The Long Term Investor

HELLO......oldmanram........and welcome. Glad to see you here and posting.

I HOPE that add of the Russell 2000 was for the longer term. If so.....it will all be good.

 

I like this little article. Even though it is short term......I think it contains a lot of truth....that will apply to the markets we are going to live with for a while. The stories and themes we are seeing today are going to be around......all year......that is why I like this little article.
Stock market news live updates: Stocks fall even after retail sales surge past expectations

https://finance.yahoo.com/news/stock-market-news-live-updates-february-17-2021-232118564.html
"Stocks fell Wednesday to retreat from record highs, even after new data showed retail sales surged at the fastest clip since June at the start of the year. The Nasdaq shed more than 1% as tech stocks underperformed, and the index was on track for its worst session of February so far.

Retail sales surged at a 5.3% monthly rate in January, coming in well above the rise of 1.1% consensus economists had expected, and ending a three-month streak of declining monthly sales.

"The 5.3% month-over-month surge in retail sales in January completely smashed our own and the consensus expectation of a more modest 1% gain and highlights how quickly reopenings and the $600 stimulus checks have translated into stronger spending," Michael Pearce, Capital Economics senior economist, said in a note. "That said, with the stimulus checks spent more quickly that we had expected, we expect retail sales to fall back in February."

A day earlier, the Dow set a fresh record closing high while the S&P 500 and Nasdaq touched and then retreated from record intraday levels. Shares of Chevron (CVX), E.W. Scripps & Co. (SSP) and Verizon (VZ), the parent company of Yahoo Finance, jumped after Warren Buffett's Berkshire Hathaway disclosed new stakes in each of the companies. Bitcoin prices (BTC-USD) rocketed above $51,000, after breaking above $50,000 for the first time ever on Tuesday.

Markets over the past month have priced in the likelihood that additional, significant fiscal stimulus will help propel the economic recovery and work alongside ongoing monetary stimulus from the Federal Reserve. The yield on the benchmark 10-year Treasury note hit a one-year high of about 1.31% on Tuesday, amid hopes of a firming economy.

West Texas intermediate crude oil prices (CL=F) added to gains after settling above $60 per barrel for the first time since January 2020 on Tuesday, as new supply concerns compounded with optimism over a post-pandemic resurgence in demand for travel and fuel. Domestic oil output has slumped by nearly one-third due to freezing temperatures in Texas, Bloomberg reported on Tuesday.

As stocks continue to set fresh record highs, some strategists have warned that markets may need to take a breather before moving higher later this year.

"We still believe the market is ripe for a pullback, but the focus should remain on our core fundamental thesis and the global reflation theme," Cannacord Genuity strategist Tony Dwyer said in a note Tuesday. "The macro backdrop and market action coming off the March 2020 low continues to track the gains coming out of the Great Financial Crisis [of 2009], which means corrections may be coming followed by even more gains."

Even still, others noted that those with a longer-term investment horizon may benefit most by staying the course.

"It's always a nervous situation for investors when markets keep making new highs, and certainly there is froth in some parts of the market. But the question around the stimulus, the roll-out of the vaccines, all of these factors that go into the price in the stock market, ultimately it boils down to when will the economy recover to pre-pandemic levels, and when will earnings get to those levels as well," James Liu, Clearnomics founder and CEO, told Yahoo Finance.

"Right now, consensus estimates are that by the end of 2021, we should see a case where we get to about $170 in S&P earnings, which is essentially getting back to where we began pre-pandemic. And if that's the case, then it does justify some of the enthusiasm we have in the stock market today," he added. "That's a little bit different than saying the stock market will keep going up in a straight line. Obviously, that's probably not the case. But it is a reason for most everyday investors to basically stay diversified and stay invested despite the all-time highs."

12:54 p.m. ET: Reddit user 'Roaring Kitty' sued for securities fraud after helping incite GameStop surge

Keith Gill, known on some social media platforms under the username "Roaring Kitty," was named in a securities class action lawsuit for claiming to be an amateur investors and using sites including Reddit to massively inflate the price of GameStop shares. Gill was one of the most prominent traders touting GameStop on Reddit's r/wallstreetbets forum last month. He is also scheduled to testify before the House Financial Services Committee on Thursday in a hearing about the surge in GameStop and other speculative stocks.

