The Long Term Investor

WELL.....made a change today at about 2:45. I SOLD ALL shares of JNJ in ALL accounts. Put the proceeds into AMZN, MSFT, COST, PG, HON, HD, and NVDA in each account.

I have been watching JNJ for the past 8 months. It has not performed as I would want. It was also on the bubble for me prior to that time. My single worst performing position. SO.....today.....as I said, I sold ALL shares.

 

BIG green today.......as expected. AND.......of course with the tech stocks RUNNING with the BULLS today.......I beat the SP500 by .92%.

 

Posted for......BUSINESS content.......NOT.......the other STUFF:

Analysis: Wall Street cheers U.S. election removing major tax-hike threat

https://finance.yahoo.com/news/analysis-wall-street-cheers-u-185727830.html

(BOLD is my opinion OR what I consider important content)
"(Reuters) - Wall Street breathed a sigh of relief on Wednesday, as the latest U.S. election tallies pointed to a divided government that made the prospect of tax hikes advocated by Democratic presidential candidate Joe Biden unlikely. [.N]

Biden has proposed raising the capital gains tax rate from 20% to 39.6% for those making over $1 million, which would represent a big blow to the asset management industry. Other tax hikes he has put forward include increasing the statutory corporate income tax rate from 21% to 28%.

Biden was leading in key Midwestern states in the race for the White House as votes were being counted on Wednesday afternoon, but President Donald Trump's Republican Party was poised to keep control of the Senate even as Democrats retained their majority in the House of the Representatives. Tax changes would need to be voted through the House and the Senate and be approved by the White House to become law.

Even if Biden were to prevail over Trump, the composition of the legislature would make it challenging for him to push ahead with his tax changes. Pollsters' earlier predictions that Democrats would win control of the White House and Congress had cast a cloud over Wall Street, fund managers said.

"The markets are taking comfort from the fact that there likely won't be a significant tax increase any time soon," said Troy Gayeski, co-chief investment officer of hedge fund investment firm SkyBridge Capital.

Shares of private equity firms, whose performance fees would have sustained a big tax hit were Biden to have his way, soared on the early voting results. Blackstone Group Inc <BX.N>, KKR & Co Inc <KKR.N> and Carlyle Group Inc <CG.O> shares jumped 7.1%, 7.4% and 4.2%, respectively. Other fund managers, including hedge funds and venture capital firms, also expressed relief.

"Regardless of the outcome for president, fears of a blue wave and the potential for a sweeping overhaul for private equity regulation are likely stemmed with the Republican Party likely maintaining control of the Senate," Jefferies analysts wrote in a note on Wednesday.

Shares of large mutual fund managers such as BlackRock Inc <BLK.N> and T. Rowe Price Group Inc <TROW.O>, whose business would also have a taken a hit from a capital gains tax hike, also rallied.

"Even if Biden wins the presidency, it will be much more difficult for him to pass his proposed tax increases and the market clearly likes that," said Bolvin Wealth Management Group President Gina Bolvin. "Markets like gridlock because a divided government takes out extremes."

IMPACT ON DEALMAKING

A capital gains tax hike would have also weighed on Wall Street's business of advising on mergers and acquisitions. Investment bankers said a pickup in corporate divestments by individuals, families and private equity firms in the run-up to the election was fueled by fears of Biden implementing his tax plan. Bankers were worried about deal activity slowing down over the next few years if Biden's tax changes were enacted.

Even though taxes are only one consideration for corporate sellers, the prospect of divided government has now removed a significant overhang for dealmakers, advisers to companies said.

"If you had a family that was looking to sell a business, they may breathe a sigh of relief now on potential tax changes but they need to be aware that things may change again in two years," said Daniel Wolf, a partner at law firm Kirkland & Ellis LLP.

Banks were big beneficiaries of tax cuts under Trump, making a reversal seem ominous. Biden's tax plan would have reduced big banks' earnings per share by a median of 7.4% based on 2021 estimates, according to Morgan Stanley analyst Betsy Graseck. Bank stocks were slightly up on Wednesday afternoon."

