The Long Term Investor

WELL.....as I have posted before......I was not a visionary....but I did scrape together $80,000 in cash and put it ALL in shares of MSFT in 1990. My entire thinking was that they had a world wide monopoly for the operating system for EVERY computer being sold world wide....how could I go wrong. They were a very young company....but.....they seemed to have a TOTAL monopoly...world wide....in the PC operating system. Apple was not much of a threat since they were extremely NICHE back than primarily being in schools and medical uses.

I was LUCKY to be living within 5 miles or so of the MSFT HQ in Redmond and MSFT was the TALK of daily business radio in the Seattle area.......I would listen to the business radio chanel while driving home every day from work.......so I had good awareness of them and their stock. They were a stock split machine for a while back than. In fact our neighbor 3 houses down had a MSFT employee number under 30. Lots of people buy a lake cabin.....I remember 8-10 years later they bought an entire camp and the lake it was located on. His options made him a fortune.

The President of MSFT......HALLMAN...who they hired from Boeing....lived about 5 houses down from us......I thought he was an IDIOT......he just seemed really slow and dumb to me....but I did not know him personally. His wife would sashay around at neighborhood women's events with her nose in the air thinking she was really something since her husband was the President of MSFT. He lasted about a year or so till he was fired. I could never figure out why in the world they would hire some guy from Boeing to be President.

As to comparisons to TESLA....back than MSFT was doing a lot of splits.....they would split every time their stock got up there....here is their stock split history:


lit Ratio
Sept. 18, 1987 2 for 1
April 12, 1990 2 for 1
June 26, 1991 3 for 2
June 12, 1992 3 for 2
May 20, 1994 2 for 1
Dec. 6, 1996 2 for 1
Feb. 20, 1998 2 for 1
March 26, 1999 2 for 1
Feb. 14, 2003 2 for 1

You can see how explosive their stock price was for about 11 years from 1987 to 1999 with all those splits. Every time there was a split the shares would immediately take off and soon be right back up there. UNFORTUNATELY......the corporate geniuses now rarely do splits. I think MUSK has another split left in him....when he feels like JUICING the stock and setting off another round of explosive growth. At least he had the BRAINS to do the recent split and not follow the current thinking of letting share price skyrocket forever.

TESLA is STILL relatively young compared to that initial EXPLOSIVE run that MSFT had from 1987 to 1999. AND....a totally different business.....heavy manufacturing....compared to operating system production. It is very difficult to compare the two.....ALTHOUGH....if you look at a chart it was not till January of 2020 that TSLA stock hit $100 for the FIRST TIME. It was a different era back than....but I do strongly believe that TESLA has more room to run in the short to medium term.

Looking at the above.....I probably bought right before the April 1990 split. I SOLD out all shares in 2002....although....I did diversify shares at various times into other holdings because that position was just TOO BIG....even for me to let it run as a single position. Like TomB16's TESLA.....this stock was one of a very few DEFINING MOMENTS for me as an investor.......a once in a lifetime holding that gave us lifelong financial security. Seattle was a hotbed of new young companies back than that became household names. SIMPLY due to living in that area....I had awareness of these companies and was able to buy them EARLY. The ones that I bought were:

NIKE (Pacific NW company)
STARBUCKS
COSTCO
EAGLE HARDWARE/HOME DEPOT/LOWES - indirectly....I was an early investor in a Seattle company Eagle Hardware that was competing with Home Depot and Lowe's in the early days. They ended up being purchased by Lowe's in the late 1990's. Through Eagle.......Home Depot, and Lowe's came onto my radar since they were all competing for dominance. At one time back than I owned both Home Depot and Lowe's but eventually settled on Home Depot as my only hardware retail holding.

I remember the battle between SBC and Starbucks for coffee dominance in Seattle. One of the early Espresso stands in the city was at the flagship NORDSTROMS store in downtown Seattle. Nordstroms would set up an espresso stand outside the door to the store every Christmas and it was so sucessful that it became a year round fixture. That is the first espresso stand I remember in Seattle. Before Starbucks started doing espresso....I remember going to a restaurant and people raving about the fact that they had Starbucks coffee...regular coffee....I thought their coffee sucked and tasted like they burned the beans.

