The Long Term Investor

HERE...is a weekend story for those that are NOT old enough to remember this. A CLASSIC case of investors "thinking" their returns were way more than they REALLY were.....with a little help from the MEDIA.

The Midwestern grandmas who became stock market celebrities
In the 1990s, a group of elderly women from Beardstown, Illinois gained national fame for their stock returns. But there was a catch.

https://thehustle.co/the-midwestern-grandmas-who-became-stock-market-celebrities/

"Thirty years ago, 16 little old ladies took the investment world by storm.

Aged 41 to 87, the women hailed from a small agricultural town 200 miles south of Chicago. They were retirees, teachers, homemakers, and hog farmers. Before their rise to fame, many of them had never picked up a copy of The Wall Street Journal.

Yet, during the bull market of the 1980s, they reportedly turned a few hundred dollars into six figures, outperforming even veteran bankers.

Dubbed the “Beardstown Ladies,” they pumped out best-selling investment books, embarked on multi-state speaking tours, and made the rounds on primetime TV.

It was the perfect story about a group of underdogs who used common sense, intuition, and Midwestern grit to beat the market.

That is, until it all came tumbling down.

The formation of the Beardstown Ladies
In the early 1980s, Betty Sinnock — then a bank teller in Beardstown (population 6k) — developed an interest in the booming stock market.

She’d seen customer after customer drop off big dividend checks and she couldn’t help but wonder: If these people can make money on stocks, why can’t I?

But there was a problem.

To buy stocks, she needed a broker. And as Sinnock later told a local paper, brokers “didn’t want to deal with an old lady.”

When her calls went unanswered, she decided to start her own investment club.

She banded together with Shirley Gross — a retired medical technologist in her 70s who’d also had trouble finding investing resources — and put out a call for other local women who wanted to take control of their finances.

On November 3, 1983, they officially formed the Beardstown Business and Professional Women’s Investment Club — or the “Beardstown Ladies” for short.

Eventually, the group settled on 16 members — all women, many of whom were working-class retirees:

Most of the club members didn’t know how to read annual reports or analyze price-to-earnings ratios.

But the group boasted no shortage of life experience: Among them, they had 30 children, 40 grandchildren, and 7 great-grandchildren. They’d lived through wars and depressions. They could slaughter pigs and fix broken engines.

How hard could trading stocks be?

To start, each woman ponied up $100, plus $25 per month in dues.

Every Thursday evening, they convened to learn about the market and discuss which stocks they’d buy with their pooled funds. Each woman would follow a particular stock, then report her findings to the group.

The club’s process for identifying good stocks was a mixture of intuition, research, and “good old-fashioned leg work.”

As self-proclaimed “fundamentalists” (or value investors), they gravitated toward stocks they felt were underestimated by the market. They’d call up CEOs and pore over publications from the investment research firm Value Line, selecting stocks that fit several criteria:

1. 
   
2. The stock price had to be under $25 per share
   
3. The stock had to have at least 5 years of solid growth
   
4. The companyhad to be in one of the 25 largest industries
   
5. The company had to have debts less than ⅓ of its assets
   
6. The company had to have a strong track record of leadership
   
7. No vice stocks (tobacco, liquor, gambling)

But their analysis went beyond the numbers. Sometimes, they’d just pick what felt right, based on observation.

They bought into the shoemaker Wolverine Worldwide because they simply liked the durability of the company’s boots. Hershey’s was selected because the Ladies saw promise in Kiss chocolates.

In one instance, a Wall Street VP told the Beardstown Ladies they were foolish for holding Walmart stock.

“Every time I go there, it’s packed with people,” club member Shirley Gross retorted. “Have you ever been inside a Walmart?”

He hadn’t.


The Beardstown Ladies’ stock picks from 1994 included classics like McDonald’s, Home Depot, and Quaker Oats (data via “The Beardstown Ladies’ Common-Sense Investment Guide”; Hyperion, 1995; graphic: The Hustle)

Above all else, though, the Beardstown Ladies remembered to have a good time. They started meetings with poems, kept things lively, and dined on Doritos and Pepsi while breaking down the earnings yield of Cracker Barrel.

Over 10 years, the Beardstown Ladies made a series of prudent investments, reinvesting profits back into the market and buying the dips.

And by the early ‘90s, the club had reportedly turned its $1.6k initial investment into more than $80k.

The National Association of Investment Clubs (NAIC) awarded the Beardstown Ladies an “all-star” rating — its top honor — 5 years in a row.

And for the media, the story of market-beating grandmas from Middle America was too good to pass up.

The rise of fame
In 1991, CBS This Morning caught wind ofthe Beardstown Ladies’ success and featured the club in a segment.

Though the club hadn’t tracked its returns, CBS pushed for a number. The reported verdict: From 1983 to 1994, the Beardstown Ladies had seen an average annual investment return of 23.4%, more than double that of the S&P 500 over the same period.

The story went viral and the group parlayed its new fame into a book (“The Beardstown Ladies’ Common-Sense Investment Guide”)that marketed them as ”the greatest investment minds of our generation.”

The plain-spoken group of women and their ‘if we can do it, you can too’ attitude captivated aspirational Americans, and the book spent 3 months on The New York Times Best Sellerlist.

In short order, the Beardstown Ladies became national celebrities and investment “experts.”

