The Long Term Investor

As an art collector I find this very interesting. CRAZY....but interesting. I guess when you consider GameStop and some of the current trading that happens....this is par for the course.
Christie's first NFT art auction skyrockets from $100 to top $60 million

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)
"Famed auction house Christie's wasn't exactly sure what kind of demand it was going to see when it announced a $100 starting price for its first-ever digital art auction by way of a non-fungible token, or NFT, in February.

Three weeks later, it had an answer worth $69 million.

A bidding war exploded Thursday to close at a final price of $69.35 million on a collage of work, dubbed "Everydays: The First 5000 Days," from rising digital artist Beeple (also known as Mike Winkelmann.) As Christie's Contemporary Art Specialist Noah Davis explained, nothing he's seen before "even comes close."

"The first 10 minutes of this sale we had more than 100 bids placed. We went from an opening bid of $100 to more than $1 million. We had bidders from seven different countries," Davis told Yahoo Finance Live. "What's a really compelling stat, and probably the most amazing to me, is only three of those bidders were previously known to Christie's, so everyone else was brand new."

That might not be terribly surprising, given how many people are still learning about NFTs and how the digital tokens function to digitize ownership of assets on blockchains. The tech has enabled verifiable digital ownership and the resale of anything from digital art, to NBA highlights that have re-sold for thousands of dollars on platform NBA Top Shot. Even the artist himself, Beeple only recently catapulted to mainstream fame after one of his other art works, a 10-second clip of people walking by a nude Donald Trump, re-sold for $6.6 million after selling for just over $66,000 four months prior.

So why pay for digital art that anyone can view, download, or embed elsewhere for free on the internet? As Beeple and other digital artists have tried to explain: anyone can take a picture of da Vinci's Mona Lisa, but that doesn't prove ownership of the Mona Lisa in the same way owning an NFT attached to the art piece can. Unlike physical art, ownership cannot be proven merely by possession, which is why the public history of an uneditable blockchain presents real value for digital art that can be readily copied.

"NFTs have a lot of very interesting and unique properties," Davis said. "It establishes scarcity, it solves for the question of authenticity testing, there's no way to forge this artwork."

Critics might point out that NFTs are still a bit detached from a true sense of ownership. In the case of many NFT sales, commercial ownership for works of art remain with the original artists. NBA Top Shot's NFTs for collectible video highlights also don't give collectors commercial rights, either (the NBA retains those.) But to many, any sense of ownership is better than none and its given rise for an entirely new way of digital artists like Beeple to make money off of previously less valuable projects.

"I know that so many people are going to feel empowered to be creative with their digital art works," Davis said about the first Christie's NFT auction, adding that more could follow. "We are going to have a lot more responsibility in this space to curate our content thoughtfully and to offer only the best of the best to the audience we have."

The First 5000 Days auction, which consists of one NFT for a digital photo collage of every daily art piece from Beeple's consecutive run of 5,000 days, closed at a final price of $69,346,250. The auction also marks the first time Christie's planned to accept cryptocurrency as a form of payment."

MY COMMENT

I will be interested to see if this sale actually goes through. If so........well NOT something I am ever going to buy.....even at the $100 starting price. BUT...to each their own....it is their money. There might be some value here if you actually owned the commercial rights....but with most of this "stuff" you dont. I think the statement below pretty much some it up:

"an entirely new way of digital artists like Beeple to make money off of previously less valuable projects."

LOL.

 

Emmett....he has the passion of a new investor......LOL. Nice to see. You tell them Zukodany!

A VERY NICE day today. We should be set up pretty well for a great close to the week tomorrow. "Should"....being the operative word.

I ended the day in the GREEN.....of course. AND....got a nice .94% beat on the SP500. I am not about 4.3% from my ALL TIME HIGH and am now positive for the year to date.....barely. My stocks in the red today....barely....Honeywell and PG.

We STILL have to wait out some time to see if this little rally is the end of the correction or just a bump up in the middle of the correction. Either way....a nice REPRIEVE any investors that were starting to have some doubts.

 

THIS pretty much sums up today.

