The Long Term Investor

ACTUALLY......I will too as I have mentioned a few times on here. My intent is to buy 200 shares....depending on price. I see it as a very strong.......short term......MOMENTUM trade. My goal will be to try to generate some quick 5-30 day profits. BUT....depending on what I see going on with it.....I might decide to take some profit and leave some of the stock for the medium term. I will just have to see what is going on when the IPO is happening......and.....make a final decision at that time.

One BAD thing.....All this GameStop drama and dominance of the news is totally overshadowing the earnings and other news. I think it is also SCARING and making the markets NERVOUS.....thus.....the down averages today.

 

On one financial site that I look at.........Yahoo Finance.......I counted nearly 40 articles.....ABOUT GAMESTOP....... in the initial 60-70 articles on the site. This situation is DOMINATING EVERY financial site and all investing discussion.

AND.....YES.....GameStop is UP by $61.53 per share in after hours trading.

 

DAX.......every SP500 ETF and every SP500 Index Fund......should be the same. ALL should be set up to move.....up or down...... in SYNC with the SP500. That does NOT mean that the price of a share in the fund will be the same as the current market quote for the SP500. AND....you will note that EVERY SP500 ETF and every SP500 Index Fund will have a different price per share.

The price per share is IRRELEVANT........a dollar invested in......ANY...... SP500 ETF or SP500 Index Fund....is a dollar invested in the SP500 Index. That dollar will rise or fall.......IN SYNC......with the daily gains or losses of the SP500 Index.

 

I mentioned yesterday (above) that the GameStop situation is disrupting the markets, making people nervous and scaring people and was responsible for the red across the averages yesterday.

From the after-hours action in the stock the SITUATION is escalating. With the averages being down significantly in the futures.....it is.....OBVIOUS......that this event is IMPACTING CONFIDENCE in our market system. I am NOT calling for anything to be done by the SEC or others.....but.....there is a danger here that we will end up in a correction or worse. If the UNDERPINNINGS of the markets seem to be at risk.......the trust and confidence of the financial world and investors.....than there will be an impact.

EVEN in the computer age.....human confidence.....is necessary for the markets to function. If investors.....amateur and professional......think that there is NO rational basis for anything happening in stocks and other investments.....we may end up in a VERY DANGEROUS short to medium term time period. There is GREAT POTENTIAL for this sort of situation to create PANIC. If people lose confidence in any rational basis for the pricing of securities.....they will start to PULL their money and go to safety. If a MOB can send your savings......skyrocketing or plummeting.....at any moment....for NO rational reason......people will lose confidence. The EXTREME end result....MARKET COLLAPSE.

NOW.....I dont think we are anywhere near that extreme end result.......and.....I intend to be fully invested for the long term as usual.
BUT.....there is potential for this STUFF to cause more impact than it seems.

AND.....there is no reason to get CRAZY over an EXTREME event like this......that will probably be history in a few weeks. Lets just hope that this ANARCHY in the markets sorts itself out in a RATIONAL WAY.

In the meantime.....lets enjoy what we.......probably.....will see today in the earnings of APPLE, TESLA, and FACEBOOK.

 

I am ALSO concerned with CENSORSHIP of market discussion. Another EXTREME potential here is that this sort of situation causes a crack down on chat rooms, message boards and other stock discussion that could potentially set off a coordinated market action. I DO NOT underestimate the actions that those that are used to CONTROLLING the markets might take to PROTECT their turf.

 

ANYWAY....moving on from THEORETICAL discussion......and....allowing the markets time to SETTLE IN for the day.....here is a little article that I like. A perfect example of a REAL danger for investors....thinking it is safe to invest in Chinese companies......and....ignoring the significant risk of ANY Chinese company being under the thumb of the Chinese government:

Jack Ma’s Ant plans major revamp in response to Chinese pressure

https://www.foxbusiness.com/lifestyle/jack-mas-ant-plans-major-revamp-chinese-pressure

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

"Ant Group Co. is planning to turn itself into a financial holding company overseen by financial regulations, according to people familiar with the matter.

