The Long Term Investor

I CONSIDER this good news and at the same time bad news if it gets out of hand. Whatever it is....it is ABSOLUTELY typical. People start to pile into stock and fund investments as the markets hit new highs. Many of these same people....who think they are long term investors or market timers.....will of course sell when the markets are hitting new lows. Thereby completing the age old cycle of buying high and selling low. WAIT......isn't that backwards........unfortunately yes.

Individual investors finally turn bullish, as stock market nears all-time highs

https://www.marketwatch.com/story/i...-stock-market-nears-all-time-highs-2019-04-12

(BOLD is my opinion and important content)

"This year’s stock market rally has been impressive, especially as its occurred in an environment where individual investors have remained cautious, as evidenced by survey data and fund flow figures, which have shown consistent equity-fund outflows in 2019.

But individual investors are once again wading into the market, indicating renewed bullishness in surveys and flow data released in recent days. These bulls should beware, however, as swings in sentiment can sometimes serve as a contrarian indicator, signaling that stocks may underperform in the months ahead.

The latest E-Trade StreetWise survey, released Friday, showed 58% self-directed investors calling themselves ‘bullish’ on the stock market in the second quarter of this year, a 12 percentage-point increase from the first quarter, when a 54% majority indicated they were ‘bearish’ in their stock market outlook.

“A cloud over the market has been lifted, now that investors aren’t worried about the Fed being too aggressive, and we are also seeing signs of a potential breakthrough on the U.S.-China trade front,” Mike Loewengart, vice president of investment strategy at E-Trade told MarketWatch, arguing that these factors have helped convince his clients that there is room left to run in the current bull market.

He added that the hangover from the nearly 20% drawdown in the S&P 500 SPX, +0.66% in the final quarter of last year stayed with them in the first quarter, causing many to miss out on a least part of this year’s rally.

“It speaks to the emotional challenge that all investors are presented with when it comes to maintaining a longer term point of view,” Loewengart said. “It’s no secret that smaller, retail investors chase performance. That’s a trend that’s unfortunately ever present.”

Indeed, it may be the case that individual investors are chasing performance now, given the market’s rapid first-quarter rise and projections of muted earnings growth in 2019. For instance, a recent survey from the American Association of Individual Investors, also showed investor sentiment improving in the week ended April 10, with 40.3% of respondents predicting that stocks will increase in value over the next 6 months, somewhat above the historical average of 38.5%.

Meanwhile, bearish sentiment, or the belief that stocks will fall over the next 6 months fell to the “unusually low” level of 20.7%, according to a statement accompanying the results, well below the historical average of 30.5%.

But this low level of bearishness is actually something of a contrarian signal for stocks, according to AAII. “Historically, the S&P 500 index has realized lower-than-average (3.8% versus 4.5%) and lower-than-median (4.2% versus 5.2%) six-month returns following [unusually low bearish sentiment] readings,” the AAII said.

AAII
Meanwhile, the latest fund flow data from Lipper shows that U.S. equity funds saw a $4.3 billion in inflows in the week ended April 10, versus an $19.7 billion outflow from domestic equity funds from the start of the year through April 3. Also during the week ended April 10, there were $8.4 billion in outflows from cash-like money market mutual funds, according to Lipper, suggesting that investors are moving cash from the sidelines to invest in the U.S. stock market.

MY COMMENT

YES.....this sort of thing is EXACTLY why I stay fully invested all the time and NEVER try to time the markets, short term trade, or move in and out of stocks and funds based on short term thinking that ALWAYS seems to be EMOTION based when you get down to it.

 

I ASSUME.....probably a dangerous thing to do.....the above survey took into account in some way the fact that we are now about a week from April 15, and that contributions to IRA accounts and ROTH accounts and other retirement vehicles linked to the date of April 15 could be driving the inflow of money into stocks and funds.

 

Short term themes of the next few weeks. We have been in a shallow drifting market for about a month now. As discussed above there is much money siting on the sidelines which will likely come back into the markets over the next few months. The CATALYST for the return of this money will be the CHINA TRADE DEAL. As news DRIBBLES in about the trade deal progress and the final deal being achieved there is MUCH potential for a BIG market rally.

The second DRIVER of the markets going forward for the next couple of months will be......of course.......EARNINGS. We are seeing better than expected earnings so far....but it is EARLY in the season. So many companies were HAMMERED on the release of their last earnings reports due to their negative forward looking statements. In my opinion some, perhaps most of the negative forward statements was nothing more than ROPE-A- DOPE. It was a no lose situation for management. Lower expectations just in case things went south, and at the same time set up themselves for the upside HEROIC surprise, and the resulting impact on stock price.

HERE are two articles that touch on the above, one is opinion and the other is fact:

Stocks could have a quick surge from here, BlackRock’s Larry Fink says

https://www.cnbc.com/2019/04/16/sto...-up-from-here-blackrocks-larry-fink-says.html

(BOLD is my opinion of important content)

"The rally in global equities may have further to go as more money jumps back into the market, BlackRock CEO Larry Fink said Tuesday.

