The Long Term Investor

I wish I had all my old baseball cards, comics, and mad magazines. BUT.....they are ALL long gone.....just like everyone.

 

I dont NORMALLY post this sort of article....but......it is a pretty good summary of where we are at the open today.......and......where we are with the markets and how they are looking at the next few months. It ALSO reflects the continued......and in my opinion.....the near term future of JOBS in the economy:

Stock market news live updates: Stocks open higher as stimulus hopes rise after jobless claims disappoint

https://finance.yahoo.com/news/stock-market-news-live-updates-january-14-2021-231700304.html

(BOLD is my opinion OR what I consider important content)
"Stocks opened higher Thursday morning, and the S&P 500 and Nasdaq headed for a third straight day of gains.

The three major indexes rose even after the Labor Department’s weekly jobless claims report showed that initial claims spiked to the highest level since August last week. However, some strategists have suggested that the recent deterioration in labor market data could further bolster the case for more fiscal stimulus.

“The economy clearly needs additional support from Washington because right now rising jobless claims tells us the labor market recovery has stalled and the direction is full-tilt down,” Chris Rupkey, chief financial economist for MUFG Union Bank, said in an email Thursday morning.

In Washington, a majority of members in the House of Representatives voted late Wednesday to impeach President Donald Trump for a second time, making him the first U.S. president in history to be impeached twice. Senate Majority Leader Mitch McConnell, however, said he would not call back members of the Senate early before Jan. 19 to hold the impeachment trial, suggesting Trump would serve out the rest of his term. The trial could still take place once Trump leaves office.

Stocks looked through the debates in the House ahead of the impeachment vote. And equities are likely to continue shrugging off the ongoing tension in Washington, according to many strategists.

“The market cares about fundamentals, it cares about profits, it cares about consumer demand,” Eddie Ghabour, managing partner at Key Advisors Group, told Yahoo Finance on Wednesday. “So these are headline risks ... But look, we had people worried about the election, that proved to be nothing that hurt the market there. People were worried about the runoff election in Georgia. These are just, again, headline risks. They have nothing to do with the fundamentals of the equities, and that’s why the market is going to continue to ignore these things, in my opinion.”

Instead, the prospects of more stimulus — both from Congress and from the Federal Reserve — have helped buoy equities even after stocks’ strong run-up last year and at the beginning of 2021. Stocks have been in a holding pattern over the past couple of sessions as investors await the start of the Biden administration, which in tandem with a Democratic House and Senate, is likely to produce substantial additional fiscal stimulus to support individuals and businesses and boost consumer spending. Biden is expected to unveil details of a substantial additional virus-relief package Thursday.

“We’re still in an economy that is struggling because of the pandemic, and until we put the virus behind us and we can truly open up the economy and get it back to what we were doing, or close to what we were doing, prior to coronavirus, I think stimulus is needed and it’s important,” Jason Ware, Albion Financial Group chief investment officer, told Yahoo Finance.

“As we look at the new administration in Washington and a Congress that’s tilted toward the Democrats, we do expect more stimulus to come down the line,” Ware added. “It’s probably not going to happen over the next couple of weeks, but certainly by the spring an extension of unemployment benefits for those who are still out of work, maybe a boost to what they’re getting on a weekly basis, and fresh stimulus checks closer to $2,000 might be something that has an appetite in Washington.”

Later Thursday, Federal Reserve Chair Jerome Powell will deliver virtual remarks with the Princeton University Bendheim Center for Finance, adding to the parade of Federal Reserve speakers offering their economic outlooks this week.

8:52 a.m. ET: US import, export prices accelerated in December
Prices for U.S. imports and exports both accelerated more than anticipated in December over November, the Commerce Department said Thursday, as fuel prices firmed at the end of a difficult year.

Import prices increased 0.9% in December month-on-month following a 0.2% increase in November. Consensus economists expected a 0.7% rise, according to Bloomberg data. This marked the fastest increase in import prices since August, as fuel prices jumped 7.8%.

Export prices rose 1.1% in December, for a print nearly double the 0.6% consensus estimate. This followed a 0.7% rise in export prices in November, and represented the fastest rise in export prices since June. A 1.3% jump in non-agricultural export prices contributed to much of the gain.

MY COMMENT

The JOB DATA is a continuation of the VERY NEGATIVE data that has been coming out since the election on jobs and employment. I dont see.....ANY....short to medium term solution to any of this situation. In my opinion it is LIKELY that the JOBS data will continue to deteriorate.

As to STIMULUS......stock market CANDY......as an investor I will take any money the markets wish to give me. AND...with all the talk of stimulus and government spending there is GOOD potential for investors to do very nicely. HOWEVER......this is just going to end up being WASTED MONEY when it comes to the general economy. At this point.......more stimulus......is not going to do anything REAL for the economy. In fact.....it is likely to drag out and prolong the current negative situation. It will ALSO DRIVE the coming PUSH in government to RAISE TAXES. Of course......this will take more money out of the private economy.....EXACTLY where money is needed. In the end.......as usual......it is doubtful that any of this STUFF.....will make any difference in a positive way to the economy......in my opinion.