Chinese regulators recently told Ant, which is controlled by billionaire Jack Ma, to become a financial holding company in its entirety, subjecting it to more stringent capital requirements, the people said. Ant, in response, has submitted to authorities an outline of a restructuring plan, they said.

The plan represents a significant turnaround by a digital-payments juggernaut that has in recent years tried to shed its image as a financial-services provider and fashion itself as an internet-technology company, which helped it command lofty valuations. Before its blockbuster initial public offering was called off last November, Ant had been on track to go public at a valuation north of $300 billion, well above the market capitalizations of the world’s biggest banks.

Designating Ant in its entirety as a financial holding company wasn’t something earlier envisioned by the company’s executives and stakeholders. In its listing prospectus last year, Ant said it intended for one of its subsidiaries to become a financial holding company and house its licensed financial businesses such as asset management and consumer lending. Doing this at the group level will subject Ant to a thicket of regulations similar to those that govern banks, and affect its growth and profitability.

The restructuring plan, still under deliberation, could be finalized before China goes on a weeklong Lunar New Year holiday in mid-February, people familiar with the matter said.

Any final plan will need a signoff from the Financial Stability and Development Committee, a superregulator chaired by Vice Premier Liu He, two of the people said.

An Ant spokesman declined to comment. The People’s Bank of China, the China Banking and Insurance Regulatory Commission and the State Council Information Office didn’t comment.

Ant owns Alipay, a payments and lifestyle app with more than one billion users in China. It handled more than $17 trillion worth of digital payment transactions in the year to June 2020, originated unsecured short-term loans to roughly 500 million people, and sells many insurance policies, mutual funds and other investment products.

Ant’s payments business and other financial services have been subject to some regulations, but the group as a whole has long been spared from the stringent capital requirements and rules that banks, insurers and other traditional financial institutions have been subject to.

In December, four Chinese regulators summoned Ant executives to a meeting and demanded the company rectify what they said were problems in its businesses. In a statement after it, Pan Gongsheng, a PBOC deputy governor, chastised Ant for “despising” regulatory compliance and “engaging in regulatory arbitrage,” without providing specifics.

Mr. Pan said regulators have laid out five demands for Ant, telling it to return to its payment roots, safeguard personal data in its credit business, set up a financial holding company, improve corporate governance and exercise more disciplines in its securities and asset-management businesses.

Putting all of Ant’s businesses under a financial holding company would give regulators oversight of all its activities, and eliminate the potential for regulatory arbitrage, according to one of the people familiar with the plan.

Ant has formed a working group, led by Chief Executive Simon Hu, to work with regulators on how to rectify its businesses. The company has appointed a chief compliance officer to oversee day-to-day compliance and restructuring work.

Top Chinese financial regulators recently hinted they are happy with the progress being made at Ant. On Tuesday, when asked during a virtual meeting of the World Economic Forum if Ant will revive its IPO, PBOC Gov. Yi Gang said if laws and regulations are followed, “you will have the result.”

He said consumers are broadly satisfied with Alipay but Ant has to resolve issues such as complaints over data privacy before getting back on track.

Ant is working on segregating customer data that is currently shared across its business units to put in place protocols that are common at banks, according to people familiar with the matter. Alipay has amassed a trove of data on many people’s spending habits and payment patterns, and has been leveraging it to provide loans and sell investment products to its users. It is a key reason the company has been able to grow quickly and diversify its business in recent years.

China’s new rules for financial-holding companies, released last fall, apply to large conglomerates holding two or more financial businesses. They took effect on Nov. 1. and affected companies have one year to submit applications to become a regulated financial holding company to the PBOC.

The new measures for financial-holding companies include regulatory requirements on shareholders, management, sources and uses of funding, risk management and corporate governance. They also require injecting additional capital into financial subsidiaries whenever necessary.

If Ant’s overhaul is implemented, the company’s revenue and profit growth could be significantly curtailed. Ant may also have to raise substantial capital to meet the regulatory requirements, and the company’s lofty valuation—which was premised on its profitability and growth potential—could also take a hit. Ant has already moved to cut borrowing limits for individual users of its digital lending services, a sign it is downsizing its business to comply with regulations.

