The Long Term Investor

YES the markets DO react to TSLA....since it is now part of the SP500 and also part of the NASDAQ 100 and the NASDAQ indexes. Due to its size and valuation it plays an outsize role in ALL of the above.

HERE is the news that ACTUALLY matters today. Hopefully this will shut up some of the constant media harping about inflation......at least for a week or two.

What to watch today: Stocks set to rise on tame inflation data after Tuesday’s surge

https://www.cnbc.com/2021/03/10/wha...se-on-tame-inflation-after-tuesday-surge.html

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


"BY THE NUMBERS

Tame inflation data pressured the 10-year Treasury yield Wednesday, and U.S. stock futures headed higher. On Tuesday, beaten-up tech stocks roared back, pushing the Nasdaq up nearly 3.7% in its best day since November. Declining bond yields supported Tuesday’s rally, which extended to the Dow and S&P 500. (CNBC)

The Labor Department on Wednesday morning said its consumer price index rose 0.4% in February, matching expectations. In the 12 months through February, the CPI gained 1.7%, the largest rise in a year, after climbing 1.4% in January. However, that yearly run rate was in-line with estimates as well. (Reuters)

Today’s most crucial event may well be the 10-year Treasury auction at 1 p.m. ET, with investors focused on the possibility of rising yields. In recent weeks, equity investors have closely watched the upward move of bond yields. Later, Oracle (ORCL), Cloudera (CLDR), AMC Entertainment (AMC) and Bumble (BMBL) are all scheduled to report quarterly results after today’s closing bell.(CNBC)

MY COMMENT

As I type this the ten year yield is......1.516%. Right in line with the recent yields. The inflation data.......no surprise there.

 

HERE is a little better article to go along with the above.

https://www.bloomberg.com/news/arti...core-consumer-prices-rises-less-than-forecast

U.S. Core CPI Rises Less Than Estimates, Easing Inflation Alarms

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

"A key measure of U.S. consumer prices rose less than expected in February as costs of used vehicles, clothing and transportation services declined from a month earlier, suggesting broader inflationary pressures remain tame.

The core consumer price index, which excludes volatile food and energy costs, increased 0.1% from a month earlier and 1.3% from the prior year. The overall CPI rose 0.4% from the prior month and 1.7% from a year earlier, a Labor Department report showed Wednesday.

The median estimate in a Bloomberg survey of economists for the month-on-month change in the CPI was for a 0.4% gain. The core measure was projected to rise 0.2%.

Core inflation “is being buffeted around in an erratic fashion by the pandemic, causing strange movements in prices for a number of categories in any given month,” Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said in a note. “One of the first signs of fundamentals returning will likely be when airlines and hotels start to nudge up their prices in the face of improving demand, an event that is probably at least a few months away.”

Stocks advanced in early trading, the dollar fell and the yield on the U.S. 10-year Treasury note rose slightly.

Yields on U.S. Treasuries have surged recently on inflation bets, but Federal Reserve officials have brushed off the concerns and expect any pickup to be transitory.

Investors and economists are split on the inflation outlook, with some predicting a wave of rising prices driven by stronger demand and pandemic stimulus, while others say the forces that have contained price pressures for years -- from technology to demographics -- are still in place.

Despite the softer-than-expected figures, inflation is poised to accelerate in the months ahead -- driven by pandemic stimulus, income growth and a vaccination campaign that’s helping businesses to reopen.

Starting with the March data, the so-called “base effect” will push up the headline rate, because sharp declines in prices at the start of the pandemic will influence the year-on-year calculations. That means even fairly small price increases during the month will likely cause the annual measure to jump above 2%.

Some pockets of the economy are already showing signs of bubbling inflationary pressures. In January, a measure of producer prices surged by the most in records dating back to 2009. The Institute for Supply Management’s factory measure of prices paid for materials rose to the highest since 2008 last month.

Energy costs played a key role in boosting the overall CPI. Gasoline prices rose 6.4% in the month, and the index for electricity climbed 0.7%, which was the most in five months. Freezing temperatures across much of the U.S. -- most notably in Texas -- drove up demand for heat.