"It is now unlikely that we're going to get a hike in the corporate tax rate," said Fred Cannon, director of research at Keefe, Bruyette & Woods.

There was more good news for Wall Street in several key congressional races. Many banks' favorite lawmakers declared victory overnight, leaving the composition of banking committees in the House of Representatives and Senate largely intact."

MY COMMENT

Seems pretty clear to me. Lets HOPE that the Senate races do not flip from where they are right now.......at least from an investing and business standpoint. As I discussed.....briefly.......a few posts above.

 

ONE more and than done for the night. I AGREE COMPLETELY with the premise of this little article. I have NEVER watched or followed Cramer.....but.....I think he is SPOT ON with this analysis. AGAIN......posted for business content......please no commentary on the other STUFF:

Jim Cramer: Election's True Winner? Growth

https://realmoney.thestreet.com/jim...equals-growth-15480252?puc=yahoo&cm_ven=YAHOO

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

"You cannot keep growth down. You cannot bet against progress. Every time it happens, whether it's in the midst of a depression or in the trauma that is an election, you must, must, must go with growth.

I know, at a time when the whole republic seems to hinge on the markings of a couple of pieces of paper out of a handful of states, how can I not talk about the ballot-counting in Pennsylvania, or the 20,000-vote margin for Biden in Wisconsin.

Simple, we are having one of the greatest rallies I have ever seen, and it begs to be explained, if only because it must not be forgotten what happens when you worry more about a thesis than the facts.

How did it happen? We got one of the biggest headfakes: Like it or not, the people have spoken and the people want lower taxes more than anything else in the world. They want the status quo. They appear to be sick of the histrionics, the arbitrary and capricious, they want a calm government not in our faces, and they don't want the extremes anymore. In fact, I regarded last night as a gigantic defeat for the hardcore lefties in the Democratic party.

It's big. I know that I was shaken about what could happen to stocks if the Democrats took over everything. It would be very difficult to make money, and, it might be taken away -- so why bother with owning stocks?

What are the consequences of the defeat of the blue wave, even as the election of the standard bearer seems more and more likely as the count comes in?

Let's go tick 'em down.

First, the possibility of an instant blue wave stimulus is now off the table. With that goes that whole bogus thesis I told you about, which JPMorgan (JPM) rolled out the other day, remember the one that said, growth was tired and spent and it was time to anticipate a better economy?

What can I say other than I told you so: Those out of growth into value narratives cost you a fortune. The banks, the oils, the industrials -- like Caterpillar (CAT) which is down 10 -- just crushed you. What made you the most money? The growth stocks that were unfairly dumped last week as this thesis originally germinated.

The stocks I highlighted -- the ones that I thought had the best quarters -- got the moves that they should have picked up last week.

Amazon (AMZN) , with that massive earnings surprise that I though was worth a huge number of points, tacked on $182 big ones and it's still more than 200 points from its high. It's now made up for that whole loss. It's the biggest beneficiary of the Covid tragedy, especially after it is spending $4 billion for safety and supply chain security. Now we like the spend for safety.

Microsoft (MSFT) , which delivered an extraordinary set of numbers -- especially its Azure cloud segment but also LinkedIn, gaming, and regular Windows -- saw its stock obliterated despite a beat and raise. It was insane. I think it might have been Microsoft's best and most balanced quarter ever. But you could not give it away. I found myself shadow boxing with the bears and Jimmy Chill got pounced on in Twitter for liking Microsoft. Wednesday the growth hounds took it way up above where it collapsed.

I was heartsick that I could have read Facebook (FB) so wrong. I saw the strength in what it was doing with small business through Instagram shops. Great growth rate for What's App. Decent numbers from stalwart Facebook. A dazzling dazzling quarter. But it got pummeled and with these other stocks, I heard talk of a negative forecast and some margin pressure. I pored through it and pored through it again. These naysayers were either lying or disingenuous.

