The Long Term Investor

YES.....Zukodany.....the old silent partner.....the government taxman. I know them well. They were the primary driving factor in deciding to retire at an early age.......besides being able to do so. Non-business-owners do not realize the impact of taxes on a small business. They also do not realize what it is like having ALL your personal assets on the line every day to back up a business.

The GOOD NEWS.....while I was out and about....the markets have turned positive....across the averages.....by a small amount.

 

LOVE the song Emmett. Very catchy. NO...not British.

 

WELL.....a very down, up, down market today. I ended up RED......moderately. And....of course got beat by the SP500 by .31%.

 

HERE is a little article that contains some data about the GameStop FIASCO......NOT surprised in the least:

Half of GameStop stock buyers were first-time traders: survey
60% of the retail investor crowd will continue to use Robinhood, Cardify CEO said

https://www.foxbusiness.com/markets/half-gamestop-stock-buyers-first-time-traders-cardify

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

"Cardify CEO Derrick Fung told FOX Business' “Varney and Co.” that company data revealed 50% of GameStop stock buyers were first-time investors.

Stocks like GameStop and AMC Entertainment made headlines in late January after seeing an unexpected surge in volatility following web postings on the popular Reddit message board WallStreetBets.

Many of these traders were new to the game, according to Cardify, which tracks consumer spending across debit and credit cards. Fung said his company ran “both quantitative and qualitative surveys” and found details on the makeup of the GameStop investor crowd, as well as how they feel about the trading app Robinhood after it paused trading on some stocks during the short squeeze.

DERRICK FUNG: “After studying some of the insights, we learned that half of the consumers that we saw deposit money into Robinhood and purchase GameStop stock – 50% of them had been new, first-time traders. And on top of that, 50% of them made their largest ever DIY day trade ever over the last four weeks.

“Sixty percent of the consumers who use Robinhood continue to love the platform. We did see a slight dip in deposits, about 16%. One-sixth of consumers who were on Robinhood actually decided to turn off the platform when Robinhood decided to stop letting consumers trade GameStop and AMC. However, 60% of the consumers still love the product and we believe will continue to use Robinhood moving forward.

I think this is a sign of a new movement of the retail investor. When you think about last year in the U.S., Robinhood adding more accounts than all the other brokerages – commission-free trading, fractional shares, the concept of the meme or the FOMO stock. I think as consumers continue to stay at home, there's going to be a lot more difference. Not just Robinhood, you've got Coinbase going public very soon. You've got all of these hot new companies going public – Airbnb, DoorDash. So we will continue to follow these trends. And we roll out data on a weekly basis and we'll continue to cover what's happening in the markets.”"

MY COMMENT

SO.......at least half of the GameStop traders were new to trading and investing. Sounds about right.....I cant believe that anyone with any sort of experience would end up holding the bag on GameStop....so.....I imagine that 50% ended up being....."IT".

As to the other 60%+ that are going to stick with Robinhood....in spite of Robinhood sticking it to them....yes......this entire situation was simply one big intelligence test. This tells me something about the people doing this stuff and trading on Robinhood. They are willing to get screwed and LOVE IT. I ALSO suspect that the number that.....actually....leave Robinhood will be very small....simply due to inertia and the hassle of transferring to another broker.

God help them.....as they move forward with their....."trading careers".

I try to NEVER use the word....."trading"....to describe what I do....long term investing. I even hate to use the word "trade". The brokerage business has now completely INFECTED....what used to be investing......with the concept of TRADING. They have convinced entire....multiple generations......that the way to do stocks is by trading.

ACTUALLY......I like it......the more others are doing something different than I am...the better. I HATE to be part of a BIG CROWD. I MUCH prefer to be an outlier......and do my own thing.....it helps to keep the CRAZINESS to a reasonable level and keeps the INSANITY away from my style of investing.

 

SOME.....will remember a while back I got a notice from the IRS that I owed them a penalty for my tax return being a month late. Of course....it was not late in the slightest. When they checked their records they MAGNANIMOUSLY......reversed the penalty. (They were backlogged in opening and processing over 16MILLION returns....so apparently just considered them late when they got around to them)

I noticed in the form they sent me......using their numbers......that if the penalty was reversed.....they might owe me some money. APPARENTLY....they calculated my tax a little bit differently than Turbotax. SO.....I told the rep....... they need to review the numbers to see if they owe me money. The best defense is a good offense.