The government’s measure of shelter costs rose 0.2% from a month earlier, the most since July. Owners’ equivalent rent registered its largest gain in more than a year, reflecting higher housing prices.

The Biden administration’s $1.9 trillion stimulus bill will add to the more than $1 trillion in excess savings that American households racked up during the pandemic. It’s unclear how much of that money they’ll spend in the coming months on things they couldn’t do during the health crisis, like restaurant dining or travel.

The CPI report showed prices of goods, excluding food and energy, declined 0.2% in February from a month earlier, the first decrease since May. Core goods costs climbed 1.3% from a year ago.

Apparel and medical care commodities costs both dropped 0.7%, while prices of used vehicles fell 0.9% for a third month. Prescription drug prices fell by the most since July 2018.

Services prices minus energy rose 0.2%, the first increase in three months, reflecting higher shelter costs and medical care services. They were also up 1.3% from a year earlier.


Digging Deeper

• Food prices rose 0.2% from a month earlier and are up 3.6% from February 2020
• Energy costs jumped 3.9% from January, the most since June
• A separate report Wednesday showed inflation-adjusted hourly earnings increased 3.4% from February last year"

MY COMMENT

Take the data any way you wish. My personal opinion the world wide deflation and the factors described above WILL keep inflation from being an issue. BUT....whatever it is WILL NOT impact how, why, or what I invest in. I am and will continue to be a long term stock and fund investor. I agree with the "camp" that believes:

"the forces that have contained price pressures for years -- from technology to demographics -- are still in place."

I ALSO believe that the 35 year trend of NO inflation issues.....even though there has been 35 years of constant opinion that we are on the verge of inflation.......WILL continue to be the norm. Unfortunately the FED has done ENORMOUS damage over the past 35 years chasing IMAGINARY inflation....including inducing a recession or two and some bear markets......by jerking interest rates around.

 

In a similar vein to the above articles.....here is the Treasury Auction data today.........No Problem Man.

10-year yield falls after Treasury auction demand is adequate enough to ease investors’ fears

https://www.cnbc.com/2021/03/10/us-bonds-treasury-yields-climb-ahead-of-february-inflation-data.html

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

"U.S. Treasury yields dipped slightly on Wednesday after key 10-year Treasury auction data showed enough demand to stave off fears of investors worried about a possible slump in demand for the government’s debt and a recent rapid rise in rates.

The yield on the benchmark 10-year Treasury note fell about 2 basis points to 1.513% at around 3:00 p.m. ET. The yield on the 30-year Treasury bond dropped 1 basis point to 2.249%. Yields move inversely to prices (1 basis point equals 0.01%).

Treasurys
TICKER COMPANY YIELD CHANGE %CHANGE
US3M U.S. 3 Month Treasury 0.041 0.00 0.00
US1Y U.S. 1 Year Treasury 0.086 -0.003 0.00
US2Y U.S. 2 Year Treasury 0.157 -0.01 0.00
US5Y U.S. 5 Year Treasury 0.794 -0.027 0.00
US10Y U.S. 10 Year Treasury 1.523 -0.021 0.00
US30Y U.S. 30 Year Treasury 2.249 -0.01 0.00

The notes auction showed adequate demand for $38 billion in 10-year Treasuries, easing concern among traders that the country’s growing debt burden would be too much for the market to bear, hitting bond demand and forcing yields even higher.

The U.S. 10-year yield at the bond auction was 1.523%. The bid-to-cover of 2.38 was slightly below the one year average of 2.42.

“It was a soft auction but not enough to scare people in the aftermath,” said John Briggs, head of global strategy at NatWest Markets. “It’s not terrible. I think that’s what people were worried about.”

The Treasury Department has printed roughly $3.6 trillion of new government debt in the past year to shore up the economy that was roiled by the Covid-19 pandemic. Increased supply of government debt and weak demand in a February bond auction has pushed interest rates higher. The U.S. 10-year Treasury yield has flirted with the 1.6% level in recent weeks, pressuring equities.

