The Long Term Investor

I do have thoughts Mizugori.......cant say if it is wisdom. First welcome to the thread. There are a good number of regular active posters here. Feel free to join as a regular poster on any investing topic.....if you wish.

As to NIKE:

"Note that Nike has two classes of stock. Class A, which are not available on the open market and are convertible into class B shares on a 1-for-1 basis; and Class B, the normal Nike shares available to all investors.Jul 16, 2020."

As to GOOGLE:

"GOOGL shares are its class-A shares, also known as common stock, which have the typical one-share-one-vote structure. GOOG shares are class-C shares, meaning that these shareholders have no voting rights. There is a third type of share, class-B, which are held by founders and insiders that grant 10 shares per vote."

So for NIKE....there is one type of share that you and I can buy.....that is Class B. So if you or anyone else bought NIKE you would be buying Class B shares like all other public shareholders.

For Google.....I personally PREFER.....and own...the Class A shares. I own this class so that I will have the normal shareholder voting rights. I just think as a matter of principle.....and as a company shareholder..........you should have voting rights. There is a slight difference in the price of the two share classes.

What are you considering buying? Have you considered just investing ALL your stock market money in the SP500 Index.....through a mutual fund or an ETF.....and just holding for the long term? That is what one of my kids and their spouse do.........since they dont have the time or inclination to put a lot of time and effort into investing. Over time in this ONE broad vehicle.........they have built up a 6 figure account. The SP500 Index gives them MASSIVE diversification since the Index contains 500 different stocks and ALL of the 500 LARGEST American companies. The SP500 has held up nicely during the current little correction. It makes a GREAT....one stop vehicle for an investor......to simply hold for the very long term with NO trading or market timing. Very few market professionals can BEAT the SP500 over the long term.

 

HERE is a chart of the MORTGAGE RATES for a 30 year fixed loan from 1971 to today. A time period of 50 YEARS. LATELY we have been seeing MANY media articles about the SURGE in rates. What a bunch of SELF ABSORBED CRY BABIES......garbage. The rates......right now....at about....3.09%....are STILL at historic 50 year lows. This is just IDIOCY.....same as the Ten Year Treasury.....WHINING. (YES......the 10 year is STILL near 100 year lows) Have people lost ALL concept of reality? Is this where we are headed in terms of knowledge and awareness of history......on the part of investors and the business media?

WELL DUH....yes it is........so.......get used to it. We are NOW living in the AGE OF INSANITY. People have....... ABSOLUTELY......no concept of history or even the slightest concept of.......how well off they are....... to live in the current era compared to what "normal" people lived with and went through in the past.

We are TRULY seeing the....internet generation....moving into adulthood. There is NO appreciation for ANYTHING that happened prior to about year 2000. This sort of CATASTROPHIC THINKING where......EVERY....... event is the WORST EVER......will eventually destroy any rational basis to finance and investing. We are seeing this SAME sort of exaggeration and lack of reality ACROSS ALL aspects of society and culture. Makes me FEEL SORRY for the younger people and the world they are going to find themselves living in.....about 30-50 year down the road. The GOOD THING.....they wont have any concept that things were ever any different in the past.......so......they will live in EXQUISITE IGNORANCE.

For myself....this just illustrates the need to try to make sure future......family....... generations are set up for success and security as much as possible. AND.......it will be GLORIOUS for........the few people....... that do have some knowledge and ability.......they will be like........the one eyed man living in the land of the BLIND.

U.S Mortgage Rates Rise for a 5th Consecutive Week

https://finance.yahoo.com/news/u-mortgage-rates-rise-5th-235222885.html

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

Bob Mason
Sat, March 20, 2021, 6:52 PM

"Mortgage rates were on the rise for a 5th consecutive week in the week ending 18th March. Following a 3-basis points rise from the week prior; 30-year fixed rates rose by a further 4 basis points to 3.09%.

Compared to this time last year, 30-year fixed rates were down by 56 basis points.

30-year fixed rates were also down by 185 basis points since November 2018’s last peak of 4.94%.

Notably, however, it was just the third plus 3% week since July of last year.

Freddie Mac Rates
The weekly average rates for new mortgages as of 18th March were quoted by Freddie Mac to be:

• 30-year fixed rates increased by 4 basis points to 3.09% in the week. This time last year, rates had stood at 3.65%. The average fee increased from 0.6 points to 0.7 points.

• 15-year fixed rates rose by 2 basis points 2.40% in the week. Rates were down by 66 basis points from 3.06% a year ago. The average fee rose from 0.6 points to 0.7 points.

• 5-year fixed rates also rose by 2 basis points 2.79%. Rates were down by 32 points from 3.11% a year ago. The average fee held steady at 0.3 points."

HERE is a chart of the historic 30 year mortgage rates for 1971 to now.

 

AND....somewhat in the same area of investing.....as my post above......real estate. I was listening to the local Real Estate Radio Show yesterday on the way to a rehearsal.....just like I do EVERY Saturday when we do not have a show. There was some REALLY interesting information. A large number of areas around the country are experiencing HISTORIC property prices and one of the greatest sellers markets in U.S. history.

In my area......the Austin, Texas metro area......there is about 1MILLION people in Austin itself....the tenth or eleventh largest city in the country..........there are 2.2MILLION people in the Austin Metro Area.

