The Long Term Investor

The other ACTUAL event of the day was the FED......steady as she goes......as expected:

Federal Reserve leaves interest rates and asset purchases unchanged, sees growth slowing

https://www.cnbc.com/2021/01/27/fed-decision-january-2021-rates-unchanged.html

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


"Key Points

• The Federal Reserve kept its benchmark interest rate anchored near zero following the conclusion of its two-day meeting Wednesday.
• Along with the commitment to zero rates, the central bank said it will keep buying at least $120 billion of bonds a month.
• The post-meeting statement noted that growth has “moderated in recent months.”
• In addition to repeating its belief that the path of the economy is dependent on the virus progression, the statement added “progress on vaccinations” to its watchlist.

The Federal Reserve kept its foot to the floor Wednesday in terms of the help it is providing for an economy that central bank officials say has slowed down.

Consistent with market expectations, the policymaking Federal Open Market Committee said it was keeping its benchmark short-term borrowing rate anchored near zero and maintaining an asset purchasing program that is seeing the Fed buy at least $120 billion a month.

“The economy is a long way from our monetary policy and inflation goals, and it’s likely to take some time for substantial further progress to be achieved,” Fed Chairman Jerome Powell said at his post-meeting news conference. Policy will remain “highly accommodative as the recovery progresses,” he added.

At the core of the move to keep policy historically accommodative was an economy in which the sectors most vulnerable to the pandemic are taking the hardest hit.

“The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic,” the committee’s post-meeting statement said.

The statement reiterated that Covid-19 is “causing tremendous human and economic hardship across the United States and around the world.”

The committee otherwise left the statement unchanged other than adding to its position that growth will depend on the pandemic.

“The path of the economy will depend significantly on the course of the virus, including progress on vaccinations,” the statement said.

The decision means that the fed funds rate, which serves as a benchmark for a variety of consumer debt instruments, will remain anchored in a range between 0% and 0.25% and most recently was trading at 0.08%.

The Fed took the rate to zero in the early days of the Covid-19 pandemic and has left it there since. In recent months, officials have made their commitment to low rates even more aggressive, vowing not to start hiking even if inflation gets close to or slightly exceeds the central bank’s 2% target.

Markets were watching, though, to see whether the statement would provide any clues on the future of the asset purchases, or quantitative easing. Since the beginning of the coronavirus crisis, the Fed expanded its holdings by more than $3 trillion, bringing its balance sheet to nearly $7.5 trillion.

Though inflation remains low now, investors worry that the Fed could start to taper the purchases unexpectedly should conditions change and cause market tumult.

“In terms of tapering, it’s just premature. We just created the guidance. We said we wanted to see substantial further progress toward our goals before we modify our asset purchase guidance,” Powell said. “It’s just too early to be talking about dates. We should be focused on progress that we need to see.”

He reiterated his pledge also that the market will get plenty of guidance before any tapering actually happens.

“When we see ourselves getting to that point, we’ll community that clearly to the public so nobody will be surprised when the time comes, and we’ll do that well in advance of actually wondering will be a pretty gradual taper,” Powell said.

Powell says Fed not driving asset prices
The chairman spoke during a tumultuous day on Wall Street in which major averages fell amid a frenzy over the market’s most-shorted stocks. Investors on the social media network Reddit have banded to buy stocks that bigger Wal Street players have been betting against, setting up wild swings and sending the Dow industrials down sharply.

As he did at the January meeting, however, Powell denied that the Fed’s loose monetary policy was playing a role in market valuations.

“If you look at what’s really driving asset prices really in the last couple of months, it isn’t monetary policy. It’s expectations about the vaccines, it’s also fiscal policy,” he said. “Those are the news items that have been driving asset … values in recent months.”

Fed officials remain cautious on an economy that has seen a two-speed recovery, with earners in upper-income brackets doing well and those at the bottom, particularly workers in services industries, faring poorly. That disparity has formed much of the impetus behind the Fed’s flexible average inflation targeting regime.

Under the approach, the Fed no longer will raise rates in anticipation of inflation but rather will tolerate higher levels in the interest of a more inclusive recovery. In the past, when the jobless rate would fall to levels consistent with what appeared to be full employment, the Fed would institute preventive hikes to stop inflation in its tracks.