“I don’t think it’s enough to move the needle. I would consider it mediocre,” Peter Boockvar, Chief Investment Officer at Bleakley Advisory Group, told CNBC. “I think this reflects that long end yields after spiking needed to take a rest.”

Earlier on Wednesday, February’s consumer price index for February came in in-line with expectations. The Labor Department said on Wednesday its consumer price index increased 0.4% last month after rising 0.3% in January. In the 12 months through February, the CPI gained 1.7%, the largest rise since February 2020, after climbing 1.4% in January.

Concerns about higher inflation have been driving bond yields higher recently.

The $1.9 trillion fiscal stimulus package is expected to add juice to the economy. That has raised inflation concerns, and the market could be spooked by a CPI report that is any hotter than expected.

House Democrats passed the stimulus bill on Wednesday, with President Joe Biden expected to sign it before key unemployment programs expire on Sunday."

MY COMMENT

SO.......the headlines in terms of the market are....no doubt.....going to be all about the Stimulus Bill passing and how that drove the markets.

In reality.....this Treasury auction data and the inflation data is more important......to the psyche......of the markets.

BUt....I really dont care what is driving what.....we are having ANOTHER BIG DAY.....although .....not as big as yesterday. With the DOW on track to close above 32,000 for the first time ever......a new AL TIME HIGH.

 

As I say over and over........ALL the data as well as earnings are lining up for a GREAT 6-24 month term for investors. A continuation of the record 12 year historic BULL MARKET. I am totally discounting the drop last spring....since that was simply the voluntary closure of the entire US economy.....NOT a REAL market event.

 

You can NEVER second guess the short term markets lately. looks like most of the tech names FADED into the close today. ANd....the NASDAQ ended the day slightly negative. The BATTLE between the buyers and the sellers. At least the DOW closed at a NEW ALL TIME HIGH and the SP500 managed to hold onto a gain for the day.

I ended up GREEN today in spite of the tech fade. BUT got beat by the SP500 by .29%.

At least the SP500 has been positive for three of the last five market days....and over those five days has a gain of 2.07%. We NEED to keep that trend going for the last two days of this week......if so.....that should start to put a dent into this little correction.....emphasis on "start".

 

THIS STUFF.......is simply a potential total train wreck for anyone FOOLISH enough to speculate in this garbage. Reminds me of the grab-bags at the dime store when I was a kid. You paid ten or twenty five cents for a sealed bag and you got whatever was in the bag. Of course the dime store.....was not DUMB enough to put more in the bag than the price of the bag.

SEC issues warning on celebrity SPACs
Over the next two years $103 billion in SPAC capital will be on the hunt for acquisition targets

https://www.foxbusiness.com/markets/sec-issues-warning-on-celebrity-spacs

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

"The U.S. Securities and Exchange Commission on Wednesday notified investors not to invest in a special-purpose acquisition company, or SPAC, just because a celebrity is involved without naming names.

The warning comes as a growing number of athletes are getting involved with SPACs. Last month, both MLB All-Star Alex Rodriguez and former NFL player Colin Kaepernick announced plans for their own SPACs. NBA Hall of Famer Shaquille O’Neal and music mogul Jay-Z are among the other celebrities who have SPAC connections.

The process involves forming a special acquisition purpose company with the goal of using the proceeds from its initial public offering to buy another firm. SPACs have no existing business prior to their IPO and must return the cash to investors if an acquisition is not completed within two years.

“Celebrities, like anyone else, can be lured into participating in a risky investment or may be better able to sustain the risk of loss,” the SEC said in an investor alert. “It is never a good idea to invest in a SPAC just because someone famous sponsors or invests in it or says it is a good investment.”

The SEC warned that SPAC sponsors are allowed to have a conflict of interest and that their economic interests may differ from that of other shareholders. Sponsors typically acquire shares at more favorable terms. They could also have an incentive to complete the deal on terms less favorable for the average investor.

