The Long Term Investor

YES.....certain industries.....I try to avoid.....oil, auto, drugs, banks, finance, Insurance and perhaps a few others. BUT.....as an investor I am not a...FANATIC. There are exceptions to all rules. I might do an OPPORTUNISTIC short term trade once in a while.

I sold out my account in January/March 2008 to about March 2009 due to the......"possible"......... impending collapse of the entire world banking system. In hindsight we came a lot closer than most people knew. AND....turned out to be great timing on my exit and my re-entry. BUT....I did not do it as a trade....I did it to preserve capital.....AND....because for the first and only time in my life I thought there was a real POSSIBILITY (about 20-25%) of an economic collapse and world banking collapse. In HINDSIGHT the timing turned out to be really nice.

I also went to cash in a couple of accounts on March 16 of 2020.......to preserve capital and at the same time try to make a trade against the HUGE pandemic panic and duplicate what I did in 2008/2009. BUT...when the FED acted decisively on March 26......it screwed up my plan and I started the few week process......(early)....... of reinvesting because of what the FED was doing. In hindsight March 26 turned out to be the low and I did get some good buy prices as I reinvested.......my basis (on paper) for taxes remained the same due to the wash rule.

My short term trade on the APPLE split.....from the announcement to about the day before or day after the split.....cant remember and not worth looking up.

EVEN my purchase of TSLA was a medium term trade based on three ANTICIPATED factors......hitting production numbers,.....hitting profitability and going into the SP500........within 3-6 months of my purchase. It ended being a long term hold....after I removed my initial investment plus a 50% profit.

BUT thee above examples are ABERRATIONS from my NORMAL investing style.

 

Here is a little article relevant to the recent market discussion regarding interest rates.

Another Take on Yield Jitters: Dividends Versus Interest?
There isn’t much evidence yield chasers drive returns.

https://www.fisherinvestments.com/e...ke-on-yield-jitters-dividends-versus-interest

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

"Interest rate jitters took on a new flavor late last week, when the 10-year US Treasury yield briefly jumped higher than the S&P 500’s dividend yield. If bonds pay more than stocks, the thinking goes, then there is no alternative goes out the window as a thesis to own stocks. People investing for income will allegedly flip from dividend-paying stocks back to bonds, removing one of this bull market’s—and the 2009 – 2020 bull market’s—supposedly key drivers. We have long seen these pure yield chasers as mostly mythical, considering people whose long-term goals and time horizon require low expected volatility probably won’t rush headlong into a more volatile asset class for its yield alone. But philosophy isn’t the only strike against that thesis. Throughout history, bond yields have topped dividend yields much, much more often than not, and we don’t see any evidence that has been bearish for stocks.

Exhibit 1 shows the S&P 500’s dividend yield and 10-year US Treasury yield since 1995, which is as far back as daily data go. As you will see, the last 11-ish months are an anomaly. Before that stretch, dividend yields topped bond yields consistently only eight times—twice during stock bear markets and six times during bull markets. That split and the overall rarity, in our view, is your first hint that this isn’t a significant market driver.

Exhibit 1: A Brief History of S&P 500 Dividend Yields and Bond Yields


Source: FactSet, as of 3/1/2021. S&P 500 dividend yield and 10-year US Treasury yield (constant maturity), 12/31/1995 – 2/28/2021.

Your second clue comes from high-dividend stocks’ relative returns during these stretches. If yield chasers were a) real and b) a significant force, then you would logically expect high-dividend stocks to beat the broad markets when dividend yields exceed bond yields. As Exhibit 2 shows, however, that hasn’t been the case. We took all stretches of dividend yield leadership in the prior chart, including the present, and calculated returns for the S&P 500 and MSCI USA High-Dividend Yield Index during each period. (To avoid letting market wiggles create super-short data sets, we define a stretch as any period where interruptions to dividend yields’ leadership over bond yields lasted less than four weeks.) Here, too, there is no pattern. The S&P 500 led five times, and high dividend stocks led in four.