“We have a risk of a melt-up, not a meltdown here. Despite where the markets are in equities, we have not seen money being put to work,” the head of the world’s largest asset manager told CNBC’s “Squawk Box. ” “We have record amounts of money in cash. We still see outflows in retail in equities and in institutions.”

In stock market terms, a melt-up is considered a big move in the markets that comes from investors trying to get in on a momentum shift. It also can be a sign of a late-stage bull market.

The iShares MSCI ACWI exchange-traded fund, which tracks global stocks, is up more than 15% this year. In the U.S., the S&P 500 has rallied nearly 16% through Monday’s close and is within 1.5% of an all-time high set in late September.



Stocks benefited this year from apparent progress in U.S.-China trade talks and a recalibration of global monetary-policy expectations.

The Federal Reserve slashed its rate projections to reflect no hikes in 2019. The U.S. central bank also indicated it will end its balance-sheet reduction process earlier than expected. Meanwhile, the European Central Bank pushed back plans for future rate hikes. It also announced last month it will issue cheap loans to banks in the region.

“Many people thought we were going to be in a period of rising rates. We were not and we saw huge underinvestment and people had to rush into fixed income,” Fink said. “We have not seen that in equities yet.”

Fink added that, with central banks being “more dovish than ever … there is a shortage of good assets” for investors, which could ignite the melt-up in the global equity market.

Fink’s comments follow the release of better-than-expected earnings from BlackRock. However, the company’s overall revenue missed expectations as it fell 7% on a year-over-year basis. Shares rose 2.4 percent Tuesday morning."

AND THE FACT:

Treasury yields rise as strong earnings lift risk appetite

https://www.cnbc.com/2019/04/16/us-bonds-investors-follow-us-china-trade-talks.html

"U.S. government debt prices fell on Tuesday as solid corporate earnings results lifted investor risk sentiment.

The yield on the benchmark 10-year Treasury note rose nearly 1% to about 2.5764%, its highest level since March 20. The yield on the 30-year Treasury bond rose 0.75% to 2.9872%. Bond yields move inversely to prices.

U.S. Markets Overview: Treasurys chart
TICKER COMPANY YIELD CHANGE %CHANGE
US 3-MO U.S. 3 Month Treasury 2.442 0.005 0.00
US 1-YR U.S. 1 Year Treasury 2.441 0.005 0.00
US 2-YR U.S. 2 Year Treasury 2.41 0.018 0.00
US 5-YR U.S. 5 Year Treasury 2.406 0.036 0.00
US 10-YR U.S. 10 Year Treasury 2.592 0.039 0.00
US 30-YR U.S. 30 Year Treasury 2.994 0.031 0.00

Investors are finding confidence in a slew of first-quarter numbers that are better than expected. UnitedHealth Group and Johnson & Johnson, both Dow components, reported strong quarterly earnings on Tuesday, boosting their shares in pre-market trading.

Traders will monitor a speech by the Dallas Fed President Robert Kaplan at 2 p.m. ET.

On the trade front, the U.S. and Japan have started negotiations in Washington on Monday, as President Trump seeks to reduce Japan’s deficit with the U.S. Elsewhere, China and U.S. officials are reportedly close to striking an agreement.

In terms of data, there will be Biz leader’s survey at 8.30 a.m. ET, industrial production and capacity utilization due at 9.15 a.m. ET; and the NAHB survey will be out at 10 a.m. ET.

There are no Treasury auctions planned."

MY COMMENT

MUCH good news potential for the markets going forward over the next month or two. The potential for an EXPLOSIVE move up is the reason that I am ALWAYS a fully invested long term investor. In my opinion we are more likely than not to see a positive surprise in earnings. ALTHOUGH.....we are only at the start of earnings reporting. We are seeing better than expected earnings so far.

 

WELL......we DEFINITELY know that short term predictions or discussion on here are simply for FUN. Predicting what will happen over the short term is luck, or random chance. I NEVER underestimate the ability of stock traders and the markets to do crazy things for crazy reasons when it comes to the short term.

My off the cuff opinion.....emphasis on "off the cuff".....is that over the remainder of this year we have potential for stocks to range from -6% to +12% on top of the gains we are at right now. If I had to narrow my "guess" down more I would predict at year end the general averages will be in the neighborhood of +15% to +20% for the year. HERE is where we are right now at nearly four months into the year:

DOW year to date +13.36%
SP500 year to date +15.85%

OBVIOUSLY if we could end the year where we are right now it would be a very successful year for investors that were in the markets and captured the entire gain of the averages. STILL a LONG WAY to go......about all we can say short term at this point is that we have a good start on the year and time will tell how we end up.

 

WELL......you know me and my mantra....."YES, there is no inflation". Here is a very "little" article on the subject. I agree with the premise of this article on the subject of inflation in general and the future potential impact of inflation on the general economy. I also......OBVIOUSLY to anyone reading this thread.....believe that the FED has been chasing PHANTOM INFLATION ever since the early 1980,s often with devastating consequences for the economy. (driving us into recession) As to individual situations on a local scale there can be a lot of variation in what people are seeing or experiencing.