One newspaper column proclaimed the Beardstown Ladies to be “one of the most successful, prolific, and high-profile investment clubs around… [earning] the kind of returns even Warren Buffett might drool over.”

The National Enquirer dubbed them “Wizards of Wall Street.”

The women hit the road on speaking tours, imparting stock wisdom to packed auditoriums. They produced a videotape titled, “Cookin’ Up Profits on Wall Street.” They rolled out 4 subsequent books, blending investment advice and pie recipes.

“We’re riding a wave and we want to stay on it as long as we can because it will come down,” one of the Ladies told the Des Moines Register.

It would come down sooner — and harder — than expected.

Too good to be true
Shortly after the publication of their book, the Beardstown Ladies’ purported returns began to draw some skepticism.

Kevin Pilot, a former Merrill Lynch broker, dug into the numbers and found that there was no way the stocks they’d picked had yielded the returns they’d claimed.

As more reports followed, the Beardstown Ladies hired PwC to run an independent audit of their ledger.

The result was sobering: The club’s actual return was a measly 9.1%, which underperformed the S&P 500 (14.9%) by a considerable margin.

The media — which had built the Beardstown Ladies up — was quick to tear them right back down.

“I think a monkey following a strict trading regimen with darts as a selection vehicle could beat the Bearstown Ladies’ butt,” wrote The Motley Fool. “They are cheats and liars who basked shamelessly in false fame.”

Amidst a wave of scalding press, Sinnock, the group’s treasurer, attributed the error to entering data incorrectly into a computer program designed to track investments. When calculating returns, they’d included revenue from the sale of their video.

The club’s publisher, Hyperion, was later sued over the Beardstown Ladies’ false claims and had to pay out an estimated $17m in refund credits and legal fees.

But the consensus among Americans was that the women had simply made a mistake.

Though their credibility had been marred, they were soon forgiven — largely because they’d succeeded in starting a larger movement:

• 
  
• Between 1983 (the year the group formed) and 1997, the number of national investment clubs rose from 7k to 28k, largely due to an influx of female investors.
  
• By 1997, 47% of all American women were investing in stocks, compared to 44% of men.

They made the mysteries of Wall Street accessible to the public, especially for women, who’d previously been a marginalized group in finance.

And the club still exists
Today, the Beardstown Ladies club still meets to select and discuss stocks.

While most of the original members have since passed away, many of their descendants now sit in their place, keeping the legacy alive.

These days, they’re a little more tight-lipped about their returns. But at last count, the club’s portfolio was worth $500k+.

Their investments now include the likes of Amazon, Facebook, and Apple, alongside the staid classics.

While the days of big press, book deals, and public drama may be gone, the spirit of the group remains intact.

“We’ve been through a lot of ups and downs,” Tillitt-Pratt, an original member, said in 2017. “And when [the market] goes down, we don’t get sad. We look for bargains.”"

MY COMMENT

What is interesting in the above......and TYPICAL......of the time. In the early 1980's to buy stocks you HAD to have a broker. And....these ladies....like many people could not find a broker that would handle their business. It was EXTREMELY RARE for "regular" individuals to be investing in stocks back than. Of course.....part of this was the discrimination against women and the elderly.

My sister.....as a single woman......in that era was employed....but....not married. Even though she had the appropriate income and a good job.....she could not get a mortgage to buy a home......without a husband. My parents had to co-sign. Single women.....just did not buy homes in her state.

 

I find this little article about NIKE interesting......as a shareholder....and as an observer of society. I wonder to what extent these issues that are starting to pop up are the result of corporate behavior and attitude..........what sometimes seems to be an obsessive focus from this company with issues and causes OUTSIDE of business.

Nike reacts to Simone Biles' departure as pressure mounts on brand

https://finance.yahoo.com/news/ubs-lowers-price-target-on-nike-amid-china-concerns-204440472.html

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

"Under pressure at home and abroad, Nike is grappling with the end of two major endorsement deals, at a time when Wall Street is losing faith in the stock.

On Friday morning, the Swoosh Brand suffered another blow on Friday when the Wall Street Journal reported that Olympic Gold Medalist Simone Biles had ended her six-year relationship with Nike, and will now partner with Gap-owned (GPS) Athleta on an apparel deal. The departure dovetailed with news this week that Kobe Bryant's widow, Vanessa Bryant, would not renew a deal with Nike out of reported "frustration" with the company.

Biles told The Journal that Athleta was a more supportive partner, "not just as an athlete, but just as an individual outside of the gym and the change that I want to create, which is so refreshing."

In a statement given to Yahoo Finance by Nike, the company wished Biles the best, as well as highlighting the brand’s commitment to female athletes.

“We’ve always taken great pride in our leadership in supporting women in sport at all levels for close to 50 years as individual athletes, through their universities, national teams, or their competitive leagues," the statement read. "We will continue to champion and celebrate all athletes.”

Rick Helfenbein, former CEO of American Apparel & Footwear Association, told Yahoo Finance recently that the Swoosh Brand's negative publicity could be a sign of things to come.

"With Nike in the news on a near-daily basis of late, some people are starting to wonder if a dark cloud is forming over corporate headquarters or whether the forecast is partly sunny or partly cloudy,” he said.

Wall Street's wary eye

Although the stock rallied by 1% in intraday trading on Friday, the world's premier athletic brand is enduring Wall Street's version of a no-confidence vote, as key analysts downgrade their views.