The current economy is showing conflicting signs of inflation, with housing and materials costs pushing higher and services inflation lower.

From a macro view, the economy grew strongly in the fourth quarter overall, though activity slowed into the end of the year. The Commerce Department releases Q4 GDP on Thursday, with expectations, according to economists surveyed by Dow Jones, of a 4.3% increase. On Friday, the Fed’s preferred inflation gauge, the personal consumption expenditures deflator, is expected to show a year over year core increase of 1.3%,"

MY COMMENT

BASICALLY.....my opinion is they just GREEN-LIGHTED the entire year of 2021. I dont see the FED as being any sort of.........negative factor.........for stock and fund investors over the course of this entire year.

 

I agree completely with this point of view:

Charles Payne EXPLODES on Wall Street ‘Whining’ Over Skyrocketing GameStop Stock: ‘It’s Making Me Sick!’

https://www.mediaite.com/tv/charles...yrocketing-gamestop-stock-its-making-me-sick/

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

"Fox Business host Charles Payne struck an angry, populist tone against Wall Street on Wednesday, lashing out at the hedge funds now facing massive losses because Reddit-based retail investors have sent the share price of GameStop stock and other companies the market had bet against skyrocketing.

Speaking on Cavuto Coast-to-Coast, Payne expressed his disgust that the financial industry’s primary concern about the sudden, unexpected explosion in GameStop shares seemed to focus primary on the plight of large institutional investors — and how to protect them. And the Fox Business host wasn’t the only one incensed at the establishment concern for billionaires over small day traders on Wednesday.

“The shorts, first of all, all this nonsense, all of this noise, all this whining by Wall Street, it’s making me sick!” Payne exclaimed, taking off his glasses and waving a piece of paper in frustration. “One hundred forty percent of GameStop was short. I didn’t hear one person on TV complaining about Wall Street trying to crush GameStop, 140% short!”

“Neil, you can’t allow Wall Street to short 75% of a stock and nobody says anything, crush these companies into the dirt, and then when the individual investor makes money everyone is up in arms,” Payne continued. “‘Oh, they’re going to lose their shirt? Don’t you think people are trading, traded 80 billion shares today. People are ringing the register. I have a kid who bought a house. He made $50,000 and bought a house. So yeah, some people are going to lose, some are going to win. But if they want to change the rules of the game now because the general public is making money after decades of the shorts crushing thousands of stocks into the dirt, I watched stocks being crushed completely to zero and no one ever whispered anything because those stocks didn’t have Wall Street sponsorship.”"

MY COMMENT

I happen to agree completely. We need the markets to be as open and free as possible. Perhaps....the so called professionals.....are starting to react to the fact that RANK AMATEURS are kicking their ass. They dont like it when their ILLUSION OF SUPERIORITY........is punctured and collapses. They dont like it when people see that much of the financial system is skewed in their favor. I see these guys come out into the media and jaw bone stocks up and down in support of their short term trading....every day. No one says a word. NOW these crybaby's need the SEC......or......the states.....or......the big brokerage firms.......or.......ANYONE......to come in and save them from......those mean Reditt guys. Pretty PATHETIC.

BUT......in the end....however.....it is CLEAR that the vast majority of the young day traders WILL NOT do well. They are making an impressive stand.....but the power and money is clearly against them........and....power and money WILL win out.

ACTUALLY...talking about money and power.....this is one reason that I invest in the BIG CAP growth stock leaders. The BIG DOGS of the US economy and the investment world. I PREFER to be on the side with ALL the BIG BOYS. I am content to be carried along for the ride.....long term.

 

Could be. The young traders on various sites DEFINITELY have the power to move the markets and individual stocks by trading IN UNISON.

The latest bad news for the CROWD TRADERS......

Robinhood Clients Report Trading Restrictions on GameStop, AMC

https://www.bloomberg.com/news/arti...s-report-trading-restrictions-on-gamestop-amc

"Clients of Robinhood Markets, the upstart online brokerage with millions of users, reported that they are unable to trade high-flying stocks, including GameStop Corp. and AMC Entertainment Holdings Inc.

Those stocks and others are “not supported” on Robinhood, according to a note on at least one of its platforms Thursday.