Hard Truths for the Inflation Truthers

https://www.pragcap.com/hard-truths-for-the-inflation-truthers/

(BOLD is my comment and opinion as to important content)

"The main goal of this website over the years has been to search for an operationally sound and empirically supported perspective of how the monetary system works. I’ve debunked tons of myths in the process of this search, but the inflation truthers have been hard to convince for some reason. Strangely, there are still people out there who believe that the BLS lies about inflation stats and that all the data is manipulated. But I have some hard truths for the inflation truthers.

Hard truth #1 – Millions of traders are not wrong. When someone says that low inflation data is wrong they are essentially saying that millions of free markets are also wrong. For instance, commodity traders have priced in near record low commodity prices. Are all of these commodity markets wrong?



Or what about the bond markets? Bond yields have collapsed in the last decade which is consistent with very low inflation. Are millions of bond traders and corporations just pricing their assets wrong for 10 years running? I find that very hard to believe. In fact, while I am no believer in efficient markets, I find it impossible to believe that they could be this wrong for this long.

Hard Truth #2 – GDP isn’t Negative. Nominal GDP has been very low for the last 10 years at an average annual rate of just 3.2%. If inflation has been high (for instance, the average Shadow Stats rate of 4.5%) then that means that Real GDP has been negative EVERY YEAR since the financial crisis. Said differently, that would mean that our economy has shrunk by 14% since 2008.¹

This is literally impossible. It doesn’t match up with any of the empirical evidence we have from other sources such as ISM, PMI, retail sales, corporate profits, foreign governments, trade data, factory orders, durable goods orders, NFIB data, etc. The economy might not be booming, but it’s patently wrong and unsubstantiated to argue that it has been shrinking.

I don’t think it’s controversial to say that the BLS data is imperfect. But that doesn’t mean it’s all a big conspiracy theory. Luckily, some common sense and some hard truths make that perfectly clear."

MY COMMENT

Why do I often talk about inflation? Why does this matter to investors? As stated above the primary reason is the actions and OBSESSION of the FED with inflation. Driving the economy into recession over interest rates, based on inflation OPINIONS of FED members has been the norm for the past 35 years.

As to the market action this week.....we are seeing the STRENGTH of the markets in general reflected in the REFUSAL of the markets to go down. We are also seeing.....so far.......the continued and normal STUPIDITY of the financial and general media with the current story line that earnings are going to be really bad. So far, they have actually been pretty good, with the usual nit-picking by short term investors over any single data point among many in an earnings report. I remain fully invested for the long term as usual.

 

OK, fellow investors. I am going to be out of touch for about a week.......no posting. DONT screw up the markets while I am gone.

 

NOT back yet. BUT I have time to SQUEEZE in this one article that I believe is yet another example of MEDIA DELUSION that often impacts investors that believe what they see and hear on the internet.

So much for the earnings recession

https://www.cnn.com/2019/04/28/investing/stocks-week-ahead-earnings-recession/index.html

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

New York (CNN Business)1. Earnings optimism: Corporate America's earnings recession might be over before it even began.

Once-booming corporate profits were expected to drop in the first quarter. Sharply. But first-quarter results from the likes of Facebook (FB), Amazon (AMZN) and Ford (F) have easily cleared Wall Street's lowered expectations.
Bottom lines have been boosted by an economy that looks healthier than feared.
Now, some analysts believe profits may not actually decline at all in the first quarter, a welcome shift from the doomsday scenarios investors were once fretting about. S&P 500 earnings haven't fallen year-over-year in any quarter since mid-2016.
At the start of first-quarter earnings season, Wall Street analysts expected a decline of 2.5% in per-share profits, according to Credit Suisse. As of Friday morning, that estimate had climbed narrowly into positive territory.
Accounting for earnings that surpass expectations (analysts typically set the bar low), S&P 500 profits will probably rise by 2.5% to 3% by the end of earnings season, Credit Suisse estimates.

That reversal helped propel stocks higher. The S&P 500 and Nasdaq notched record highs last week. And the Dow isn't far behind. All three major indexes are up double digits in 2019.

It's no fluke. We're well into earnings season: The S&P 500 companies that have already reported earnings make up half of the index's value. Results have impressed so far.
Nearly 80% of companies have reported bottom-line results that exceeded Wall Street's expectations, above the three-year average of 71%, according to Credit Suisse.

Wall Street isn't out of earnings trouble yet, though.
A long list of corporate titans are scheduled to hit the earnings stage this week, led by Apple (AAPL), Alphabet (GOOGL), General Motors (GM), General Electric (GE), McDonald's (MCD) and Under Armour (UA).
Simply topping expectations isn't enough to please shareholders these days.
Companies that have beaten earnings estimates have gained less than 1% on their earnings reaction days, according to Bespoke. That's less than half the average one-day gain of 1.9% over the prior two decades.
And Wall Street has hammered companies that miss. For example, Post-It maker 3M (MMM) plummeted nearly 13% on Thursday after reporting weak results and slashing its outlook.

Companies that have missed earnings-per-share estimates this month have declined by an average of 4.6%, compared with the historical average of 3.5%, according to a research report from Bespoke Investment Group on Friday.
One major area to watch is corporate revenue, which has lagged thus far.
Only 54% of companies that have reported results have beaten revenue estimates, according to Bespoke Investment Group.
"That is definitely a concern," Bespoke analysts wrote.