According to the radio show yesterday......in the Austin Metro Area.......Austin, Pfulgerville, Hutto, Cedar park, Georgetown, Round Rock, Lakeway, Dripping Springs, Bee Cave, Kyle, etc, etc, etc.......we are currently averaging about 300 active listings at any one time. This translates into about 3-5 days of inventory. (According to the radio show host)

Of course.....this is why ALL listed homes in this area are seeing multiple offers.....often 30 to 100 offers or more. Homes are selling for $100,000, $125,000, even $150,000 or more.....OVER list price. MANY buyers are even......WAIVING APPRAISALS.

As an owner of a home.....I love it.....but since my home is NOT for sale.....who knows if this sort of pricing will continue and become the norm or will collapse at some point. Based on the influx of people with HUGE amounts of money moving into the area.....I suspect that we are going to be in this type of market for a long time. Mortgage rates are IRRELEVANT.....many if not most buyers........are ALL CASH.

UNFORTUNATELY........for anyone in the Real Estate Industry.......it is.......THE BEST OF TIMES-THE WORST OF TIMES. The same radio show also indicated that there are 17,000 REALTORS in the Austin Metro Area. These poor people are simply SCREWED......it is the hottest market in history....and there is NOTHING for them to sell. They are competing with thousands of other real estate professionals for the few....very rare....listings. Many of them are not going to have any income and many are simply going to go out of business. It is the same situation for all the people that live from the real estate market........mortgage companies, appraisal companies, closing service companies, escrow companies, title companies, etc, etc. They are ALL......no doubt.....suffering greatly with little to NO business.......in the middle of the greatest local real estate BOOM in history.

YES......we live in very interesting times.

 

FOR....the few.....the brave...that STILL have some concept of history and value actual knowledge and data....here is a little article that reflects....as usual......the total simplicity......that leads to financial success and security.

STREETWISE: Patience and fortitude remain a necessity in equity investing

https://www.heraldtribune.com/story...remain-necessity-equity-investing/4731822001/

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

"Let us test the memory of older readers; for my younger readers here is a bit of history.

How many of you can recall an advertising campaign from decades past: "When E.F. Hutton talks, people listen." If you can then you have probably been around the markets about as long as I have.

Looking back into history in the 1970s and 1980s, Nearly everyone on Wall Street paid more than a little attention to what Henry Kaufman had to say about the economy and interest rates.

Never was that the case more than nearly four decades ago, when the celebrated Dr. Doom, as the widely followed former chief economist of Salomon Brothers was popularly known, reversed his longstanding bearish outlook for bonds.

That sparked a then-record jump in stocks, recounted in Kaufman's latest book, due out next month, "The Day the Markets Roared."

Salomon has long since passed into annals of Wall Street history, along with E.F. Hutton, Bache, and scores of other brokerages. The result is a relatively few financial behemoths that control an unprecedented share of the financial markets. This, in Kaufman's view, is a disconcerting aspect of the current Wall Street landscape.

Monetary policy is now the opposite of what it was when Kaufman made his famous call in 1982. The Fed, then under Paul Volcker, had raised interest rates to unprecedented levels to squeeze out inflation, at the cost of back-to-back recessions in 1980 and 1981-82.

In contrast, today's Fed has lowered the fed-funds rate to just above 0%, while pumping in $1.44 trillion a year with its securities purchases.

At the same time, the Treasury has been able to fund fiscal packages totaling over $5 trillion at historically low interest rates. And the stock market has recovered to record highs. So, what is the problem?

It all reminds me of a marquee outside of a local restaurant. It said, “Be careful about following the masses for sometimes the letter 'm' is silent.”

Those words succinctly describe what happens every time the markets exhibit increased volatility. So, each time the Street vents its frustration, sending the major market indices into a temporary tailspin, should you react? The answer is no.

There is no need to regurgitate the continuing negative effect the coronavirus or COVID-19 is having not just on the stock market but on our daily lives. Unfortunately, the impact on both is likely to continue for some time.

Does that mean my views on equity investing have changed? Absolutely not. If your research has given you confidence in the long-term future of a company, (2 to 3 years), use the current volatility to buy when others are selling.

Yet, whenever there is a market downturn the Chicken Little syndrome comes into play with every financial Paul Revere shouting "the correction is coming, the correction is coming."

The fear of impending doom is often a promulgation of theories utilizing indefensible assumptions grounded on questionable data. So, what is your defense? Regardless of the veracity of innumerable market theories, having a combination of patience and fortitude remains a necessity.

An investment methodology focused on capturing dividends has historically helped insulate portfolios from market declines, while utilizing the recommendations of prognosticators without doing your own research is fraught with risk.

Thanks to the First Amendment anyone can, without recrimination, go off half-cocked blathering prose that is tantamount to carrying a sign saying “Repent now, the world is coming to an end.”

One investment house was given to state that it is delusional to think you can expect to increase your wealth by investing long term. Such comments are often followed by the often incorrectly sourced quotation from John Maynard Keynes, “In the long run we are all dead.”

Interestingly, Keynes’ statement appears not in his meteoric work, “The General Theory of Employment, Interest and Money,” as many mistakenly state but rather in his 1923’s “Tract on Monetary Reform.” Discussing the fallacy of returning to a gold standard, Keynes wrote, “... the long run is a misleading guide to current affairs. In the long run we are all dead.”"