When Advanced Micro Devices (AMD) reported I was ecstatic. Then numbers were so perfect that even the fact that the company was bidding at the same time for Xilinx (XLNX) shouldn't hurt it. Instead people abandoned it like rats on sinking ship. Dirty rats.

Maybe the worst was Apple (AAPL) . I was on the phone with Tim Cook as he released the numbers and I was joyous that he could have such a terrific quarter without a new phone. I was stunned that the service revenue stream and the wearables sales were so bountiful. I articulated my amazement at the record earnings on the call.

Wednesday night, Qualcomm just reported a monster number, again, fantastic for Apple.

Ten minutes later, I felt like a total bozo, as the stock collapsed in front of me for reasons no one knew -- but all were willing to make up. Now it is putting them back and then some, and I think it's just one more buying opportunity, especially after we heard from top supplier Skyworks (SWKS) , which intimated that a large client was buying a huge number of parts for their 5G phones. Wednesday night, Qualcomm (QCOM) just reported a monster number, again, fantastic for Apple, and, of course, amazing for Qualcomm owners given that its up 19 points. Next stop, all time high for Apple.

What do these tell you? I think speaks to the power of the micro over the macro people. Or in English: The people who told you to switch into the banks and the industrials and the oils once again made you trade the great ones to buy the losers. Sell the bad ones.

Why, after a 4% move by the Nasdaq do I still think there is more to come and the shareholders aren't done being rewarded.

First, I used to write obituaries for the Tallahassee Democrat and the L.A. Herald Examiner. Every bit of the commentary I heard last week was that these stocks and their cloud acolytes were finished, just like my obituaries. The funeral home: The new, hard-left U.S Congress, which was going to draw and quarter them and confiscate their wealth while hobbling them worse than Kathy Bates rendering James Caan's legs useless. You could expect endless hearings about how to limited the power of the Zuckerbergs and the Cooks and the Pichais and Bezos. Those are off the table. There will be some poorly attended show trials. But the success of the ballot initiative to let the gig economy survive, the one that boosted Uber (UBER) and Lyft (LYFT) , is more in keeping in this market's zeitgeist.

Second, we are going to get a stimulus, but not enough to make up for the lost jobs that are coming from the hospitality industry as the virus takes its told. Against that, though will be an increase in immigration as the draconian immigration policies of Trump could be history. Great for housing and I predict still one more surge, considering the low mortgage rates.

Third, the drug stocks and health insurers no longer have much to fear from a divided Congress with a president who actually favors Obamacare. I think that there will be money showered at the United Healths (UNH) and the Humana (HUM) and Cignas (CI) to get them to write quality insurance anywhere. I think you will see subsidies to them and to you.

Now, again, we aren't sure who wins. It's not been called. But I think the electorate has spoken: They are thrilled that no matter who wins, it looks like there's no lunacy, no craziness, no White House bunker with a huddled harried American style junta that refuses the verdict. There are plenty of challenges coming, but they are of the legal kind and nothing else, no insurrection -- nothing that needs the 101st Airborne or the 82nd for that matter to patrol our cities' streets.

Instead, there are just companies to talk about again, and what we know now is that a red Senate, a blue House, and a blue White House, may be nirvana for growth. Value? You are on your own."

MY COMMENT

I did not buy any of the BALONEY that was been spread around lately......some of it mentioned in this article. REAL INVESTORS.........long ago, mid to late 1990's, I used to post on MSN under the name REAL INVESTOR......anyway, real investors should avoid this sort of short term propaganda and garbage that is put out there daily by the investment press. USE your own brain and senses to actually SEE what is going on around you in the business and investment world. The typical small investor needs to have CONFIDENCE in their own analysis and stock picks. Many of the....so called experts.....are empty suits, market manipulators, and fools. AVOID their DRIVEL at all costs.