This week, UBS (UBS) lowered its price target for Nike (NKE) from $183 to $175, following a Chinese-led boycott of the brand for past statements criticizing China for alleged human rights abuses against Uyghurs in the northern province of Xinjiang.

The Chinese government has built a network of internment camps for the Muslim minority group, forcing them to work in textile and other hard-labor manufacturing jobs, according to human rights groups.

“The pushback from China on Xinjiang has at least one analyst on edge, and their over-emphasis on e-commerce makes others wonder, 'What will happen when retail reverts to more normal times?'" Helfenbein asked.

"Meanwhile, the small- and medium-size retailers who helped build the brand are being pushed to the sidelines. Taking all this into consideration and, of course, the loss of the Kobe Bryant contract, there are some Nikeheads who just want a pause, or in sports terminology – a 'time-out,'" he added.

In a note to investors, UBS said it believes the troubles for Nike across greater China will be short-term. Pressure on the stock will dissipate as pressure on the brand "will lessen significantly" in the months to come as Nike moves to "craft a coordinated marketing message response to its various audiences in a way that significantly reduces tensions."

UBS added: "We agree the most likely outcome is the issue fades away over the next month or two. Plus, we continue to believe Nike’s execution elsewhere remains very strong. Thus we continue to believe the stock will outperform over the next twelve months.”

Separately, Citigroup (C) also recently lowered its rating and price target based on similar concerns.

UBS also noted that key catalysts are approaching, in particular how well the brand fares in the month of June. The sixth month of the year is a key shopping month in greater China, with “Children’s Day” on June 1st and the “6/18 Festival” on June 18th. UBS believes that Nike sales will rebound during the month.

“Nike sales last June were 160% higher than sales in May. Our current forecast assumes sales rebound by June. If sales don’t improve by then, we may revisit our view.”"

MY COMMENT

Corporate policies that incorporate OUTSIDE STAKEHOLDERS......screw your long time small business partners......and.....piss off half your potential customer base......may NOT lead to business success. Many OLD-FASHIONED management practices are being ABANDONED by management....trying to respond to the new style of employee and.....the media. We are NOW seeing management at NIKE that has now moved BEYOND the original founders of the company........those that created and grew the company. Many companies at this stage in their life....lose their way.....and go through a time period of wandering around in the desert of.......bad management. They end up paying the price with their customers......and....shareholders. Microsoft went through a similar time from about 2002 till the current leadership took over.

BUSINESS needs to realize.....it is STILL....all about business......not whatever foolish FAD the CEO is pushing. The CEO is there to manage and grow the business.....nothing more, nothing less.

 

OBVIOUSLY.....government......is the big black swan for the markets. Taxes, regulation, policies, new laws.......WILL ALL....impact the markets.....as usual. As an investor.....a long term investor....it is just something you have no control over and have to live with.

BUT.....you would think that they would give SOME...... small degree of thought.....to the process......never mind the actual content. Announcing the capital gains last week....in the middle of a market day.....not real sharp. NOW....next week.....smack dab in the middle of perhaps the most watched earnings week....they will be at it again. The government....on Tuesday evening....will announce their entire wish list of taxes. A perfect way to TANK what would have.......probably.......been the most positive earnings week to date for the markets.

It will be a good test for the POWER of the markets......at least short term.

Longer term.....I hope they get these issues....PLUS.....all the spending bills they have lined up....sorted out quickly. The markets HATE uncertainty. BUT.....knowing government.....I suspect it will take many months to pass whatever they are going to pass...perhaps to the end of the year. SO....there is GREAT potential for this uncertainty to really SCREW UP the markets this....ENTIRE YEAR.

 

This little article is interesting.....nothing new. Speaking of taxes above leads to this little article....as a companion piece. This has been a GROWING problem for some time....but....it is coming to a head now. My taxes for 2019 were caught up in the BIG backlog and finally reviewed very late by the IRS. Of course their response was to send me a bill for LATE FILING. They CAVED on that claim as soon as I called them and.....in the end.....sent me a check instead of the other way around. This year....I sent my return with a tracking number......AND.....got a "proof of mailing" from the Post Office.

IRS holding over 29M unprocessed tax returns, delaying refunds for many low-income Americans
At least 8 million returns have been placed in 'suspense' until an IRS employee can review

https://www.foxbusiness.com/economy/irs-millions-unprocessed-tax-returns-delaying-refunds

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

"The IRS is holding more than 29 million tax returns for manual processing, delaying refunds for many low-income Americans as the agency struggles to adopt a slew of coronavirus pandemic-related changes, according to its internal watchdog.

"As one would expect, IRS employees are stretched thin working through the manual processing of these returns," National Taxpayer Advocate Erin Collins wrote in a recent blog post. "So if a taxpayer’s return is pulled for manual processing, there will be delays."

At least 8 million returns have been placed in "suspense" until an IRS employee can review them to ensure the taxpayers received the fully promised stimulus check money. IRS officials are also calculating the earned income tax credit and the child tax credit – two tax credits for lower-income Americans that were expanded in President Biden's $1.9 trillion coronavirus relief package.

On top of that, 5.3 million 2019 or 2020 paper returns are awaiting manual processing, while 4.7 million returns have processing errors or fraud identification issues that require a response from the taxpayer. The IRS withheld 11 million business returns for manual processing.