MY COMMENT

YES......the few that have the guts......WELL....actually EVERYONE in the entire country that has a 401K or an IRA......whether they know it or not....are LONG TERM INVESTORS. They are content and smart enough to follow......(often unknowingly since they dont want to RISK their retirement).........the market data and research that show that long term investing WILL provide the compounding of gains that leads to REAL MONEY.......and....REAL financial security. With their 401K and IRA account the VAST MAJORITY of people........ INSTINCTIVELY.......... know that plodding along and investing what they can every year and letting that money grow over the long term.....is the right course. Even if they dont know at first......after time as they see the money pile up in the account.......they become comfortable with continuing the same sort of investing for life........long term steady investing.

 

You seem to have a good head on your shoulders mizugori. I think it is important for most responsible people to own a home. It is a key part to a lifetime financial plan. As you know from the mortgage business.....many areas have first time buyer programs. BUT.....as you say it is hard in many areas to find the first home. Most of us that are older started out with homes that were definately not a dream home.......a bad house in a bad area......but once you are in the market it is easier to move up.

At least you are thinking about your future and investing and money. That gives you a big advantage over many younger people.

AND.....everything is relative. Our first house......2 bed 1 bath.......on the wrong side of the tracks.....bought through a HUD foreclosure....."0" down.....program.....was $16,000. BUT....our combined income was $600 per month in 1974.

My parents first home......brick.....3 bed......probably 1 bath.......dont know anything else....was $4000 in 1950. I imagine their single income at the time was less than $200 per month.

 

SOON.....a new week starts. We start FRESH and go forward from there. HERE is some of what to anticipate for the week.

GameStop earnings, inflation data: What to know in the week ahead

https://finance.yahoo.com/news/game...what-to-know-in-the-week-ahead-154959679.html

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

"Traders this week will turn their attention to another set of inflation data, though signs of a pronounced rise will likely be elusive for at least another month. A handful of earnings reports are also set for release.

On Friday, the U.S. Bureau of Economic Analysis will release its report on February personal consumption expenditures (PCE), or the change in value of goods and services purchased by the U.S. consumer. The core measure of PCE, which excludes more volatile food and energy prices, serves as the Federal Reserve's preferred gauge of underlying inflation in the U.S. economy.

Consensus economists expect to see headline PCE to rise by just 0.3% month-over-month to match January's tepid rate. Core PCE likely rose by an even smaller margin, or by 0.1% following a 0.3% January rise, according to consensus. And over last year, core PCE is expected to have risen by only 1.5%, holding well below the Federal Reserve's 2% target as it has for years.

But with the post-pandemic economic recovery under way — and not to mention trillions more pumped into the economy via the latest coronavirus relief package — many investors have been nervously looking for signs of rapid inflation. This, some fear, might prompt a tightening of financial conditions by the Federal Reserve and an increase in borrowing costs for companies and consumers. Signs of core PCE inflation are likely to start pushing decidedly higher this spring, since the year-over-year data will lap the depressed levels from the same period in 2020 when the start of the coronavirus pandemic weighed pronouncedly on economic activity.

Given these base effects, the Federal Reserve has maintained that inflation this year will be "transitory," and will attenuate in the coming years. Still, the Fed earlier this month upgraded its outlook for core PCE inflation to 2.2% this year, from the 1.8% rise it saw in its December projection. The Fed has targeted 2.0% core PCE inflation, but has suggested it would tolerate above-target inflation for some time to compensate for years of undershooting in inflationary pressures.

"Lift-off will not occur until the Fed becomes convinced this year’s temporary increase in inflation has been followed up by a more persistent inflation push modestly above its 2% target. This implies actual inflation will need to push beyond 2% for an extended period before the Fed will consider hiking short rates," Steven Ricchiuto, U.S. chief economist for Mizuho Securites USA, said in a note on Friday. "Given the Fed’s recent forecast calls for its key inflation measure, the personal consumption expenditures deflator, to average only 2.0%-2.2% in 2023, lift-off is likely to occur later than is generally expected."

Still, markets have suggested they will need to see more proof. The benchmark 10-year Treasury yield broke to a more than one-year high of 1.75% last week, climbing by nearly 50 basis points from levels one month ago, in anticipation both of a strong economic recovery and of firming inflation.

"The Fed tends to think as an economist, and economists look through changes over time. Markets tend to live more in the moment," Mohamed El-Erian, Allianz chief economic advisor, told Yahoo Finance on Thursday.

"If inflation is going up, the marketplace is saying, I'm not so sure it's transitory. Prove to me it's transitory. And that's the difficulty the Fed has," he added. "We are seeing supply bottlenecks multiply. And for me, I do think inflation will go up. I do think it's not going to be a permanent inflationary process. But the market is not going to look through that as easily as the Fed would like it to."

GameStop earnings
While the fourth-quarter corporate earnings season has slowed down, a small number of notable companies are still set to report results this week.

GameStop (GME), the poster child for the latest surge in retail investor interest in the stock market, is set to report fourth-quarter results Tuesday afternoon.