 

If I was in the PREDICTION business......which I am not.....I would say we are in for ANOTHER big market day today. In fact, I would say.....again.....that we are in for a very BIG week of gains by the time we get to the close tomorrow. Those siting on the sidelines......WAITING.....for some mythical entry point to get into the markets are going to have a long time to wait. AND.....by the time something happens that they think is their opportunity......they will be WAY BEHIND due to the gains that they missed out on.

We are seeing......as usual......and.....once again....confirmation of the academic research that overwhelmingly shows that all in all at once WINS. A commitment to making a trade NOW......that is REALITY based......versus waiting for some MAGIC FAIRY DUST time or event......to BLESS the trade........just about always wins out over the medium to long term.

Market timing....waiting for a dip....and all the other things that investors routinely do....achieve nothing other than creating poor results. These are the behaviors of TIMID people and TIMID investors. BUT.....if this allows you to overcome your human brain and to be invested versus not investing at all than......OK.

Of course.....for the above to work there has to be some rational reason for the purchase of the particular business.

 

As an illustration of where we are right now here is the SP500 year to date:

SP500 year to date +6.58%

I am GUESSING that we will see SP500 at year end with a total return for 2020 in the range of 12-18%. SHOCKING but eminently doable. If you add in the dividends to the above year to date change we are right now at approximately 8.5% total return year to date. Add in the 2-3% that we......MIGHT.....add over the next few days and we are POTENTIALLY at 10-11% total return year to date by the start of next week.

DOW of course is STILL slightly negative year to date. BUT....I do NOT consider the DOW a valid representation of anything at this point. I believe.....although I have not run any data and dont intend to......that the DOW is performing differently now than before the recent changes they made in the make up of the index. In my opinion they make too many changes, too often, and they appear to me to CHASING performance. I DO NOT believe the DOW reflects the REAL ECONOMY. BUT......it is STILL a benchmark that is FUN to follow over time.

YES.......at this time I am MASSIVELY BULLISH when it comes to stocks and funds.

 

For those interested in......MEANINGLESS but FUN.......data. Here are the results of the trade I did yesterday. At about 2:45PM yesterday I SOLD ALL shares of JNJ. I than PUSHED HARD and and managed to get those funds ALL reinvested by the close....which in my time zone was 3:00. HERE is the impact of this little trade after about 45 minutes.......15 market minutes yesterday......and......about 30 market minutes TODAY:

JNJ +0.30%

versus

AMZN +3.23%
MSFT +2.77%
COST +1.90%
HD +1.00%
HON +1.68%
NVDA +3.25%
PG +1.23%

FUN to play with.....but meaningless........just short term FLUFF to post. BUT.....I do think this sort of post might give some the confidence to follow their thinking and be decisive investors. NOTE......decisive does NOT mean being a trader or jumping in and out of stocks like a MEXICAN JUMPING BEAN. ACTUALLY......do they STILL have jumping beans? I have not heard of them since I was a kid in the 1950's.

The KEY is to identify and buy great companies and hold them for as long as possible. JNJ was probably my longest term holding, I dont know how long but probably decades. BUT......I have not been particularly happy with them for the past year or two. I did not like the baby powder event and how management handled it. AND.......of course I STILL retain the ability to invest in them in the future if I feel it is justified and meets my investment goals.

I will ADMIT that I have been doing more changes to my portfolio over the past couple of years compared to what I would consider IDEAL. BUT......I have to do what I believe is indicated by business and company Fundamentals and the general economy. I HOPE that I will now be in a long time period of doing NOTHING.

 

Yeah to the above post.

"I just don’t know how to time the market, so I avoid it altogether."

NO ONE knows how to time the markets......it is not possible.......and......the academic research proves it. So.....you are in good company Zukodany.

I should CLARIFY......the ONLY reason I am massively bullish right now is the PRESUMPTION that we are going to have a split congress. If somehow the Senate goes DEM.......I will be BEARISH.....at least for a while......to watch and observe how CRAZY it is going to get. In any event I will STAY fully invested.