"From a taxpayer’s perspective, it feels like their return has fallen into a black hole: they do not know what is going on, when they will get their refund, why it is being delayed, or how to get answers or help," Collins wrote.

That's because, in addition to a high volume of 2020 returns that need manual processing, the IRS is grappling with a massive backlog of processed 2019 paper tax returns and the herculean task of delivering millions of stimulus checks.

Collins estimated that just 1 out of every 50 calls to the IRS customer service representative service line is being answered.

IRS Commissioner Chuck Rettig previously told lawmakers during congressional testimony that the agency had received about 21.4 million taxpayer calls by April 2.

"There was no way to predict the pandemic and the impact it would have on our call volume, filing season, and hiring," Rettig said at the time. "We are still working through the impacts of COVID-19, which created staffing shortages and closures, and we have been experiencing a much higher-than-expected call volume, coupled with an increase in call handling time caused by greater call complexity due to three rounds of EIPs and other tax law changes."

In March, the IRS delayed the main April 15 tax-filing deadline until May 17, giving most Americans more time to prepare their filings this tax season amid a slew of pandemic-related policy changes. It also postponed the deadline for people to contribute to their individual retirement accounts and health savings accounts until May 17."

MY COMMENT

This is a BIG PROBLEM.....that cuts across politics or party. The incompetence of the IRS and their lack of ability to process returns has SNOWBALLED over the past couple of years. When I called them I was on hold.....with the mandatory elevator music....for over TWO HOURS. Being a FANATIC.....I just held and finally got to speak to a Rep.

An aging computer system......and the advent of E-Filing has made the paper returns second class citizens. They seem to be quickly losing their ability to process paper returns.

I did send in my 2020 return in early April.....the amount I owed was so small.....about $1000.....I just decided to send it in and get rid of it. I noticed a day ago that they had cashed my check.

 

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Is that your new boat? Looks perfect for a family of 5.

 

HERE is a little preview of the coming week. Earnings from these companies should be very nice.....but are likely to be OVERWHELMED by other news and events during the week.

Next week's earnings could boost tech stocks once again

https://www.cnn.com/2021/04/24/investing/tech-earnings-google-apple-amazon/index.html

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

"Investors are getting ready to reposition their portfolios for the post-pandemic world. That means moving money out of big tech, which did amazingly well in the work-from-home economy, and into more cyclical sectors, like manufacturing.
But hold on a moment — big tech might have another ace up its sleeve.

Next week's earnings calendar is packed with high-profile performance reports from Google (GOOGL), Microsoft (MSFT), chip maker AMD (AMD), Apple (AAPL), Facebook (FB), Amazon (AMZN) and Twitter (TWTR).
Solid earnings from these companies could mean another rally in tech stocks, according to Wedbush Securities analyst Daniel Ives.

"We believe (first quarter) earnings over the coming weeks will be a major positive catalyst for tech names," given the sector's robust fundamentals, Ives said in a note to clients last week.

And as tech stocks go, so goes the market, because they are among the biggest stocks in the major equity indexes.
Of course, it will be many months until we know how much of the pandemic-driven remote way of life that boosted tech company's margins last year will continue once when the economy fully reopens.

Even so, there is plenty to be optimistic about in the sector. Businesses are preparing to let workers continue to log in remotely after the pandemic, which means a continued reliance on gadgets and services. And some of the transformation that has occurred over the last year are likely to stick, like more digital meetings or virtual doctor's visits.

A digital transformation is underway, and it could bring about the next multiyear rally for tech companies, according to Ives. That said, it might be tricky for investors to determine whether to put money into cybersecurity, artificial intelligence or cloud computing at this point.

"Today we estimate 35% of workloads are on the cloud with a doubling of workloads on the cloud expected by 2023," he said.

So, although valuations for tech shares are sky high — even after the recent sell-offs — there is reason to believe that those stocks will continue to climb even higher. The growth prospects might just outweigh the high stock prices.
Of course, there are some clouds on the horizon for big tech as well.

The regulatory environment could change under the Biden administration. And the White House is intent on raising corporate taxes, which could hit tech companies hard.

President Joe Biden is also looking to raise capital gains taxes on the wealthy. This caused stocks to tumble last week. A change in tax liabilities could change how people invest in the stock market."

MY COMMENT

Hold off on the BIG CELEBRATION. I have NO DOUBT that the earnings will be GREAT. These companies are the PREMIER businesses in the world. AND.....we are just in the early stages of the tech revolution. BUT.....outside factors and business conditions WILL have an impact on how these earnings are viewed....or....whether they are simply ignored.

PLUS....I dont discount the typical habit lately of the markets.....punishing....great earnings for a few days after a report. For those of us with an investing horizon longer than.....the life span of a fruit fly.....it will be good news. BUT.....the breathless story of the week....will probably NOT be stocks or earnings.

(no fruit fly's were harmed in the creation of this post......Any similarity to actual fruit fly's, living or dead, or actual events, is purely coincidental.” )

 

In addition to the above.....and the government drama next week.....of course the FED rears its ugly head.....as usual. Great......just what we need in a week that is going to be ALL.....DRAMA......in the media.