Anyway....I DIGRESS.......good memories....the glory days....the old days. It is NICE to sit in a warm house and reminisce when it is SNOWING outside today and we have 2-4 inches of snow here in Austin, Texas.

 

ZUKODANY......the era for Microsoft that was comparable to what we are seeing with Tesla lasted from about 1990 to about 2002. They were hot, hot, hot. About 2002 they fell into hard times for a good length of time. So they had a DEFINING 10-12 year run. Tesla.....has had a comparable.....ONE YEAR RUN. BUT.....as I said....very different businesses....very different business model....very different products. The greatest difference.....Microsoft was a monopoly with NO REAL competition.....Tesla has lots of competition in the same product.

 

YES.....I agree....a very speculative....young and risky company for stockholders that get carried away. BUT.....no guts no glory???

I look back on the stocks that I bought and held for a time.....some of which I still hold.....and am very thankful and amazed how life turns out and how single events during your life can have such an impact. Investing our money in the stock market allowed me to retire at age 49 in early 1999. We were so young back than and had such good invest-able income from my business that we were able to take risk.......but....I am not sure we appreciated how much risk at the time. I am VERY HUMBLED and very thankful for how it has all turned out.....so far.

 

Interesting that the MSFT GLORY YEARS and the current TSLA glory year.........how long it lasts is yet to be determined...... both occurred during a time of stock market MANIA with day trading by young guys with little to no experience.

Probably irrelevant to anything.

 

JUST when you thought it was safe..............EARNINGS are back. YES......at least they will give those of us that are not GLUED to our national PERFORMANCE ARTISTS in DC.......and the DRAMA flogging media.....something to read and consider that....ACTUALLY...has something to do with investing. (I intend this comment toward them ALL........not political.....simply fact)

Forth quarter earnings reports will start this next week and will continue for many weeks after. I am sure we will see the USUAL response to any report. The earnings will be good, if not great. The stock will than drop for the next 2-5 days....as the so called professionals and the investing media OBSESSES over some obscure forward looking statement.

For those of us that are long term investors......I expect that the majority of earnings reports.......70-85%......will ACTUALLY be positive.....and....over the long term WILL push stock prices higher as usual.

 

I find this INTERESTING......not particularly relevant to stock investors....but interesting:

Two-Day Bitcoin Plunge Shakes Faith in Cryptocurrency Boom

https://finance.yahoo.com/news/two-day-bitcoin-plunge-shakes-042414396.html

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

The white-knuckle Bitcoin ride took another twist Monday as a two-day tumble in the digital currency stoked concern that the polarizing cryptocurrency boom may run out of steam.

Bitcoin, the largest cryptocurrency, slid as much as 18% over Sunday and Monday to as low as about $33,500. That’s the biggest two-day slide since May last year and follows a record high of almost $42,000 on Jan. 8.

“It’s to be determined whether this is the start of a larger correction, but we have now seen this parabola break so it might just be,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore.

Bitcoin’s price has more than quadrupled in the past year, evoking memories of the 2017 mania that first made cryptocurrencies a household name before prices collapsed just as quickly.

True believers in Bitcoin argue the difference this time is the asset has matured with the entry of institutional investors and is increasingly seen as a legitimate hedge against dollar weakness and inflation risk. Others worry that the rally is untethered from reason and fueled by vast swathes of fiscal and monetary stimulus, with Bitcoin unlikely to ever serve as a viable currency alternative.

“Bitcoin is almost certainly in another bubble and its current growth rate is not sustainable,” Howard Wang, co-founder of Convoy Investments LLC said in a Jan. 10 note. “While it may mature in the future, Bitcoin as it exists is largely a speculative asset.”

Bitcoin has shrugged off recent dips and may do so again, potentially recovering to as much as $44,000 “before the actual correction,” Luno’s Ayyar said.

The coin pared some losses Monday and as of 2:03 p.m. in Tokyo was around $35,600. Rival digital assets are also slumping, with second-largest coin Ether tumbling as much as 20%.