Exhibit 2: Yield Chasers Aren’t Driving Returns


Source: FactSet, as of 3/1/2021. MSCI USA High Dividend Index and S&P 500 total returns in the periods shown.

Perhaps most notably, high-dividend stocks’ worst underperformance happened during the current stretch—exactly when the yield chasers have allegedly been driving returns. If that were actually true, then we would expect these yield chasers to be bidding share prices much, much higher than this. Maybe not enough for the high-dividend index to actually outperform the S&P 500, which gets a boost from some high-flying Tech-like stocks that don’t pay material dividends, but it probably wouldn’t be virtually flat over the past 13 months.

Now, none of this precludes short-term volatility as these jitters persist in the next few weeks. Sometimes investors need to feel like they were “right” about an alleged negative for a bit before they get over it. But history and reason argue against a big setback for stocks just because dividend yields sink back below bond yields—in our view, it would just be a return to normal.

MY COMMENT

I happen to believe this data and argument. I also happen....obviously.....to believe that it is HIGHLY unlikely that many stock and fund investors are going to bail for these STILL extremely low yields.....even if the get up to 3-4%.....which I dont think will happen....at all. ALL this BALONEY is like the thousands of articles I have seen over the past 10-20-30 years in various time periods drawing all sorts of comparisons to the great depression and some current market conditions and predicting another great depression.....it NEVER happens. Of course.....any weakness in stocks will be taken as confirmation of whatever the current DOOM&GLOOM theory of the moment is.....and proof that it happened.

 

HERE is what should really matter today.....a DISMAL employment number.......in an economy as large as ours it is pretty pathetic that we only created 117,000 private sector jobs in a month. BUT....there are strange times and obviously the employment driver of our economy.....small business.....is very wary and struggling to survive.

Private employers added back 117,000 jobs in February, missing expectations: ADP

https://finance.yahoo.com/news/adp-private-employment-payrolls-change-february-2021-131527071.html

(BOLD is my opinion OR what I consider important content)
"U.S. private employers added back fewer jobs than expected in February, disappointing economists who had anticipated that the early stages of the vaccine rollout and falling COVID-19 cases would allow hiring to pick up strongly during the month.

Private payrolls in the U.S. grew by 117,000 in February, ADP said in its closely watched monthly report Wednesday morning. This followed an upwardly revised gain of 195,000 payrolls in January, which had in turn reversed a drop of about 75,000 payrolls in December. Consensus economists expected a rise of 205,000 private payrolls for February, according to Bloomberg consensus data.

"The modest 117,000 gain in the ADP measure of private payrolls for February, down from an upwardly revised 195,000 increase the month before, is a disappointment given that the drop-off in coronavirus case numbers and the resulting lifting of containment measures should be giving the economy a bigger shot in the arm," Paul Ashworth, chief U.S. economist for Capital Economics, wrote in a note Wednesday morning.

Service-providing businesses made more headway in recovering jobs last month. Across the private services sector, payrolls rose by 131,000 in February, led by a gain of 48,000 in trade, transportation and utilities industries. Education and health services payrolls followed with a rise of 35,000 payrolls, and leisure and hospitality jobs rose by 26,000. Within services, only information payrolls fell in February, though financial activities jobs registered no change.

Manufacturing and constructions jobs in the goods-producing sector dipped, however, as winter weather likely weighed in part on employment in these industries. Private construction jobs fell by 3,000 in February, while manufacturing payrolls fell by 14,000.

U.S. labor market data has been choppy over the past several weeks, as harsh winter weather in states like Texas weighed on hiring but also frustrated data collection for jobs report surveys, resulting in data that may understate the extent of the ongoing weakness in the labor market. Other recent reports showed signs of this noise: Weekly initial jobless claims spiked at the beginning of February to nearly 850,000 before falling precipitously to 730,000 last week.