For investors......this FREE CANDY......will push the markets higher. The CRUNCH will be when the music ends and the economy has to sustain......ITSELF. EVEN at that point.....I expect that investors will continue to do well.....BUT.....we may have to endure an old fashioned correction for a while.......as the markets adjust to not having all that free money SLOSHING around. At that point......individual stocks will HAVE to......stand on their own FUNDAMENTAL MERIT. Investors will QUICKLY LEARN if the companies that they are investing in are.......REAL......long term holdings with good business prospects...or.....if they are companies that were being driven by short term mania, aberrant conditions caused by the shut down, free government money, etc, etc, etc.

TODAY......a strong open. Looks like a nice.......POSSIBILITY.......of a good day leading to a positive close for the day. AND......with what we are seeing I would say there is a probability for a good close to the week tomorrow. If so....it will be another week of a down day on Monday......and......all green to cap the week after. Of course.....this is just one of those little interesting observations that has NOTHING to do with anything. ALL in all........there is money to be made.....so lets make it. As they say......whoever......."they"...... are......NEVER look a gift horse in the mouth.

 

It TELLS YOU a lot about the current state of the markets that.......when it comes to the BANK EARNINGS tomorrow.....it is TOTAL CRICKETS. NOT a peep. So far today after skimming ALL my financial sites and publications......I dont see a single thing about ANY earnings......and......particularly....the bank earnings that will be reported tomorrow.

SO.......I will simply.....RIDE THE WAVE for as long as possible. No need to overthink anything. For long term investors.....simply trust your portfolio. If your holdings are reasonable and rational.....it will ALL be good.

LOL.....just made a liar out of myself......as I clicked on my last site.....there was the ONLY article I have seen today on the above. HERE is what it says:

JPMorgan, Wells Fargo & Citigroup may kick off a banner earnings season

https://www.foxbusiness.com/financi...nk-earnings-period-ever-seen-top-bank-analyst

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

Top bank analyst provides 4Q bank earnings preview
Odeon Capital Group chief financial strategist Dick Bove on his outlook for the financial sector ahead of big bank earnings.

Earnings season for the big banks will kick into high gear on Friday with JPMorgan, Citigroup, and Wells Fargo all reporting quarterly results.

Odeon Capital Group Chief Financial Strategist Dick Bove says the biggest banks are going to show “much better earnings than expected” and possibly positive forecasts despite weaker loan volume.

“Interest rates went up so their margins are higher. They’ve over reserved for bad loans so they’re going to reduce their reserves, they’re seeing low operating costs because of the huge amounts of money they’ve spent on technology” he said during an appearance on “Morning with Maria."

He also noted select banks will see an extra boost from activity such as mergers and acquisitions and initial public offerings.

“If they're the big banks, guys like JPMorgan, Bank of America, Goldman, Morgan Stanley, there has been an explosion of activity in the capital markets arena” he added.

Bove also predicts that 2021 is likely going to be “one of the strongest” bank earning periods ever seen.

U.S. banks have recently benefited from rising Treasury yields, which pushed the 10-year note above 1% last week for the first time since last March when the coronavirus pandemic pushed the country’s economy to a virtual standstill as state and local leaders imposed strict lockdown orders in an effort to curb the spread of COVID-19.

During the pandemic, America’s biggest banks have borne the brunt of the stock market turbulence surrounding the Federal Reserve’s emergency interest rate cuts. A rate cut is detrimental to a bank’s earnings as it slices the profit margin on loans.

Bove then pointed to his 2021 forecast, noting that if “you assume that the economy is going to get better, there’s this huge unbelievable amount of liquidity sitting in the banks at the present time, which will move from a liquid position to loans.”

“The Federal Reserve, in my view, is going crazy printing money,” Bove said. “And 83% of the money which they create is bank deposits so you’ve got $17 trillion sitting in the banking industry and as anybody who has a bank account knows you’re not getting paid anything for putting your deposits in a bank.

“So the net effect is the banks have that money and they are ready to spend it in loans if the economy picks up,” he continued.

MY COMMENT

In my opinion.....EARNINGS season is going to be STRONG. There appears to be very little being said lately about corporate financials. Companies are playing it close to the vest. I believe that this reflects VERY STRONG earnings coming over the next month or two......since.......there have been very few announcements by companies of changes to their financial projections. If business was expecting NEGATIVE surprises they would be out there trying to get ahead of the news.....I have not seen much of this lately.

 

WELL....the markets were just happily FLOATING along today....humming to themselves....la la la...la la.....when SUDDENLY about an hour before the close.......BOOM.....reality hit....OMG, bank earnings tomorrow...OMG, stimulus plan.....OMG, what is happening to jobs. So...down we went for the day. In my opinion a VERY shallow market and......therefore.....the slightest hiccup and down we go. BASICALLY.....I think the markets just FREAKED themselves out today and panicked.