 

Oh yeah.....today.....the GREEN continues.....obviously......with ALL positions being up except for poor little Snowflake which was down less than a dollar per share. The icing on the cake for me.......a beat of the SP500 by .36%.

 

Markets today are REFLECTING the reality check that the Senate control is not a sure thing. We will probably face two run-off elections for control of the Senate in Georgia in January. These will be NATIONAL elections for senate seats since......obviously......the money and workers from outside the state will POUR IN. This thinking ASSUMES that Alaska and North Carolina will go REP.

SO.....as a result, the markets SUDDENLY realize that tax increases for business and individuals and ALL other issues are STILL on the table. My personal view....this will be a DRAG on the markets for the next couple of months. I still think the general market direction is UP for the remainder of the year.....but.....not as much as it would have been.

I would not be surprised to see the markets turn positive some time today and close in the green.

 

FOR ME.....today......about as flat as you can get. I was RED......by.....$22.99. Official result according to Schwab today for me 0.00%. DEAD EVEN. BUT, i did beat the SP500 by 0.03%.

In terms of MONEY......a very good week:

SP500 year to date +8.63%
SP500 for the week +7.32%

I will post the DOW....but it is really not relevant anymore to economics or markets....unless you happen to own an Index or a big chunk of Dow stocks:

DOW year to date (-0.75%)
DOW for the week +6.87

So since the DOW pays about 2.14% dividend for the year.....we are positive for the DOW year to date....total return.
For the SP500 the dividend yield is about 1.8%........ we are at a total return year to date of about +10.43%. The SP500 is kicking ass in spite of the INSANITY this year and is well on the way to even higher total return for 2020.

 

WOW........just looked at my primary account.......and......after the results of my two funds added to my account a little while ago......I ended with a TOTAL GAIN of.........$93.38. So....I ended up in the green for the day for TOTAL account value by $93.38. Account STILL shows a result for today of 0.00%.

Everyone surviving post-election?

 

AND......here is MORE good economic news and news for the country....of course......there will be no discussion of this in the general media:

October jobs report: Economy added 638,000 jobs as unemployment rate fell to 6.9%

https://finance.yahoo.com/news/octo...epartment-coronavirus-pandemic-195633097.html

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

"U.S. employers brought back more jobs than expected in October and the unemployment rate improved by a greater than anticipated margin. Still, improvements in both metrics have decelerated considerably from earlier this year during the initial stages of recovery during the pandemic period.

The Department of Labor released its monthly non-farm payrolls report Friday at 8:30 a.m. ET. Here were the main results from the report, compared to consensus estimates compiled by Bloomberg:

• Non-farm payrolls: +638,000 vs. +580,000 expected and a revised +672,000 in September
• Unemployment rate: 6.9% vs. 7.6% expected and 7.9% in September
• Average hourly earnings, month-over-month: 0.1% vs. 0.2% expected and 0.1% in September
• Average hourly earnings, year-over-year: 4.5% vs. 4.5% expected and a revised 4.6% in September

Friday’s jobs report also saw revisions to the last couple months’ worth of payrolls. August employment was upwardly revised to see a gain of 4,000 jobs to 1.493 million, and the change for September was revised up by 11,000 to 672,000.

U.S. stock futures, which had been trading sharply lower earlier during the pre-market session, cut some of their declines after the release of the better-than-expected jobs report.

Leisure and hospitality industries contributed a significant portion of jobs to October’s overall rise in payrolls, as the areas hardest hit earlier on during the pandemic continued to recover. Employment in these industries rose by 271,000, though this sum was a step down from the 406,000 jobs added back in September. Elsewhere within the service sector, professional and business services jobs rose by 208,000, increasing significantly from the 122,000 brought on during the previous month. Retail trade jobs also increased by more than 103,000.

Utilities industries were the only area in the private sector to see net job losses during October. Government employment, however, slid by 268,000, with 147,000 of these due to losses from temporary 2020 Census workers.