However, in the eyes of many Wall Street analysts, GameStop shares have not been trading according to fundamentals like earnings results this year. Instead, shares have been pushed astronomically higher by a frenzy of speculative interest among traders, many of whom have convened on forums like Reddit to discuss the potential for the stock.

The stock was identified as a target for a short squeeze in January due to its elevated short interest, prompting a flood of purchases to force shorts to cover their bets and push the stock still-higher. The stock peaked at $483 intraday on January 28, after closing the final trading day of 2020 at just $18.84. Shares have since come back down to $202.44 apiece, holding onto a year-to-date gain of 970%.

With a market capitalization hovering around $14 billion as of Friday, it has quickly vaulted to become one of the biggest companies in the small-cap Russell 2000 index (^RUT). The volatile trading prompted two hearings from the House Financial Services Committee, as well as increased scrutiny into the trading platform Robinhood, which temporarily restricted trading in GameStop and some other stocks in January as a result of the unprecedented volatility.

But while speculative interest has been cited as the primary driver of GameStop's stock moves over the past three months, news from the company itself has also catalyzed changes in the stock price. GameStop announced in early February that it had brought on Matt Francis, a former engineering leader from Amazon Web Services, as its first-ever chief technology officer. Later that month, the company announced its Chief Financial Officer Jim Bell would be resigning — news that was taken as a positive by investors on social media, and catalyzing a more than doubling in the stock at the time.

Some investors have purported that GameStop was a long-term investment and recovery play after a weak 2020, when the coronavirus pandemic decimated business for it and other brick-and-mortar retailers. Keith Gill — the user known as "Roaring Kitty" on some social media platforms, and whose posts and comments have been viewed as a galvanizing force behind the GameStop rally — told the House Financial Services Committee in February that he believed the company had "a unique opportunity to pivot toward a technology-driven business," and that "by embracing the digital economy, GameStop may be able to find new revenue streams that vastly exceed the value of its business."

Most Wall Street analysts, however, are not convinced. The stock had zero Buy, 4 Hold and 3 Sell ratings as of Friday, according to Bloomberg data. Some firms, including Loop Capital Markets, suspended coverage of the stock in the wake of the January rally, citing a massive disconnect between the stock's fundamentals and valuation.

Consensus analysts expect GameStop to report revenue of $2.21 billion for the three months ending in January. That would mark a rise of 1% over the same period last year, and end an eight-quarter streak of declining revenues. Adjusted earnings likely totaled $1.43 per share, according to consensus estimates. Net income likely totaled $106.9 million in the fourth quarter, though the company is expected to still post its third consecutive full-year net loss at $188.7 million.

Economic calendar

• Monday: Chicago Fed National Activity Index, February (0.72 expected, 0.66 in January); Existing home sales, February (-2.8% expected, 0.6% in January)
  
  
• Tuesday: Current account balance, 4Q (-$188.5 billion expected, -$178.5 billion in 3Q); New home sales, February (-4.6% expected, 4.3% in January); Richmond Fed Manufacturing Index, March (18 expected, 14 in February)
  
  
• Wednesday: MBA Mortgage Applications, week ended March 19 (-2.2% during prior week); Durable goods orders, February preliminary (0.9% expected, 3.4% in January); Durable goods orders excluding transportation, February preliminary (0.6% expected, 1.3% in January); Non-defense capital goods orders excluding aircraft, February preliminary (0.7% expected, 0.4% in January); Non-defense capital goods shipments excluding aircraft, February preliminary (1.8% in January); Markit U.S. Manufacturing PMI, March preliminary (59.5 expected, 58.6 in February); Markit U.S. Services PMI, March preliminary (60.0 expected, 59.8 in February); Markit U.S. composite PMI, March preliminary (59.5 in February)
  
  
• Thursday: Initial jobless claims, week ended March 20 (728,000 expected, 770,000 during prior week); Continuing jobless claims, week ended March 13 (4.124 million during prior week); GDP annualized quarter-over-quarter, 4Q third print (4.1% expected, 4.1% in prior print); Personal consumption, 4Q third print (2.4% expected, 2.4% in prior print); Core PCE quarter-over-quarter, 4Q third print (1.4% expected, 1.4% in prior print); Kansas City Fed Manufacturing Activity, March (25 expected, 24 in prior print)
  
  
• Friday: Advance goods trade balance, February (-$85.5 billion expected, $83.7 billion in January); Wholesale inventories, month-over-month, February preliminary (1.3% in January); Personal income, February (-7.0% expected, 10.0% in January); Personal spending, February (-0.8% expected, 2.4% in January); Personal consumption expenditures (PCE) deflator, month-over-month, February (0.3% expected, 0.3% in January); PCE deflator, year-over-year, February (1.5% expected, 1.5% in January); PCE core deflator, month-over-month, February (0.1% expected, 0.3% in January); PCE core deflator, year-over-year, February (1.5% expected, 1.5% in January); University of Michigan sentiment, March final (83.5 expected, 83.0 in prior print)
  

Earnings calendar

• Monday: N/A
  
  
• Tuesday: GameStop (GME), Adobe (DBE) after market close
  
  
• Wednesday: General Mills (GIS) before market open; Restoration Hardware Holdings (RH) after market close
  
  
• Thursday: Darden Restaurants (DRI) before market open
  
  
• Friday: N/A"

MY COMMENT

A few earnings reports this week. AND.....a few economic reports of various types. I believe POWELL is speaking this week so that is always a potential challenge. ALL in all not a particularly exciting week in terms of events or reports.