No harm done....for me....it was a negative day for me all day anyway. I had TWO.....yes....TWO....holdings up today...HON and SNOW. That was it....red for me today. AND...got beat by the SP500 by .67%.

It will be interesting to see how the markets....VOTE....with their action tomorrow on the announced stimulus plan. I DONT see the $15 minimum wage as being much of a help to the employment situation.

Here is a relevant article for long term investors that are starting to get that vague QUEASY feeling in their stomach:

How to stay in stocks if the record market has you fearing bubble

https://www.cnbc.com/2021/01/14/how...the-record-market-has-you-fearing-bubble.html

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

"Key Points

• The S&P 500 has outperformed international markets, emerging markets, and small-cap stocks for multiple years.
• The price growth gap between S&P 500 Growth and S&P 500 Value is as wide as it was in Dec. 1999 before the dotcom crash.
• For investors worried about the narrow group of large-cap technology winners that have led this bull market as rates tick up, a focus on recent market laggards may offer one way to stay invested.

The current bull market has been defined by the fact that nothing can defy it. Threats come and go, but stocks keep setting new records. Among the latest threats: bond rates are rising, which can be bad for stocks, including the big tech companies that have dominated returns in the S&P 500, and some of the biggest names in the market are sounding alarms about stock valuations being so high that a market correction is likely.

But even among the market’s brightest, defiance of the risk-on investment stance is not a stand easily taken. “I think the path of least resistance ... is still up,” Mohamed El-Erian, chief economic adviser at Allianz, recently told CNBC. “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.”

Selling this market hasn’t been the right move, at least not for long, for years now. After suffering through a 34% price decline early in 2020, the S&P 500 recouped all that it lost by August 18 and went on to set 20 new closing highs through the end of the year — while enduring twice the average annual count of 1%+ daily volatility, according to data from CFRA.

But reversion to the mean has a history of eventually being right when it comes to stocks, and there are ways to invest in a richly valued market without giving up on it — investment strategies with a focus on sectors and asset classes that have underperformed and can add a form of stock market hedging without necessarily giving up on winners. And there are some big current disconnects in pricing between winners and losers.

Over the last three years, the S&P 500 has outperformed the S&P developed international and emerging market indices. The last time those international markets outperformed the U.S. large-cap index was 2017.

Small-caps have underperformed the S&P 500 since the end of 2018.

The price growth gap between S&P 500 Growth and S&P 500 Value was at its highest in history this past August (dating back to the mid 70s) and is currently, even after some stock rotation, as wide as it was in Dec. 1999, before dotcom crash.

“If you are a believer in reversion to the mean, there is a good possibility it becomes that reversion year,” says Sam Stovall, CFRA chief investment strategist.

That’s a message that comes as fourth quarter 2020 earnings season begins and large-cap stocks that have led the way look a little “exhausted” compared to others as far as earning growth potential as a catalyst for higher stock prices in 2021.

The last red ink from steep 2020 losses caused by the Covid-19 pandemic will finally be put on the books and the market will move past an ugly year, but the S&P 500 looks stretched as far as earnings growth potential, especially the growth stock part of it, compared to other market bets.

The S&P 500′s 12-month price-to-earnings ratio is at a premium of 45% to its 20-year average. CFRA pegs 2021 earnings increase for the S&P 500 Growth component of the index at 13.3% versus 20.1% for its value group.

Equal weights and barbells
This analysis suggests it could be time to do what many financial advisors have recommended with core U.S. market exposure: consider moving away from the market-cap weighted S&P 500 where the gains have been concentrated in growth and into an equal-weight S&P 500 index funds and ETFs, such as the Invesco S&P Equal Weight ETF (RSP). That allows investors worried about a large-cap index now concentrated (as much as 25%) in a handful of mega tech stocks to gain a form of hedging within the index itself with more of the value-oriented stocks and sectors that have not run being greater represented.

“Last year’s losers are those that have not been overpriced and won’t experience as deep of a drop in a pullback many people believe market is ready for. The old adage is let your winners ride and cut losers short, but losers could bounce back quicker or hold up better should we have a correction from overvalued levels,” Stovall said.



Some of 2020′s ugliest sectors have the best potential for earnings growth in 2021.

But investors also need to look beyond the S&P 500 for earnings growth. While large cap stocks overall are expected to post a 20% gain in earnings this year, for mid-cap stocks it is 40% and for small-caps, 77%. Overseas, developed markets stocks earnings are expected to rise 40.8%, while emerging markets rise 36.6%.

CFRA research also suggests that what is called the “barbell portfolio” strategy might be in order. You don’t have to sell the biggest winners in the S&P 500, but history says you will do well if you also hold last year’s biggest losers, and you can beat the overall market. Investors who have owned the S&P’s worst sub-sectors from the previous years, or stocks that represent those sectors, have generated market beating growth.