2. Fed guidance: The Federal Reserve is holding its two-day April and May policy meeting this week, culminating in its interest rate decision and policy update on Wednesday at 2 pm ET.
It's widely assumed the central bank won't change its interest rates. The CME FedWatch shows the market prescribes a 98% chance that rates will be kept on hold. Still, the meeting could be market-moving. Investors will be paying attention to Fed Chairman Jerome Powell's views on the economy.
After raising rates four times last year, the Fed took its foot off the gas in January, throwing financial markets into a frenzy. Investors began wondering whether the next move for the central bank would be to lower rates again, which is intended to stimulate the economy. Friday's GDP print, however, should have put those worries at ease, at least for now. The United States reported a growth rate of 3.2% between January and March, along with muted inflation. That gives the Fed some more wiggle room to let the economy run its course.

3. Jobs, jobs, jobs: A lot of key economic data is on the agenda for this week, including personal income, manufacturing and trade data. Arguably most important, however, is Friday's jobs report, due at 8:30 am ET, which includes non-farm payrolls and hourly wages. The unemployment rate is expected to remain flat at 3.8%.
Last month, the headline number was better than expected, but wages lagged behind.
Wage inflation has been stubbornly low, to the dismay of both market participants and central bankers. The Fed's inflation target is around 2%, but wage inflation numbers have raised questions about the use of inflation targeting.
In the run up to the report on the employment situation, jobless claims for the week ended April 27 are due on Thursday. Claims are expected to be 215,000, according to Refinitiv.

4. King dollar: Less staunchly dovish words from the Fed, as well as further economic data hammering home the point that the US economy is healthy, could also inspire the US dollar higher.
Compared with its peers, the United States is the strongest economy on the block. And unless this week's Eurozone GDP print surprises on the upside, there is little to challenge the dollar's supremacy. While a lot of the good stuff is priced into the buck already, analysts say it remains too attractive to miss out on.
On Thursday, the ICE US Dollar Index reached its highest level since May 2017.

MY COMMENT

YES the delusional MEDIA is often wrong, allowing their political and other personal views to interfere in REALITY reporting. Of course, most of what you see reported as fact in the media these days is nothing more than opinion. Investors that invest or respond based on media information rather than holding and investing for the LONG TERM are DOOMED to failure. So, lets see........GDP was way higher at 3.2% that the so called "EXPERTS" and the media predicted.........Earnings are coming in MUCH better than those same IDIOTS predicted.........unemployment is great as usual recently......wage inflation is non-existant driving a STAKE in the heart of the INFLATION drum beat that the media drags out every month or two to scare investors. AND.......etc, etc, etc. Sounds about NORMAL to me and EXACTLY in line with how "I" see current REALITY in the investing and business world at the moment. We are in the middle of a really STRONG business and investing climate at the moment.

If YOU invest for the LONG TERM, avoid market timing and trading, invest in proven business models and companies with great fundamentals going forward, avoid being shaken out of the markets based on fear mongering and short term events and news........you will do just fine over the LONG TERM.

BUT.....as I have said a few times on here.....the BIG UGLY BLACK SWAN is the upcoming election.

 

As a LONG TERM INVESTOR "I" and any others that follow this path MUST be concerned with 20, 30, 40, and even 50 years of investing horizon. Over a lifetime of investing it is our DUTY to ourselves, our family, and others to do what must be done to educate and inform people coming up about the aspects of our society and culture that have made long term investing in stocks and funds a successful strategy. Of course, if long term investing in stocks and funds fails to work, that will mean that we were experiencing a BREAKDOWN in our capitalistic economic system. Such a breakdown would in all likelihood be nearly impossible to recover from. Once the MAGIC is gone it will be impossible to capture it again. In the span of just one to three generations it would be possible for our capitalistic system, that is the basis for all investing success, to completely disappear. THUS, the couple of general articles below. We, the older generations, have an OBLIGATION to those younger than us to share:

(BOLD represents my opinion and important content) (My posting of this "stuff" is apolitical, Democrat, Republican, Libertarian, whatever, this stuff cuts across the political spectrum)

'Expert opinion' is wrong again

https://www.washingtontimes.com/news/2019/apr/30/when-assessing-the-trump-economy-talking-heads-res/

""Remember a few months back, when the so-called experts in the room warned us that the partial government shutdown would ruin the economy? Boy, were they wrong.

The markets were supposed to falter and economic growth was bound to slow, with President Trump’s “Libertarian Experiment” resulting in a recession. Fast forward a few months later, and we find that the only “problem” with these predictions was that U.S. GDP instead grew 3.2 percent.

This is not the first time that the talking heads and respected economists have totally missed the mark when trying to make predictions about the Trump economy. How many times will it take before the likes of Paul Krugman admit that they have been wrong all along? I’m not holding my breath.

Friday’s report from the Bureau of Economic Analysis indicates that U.S. GDP grew 3.2 percent in quarter one of 2019, compared to the forecasted 2.1 percent. To put it in the president’s vernacular, this is “huge,” especially when you take into account that the partial government shutdown was supposed to be a massive drag on economic growth.