TODAY....I got a check from them for $477. So.....their screw up in saying I filed late.......ended up with them PAYING ME. Of course....with their check.....they were quick to point out that any interest in the check would be......TAXABLE INCOME that I would have to put on my 2021 tax return.

 

HERE is a little something for those that are new to investing and are not convinced that day trading is for them:

3 Tips for Millennial Investors in 2021
As the largest generation, millennials hold influence over much of today's stock market behaviors.

https://money.usnews.com/investing/investing-101/articles/tips-for-millennial-investors

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

"Millennials are now the largest generation, giving them the power in numbers to influence how older and younger generations adopt investing habits and behaviors.

As more investors in this generational cohort strip away their fear of investing in the stock market, their influence could become even stronger.

Millennials tend to be hands-on investors. They grew up during a time where resources and tools were freely accessible, allowing them to search for answers on-demand. They conduct research and analysis to make sure they're making the right investment decisions. This fluid process allows millennials to take ownership of their investments and find opportunities that fit their preferences.

In our conversation with Kevin O'Leary, Beanstox chairman and co-owner and "Shark Tank" investor, and Daniel Egan, managing director of behavioral finance and investingat Betterment, we discuss tips to improve millennial investing habits:

How Millennials Can Embrace Fintech
The digitization of money management has enabled easy and low-cost access to investing and trading, resulting in a new wave of millennials rushing into the markets.

In recent weeks, many millennials were eagerly hovering over popular Reddit stocks like GameStop (ticker: GME) and AMC Entertainment (AMC). An online group of traders saw an opportunity to make some profits by driving up the price of these stocks, all while Wall Street hedge funds were betting against the companies through short selling.

As retail investors fueled demand for these stocks, their market values surged to extraordinary levels, which did not necessarily align with the stocks' intrinsic value. This resulted in some brokers limiting trades on certain stocks, angering investors who lost money.

An event like this shows that when there is a lot of excitement in the stock market, people tend to pile on to be a part of the enthusiasm. This, however, could lead to bad market behaviors for new investors coming in who may not have a strategy for these trades or are unaware of how to navigate the volatility.

"(Self-directed investors) are going to learn that the best way to play this game is to not play it on the terms of Wall Street," Egan says.

He explains the advantages retail investors have is their ability to monitor cost, the ability to put money in and to let it grow over the years.

The silver lining coming out of the GameStop mania is that millennial investors may have observed that some of the best ways to benefit from the stock market are through the traditional methods of investing – like diversifying your investments rather than gambling on one particular stock, and learning that time in the market can prevail over timing the market.

Millennials with disposable income who want to self-start with investing, one way to begin is by using a robo advisor platform that can automate and manage your investments. This on-demand money manager can help users make more calculated decisions around their holdings.

Millennials' Love Affair With Stock-Picking
While retirement is part of millennials' long-term investing plan, their attention is also turned to picking individual stocks.

As stimulus dollars trickled in to boost the economy from pandemic woes in 2020, many millennials used that extra cash to purchase whole or fractional shares of trending stocks. Some of the most popular among this generational cohort were the "FAANG" stocks – a group of tech giants that includes Facebook (FB), Amazon.com (AMZN), Apple (AAPL), Netflix (NFLX) and Alphabet (GOOG, GOOGL) – along with other pandemic favorites like Tesla (TSLA) that saw an unprecedented rise in market value last year.

By millennials buying into these volatile stocks, it could be that they're trying to generate quick returns as they try to outperform the broader market. This inevitably can carry market risk as traders try to catch short-term gains.

The idea of having a short-term mindset, however, may not necessarily be a concern if the aim is to learn how the markets work.

"It's great that millions of people are out there trading stocks and learning about it," O'Leary says.

"But my advice is very simple," O'Leary continues, "take 10% of your winnings every time you do a successful trade on whatever stock it is you're trading."

By safeguarding some of your returns, you can hedge risk by not investing too much while having your money work for you by securing it over the long term.