MY COMMENT

INTERESTING......but irrelevant. Seems like the last Bitcoin BUBBLE took off about Sept/Oct and peaked about December 8, 2017......the current BUBBLE took off about Sept/Oct and peaked about January 8, 2021. A very similar pattern. Looks suspicious to me. ACTUALLY........I dont have a clue or know anything about it.

 

I should NOT have mentioned anything about TESLA......jinxed the stock today. ACTUALLY.....this is just one of those days that you have to let the markets settle after the open. The futures leading to the open were so negative.......and....the weekend media drama.....so crazy this weekend......that we are actually doing pretty well considering.

Days like this........nothing the first half of the day means anything......once things shake out by about 1:00 Eastern time......we will see the real market. No way to tell where or how we will end the day today. Probably simply a continuation of the erratic day to day market action we have been living with for the past 6 months. I dont see much going on one way or the other TODAY that is really relevant to investors....especially long term investors.

JUST as something that I am interested in.....here is a little article that is related to my recent China theme of the past few weeks:

Where is Jack Ma?

https://www.aier.org/article/where-is-jack-ma/

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

"Should economic freedom take a backseat to civil rights? Jack Ma found out the hard way that both are equally important. The Alibaba founder and Chinese billionaire has been missing for over two months now following his recent criticism of China’s banking system. Quartz gives a brief recap of the occurrence when it writes,

It has been two months since the flamboyant founder of e-commerce giant Alibaba vanished from public view, after he drew the ire of Beijing for giving a daring speech in which he criticized Chinese financial regulators for stifling innovation. Soon after those remarks, Beijing suspended the $37 billion IPO of Ma’s fintech empire Ant Group planned for November, a decision that was said to be made by Chinese president Xi Jinping. The tech mogul has not since appeared at any public events or given any speeches, and was even replaced as a judge in a game show he helped create to promote African entrepreneurs. (Alibaba said the replacement was due to “a scheduling conflict.”)

You can find AIER’s recap and commentary on the Ant Group incident that ultimately led to Ma’s disappearance from public life here. What sparked the Chinese crackdown was when Ma made a number of critical comments on the Chinese banking system, which he described as bogged down by state intervention and regulation. Business Insider reports that

“On October 24, when Ant Group was gearing up for an IPO, Ma criticized China’s financial regulatory system, saying China was following global rules that are part of “an old people’s club.” Ma said that the rules that govern global banking aren’t well-suited for Chinese tech innovation.”

Of course this is a perfectly reasonable criticism as state regulators usually tend to get in the way of innovation whether it’s China or the United States. The main difference is that such dissent and criticism is not tolerated in China. Not only because of the Chinese Communist Party’s authoritarian tendencies but also because such criticism undermines their legitimacy. The Chinese government’s intervention into Ant Group’s IPO and antitrust probe into Alibaba are blatant shows of force against Ma’s criticism. With Ma out of the picture for what will hopefully be a short time, the Chinese government has begun an assault on Ant Group as well as Alibaba. The Wall Street Journal reported that Ant Group has been ordered to take significant restructuring measures which include potentially sharing its consumer data as well as participating in a credit reporting system run by the People’s Bank of China.

A History of Disappearing Billionaires
Jack Ma’s run in with the Chinese Communist Party is not the first time a business tycoon was arbitrarily persecuted for questioning the government. Not even close. Quartz highlights a number of high profile individuals who have been sacked. One of the most recent was Ren Zhiqiang,

“The property mogul, who has long been known for his outspokenness on social issues, vanished from public sight in March. Many at the time attributed his disappearance to his bold criticism of the government’s cover-up of information about Covid-19.”

Another high profile case was former Anbang Insurance Group chairman Wu Xiaohui, who was quietly sentenced to 18 years in prison for “fraud and abuse of power.” Although one would be somewhat inclined to believe that accusation, the fact that he disappeared for nine months prior to a sudden trial gives one reason to believe this was likely political. Quartz reported that

“Anbang was taken over by China’s insurance regulator after Wu fell from grace in 2018. Last September, Anbang applied to the regulator to liquidate the company.”

CNN reports on the ever tightening restrictions on China’s private sector, if you can call it one, when it writes,

“In recent months, the government’s steps to rein in the industry have gotten more blatant. The Communist Party published an unusually frank set of guidelines in September, for example, that called on its members to “educate private businesspeople to weaponize their minds with [Xi’s] socialism ideology.”