Stock market news live updates: Dow, S&P 500 set records, tech and Bitcoin soar as Biden stimulus signing feeds risk rally

https://finance.yahoo.com/news/stock-market-news-live-updates-march-11-2021-231439220.html

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

"Stocks advanced on Thursday and the Dow and S&P 500 each set record highs after President Joe Biden signed into law another expansive coronavirus relief package. Technology shares rebounded, and Treasury yields steadied.

The S&P 500 added more than 1% to reach both a record intraday and closing high. The Nasdaq outperformed as tech stocks resurged, and the index climbed 2.5%. The risk rally extended to Bitcoin, which rallied to more than $57,000 and closed in on the record high the token achieved late last month. The Dow added 0.6%, or 188 points, and also reached a closing high.

Over the past several weeks, the technology-heavy Nasdaq and Dow have diverged in performance as traders increasingly piled into value and cyclical shares viewed as most closely tied to a strong economic recovery. The cyclical energy and financials sectors have also been leading gains in the S&P 500, extending a run of outperformance against tech and growth shares. Treasury yields steadied across the curve, pulling back following a milder than expected print on consumer price inflation earlier this week.

The market moves on Thursday came after Biden signed into law a $1.9 trillion coronavirus relief package, which includes provisions like $1,400 stimulus checks to most Americans, $300 per week in augmented unemployment benefits through early September, and $350 billion in state, local and tribal government aid. The bill cleared both the U.S. House of Representatives and Senate in the past week by party-line votes.

The passage of the massive bill — exceeded in dollar amount only by the $2.2 trillion CARES Act passed at the start of the pandemic last year — will reverberate quickly through the economy, many pundits have said. The bill also comes one year following the World Health Organization's formal designation of the coronavirus outbreak as a pandemic, which took place March 11, 2020.

"The most immediate impact in the macroeconomic data will be in retail sales numbers, where some of the $410 billion in direct payments will appear in both the March and — especially — April reports," Ian Shepherdson of Pantheon Macroeconomics wrote in a note Wednesday. "We also expect to see a rapid response — though not quite as quick as in the retail sales data — from state and local governments, which will use much of their $350 billion in direct support from the federal government, alongside $130 billion for schools, to re-hire some of the 1.3 million people let go from the sector since the pandemic started."

The $1,400 stimulus checks will likely also have a direct impact on equity markets. Earlier this week, Goldman Sachs equity strategists raised their forecast for household equity demand this year to $350 billion from $100 billion, reflecting "faster economic growth and higher interest rates than we had assumed previously, additional stimulus payments to individuals, and increased retail activity in early 2021," according to the firm.

Others echoed similar sentiments.

"Given that the most recent reading of the personal savings rate is a healthy 20.5%, our expectation is that a portion of the stimulus money makes its way into equities," Cliff Hodge, chief investment officer for Cornerstone Wealth, said in an email on Wednesday. "The last time around, flows went into more speculative areas of the market, including SPAC’s, Reddit stocks, and high-growth momentum, so it wouldn’t surprise us to see something similar."

—

4:01 p.m. ET: S&P 500, Dow end at records, Nasdaq jumps 2.5%
Here's where the three major indexes closed out the regular session on Thursday:

• S&P 500 (^GSPC): +40.46 points (+1.04%) to 3,939.27
• Dow (^DJI): +188.57 points (+0.58%) to 32,485.59
• Nasdaq (^IXIC): +329.84 points (+2.52%) to 13,398.67"

MY COMMENT

Of course the Stimulus is being given the credit....but....this has been locked in for at least a month now. I PREFER to actually credit the many other factors that ALL came together with the Stimulus to create a.......perfect storm.......this week for the markets.......as I said Wednesday evening:

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.

 

I am CONSIDERING buying some Coinbase stock when their direct listing (IPO) happens. I am a current customer...having had an account there for a few years. They are basically a brokerage firm for Cryptocurrencies. A few years back I bought ONE Bitcoin....so....I opened an account there. I now have a very small fraction of one Bitcoin in my account.