FOMC meeting, Big Tech earnings: What to know this week

https://finance.yahoo.com/news/fomc-meeting-big-tech-earnings-what-to-know-this-week-123351253.html

(BOLD is my opinion OR what I consider important content)
"Investors will have a variety of potentially market-moving events to contemplate this week, with corporate earnings season ramping up and a Federal Reserve monetary policy decision on deck.

The Federal Open Market Committee (FOMC) will meet for its April meeting on Tuesday and Wednesday, with a monetary policy decision and press conference from Federal Reserve Chair Jerome Powell slated for Wednesday afternoon. With the Fed having already signaled that benchmark interest rates would remain on hold through at least 2023, market participants are expecting virtually no major changes to policy to be announced at the conclusion of this April FOMC meeting.

Powell himself has suggested that the Fed's first action once it begins shifting its policy posturing, will be to adjust the central bank's crisis-era asset purchase program, which is currently taking place at a rate of $120 billion per month. In past press conferences and public remarks, however, Fed officials have signaled they were still not inclined to even begin thinking about tapering these quantitative easing policies, given the lingering uncertainty around the pandemic.

But even in the month since the last Federal Reserve meeting, data on the economic recovery has firmed considerably, building a case for easing support. Initial jobless claims plunged to a pandemic-era low last week, and retail sales jumped nearly 10% to rise by the most since May 2020. IHS Markit's manufacturing and service sector purchasing managers' indices rose to the highest level in survey history, as pent-up consumer demand prompted a quick pick-up in both the goods-producing and service-providing areas of the economy.

"At the conclusion of the April FOMC meeting, we expect Chair Powell and the FOMC to give a more positive view of the economy but reiterate that the economy needs to make further progress before signaling any policy change and risks remain from the virus," Bank of America chief economist Michelle Meyer wrote in a note.

"The policy statement and the press conference are likely to emphasize that while the Fed is encouraged by the recent data, the recent acceleration in inflation should prove temporary and the labor market recovery is far from complete," she added. "On asset purchases, we will look to see if Powell reiterates that it will be 'some time' before achieving 'substantial further progress' or changes the description of the path. We believe 'some time' is still appropriate, but there is a risk that he shifts."

Others have also suggested that the rapidly strengthening economic backdrop could prompt a similarly faster than currently telegraphed shift in Federal Reserve policy. This could come both as a response to an economy no longer in need of such immense support, and as a means of staving off a potential surge in inflation as demand outpaces supply during the recovery.

"With the economy opening up more and more each day, we are anticipating a series of 1 million-plus monthly payroll gains that could be enough for the Federal Reserve to call 'substantial further progress' and start the tapering process before the end of the year," ING chief international economist James Knightley wrote in a note Thursday.

Others, however, expect monetary policymakers to continue to demur on talk of tapering for the near-term.

"We don’t expect any substantive new signal yet on tapering—or tightening—even as the tone on the economy is more positive than in March," Jim O'Sullivan, chief U.S. macro strategist, wrote in a note. "We expect the signaling to evolve over time as the recovery proceeds, and we just changed out forecast for the start of tapering to March 2022 from September 2022, but we expect officials will be reluctant to say anything that could be construed as a tapering countdown signal until much later this year."

Big Tech earnings
The bulk of the mega-cap technology companies will report first-quarter earnings results this week. The companies – including Amazon, Alphabet, Facebook and Google – are up against heightened expectations, with tech stocks having largely benefited from stay-at-home trends during the pandemic, and as earlier quarterly reports set a high bar.

Companies comprising just over one-quarter of the S&P 500's market capitalization had reported first-quarter results as of Friday morning, according to an analysis from Credit Suisse's Jonathan Golub. Eighty-three percent of companies reporting results had posted earnings that topped estimates, with the beats coming in an aggregate of 23.1% above expectations.

That said, the reaction to last week's report from Netflix (NFLX) underscored the dangers of high expectations. Netflix's disappointing first-quarter net subscriber additions and current quarter guidance served, to some, as a harbinger of the difficult stretch ahead for tech companies: Most will have especially tough year-over-year comparisons as they lap the results they posted last year that had been aided by stay-at-home trends.

"Amazon is our favorite FANG name into 1Q earnings. We expect upside to our 1Q revenue estimate of $105B on continued strong e-commerce trends (also helped by two rounds of stimulus), with investor expectations for $106B+ based on our conversations," JPMorgan Chase analyst Doug Anmuth wrote in a note. "In terms of positioning, we believe Amazon is less owned than Google, and sentiment more in-check than in recent quarters given tough comps ahead, which Netflix results may have reinforced."

Amazon is expected to post first-quarter revenue that grew 39% over last year, according to Bloomberg consensus data, accelerating from its 26% growth rate from the same quarter of 2020. And the e-commerce giant suggested in February that it would incur virus-related costs of about $2 billion in the first quarter, after incurring more than $5 billion in costs since the start of the pandemic through the end of last year.

"We think AMZN’s difficult comps owing to the acceleration of eCommerce during the pandemic are well understood, but nevertheless will remain the top focus for the print," BMO Capital Markets analyst Daniel Salmon wrote in a note. "With that said, we are more intrigued by the potential change in margin profile as some COVID related expenses could fade as vaccinations rise and restrictions ease. This comes after 2019 when a similar level of investment was put into one-day shipping."