China is entering new territory as an economically prosperous authoritarian regime when traditional thinking suggests that prosperity usually leads to calls for liberalization. It also has been and is continuing to position itself as a geopolitical hegemon. It is likely that such calls for political unity and compliance will increase in the near future.

Political Risk and Investing in China
Ant Group’s cancelled IPO was reported by NPR to have the potential to raise over $37 billion, bringing its market value to over $300 billion. To say that its abrupt cancellation and the regulatory assault that followed sent ripples through the financial sector would be an understatement. Jack Ma’s sudden disappearance along with other Chinese business leaders shows the considerable political risk of dealing with Chinese companies. Things can change at a moment’s notice because a CEO says something out of line or because someone in the government was having a bad day. The Motley Fool notes that the recent antitrust probe into Alibaba, likely in retaliation for Ma’s comments, led to a selloff which took $100 billion off its market cap. Yahoo Finance writes

“Chinese tech companies did a pretty good job convincing global investors that they operated independently from the Communist Party. Now, Jack Ma has become a case study for the firms’ biggest skeptics.”

As tensions with the US and China begin to rise, in part due to geopolitics as well as the behavior of the Chinese government, there will likely be more disruptive regulations on both sides. One recent example has been the signing into law of a bipartisan bill that will remove Chinese companies from the US stock exchanges if they fail to comply with auditing standards. China has also considered creating a blacklist of US tech companies. The United States already has its own active blacklist which sent Alibaba shares downward after it was reported that it was possible it could be added to the list. Such examples demonstrate the political risk of not only being a Chinese businessman but doing business with China at all. Abrupt and arbitrary regulations tend to cause suffering for all sides involved.

Economic Freedom and Social Freedom
Such occurrences show that the Chinese government values political compliance more than anything and that even business leaders must kneel before that mission. A mission that is not interested in innovation and economic prosperity more than it is in power. It also shows that economic freedom and social freedom are directly related. They are not mutually exclusive and one easily leads to the other. If people have social freedom but not economic freedom, they will use that social freedom to speak out in favor of acquiring more economic freedom when they see that things could be better, as in the case of Jack Ma. If people have no social freedom then economic freedom is impossible and vice versa because rights such as private property and freedom of speech are a crucial component of both. If the state is willing to take away one, what’s stopping them from taking away the other, especially if it jeopardizes its agenda?

The people of China have learned this firsthand but even here in the United States, where we place social freedom above economic freedom, such a dystopian future is possible if we are not careful. We have already seen firsthand what forced business closures in response to Covid-19 have done for our civil liberties. It doesn’t just stop at business regulation. Imagine what could be in store for those who question the Democrats’ Green New Deal or the Republicans’ industrial policy agenda?

The disappearance of Jack Ma demonstrates the truth that economic freedom and social freedom are not mutually exclusive. While we should condemn the Chinese government’s actions, we should also be cautious of rising authoritarian tendencies here at home, whether it’s towards our civil rights or our economic freedom."

MY COMMENTS

It will be interesting to watch the Jack Ma situation and see where and how it ends up. Of course....as usual....I will NOT be investing in Chinese companies. It is bad enough that many........if not most of....... the AMERICAN companies that I am invested in have significant and substantial ties to China. The more companies become dependent on China......the WORSE it will be for shareholders that desire independent company management......free of nationalistic Chinese interference. BUT......in reality...if you want to own those companies.....just a "cost of doing business".

 

Does ANYONE care that we start earnings this week? FRIDAY will be a BIG bank reporting day. I look at the general stock market news today and it is ALL broad sweeping negativity based themes......very little that is specific to the actual markets and relevant to individual investors....especially long term investors. It is hard for the markets to cut through that kind of "stuff" on a day like this. All anyone can do is.....sit and wait and watch the show.

 

OUTSIDE of investing....I will mention...that I did add a new painting to the old collection recently. I RARELY buy art on eBay......but a painting came up on one of my saved searches that I was interested in. I know the artist well enough to know that it was real.