Since 1991, combining the 10 best S&P 500 sub-sectors with the 10 worst groups into the barbell portfolio delivered a compound annual growth rate of 12.6%. In all but three years (2008, 2011, and 2018), the average return for either the top-10 or bottom-10 sub-industries beat the market.

“It has typically been better to ‘let your winners ride’ by building a portfolio of last year’s top-10 S&P 500 sub-industries since they posted a substantially higher average CAGR and frequency of price increase. However, should one worry that last year’s best performers rose too far and that the pounding endured by the 2020 laggards was too tempting to pass up, the barbell portfolio may be a suitable alternative since it has also delivered a market-beating return along with an improved return-for-risk ratio,” Stovall wrote in a recent report.

It is important to remember that if the market drops, everything drops. Investors can’t avoid a risk-off shift in the markets entirely if they stay invested.

“A receding tide drops all boats, but who will recover more quickly? We could see those areas of valuation vacuums the where greatest values remain: international, small-caps and value stocks. When you don’t like anything is when need to own everything,” Stovall said. ”“If you’re not committed to one thing that’s when own everything.”

As fears of a dotcom bubble repeat come into focus, Stovall also noted that in 2000 when large caps were down, both mid and small caps were up. It wasn’t until 2002 that all three segments of the market were simultaneously dragged down.

Thinking in terms of barbells, equal weight S&P 500, and also value, small-caps and international — all the multi-year underperformers — is a way to implement a simple message for investment strategy in 2021: “Now is a time to increase diversification, not narrowly focus on riding the winners in large-cap growth,” Stovall said."

"

The S&P 500′s best- and worst-performing sub-sectors of 2020, and stocks that are proxies for these sector bets which have outperformed the index as a whole in subsequent years, based on the history of the index since 1991."

MY COMMENT

One strategy above. Personally as a very long term....and....fully invested all the time investor...I have NO plans to deviate from my usual Portfolio Model strategy. Even if a BROAD strategy is used.....like above....to me it is STILL trading. BUT....for others that wish....the above is one strategy to consider.

MUCH of the market over the past year has been DRIVEN by the Robinhood guys and other traders. We are past due for a a shake out of those market driving......short term......traders. When.....or......if.....this ARMY of new traders abandons the markets....there is going to be a pretty good shake-out. At that point stocks will....quickly...migrate back to prices that are supported by FUNDAMENTAL factors. In that sort of a market readjustment......I prefer to stick with my proven BIG CAP holdings.

The KEY for me......having a long term horizan. That means 5-10 years.....NOT the 6-24 months that MANY investors are now thinking is LONG TERM. I have watched the definition of LONG TERM steadily go....down....down....down. For me it is....at the ABSOLUTE MINIMUM.....three years.....and personally for me FIVE years.

 

As Zukodany and Ragin Cajun were discussing above.....BALANCE is the key for long term investing and having the ability to stick out periods of uncertainty. Not having ALL your eggs in one basket gives an investor the strength to hold on for the long term without being shaken out of the markets.

For example....I own about $900K of real property......my home. I dont have to be a real estate investor to have that BALANCE.....I have it simply by owning a paid off home.

FIXED income......check. My income annuities are basically a fixed investment. The return is LOCKED in regardless of what happens to the stock markets or anything else......short of the insurance companies that fund them going bankrupt. EVEN in that situation.....I am MOSTLY within the limits of the Texas Insurance Guarantee Fund which would cover such a RARE situation. AND....having carefully selected the three insurance companies for historical strength and staying power.....I have ZERO concerns of any of them going under.....short of a TOTAL world wide economic collapse.

AND.....in case of that...... TOTAL world wide economic collapse.......road warier.....situation.....well EVERYTHING is toast anyway. BUT....if I can avoid the marauders......I will have my HOARD of silver and gold to bury out in the woods.

BALANCE along with reasonable investing for the long term......and realizing that long term.......ACTUALLY means......LONG TERM........is ALL the safety net and protection I need to be able to sleep at night as a fully invested all the time investor.

 

I have posted a few time about the CRAZY housing market on here. I like this "little" article:

The housing market tells the whole story

https://finance.yahoo.com/news/housing-market-tells-the-whole-story-morning-brief-110815308.html

(BOLD is my opinion Or what I consider important content)
On Wednesday morning, we covered the diverging fortunes of cities and suburbs as seen through the lens of national burger chain Shake Shack (SHAK).

And then on Wednesday afternoon, the Federal Reserve’s latest Beige Book report offered another way to see the urban/suburban economic divide. And that is through the real estate market.

“Residential real estate activity remained strong, but accounts of weak conditions in commercial real estate markets persisted,” the report’s summary read. With residential real estate serving as a relative proxy for the strength of suburban markets and commercial real estate standing in for the overall health of urban cores, we see another pillar of this uneven recovery, one that is advantaging activity that can take place outside of city centers.