"In order to disguise that the aim of his social-media campaign was simply to increase the worth of his GameStop shares by creating a demand for the stock, Gill took on the fake persona of an amateur, everyday fellow, who simply was looking out for the little guy," according to the complaint, which was filed in Massachusetts on Tuesday. "He exaggerated and misrepresented the prospects of GameStop and made bold predictions about its future.

The complaint said that Gill obscured the fact that he held "extensive securities licenses and qualifications, including a securities principal and supervisory management license and a Chartered Financial Analyst license."

"Gill's deceitful and manipulative conduct not only violated numerous industry rules and regulations, but also various securities laws by undermining the integrity of the market for GameStop shares," according to the filing

12:25 p.m. ET: Stocks hold lower, Nasdaq sheds more than 1% as tech shares give back gains
The three major indexes remained lower intraday on Wednesday as tech stocks underperformed. The Nasdaq dropped 1.3% and paced for its worst day so far in February.

The S&P 500 also slipped from a recent record high, as the information technology, industrials and materials sectors lagged. Shares of Apple slid more than 2%, making it the worst-performing stock in the Dow and offsetting a more than 4% jump in shares of Verizon.

10:01 a.m. ET: Homebuilder sentiment unexpectedly rose in February
Homebuilder confidence unexpectedly ticked higher in February as a boom in housing market activity continued well into the start of this year, even as concerns over affordability and rising rates loom.

The National Association of Home Builders' monthly builder sentiment index increased to 84 in February from 83 in January. This topped estimates for an unchanged reading for the month.

Going forward, however, home construction may retreat after a 2020 surge.

“Demand conditions remain solid due to demographics, low mortgage rates and the suburban shift to lower cost markets, but we expect to see some cooling in growth rates for residential construction in 2021,” NAHB chief economist Robert Dietz said in a statement.

MY COMMENT

This......ONE....little article hits on many themes that will.......repeat.....over and over in the next year.

FIRST....the surging economy and stock markets. This will mean more volatility and froth as we go forward. Many investors WILL struggle with feelings that......things are getting too out of control......and that......"something is going to happen". YES......there will be one or more corrections in 2021....just like.....any year in a normal market. As usual......the few and the brave.....that have the guts and foresight to be long term investors will do just fine. In fact......better than just fine....since they will be the ONLY investors that capture the FULL gains that the markets are going to give us as the economy.....REFLATES.

PERSONALLY.....I am NOT bothered by the current record highs......the economy has a long way to go to fully reopen. As this happens.....those that are long term owners of the most iconic businesses in the world will reap the rewards. Of course....as we experience drops....or....even corrections....many investors that thought they had the risk tolerance gene.....will turn into....market timers.

On a different topic....Reddit. YOU, me, anyone has....no idea.....who the person is that is egging us on to do something with our investing dollars on the internet. We will see this GameStop situation evolve and come to light over the next year. In the end.....as we have already seen.....the markets are NOT the place to try to make a point......or....fight the MAN. You invest for the financial security of you and your family. That is it....pure and simple. NO ONE on the internet.......has your financial well being in mind. It is ALL self serving....in some way. AND.....it is the short term stuff that is the most dangerous.....BEWARE.

This little article also mentions housing.....the other BIG theme for the year. We are in a HISTORIC housing BOOM. Prices are CRAZY in many many areas. It is a FRENZY. I expect that it has a long way to go till it ends. People that already own a home are going to see a HUGE increase in net worth going forward. We are in the era of the....all cash buyer.....in most of the hot city areas.

When will it all end? My opinion.....when we start to see the ten year treasury rates normalize.....some time over the next 2-5 years. As this happens...mortgage rates will also rise. When mortgage rates get back into the 4.5% to 6.5% range....many buyers will be priced out of the most desirable areas and homes...because of the monthly payment. The market will.....SELF CORRECT. Property taxes will also contribute.....as they go up....houses for many will become less and less affordable.