But temporary factors aside, many economists say that the labor market remains on track for a more sustained recovery later this year, aided by the vaccine-enabled economic reopening.

“Certainly this was disappointing. Job growth has been softer in late 2020 and early 2021 than we would like coming out of the recession that we experienced last year,” Gus Faucher, PNC chief economist, told Yahoo Finance Live Wednesday morning. “That being said, I do expect to see much strong job growth later this year.”

“We are getting vaccine distribution, we’ve got this big stimulus bill that’s going through Congress, low interest rates from the Fed, better weather in the spring that will allow more outdoor activity,” he added. “So I think the job market is a little soft right now. But I would expect it’s going to see much better improvement as we head into the spring and summer this year.”

On Friday, the U.S. Labor Department will report the results of the "official" monthly jobs report for February. The ADP report has typically been an unreliable indicator of the results in the government report due to differences in survey methodology. In January, for instance, ADP showed a private payroll gain of 174,000 before revisions in its initial print, while the Labor Department showed private payrolls rose by a disappointing 6,000. With the ADP report, only individuals on an active payroll are counted as employed, while the Labor Department considers any individual that received a paycheck during the mid-month survey week for the report as employed.

MY COMMENT

It is what it is. What is bad in this article is the fact that some think that this number....UNDERESTIMATES.....how bad the number really is at present. The good news.......the rational....parts of the country are in the process of reopening and removing restrictions. The IRRATIONAL parts of the country.....the West coast, New York, New Jersey and the Mid West.....not so much.....they remain under.......ARREST.

Of course......the stock markets and all the MEDIA......will ignore this data in favor of more sensationalistic stories and opinions.

 

The DOW has now made a very nice turn around. It will be interesting to see if the more risky averages can do the same by the close. perhaps a 50/50 chance in my mind. AND.....I am waiting for my SNOW earnings today and COST tomorrow.

 

NO NOT AT ALL.

That whole part of that post (post 4083) was just examples of things I have done in the past that are AT VARIANCE with my usual long term investing. Times when I thought there was an OPPORTUNITY that justified doing something different. Those two times I mentioned in that post when I sold out the portfolio are the ONLY times in the last 45+ years that I have done so. AND....each was for a very specific reason.

BUT.....NO....I have no plans to do anything different than what I always have done....and.....I WILL DEFINITIVELY remain fully invested for the long term as usual.

You know....considering where we were a year ago.....I am very satisfied with where my portfolio is right now in spite of this little weak spot in the markets that we are seeing right now. We seem to just be in-between the pandemic and a normal economy right now and that is creating confusion and worry about various factors. We are FAR from year end and with the Reopening have a good shot at a very NICE year. BUT.....even if we end up having a down year.....that is just the way the averages fall...we can not be UP every year. That is the nice thing about being a LONG TERM INVESTOR....over time the good years GREATLY outweigh the bad years. MY......BIG GOAL.....is to capture the long term compounding.....nothing more.....nothing less.

I edited the post above to make it more clear that I was talking about examples from the past.

 

Welcome Boyne05

My portfolio is slightly different now than back 2.5 years ago when this thread started. I post the current portfolio every 5-10 pages and I STILL post any moves that I make in real time on here.

BOY....that is a difficult question. I LOVE the SP500 Index which you are in.....it is like a lifetime money machine......set and forget. Now individual picks......lets see.....only one or two? I would HAVE to pick AMAZON. They are so DOMINANT. Probably for number two.......If I had to narrow it more I would probably pick GOOGLE. So my two.....Amazon and Google. As a non tech.....Honeywell or Costco.

My short list for pick number two was Microsoft, Google, and Apple. But I had to go with Google......YouTube is what made me give them the edge plus....OWNING.....search on the internet.

I would not pick Nvidia because they tend to be a little more erratic and move up and down. I obviously like them as part of my portfolio. I prefer the more proven dominance of the other two. Just ME personally......not intended as investment advice.