It is unclear how the restructuring would affect Ant’s nonfinancial businesses such as blockchain-technology development, digital-lifestyle services and artificial-intelligence technology, areas the company has previously identified as growth drivers."

MY COMMENT

CLEARLY.....this company is NOW going to be under the control of the Chinese government. For owners.......revenue and profit will be SIGNIFICANTLY curtailed. THIS is the significant risk of investing in ANY CHINESE company. You will end up....in some way or other......being a business partner with the totalitarian Chinese government......and.....YOU will definately be the minority partner with NO rights.

Dont even get me started on the RAMPANT fraud and TOTALLY irrational and FAKE financial data put out by the Chinese government.......and....many Chinese companies.

 

NOT unexpected......I looked and.....I am red across the board EXCEPT for Microsoft, Snow, and Tesla....at the moment.

The good news for long term investors......the EARNINGS NEWS that we will be seeing today.....as well as.......the recent past earnings news........as well as.......the FED MEETING release........WILL be money in the bank as we move forward beyond the INCESSANT FOCUS on the extreme short term.

At some point over the next week or two....investing WILL.......probably....return to NORMAL.

 

I kind of....personally...bounce around on the GameStop issue.

NOW....I see that a number of BIG brokerages are limiting or restricting trading in the stock. I REALLY have an issue with this......AND.....this is the BIG DANGER inherent in what is going on. With what is going on in society LATELY.....it was only a matter of time till it SPILLED OVER into investing. That is happening RIGHT NOW.....that time is right now.

The BIG brokers are canceling a company and trading in that company:

*Who gives them the right to cancel the free market in a public company?

*What gives them the right to refuse to allow you to trade YOUR OWN money?

*Who is the person.....or company....or entity.... that is going to be THE ONE to decide when a stock is not properly valued?

*Do we actually have FREE MARKETS?

I can see them stopping margin trading or other forms of leverage that might impact THEM......but if it is simply your money and your account......they should BUTT OUT.

WE ALL know why this sort of stuff happens.....those in power.....in whatever it is in society....want control. And....when things start to take away their control....they clamp down. A very DANGEROUS situation in a.....supposedly.....free society.

It is very easy to speculate........and I am...... that the big banks, the hedge fund elites, and trading houses are having a lot of discussion.....right now.......and.....they have the power and influence to protect their turf. My.....speculation....we are seeing that power being used right now and we will see more of it in the near future as they pressure the SEC and brokers and others that are the investing and market infrastructure......to clamp down on this sort of MASS TRADING.

 

THIS is basically what is being reported.......I dont see any article that outlines WHAT the restrictions actually are. This is NOT a good way to instill confidence in the markets or a brokerage company.

TD Ameritrade puts limits on GameStop, AMC trades amid market mayhem

https://nypost.com/2021/01/27/stock-trading-platforms-suffer-tech-problems-amid-market-mayhem/

"TD Ameritrade moved to rein in a Reddit-fueled stock-market frenzy on Wednesday by limiting some trades of GameStop and AMC Entertainment.

The video-game retailer and the struggling cinema chain have become favorites of amateur investors on Reddit’s “wallstreetbets” forum, leading their share prices to explode over the past week. GameStop soared nearly 157 percent to an intraday high of $380 on Wednesday, while AMC surged as much as 310 percent to $20.35.

In response to the unprecedented rally, TD Ameritrade said it placed “several restrictions” on some transactions involving GameStop, AMC and other securities on its trading platform “in the interest of mitigating risk for our company and clients.”

“We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors,” TD Ameritrade spokesperson Margaret Farrell told The Post in an email. She didn’t elaborate on what the restrictions were or what securities besides GameStop and AMC were affected.

The move came hours after TD Ameritrade and parent company Charles Schwab suffered slowdowns on their trading platforms because of the massive market activity."

MY COMMENT

WELL......I am just in wait and see mode like everyone......not in terms of being a long term investor.....in terms of how this is all going to play out.....as a short term drama.

AS AN INVESTOR........I will ABSOLUTELY do nothing. I will continue to be fully invested as usual for the long term. This little event will soon be over and will NOT impact me in the slightest financially.