I remember when I purchased my income annuities 7 years ago. Ten year treasury rates were in the 2.5% range. At that time that was considered low by historical standards. Now here we are at about 1.2% to 1.3%. It WILL HAPPEN.....the rates will go back up to a more normal range. Sooner or later.....the FED....WILL start to raise rates. I believe it is a year or two in the future....but when it happens it will impact the housing markets.

SO.......what to do. NOTHING. At least for long term investors that are NOT.....playing....the markets. A lot of the above will be BIG....media topics....but for long term RATIONAL investors.....as rates rise.....and....housing prices slow.....and.....the day trading options GAMBLERS get taught an age old lesson......and.....NORMAL corrections happen.....the long term investor will continue to capture the long term market gains.

In the end what will really count is......the long term BUSINESS FUNDAMENTALS....of the companies and Indexes each of us is invested in. In the end it is......ALL ABOUT......INDIVIDUAL BUSINESS SUCCESS. That is the......ONE AND ONLY....reason to be a long term investor....and....that is the NUMBER ONE criteria for ANY investment choice or decision.

 

I have said MANY times on here.....I DO NOT re-balance. I....LET WINNERS RUN. THUS.....I like this little article.

Learning from Warren Buffett's recent mistakes: Let your winners keep winning

https://www.usatoday.com/story/money/investing/2021/02/17/warren-buffett-mistakes-winners/43389815/

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

"Few investors have been around as long as 90-year-old investing legend Warren Buffett. The person many call the Oracle of Omaha remains as CEO of Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B), a company he first started doing business with more than half a century ago. Buffett's lifelong track record has put the power of time to full advantage, and his accomplishments will be hard for anyone to surpass.

Yet Buffett has admittedly gotten a lot of things wrong over the past year. In particular, three missteps have cost him and Berkshire shareholders significant amounts of money. However, there's one thing that Buffett has done that's consistent with his investing strategy – and it has served to make up for his miscues.

Mistake 1: Selling airline stocks low

Many of us have learned the hard way that it's never a good idea to sell stocks after a huge crash. Emotions have us on edge, and the prospect of huge losses can impair anyone's judgment.

Yet that's exactly what Buffett did with Berkshire's airline holdings, selling Delta Air Lines(NYSE: DAL), American Airlines Group(NASDAQ: AAL), Southwest Airlines (NYSE: LUV), and United Airlines Holdings(NASDAQ: UAL) in early May 2020. At the time, they were down between 45% and 70% from where they had started the year, reeling from the impact of the COVID-19 pandemic.

Since then, however, the stocks have bounced back. They're all still below their levels at the end of 2019, but Southwest in particular has clawed back nearly all of its losses.


DAL data by YCharts.

In Buffett's defense, selling a stock unemotionally can make sense if your thesis for investing in it has changed. That's what happened with Berkshire, as Buffett saw the fundamentals of the airline industry changing forever. Even after a huge infusion of government assistance, moreover, there's no guarantee that airlines will in fact outlast the impact of the pandemic without further financial suffering.

shares of several major banks played a much less prominent role in Berkshire's portfolio at mid-year in 2020. Specifically, Buffett sold out of Goldman Sachs(NYSE: GS) entirely, while slashing his stake in JPMorgan Chase(NYSE: JPM). It's unclear exactly when during the second quarter of 2020 those sales happened, but as of June 30, Goldman was down 14% for the year, and JPMorgan had fallen 33%.

Since then, both banks have completely made up for their losses. JPMorgan is up just a bit since the beginning of 2020, but Goldman has soared to hit new all-time highs.


GS data by YCharts.

To be fair, Buffett has increased his position in Bank of America(NYSE: BAC), which has seen a similar trajectory. However, B of A has underperformed both Goldman and JPMorgan in the past 13 months.

Mistake 3: Delaying big buybacks of Berkshire Hathaway stock

Lastly, Buffett missed a big opportunity to buy shares of Berkshire Hathaway on the cheap. He made only minimal repurchases during the first quarter of 2020, when share prices fell as low as $160. Yet in the second and third quarters, he spent billions on buybacks – and paid $215 to $220 per share on a big chunk of purchases in September.