Investors don't need to engage in day trading individual stocks to get a piece of the action around hot stocks. That would require a lot of effort for people to look constantly at market activity on individual securities, and it ultimately doesn't align with long-term investing principles.

New investors might want to consider index investing or making use of a robo advisor.

Index investing is a strategy that imitates the performance of an index. For example, by the holding SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500 as its benchmark, you own a basket of individual stocks listed on that index without piling on too much risk. This is one strategy that can be helpful for millennials who don't want to take on the concentrated risk that comes with owning individual stocks.

"The days of managing individual securities is really hard because you have to track all of those individual companies, whereas a lot of people want to have it maintained by somebody else without taking on hundreds of thousands of individual positions," Egan explains.

Intraday trading activity tends to be done by only a portion of millennials, whereas many users focus on long-term investing or have yet to even tap into investing.

"We're trying to solve for the hundred million people that don't have an investment account and their No. 1 mandate is not to day trade stocks. What we're trying to solve for is to allow them to get a broadly diverse portfolio personalized for them," O'Leary explains."

MY COMMENT

I am NOT a fan of Robo-advisors mentioned in the article. The rest.....yes.....what I bolded is good advice for any age investor....especially the new investor.

 

I like this little article that is related to the fallout from the recent trading mania and GameStop. LOTS of....mixed messages in this little article.....a few good....many bad.

‘Losing money is not a joke’: GameStop drama drives interest in financial literacy — the most important takeaway of all

https://finance.yahoo.com/m/33e4a352-0e11-3b4d-9cd8-1f86c1fdef04/‘losing-money-is-not-a-joke’-.html

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

"The recent trading bonanza on meme stocks like GameStop GME, -16.15% and AMC Entertainment have so far been a losing bet for Hector Medina Camacho, a 26-year-old administrative assistant working in the health services industry. He is, however, earning some hard-won insights on the market that he hopes will pay off in the future.

In the wake of GameStop shares hitting a high of $483 on Jan. 28 — it was down to $60 by market close on Monday — financial literacy experts hope that’s the case for anyone who’s been swept up in the frenzy.

Medina Camacho lives in Sacramento, Calif. and has traded on and off since 2018. He acknowledged he may have rushed into the purchase, spending roughly $550 for his 36 shares of AMC and $600 for his three GameStop shares. He bought the stocks between Jan. 27 and Feb. 3, he said.

At Monday’s market close, Medina Camacho was down more than $700 on his shares of AMC Entertainment AMC, -11.00%, the national movie chain, and GameStop GME, -16.15%, the video game retailer. Both stocks were at the center of Wall Street’s recent wild ride, propelled by Reddit’s WallStreetBets, a forum for investors aiming for big gains.

Now his plan is to hold the stocks to see what’s next, especially as mass vaccination efforts hopefully send moviegoers back to theaters. Another strategy is to get ready to average down — buying more of a stock at a falling price to lower the cost basis per share.

“I should have had more patience before jumping in,” he told MarketWatch.

Like many others, he’s angry at Robinhood, one of the investing apps he uses, for limiting trades at one point. He left open the possibility that he could also be angry at himself.

So is he done playing the market? Nah.

“It doesn’t discourage me from trading in the future,” Medina Camacho said.

In fact, he wants to learn more.

He is hardly alone. Approximately 44% of 1,600 self-directed investors in GameStop and AMC had less than a year of experience trading and another quarter had up to two year’s experience, according to a survey from Cardify, a consumer data firm; perhaps more worryingly, 45% of surveyed investors said they were seeking a quick financial profit, the survey said.

Financial literacy experts express worry and delight at GameStop
Medina Camacho’s readiness for risk is unchanged; he only trades with money he’s ready to lose, he said. But he wants to coach himself to think more long term and learn more about the fundamentals of companies. Medina Camacho already looks at whether a stock is overbought or oversold to spot possible bargains and smart sales.

He also wants to stay current on what people are saying about stocks on Facebook FB, +1.08%, Twitter TWTR, +2.87% and Reddit, even if he’s taking it in with a grain of salt.

But isn’t that last part just buying into buzz that could potentially leave Medina Camacho at a loss again?