“The 638,000 rise in non-farm payrolls in October is stronger than it looks as it included a 147,000 drop in temporary Census employment and, alongside the big fall in the unemployment rate, it suggests that the labor market recovery still has plenty of momentum,” Andrew Hunter, senior U.S. economist for Capital Economics, said in a note Friday morning. Excluding the decline in government jobs, private payrolls rose by 906,000 last month following a jump of 892,000 in September.

“The slowdown in hiring in leisure and hospitality might be an early sign that virus concerns were starting to weigh on the sector but, at 271,000 last month, hiring remains much stronger than it was back in August,” Hunter added. “In any case, that was offset by larger gains in retail, construction and professional & business services payrolls.”

U.S. employers have brought back fewer jobs on net in every month since June, when payrolls rose by a record 4.78 million as stay-in-place orders and lockdowns lifted and allowed many businesses to restart operations. That trend continued in October, as the economy only slowly brought back payrolls that had been lost at the start of the pandemic.

And employment is still down by about 10 million payrolls since the beginning of the pandemic, since net job increases in each of the past six months have still not compensated for the historic declines in each of March and April. And 21.5 million Americans are still receiving some form of unemployment insurance, according to the Labor Department’s latest weekly jobless claims report, for a sum that has improved from a pandemic-era peak of more than 30 million, but held multiples above the total from the same time last year.

The October jobs report also continued to reflect a worrying trend seen in the past several months’ worth of data: Many individuals’ temporary furloughs or layoffs have become permanent. The number of so-called permanent job losers stayed about steady at 3.7 million in October, for a sum of 2.4 million above the level from February. And the number of long-term unemployed Americans, or those jobless for 27 weeks or more, jumped by 1.2 million to 3.6 million last month to account for about one-third of the total unemployed.

Still, the overall unemployment rate ticked lower again in October for the sixth straight month of improvements. The labor force participation rate also improved to 61.7% from 61.4%, reflecting an increase of 724,000 individuals into the civilian labor force.

The release of the October jobs report comes as coronavirus case counts worsen in the U.S. The country topped 100,000 new infections in a single day for the first time ever on Wednesday, according to data cited by the Washington Post. The latest resurgence in virus cases likely began too late in October to have generated a meaningful impact on the jobs report due out Friday, given that the survey week for the report takes place around the 12th of each month. However, the outbreak may present risks for the labor market going forward.

“The rise in COVID cases in recent days has elevated concern about the outlook for the economy before availability of safe and effective vaccines,” Mark Hamrick, Bankrate.com senior economic analyst, said in an email Friday morning. “Even so, the economic recovery remains intact.”"

MY COMMENT

This report and the REVISIONS.....in my opinion.......is a BLOW OUT report. Of course the reporter has to GRATUITOUSLY mix in some virus data and other comparisons that are NOT relevant......after all.....all this good news MUST be balanced out. We cant have anyone getting too out of control. AND......as has been the NORM for the past four years.....the prior data is REVISED UP. For some reason.......over the past four years........ the data seems to ALWAYS be reported to the negative compared to where it ends up after revision.

AS USUAL......no one will care about this information. BUT.....I consider it....money in the bank.....as we move forward.

 

Well done MODS. There was a pretty good spam operation on the "INVESTING" forum last night. At least the spam poster took the time to actually post relevant responses on 8-10 threads before posting their link to their BS site.

Which brings me to my conclusion and comment.......the MODS and management on this site are EXCEPTIONAL. The BEST of any site of this type that I have seen. They step in where needed.....like last night.....but otherwise they run the site with an EXTREMELY light hand. I will also add that the posters on this site are also pretty FANTASTIC. You rarely see the kind of constant arguments, disputes, harassment, etc, etc, that you see on other typical sites.

THANK YOU and congratulations MODS and MANAGEMENT for a very well run and moderated site.