I have done a few speculative trades in the past....most recently a medium term trade of about a month on the Apple split. I made about $10,000 on that trade over the approximately one month time period. The FEW times that I tend to do any sort of short term trade........USUALLY.......involve new IPO's or stock splits.

I am considering doing the same with Coinbase....with a medium term goal of $5,000 to $10,000 in gain. If I do the trade I will buy either 100 or 150 shares.....depending on price.....at the market open on the first day of the listing. My intended holding period will be about 30 days.....or....more or less depending on what I see going on as it trades. IF.......I do the trade and make a profit...I will either cash in....or....cash out my original basis and hold the profit in shares.....for a while.

They have little competition and I believe are by far the largest Cryptocurrency brokerage firm. They ARE profitable.

I HAVE NOT made a final decision yet. The exact day of the listing has not been released yet....it will be some time later this month....March.

HERE is some info for anyone that is curious:

Coinbase Direct Listing (Formerly IPO): Everything You Need To Know

https://decrypt.co/54639/coinbase-direct-listing-ipo-everything-you-need-to-know

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

"In brief

• Cryptocurrency exchange Coinbase has selected Nasdaq as the venue for its direct listing.
• A direct listing is limited to existing shares, whereas an initial public offering (IPO) involves the creation of new shares.
• On Nasdaq Private Market, a secondary market for Coinbase stock ahead of the listing, the company has been valued at $90 billion.

In January 2021, San Francisco-based cryptocurrency exchange Coinbase announced plans to go public via a direct listing.

The company shared the news in a blog post, in which it announced its intent "to become a publicly-traded company pursuant to a proposed direct listing of its Class A common stock."

The following month, Coinbase filed its Form S-1 with the SEC, a document that provides would-be investors with a detailed overview of a company going public, including its financial information and risk factors.

Coinbase's filing revealed that the exchange brought in a $322 million profit on revenues of over $1.2 billion in 2020. It even sent a copy of the filing to Satoshi Nakamoto, the pseudonymous inventor of Bitcoin, as a symbolic gesture. Coinbase will reportedly list its shares on the Nasdaq.

Direct listing vs IPO

Coinbase has opted for a direct listing over a traditional IPO.

In the past, a direct listing meant a company could only float its existing shares, whereas an IPO allows for the creation of new shares. While the SEC recently lifted that restriction, Coinbase nonetheless declined to create new shares for the offering–which means it will not dilute its existing equity. The direct listing also means Coinbase can avoid some of the onerous (and expensive) requirements of an IPO, including using the services of intermediaries known as underwriters.

The upshot of the direct listing is that anyone will be able to buy and trade shares in Coinbase, potentially drawing a lot more investors into the industry.

What Coinbase's Form S-1 revealed

Coinbase's Form S-1 filing contains a wealth of insight into how the exchange has performed over the last few years—and what risk factors might affect its upcoming direct listing.

For a start, the S-1 shows how Coinbase has grown significantly. According to the filing, Coinbase now has 43 million "verified" users, and 2.8 million monthly active users. In total, these users have made $456 billion of trades since the exchange opened in 2012.

As noted, Coinbase was also profitable in 2020—making it a rarity among tech unicorns that have gone public. Its 2020 profit of $322 million was also a significant jump from 2019, when the exchange lost $30 million on $533 million of revenue.

Among the risks described in Coinbase's S-1 are the inherent volatility of cryptocurrencies and the prospect of another "crypto winter"—a term used for a bear market that lasts several years.

The filing also mentioned that venture capitalist Marc Andreessen owns the most common stock in Coinbase. He has 5.5 million shares, with Coinbase CEO Brian Armstrong behind him with 2.7 million shares.

Coinbase: the basics

Coinbase opened to the public in 2012. With the backing of about half a billion dollars from venture capitalists, the crypto exchange grew and grew, attracting over 35 million customers by July of 2020. In December 2020, crypto market analysis firm Messari valued the exchange at $28 billion.

Coinbase has two primary lines of business.


The first, Coinbase, is the cryptocurrency wallet

and brokerage service so popular among the public. On Coinbase, users can buy and sell crypto within Coinbase using fiat currencies (i.e. ‘regular’ currencies like the dollar, sterling, or euro). It’s a brokerage, meaning that you technically buy and sell from and to Coinbase itself.