SO....after contacting the seller I was able to work out a "buy it now" deal at a discount and avoid the auction. A nice 30 X 40 oil on canvas from about the 1940's or 1950's by a nationally recognized Western artist. The price was right....under $2500. It arrived a few days ago and was even nicer than expected.....so a good ending.

The bad news is.........it caused a cascading affect of having to move art around on the walls. Some rooms in our house are now definately "SALON STYLE" when it comes to hanging art.

As an educational service.....on the topic of hanging art.....from an irrelevant source:

"If you have spent time in museums or galleries lately, there's a good chance that you will have seen an exhibition hung “salon-style,” a term that refers to large groupings of art that extend higher and lower than the traditional eye-level single row or “museum-style” hanging."

YOU can tell what kind of a market day today is by the fact that I am posting about art MINUTIA........BORING and DULL.

 

Well, well.....as I was droning on about art.....looks like the markets have turned a little bit.......to the positive side of the force. There is now.....a definite...."CHANCE" for a positive or at least a mixed market at the close. I would consider either one a total VICTORY considering the open today.

 

Today was a given.....RED....of course. My ONLY positive holdings were NKE, HD, and NVDA. And....on top of that a beat by the SP500 by 1.06%.

For any that are long term investors and starting to get FREAKED OUT that some big.....boogie man.....correction is coming soon....I like this little article and the simple yet....absolutely critical....lessons it contains:

When investing, know your risk tolerance and how to recover from mistakes

https://www.usatoday.com/story/mone...ow-recover-after-investing-errors/6598329002/

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

"Dear Pete,

I'm embarrassed to say I panicked at the end of March and sold all my investments and went to cash. Before I knew it, the market was on the rebound. I kept assuming the market would crash again and give me a chance to buy back in, but whenever the market went down, I never thought it was enough of a decline to justify buying back in. I'm 55 years old and have about $600,000, down from $960,000. Did I just ruin everything I've worked for? I'm really upset and don't know what to do.

I'm terribly sorry you're in this situation, Richard. I know how awful you must feel, but frankly, there's nothing you can do about the opportunity and money lost. It will take awhile to come to terms with this, but the sooner you do, the sooner you can move on and put together a feasible Plan B. In fact, trying to reverse history is both impossible and a complete waste of time. Mourn the money lost and move forward

Plan B is so intense and robust, you won't have the luxury or even the time to look back on what could have been. First things first, you have a major risk-tolerance problem. People panic sell for lots of reasons, but the primary reason is because they've invested outside of their risk tolerance.

Your risk tolerance is the amount of volatility you're willing to endure, prior to suffering undue stress and anxiety, which eventually can lead to irrational trading. In other words, your risk tolerance will help you determine what investments to choose so when the market gets rocky, you aren't inclined to make sudden changes. Needless to say, you didn't have the right investments selected for your particular ability to tolerate risk and volatility.

I could tell you to stay calm until I'm blue in the face, but my directive is pointless if you're not investing in accordance with your risk tolerance.

Having had this same conversation for over two decades, don't fall for the urge to dismiss this very important first step. Not only do you need to change the way you invested the first time, but you must make sure you don't try to take more risk to make up for lost time. That's a very common second mistake, which can permanently seal your fate of a failed retirement.

Next, you have to get your money out of cash. I'm not necessarily saying you need to get directly back into the stock market, but you're going to need your money to earn more than close to a zero percent rate of return.

This is also my opportunity to tell you how bad you need a good financial adviser. Not only will a good adviser help you determine your risk tolerance, but that person will also help you choose investments that will align with this newfound risk tolerance. Don't get further caught up with trying to time the market when getting back in – that thinking is what got you into this jam in the first place.

Now you need to determine how much money you'll be able to invest over the remaining years of your career. Your new adviser will easily be able to put together projections to help you understand what sort of nest egg you'll be working with on your chosen retirement date. That's just math, and you should resist the urge to overcomplicate that process.

Now for the hard parts.

First, whatever income your adviser tells you will be available via your nest egg for retirement, you need to begin adjusting your current lifestyle to meet that level of income sooner rather than later.