And the details from some of the Fed’s 12 districts show this high-level “strong vs. weak” real estate story is much more potent than the one-sentence summary suggests.

In the Boston Fed’s district, for instance, “the home buying ‘frenzy’ continued in November, with contacts attributing strong buyer confidence to historically low mortgage rates and historically high stock market performance.” At a time when overall employment is down about 9 million from a year ago, it’s quite jarring to see “frenzy” used as a word to describe the home buying market.

But this kind of adjective does appear appropriate when squared with results out of KB Home (KBH) released Tuesday evening, which showed the home builder recorded a 42% increase in purchase contracts in the fourth quarter. This order total marked the company’s best fourth quarter since 2005. A quarter also known as the absolute peak of the U.S. housing bubble.

Meanwhile, in Boston’s commercial real estate market, the pain is only starting to be felt. “With new activity thin, rents have not yet begun to reflect the downward pressure from increased sublease space,” the report said. “The retail and hospitality markets were still very soft, especially as some areas experienced new restraints in response to COVID-19 spikes. Many contacts predicted that some retail space will be converted to industrial over the next several years.”

And this dichotomy between a persistent appetite for individuals buying homes and a lack of enthusiasm for business’ to expand their real estate footprint was repeated nationwide.

In the Cleveland Fed’s district, “One residential real estate agent noted that while the pace of transactions slowed in recent weeks, activity was still much higher than it was a year earlier.” While in the same region, “demand for retail and office space remained weak as COVID-19 cases continued to rise and corporate uncertainty persisted.”

In the Atlanta Fed’s territory, “Existing home inventory remained extremely low in many markets, continuing to place upward pressure on home prices. The pace of new home construction continued to lag behind demand...However, builders noted the ability to pass along rising costs to buyers through higher home prices.” Meanwhile, “Commercial real estate (CRE) activity continued to be impacted by the pandemic.... Recent CRE asset valuations confirmed that values have deteriorated and may be creating impediments to new lending along with tighter underwriting standards.”

In the midwest, the Chicago Fed said, “A contact in Des Moines said home construction was at its highest level in more than a decade and that the market for land was quite competitive.” And while the industrial side of the economy remains solid — as we highlighted last week — and demand for industrial space remained “robust,” the report said “interest in office and retail space decreased further.”

Similar examples are repeated nationwide.

One unfortunate standout, however, was in the New York Fed’s district, which covers New York City, upstate New York, and northern New Jersey. In this region, conditions in the real estate market are tough all around, with the struggles of New York City perhaps the clearest sign of how deeply cities continue to struggle during this recovery.

“The residential rental market has continued to weaken, led by New York City,” the Fed’s report said. “Partly reflecting increased landlord concessions, effective rents in Manhattan and Queens are reported to be down more than 20 percent from a year earlier and down 8 percent in Brooklyn. Rental vacancy rates across New York City are reported to be at multi-decade highs.”

The report added: “Commercial real estate markets have weakened further, to varying degrees, across the District. Retail and office markets have been particularly weak in New York City, with asking rents trending down and well below year-earlier levels.”

MY COMMENT

The data speaks for itself. The...old school....cities are NOT going to see any sudden turn around to the commercial market. If anything it will become.....the worst of times. FOR homeowners....especially those in the BURBS......it is the.....best of times.

 

I got my vaccine shot today. Moderna. I dont have even the slightest soreness in my arm....knock on wood. It was a THREE+ hour endurance contest of waiting in line outside a small college sized arena with about 2000-3000 other people. The line went around the building three times.

Definitely a super spreader event. Inside were 15 stations giving the shots.....maned by the local fire department doing the shots and health department workers doing the paperwork. You came out of there with an official CDC shot record of your vaccine. Once you got your shot you moved into a holding area where you sat for 15-30 minutes to see if you had any reaction.

VERY poorly organized....but the people working there and the FIREMEN were HERO'S and did a great job.

Originally we were ALL set up with 30 minute time slots through the day for our shots. BUT...last night we got a text that the system had CRASHED....and that the time slots were no longer in affect......that people could come any time they wished between 2:00 and 7:00. Of course.....EVERYONE showed up before or at 2:00.....the time when the event started. Our original appointment was for 2:00 so we got there about 1:15 and had about a 2.5 hour wait to get inside the arena. I am sure EVERYONE that was supposed to be staggered through the day from 2:00 to 7:00 had fully arrived by 3:00......after that time the line did not grow at all.

At this time our entire immediate family......9 adults......myself, wife, sister, my kids, spouses, etc,.....have been vaccinated. SO....no complaints......we are ALL lucky to have been able to get the vaccine so early compared to many in the country.

As luck would have it....our state......is the first in the country to have vaccinated over 1MIL people to date.