Then there’s Coinbase Pro, a more advanced exchange (originally called GDAX) where users can buy and sell cryptocurrencies directly from other users, comparable to dozens of other exchanges, which also allows for more advanced types of trades.

How does Coinbase make money?

To make money, Coinbase charges several different fees on its brokerage app, including for buying and selling Bitcoin and other cryptocurrencies. Fees are more expensive for smaller purchases, and when customers move funds out of Coinbase.

These fees also apply to Coinbase Pro. It’s more expensive than its main competitor, Binance, but its selling point is greater compliance with regulators. Binance does operate in the US, but under the auspices of a relatively tiny independent subsidiary, Binance.US.

Coinbase also has a venture capital arm, Coinbase Ventures, which invests in companies such as CoinTracker, Compound and BlockFi.

When will the Coinbase listing happen?

It is expected to take place sometime in March.

What the Coinbase listing means for crypto


Coinbase’s listing offers investors and traders another way to get exposure to the booming cryptocurrencies market by owning shares. It also offers the peace of mind afforded by regulation from the SEC.

Coinbase has taken care to play nice with regulators. It’s shied away from listing privacy coins due to US regulators' hard-nosed attitude against them; it's also declined to list controversial coins like Tether, the US dollar stablecoin that's currently under investigation by the New York Attorney General.

Coinbase is also looking to address a recurrent issue that's plagued it, and other exchanges: downtime during periods of cryptocurrency price volatility. Recent record trading volumes have driven traffic to the exchanges to new heights, putting their infrastructure under strain and causing outages. Coinbase is reportedly planning to break its "monolithic" infrastructure into "separate discrete services" in order to better scale in the event of load surges.

Secondary markets on Nasdaq and FTX

While Coinbase shares are not available to the public as yet, they have been trading actively on forums like Nasdaq Private Market, which launched a secondary market for Coinbase stock. This allows existing shareholders, including current and former employees, to sell some of their holdings. Recent trades have valued the stock at $350 a share, which would place the company's total valuation at around $90 billion. Earlier, some shares had traded at $375 a share, which would imply a $100 billion valuation.

Crypto derivatives exchange FTX, meanwhile, has been running a pre-listing futures contract market for Coinbase shares in collaboration with German capital markets firm CM-Equity.The service allows investors to bet on what they think the shares will be worth."

MY COMMENT

As I said....I am STILL thinking about this potential medium term trade. I need to try to find much more information before I make a final decision.

DISCLAIMER: I AM NOT SUGGESTING OR RECOMMENDING THIS TRADE TO ANYONE ELSE....ON OR OFF THIS SITE. If I do this trade it will be a speculative medium term trade that represents a........SIGNIFICANT SHORT TERM RISK.

 

Here is some pretty good news for Costco shareholders like me. Although this is a ways off. The membership fee that Costco collects from their shoppers EVERY year is a HUGE contributor to their bottom line.

Costco membership fees poised to increase
Costco's membership fee usually increases every five to 5.5 years

https://www.foxbusiness.com/markets/costco-membership-increases-earnings

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

"Costco shoppers may soon pay more for access to coveted items like the warehouse retailer's in-house rotisserie chicken, Kirkland bacon and big cheese wheels.

"The membership fee looks poised to increase in the next 18 months and represents a potential catalyst for sales and earnings," Wells Fargo equity analysts said in a research note Thursday.

The current price for Costco members is $120 annually for the Gold Star Executive package. Costco's membership fee last increased in June of 2017, when it added $10 to the package.

While the Gold Star Everyday value runs $60 annually, it increased by $5 last go-round.

Analysts noted that Costco's membership fee increases every five to 5.5 years, suggesting its next increase for international customers will begin in 2021 with U.S. and Canadian shoppers getting hit with an increase in the latter half of 2022.

The latest fee increase is projected to boost earnings per share by 4% to 5%, even after a year in which the retailer mostly benefited from the pandemic.

