The Long Term Investor

I am always interested in the financial MEDIA........and where they are focused in their relentless short term thinking. TODAY....I am seeing more articles on Bitcoin....than anything else. On the numerous sites that I look at each day....I would say that today....at least 50% of the articles are....Bitcoin.

BUT.....here is the ACTUAL news of the day...that might reflect information that is an indicator for where the economy is headed:

New home sales jump 4.3% in January

https://finance.yahoo.com/news/home-sales-jump-4-3-151701953.html

(BOLD is my opinion OR what I consider important content)
SILVER SPRING, Md. (AP) — Demand for new homes in the U.S. surged 4.3% in January as the housing market remains one of the strongest segments of the economy.

Last month's increase pushed sales of new homes to an adjusted annual rate of 923,000, the Commerce Department reported Wednesday. That's much stronger than the 855,000 economists were expecting. December's new home sales figure was revised higher as well, from 842,000, to 885,000.

The median price of a new home sold in January slipped 346,400 but is still up more than 5% from a year ago. Persistent demand fueled by record low mortgage rates has pushed prices higher over the past year.

After a three-month spring slide due to the coronavirus outbreak, housing boomed in the summer and fall until a downturn in November. It appears to be surging again with the busy spring buying season approaching.

MY COMMENT

Pretty good data in general for the economy. AND.....in many many parts of the country, perhaps even most parts of the country....especially SUBURBAN areas OUTSIDE the many......old city FAILING and DETERIORATING cities......areas that are family oriented and have great schools......the market has been HOT for some time now and DID NOT experience any dip in prices in November or the winter. The MILLENIALS are going to continue to DRIVE the housing markets as they get married, have kids, and want to move to the suburbs. JUST like ALL the generations before them.

 

For those that are OBSESSING over the ten year rates....here is the historical rate chart. Personally.....I am NOT going to get very excited about rates going up from the LOWEST level in the past 140 years.

I have invested over the past 45+ years......and except for the INSANE rates of the early 1980's.....I dont remember ANY time period where stock and fund investors were switching to 10 year......or any year for that matter.....Treasuries. I suspect that any company that is large enough to be publicly traded has.......ALREADY..... taken advantage of.....and locked in...... these historic low rates.

ACTUALLY....I remember not too long ago.....when rates in the 2.5% to 3% range were being called abnormally low. I guess it all depends on your knowledge and view of historical rates.....something that seems to be TOTALLY LACKING at the present time. NOT too hard to understand with the current state of the financial MEDIA.

If you look at the chart above and superimpose ALL the times of BULL MARKET and rising stock prices......which is the majority of the time since the early 1980's........well.....you form your own view of how the ten year yeild impacts stocks....especially over the long term.

 

YES we do need Powell to speak every day.....and some people will find out the old saying.....DONT FIGHT THE FED.....like ALL old sayings is usually based on the truth.

 

"why does the media so harp on about it?"

Why does the media HARP on anything? It is pretty obvious........besides the fact that they are MORONS. I REALLY dont decide what to invest in or how to invest based on ANYTHING in the general financial media. Why in the world would I give them any credibility. They represent.....total herd behavior.....chasing after whatever is the sensational story of the moment....trying to capture eyeballs. RELYING on the media....is even more INSANE than relying on all the economists and analysts and other so called experts that are out there EVERY DAY....trying to get publicity and PR for themselves.

 

My opinion is......I dont care to participate in short term insanity. The level of short term mania, delusion, and obsession right now is off the charts. REALITY.......just 12 days ago we were at a record high with the SP500 at 3934. TODAY we are at 3897 as I type this. A drop of 37 points.....NOT....exactly a BIG SCARY drop. LOOKS LIKE....a MASSIVE DROP (sarcasm)....of LESS than 1%....WOW.

What is going on right now is EXACTLY what you get when millions of former sports gamblers and others that have absolutely no experience with investing or stocks or funds......all pile into the markets....as short term options traders and day traders and speculators...... and dominate the daily commentary.....and the media story line of the day...... with chat room and message board drama. This is EXACTLY why a NON-STORY like Bitcoin is dominating the financial news at the moment. It is why GameStop happened and was a MASSIVE story for about a week. Simply.....the epitome of short term insanity.

AS usual....I will just......do nothing.

(Ironically.....says the person posting this comment on a message board)

 

I GUESS.......with the averages now recovered.....the APOCALYPSE is CANCELED....for now.

Oh well.....I was just about to get out the shovel and bury my gold and silver in the back yard. UNFORTUNATELY.....for me.....I just spent the past hour with the welding rig...turning my Ford Escape into a ROAD WARRIOR vehicle....my wife is not going to be too happy when she gets home.

 

Thanks Emmett......a little bit out of my price range.....but I will look at the catalog in case there is any....lesser....Western or American Impressionistic art in the collection.

 

HERE.....is the PERFECT example of what is WRONG with the MEDIA today. Absolutely no factual basis for the headline of this article.....PLUS a few SCARY code words in the article.....nothing more than sensationalism and trying to capitalize on the fact that the housing markets are HOT right now and in the news. NOT to mention....blatant fear mongering for clicks.

Housing market concerns begin to emerge

https://www.cnn.com/2021/02/24/investing/home-depot-lowes-earnings-housing/index.html

(BOLD.....is NOT MY OPINION......but emphasis of the wording of the article and the fact that the content of the article is ACTUALLY positive)

"New York (CNN Business)The housing market is still red hot. But there are growing concerns about how much longer this strength can last.