“If there’s an opportunity, I take it,” he said. “There’s always money to be made in these types of trend and hype stocks.”

And that’s why some financial-literacy experts say the GameStop saga might be a blessing and a curse. It is juxtaposing an appetite for gains with a financial literacy knowledge that — up until now at least — has been lacking nationally.

The uneven combination could put new investors in serious financial peril if things go wrong.

‘Broke Millennial Takes on Investing’
“It’s encouraging to me that an interest in learning about investing is spiking,” said Erin Lowry, author of the “Broke Millennial” book series on personal finance. “But hopefully this event isn’t making it seem like the market is rife with ‘get rich quick’ schemes for a typical rookie retail investor.”

As the GameStop trading crescendoed, Lowry noticed a jump in sales of her book “Broke Millennial Takes On Investing.”

“While I have some concern about the full aftermath of GameStop, it does seem that it’s given a renewed sense that the average person with no financial background or Wall Street experience can invest,” she said.

Retail investing was already on the rise in 2020, long before GameStop trading took center stage. Investors opened 10 million new brokerage accounts in 2020, a year that gave rise to the term “retail bro.”

But only 55% of Americans said they owned stock according to a Gallup poll last year, which is roughly the same ownership rate as the past 10 years.

Around the same time period, the FINRA Investor Education Foundation said from 2009 to 2018 there was an 8% drop in people who could answer most questions about interest rates, inflation, bond prices, financial risk and mortgage rates, going from 42% to 34%.

Bottom line: There’s a link between “financial fragility” and weaker grasps on financial basics, a recent study said.

‘Only invest with the money you can afford to lose’
On Friday, a trending thread on WallStreetBets went by the title “people in this sub need to understand that you only invest with the money you can afford to lose.”

“I can see comments of [a] single mother putting her life savings in and college kids borrowing money at a very high interest, and going all in,” the original poster said. “This is not a joke. Losing money is not a joke. If you get a loan and buy a stock, you are at a risk.”

“The need for investor literacy and, by extension financial literacy as a whole, is still paramount,” said Ken Zendel, CEO of the National Association of Investors, a nonprofit organization geared towards investor education, which had growing membership in 2020.

“Far too many are missing out on the basic building blocks of wealth creation because of lack of knowledge, exposure and opportunity.”

The last couple of weeks “has once again shown the power of the individual investor,” said Zendel.

Like Lowry, Zendel sees a mixed bag in the meme stocks. “We’re hopeful people didn’t get burned in this situation, it piqued their interest in the market and they learned about the need to invest rather than gamble,” he said.

Zendel had a bit of advice for Medina Camacho: “Ignore the noise of the get-rich-quick schemes and invest in the long term.”

“It’s good advice,” Medina Camacho said. Still, he added, if investors keep their eyes on stocks to know what’s potentially being overbought and oversold, “you can make money.”"

MY COMMENT

VERY....mixed messages in this article. On one hand we have a nod of the head to long term investing:

"Ignore the noise of the get-rich-quick schemes and invest in the long term.”

On the other hand...much of the material in the article is dismal......for the future of young investors.........due to the trading mentality. It is ESPECIALLY sad that the financial literacy of many new investors seems to have made a distinct turn for the worse. Financial literacy is in the toilet.

It will be interesting to watch....the new generations of investors.....try to get rich. It will be a race......between getting hammered by the markets and just giving up........and.......learning a hard lesson and moving on to more realistic forms of investing.

On a POSITIVE NOTE......many of the young people we see on these boards that seem to have it all together are a stark contrast.....to what we see reflected in this article.

 

Hey Jaypay......WELCOME. Hope to see you posting as a regular. Any post about investing is welcome.......no need to stay on topic or agree with me or anyone else.

Are you really investing in The Bank Of China? I do not invest in ANY Chinese companies......I just do not trust their financials or their government to stay.....hands off. I also dont want my money at risk supporting the worlds most brutal communist dictatorship.

I dont follow any of the Chinese companies......although there are a number of posts on here about the problems that Jack Ma has been having lately with.....his RE-EDUCATION and the impact on his companies.

Please keep me posted on how the bank stock does over time and your analysis of it. Thanks.