Easing into that adjusted retirement lifestyle is much more feasible than trying to figure it out once you retire. Unfortunately, it's admittedly tough to find the motivation to do that now. But when you stop and think about it, waiting to adjust your lifestyle until later makes the task much more difficult.

The second "hard part" is forgiving yourself.

You messed up. No one died. It's over. And now you have to extend yourself some grace. That's really hard to do; much harder than adjusting your lifestyle to match your future retirement income. But hopefully as time passes, you're able to come to terms with your new reality and enjoy a peaceful retirement.

MY COMMENT

ABSOLUTELY the truth. As usual......so simple....in theory. Evaluating and accepting RISK TOLERANCE is the first CRITICAL step to being able to be a long term investor.

 

The ten year Treasury Yield is now at 1.1358%. I dont see much in the financial media paying any attention to this issue.....a few articles.....but, not much. Too many other distractions. HERE is one take:

What rising rates could mean for the stock market

https://www.cnbc.com/2021/01/11/what-rising-rates-could-mean-for-the-stock-market.html

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

"Key Points

• The 10-year Treasury yield has risen more than 20 basis points (1 basis point equals 0.01%) since the beginning of the year, and strategists say it’s a warning that the stock market could be heading into a more volatile period.
• The FANG stocks and other high growth stocks are most susceptible to rising yields, and they were under pressure Monday.

The benchmark 10-year Treasury has risen about 20 basis points since the start of the year (1 basis point equals 0.01%), and was at 1.13% Monday. Still relatively low, the yield is at the highest it’s been since last March, but in itself the yield is not a problem.

But the move could be signaling a period of more volatility for the stock market and the potential for more pressure on FANG and the other growth names that helped take the stock market higher last year. Some strategists expect those big tech and growth stocks to slow their gains this year, as value and cyclical names move higher on prospects vaccinations will lead to an improving economy.

Strategists do not see yields at current levels halting the stock market’s gains, but the expectation that rates will continue to rise could make the ride bumpier for stock investors.

“I think the path of least resistance...is still up...The technicals supporting this market are strong, but if you’re looking for warning signs there are some warning signs coming out of the fixed income market,” said Mohamed El-Erian, chief economic adviser at Allianz.

El-Erian, in a CNBC interview, said yields have been rising on longer duration bonds, like the 10-year and 30-year bond, but the 2-year yield has stayed low, anchored by the Fed’s zero interest rate policy . The 10-year is widely watched, since it influences mortgages and other lending rates.

“It’s going up for the wrong reason, not because of growth but because of a combination of buyers getting hesitant and people worried about inflation, not reflation,” El-Erian said. “So if that continues, if you get another 20 basis points in another five or six trading sessions, then it’s flashing yellow a lot brighter at that point.”

The 10-year yield edged above the psychological 1% level last week after Democrats won two Georgia Senate seats, giving the Democrats control of the Senate. That prompted more selling in bonds, as investors speculated President-elect Joe Biden will now be able to push through his plans for trillions in spending. More stimulus means more debt and more Treasury issuance to pay for it, a recipe for higher yields. Yields move opposite to price.

“In the last few weeks, we made the leap to rising rates being neutral, to rising rates being positive, to today where you can argue that rates moving higher from here is likely to be a headwind for stocks, particularly high growth, high P/E stocks,” said Julian Emanuel, head of equities and derivatives strategy at BTIG. Emanuel notes investors have already begun the shift away from high growth to value over the last several months.

Emanuel expects the S&P 500 to reach 4,000 by year end, but he also sees the market as entering a new phase of speculation, with both upside and downside volatility.

He said evidence of the speculative phase is apparent in the way the stock market continued its advance as the 10-year moved rapidly above 1%. He also pointed to the fact that stocks were not rattled much last week when a violent mob seized control of the Capitol Building during a session of Congress. Stocks also continued to climb as Covid cases mounted and deaths hit a new record daily level. The market also ignored a very weak employment report Friday.

“We’re in the more speculative phase of the rally. The price action confirms we’re in the more speculative phase of the rally. It doesn’t mean you’re imminently going to make a top but you should be ready for more volatility. Were comfortable with 4,000 but it’s possible you could see a series of 10% plus corrections along the way of getting there,” he said.

