Nvidia GPUs and high-performance networking,” the company said."

MY COMMENT

Bottom line NVDA is going to be just fine and this sort of advance might even cause more demand for their lesser products. I suspect in the end this might end up boosting their business.

BUT....it is still Chinese spy-ware. So you will not see me using it when there are alternatives that are not from China.

 

Simply insane that this many people are willing to give the Chinese access to their devises and data. Are people actually that DUMB? Dont answer.

DeepSeek displaces ChatGPT as the App Store's top app

https://finance.yahoo.com/news/deepseek-displaces-chatgpt-app-stores-193436424.html

"DeepSeek is currently the No. 1 free app in the U.S. App Store and 51 other countries."

..........

"Friday, DeepSeek's mobile app had a million downloads across both the App Store and Google Play. That number has since doubled, as of Monday morning, to 2.6 million downloads of DeepSeek's mobile app across both platforms."

 

This is ALL good news for the FED and for inflation. We have plenty of room for the economy to soften....as long as the FEd does not freak out and start to tighten and tank the economy.

Higher-income American consumers are showing signs of stress

https://www.cnbc.com/2025/01/27/higher-income-american-consumers-are-showing-signs-of-stress-.html

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

"Key Points

• Delinquency rates for borrowers with incomes of $150,000 are near their highest level in five years, according to a new study by VantageScore.
• Consumers are being cautious with credit. Credit utilization dropped in December last year.
• High earners ‘intent to spend’ decreased in January, which could be a warning sign for the economy.

Inflation, job concerns, and already high interest rates are putting the squeeze on many American consumers.

Now, even high earners, defined as people with incomes of $150,000 or more, are showing signs of stress. These borrowers are increasingly having trouble meeting payments on credit cards, auto loans and mortgages.

The delinquency rate among high earners is near a five-year high, rising 130% over the last two years from January 2023 to December 2024, according to a new report by VantageScore, a national credit company, released early to CNBC.

“We’ve seen significant increases in services cost, like home insurance and auto insurance, and that is hitting the high-income consumer harder than most. That’s what’s driving that delinquency rate,” said VantageScore CEO Silvio Tavares in an interview with CNBC.

Higher-income earners show caution with credit

Tavares says for the most part consumers are being cautious with credit. While credit card balances rose 2.9% year over year in December 2024, that pace was keeping with inflation. Consumers have some running room before hitting their limit.

Overall, consumer credit utilization dropped one full percentage point to 51.6%, the second-lowest rate in 2024.

“They actually had a lot of available credit,” Tavares said. “They just chose not to use it.”

Tavares says it’s a positive sign that consumers are exercising self-control and are more “credit cautious” as the year begins. Despite last year’s strong stock market gains, concerns about inflation and unexpected prices remain.

Challenges to consumers on the horizon include the Department of Education’s plan to start reporting missed or late federal student loan payments to national credit reporting agencies starting this month.

Tavares says those borrowers who don’t pay those loans can expect an 80-point drop in their credit score. The average VantageScore in December was 702. VantageScores range from 300 to 850, with a score below 660 considered subprime.

With the cost of insured losses after California wildfires reaching an estimated $40 billion, Tavares says the increase in insurance rates could stress borrowers further.

“The cost of the damage is going to spread across all consumers of those insurance companies across the country,” said Tavares. “It’s going to raise insurance rates, and it’s going to further the delinquencies that we’ve been seeing already in the high income category over the past year.”

High income earners intend to slow spending

Other recent data points to the financial stress facing higher-income consumers.

Bain’s Consumer Health Index, a data series focusing on high earners, showed a 10.8% drop in their intent to spend, driven by uncertainty around the future performance of the stock market after strong gains over the last two years.

“We see a worrying signal recently coming from upper-income earners; their intent to spend is down, and that worries us, given their disproportionate share of discretionary spending in the United States,” said Brian Stobie, a senior director at Bain and Company, a global management consulting firm.

The Bain Index also dipped this time last year and recovered, although not back to the previous levels. Since higher-income earners represent the majority of discretionary spending any weakness could have an outsize impact on the economy.

Signs of strength

Wages continue to grow, and the unemployment rate has remained around 4%, making the case for continued growth in consumer spending. While the rate of growth has slowed, the direction is still positive. PNC Financial Services expects consumer spending will be around 2%.

“I think that that’s a good, solid pace that’s consistent with a good economy and a good labor market and sustainable over the longer run,” said Gus Faucher, chief economist at PNC."