The superb quarter one GDP numbers tell us that a few things are at play. For starters, the Keynesian system of government transfers and dabbling in the economy isn’t the real driver of economic growth. But because most talking heads do not subscribe to supply-side theory, we see how they could be so concerned with how a partially functioning government would negatively impact the economy. Contrary to their assertions, government spending isn’t necessary for economic growth, as proven by quarter one’s GDP growth.

Instead, free market policies that involve cutting taxes and red tape are shown to work much better. A “hands-off” approach to economic policy means that even when Washington can’t get its act together, everyday Americans continue to prosper. This should be a no-brainer. American workers and small business owners seem to understand it, so why can’t the Beltway insiders? This is the sort of perilous hubris that contributed to President Trump’s election in the first place, and will likely tee-up his re-election in 2020.

Apparently, the U.S. economy will grow at a robust pace even in the midst of a government shutdown, which if you live within the Beltway bubble was supposedly akin to living in a dystopian parallel universe. Obviously the rest of America, especially those pesky fly-over states, paid no heed to the doom and gloom predictions. Main Street America continues to thrive, unemployment remains low and consumer confidence remains at an all time high.

Thanks to Mr. Trump and the GOP’s pro-growth agenda, and despite the partial government shutdown, Americans from every demographic are finding success in today’s economy. With more than 2.6 million African-American-owned businesses in the United States today, the past two years have been a boon for African-American entrepreneurship like never before. This is the result of free market approaches, initiatives and platforms that come not from government, but from individuals.

At the same time, the past two years have been extremely good for women in the workforce and the economy. More than half of the jobs created since January 2018 have gone to women, and women’s unemployment is down to 3.8 percent. Pro-growth economic policies have benefited Americans of all stripes more than any government program ever could. The narrative that pro-growth policies only benefit the wealthy and advantaged is collapsing, fast.

Democrats and their friends in the media would do well to recognize that hands-off, pro-growth policies, rather than big government and identity politics, are the keys to enabling all Americans to prosper. The dire predictions made by pundits during the government shutdown have not come to pass and we have instead continued to see robust economic growth. Friday’s report should serve as a reminder not to trust everything that’s been written or said, especially if it’s “expert opinion.”"

AND

How to talk to millennials about capitalism

https://www.latimes.com/opinion/op-...sm-millennials-capitalism-20190501-story.html

"For generations, American children found communists just as scary as the Wicked Witch of the West and Darth Vader. Socialism, as Friedrich Engels described Karl Marx’s philosophy, never caught on here. To modern millennials, however, fear of socialism seems as ancient as a rotary phone. In March 2019, Axios released results from a Harris poll showing that nearly half — 49.6%% — of millennial and Generation Z respondents said that they would “prefer living in a socialist country.” An August 2018 YouGov poll revealed that only 30% of 18-to-29-year-olds had good feelings toward capitalism, but 35% regarded socialism positively.

It was just 25 years ago that socialism in the Soviet Union collapsed; how could it have made such a comeback?

The likeliest answer: The Great Recession left millennials looking for alternatives to capitalism, without the Cold War ideological guideposts that positioned older generations. Apostles of free markets once could condemn bad economic ideas merely by branding them “socialist” because real-world Marxists did such a good job of showing how much evil could radiate from aggressive state control. But with those negative examples mostly vanquished, the task ahead is to convince young people that society requires liberty as well as compassion. The private ingenuity that generates new products and new jobs needs incentives as well as regulation.

However imperfect the free market is, the moral and economic track record of state-dominated economies is far worse.
Recent economic travails have had a far greater impact on the young than anyone else. In 2010, the jobless rate for men 25 to 34 stood at 21.8%. Two years later, the rate had fallen only by a few points, to 19.8% . Even by 2018, joblessness among young men remained alarmingly high: 13.9%. At the same time, younger Americans could see wealthier, older people getting richer. Housing markets recovered; the stock market rose again and again from 2009 to 2018.

Faced with these realities, many younger Americans listened to left-wing critics of President Obama, who argued that the administration was too timid in its economic reforms, too friendly with Wall Street. In 2011, the Occupy Movement found converts by attacking capitalism and the need for any political compromise. Nevertheless, young Americans aren’t die-hard socialists. If the friends of freedom want a way into their hearts and minds, however, we’ll have to update our message to speak to millennials’ hopes and fears.

We should recognize that millennials like entrepreneurship, the cornerstone of capitalism. A 2016 Gallup survey found that 90% of 18-to-29-year-olds viewed entrepreneurs — think Silicon Valley — positively, and 98% looked favorably on small businesses. In fact, the youngest respondents had the most enthusiasm for socialism and for small businesses and entrepreneurship. Millennials have not lost sight of the dynamism that comes from private enterprise.

The case for liberty must be about more than material gains, however. Too often, advocates of economic freedom make their case primarily by arguing that low taxes lead to immediate prosperity for individuals and to system-wide gains because strong economic incentives generate higher levels of output. But we rarely hear the moral argument that can counter the left wing’s castigation of capitalism’s apparent injustices.