Buffett explained that buying back stock when the insurance implications of the coronavirus crisis were uncertain would've been imprudent. When that potential source of liability became less troublesome, the Berkshire CEO felt more comfortable with repurchases. Nevertheless, with so much cash available, Berkshire could've made a bigger impact by pulling the trigger at the optimal time.

Why it didn't matter in the end
As it turns out, though, all of Buffett's mistakes were made up for by a simple decision. Berkshire held onto most of its Apple (NASDAQ: AAPL) stock, and that proved to be a huge moneymaker.

At the beginning of 2020, Berkshire owned just over 1 billion shares of Apple. The value at that time: about $72 billion.

Buffett did trim some of Berkshire's Apple holdings. Yet as of the most recent report, the insurance company still held 944 million shares of the tech giant's stock. With Apple's stock price having soared from $72 to $135 over that span, Buffett's remaining holdings amount to more than $127 billion in Apple stock. That's $55 billion in capital appreciation – far more than the entire value he had invested in airline stocks.

The lesson: Let your winners keep winning

As a result of a simple investing philosophy, Buffett has managed to hold his own even though he's made some big mistakes recently. Buying great stocks and holding them for the long run can pay off big, and it can also make up for a multitude of missteps along the way.

MY COMMENT

BUFFETT is a great investor....one of the best ever. lately...he seems to be moving in and out of some investments much more than he has in the past. His......TWO.....BIG reasons for his success.....in my opinion.....LET THE WINNERS RUN....and....avoid OVER DIVERSIFICATION. Of course.....the current FADS.....diversify, diversify, diversify......and....short term buying and selling.

Of course.....these two investing habits are secondary to his PRIMARY reason for success.....buying GREAT BUSINESSES....at a good price or at a good time in their company business cycle.

I.....obviously dont believe in either and never have. BUT....that is me....we ALL have to do what we have to do.

As to the markets today......somewhat of a comeback.....lets carry this MOMENTUM over to tomorrow.

 

A GOOD day today....in spite of the.......languishing markets....during most of the day. Like many....I ended up in the GREEN by a little bit in spite of the market action during the majority of the day. I ALSO beat the SP500 by .17%. My RED positions today....AAPL.....HON...NVDA....and...SNOW.

 

This post that follows is....NOT...aimed at Rustic1....but I will use his comments as a topic of.....GENERAL..... discussion. HE like everyone.....must invest in the way that is right for them.......and......any investor MUST be comfortable in their own skin to be successful. That is why...any sort of investing discussion is welcome on this thread. EVERYONE has to do their own thing.......and be comfortable doing it.

SO......

ACTUALLY.........I am FAR from "set and forget it". As can be seen from the past 2.5 years of this thread. Kind of like in the old days when......the traders......would deride those that invested as I do as......."buy and hold". I would more accurately describe myself as......"set and monitor......and adjust as needed". My preferred label......a...."long term investor".

Personally in my opinion......HFT's and Algo's and AI trading......are simply short term trading.....and....types of day trading. They dont impact what I do in the slightest. SINCE I am a stock and fund.....PICKER....for the long term.....as well as a long term fully invested all the time investor....I would NOT consider myself.....at the mercy of the markets in the slightest. I constantly compare myself to the general markets. The MAIN distinction that I draw between various types of investing are....FUNDAMENTAL ANALYSIS....versus.....everything else. In my world....Fundamental Analysis investing includes Value Investing, long term Growth Investing, and any other types of investing based on specific company FUNDAMENTALS.

BUT....even if I was a simple INDEX investor....with everything in the SP500 or the NASDAQ 100....I would.....PROBABLY....beat all the traders and market timers. HOW do I know this....because the academic investing research........ALWAYS......shows that this is the REALITY over and over and over.

I would love to see any short term trader or market timer.......not talking about people on this board........show actual audited results that include EVERY trade......and....the NET annual return after ALL fees, taxes, and other expenses....over a five to ten year time period. BUT....it NEVER happens.

The way I look at it is.....in the end.....there are NO limits to success.....ALL of us can be successful regardless of style. My success does not limit anyone else's success. The important thing is to make money and meet whatever your goals are....I dont buy into ANY ZERO SUM......"stuff"......EVERYONE can succeed at the same time....using whatever works for them.