 

HOPE SO........here is the news of the day.....the bank earnings....ALL were at RECORD LEVELS. Of course....they are ALL down as a result. First you can NOT satisfy the markets......second.....it is likely that the VAST MAJORITY of professionals in the investment business traded these stocks up before earnings and now are taking their short term trading profits.

JPMorgan Chase just reported a record quarterly profit. But its CEO is still nervous

https://www.cnn.com/2021/01/15/investing/jpmorgan-chase-earnings/index.html

Wells Fargo records rare profit beat as credit costs fall

https://www.reuters.com/article/us-...rofit-beat-as-credit-costs-fall-idUSKBN29K1JW

Citigroup beats analysts’ profit estimates as bank releases money set aside for loan losses

https://www.cnbc.com/2021/01/15/citigroup-earnings-q4-2020.html

HERE is the other general economic news today.......I am NOT surprised in the least.....actually:

U.S. Retail Sales Post Surprise Monthly Drop to Cap Dismal Year

https://www.bloomberg.com/news/arti...ail-sales-wraps-up-painful-year-for-merchants

MY COMMENT

I am not going into any detail on the banks since I dont own any of them. TYPICAL......no matter how good any company earnings are.....the market over the past few years PUNISHES them for a few days to a week. As to retail sales I see TWO reasons in various articles.........the VIRUS.......and....the ELECTION RESULT.

 

I like this "little" article.....and....I agree with it:

A Sketch to Illustrate What Stocks See Ahead

https://www.fisherinvestments.com/en-us/marketminder/a-sketch-to-illustrate-what-stocks-see-ahead

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

"COVID case counts continue to rise, with the US adding 230,000 cases Wednesday—a surge paralleled in Europe and Asia. Deaths, tragically, are also ticking higher. Politically, a contentious US election year gave way to perhaps an even more tense lame-duck period—including a riot at the Capitol and the National Guard’s deployment ahead of President-elect Joe Biden’s inauguration next week. Economic data, reflecting renewed lockdowns to deter COVID’s spread, show slowing in the developed world’s dominant services industry—even contraction in some European nations. Analysts expect S&P 500 corporate earnings to decline -8.8% y/y in Q4 2020, per FactSet. Individuals in many locales worldwide are isolated from friends and family. The world surrounding us today looks, in some very significant ways, rather bleak.

Despite this backdrop, stocks continue churning higher, leaving many lingering skeptics aghast at the perceived “disconnect.” But when you consider where stocks are looking—3 – 30 months ahead, in our view—the disconnect fades. Here we will attempt to paint a loose picture of what stocks are likely looking to—and how that can influence the evolution of sentiment over the course of 2021.

While few would question 2020’s awfulness on a societal level—or 2021’s start, for that matter—stocks are looking beyond this, in our view. At the shortest end, we think they are looking roughly three months out. That would be around April. By then, the inauguration and tumult that followed 2020’s election should be well behind us. President-elect Biden’s first 100 days—often when a new president’s policy aims take shape—will be almost complete, giving investors more clarity about his agenda. Two of 2021’s few elections—Holland’s and Israel’s—will be over. If recent history and polling are any indication, they will likely be squabbling over how to form fractious coalitions that accomplish little when in office. Vaccine rollouts will assuredly be further advanced, if not significantly so, which has major implications for the services economy. In part due to Q1 2020’s low base, analysts expect S&P 500 earnings to resume growing in Q1 2021—at 16.5% y/y, per FactSet—with reports on this emerging right around three months from now.

Six months out, we think the backdrop should look brighter still. If the US is even close to the Centers for Disease Control’s vaccine distribution plan, we should be entering phase 2 of vaccination—with health care personnel, essential workers and those above 65 or at high risk already done. Many expect this to be about when a travel and tourism recovery really gets underway. By this time, we suspect we will have a greater sense of what the Biden administration is likely to accomplish (probably far less than hoped or feared, depending on your viewpoint, given tight margins in the House and Senate). Holland may still be talking about forming a government and Israel may be looking at its fifth election since 2019, but we doubt major legislation will be emerging. In Q2 2021, analysts presently project earnings growth of 46.1% y/y with sales jumping 14.1% y/y.[ii] Of course, those year-over-year calculations look back to extraordinarily depressed Q2 2020 levels. But the moves are huge and noteworthy.

By 2021’s close, will COVID still lurk? Probably, but if governments have any success rolling out vaccines, it doesn’t seem likely to hinder the global economy much. To that end, the median US GDP forecast of 72 collected by FactSet calls for 4.1% growth, with the lowest being 1.8% and the highest 7.1%.[iii] US politicians will be sweating midterms—especially in a year when House districts in 16 states are expected to be redrawn due to last year’s census. Germany and Japan will have wrapped their parliamentary elections. The holidays should be much brighter than 2020’s gloom.