Costco saw a boost in sales as Americans stocked up on bulk goods amid the height of stay-at-home orders. Most notably though, the company, known for its oversized warehouses, also saw an increase in online shopping.

In fact, its membership model, including its pricing, merchandising, experience and overall customer loyalty, continues to have a sustainable competitive advantage over its competitors, analysts say.

According to its latest earnings call, the company ended the second fiscal quarter with 59.7 million member households, an increase from 59.1 million 12 weeks earlier.

The total number of cardholders alone increased to 108.3 million, up from 107.1 million 12 weeks earlier. Meanwhile, there were 23.8 million "executive" members, an increase of 506,000.

So although Costco's stock has since dropped down to pre-pandemic levels, analysts say the company's "outlook overall remains bright, especially with the digital narrative improving" and the potential "return of parties and its services business.""

MY COMMENT

This company is a JUGGERNAUT. They have amazing customer loyalty. It is a huge advantage for shareholders that a small increase in the membership fee INCREASES earnings per share by 4% to 5%........with absolutely no increase in sales, customers, etc, etc. A business that really knows how to take care of their customers and employees.

The ONLY unfortunate issue that I see is their REFUSAL......like most companies these days.....to do a stock split. They are penalizing their shareholders with this inaction. If stock splits are REALLY a neutral event like everyone tells us...that do a split......and......no issue. In REALITY....a stock split USUALLY.......at least in my experience......with a successful sought after company.....DOES boost the stock and DOES allow for more people to purchase the shares.

 

Looks like a NORMAL market day. With the recent run-up this week it is natural that some people will take this opportunity to sell and take some profit.....or.....take the opportunity to bail out of some holdings with the anticipation that the near term will be a continuation of the correction. And for the interest rate fearmongers.....the ten year yield is slightly above 1.6%. NO...I dont care in the slightest

I believe there is a pretty good chance that the general averages will be UP by the end of the day. A one week rally is not an indicator of anything.....except a one week rally. BUT....who knows. In any event it has been a great week for owners of stocks and funds.

 

I like the thinking in this little article.......yes once again....the topic is inflation.

The Simplest Asset to Hedge Against Inflation

https://awealthofcommonsense.com/2021/03/the-simplest-asset-to-hedge-against-inflation/

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

"Inflation expectations continue to shoot ever higher:


I don’t know if we’ll finally see the inflation risk people have been worrying about since 2008 but it’s certainly a risk investors are more concerned about than they have been in some time.

Inflation is always something you need to worry about as an investor because the whole point of investing your money is to keep up with or outpace the rising standard of living.

The stock market is a wonderful hedge against inflation for a few reasons.

Since 1928, the U.S. stock market is up 9.8% per year while inflation has averaged 3% per year. So stocks have grown at nearly 7% more than the rate of inflation.

One of the reasons for this is the fact that earnings and dividends also grow at a healthy clip above inflation. Over the past 93 years, earnings have grown at roughly 5% per year. Stocks also have perhaps the greatest income stream of any asset. Dividends have grown at roughly 5% per year.

So earnings and dividends both have a history of growing above the rate of inflation.

It is true that the overall stock market has historically shown lower than average returns in an elevated inflationary scenario but there are certain areas of the market that have done better in those times.

Value stocks tend to perform better than growth stocks when inflation rears its ugly head.

Precious metals & mining stocks have a history of low returns with enormous volatility. But under a highly inflationary environment, they tend to shine.1

Treasury Inflation-Protected Securities (TIPS) are one of the only true real assets available in that the principal amount on these government bonds goes up with the rate of inflation. It is worth noting, however, TIPS would only provide a huge boost to your portfolio with unexpected inflation. Expected inflation is already baked into the current yields.

Then there is gold but gold may not be the inflation hedge you think it is. It’s possible the massive repricing of gold that occurred in the 1970s when Nixon ended the convertibility of dollars into gold made people believe gold was an inflation hedge. But gold tends to simply march to its own drummer. Sometimes it works under deflationary crashes as well.

So stocks are still your best bet for beating inflation over the long-term and TIPS can help with unexpected inflation but there is another asset many people overlook in terms of hedging out inflation in the short-run — cash and short duration fixed income.