SPACs have become the preferred way for U.S. companies to go public and have also attracted some of the hottest names on Wall Street and corporate America, including hedge fund manager Bill Ackman and Virgin Group Ltd. Founder Richard Branson.

One hundred seventy-five SPACs raised a total of $56 billion during the first two months of this year, according to Goldman Sachs. At the current pace, the amount of money raised via SPACs will exceed last year’s $76 billion by the end of March.

The trend is expected to continue over the next two years as approximately $103 billion in SPAC capital is looking for acquisition targets, Goldman Sachs analysts said. They predict SPACs could generate up to $700 billion of deal activity by the end of 2022."

MY COMMENT

The majority of these SPAC acquisitions....in my opinion......will be garbage. There is no where near $700BILLION of acquisition targets out there......that are quality companies.

I would file this SPAC........"stuff".......under the key word.....INSANITY.

 

SO.....after the markets FLAILING around with this correction......I am now starting the REST of the year........down 5.5% from my ALL TIME HIGH.....which was achieved this year. AND.......basically even with my starting point at the first of the year.

SO.....a new beginning.

 

So....lets see for tomorrow and Friday:

The futures are UP nicely right now for ALL the averages.......check.

The inflation scare was backed off by the data today....check.

The bond auction and yields went well and are stable as of today....check.

We have had two really nice UP days in a row....check.

Ok employment data is expected tomorrow......check.

The Stimulus bill is passed and a sure thing......check.

The DOW hits a milestone, 32,000, and a new all time high.....check.

Nothing negative on any of the media sites at this instant....check.

SO......will we have a good, solid, GREEN day tomorrow and Friday.......who knows. Predicting the short term market action is......a puzzle, floating around a conundrum, containing a riddle, wrapped in a mystery, inside an enigma. Other than that....it seems pretty clear cut to me.

 

About a week ago I commented on the fact that in our general area of 4,200 homes we were now seeing a Spring surge....with 7-8 listings.

Well as usual....as of today.......ALL are pending except for one. EVEN the home that is ONLY 4088 square feet and was priced at $452 per square foot........and....is pending at $1,850,000.......about $700,000 OVER market....and by ALL sales up to now should be priced at about $250 to $275 per square foot. I hope they have an all cash buyer because....there is NO WAY that house is going to appraise.

THAT is how CRAZY the real estate market is around here.

 

My view is CELEBRATE the positive. CELEBRATE when the markets are UP and positive. Mentally reward yourself when goals are achieved and money is being made. REINFORCE your behavior by allowing yourself to be happy when success is happening. I STRONGLY believe in the power of POSITIVE THINKING and VISUALIZATION.......combined......with actual planing and working for success.....in life and in investing.

When markets are down....MORE of the same. Look to the future. Look to the positive. IGNORE the negative....RATIONALLY. USE the down times to put the future positive in place for yourself. AND......ESPECIALLY....during the down times....continue to use the power of positive thinking and visualization.....to see the future. Look BEYOND the present when it is negative.

My view is that this sort of behavior REINFORCES positive.....long term..... investing habits. That is why I INTENTIONALLY CHOOSE to be a market CHEERLEADER. RATIONAL positive emotion and thinking is a good thing. Negative thinking fuels negative emotions, stress,.....and......negative physical reactions in brain chemistry and your physical body. To the greatest extent possible......(there are some times and situations where you can not obviously)....TRY to avoid negativity in life and investing.

 

I LIKE this little article. It sums up much of my experience as a business owner and in life. In my financial life as an investor and MANAGER of my own money and assets......I try to create a "personal" CULTURE of success and positivity.

How to Build a Positive Culture

https://joescarlett.com/leadership/how-to-build-a-positive-culture/

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

"Let’s say you and I operate competing hardware stores in the suburbs of the same city. Most likely we’d carry a similar assortment of products, arranged in a comparable store layout. And we’d probably be recruiting staff from the same labor pool.