 

I STILL dont see any actual reports of how trading was restricted today. I.......IMAGINE.....that they did it by pulling the ability to use margin or any other sort of leverage provided by the broker. SO.....pulling the ability of buyers to buy on borrowed money.......and.....forcing them to self-fund and fully fund all shares in a trade. I am sure most brokerage agreements allow them to do this.

As to the VIX....Zukodany.

No I dont really follow it. I hear or see where it is every day since it is commonly mentioned in the media. I dont really care where the puts and calls are 30 days out on the SP500. ALL I care about is MY OWN personal opinion of my particular holdings. As a FEAR GAUGE......no I dont care. As a measure of potential future volatility......no I dont care.

As a long term investor.......that is FULLY INVESTED all the time......it is just NOT relevant to me. I LUMP it in there with all the other various sorts of TECHNICAL INDICATORS.......ALL of which I ignore. All I really care about is the fundamentals of what I own, their future growth potential, their dividends, the dominance of their product lines, their management, etc, etc.

 

I was SOLIDLY in the red today. EVERY holding except for Microsoft was negative for the day. My ONLY consolation was a small beat of the SP500 by .05%.

Otherwise my account value is back to where it was perhaps a week ago. So YEAH....a hit....but losing a week or two of gains is essentially meaningless to a long term investor.

 

TESLA caped off a wired day in the markets with an earnings miss:

Tesla misses on earnings, expects 50% average annual growth in deliveries going forward

https://www.cnbc.com/2021/01/27/tesla-tsla-earnings-q4-2020.html

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

"Key Points

• Tesla missed on earnings in Q4 but beat on revenue.
• The company said it expects annual average delivery growth of 50% going forward.
• Tesla also said it would begin producing its latest model -- a crossover SUV, the Model Y -- at new plants in Austin, Texas, and Brandenburg, Germany, in 2021 using the company’s own new battery cells.

Tesla reported quarterly results after the bell, missing analysts’ estimates on earnings but notching another profitable quarter for the electric vehicle and solar business.

Shares were down about 5% after hours following an earnings call to discuss the quarter and year ahead.

Here are the results, versus what analysts were expecting according to estimates compiled by Refinitiv:

• Earnings: 80 cents adj. vs $1.03 per share expected
• Revenue: $10.74 billion vs $10.4 billion expected

The company also gave some guidance on sales going forward, writing “Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries.” Tesla expects faster delivery growth than that for 2021, with two new factories expected to come online this year and updated versions of its Model S and X vehicles now in early stages of production.

CEO Elon Musk said on the call Wednesday that deliveries of the updated version of Model S would begin in February.

Tesla also plans to make its premium driver assistance software, marketed as the Full Self Driving option, available on a subscription basis. That means drivers won’t have to pay the high up-front price of $10,000 to use FSD if they want it.

Musk also said that drivers who previously purchased FSD for their Tesla vehicle could not transfer the software to another Tesla, should they buy another. The price of the software is included in the value of a trade-in by Tesla he said, but not transferable.

Gross margins reached 19.2% for Tesla in the fourth quarter of 2020, the lowest since the last quarter of 2019. Capital expenditures hit $1.15 billion for the period ending Dec. 31.

The company also reported positive free cash flow for 2020 of $2.79 billion, more than double its 2019 figure of $1.08 billion.

Tesla previously said it had delivered 499,550 vehicles in 2020, falling barely shy of its guidance for half a million vehicle deliveries in 2020. (Deliveries are the closest approximation of sales numbers disclosed by Tesla.) It produced 509,737 vehicles during the year.

Both deliveries and production numbers set a new record for the maturing electric car company, seen as a triumph in a year when auto sales and factory operations were dampened by a global pandemic.





Automotive revenue grew to $9.31 billion in Q4, while revenue from energy generation and storage reached $752 million, and services and other revenue grew to $678 million. “Other” revenue includes sales of Tesla merchandise including the company’s own tequila, apparel and more essential vehicle accessories like car charging adapters.

Tesla spent $522 million on research and development and nearly a billion on SG&A, sales, general and administrative costs in the last quarter of 2020.