TOO often investors get all BOGGED DOWN arguing about what is the right way to invest....but....the REALITY....the right way for me to invest is how "I" invest....the right way for "you" to invest is how "you" invest.

AND......being a community of investors.....discussing all the various issues and helping others when they need it....SHOULD be the goal of any site like this one. I think WE ALL do a pretty good job of this on this site. I have been on many investing sites over the years....and.......THIS SITE...... is the best one of ALL....which is a very positive reflection on ALL the people that post here.

 

That is an idea Emmett.....but....probably more trouble for me to try to find some old post that will cover a question....than just answering. BESIDES.......if someone takes the time to ask something......I am going to give them a "personal" answer.

This whole thread....for me.....is one big........STREAM OF CONSCIOUSNESS. Nothing is planed out or written out....all just off the top of the head....for better or worse. Which kind of ties in with my purpose here.......which is.....to capture my thinking at any one time and my thoughts as I invest.....and......reinforce my OWN behavior. It also gives me a running account of my investing. AND....sometimes I might reinforce my own behavior with repetition. My BIASES......and FLAWS..... are obvious...on here....what you see is what you get.

 

SO.....we will see if the FED can kick things UP tomorrow in the markets.....they seemed to be the cause of the late day RALLY into the close today.

Fed officials see economy ‘far from’ where it needs to be, meaning easy policy won’t change soon, minutes show

https://www.cnbc.com/2021/02/17/federal-reserve-releases-minutes-from-its-january-meeting.html

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

"Key Points

• Minutes from the January Fed meeting showed that officials see the economy “far from” the central bank’s goals.
• Those objectives include a “broad and inclusive” labor market recovery and inflation up to at least 2%.
• The meeting summary said it likely will “take some time for substantial further progress to be achieved,” meaning policy is unlikely to change soon.

Federal Open Market Committee members at their most recent gathering reaffirmed that the central bank will be keeping policy loose well into the future, according to meeting minutes released Wednesday.

With the economy continuing to shake off the effects from the Covid-19 pandemic, the committee, which sets monetary policy for the Federal Reserve, kept policy unchanged.

That meant holding benchmark short-term borrowing rates near zero and maintaining the minimum $120 billion of asset purchases each month.

In a discussion over the Fed’s asset purchase program and interest rate policy, the minutes indicated little chance for a change anytime soon.

“Participants noted that economic conditions were currently far from the Committee’s longer-run goals and that the stance for policy would need to remain accommodative until those goals were achieved,” the meeting summary said. “Consequently, all participants supported maintaining the Committee’s current settings and outcome-based guidance for the federal funds rate and the pace of asset purchases.”

Heading into the Jan. 26-27 meeting, investors had been looking for discussion about when the FOMC might start tapering the pace of its bond buying, or quantitative easing. The post-meeting statement made no mention of the talks, and Fed Chairman Jerome Powell said afterward that the central bank likely would keep policy accommodative.

Members noted that the QE program, which has taken the Fed’s balance sheet to nearly $7.5 trillion, “had materially eased financial conditions and was providing substantial support to the economy.”

The deliberations come amid concerns central bank officials have over the pace of recovery. Of particular focus is the goal of a ’broad and inclusive” labor market recovery, across racial, gender and income lines.

The post-meeting statement noted that the speed of economic activity and improvements in the labor market has “moderated in recent months.” The minutes helped amplify Fed sentiment in that regard.

“With the economy still far from those goals, participants judged that it was likely to take some time for substantial further progress to be achieved,” the summary said.

Since the meeting, Fed officials have been virtually unanimous in saying they don’t expect significant policy changes until more progress is made toward the central bank’s enhanced goal for the labor market. Powell and others have stressed that they won’t start raising interest rates to head off inflation, but rather will wait for actual price pressures to show up before tightening policy.

“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 at his post-meeting news conference.

The minutes noted that asset prices are “elevated” and said that vulnerabilities associated with household and business borrowing levels are “notable.” Officials also said some money market and open-ended mutual funds face “significant vulnerabilities associated with liquidity transformation."

MY COMMENT

This is EXACTLY what the markets and stock investors wanted to hear. It will be interesting to see if the markets reflect this GOOD NEWS tomorrow.