One of us may have a slightly larger building or better location, but generally speaking we are in the same business. We certainly can’t win a pricing war, so how does one of us gain a competitive advantage? The answer is culture.

Company culture is established one of two ways: Leadership drives it intentionally or it evolves on its own when leadership abdicates responsibility. The latter often leads to a negative and even toxic environment. On the other hand, when a company clearly defines its culture and constantly communicates its values, people generally come together. Teams tend to thrive and prosper in a culture of pro-active positivity.

How to build a better culture
CEOs have near complete authority to define culture in an organization. But few of us get to that level so we have to work with the existing company culture. But whether you are managing a team of 10 or 1,000 you can still impact attitudes in a positive way.

I learned early in my career that people tend to follow the boss’s lead. If you are a quiet and stressed-out captain, most of your team will fall into the same mode. If your default is a smile and you appear happy, more often than not your team will follow suit.

In a leadership role you set the tone and, importantly, your actions as a leader define the culture in your unit. If you pad your expense reports or send out overly critical communications, you’re setting a negative example. But when you display an upbeat attitude, you will soon find out how contagious it can be. Start here:

• Lead with a smile, a big “hello” and positive, intentional conversation.
• Start building a culture of earned respect through constructive, forward-looking performance evaluations.
• Carve out “coaching” time to send a message that you support, invest in and trust your team.

Your actions have a direct impact: Typically, a positive culture with high morale leads to more productivity and less turnover.

Make your message clear
Leaders build a positive culture by talking about it at every opportunity. Take most meetings and conversations as a chance to reiterate the mission and vision of your company. The goals for your business unit should also be part of regular discussions. Bottom line: No one should be confused or in the dark about mission, vision, values and goals. You’ll maximize achievement by getting everyone on the same page.

Don’t be shy about the topics that are central to culture. Remember, it’s more than acceptable to talk about with your people about:

• The importance of ethical behavior
• Showing respect for others
• The impact of a positive attitude
• Helping peers, working as a team and taking initiative
• Embracing change and performance accountability for all

Regularly discussing — with as much enthusiasm as you can muster — all the factors that support a strong culture will keep the momentum alive.

I hope you already work for an organization with a positive culture, but if not, you still have the opportunity to build a strong culture in your environment. I hope you’ll take the initiative to influence your work culture for the better."

MY COMMENT

As an investor I am a culture of one.....well perhaps two.....since I keep my wife and to a lesser extent family up to date on money matters.

When I was in business grad school there was a term "marketing concept". It BASICALLY boiled down to business culture. Separating yourself and your business from the competition......often competition that was bigger and more powerful....by using the culture of POSITIVE exceptional service to the customer to create business success.

ALLOW yourself....as an investor....to be a positive culture of one.

 

That is a great little article gtrudeau88......and in line with the ABSOLUTE majority of research and experience. I want to emphasize the key points:

"In 2020, 60% of U.S. large-cap stock-picking funds lagged behind the benchmark S&P 500, according to new data from S&P Dow Jones Indices."

"2020 was the 11th consecutive year in which a majority of actively managed U.S. large-cap funds underperformed the S&P 500, according to S&P Dow Jones Indices’ year-end scorecard on active management."

My COMMENT

The above is all I can see without being a subscriber. But the data shows that this is the long term truth. And many years the percentages are even higher....80-90% of managers can NOT beat the SP500. Pretty TELLING when you consider that these people are.....the professionals. They are the people that worked their way to the top of the investing world from lower level jobs to become a....FUND MANAGER. THEY.....made it to the top of their profession....but....they can NOT beat the SP500 on a consistent basis. They have access to all the data, droves of people working for them with the best data and analysis, resources and all the tools, etc, etc. BUT.....in the end....well we ALL know the results.

 

HERE is another positive story for investors looking to the future:

Jobless claims: Another 712,000 Americans filed new unemployment claims

https://finance.yahoo.com/news/weekly-jobless-claims-week-ended-march-6-2021-pandemic-190216464.html

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

"U.S. states saw new jobless claims fall more than expected to reach a four-month low last week, as impending spring weather and more vaccine-driven business reopenings allow hiring to pick up.