Looking ahead, Tesla said it would begin producing its newest model -- the crossover SUV known as the Model Y -- at new plants in Austin, Texas, and Brandenburg, Germany, in 2021. Tesla intends to incorporate its own new “tabless” battery cells, which it unveiled at an annual shareholder meeting and battery presentation in September last year in those vehicles."

MY COMMENT

I would not particularly call this an earnings MISS. I would call it a mixed earnings report. Not too bad for a very young growth company that has just become profitable in the past year and a half. They missed on earnings but had a nice revenue beat. the other things that I consider positive are:

1. The large amount of manufacturing capacity they will have come on line in 2021.

2. The use of their own battery

3. The plan to monetize and and broaden the market to sell the self driving feature by subscription.

4. The large increase in free cash flow.

They will be punished tomorrow....after hours is down about 5%.....but it seems like OFTEN in the past this stock did NOT have as much actual drop during the actual active markets as reflected in the after hours trades. So tomorrow.....perhaps down by 2-5%. I have over a 300% gain since June of 2020......so.....I will continue to wait for an opportunity to take my initial investment of $13,400 off the table and let the rest of the funds ride for the long term.

 

NOW.....my other big earnings report today....APPLE:

Welcome to the super cycle: Apple just had the best quarter in the history of the smartphone

https://www.cnbc.com/2021/01/27/apple-q1-2021-best-quarter-in-the-history-of-the-smartphone.html

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

"Key Points

• The iPhone is booming: Sales were up 17% year-over-year to a whopping $65.6 billion in a single quarter.
• Research firm IDC estimates that Apple shipped more phones during the quarter than any other smartphone vendor ever has in a single quarter.
• Apple’s dominant quarter is adding fuel to the so-called “super cycle” investor thesis that suggests that every few years, Apple’s new phones are timed to ride a wave of of must-have upgrades to strong growth.

Apple reported blowout earnings on Wednesday. Even during a global pandemic, every single product line was up, leading to the company’s first quarter with over $100 billion in sales.

But Apple is still best known for the iPhone, which accounted for nearly 59% of the company’s revenue during the holiday quarter. The iPhone is booming, too: Sales were up 17% year-over-year to a whopping $65.6 billion in a single quarter. That’s a big improvement from last year’s holiday quarter, when sales were up only 7.6% from the year ago.

Apple doesn’t provide unit sales for its products anymore, but according to an estimate from research firm IDC, Apple shipped 90.1 million phones during the quarter. That’s the largest number in any single quarter since IDC started tracking smartphones, analyst Francisco Jeronimo said.

Apple’s dominant quarter is adding fuel to the so-called “super cycle” investor thesis, where must-have updates combine with the natural customer upgrade cycle to drive a spike in sales growth. Analysts saw this year’s iPhone 12 models as a good candidate for a super-cycle because they sported a new design and added 5G, which enables the devices to connect to faster wireless networks.

In a note on Wednesday, Wedbush analyst Dan Ives predicted that the current cycle “should eclipse the previous iPhone record set in FY15, an achievement for the ages in our opinion.”

Apple CEO Tim Cook also said in an interview with CNBC that the company’s iPhone results could have been better if not for store closures caused by the ongoing pandemic.

“Taking the stores out of the equation, particularly for iPhones and wearables, there’s a drag on sales,” Cook told CNBC’s Josh Lipton.

In a conference call with analysts, Cook said that the new iPhones were not only getting current iPhone users to open up their wallets and upgrade, but also convincing people who had previously used competitor phones to get their first iPhone.

“Looking at the iPhone 12 family, we saw both switchers and upgraders increase on a year over year basis. And in fact, we saw the largest number of upgraders, that we’ve ever seen in a quarter,” Cook said.

5G remains a potential tailwind for iPhone sales through the rest of the year, Apple signaled on Wednesday. Cook said that while 5G in China was well established, leading to strong iPhone sales, 5G cellular networks in other regions aren’t as built-out yet, especially in Europe.

“I think most of that growth is probably in front of us there as well,” Cook said.

MY COMMENT

A great report with many records in various categories. I have problems warming up to APPLE management.......especially Cook. But........you cant argue with what they are doing. It is a SHAME that this report........and many other good earnings reports.........have been totally overshadowed by GameStop.

Of course.....they are down 3.26% after hours......typical.