The Long Term Investor

I have posted a number of times about the labor and employment markets being DISTORTED. I TOTALLY agree with this little article about that distortion. I have also been thinking about this "extra" unemployment and the "child credit".......of up to $3600 per month per child......that will start being paid monthly in June or July.....as being a basic GUARANTEED MINIMUM INCOME.

Gundlach: Stimulus checks are opening the door to universal basic income

https://finance.yahoo.com/news/gundlach-on-stimulus-and-ubi-120022461.html

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

"Billionaire bond investor Jeffrey Gundlach believes stimulus checks are distorting the labor market.

The founder and CEO of $135 billion DoubleLine Capital added his thoughts to a vigorous debate over the brewing labor shortage that's causing a mismatch between surging demand, and companies desperate to hire.

"We have this strange thing of 8 million job openings, and everywhere you go…people are saying, 'I can't fill them. No one will take them,'" Gundlach told Yahoo Finance in an interview this week. He blasted the "money giveaways" baked into COVID-19 relief, such as stimulus checks and generous supplemental unemployment benefits.

Gundlach added that the end result is "people are making more money sitting at home watching Netflix, than they are at work, and they don't want to go back. I think one of the dangers that we've opened the door to is these stimulus checks are starting to feel like they might not go away," Gundlach added.

The California resident pointed to Gov. Gavin Newsom's proposal to send $600 stimulus checks to residents making up to $75,000, due to the state's budget surplus.

"In the state of New York and the state of California, a lot of people are getting $57,000 per year, tax-free, by not working. So there's a lot of distortions there," Gundlach said.

The bond investor asserted that the stimulus checks are opening up the door to universal basic income.

"I think we're already there. We had basic income, way back in the 1960s; it's still with us with welfare programs and the like. And now we've been expanding it and expanding it," Gundlach added.

With the increase in the federal deficit and U.S. debt pushing $29 trillion, "it's almost like they're moving into UBI and even sort of a wealth tax sort of situation by having the deficit so big that where you're going to get it from?" he asked.

The additional income provided via COVID-19 stimulus appeared temporary at first, then was supplemented by a boost to unemployment.

Now, "it's been extended and extended, and that was being extended is being increased... [by] California, and the federal government. My guess is that they're, they're ready to roll out another one because that's just been the pattern," he added.

With workers effectively being paid to sit out a labor force that critics say needs to pay more, Gundlach believes "people's behavior is going to, is already, I think, partly modified to kind of factor in ongoing government assistance."

He added: "And the government doesn't seem to be discouraging them from thinking that it's going to be here for a long time." "

MY COMMENT

The DISTORTIONS that are occurring in the labor and employment markets are OBVIOUS at the moment. The impact of this is NOT going to be positive for society or business.......if it does not end soon. AND.....this stuff is INTENTIONAL.

On one level...I dont care if people work or not. If they are willing to sit at home for $30,000 to $50,000 per year and perhaps work under the table...I dont care. BUT...I do care when that sort of behavior starts to impact and put at risk the ENTIRE CAPITALISTIC SYSTEM that is the basis for our economy. AND....that is the next step from here. If this "stuff" continues for too long and infects multiple generations of workers....the economy as we know it will be TOAST. There will be no going back.

When or if......we destroy the AMERICAN economy....as we know it.....we will at that point have achieved the classic Science Fiction plot.......where the majority of the population live in DIRE POVERTY (60-80%)..........and the ELITES (10-15%) live in their enclaves.......with those that serve them and work as government bureaucrats (10-25%)....being the small....slightly less impoverished...... middle class.

ACTUALLY.....I see the above outcome as the most palatable of the potential NEGATIVE outcomes if we let this stuff get out of control economically.

ANYONE that thinks they are going to be able to simply continue to invest and grow their wealth...... if this sort of thinking takes hold and becomes a permanent distortion of our economy.......is fooling themselves.

Just some weekend posting.....since the markets are closed.

 

BUT....back to the present....from a possible future......here is what we will see next week from the ACTUAL markets. As to what the DRAMA and FEAR of the week will be next week.....I expect more of the same......inflation, inflation inflation.

Walmart and Target earnings, housing data: What to know this week

https://finance.yahoo.com/news/walm...ng-data-what-to-know-this-week-153636806.html

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

"This week's slate of quarterly earnings results will include big box retailers Target (TGT) and Walmart (WMT), which will provide investors with more information on consumer spending trends during the COVID-19 pandemic recovery. New economic data on housing starts, building permits and existing home sales will also offer an update on the state of the housing market, which has started to cool as mortgage interest rates tick up and inventory tightens.