Beyond that? Too soon to say now. In our view, sentiment has already warmed significantly based on increased political clarity, stocks’ rebound and vaccine news. It wouldn’t shock us if, should the loose picture we have painted play out over the ensuing 11 ½ months, broad sentiment shot further into optimism and, possibly, euphoria. If so, investors likely won’t be worried about the world immediately around them. They will be buying speculative firms based on pie-in-the-sky forecasts of how the world will look in 2041.

We can’t know today, of course if picture we have painted will unfold exactly like this. Forecasts are rarely precise and headlines and developments likely will emerge—possibly stoking occasional volatility. But we think this general backdrop can help illustrate why stocks’ behavior at this troubling time seems rational to us—and a reason optimism regarding 2021 looks justified."

MY COMMENT

I AGREE....in general. To capture the gains....you will be required to be in the markets.....in a rational and reasonable way. SO.......OK.....what is the NEGATIVE potential? With the opening back up of the economy and the vaccine roll out happening through the year......I believe.....that the worst case situation is for a FLAT market. I dont see much probability for a big down year or even a moderate down year. Investors that......stay the course.....will at best be well rewarded.....at worst....be flat. Therefore the......ODDS.....in my opinion are POSITIVE.

One thing that will DRIVE the markets this year are the large number of IPO's that are lined up to come on line during the year. They will create investing BUZZ......I NEVER discount the ability of......BUZZ....positive market PR.....to push investors forward.

 

HERE is the PRIMARY article that I have been waiting to post today. YES....old news for many of us....but......dont discount the number of young people that are out there and have little to no knowledge of the power of compounding and life long stock investing. Of course.....starting at an EARLY age is the KEY:

Yes, You Can Build A $1 Million IRA With Realistic Savings

https://www.investors.com/etfs-and-funds/retirement/retirement-savings-can-build-1-million-ira/

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

"Can you amass $1 million in retirement savings with just an IRA? You may be skeptical, but the answer is yes. The real question is how long would it take?

Saving $1 million is totally doable. And success does not depend on unrealistic assumptions.

Did you just raise your eyebrows? Perhaps you're thinking it's hard enough to save $1 million in, say, a 401(k) account, where the $19,500 basic annual contribution limit is more than triple your IRA's $6,000 contribution cap this year.

The maximum additional amount you can contribute to your 401(k) if you are age 50 or older is much higher too: $6,500 vs. $1,000.

Retirement Savings: Building A $1 Million IRA Balance
And in your 401(k) account, you almost certainly receive contributions from your employer as well. Employers don't kick into traditional IRAs, though.

With a Roth IRA, some different rules apply. You're not allowed to open or contribute to a Roth IRA if you make too much money.

But don't worry. You can still make sure that money ends up in a Roth IRA, where all withdrawals after age 59-1/2 and five years are tax-free. Start by contributing money to a nondeductible traditional IRA. Then convert that money to a Roth IRA. Just remember, if you have other traditional IRAs, part of that conversion could be taxable.

How To Save $1 Million
Now let's get back to the central question: Can you build up at least a $1 million balance in your traditional IRA?

Let's say you kick in $6,000, the basic maximum you're allowed to ante up this year. Let's also say you are a 25-year-old, just starting your career.

And for the sake of discussion, let's assume you plan to retire at age 67. Why that age? Because Congress will probably trim benefits for people who retire at 65 instead of 67, to prop up the Social Security system's finances. Even now, you get a bigger benefit by waiting until age 70.

Next, let's say your income now is $70,000. That puts you into the 22% marginal tax bracket. Today, that bracket starts with income above $40,525. So let's agree that you'll also be in the 22% bracket at retirement.

And let's say the annual rate of inflation is 1%.

How Fast Will Your Retirement Savings Grow?
Finally, suppose you've invested your IRA in mutual funds whose annual return between now and retirement averages 7%.

That's a reasonable assumption. It might even be a little conservative. That's because large-cap stocks like the S&P 500 averaged a gain over 10% since the start of 1926 through this past Nov. 30, according to Morningstar Direct. Small-cap stocks grew at an average of nearly 12% a year.

In later years, you may add bonds to dampen volatility and enhance yield. Even a popular index of corporate bonds averaged more than 6% growth.

So all in all, your overall assumption of a long-term 7% a year average gain is totally likely.

Crunching Your Retirement Savings Numbers
What happens? First, look at how your retirement savings grow with a traditional, Simple or SEP IRA. At age 67, your ending balance is $1.38 million. If you withdrew the whole balance at once, you'd still have a nest egg worth $1.08 million after paying income tax. And you'd almost certainly not withdraw the entire balance at once. Instead, you'd likely take out only as much as you need each year. You'd leave the rest inside your IRA. There, it would continue to grow, sheltered from current income taxes.

If you put the money into a Roth IRA, at age 67 you'd have $1.08 million both before and after taxes. That's because withdrawals from a Roth IRA are tax-free in this situation.