And yet the case can be made. “Socialists ignore the side of man that is the spirit,” said Ronald Reagan. “They can provide you shelter, fill your belly with bacon and beans, treat you when you’re ill, all the things guaranteed to a prisoner or a slave. They don’t understand that we also dream.”

Reagan’s argument remains a potent condemnation of leftist chimeras. For example, liberal enthusiasm for a universal basic income — a favorite idea among Silicon Valley elites, who see artificial intelligence and robotics as potentially obliterating millions of jobs. What kind of nation would the U.S. be if, say, 40% of adults subsisted on government handouts? The data on joblessness show the broken spirits of those lacking the sense of purpose and social connections that come with work. The make-work public employment guarantees advanced by Sen. Kirsten Gillibrand (D-N.Y.) and other politicians are soul-killing.

Many millennials recognize that the economy often protects insiders at outsiders’ expense. But that can be an argument for liberty too — by undoing regulatory policies that entrench the old, we can encourage the young. For example, anti-tax absolutists in California could rethink aspects of Proposition 13, which, among other things, inordinately helps older homeowners and challenges first-time home buyers. Fairer regulation, and less of it, will be an entrepreneurial boon. If a Harvard undergrad wants to start an internet business in his dorm room, he may accumulate 1 billion users before government starts paying attention. If a Haitian immigrant wants to open a grocery in Harvard Square, he may be sunk by a dense thicket of regulations.

To succeed today, the case for capitalism and liberty also must acknowledge that the system can leave people unprotected from calamity. Social insurance policies compatible with the cause of freedom can make the safety net, like regulation, fairer. Means testing benefits would be a great start. And the right must stop equating social democracies like Sweden and Denmark with socialism. When they do that, millions of young people who like the way Swedes live start thinking they must be socialists.

Twentysomethings don’t want the government to run pizzerias, but they do want more government control over some sectors of the economy. To keep the young from falling into real socialism, we must enhance their upward mobility and create a more equitable safety net by empowering entrepreneurship and making capitalism’s case: However imperfect the free market is, the moral and economic track record of state-dominated economies is far worse."

MY COMMENT

I have tried to NOT emphasize the political content of the above articles and at the same time emphasize the economic content that is the basis of our business success. There is much in the second article that I DO NOT agree with, like "means testing", etc, etc. BUT, we, the older or more established in the country, need to do as much as possible to educate and inform others as to the basis for our capitalistic society and culture BEFORE it disappears. Investing in stocks and funds is the perfect vehicle for economic education on a broad level........think SP500 investing......or, on a micro level.....think investing in very specific individual stock (business). If WE fail to properly educate the generations, or worse, commit educational malpractice, there will be NO long term investors or any sort of investors at all. Investing is one of the few paths to financial success and a piece of the economic pie available to ALL in our society.

Of course, as usual, you can live in REALITY or you can live on FANTASY ISLAND. Just some random thoughts.

 

NOW.....back to the present and the basis for GOOD INVESTING going forward:

U.S. Fed sees no strong case for hiking or cutting rates

https://www.reuters.com/article/us-...ase-for-hiking-or-cutting-rates-idUSKCN1S735L

U.S. inflation muted, economic outlook strengthening

https://www.reuters.com/article/us-...-economic-outlook-strengthening-idUSKCN1S61HL

MY COMMENT

ADD IN the great GDP numbers, great wage numbers, great employment numbers, the very nice earnings reports coming out right now with the vast percentage being positive, the upcoming China and Japan trade deals.........and.......the bottom line.........I expect to make some really good money over the next year or two if we can keep things chugging along. ALL IN ALL, things are looking very positive for the short term right now. BUT, as usual, my focus is and always will be.......... THE LONG TERM.

 

Talking about the ECONOMY (see above). KILLER jobs report. The ECONOMIC ENGINE is humming along fully in tune with plenty of gas.

Jobs report crushes expectations, unemployment drops to 50-year low

https://www.businessinsider.com/nonfarm-payrolls-jobs-report-for-april-2019-2019-5

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

"The Bureau of Labor Statistics added 263,000 nonfarm payrolls for the month of April, surpassing the 190,000 that economists expected. The unemployment rate came in at 3.6%, versus the 3.8% that was expected.

Economists surveyed by Bloomberg forecast that the Bureau of Labor Statistics will say the US added 190,000 nonfarm payrolls last month. The unemployment rate is seen holding at 3.8%, its lowest level in nearly five decades.

That could push wage growth higher as companies compete for workers. Average hourly earnings are seen rising 0.3% after slowing in March, though increases have been softer than what economists would expect with the current unemployment rate.

Strong results would offer further evidence that a weaker period of hiring earlier this year was just monthly noise and not the start of a downward trend. Hiring rebounded in March, with the US adding 196,000 jobs, after slowing to a near standstill in the previous month.

In March, the US shed 6,000 manufacturing jobs after nearly two years of steady gains. That was just the latest sign of a slowdown in manufacturing activity, which accounts for about a tenth of output in the US economy.

On average, nonfarm payrolls increased by a solid 180,000 per month in the first quarter."

MY COMMENT

In MY opinion the economy we are seeing right now is one of the STRONGEST we have seen in the past 18 years. If this BOOM can continue it will rival the Regan economic boom that lasted from the early 1980's into the early 2000's. Of course a booming economy does not make stock gains across the board a given. Investors still need to practice solid fundamental analysis of company financials and invest with reason and focus on the long term.