There are two reasons for this.

First of all, a shorter maturity is a benefit in a rising rate environment because you can quickly roll over cash equivalents like t-bills or short-term bonds into new bonds with higher yields.

Another benefit of a shorter maturity profile is you don’t have nearly as much duration risk. When interest rates rise, bond prices fall. But bond prices fall much harder in long-duration bonds than short-duration bonds.

Consider the difference in duration between the iShares 1-3 Year Treasury ETF (SHY) and the iShares 20+ Year Treasury ETF (TLT). SHY currently has a duration of 1.9 years while TLT has a duration of 19.1 years.

This tells us a 1% increase in interest rates would cause losses of just 1.9% in SHY but losses of 19.1% in TLT.2

You can get a better sense of this relationship by looking at how ultra-short-term bonds have performed during inflationary periods of the past.

The 1970s is the inflationary nightmare so many people worry about today. From 1968-1981, CPI was 7.6% annually. There were the nominal returns for long-term government bonds, 5 year treasuries and one-month t-bills during this time along with their corresponding volatilities:


Obviously, the returns for each were still under the rate of inflation. But one-month t-bills held up better than intermediate and long-term bonds and they did so with much less volatility.

And the great thing about short-duration assets when rates and inflation are rising is you don’t have to worry about losses. These were the annual calendar year returns for each in this time:


The down years are highlighted in red. You’ll notice 7 down years (out of 14 in total) for long-term bonds, just one down year for 5 year treasuries and none for one-month t-bills.3

It’s counterintuitive to think cash would be a good hedge against inflation since short-duration fixed income is a terrible hedge against inflation over the long-term. This is why long-term assets like stocks and short-term assets like cash can make for a decent inflation-hedged portfolio.

Stocks can help protect you against long-term inflation while cash can allow you to use any short-term inflationary spikes to redeploy faster at higher rates.

Whether we get inflation or not, there are going to be all sorts of complex products and funds rolled out to take advantage of the fact that people are now worried about this risk.

Some of these products could help you under certain scenarios. Others will almost certainly be too expensive or complicated to actually do what they say they’re going to do.

Most of the time complex problems such as inflation don’t require complex solutions. Sometimes the best solution is the simplest one.


For most investors that means stocks and short-duration fixed income can get the job done if inflation becomes a problem."

MY COMMENT

Yes....owning stocks and funds WILL produce nice returns....."IF".....we ever see "some" inflation. My view of the potential remains the same.......not concerned in the slightest. ACTUALLY.....simply owning a home is ALSO a pretty good inflation hedge.....in many housing markets.

 

This little article is a good starting point for newer investors. I....personally....do not give ANY credence to Technical Analysis or Technical Indicators......but......the topic is included in this brief......starting point....... article....along with other basic indicators.

4 Stock Market Predictors to Watch
Before you jump into the world of stock market indicators, understand who you are as an investor.

https://money.usnews.com/investing/stock-market-news/articles/stock-market-predictors-to-wa(BOLD is my opinion OR what

"If there's one sure thing in investing, it's that past performance doesn't necessarily indicate future success. Yet experts and amateurs alike constantly make stock market predictions.

While there isn't a surefire way to predict what the general market, an investment or a specific stock will do, there are many stock market predictors that forecast what behavior they might take.

Probably the best thing you can do before jumping into the world of market indicators is to assess what kind of investor you are or want to be.

Do you prefer a "set it and forget it" approach to you portfolio? Then you may want to invest in index funds and call it a day. "Study after study has shown that it is extremely hard for active managers to beat low-cost, broadly diversified index funds," says Keith Lichtman, a founder with Maycomb Wealth Advisors who focuses on financial planning for lawyers in the U.S.

Or are you seduced by the allure of day trading or other shorter-term investing? If so, you'll probably be more interested in indicators – but please understand that no one has a crystal ball.

"People have been searching for a foolproof indicator for as long as markets have existed, and there are brilliant minds constantly data-mining for clues," says Steve Sosnick, chief strategist with Interactive Brokers and head trader with Timber Hill. "That this much brainpower, effort and money is spent on the search for solid predictors ought to be a clue that they are not easy to find."