I am sure the markets WILL continue the trend of the past month or two....erratic, volatile,.......days that can change from day to day with no clear direction.......more of the same.

On a different topic......I see that the Coinbase direct sale is now being reported to be pushed back into April. I dont see a set date yet....so have no idea when in April.

 

OK....we are open with green across the board.......as if it matters after just 20 minutes. LOL So....we are 20 minutes into the next ten years of investing. But better green than red.

Here is another relevant little article to the current short term.

The Lower for Longer Conundrum
There is an epic case of monetary policy confusion right now.

https://www.fisherinvestments.com/en-us/marketminder/the-lower-for-longer-conundrum

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

"10-year Treasury yields inched up again Thursday, closing above 1.7% for the first time since early 2020. With this move, Treasury yields erased their pandemic plunge, which one might rationally call another indication of the economy’s returning to normal. But reason seems to be in short supply, as we have basically seen two schools of thought among pundits. The first argues rising long rates mean big inflation looms, dooming us all if the Fed doesn’t tighten monetary policy. The second, seeing higher inflation as a desirable sign of burgeoning demand, doesn’t acknowledge the strong correlation between long-term interest rates and inflation. Instead, they worry rising long rates amount to premature tightening, dooming us all if the Fed doesn’t intervene with more bond buying under quantitative easing (QE) to tamp rates back down. In our view, both camps are making the same central error: presuming low long-term rates are indeed loose monetary policy.

The reason that thesis is off base, in our view, is the same reason long rates correlate with inflation: Long rates’ role in monetary policy stems from the yield curve. Steeper yield curves have a long, long history of getting money moving. They motivate banks to lend, which pumps more money through the economy, driving faster growth and, as a byproduct, inflation. For the yield curve to be steep, long-term rates must be well higher than short. If long rates are only mildly above short rates, the flatter curve doesn’t do enough to encourage banks to take the risk of lending. Banks borrow at short rates and lend at long rates, with the spread their profit on new loans. Smaller profits mean less reward for taking risk, which discourages lending. That means slower money supply growth. Less money flowing through the economy drags down growth and inflation. (An inverted yield curve, with short rates above long, is generally contractionary and deflationary, but that is a topic for another day.)

With this in mind, let us examine the amusing irony of both schools of Fed watchers. The first school wants the Fed to slow QE down or end it, encouraging higher long-term interest rates. They miss that this would, all else equal, steepen the yield curve and lead to the faster inflation they want to prevent. That outcome would fulfill the goal of the second school. But they would rather have the Fed buy more long-term bonds—which would flatten the yield curve, slow growth and inflation and, in the end, make the first school happy. And that, folks, is the weird place most analysts have reached: Each side’s chosen monetary policy prescription would only worsen their perceived problem.

The simple way to see through this conundrum is to remember the immortal words of Milton Friedman: Identifying tight money with high interest rates and easy money with low interest rates is a fallacy. Interest rates were high and rising throughout the 1970s, when money was easy and inflation galloped ahead. They fell in the 1980s, leading to a liquidity crunch and 1987’s bear market (which included Black Monday). Japan has had rock-bottom rates for nearly a decade now. Inflation? Lending? They are barely crawling.

To assess monetary policy, we suggest chucking surface-level views. Don’t simply look at interest rates and presume high or low has a preset outcome. Rather, look at the whole yield curve. Look at the spreads. Are they sufficiently wide to encourage lending or flat like today’s? Look at money velocity, the rate at which money changes hands in the economy. It has tanked in the post-2008 era, coinciding with the Fed’s yield-curve-flattening rate policies, like zero percent short rates and QE. Considering these factors, monetary policy is much tighter than either of these camps presume based merely on long-term rates.

Now, none of this is to say we think these camps make no sense. There is an argument to be made that inflation is a risk now, based on the increase to the monetary base the Fed stoked in restarting QE last year. But, as we have written, it is more a risk if long rates rise than if they fall, based on Fed intervention or other factor. Rising long rates would likely encourage more lending and stoke inflation beyond what policymakers envision today—forcing them to play catch up. As they do, they may overshoot and hit stocks and growth in the process.

But those things aren’t at hand today. Instead we still have the confusing conundrum of pundits who think the Fed should talk rates lower to get inflation higher, despite oodles of evidence the two are linked—and others convinced low long rates risk fast inflation, despite everything the last decade globally (and 30 years in Japan) has shown them.

MY COMMENT

As usual.......economic talk by the different factions......is just that....blah, blah, blah. NONE of these experts know anything more than anyone else. It is ALL simply hindsight analysis.

 

HERE is the existing home sales data. ABSOLUTELY IRRELEVANT in the current housing market. WHY? Because the data is totally corrupted by the lack of inventory problem that is a function of the BOOMING housing market in many places in the country. If there is nothing to buy....there is no home sales.