You cant go wrong starting at age 28. You have so many decades ahead of you to double your money over and over and over.

 

Off to a rehearsal....again. Will pick up this evening.

 

You are so right Emmett. Just a shake out......not even near a correction yet.....and even a correction is just NORMAL market action and nothing in the scheme of things. ALTHOUGH some individual stocks like TSLA are in correction right now.

 

Well my SNOW earnings came in today.....Here is the info:

Snowflake eliminates dual-class share structure, hits estimates on guidance

https://www.cnbc.com/2021/03/03/snowflake-snow-earnings-q4-2021.html

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

Key Points

• Snowflake called for a decline in product revenue in the current fiscal year, as analysts had expected.
• The company went public in September.
• Snowflake also announced the elimination of its dual-class share structure, giving all shareholders one vote per share. Dual-class structures have become common in the tech industry and tend to give founders and early investors more control, and it’s unusual to reverse them.

Snowflake stock fell as much as 7% then rebounded in extended trading on Wednesday after the data analytics software company gave full-year guidance that met but did not exceed analysts’ estimates, and announced an end to its dual-share class structure, which could allow newer investors more control over the company’s direction.

The stock had already dropped about 9% during regular trading Wednesday, amid a broad sell-off in tech stocks.

Here’s how the company did:

• Earnings: Loss of 70 cents per share
• Revenue: $190.5 million, vs. $178.5 million as expected by analysts, according to Refinitiv.

The company’s revenue increased by 117% on an annualized basis in the fiscal fourth quarter, which ended Jan. 31, according to a statement. In the prior quarter had grown 119%. The company’s net loss widened to about $199 million from $83 million in the year-ago quarter.

“We have implemented operations that will help us show more profitability,” finance chief Mike Scarpelli said during a conference call with analysts. “We’re continuing to invest heavily in the business.”

The company also said in a regulatory filing that as of Monday it had gotten rid of its dual-class structure, in which Class A shares got one vote per share and Class B shares got 10 votes per share. The structure had been in place since September, when Snowflake stock debuted on the New York Stock Exchange. Now, all Class B shares will be converted into Class A shares.

Dual-class structures have become common in tech companies, including Google, Facebook and Snap, as a way to let founders and early investors maintain control, and block takeovers from activist investors.

With respect to guidance, Snowflake said it expects $195 million to $200 million in product revenue in the fiscal first quarter, which would be up 92% to 96% year over year. Analysts polled by FactSet were looking for $196.3 million in product revenue. Almost 94% of Snowflake’s revenue came from product revenue in the fiscal fourth quarter.

For the full 2022 fiscal year, the company sees $1.00 billion to $1.02 billion in product revenue, representing 81% to 84% growth, a decline from 116% product revenue growth in the fiscal fourth quarter. Analysts polled by FactSet had expected $1.01 billion in product revenue.

Excluding the after-hours move, Snowflake stock has fallen 11% since the start of 2021, while the S&P 500 index is up 2% over the same period."

MY COMMENT

So so earnings but to be expected by a new IPO company. Time will tell ......since this company is very early in its life as a public company.

 

I was RED today like many people. And got BEAT by the SP500 by 1.33%. We may be heading for a little correction.

The SP500 is still a good ways from correction territory. HOWEVER......the NASDAQ is DOWN by 7.78% from the high before this little dip. The NASDAQ 100 is down by 8.14% from the recent high before this little dip. We may see either or both dip into correction territory over the next week or two. A creeping correction. SO.....our first correction of 2021 may be in the making. I know people might be expecting a bump from the stimulus bill....but.....I think it is more likely to have no impact or even a negative impact. It is way past BAKED IN already.

In comparison....the SP500 is down by 2.92% from its most recent high on February 12, 2021. This shows the power of the SP500 in a little tech correction. The safety and strength of the BIG CAP side of the markets and the top 500 companies in the world.