Walmart has been one of the major beneficiaries of pandemic-era pantry-loading trends, and sales have also received boosts from multiple rounds of government-issued stimulus checks. Walmart reported record fourth-quarter and full-year sales in February, with U.S. comparable same-store sales up 8.6% in the final three months of 2020, accelerating over the prior quarter.

However, this momentum likely slowed down in the first three months of the year, even as two more rounds of direct checks to most Americans were distributed. Consensus analysts are looking to see revenue dip 2% over last year to $131.99 billion. That would mark the big box retailer's first year-over-year revenue drop since 2016.

Earnings, however, are expected to rise by 4% to $1.22 per share, with incremental costs related to the coronavirus beginning to ease. Last year, Walmart incurred more than $4 billion in COVID-related costs. Walmart Chief Financial Officer Brett Biggs said in February to expect operating income and earnings per share to be flat to up slightly for the first quarter.

Still, the company has been shelling out additional capital to raise wages for workers and build out its relationships with shoppers. The company also said it expected to spend nearly $14 billion in the current fiscal year to build out supply chain capacity and automation to keep pace with demand.

Growth in some Walmart's newer initiatives will also be a key focus of this week's earnings report and call. In September, Walmart launched Walmart+, a competitor to Amazon's Prime membership offering customers unlimited free delivery on items from household goods to groceries and an in-app payments option. The initiative has been viewed as a key means of retaining customers acquired during the pandemic, though management did not offer Walmart+'s subscriber number during February's earnings call.

Meanwhile, peer big box retailer Target is also slated to report results this week. Like Walmart, Target's first-quarter results have the disadvantage of lapping last year's exceptionally strong figures. However, Target —with its wide range of discretionary goods available for sale — may have caught a biggest boost from the January and March stimulus check disbursements than Walmart did. Consensus analysts expect Target's revenue grew 11% to $21.49 billion in the first three months of the year, slowing from the fourth quarter's 21% growth rate but matching the rise from the same three months of last year.

Target has also seen consistently larger growth in e-commerce sales than Walmart has over the course of the pandemic. Digital comparable sales grew at a year-over-year rate of as much as 195% in the second quarter of 2020, marking the fastest increase in company history. Those growth rates have moderated somewhat in the months since, but not by much – Target last reported a 118% jump in digital sales for its final three months of 2020.

While Target declined to offer full-year guidance, CEO Brian Cornell did offer some commentary around shopping trends at the start of the year, suggesting a pick-up in in-person shopping but a continuation of some purchasing trends from the pandemic.

"They're looking for the opportunity to shop our stores and find new items," Cornell said during a call with investors. "They're tired of the yoga pants and really appreciate some of the new assortment we have in apparel. They're still shopping for their homes as they refresh the core. They're still eating at home so kitchen and food-related items are still really important."

Housing data
Economic data this week will center on new updates on the state of the U.S. housing market, with reports on housing starts, building permits and existing home sales all due for release.

New homebuilding likely pulled back sharply in April following a surge to the highest level since 2006 in March. Consensus economists expect Tuesday's housing starts report from the Commerce Department will show starts fell by 2.1% to a seasonally adjusted annualized rate of 1.703 million, according to Bloomberg data.

"After consecutive volatile months due to weather – housing starts declined 11.3% in February followed by a 19.4% surge in March – we expect starts to pull back only slightly by 0.3% m-o-m to an annualized pace of 1730k in April. The strong weather-driven rebound in March likely overstated the underlying trend for starts," Nomura economist Lewis Alexander wrote in a note Friday. He added, however, that "limited supply for existing single-family homes should continue to support housing starts over the near term."

Though starts likely pulled back last month, building permits — which point to future homebuilding — are expected to have increased for a second straight month. Consensus economists are looking for a monthly increase of 0.6% to a seasonally adjusted annualized rate of 1.770 million, or the highest level since January's 15-year high.

The surge in housing market activity in 2020 has given way to choppiness at the start of this year, with mortgage rates lifting off record lows and tightening inventory pushing home prices to the highest level since 2006. These factors are expected to have weighed on existing home sales for April. The National Association of Realtors' report on Friday will likely show a monthly rise of just 1.2% for the sale of previously owned homes, only partially reversing March's 3.7% drop.

"Sales have come down substantially since peaking during the winter, but the level of activity remains elevated," Credit Suisse economist James Sweeney wrote in a note Friday. "We expect existing sales to remain robust as mortgage rates remain low, homebuilders' sentiment remains high, and consumer sentiment begins to rebound."