If you had saved the money in a regular, taxable savings account or taxable brokerage account instead of using an IRA? Your age-67 balance would be $713,640.

Save As Much As You Can
Look again at that $1.38 million age-67 balance we spoke about. How important is it to save as much as you can? That balance would be built with annual contributions of $6,000. If you kicked in only $5,000 a year, your age-67 balance would be merely $879,753.



Don't Forget Catch-Up Contributions
So far, the retirement savings figures we're showing you do not include any so-called makeup contributions. That's the extra money you're allowed to kick in starting at age 50. And they don't include cost-of-living adjustments to the contribution caps. When inflation rises enough, the IRS raises the contribution caps.

What happens if you do add $1,000 in catch-up contributions to your basic $6,000 contribution? By age 67, your balance would be $1.5 million, according to calculator.net. After income taxes, you'd still have nearly $1.2 million.

Start Saving Early
What happens if you start the whole retirement savings process 10 years later at age 35? That 10-year delay would cost you a ton of money. Your traditional IRA balance at age 67 would be $661,309.


After paying income taxes, your balance would be just $515,821.

If you start to add catch-up contributions at 50, your age-67 balance would still be only $744,440. After taxes, you'd have $580,663 left.

Retirement Savings Lessons
What lessons can you take away from all of this?

First, you can build retirement savings that exceed $1 million with an IRA. "It is doable," said Ed Slott, founder of IRAHelp.com. "Numbers don't lie."

Second, the earlier you start, the easier it will be. "The sooner you start to save, the more time your savings have to grow through compounding," Slott said.

Third, do not overlook catch-up contributions. "Most people are not making catch-up contributions, and it's a big missed opportunity," Slott said. "You should make catch-up contributions if you're eligible.""

MY COMMENT

For those that are YOUNG......PAY YOURSELF FIRST......secure your future. Start EARLY and invest in your IRA or 401K EVERY year. You WILL achieve the numbers above if you start at an early age. In fact.....you will PROBABLY greatly EXCEED these numbers because the ACTUAL returns that you will achieve in an investment like the SP500 Index will PROBABLY be in the 10-11% range over a lifetime of investing. RETIREMENT seems a long way off in your 20's and early 30's....but....that time will pass quickly. START NOW.....take care of yourself. My personal opinion......It is INSANE for someone young to have ANY money invested in bonds. It will take stock market investing to get the returns above.

For those that have not started yet......start today.....call one of the big discount brokers.....Schwab, Vanguard, whoever you want......and.....set up either a ROTH IRA or a traditional IRA. If you have a 401K at work and are NOT taking advantage of it......call your HR department and get set up TODAY. Be sure to contribute enough each month to CAPTURE the ENTIRE match that your company offers.

For those saying I dont make enough money to fully fund an IRA.....you can STILL capture the ENTIRE gain laid out in this article.....if or when....you are married. Start out with you and your wife EACH contributing HALF the MAXIMUM amount to an IRA......$3000......each per year. That is $250....EACH....per month. THIS will get you......as a couple....to the $6000 number in the article. Make the short term SACRIFICE to your income to SECURE YOUR FUTURE. After a while you will not even notice that money that is investing every month coming out of your income. As time goes by increase the amount that EACH of you is saving until you are MAXING out that 401K or IRA.

YOU CAN DO IT.......TAKE THE FIRST STEP TODAY.

 

Good for you Jwalker.

It is NOT a sprint......it is a marathon. You have now established three different saving vehicles.....so, you guys are doing just fine. What is nice is.....if you project out what you are adding each year......and your ages now......and the general return you will make over your work lives......you will see that your FUTURE IS SECURE. Factor in.....the additional contributions you will make as your income rises over your lives......and....you are creating REAL wealth for your family. Add in the values and education regarding saving and money that you will give your kids (if you have them) as they see how their parents are saving and investing for the future.......and you get.....PRICELESS BENEFIT for your family for multiple generations.

 

STILL doing the stock market two step.......as usual over the past month or so. One step forward.....one step back. I HOVER....just at or just below my all time high........in the same general range.

TODAY......every single position except for HD was RED. Plus....got beat by the SP500 by.15%. As usual.....I guess the markets were underwhelmed by the stimulus now that the REALITY is released.......like a lot of things in life.....the FANTASY is better than the real thing. Bank earnings....generally GREAT.....market reaction....generally BLAH. These periods of CONSOLIDATION and CHURNING are boring.....but......necessary in order to eventually.....move forward.

At least we are done with another week......on to the next one from here.....a NEW beginning.

SP500 for the week (-1.48%)
SP500 year to date +0.32%

DOW for the week (-0.91%)
DOW year to date +0.68%

NASDAQ 100 for the week (-2.30%)
NASDAQ 100 year to date (-0.65%)

NASDAQ COMP for the week (-1.54%)
NASDAQ COMQ year to date 0.86%

Pretty consistent results all across the board.