Strategists say it’s even more important for corporate earnings to be strong in an environment of rising yields. Strategists at both Goldman Sachs and Morgan Stanley Monday warned that higher interest rates could put a lid on market gains.

“Higher rates is the wild card and could begin a period of falling equity valuations, making earnings revisions even more important than usual for stock performance,” wrote Morgan Stanley strategists.

Goldman strategists said more fiscal stimulus should lead to higher 2021 earnings, but rising rates could cap the upside for stock multiples. The multiple is the price-to-earnings ratio, and many growth stocks are at very high levels. Amazon, for instance, has a P/E of 91. Amazon was down 1.8% Monday, while other members of FANG, Alphabet, Facebook and Netflix were also lower .

“You’re going to get more volatility to the upside and downside,” said Emanuel. “You may get a marginal new high here, in the next several days, but by and large what you’re going to see is the market get more selective, the higher up you go, and that increases the odds that you get a much fuller, more comprehensive correction, led by high multiple growth stocks.”

Dan Suzuki, deputy CIO at Richard Bernstein Advisors, said the type of stocks that should do better are cyclicals or value names, the same types of stocks that are more insulated from rising rates.

“Basically by definition, a high P/E stock is also embedding a lot of growth. If you are to put it in valuation terms, a lot the value of the stock is far into the future. That value that’s far in the future is more sensitive to interest rates. The more those rates go up, the more you discount future value,” he said."

MY COMMENT

I dont see this as an immediate issue. BUT....something to be aware of and consider for any future stock selections. Someone like myself.....I will just stick with what I already have in my portfolio. I am NOT going to make moves in stock holdings based on interest rate projections. Some people will see rising rates as a possible harbinger to inflation. BUT....we are a long way from an inflationary environment. In fact much of the world is experiencing the opposite....a deflationary environment.

 

WELCOME.....Globetrotter. Hopefully you will become a regular poster and contributor.

You did very nicely in 2020......+15% is nothing to sneeze at. Best wishes back to you.

 

YES....Globetrotter.....I do remember that hydrogen post that you mention.

In the far distant past I read the Graham book and some of the other books that everyone mentions. The VAST majority of my reading is now......and for years......has been online articles and analysis. I have not read an actual investing book for many years. I spend about 1-3 hours daily scanning and reading investment and economic news and articles. I also usually have Fox Business......Varney.....on in the background in the morning as I catch up on the daily news and events online. I have the LUXURY of not having to go to a job.....so I am able to do a couple of hours on reading and catching up on week days.

One of the primary reasons I am POSITIVE about investing and long term investing......is.....the fact that after 45+ years as an investor I have seen it all......well not it all.....but much of it. I have seen that no matter what is happening in the short to medium term.......for me at least.....being fully invested all the time through it all.....leads to very positive results. Add to that.....the additional 15-20 years of growing up and seeing my mom invest in the same way. Add to that the data and actual academic research regarding long term investing......with NO market timing or trading.....and I have CONFIDENCE in the long term future as an investor. No matter the short term to medium term........RAGING STORMS......there is ALWAYS a silver lining and good times ahead.......somewhere in the future. I have seen that.......and.....investing HISTORY tells us that.

ONE big factor for me......is the fact that my entire adult life has been oriented to BUSINESS. From business education in college to owning and running a very successful small business.....to successfully handling money for various family members and in-laws.....ALL my life I have just been very interested in and oriented in business. I dont know why......it is just how my brain works.

AS A RESULT.......I approach investing with a TOTAL focus on the BUSINESS. That is why I dont get all caught up in charts and systems and technicals or the markets in general........as an investor when I see or read something about a company......and ESPECIALLY when I own a stock....... I see management, products, marketing, personnel management, sales, positioning, etc, etc, etc. I dont know why....that is just me.

ANOTHER thing that has definitely helped me as an investor is my business ownership experience. As an owner....whose personal money was on the line every day.......I discovered that I had to anticipate and project business conditions and operations far into the future. I think this is where many small business owners ultimately fail. They can not project where they will be in the future......and....take the necessary steps........in the present......to manage finances and business conditions and operations to fit what will be happening a year or two or five down the road.

SORRY.....for rambling.