Earnings calendar

• Monday: Clover Health Investments (CLOV), Lordstown Motor Corp. (RIDE) before market open; Riot Blockchain (RIOT), Fisker (FSR) after market close
• Tuesday: Walmart (WMT), Macy's (M), Home Depot (HD) before market open; Take-Two Interactive Software (TTWO) after market close
• Wednesday: Target (TGT), Lowe's (LOW), TJX Cos. (TJX) before market open; Cisco Systems (CSCO), L Brands (LB) after market close
• Thursday: Kohl's (KSS), Petco Health and Wellness Company Inc. (WOOF), Ralph Lauren (RL) before market open; Applied Materials (AMAT), Palo Alto Network (PANW) after market close
• Friday: VF Corp (VFC), Deere (DE), Foot Locker (FL) before market open

Economic calendar

• Monday: Empire manufacturing, May (24.0 expected, 26.3 in April); NAHB Housing Market Index, May (83 expected, 83 in April); Total net TIC flows, March ($72.6 billion in February); Net long-term TIC flows, March ($4.2 billion in February)
• Tuesday: Housing starts, month-over-month, April (-2.0% expected, 19.4% in March); Building permits, month-over-month, April (0.7% expected, 2.3% in March)
• Wednesday: MBA mortgage applications, May 14 (2.1% during prior week); FOMC Meeting Minutes, April meeting
• Thursday: Initial jobless claims, week ended May 15 (450,000 expected, 473,000 during prior week); Continuing claims, week ended May 8 (3.64 million expected, 3.655 million during prior week); Philadelphia Fed business outlook index, May (41.9 expected, 50.2 in April); Leading index, April (1.2% expected, 1.3% in May)
• Friday: Markit U.S. manufacturing PMI, May preliminary (60.4 expected, 60.5 in April); Markit U.S. services PMI, May preliminary (64.7 expected, 64.7 in April); Markit U.S. composite PMI, May preliminary (63.5 in April); Existing home sales, month-over-month, April (0.9% expected, -3.7% in March)

MY COMMENT

Walmart and Target are some BIG EARNINGS this week. BUT....no one cares about earnings anymore. The markets have certainly shown that they dont care about earnings....over the short term. Earnings season was over the week that Amazon and the others reported....with ZERO reaction from the markets.

Being forward looking.....and....focused on the DRAMA.....for the short term.....it is all about the negative story line as usual. And....that negative story line at the moment is inflation. Right or wrong that is what it is.

As to housing.....none of the numbers matter....what counts is the local housing market in each local area. AND....for the moment....until there is a sudden stop......the MANIA will continue. I have seen a good number of housing MANIA markets over the years and a good number of housing COLLAPSES. The COLLAPSES can happen REALLY FAST.....for months the market is red hot.......and suddenly the next week it is dead. It can end that quickly. At least....at the moment....it seems like the buyers are REALISTIC and qualified so if the market does suddenly STOP....people will not be in danger of losing their house. They will just have to sit it out where they are for a while.

 

HERE is a little message for any that read this thread or lurk on this board. JOIN US on this thread.....feel free to post about your experiences and your investing. This thread is....for the most part.....a nice place to hang out and talk about investing. No experience level necessary.

I am NOT a MOD or an owner of this site.....in fact NONE of the regular posters on this thread are.....we just gather here to talk about investing and our good and bad experiences. So feel free to post if you wish......if you wish to just LURK......well that is all good too.

 

Oldmanram....those first two paintings that you posted.....somewhat....reminded me of an artist that I would own....if his prices had not gotten so high lately.......Birger Sandzen.





One of my favorites......American Impressionism. Sometimes he is called the American Van Gogh because of his thick paint and brush work. He is....of course....deceased.......having lived from 1871 to 1954.

SORRY.....oldmanram gave me the excuse to post some American Impressionism......so I took it.

A few more:





Both painted by Dawson Dawson Watson 1864-1939.

 

Well lets talk money....since that is the function of this board.......and......NO....I do not own any of the above paintings.

The two Birger Sandzen paintings:

Number one - current value about $400,000 to $600,000. Size is 62X47. Painted about 1923.

Number two - current value about $600,000 to $750,000. Size is 48X60. Painted about 1927.

The Dawson Watson's:

The Grand Canyon - current value about $15,000 to $30,000. (just a guess since I dont know the size)

Cactus - current value about $30,000 to $45,000. Size is 21X16 Painted in 1931.

For any Art Fans....here is some info on each artist:

https://sandzen.org/biography/
Famous for his scenes like above

From Giverny to San Antonio
https://dawsondawsonwatson.wordpress.com/
Famous for his cactus scenes done when he lived in San Antonio.