If you want to learn more about stock market predictors, here's where to start:

• Economic indicators.
• Company fundamentals.
• Technical charts.
• Contrarian indicators.

When looking for indicators that can suggest how the whole market might move, one place to start studying economic indicators such as durable goods orders, manufacturing jobs, building permits, and the difference between the yield on short-term and long-term government debt.

Considerations about the economy and inflation affect interest rates, which determine how expensive it is for companies to borrow money to expand operations, acquire other companies, or free up cash for share buybacks or dividends.

Interest rates also affect how easy it is for regular folks to borrow money to buy a house or a car. That in turn can affect a host of companies from home builders and big-box home improvement retailers to companies that produce raw materials like copper or timber.

Company Fundamentals
When thinking about individual stock indicators, investors try to figure out whether a stock's current price reflects the company's fundamental value, says George Calhoun, a finance professor at the Stevens Institute of Technology and author of "Price and Value: A Guide to Equity Market Valuation Metrics."

There are many metrics that investors can use when trying to suss out whether a company is overvalued or undervalued. To start with a fairly simple valuation metric, an investor might examine the price-to-earnings ratio. Investors can then compare that ratio with the market's overall average, the average for the company's sector or industry, or with specific companies that compete against it.

At some point, this becomes a judgment call. A company with a forward P/E ratio twice that of its competitors could be overvalued, or it could be well valued because current fundamentals or future expectations are sound.

Metrics like P/E ratios can be considered as part of fundamental analysis of a company along with cash flow or debt load.

This type of fundamental analysis might be more appealing to longer-term investors who want to buy a stock and hold it for years in hopes that it grows in value, but short-term traders also use these metrics. When a company beats or fails to meet analysts' earnings or revenue expectations, that can move a stock substantially in a short period of time.

Technical Charts
There are a mind-boggling number of technical indicators that professional and amateur investors use to try to determine what a stock might do in the future.

"Generally speaking, the shorter the focus for an indicator, the more appropriate it is for trading and vice versa," Sosnick says. "A trader might look at 5- and 10-day moving averages, or even 30 and 60 minutes, while an investor might look at the trends implied by 100- or 200-day moving averages."

Let's say an index has been declining and is nearing its 200-day moving average. Some would consider a sustained breakdown below that level to be a bearish stock market predictor, or a bounce off that level to be bullish.

Jake Wujastyk, chief market analyst at TrendSpider, says widely used indicators like moving averages become self-fulfilling prophesies. Those indicators don't necessarily have much linkage to what is fundamentally going on with a stock, index or market. When a moving average breaks down, selling can beget selling.

There's also the chance that, for the short term, a company could be a momentum play whose shares will keep falling or rising for a time regardless of its fundamentals.

Calhoun says stocks or a market that have trended one way for a period of time will probably continue in that direction – until they don't. "At some point the music stops," he adds. That's part of a longer-term factor called reversion to the mean, a tendency for high-flying stocks to come back down and undervalued stocks to rise, according to Calhoun.

Contrarian Indicators
There is a strong correlation between negative sentiment and positive outcomes in the market, Calhoun says.

If most people are bearish on something, that probably means the market will be going up soon, he says. If most people are euphoric, "that's a negative signal," he adds.

"Whenever the market gets too excited on one side of the trade, the market generally does the opposite," Wujastyk says.

The options market can provide an indicator for sentiment. A stock option contract is an agreement that gives the buyer the right to buy or sell shares of a stock at a given price on a given date in the future. Call options indicate optimism, while put options indicate negative sentiment.

When calls outnumber puts, that's a generally reliable indicator that the market is going to fall, and vice versa, Calhoun says.

MY COMMENT

This article is a simplistic TASTE of some of the schools of thought when it comes to evaluating stocks and funds. A good starting point for newer investors to try to focus on the factors that they "believe" are significant. My opinion.....I prefer to focus on Fundamental Analysis and general economic indicators......and....the long term. BUT......to each their own.