Home Depot (HD) reported earnings and sales that topped Wall Street's forecasts Tuesday. Lowe's (LOW) also reported better-than-expected earnings and sales on Wednesday morning, and CEO Marvin Ellison said in a statement that sales were lifted thanks to "broad-based demand driven by the continued consumer focus on the home."

Still, rising interest rates could eventually be a problem for Home Depot and Lowe's. Even though the Federal Reserve is expected to keep its key short-term rate near zero for the foreseeable future, longer-term bond yields have started to spike. And mortgage rates are influenced more by the 10-year Treasury than Fed rates.

In an ominous sign, Home Depot declined to give any guidance for 2021. Its shares fell 3% on the news.

"Increased demand for single-family homes has driven housing turnover and home price appreciation," said Home Depot chief financial officer Richard McPhail during a conference call with analysts Tuesday. "However, significant uncertainty remains with respect to the course of the pandemic, the distribution of vaccines, short-term fiscal policy and how these developments will impact the broader economy and ultimately, consumer spending."

For now, it appears that consumers are not too concerned.

The latest housing market numbers still paint a healthy picture. Consumers are eager to find more space and are willing to pay ever higher prices for homes.

S&P/Case Shiller and the Federal Housing Finance Agency reported a more than 1% monthly increase in their latest housing price reports Tuesday.

"Both surveys suggest strong momentum and support our view that the housing market remains in solid footing," said Blerina Uruci, an economist with Barclays, in a report.

The housing market strength is helping to lift the prices of lumber too, which has also boosted Home Depot. Ted Decker, the retailer's president, said during the earnings call that "during the fourth quarter, pricing for both framing and panel lumber" surged, helping to lift overall sales.

Forestry companies have benefited from the housing boom and soaring lumber prices as well.
Two timber exchange-traded funds with the ticker symbols of WOOD and CUT -- the iShares Global Timber & Forestry (WOOD) and Invesco MSCI Global Timber (CUT) ETFs -- are each up more than 5% this year and have both gained more than 25% in the past 12 months.

Builders remain confident that the housing boom won't come to an end just yet.
Toll Brothers (TOL) reported earnings and sales after the market closed Tuesday that easily beat analysts' expectations.
"The housing market remains very strong, driven by a tight supply of new and existing homes for sale, favorable demographic trends, low mortgage rates, and a heightened appreciation for home ownership," said Toll Brothers CEO Douglas Yearley, Jr. in the earnings release. He added that he expects these market conditions "to continue for the foreseeable future."

MY COMMENT

If I was highlighting ALL the positive content of this article and put up a different headline......"Housing Remains Strong For The Foreseeable Future"....you would have no clue it was a HOUSING SCARE STORY. There is NOTHING in this article to suggest anything negative with housing or that supports the headline. The only supporting data.....a general quote about the pandemic from Home depot that has nothing to do with the topic of the article.

AND.....this CRAP....is coming from CNN BUSINESS......not regular CNN but their BUSINESS reporting bureau.

The SAME THING....happens every day in the financial media regarding inflation, Bitcoin, interest rates, the markets, various individual stocks, especially just after earnings, etc, etc, etc. UNFORTUNATELY....this is just the reality of where we and our MEDIA HEROES.......even in a lot of the business and financial media...... are right now.

To be fair....there is a lot of good content out there.....but like everything with the internet....you have to be able to find it and appreciate it.

 

Back to the discussion by posters above. YES....the current mortgage rates are HISTORIC. The lowest in my entire lifetime. A God-send for anyone trying to buy their first home and for current owners to refinance.

I also remember.....OLDMANRAM........

We bought our third home on a Real Estate Contract at 12% interest......in Washington State. I ALSO......remember very well the ONLY time that I bought Treasuries. In 1983 and 1984 and 1985.....I funded my Keogh retirement plan......with 30 year Treasuries at rates between 13% and 11%. Zero coupon, 30 year Treasuries.

I knew it was a no brainier to lock in that return on a....present value contribution of nearly $100,000 (about $30K per year)......when it was higher than long term stock returns.

By CHANCE....it turned out to be EVEN BETTER than I ever expected.

As rates plummeted back down into the 7-8% range about 5-7 years later....I had a HUGE gain in the value of those Treasuries. Some time about 1989/1990/1991 I got a call from a Vice President at my broker at that time.....Merrill Lynch.....they wanted to see if I would sell them my Treasury Zero coupons. So we started negotiating on the first one.....he offered way above the current value and I accepted. On the second one I threw out a crazy number and he bitched about it....but he accepted. As we went through each one......I JUST SCREWED THEM..... I got great value for those bonds.

They were in some sort of a bind.......he did not tell me why they needed those bonds so badly..... but I had what they needed....so they paid the price. It was VERY satisfying to stick it to Merrill Lynch....I hated them. I realized what would have been my....nearly.....TOTAL 30 year return on those Treasury Zero coupon bonds.....in only about 5-7 years.

LUCK of course and random chance.....I assumed I would own them for the entire 30 years. That money than was invested in my usual long term style BIG CAP and fund stock account. I NEVER bought another bond or Treasury since.

Perhaps my best investment....other than Microsoft......BUT......as I said....I claim no credit.....pure chance.....other than realizing that those crazy rates were historic.