 

Thought these two articles were interesting. The first addresses the CURRENT long lasting BULL MARKET. We have been BOOMING since March of 2009 now. In my opinion the Regan BOOM lasted from about the mid 1980's till the dot-com crash of about 2002. There were some typical corrections and a very mild recession along the way, but that time period was generally one of a great economy for investors. The current BULL MARKET by those standards may have a lot longer to run than anyone seems to think. The election will be the primary factor to determine who soon this bull market ends in my opinion.

The U.S. Stock Market Can’t Stop, Won’t Stop Its Endless Rally

https://www.bloomberg.com/news/arti...arket-can-t-stop-won-t-stop-its-endless-rally

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

"The U.S. stock market in 2019 has exploded, with the S&P 500 index rising 18 percent and the total market adding about $5 trillion in value. Clearly, it stands to reason, superconfident investors are diving in and buying stocks with both fists. Well, not exactly.

In fact, money has been leaking from stock funds all year. Investors have pulled $134.2 billion from global equity mutual funds, according to a Goldman Sachs Group Inc. analysis of data on fund flows from EPFR Global. Of that, $56.4 billion has been yanked from U.S. mutual funds, a drawdown that’s been only partially offset by $16.3 billion that’s flowed into U.S. exchange-traded funds focused on equities.

The reason? Some see it as part of a long-term trend of aging individual investors gradually shifting into safer investments such as bonds. “We’ve seen a steady grind of redemptions from U.S. equity funds that we—and managers—attribute to retiring baby boomers,” says Cameron Brandt, director of research at EPFR. Bursts of bull market exuberance can sometimes overcome this gravitational pull. But right now, deep into an economic recovery and a long market upswing, regular investors may feel more cautious. “It’s hard to believe the current cycle isn’t close to rolling over, so cashing in gains as they come makes basic sense,” Brandt says.

If individuals aren’t enthusiastic, who’s buying stock and pushing prices up? It’s impossible to know precisely, but one set of usual suspects is clearly doing a lot of the heavy lifting: corporations themselves. They’ve had plenty of profits in recent years, which have been boosted by federal tax cuts, and have used a chunk of them to buy back their own stock. Share repurchases rose 22 percent in the first quarter, to an estimated $270 billion, according to Bank of America Corp., easily eclipsing the amount of money withdrawn from mutual funds. That companies don’t see more opportunities to invest in their actual businesses—say, in factories and research and development—instead of shares may be a bad omen for growth, but for now it’s keeping the party going.

The split between regular investors and corporations could widen in coming months. Experience shows many folks heed the old stock market cliché “sell in May and go away,” according to Sayad Baronyan, EPFR’s quantitative analyst. Inflows into equity funds tend to be noticeably weaker from May to October compared with the rest of the year, with the median net flow of cash at around zero, Baronyan wrote in a blog post.

To some Wall Street contrarians, outflows amid a market rally are encouraging. Excessive flows into equity funds would suggest the type of Main Street exuberance for stocks that makes professional investors fear a climactic market top is approaching. Bank of America-Merrill Lynch strategists, for example, say they won’t get bearish until they see “greed shoots”—a wordplay on the green shoots of growth that economists spot at the beginning of an economic recovery.

The market turmoil at the end of last year left the investing public, and hedge funds in particular, wary of allocating too much of their portfolios to stocks, according to Julian Emanuel, chief equity strategist at brokerage BTIG. Because hedge funds are less transparent than mutual funds, their collective appetite for equities is hard to quantify in real time, but movements in indexes that track their performance suggest hedge funds, too, haven’t been enthusiastically chasing the stock rally. That resistance could be another good sign. “In the typical endgame of any bull market, you see a degree of mania come in,” says Emanuel.

The 10-year bull market in stocks hasn’t yet seen that sort of manic phase, he says, though it came close in January 2018. Then, after the S&P 500 had just put a 22 percent return on the books for 2017, euphoric investors pushed it higher by an additional 7.5 percent in about the first three weeks of the year. A fierce correction followed, with the index sinking 10 percent in two weeks. “That was, in our view, a dress rehearsal of something larger to come,” Emanuel says. But not just yet.

A bit more drama could enter the picture soon. Senator Chuck Schumer (D-N.Y.) and his presidential candidate colleague Bernie Sanders (I-Vt.) have proposed limiting buybacks for companies that don’t meet certain obligations to employees, such as paying all workers at least $15 an hour. Such talk could actually encourage more repurchases as corporations try to get them done while they can. The “threat of populist policies in the 2020s to reduce buybacks and inequality will likely increase buybacks in 2019 as corporations rationally front-run populist policies,” Bank of America-Merrill Lynch strategists wrote recently. While it’s possible that a serious threat to buybacks could become a stumbling block for the bull market, it may be just another brick in the fabled “wall of worry” that markets climb on the way up.

BOTTOM LINE - The behavior of mutual fund investors and hedge fund managers suggests there’s some skepticism about this bull market. But buybacks may keep the party going for a while."