Existing home sales fell sharply in February, as supply dropped by the largest amount on record

https://www.cnbc.com/2021/03/22/exi...bruary-as-supply-declined-at-record-pace.html

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

"Key Points

• Closed sales of existing homes in February dropped a larger-than-expected 6.6% compared with January, according to the National Association of Realtors.
• That put them at a seasonally adjusted, annualized rate of 6.22 million units, which was 9.1% higher compared with February 2020.
• The supply of homes for sale fell 29.5% year over year, the largest annual decline ever, to 1.03 million homes.

Closed sales of existing homes in February dropped a larger-than-expected 6.6% compared with January, according to the National Association of Realtors.

That put them at a seasonally adjusted, annualized rate of 6.22 million units, which was 9.1% higher compared with February 2020.

Despite being on the cusp of the historically busy spring housing market, homeowners are not listing their properties for sale at the pace they normally would this time of year. The supply of homes for sale fell 29.5% year over year, the largest annual decline ever, to 1.03 million homes.

At the current sales pace, it would take two months to exhaust this supply. One year ago, there was a three-month supply, which is also considered low.

That tight supply continues to fuel home prices, which were 15.8% higher in February year over year. The median price of an existing home sold during the month was $313,000. That is the highest February price on record. Prices are rising due to bidding wars for homes, but the median was also skewed higher because more sales are occurring on the higher end of the market.

Sales of homes priced above $1 million were 81% higher compared with a year ago. Homes priced between $100,000 and $250,000 fell 11%.

“The fact that even with the decline in sales, the days on the market are swift, and prices rising,” said Lawrence Yun, chief economist for the Realtors. “This is implying that it is not due to demand disappearing from the market, it is really lack of supply.”

Homes are also selling at the fastest pace on record. The average days-on-market fell to just 20.

Buyers in February were also facing higher mortgage rates than they were at the end of last year, which cut into their purchasing power. The average rate on the 30-year fixed mortgage wavered around 2.8% in January, according to Mortgage News Daily. It then began to rise steadily in February, hitting 3.27% by the end of the month. Those closing on homes in February, however, would likely have locked in their rates in January.

“Already this year, the monthly cost of a $300,000 loan is up $70,” said Danielle Hale, chief economist for realtor.com. “Looking ahead, the large and still growing cohort of consumers reaching prime home buying age will keep interest high, but whether shoppers can translate that desire into ownership will depend on whether shopper incomes rise along with economic growth, buyers are willing to let housing costs take up a bigger share of their monthly budgets, or whether more homes for sale help stem the pace of home price increases.”

Homebuilders continue to face headwinds to faster production, such as higher costs for land, labor and materials, as well as supply-chain delays. Single-family housing starts were lower in February than expected, but some of that could be related to harsh winter weather in the South.

Regionally, existing home sales fell 11.5% month-to-month in the Northeast. They fell 14.4% in the Midwest, and were 6.1% lower in the South. The West was the only region to see a monthly gain of 4.6%.

MY COMMENT

The data shows a BOOMING housing market that is being restricted by a historic SEVERE lack of inventory. Any talk of buyers being held back by......higher mortgage rates......is just CRAZY. People are not stupid......they know that the current rates are FANTASTIC. What is going on in the markets is all about demand and lack of inventory.

 

I have NOW decided NOT to do the short term.........momentum......trade that I was considering.....on the Coinbase direct Listing.

I have been spending a lot of time scanning the Reddit boards....I am seeing so-so interest there. In addition I am NOT seeing media BUZZ at the moment. Perhaps the fact that this is a direct listing is hurting....since Coinbase does not have a powerful investment bank pushing the PR and media coverage.

In the media and elsewhere there is much discussion about the company being OVERVALUED for the direct listing and the anticipated price per share.

In addition.....since I am NOT a trader or speculator.....I do not do this sort of short term trade unless I feel that there is a........ very significant........ likelihood of success. I DO believe that Coinbase is....at the moment.....the most DOMINANT company......in their business area. I WILL keep them in mind as a FUTURE long term holding candidate. BUT....that is a while down the road. They need to prove to me that they are......"THE"......dominant......company in their area over a longer time.

HERE is a little article on their recent WASH TRADE issue. I dont see this as a particularly negative issue...but it is another piece of information that has potential to reduce interest in the IPO......or at least squelch the BUZZZZZ.

Coinbase Settles With CFTC for $6.5M Over Old Trading Practices

https://www.coindesk.com/coinbase-settles-with-cftc-for-6-5m-over-old-trading-practices

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

"Crypto exchange Coinbase will pay $6.5 million in a settlement with the Commodity Futures Trading Commission (CFTC) over allegations the exchange “self-traded” digital assets.

According to a consent order published by the commodities regulator Friday, Coinbase self-traded a small amount of cryptocurrency between 2015 and 2018 through two of its automated trading programs. A now-former employee of the exchange also allegedly “wash traded” litecoin (LTC, +0.38%) during that time period, as well.

One of these programs was designed to project how much of any given cryptocurrency Coinbase was expected to sell on its retail brokerage app. The system would then purchase the suggested amount of cryptocurrency through its professional trading division (GDAX, now known as Coinbase Pro) and hold it in the exchange’s treasury.

Self-trading is when “the same entity takes both sides of the trade,” a report by the U.S. Treasury Department and several financial regulators said in 2014. This type of market activity could be likened to wash trading, where an entity might artificially pump up the trading volume of an asset.