The advertising-driven companies Facebook (FB) and Alphabet (GOOGL), the parent company of Google, are also reporting against high estimates, given that analysts have already priced in a rebound in advertising revenues during the economic recovery. Plus, smaller social media company Snap (SNAP) posted first-quarter sales growth of 66% and another 22% surge in user growth last week, underscoring the staying power of online media usage on some platforms even as parts of the economy start to open.

Facebook's expected first-quarter revenue growth of 34% would be its fastest since early 2018, and Alphabet is expected to report revenue growth of 26%, or its fastest pace since early 2013.

"We think GOOG faces a higher bar this quarter than the past few as expectations for a strong search and brand advertising recovery are anticipated," Salmon wrote. "But our estimates move slightly higher too, as key categories like travel continue to return, and YouTube's strength in CTV [connected TV] shines through."

Finally, Apple (AAPL) is set to report fiscal second-quarter results after a record-setting holiday quarter at the end of last year, with the iPhone 12 upgrade cycle helping fuel results. The boost from these new devices likely extended into the start of the year, though ongoing chip shortages could put a damper on results later in the year, some pundits suggested.

"We are expecting the iPhone 12 super cycle theme to be front and center on Wednesday after the bell when Cupertino delivers another strong upside March quarter based on our analysis.," said Dan Ives. "That said, all eyes will be on June guidance with the Street worried that a moderation in growth and lingering chip shortage will spoil the super cycle party in Cupertino, which we strongly disagree with. We also are expecting another strong services quarter which is slated to exceed $65 billion of revenues in FY21 and remains key to the re-rating in Apple's stock over the past year."

Earnings calendar

• Monday: Albertson's (ACI) before market open; Tesla (TSLA) after market close
  
  
• Tuesday: UPS (UPS), Centene (CNC), Sherwin-Williams (SHW), General Electric (GE), 3M (MMM), Hasbro (HAS), Eli Lilly (LLY), Raytheon Technologies (RTX), JetBlue (JBLU), Crocs (CROX) before market open; Mondelez (MDLZ), Capital One (COF), Alphabet (GOOGL), FireEye (FEYE), Texas Instruments (TXN), Visa (V), Advanced Micro Devices (AMD), Pinterest (PINS), Starbucks (SBUX), Microsoft (MSFT), Amgen (AMGN) after market close
  
  
• Wednesday: Humana (HUM), CME Group (CME), Sirius XM Holdings (SIRI), Wingstop (WING), Boston Scientific (BSX), Six Flags Entertainment (SIX), Boeing (BA), Yum Brands (YUM), Moody's Corp (MCO), Discovery (DISCA) before market open; Apple (AAPL), Facebook (FB), eBay (EBAY), Align Technology (ALGN), Ford (F), O'Reilly Automotive (ORLY), Qualcomm (QCOM), MGM Resorts (MGM), ServiceNow (NOW), Teladoc (TDOC), GrubHub (GRUB) after market close
  
  
• Thursday: Caterpillar (CAT), Intercontinental Exchange (ICE), Bristol-Myers Squibb (BMY), Comcast (CMCSA), Merck (MRK), PG&E Corp (PCG), Bloomin' Brands (BLMN), Molson Coors (TAP), Keurig Dr. Pepper (KDP), LendingTree (TREE), Overstock.com (OSTK), Altria Group (MO), Kraft-Heinz (KHC), McDonald's (MCD), Mastercard (MA), Domino's Pizza (DPZ), T Rowe Price Group (TROW), Royal Caribbean (RCL), S&P Global (SPGI), SolarWinds (SWI) before market open; Amazon (AMZN), Twitter (TWTR), SkyWorks Solutions (SWKS), Gilead Sciences (GILD) after market close
  
  
• Friday: Colgate-Palmolive (CL), Charter Communications (CHTR), Clorox (CLX), AbbVie (ABBV), Chevron (CVX), Exxon Mobil (XOM), Goodyear Tire & Rubber Co. (GT)

Economic calendar

• Monday: Durable goods orders, March preliminary (2.5% expected, -1.2% in February); Durable goods excluding transportation, March preliminary (1.6% expected, -0.9% in February); Non-defense capital goods orders excluding aircraft (1.5% expected, -0.9% in February) Non-defense capital goods shipments excluding aircraft (1.5% expected, -1.1% in February); Dallas Fed Manufacturing Activity Index, April (30.0 expected, 28.9 in March)
  
  
• Tuesday: FHFA House Price Index, month-over-month, February (1.0% expected, 1.0% in January); S&P CoreLogic Case-Shiller 20-City Composite index, month-over-month, February (1.1% expected, 1.2% in January); S&P CoreLogic Case-Shiller 20-City Composite index, year-over-year, February (11.8% expected, 11.1% in January); Conference Board Consumer Confidence, April (112.0 expected, 109.7 in March); Richmond Fed Manufacturing Index, April (22 expected, 17 in March)
  
  
• Wednesday: MBA Mortgage Applications, week ended April 23 (8.6% during prior week); Advance goods trade balance, March (-$87.5 billion expected, -$86.7 billion in February); Wholesale inventories, month-over-month, March preliminary (0.6% expected, 0.6% in February); Retail inventories, month-over-month, March (0.0% in February); FOMC monetary policy decision
  