On Wednesday, Charles Schwab Corp.’s TD Ameritrade also curtailed transactions on GameStop, AMC and other securities.

A Robinhood representative didn’t immediately reply to messages seeking comment."

THIS......is what ROBINHOOD was saying yesterday.

Robinhood CEO: The retail investors that have felt 'talked down to' are now 'empowered'

https://finance.yahoo.com/news/robi...lked-down-to-are-now-empowered-214947293.html

"The pandemic, stimulus checks, the ability to own less than one full stock, and concurrent rise of commission-free trading have coalesced into ripe conditions for first-time investors. It’s been a good time for both buy-and-hold types and the daytraders meme-ing Gamestop (GME) to the moon. (The stock has soared more than 1,000% so far in January, though… check because it’s changing every minute..)

Robinhood, which is responsible for popularizing both commission-free trades and fractional investing, has long had the goal of democratizing investing. In an interview with Yahoo Finance, CEO Vlad Tenev explained that the investing climate of the past few days has illustrated a key problem in the world of investing – inequity.

“Retail investors and individuals have felt like they’ve been talked down to. Lots of them felt like they haven’t been taken seriously,” he said. “There’s this term 'sophisticated investor’ that’s been thrown around, so there’s an idea that they’re unsophisticated.”

Over the past few days, a group of retail investors on Reddit have swarmed on a few stocks, many with short positions held by hedge funds — “the establishment.” Because these stocks are relatively small in terms of market capitalization, the retail investors have been winning.

“There's a lot of pent-up aggravation at the financial services industry that's been brewing for the last 13 years,” one Redditor told Yahoo Finance on Wednesday. .

As one former hedge funder wisely said, it’s easier to fight 100 mini Mike Tysons than a big one, and that’s what the “upstarts” are doing.

“I think people are seeing now that [retail investors] now have the ability to invest and they’re empowered,” Tenev said.

Clearly, the sophistication required to both have a solid investing thesis but also convince others of that thesis, resulting in margin calls for the short sellers, is something new and impressive.

One theme going around since the beginning of this latest retail investing boom is that this group is getting smarter. New investors, eager to learn, are driving up traffic to brokerages’ websites with educational content. Perhaps with GameStop the retail investors — the day-trading side — are having their Terminator Skynet moment, becoming sentient and gaining the upper hand, at least in certain cases.

Tenev told Yahoo Finance that Robinhood had over 3.2 million people visit their education resource pages last year. (Robinhood has around 13 million accounts.)

“Just this past week we updated [the education pages] and launched a revamped version of our portal, which makes it really easy to go from the basic concepts of investing all the way through the more advanced concepts involving options trading,” Tenev said.

Daytrading may be more exciting, but it’s not the bread and butter of the platform, Tenev was quick to add.

“The truth is, while the activity around more active investing is probably more interesting to report on, the bulk of customers in Robinhood engage in what’s typically called ‘buy and hold’ behavior,” Tenev said. “The majority of Robinhood customers are what they call 401(k) savers, long-term investors.”

Options trading, on the other hand, is a “small fraction of the users we’re seeing,” Tenev said

MY COMMENT

That is quite a change in attitude by ROBINHOOD in 24 hours.......I wonder why? I have some definite ideas.....but I am not going to put them up on here.

CANCEL CULTURE......tech tyranny......wokeism........ the nanny state.......whatever you want to call it......is NOW impacting the stock markets. Under the GUISE of protecting the little guys from their foolish speculation......they restrict a publicly traded company......and.....of course.......the people that will be hurt by the restriction......the little guy traders. The WINNERS......well, of course.....the big money ELITES.

NO DOUBT....there will now be regulations and limitations put on the little guy traders.....of course to protect them from themselves. AND.....as usual......in the months ahead the ELITES will be giving each other (phony) medals and basking in the wonder of their charity and good will toward society.....in saving the little people from themselves.

 

I see that the GDP data is out today......no one cares. Oh by the way.....the markets are UP.....no one cares. APPLE had blow out earnings....no one cares.

We.....being human.....are all caught up in the high school drama of the trading wars. At least we have a good open today. Lets see where we end up by the end of the day. ALL this STUFF that we are seeing this week is the PERFECT JUSTIFICATION for being a long term investor.