 

This little article is RIGHT IN LINE with what I posted the other day about the total returns of the SP500 for 2020 and where we are headed:

Wild 2020 is shaping up to be a surprisingly normal year for buy-and-hold investors

https://www.cnbc.com/2020/11/07/wil...y-normal-year-for-buy-and-hold-investors.html

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

"By now, “2020” has become four-digit shorthand for the unprecedented, unsettling and unbelievable. Yet in the markets, from point to point, this year has been surprisingly normal for a buy-and-close-your-eyes investor.

After last week’s tension-release rally, the S&P 500 has posted an annualized gain of about 10% for 2020, or 12% or so including dividends, right in line with the historical yearly average.

For investors in a traditional balanced portfolio of 60% stocks and 40% bonds, the returns are almost the same – a bit better than the long-term average for this strategy, but not by much.

Now, sure, the path has been wild. Since the year began, the S&P 500 went up 5%, down 35% and then up 60%. Yet market performance is always streaky and exaggerated rather than steady and comfortable.

This year some of the cadences have conformed to the “usual” pattern, too. After May, the rally flattened out and grew less stable, in line with seasonal tendencies. September, the worst month of the year through the decades, saw a sharp 10% correction. And September and October together were choppy, in the typical manner of those months in an election year.

The hecklers might look at the positive resolution to the drama of this pandemic-and-recession-beset year so far and insist it was all because of the Federal Reserve. And, sure, the Fed did its job in providing liquidity during a panic and pursuing its legal economic mandate of maximizing employment.

“Where would the market be without the $3 trillion government stimulus?” the purists will ask, and the answer is, “In a bad place.” It’s true that Congress, with rare urgency and uncommon consensus, utterly short-circuited a recession with a massive infusion of cash into the economy — and might have modeled effective fiscal activism for future crises in the process.

Eight weeks left
Where does that leave the market now, with eight weeks left in this jarring but in some ways not-so-unusual year? Is it set up for the “normal” November-December tack-on rally?

Well, to start with the basics, it remains a bull market, one of the strongest on record if one dates its start to March 23 of this year. After the same number of days since the start, this run is about even with the initial ramp of the bull market that started in August 1982, and behind only the one that launched March 2009, according to SunTrust. Other perfectly respectable, multi-year bull runs faltered or stalled a bit around this number of days since they began, but then resumed their climb.



Last week’s 7% pop in the S&P 500 is perhaps best seen as a collective mood swing from anxiety to relief to FOMO, or fear of missing out. As hinted here last week, investors ahead of the election had grown scared and cautious enough to create the makings of an upside reversal.

Early in the week, the market was positioning as if confident of a “blue wave” ushering in Democratic control of government and major fiscal expansion with higher taxes. Treasury yields and cyclical stocks rose dramatically. After Election Day pointed toward divided government with less chance of an aggressive fiscal agenda, growth stocks and bonds were bought avidly.

Yet the rationales were most likely less relevant than the fact that investors simply let go of their fears and downside hedges once the big, looming event passed in a mostly orderly way.

As Deutsche Bank strategist Parag Thatte put it, “While various market narratives have ascribed fundamental drivers to the moves across asset classes, in our reading these have been in line with the historical playbook, largely reflecting instead an unwinding of protection that is common around calendar risk events.”

Bullish signs
The buying was surely intense enough, with the look of under-invested fund managers and individual investors grasping for exposure to a market before it ran away from them. The S&P 500 logged four straight daily gains of at least 1% for the first time in 38 years. On three separate days more than 80% of NYSE volume was in advancing stocks, a sign of powerful demand for shares.

If there’s a concern in the immediate term, it could be that the market has burned a lot of fuel simply to rush toward the upper end of its three-month range. And it’s running a bit hot too. The S&P jumped from just over 3200 to above 3500 in a week. It previously traveled almost the same distance between similar levels over the course of three weeks into the Oct. 12 peak. Some cooling off or choppy churn would be neither surprising nor particularly damaging at this point.