Importantly, the CFTC is not alleging that any Coinbase customers were harmed or that any wrongdoing occurred. Rather, it’s describing the activity as reckless but not intentional. This activity is no longer occurring, the CFTC said Friday.

Coinbase disclosed the investigation’s existence in its Form S-1, which the company filed ahead of its planned listing on Nasdaq.

The CFTC began investigating “trades made in 2017 by one of the company’s then-current employees,” according to the S-1. The investigation also included “the design and operation of certain algorithmic functions related to liquidity management on the company’s platform.”

While the CFTC has conducted other investigations into Coinbase, according to the S-1, including into an Ethereum “market event” and the bitcoin cash listing, this is the only investigation the exchange anticipated would have a “material adverse effect” on its operations.

In a concurrent statement published with the settlement, CFTC Commissioner Dawn Stump wrote that while she agreed with the regulator’s findings, she wanted to ensure the public is aware that the CFTC doesn’t regulate spot exchanges.

Coinbase doesn’t offer any derivatives products and is therefore not registered with the agency, she wrote. The activity at the heart of Friday’s enforcement action also doesn’t affect any derivatives covered by the agency.

“The settled charges are based largely on conduct that is several years old, has not been repeated, and in the case of the charge of secondary liability, is based on conduct by an employee who left Coinbase years ago and who is not being charged,” she added.

In a statement shared with CoinDesk, a Coinbase spokesperson said the company neither admits nor denies the findings, but said the order does not find any Coinbase customers were harmed.

“We believe clear, common-sense regulations are needed to provide a stable trading environment for all market participants. Because of this, we proactively engaged with the CFTC throughout their investigation, and we believe that our conversations were constructive and contributed to an outcome that is satisfactory for both parties,” the spokesperson said.

MY COMMENT

I will STILL watch and evaluate over the time from now till the IPO (DL).......but at this time I do NOT anticipate doing a trade on the DL. As I said above......I DO....believe that this company has great potential to end up as the most DOMINANT broker in their business area. It will be a potential candidate for a long term holding if this is proven by the passage of time.

The very erratic, volatile, skittish market that we are seeing day to day at the moment is....another....reason that I am hesitant to do this trade. The RARE TIMES that I tend to make this sort of trade usually occur when we are in the middle of a BOOMING market. So...that is another factor in my decision.

The short basis for my decision......I am NOT seeing enough.......OBVIOUS...... STRONG MOMENTUM......for this trade at the moment.......at least for me....a non-trader.

 

A couple of RANDOM comments.

I was driving yesterday and a little Japanese BEATER car......probably about 15-20 years old passed me. Roaring exhaust sound and fumes. On the back was a TESLA logo. Made me laugh out loud.

Cancel Culture. I just saw a little blurb on the morning business how about Cancel Culture and Panda Express and cultural appropriation. THIS stuff is so classic for observers of HUMAN BEHAVIOR. It makes me laugh when I see ALL these young people BASHING cultural appropriation.......eating at ASIAN restaurants using chop sticks.

YOU....have to love human behavior......so weird and funny. Not so funny when it impacts investing and money management....but still VERY entertaining.

 

It drives me crazy to see investors.....and.....financial and other media.....MIXING economics and investing. The two have very little to do with each other. On one hand you have actual businesses.....generating REAL business results.....hard data that is available for anyone to review. On the other hand......you have OBTUSE and OBSCURE......economic theory......with the BIG EMPHASIS on the word.....THEORY. There is NOTHING in economics that is REAL......it is ALL THEORETICAL models and other garbage that can NOT be proven.

YET.......mainly through our governments.....we allow ECONOMISTS to have a HUGE oversize say in how the economy......a reflection of the actual businesses that ARE.....the economy.......is going to operate. JUST more INSANITY.....but.....it is so embedded into how we do things that there is ZERO chance it will ever change.

There is a BIG reason that all the various successful companies in the USA and around the world are NOT.....being run by economists. This little article is a PERFECT EXAMPLE.....economists with all their THEORETICAL BLATHER....can NOT even agree on the most BASIC concepts. AND.....of course....there is ABSOLUTELY no way to test any of their theories......since Economics is NOT science........not that REAL science matters anymore anyway.

YET the investing media and discussion if constantly FULL of this GARBAGE.

What Drives Interest Rates? Old Question Is Key to New Economics

https://finance.yahoo.com/news/heart-economics-lies-centuries-old-090000479.html

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

"Stripped down to basics, the new consensus in economics goes like this: It’s fine for governments to borrow and spend more money -- so long as they can get hold of it cheaply.But as a guide to policy, the doctrine has a blind spot. Because even after arguing the point for a couple of centuries, economists find it hard to pin down what drives long-run interest rates -- or predict where they’re headed.

“The greatest area of uncertainty in any forecast is really the forecast of interest rates,” Laura Tyson, a senior economic adviser to the Clinton and Obama administrations, told Bloomberg TV . “The profession has not been great at timing either the direction or the amount.”

Those are crucial questions right now, for governments trying to figure out how much it’s safe to spend on pandemic recovery, and for investors wondering if this year’s surge in sovereign-bond yields is a blip or the start of a new era.