MY COMMENT

Some mixed commentary above. All in all a slow down in high end spending and credit use will be a good thing....especially if it slows down the economy some.

 

I am very happy to have my total portfolio make-up with my nine stocks......and my two funds. I am also very happy to have my two funds on a day like today. Both helped me to somewhat limit my losses today.

I ended the day in the RED......DUH. BUT....I had five of nine stocks in the GREEN......AAPL, CMG, COST, HD and AMZN. not too bad on a day like this.

BUT....I got beat by the SP500 today....with my nine stocks..... by 4.26%. My total portfolio loss will be less.

(I assume people know this....but...when I post daily about having won or lost compared to the SP500...I am talking about my nine stocks. When I report each Friday on my YTD result...I am talking about my entire portfolio)

As I said above.....my portfolio has now time traveled back to where it was in early September.

I dont have much expectations for this week in the markets. Perhaps at some point we will see a GREEN day out of relief if things get too crazy. MOVING ON UP.....ONWARD AND UPWARD.

ENDURE....PATIENCE......COURAGE.

 

Ya think? DUH.

Why market panic over China's DeepSeek is 'overblown,' analysts say

https://finance.yahoo.com/news/why-...seek-is-overblown-analysts-say-211148821.html

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

"Don't jump off the Nvidia bandwagon just yet.

China’s AI startup DeepSeek triggered a tech sell-off today as investors panicked over fears of a cheaper open-source large language model, raising concerns about the US’s AI dominance.

The tech-heavy Nasdaq (^IXIC) closed down 3%, with Nvidia (NVDA) leading the decline. The chip giant’s stock plummeted 16.9%, erasing a record $589 billion from its market cap.

That sent a ripple across the broader technology sector. Chip stocks including Broadcom (AVGO), Lam Research (LRCX), KLA (KLAC), and Marvell (MRVL) fell Monday, while Magnificent Seven members Microsoft (MSFT) and Alphabet (GOOGL) dropped 2% and 4%, respectively.

The fall adds pressure for the group ahead of fourth quarter earnings. Wall Street is already expecting the group’s profit growth to fall to 22% in the fourth quarter, its slowest rate in nearly two years, amid renewed focus on capital expenditures.

But the panic-selling may be overdone, according to top analysts. Bernstein’s Stacy Rasgon characterized the market's reaction as "overblown," telling me the development of DeepSeek doesn’t spell out “doomsday for AI infrastructure."

“I am not of the belief that we're anywhere close to the cap on compute needs for artificial intelligence,” Rasgon said. “I'm of the belief that if you're freeing up compute capacity, it likely gets absorbed … We're going to need innovations like this if you're going to be able to keep things going.”

Futurum’s chief strategist Daniel Newman echoed this sentiment. He said a more efficient model like DeepSeek will expand AI use, citing an economics concept called the Jevons Paradox.

“The market is completely missing this one,” Newman warned. “If we can use compute more efficiently … the companies that we're saying aren’t driving enough revenue will be able to build their models cheaper. They'll be able to create solutions with less overhead expense, and they're going to drive more EPS.”

The idea of the Jevons Paradox was also cited by Microsoft CEO Satya Nadella, who tweeted that as AI gets more efficient, its use will skyrocket.

“Spending is still continuing to accelerate … I don't think that this has to stop that,” Rasgon added.

And it's perhaps that sentiment that helped alleviate some of Wall Street’s initial panic as Big Tech names including Microsoft closed well off their lows of the session, while Amazon and Meta finished Monday up 0.3% and 1.9%.

For the broader market, Principal Asset Management’s chief global strategist Seema Shah downplayed correction fears, telling me she still sees a “constructive” macro environment.

“I don't think we're at a point where we can start talking about correction territory ... The economic environment is still very constructive for earnings across most sectors,” Shah told me on Yahoo Finance’s Morning Brief.

“If DeepSeek is everything they're saying, this is ultimately positive for productivity around the world for all sectors … it certainly isn't the end of the story of the US exceptionalism and productivity.”

The Nasdaq closed Monday down 3%, while the S&P 500 (^GSPC) dropped 1.5%. The Dow Jones Industrial Average (^DJI) reversed earlier losses, ending up 0.65%."

MY COMMENT

Seems pretty obvious and common sense to me....but....when did that ever matter to the short term markets. NEVER.