The Department of Labor released its weekly report on new jobless claims on Thursday at 8:30 a.m. ET. Here were the main metrics included in the report, compared to consensus data compiled by Bloomberg:

• Initial jobless claims, week ended March 6: 712,000 vs. 725,000 expected and a revised 754,000 during the prior week
• Continuing claims, week ended February 27: 4.144 million vs. 4.200 million expected and a revised 4.337 million during the prior week

Initial unemployment claims held below 800,000 for a third consecutive week and improved to the lowest level since early November, following a stretch of elevated claims around the holidays earlier this year. Still, claims remain well above even the Great Recession-era high of 665,000 weekly claims in March 2009.

And new claims are more than likely to continue dropping into the spring and summer, assuming the vaccine rollout and improving COVID-19 case counts extend into the coming months. Companies like Disney (DIS) have recently discussed plans to bring back thousands of furloughed workers in the spring, as more discretionary activities like theme parks and restaurants and resorts are permitted to reopen with easing capacity constraints. And last Friday's February jobs report showed that the economy added nearly double the number of payrolls expected for the month, affirming the hiring upturn in the service sector.

"We think that the vaccine rollout and downward trend for new COVID-19 cases should allow economic activity to keep picking up over time and that this will result in a downward trend for jobless claims filings through the volatility in the weekly series,” JPMorgan economist Bruce Kasman wrote in a recent note.

By state, California saw the greatest number of initial claims filed last week at nearly 17,000 on an unadjusted basis, ending a streak of declines in new claims over the past several weeks. Ohio, which has been contending with a wave of fraud in filings for new jobless claims, saw initial claims rise by another more than 6,000 last week. However, the vast majority of states reported declines in new jobless claims, contributing to the headline improvement last week.

Continuing claims, which count the total number of Americans still receiving state unemployment benefits, also fell for for an eighth straight week last week, reaching the lowest level in nearly one year.

Outside of regular state benefits, the number of Americans claiming unemployment benefits across all programs has still remained sharply elevated, however: Some 20 million Americans were still claiming benefits across all programs as of Feb. 20, the latest date for which data is available. That marked an increase over the prior week, and included 13.8 million Americans on either Pandemic Unemployment Assistance (PUA) — the federal program offering benefits to gig workers and the self-employed who do not qualify for other programs — or Pandemic Emergency Unemployment Compensation (PEUC), which offers additional weeks of federal benefits to those who have exhausted their state benefits.

Both the PUA and PEUC are likely to be extended until Sept. 6 once President Joe Biden signs off on the latest $1.9 trillion coronavirus relief package, which could take place as soon as this week since the bill has passed both chambers of Congress. These federal benefits were set to expire on March 14, based on terms of the $900 billion stimulus package passed in December."

MY COMMENT

No surprise that California is the WORST. Some day their government will wake up. BUT...in general...we are moving solidly in the right direction. In my opinion it will be government policy....federal and state..... that will be the MAIN factor that determines how far this employment data moves toward the positive....and....where it stagnates.

 

REALLY a strong open today. I just..."looked".....and I am SOLID green across the board. One of the best opens in a good length of time for my account. TIME to push back toward new account highs....hopefully.

Big words considering that we are ONLY a little over an hour into the market day....and....we have yet to get through the typical mid-morning/mid-day fade.

Is the little nasty correction over? I believe so....there is just TOO large a volume of positive news and events for the markets to be held back. This is like a dam breaking. So much positive data and information piled up that it just could not be held back any longer.

In addition.....MOST.....well NEARLY ALL.....of the market headwinds was MEDIA driven negativity causing investor fear over the past month or so. But...like we are seeing now...eventually the truth reflected in the earnings an data overwhelms all media OPINION BLATHER as they pump out daily article trying to capture attention and views......financial tabloid journalism....although I should not use the word "journalism".

RIDING the wave.....again.