‘More Power’

For years, estimates of future borrowing costs have tended to be too high –- leading to projections of bigger debts, and helping deter public spending. Some worry the opposite could happen now: politicians will grow complacent about low interest rates, borrow and spend too much, then get a nasty surprise when they spike.But there’s a school of economic thought says that governments and central banks play a bigger role in shaping interest rates than the mainstream acknowledges. Translated into practical terms, that means countries can turn their own borrowing costs into a policy choice, instead of a price that gets discovered in the marketplace.

It’s not a new idea, says Paul McCulley, the former chief economist at Pimco. “The central bank has always had more power over long rates than the consensus had thought,” he says. “They just weren’t exercising it.”Now, they are -– one way and another.The Bank of Japan has been explicitly targeting government borrowing costs for years, under a policy known as yield-curve control. Australia followed suit during the pandemic.But central bankers, often the main buyers of sovereign debt nowadays, have other ways to steer the yields without officially making them a policy tool. European Central Bank officials, for example, acknowledge off the record that they manage the cost of borrowing for euro-area governments via bond purchases.

The Federal Reserve, which is buying about $80 billion of Treasuries every month, practiced overt yield-curve control during World War II. In the past year, Fed officials have referenced the policy without suggesting it’ll be implemented anytime soon.

‘Self-Fulfilling’

Sometimes the idea on its own is enough, says McCulley, who now teaches at Georgetown University. Once central banks acknowledge they have that power, “and the market agrees with that, then it becomes a self-fulfilling prophecy.”The concern about such policies has been that politicians will spend their countries into bankruptcy or hyperinflation without some kind of external discipline.

Once, financial markets were thought to provide it. More recently the task has been assigned to central banks, which were supposed to be walled off from the rest of government so they can focus on nipping any signs of inflation in the bud.Key parts of that intellectual edifice have crumbled, especially since the financial crisis. Bigger budget deficits and debts, one of the things that were supposed to push interest rates higher, didn’t do so.

Politicians pivoted to austerity anyway, without much of a push from the markets -- and economies suffered a lackluster recovery as a result.

Covid-19 brought a different approach. Spending by governments has been the key to recovery -- and the frameworks for assessing how far they could safely go didn’t seem much use.

New Rules

Typically based around budget deficits or national debts as a share of the economy, traditional fiscal guidelines didn’t have a role for interest rates. They made no provision for the way debts have become cheaper to service even as they grew bigger -- because of the plunge in borrowing costs. Even the Euro area, which enforces a strict version of the old-school rulebook, threw it out in the pandemic.Economists are working on new rules for a low-rates era.

In a November paper, Jason Furman and Larry Summers -– Harvard economists and senior officials in the Obama administration -- argued that the interest payments a government has to make every year are a better benchmark than its total debt or annual deficit.

The idea carries weight in the Biden administration. Treasury Secretary Janet Yellen says she agrees with it.

Furman says that the rule of thumb advocated in his paper –- keeping real debt-service costs below 2% of GDP –- is applicable regardless of who’s right in the debate about what drives interest rates. He says there’s not much to be gained from using monetary policy to impose a cap on government borrowing costs.“Can central banks decide one variable? Yes. Can they simultaneously decide three variables? No,” he says. “You can do financial repression for a while,” but that just makes it harder to meet other targets like keeping inflation under control.

‘Always This Danger’

Modern Monetary Theory, an emerging school of economics, agrees that inflation is the ultimate yardstick for policy. But it has different ideas about how governments pay for their spending -- and what determines long-term interest rates.While Furman and Summers favor explanations such as ageing populations, rising inequality and capital-saving technology, the MMTers follow a line of thought that has roots in the work of John Maynard Keynes. It emphasizes the role of monetary policy. The long run is just lots of short runs piled together, the reasoning goes. So when central banks persist in keeping short-term borrowing costs low, they shape long rates too.After decades on the fringes, MMT economists see the debate shifting in their favor. Some of their positions are now widely held: Countries that borrow in their own currencies can’t go broke, and the real risk of overspending is inflation not bankruptcy.The MMTers would like the profession to take another step in their direction by acknowledging that governments can manage their own borrowing costs.

In the mainstream models, even when governments are paying low interest rates and have room to spend, “there’s always this danger” that debt costs could spike and derail their plans, says Scott Fullwiler, an MMT economist and professor at the University of Missouri-Kansas City. “They haven’t put into this framework that the interest rates are a policy variable.”

MY COMMENT

NOT posting this article for the content......there REALLY is NONE if you look at it....anyway. It is filled with economic THEORY.......old theory...new theory. Than we have self-fulfilling economics.... Modern theory....new rules....old rules.....traditional guidelines......nontraditional rules.....estimates.....wild ass guessing....rulebooks....thrown out rulebooks....etc, etc, etc.

AND....in the end this is where you end up:

"Because even after arguing the point for a couple of centuries, economists find it hard to pin down what drives long-run interest rates -- or predict where they’re headed." "The greatest area of uncertainty in any forecast is really the forecast of interest rates,” “The profession has not been great at timing either the direction or the amount.”

TOO many investors think like economists. They forget that they are BUYING a business....or....a collection of businesses in an Index of a fund or an ETF.

 

Agree.......as usual.......Zukodany. With the internet and EVERYTHING being based online these days......it is MUCH easier to manipulate everything.