 

I was looking at one of my accounts a minute ago. At that time the SP500 was at 3808. SO....after the past three days of FLAILING AROUND.......the SP500 is now back to where it was on January 19 and January 20. SO.....we have gone back in time 6 trading days.

In other words......the losses we have seen lately are IRRELEVANT and are simply short term NOISE.....and......market emotion.

It is ALSO interesting to me....that....EVERY position in my account was POSITIVE.....except for....APPLE and TESLA. Apple was down 1.35% and Tesla was down 5.5%. Both companies reported yesterday. Apple is being PUNISHED for having the greatest earnings in their history. Tesla is being punished for having a mixed but generally good earnings report.

As has been the NORM for many months we are in a very ERRATIC and often very SHALLOW time for the markets and investors. We are ALSO in a TRANSFORMATIVE time for the markets and investing. The pandemic introduced millions of people to investing.....many using options trading. My view......this is going to be the NEW NORMAL. NOW.....I have seen and heard about many many "new normal's" over the past 20 years. They ALL end up just being the "old normal" in the end.

THIS TIME.....I believe it is different. This event is a GENERATIONAL and technological....changing of the guard. These young traders are NOT going to just go away. I believe what we are seeing now is going to continue.

As I said above......what is going on now is simply more justification for being a long term investor. The ONLY alternative to the short term turmoil and erratic market action that is going to be the......new normal......will be to have an investment horizan that makes the short term confusion and turmoil IRRELEVANT. The longer your horizan....the better off you will be.

And just to emphasize.......I continue to be fully invested for the long term.......and.....have absolutely NO plans to make any changes. Any time I make a change to anything in my portfolio I WILL post it on here....the day it happens.

 

Hello Stockinvestor2222.....and....welcome. Feel free to post and participate in this thread any time you wish.

I dont give specific investing advice........but....in general if I was a NEW investor...with limited funds......under $10,000. I would simply put the money into a SP500 Index Fund. It you want to take a little more risk.....you might look at a NASDAQ100 Index fund or ETF like QQQ. (compliments of Chris Eastman) BOTH would give you broad diversification......in an investment that will achieve a GREAT return over the long term.

I am not sure if you are thinking of being a long term investor or short term trader from your post....perhaps both. I am NOT a short term trader and would NEVER........in general........ recommend to a new investor that they do short term trading. THIS is simply MY BIAS. BUT....for you specifically......you have the make that choice.

Whatever you do....educating yourself as you move forward will be CRITICAL to becoming a good solid investor of any type. Be cautious about info that you get on the internet....especially chat rooms and message boards. Learn how to research stocks and funds that you might be interested in. Learn and understand the difference between being a FUNDAMENTAL investor or a TECHNICAL investor or a long term investor versus being a trader.

A good starting point is to think about your goals. Next think about the importance of the money you are investing and think about your risk tolerance. If you wish.....go back and read all the.......GENERAL .....long term investing commentary in this thread. Most of it applies today as much as when it was posted. Whatever type of investing you decide to do you will find MUCH educational material on the internet. BUT......like anything on the internet.......be wary.

CRITICAL POINT TO YOU.....there is no hurry. Take your time and figure out what you want to do and why. Do not get rushed into doing something, just to do something....or....out of panic that you are somehow missing out.

 

Speaking of MANIA.....real estate that is. AND....I do not use the term "mania" as a negative term.....simply as a term to describe a VERY hot market.

I noted a few days ago that my "little" area of about 3000 homes now had 6-8 active listings. WHOOPS.....I spoke too soon. ALL are now pending. We have a SINGLE listing at...........$4MILLION.

I keep good track of the residential real estate market in my area. I drop in as a.....lookie-lou......at many open houses in my area. I went to an open house last Sunday. A home priced at $700,000. I knew the realtor that was there that day. She told me the house already had 5 offers including one from a potential buyer in Oregon that had NOT seen the house in person....they were making an all cash offer simply from the online photos. I imagine that that home......which is now pending.....ended up with at least 10-20 offers. I read a story in the media the other day about a house in a small desirable suburban close in area that got 95 offers.

The house that we sold 15 months ago when we downsized would now be priced at about $160,000 more. The home we bought 20 months ago......we bought the new home 5 months before we sold the old home because we know it was perfect for us and we knew it would sell quickly.......is NOW worth about $130,000 more.