Other reassuring tidbits: The S&P 500 notched a record-high weekly close Friday (of relevance to some chart-studying traditionalists); semiconductors made a new high (though are starting again to look a bit stretched); and credit conditions are at their strongest since the Covid collapse. Any of these can reverse, but it’s tough for the market to get into too much trouble unless and until they do.

Companies have proven unexpectedly resilient, too, with profits bottoming at a higher level than forecast. John Butters, senior earnings analyst at FactSet, notes that analysts in October boosted S&P 500 profit forecasts for the current quarter by 1.8% so far. This is rare, only the third time since 2011 that estimates have gone up in the first month of a quarter; on average forecasts tend to fall more than 2% over such a span.

There’s little doubt that the passage of the election will soon give way to another focal point of worry, whether the Covid-case surge or related prospect of a backsliding economy due to health-related business restrictions.

This would test investors’ impressive ability to continue looking ahead to vaccine progress and corporate revival. Yet given Wall Street’s unlikely ability this year to turn extraordinary world events into perfectly normal positive returns, it’s hard to bet too confidently that the market would fail such a test."

MY COMMENT

HERE is my personal view of the stock markets and the economy......yes......they are very different and NOT linked......and other factors going forward over the long term......2-4 years.

GOING forward I DO see a bull market. COVID will play no role at all. We will be driven by earnings and data. Any positive economic drivers of the past four years will be out the window. I EXPECT that the general economy once we get into the new policies will GENERALLY SUCK. Jobs will once again strongly flow overseas and to Mexico. Illegal immigration will hit new all time highs. Employment numbers will be totally unreliable.....but credit will be claimed....... since we will still be in covid recovery state for 1-2 more years. Jobs will be outsourced in record numbers and record numbers of foreign workers will FLOOD the country taking jobs away from qualified Americans. Wages will stagnate and probably go down. The manufacturing RENAISSANCE will end.....quickly.......and the poor Midwestern states......the so called "blue wall" will go back to being the poor rust belt. REGULATIONS will balloon and along with a REVIVED bureaucracy will strangle the economy.....especially the OIL industry

My view is based on a TOTAL DISCONNECT between performance of the stock markets and the general economy. I see the stocks markets and investors doing very nicely. In my opinion this disconnect is a TYPICAL thing we have seen many times in the past.....not something new. The economy in general.......will settle, stagnate and linger for the next four years. LONG TERM investors will do very nicely and should average above 12% total return.

WHY? NOT politics. It is........Because......I have seen this play out over and over during my lifetime......10 different Presidents. It NEVER changes.

AND

ALL the above is based on there being gridlock with a REP Senate. If the Dems take control of the Senate the above will NOT happen......things will be way more dire in terms of the economy. HOW DIRE.......I have no idea without seeing what they do and how.

For myself.....based on the companies that I own......I expect to make a lot of money. Not as much as what I might have made with Trump post-covid......but......a lot. SO......as usual.....do I care? Others get what they deserve and have to live with what they get. NOT MY PROBLEM. As a CAPITALIST INVESTOR.......ALL I care about is making......."MY"........good money......and I will.

 

It is my.....OPINION.....that there is a "probability" that the markets will be UP by 10-12% over the next three months......mid November to mid January. In other words.....an election relief rally.......a Santa Clause rally.....and a January rally. As I said above......I believe that the outlook for stocks is strongly positive in spite of the fact that I believe the outlook for the economy......once the current government change occurs........is negative.

Now that my annuities have kicked in and I am budgeting based on those funds along with the HUGE tax savings I will see annually going forward.....I am projecting that I will have about $20,000 annually to add to my primary investment account from non-investment income. I was going to make that addition to my account in January each year. However.....based on my opinion above.....this year......I will add those funds tomorrow instead of in January. After I make this post I will go into my account and transfer those funds into my primary stock account and they will be invested at the close tomorrow in the SP500 Index fund in my account.

I see little to no reason to wait till January based on the particular.......and very specific......market situation that we have in place right now.

Of course no guarantee that this will happen......but since these are VERY long term funds......I will invest ALL IN now instead of January when I planned.