  
• Thursday: Initial jobless claims, week ended April 24 (550,000 expected, 547,000 during prior week); Continuing claims, week ended April 17 (3.674 million during prior week); GDP annualized quarter-over-quarter, Q1 advanced print (6.5% expected, 4.3% in Q4); Personal consumption, Q1 advanced print (10.5% expected, 2.3% in Q4); Core personal consumption expenditures, Q1 advanced print (2.4% expected, 1.3% in Q4); Pending home sales, month-over-month, March (4.5% expected, -10.6% in February)
  
  
• Friday: Personal income, March (20.0% expected, -7.1% in February); personal spending, March (4.3% expected, -1.0% in February); Personal consumption expenditures deflator, month-over-month, March (0.5% expected, 0.2% in February); Personal consumption expenditures deflator, year-over-year, March (2.3% expected, 1.6% in February); MNI Chicago PMI, April (65.0 expected, 66.3 in March); University of Michigan consumer sentiment, April final (87.8 expected, 86.5 in March)"

MY COMMENT

PROBABLY.......the most action packed week of the entire year. As can be seen in this little article....the media....is starting to ALREADY.....ramp up the......FED DRAMA......talk. As the week builds it will be full on hysteria for the media on taxes and the FED. Will anyone notice or care.....that is the question.

WELL.....the general public is probably just about worn out by all this "stuff".....and......longer term investors will probably just ignore the CHAFF and move forward. After all....what choice do you have....and....is any long term investor going to have any legitimate concerns about any of these BIG CAP PREMIER companies. I dont think so. I doubt that ANY long term owner of any of these companies is going to be doing much selling. HOWEVER......the TRADING PROGRAMS....might have a field day next week trading on the news items and DRAMA....minute to minute....hour to hour.

ALL we need to cap off the DRAMA.......is a big drop in CRYPTO........caused by TAX concerns. That would make the week the SUPER BOWL of financial DRAMA and FEAR MONGERING.

 

YES......"G"....I saw that post you made elsewhere. A good addition for this thread. Simple....yet....very important content in that little article.

 

posting the above made me curious....so I looked up the life span of a fruit fly. It is....40-50 days.

We had a fruit fly infestation once. I fought them for a week to two. I would take the dust buster with the extension and vacuum them up from the walls and ceiling.....than....a few hours later there were more of them. I spent a few weeks in an EPIC BATTLE with them. It drove me crazy trying to figure out where they were coming from. I finally discovered a potato that had slipped down behind some items in the pantry.....that was the SOURCE. At that point the battle was over quickly.

 

FibbyNacci

I see that we are in the SAME camp. I PUT the SP500 at 23% to 26% total return for 2021. With the SP500 being at about +11% right now.....I am seeing another 12% to 15%...to the end of the year. I also see 2022 as another very good year. This will be the year that the pandemic officially ends.......and/or....business is starting to HUM along on all cylinders.

I also....obviously....AGREE with your list of positives and your list of negatives.

I would add to your list of negatives....Russia and the Ukraine.....as well as some of the smaller countries that boarder on Russia. I SUSPECT that ALL of the world events......Iran, Russia, and China WILL happen....but will be relatively short term events. They will happen due to DISRESPECT for the current weak government. They will be relatively short events because....our government will have NO realistic response. BUSINESS...will win out and the world will simply move on.

As to taxes in general........much of the craziness will end up being somewhat moderated....but....regardless......people...... investors....will just deal with it since they have NO choice...so will business. AND....for government....not that it matters to them.....the amount of taxes collected will actually go DOWN. Business, investors, the rich.....ALL....are very BRILLIANT in dealing with tax increases in very inventive......and unanticipated (at least by government) ways.

 

Any discussion about taxes is.....obviously....premature at this point. We will know more about the tax proposals in a few days. BUT....even than....there will be NO clarity until the actual language is released.....AND....we see what actually passes.

The.....potential....BIG LOSERS.....small pass through businesses.....estates including farmers, small business.......EVERYONE that inherits any asset that would have had a step up in basis.

I tend to agree with this little article.....because...investors will simply go on with what they do.

Capital Pains? On the Latest Rumored Biden Hike
To the extent anyone would actually pay it, nearly doubling capital gains taxes for 0.3% of US taxpayers is not a giant sucking sound for stocks.

https://www.fisherinvestments.com/en-us/marketminder/capital-pains-on-the-latest-rumored-biden-hike

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

"Investors have dealt with a lot of tax chatter over the past year and a half. This week added another, albeit widely expected, round: the Biden administration’s rumored plan to nearly double capital gains taxes for people earning over $1 million. We have seen a lot of hyperbolic talk about this sucking money out of the private economy, hurting growth and productivity—not to mention reducing demand for stocks following a wave of selling as the affected people race to lock in gains before the increase takes effect. We have also seen long defenses of the preferential long-term capital gains rate, which we sympathize with. But America has a long history of capital gains tax changes and, spoiler alert, they aren’t automatically bearish. We think President Joe Biden’s proposal is quite unlikely to differ, even if it passes exactly as advertised. One reason why? Next to no one would pay it.

If the rumors are accurate, Biden’s plan would jack up capital gains rates to 39.6% on these high earners. That rate would be up from 20% currently and slightly exceed the current 37% top marginal income tax rate. Actually, these folks’ gains would face a 43.4% rate when you add the Affordable Care Act surtax. Plus many states levy capital gains taxes, meaning taxpayers in higher tax states like New York or California would pay capital gains rates topping 50%. Hence, the uproar.