There is NO END IN SIGHT for what is happening with real property in my area. I think this market will continue as it is for at least FIVE YEARS. CRAZY STUFF.....but I like it......money in the bank.

 

In general......not talking politics......ALL those that sat there and had no issue with what happened to Parler or any of the other businesses or people that were CANCELLED lately......WELL.......for some of you that are day traders....it is NOW your turn. For the rest of society.....your turn will come. SOONER or LATER......when you start to clamp down on rights........and others that are not you........ and........create a culture of repression......your monster WILL run out of food.......and......YOU will eventually become the next in line to be eaten.

This WHOLE environment.........that is very QUICKLY becoming the norm over the past month or two......should be a BIG CONCERN of.......EVERY.......American.

 

Roadtonowhere08......appreciate your view......here is my view:

You are right.....BUT.....we have ALL been in that position at some time in our lives. You adapt.......play any angle you can under first time buyers programs, low income programs, etc, etc.

AND.....it is not really "free equity"......the homeowners money and credit is totally at risk....house prices can ACTUALLY stagnate or go down.......as we saw happen when the HOT markets stagnated in 2008/2009.......and......many many people became upside down and just walked away from a home.

AND........the current young people are NOT the first to face economic roadblocks. My generation was faced with trying to buy a home with 10-18% interest rates. My sister in the early 1980's could NOT get a mortgage as a single woman....with a good job and great credit......because.....single women could not get a mortgage. My parents had to co-sign.

When we bought our first home in 1974......we had a combined income of $600 per month. The ONLY way we could buy was under a no money down HUD program that was rehabbing.....small..... foreclosures. Of course.....the homes were on the wrong side of the tracks. We just SUCKED IT UP and got what we could regardless of the location. We ended up on food stamps for the next 2 years.

The generations before had to go to war in WWII.

EVERY generation has their challenges. The majority will deal with those challenges and be successful. The deck is NOT stacked any more than it has ever been. In the end.......YOU.....are the ONLY one that is responsible for your life and what you do with your life.

EDIT: For the Millennials and Gen Z. It is very easy to compare yourself to, feel sorry for yourself, and judge those that are 10-20-30-40-50 years older than you. By the time you are looking at them and their life......YOU have no idea what they went through to get to where they are. AND....most of them will NOT talk about it. They just dealt with it and moved on.

 

ZUKODANY....at least we are getting our moneys worth in entertainment value. I wish we were not.....I dont like seeing what is happening......AT ALL.

 

FOR....those that are looking for FODER for a conspiracy theory:

Yellen received $800G from hedge fund in Gamestop controversy; WH doesn't commit to recusal

https://www.foxnews.com/politics/yellen-robinhood-citadel-gamestop-speaking-fees#

"Newly-confirmed Treasury Secretary Janet Yellen received around $810,000 in speaking fees from the hedge fund that bailed out one of the primary losers in the recent Gamestop frenzy.

Yellen's financial disclosure shows her making $337,500 for multiple days in Oct. of 2020 from Citadel. She similarly banked $292,500 in October of 2019 and $180,000 in December of that year.

The Senate confirmed Yellen on Monday, making her the first female secretary of the department. She previously chaired the Federal Reserve after an appointment by former President Obama.

Both Citadel and Point72 infused almost $3 billion into Melvin Capital, which saw massive losses after betting against the video game retailer Gamestop. The White House said on Wednesday that Yellen was monitoring the situation.

White House Press Secretary Jen Psaki was asked Thursday during the daily briefing whether Yellen would recuse herself from advising the president on Gamestop. Psaki did not commit one way or another.

The Treasury Department did not immediately respond to a request for comment.

Citadel founder Ken Griffin has invested in Robinhood, the trading app that helped fuel the massive stock activity that hit Melvin Capital.

Robinhood said Thursday investors would only be able to sell their positions and not open new ones in some cases, and Robinhood will try to slow the amount of trading using borrowed money.

GameStop stock has rocketed from below $20 earlier to close around $350 Wednesday. The action was even wilder Thursday: The stock swung between $112 and $483. At midday it was down 27% at $255."

MY COMMENT

Actually.......NO COMMENT.