AND

Warren Buffett still has valuable advice, but do his fans even listen?

https://www.marketwatch.com/story/w...age&mod=mw_theo_homepage&mod=mw_theo_homepage

"It has been a rough stretch for Warren Buffett, but the legendary investor’s long-term record is still guaranteed to pack in the faithful when Berkshire Hathaway holds its annual meeting festivities this weekend.

And while Buffett always has plenty of interesting things to say when it comes to investing, evidence indicates many of his fans don’t listen to what he has to say. That is a shame, because investors who do listen to his advice can avoid making the sorts of mistakes that are difficult to bounce back from.

Best-selling financial author Larry Swedroe said he was inspired to write his 2012 book, “Think, Act and Invest Like Warren Buffett: The Winning Strategy to Help You Achieve Your Financial and Life Goals,” after discovering during the financial crisis that he could dissuade clients from committing what he described as “portfolio suicide” by citing Buffett’s advice.

Swedroe, who is director of research for Buckingham Strategic Wealth, recalled a client who couldn’t be persuaded by hard evidence and data on how bear markets inevitably end and go on to set new highs and the merits of passive investing over active, instead focusing on doom-laden forecasts.

Swedroe said he decided to attempt a different tack. Knowing that the client viewed Buffett as the world’s greatest investor, Swedroe laid out Buffett’s past statements focusing on the long run and his disdain for making decisions based on economic forecasts. It did the trick and seemed to work with other clients.

Buffett’s advice to mere investing mortals has tended to emphasize temperament, urging them to focus on the long term and not to overreact to short-term market fluctuations or to pay undue heed to forecasts and events.


But without a reminder, investors who profess to emulate Buffett’s principles often tend to forget that advice, Swedroe says. They get the itch to become stock pickers despite Buffett’s advice to stick to indexing, they attempt to time the market and end up chasing returns.

“If you ask people who the greatest investor was, they’ll say Buffett. But not only do they ignore his advice, but they pretty much do the opposite,” Swedroe said in a phone interview.

The Berkshire annual meeting, often jokingly described as “Woodstock for capitalists,” brings tens of thousands of people annually to Buffett’s hometown of Omaha, where they have the opportunity to purchase swag, eat steak and buy wares offered by Berkshire companies, including See’s Candies.

The highlight comes on Saturday afternoon when the 88-year old Buffett and Berkshire’s 95-year old vice chairman, Charlie Munger, hold a marathon Q&A session with shareholders and selected media ahead of Berkshire’s business meeting. This year’s event kicks off at 10:15 a.m. Eastern on Saturday.

The Q&A won’t all be about investment advice. Berkshire’s stock BRK.B, +1.19% BRK.A, +1.04% now lags behind the S&P 500 SPX, +0.96% over the past five, 10 and 15-year periods, notes Barron’s, though its performance since Buffett took it over in 1965 solidly eclipses the index.

Buffett is certain to get questions about recent performance, as well as pressure to open up more about Berkshire’s succession plans.

Swedroe noted that the “secret sauce” behind Buffett’s investing success was effectively cracked years ago. A paper by quants at hedge-fund AQR in 2013 broke down the factors that long accounted for Buffett’s success. They boiled down to his preference for cheap, safe, high-quality stocks combined with his consistent use of leverage to magnify returns while surviving the big draw downs the strategy inevitably entails.

While the types of stocks Buffett prefers may be relatively obvious, he does still have some advantages when it comes to leverage, thanks to the money thrown off by Berkshire-owned businesses and, in particular, the float held by Berkshire’s insurance business. The float is money collected from insurance premiums but not yet paid out to meet claims. It is a liability on an insurer’s books, but the lag between collecting the premiums and paying out claims provides an opportunity to invest the float.

And while a lack of attractive companies to buy has left Berkshire with a tremendous pile of cash, the firm has money to deploy on very attractive terms when the time is ripe. Indeed, Buffett is likely to get some preliminary kudos for Berkshire’s decision earlier this week to invest $10 billion in Occidental Petroleum OXY, +1.05% to finance the oil company’s bid for Anadarko Petroleum APC, +1.65%

The reason investors seem to struggle to abide by Buffett’s broader investing principles, Swedroe said, is due to the sorts of cognitive biases of which many investors are well aware, but that often prove so difficult to overcome.

So is there any value in this weekend’s exercise?

“There’s always hope,” Swedroe said. “If you have an open mind, and there are people who do listen and learn from him.”"

MY COMMENT

I believe the election will be the primary factor to determine whether the economy tanks and goes into a recession. As to Buffett, he has severely under-performed for a number of years. MUCH of his gains stem from purchases made long ago. His avoidance of TECH and companies like AMAZON was a HUGE mistake. At least it seems that his company has now invested in Amazon if what I saw on the news this morning was correct. Apparently he called himself an "IDIOT" for not investing in the company. My personal opinion of Berkshire is that it is way too late to invest in this conglomerate investment company. the glory days are long gone at this point and the "age factor" will continue to severely impact performance. In my opinion MUCH of what Buffett says (simply invest in a SP500 Index Fund) is GOLDEN for LONG TERM investors, although I would NOT touch Berkshire as a potential buy.