Now, from a pure logic standpoint, we sort of get the angst. For one, capital gains taxes are an example of double taxation. Publicly traded companies pay corporate taxes. Therefore, the value of a company and its earnings—which stock investors own—is all after-tax. From that standpoint, paying capital gains taxes would be like paying income taxes on withdrawals from a Roth IRA. Paying taxes on money you have already paid taxes on is, well, annoying and stupid. Two, it isn’t like most people who earn a million dollars annually are living off their capital gains. In many cases, realized gains aren’t used as cash flow. People are merely selling one stock to buy another. So if Uncle Sam doubles his cut, that takes a big bite out of the money available to reinvest, which—in theory—can hit stock demand. Whether Uncle Sam spends that money more productively is the subject of endless debate and a matter of opinion, but we generally think the market is likely to allocate capital better than politicians, regardless of their ideological bent, competency and character.

But that is all just philosophy and opinion. Those aren’t market drivers. This is why it is critical to strip out all of your opinions and biases when assessing political developments’ potential market impact. Biases blind. So turn off feelings and opinions, and just look at the data. Congress has hiked capital gains taxes 10 times since 1968. S&P 500 returns, with dividends, are positive over the next 12 months 9 of those times, far above the index’s overall frequency of positive annual returns—and slightly higher than the frequency of positive returns after tax cuts. In the 12 months before the change, when the incentive to sell is theoretically higher, returns are still positive 7 of 10 times, right around the average frequency of positive returns.[ii]

In short, capital gains tax hikes haven’t historically been bearish. We doubt this time goes different. After all, the above were broad capital gains tax hikes. Biden’s proposed hike is the opposite of broad. It would hit just 0.3% of all US tax filers, according to Bloomberg’s analysis of IRS data.[iii] But wait! Even that number is probably too high, because this will probably be a very, very easy tax to avoid. Imagine a hypothetical high roller named Zelda Zillionaire. She raked in $1.5 million last year, theoretically exposing her to this astronomical new capital gains rate. What does she do? Well, we reckon she makes darned sure she doesn’t earn $1 million if she wants to sell stock this year.

It is actually pretty easy to avoid earning $1 million, and those who do earn that much have more options to reduce income than most of us. This is not a how-to guide, and it certainly isn’t tax advice, but options include donating to charity, asking your board to pay you with more stock options instead of cash and deferring salary. If excessive dividends and interest are the issue, there are loads of ways to minimize those. Movie stars might deduct what they pay to their stylists, trainers, yoga coaches and lifestyle gurus. Failing all that, people can make like the Rolling Stones and David Bowie and just move to tax-friendlier climes. Again, this is not tax advice! But you know who does give advice? The legions of accountants and lawyers who specialize in devising these strategies for people. Our hunch, therefore, is that this tax proposal will raise a lot of revenue for Big Tax Avoidance, but not much for the feds.[iv]

This is always how it goes with niche taxes targeted at the super rich. It is why Europe’s wealth taxes never raised anywhere near as much as advertised. It is why France’s 75% tax rate on income exceeding €1 million died on the vine after raising barely any revenue. As a general rule, the more you tax something, the less you get of it. That is how incentives work.

If Biden’s tax plan passes (a big if, given the Democrats’ narrow margins in both the House and Senate), this is the benign reality people will eventually discover, paving the way for the positive surprise that usually lifts markets when tax hikes don’t bite as advertised. To the extent they weren’t already, the worries are getting baked in now, courtesy of all the chatter about the potential impact on big Tech and other high-returning stocks. Selling on that chatter now would be a mistake, in our view, as fear flips fast. Instead, remember bull markets climb a wall of worry, and tax dread shows there is more wall left.

MY COMMENT

What is interesting about this.....possible....capital gains rate increase......it basically eliminates the difference between short term and long term capital gains....for some people.

The BIG things to watch for that NO ONE is talking about in this tax STUFF......anything that is INDEXED. This is the ....vehicle....for automatic and continuous tax increases.....which....sooner or later as usual....will apply to more and more people and eventually EVERYONE. The current income tax system started the same way.....only on the 1%....it did not take long to filter down to EVERYONE.

The other BIG areas to watch......all the tax increases that are being talked about for small....pass through...businesses. The ESTATE tax has potential to impact.....regular....people.....small business, farmers, people that own a home or a few rentals in high cost and high value states.

The greatest and most SEVERE increase that.....might....happen is the elimination of the STEPPED UP BASIS. This will hit EVERYONE if it happens........and....will be a MAJOR tax increase.

The other BIG issue...do these tax increases apply to 2021 or start in 2022?

I do agree with the article.....the very rich.....can easily manipulate their income....at will. Donate more to YOUR foundation, adjust when and where you want to take income, etc, etc.

BUT.......who knows....we will just have to wait and see the actual language that is put forward after all the......special interests and lobbyists.....have their impact. After that we will have to wait and see what actually passes.

 

NOW....the markets......a nice open...even if I have a slight LOSS .....so far today.....thanks to the BIG CAP companies many of which will report this week.

The BIG STORY today.....will be TESLA. They report after the close today. They will be the first of the BIG BOYS to report this week and have the potential to set the tome for the entire week.

I am NOT a shiny metal investor.....but I cant help but notice the weakness in gold lately and the strength in silver.