 

Yeah Chihuly.....we were looking at his work in the 1990's when he was in a gallery in Pioneer Square. He had an installation of big pieces all over the floor in one room. He heard a man there tell our kids he would give them five dollars if they would run through the display. Luckily we heard it and put an end to it right away.

 

Elon Musk......for the Crypto world....he gives and he takes.

Bitcoin and the rest of the Crypto world are being whipsawed right now by a comment from Musk implying that he has or will sell the bitcoin being held by TESLA. At the moment bitcoin is trading around $45,600.

Elon Musk implies Tesla could dump its bitcoin holdings

https://www.marketwatch.com/story/e...ts-bitcoin-holdings-11621200452?siteid=yhoof2

I have NO opinion on bitcoin since I do NOT trade in it. BUT....to me as a NON-TRADER....it seems to be very sensitive to announcements from Crypto opinion drivers such as Musk. It is certainly HIGHLY SPECULATIVE over the shorter term.

 

This is why you.....DONT CHASE RETURNS. This fund was the DARLING of the year last year.....now there are articles like the one below talking about the fund sinking. The fund invests in the known names in the TECH world as well as highly speculative TECH stocks. NO.....I dont think the fund is going to SINK....but this does show the danger of jumping on the latest media pushed fad in the investing world. It also shows the danger of investing in companies that you dont know anything about. My GUESS is that over the long term this fund will do just fine....BUT....it will be a VERY WILD RIDE. My view is....this fund is for aggressive investors.....or at the minimum.....investors that can stand the volatility and are willing to ride out the short term. To me....this is NOT a......BET THE RANCH.......investment......unless you happen to own a lot of ranches.

Is Cathie Wood’s ARKK Innovation Fund Sinking?

https://finance.yahoo.com/news/cathie-wood-arkk-innovation-fund-072106000.html

 

"reminds me of another local artist that got locally famous doing the old vanishing hills into the haze format."

Oldmanram....Elton Bennett?

 

Well from the little I have read about her....Woods is a long term strategic thinker. Buyers of her fund may come and go....but I believe she will hang in there for a long time.....and....probably do well. UNFORTUNATELY.....the media coverage about her funds will drive people to flood into.....and....out of it....as they chase the hot returns.

it is just like the general markets.......the BIG BOYS and banks control the short term totally. BUT....over the long term...the little investors have just as good a chance as they do. AND.....the little guys....like all of us.....are not competing with them. THEY are driven by the short term........their next quarterly or annual report. They dont care about what the little investors do.....compounding money over the long term. It is like two separate.......parallel markets.......happening at the same time with the same stocks.......but....two different investing universes.....short term......and.....long term.

Now on the other hand......the little guys trading and speculating.....no they dont stand a chance against the professionals. They cant even begin to compete and they do not have anywhere near the tools or the financing. As you said Zukodany.....the new stream of investors......it happens every time there is a BOOM...the dot-com era.......the derivative era......the current era......they flood in and short term speculate without knowing what they are doing. it might work for a while but sooner or later they get KILLED.

 

That is a KILLER ETH chart Zukodany. DOWN by 24% in the past week. I just looked at Bitcoin out of interest. DOWN 30% in the last month and DOWN by 15% in the last five days. MORE POWER to those that trade this CRYPTO STUFF......it is just too crazy for my taste. BUT than.....I am and have always been........a long term investor. The REAL traders LOVE volatility.......and you definately get that with the CRYPTO.

The problem with CRYPTO....or any trading asset.....is when you get a bunch of inexperienced traders speculating in it during a RISING MARKET.....and....they think they are the ones making the money. In REALITY it is just the rising market that is making the money....and....when it collapses or turns against their trades.......they get a very PAINFUL lesson.

 

OK....another week....but....who cares....as I SIT and ignore the short term churning. I do like this little article.

Our Perspective on Volatility and Fast-Rising Price Fears

https://www.fisherinvestments.com/e...ive-on-volatility-and-fast-rising-price-fears

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

"Ouch. That word, we imagine, sums up many investors’ feelings about the S&P 500’s first sharp burst of negativity in nearly two months. After closing last Friday at all-time highs, the index dropped -1.0% on Monday, -0.9% on Tuesday and -2.1% today—a total drop of -4.0%. Volatility like this can strike any time, for any or no reason, but sentiment usually plays a dominant role. This time, that sentiment is rising fear over inflation, especially in the wake of today’s report showing US CPI inflation speeding to 4.2% y/y.[ii] This, plus jumping commodity prices and reports of shortages, has sparked doom-laden 1970s comparisons. Whenever this happens, we think there are two big things all long-term investors should do: Breathe deep and resist the urge to react. Rough patches are normal in any bull market, and enduring them is key to reaping bull markets’ big returns.

This pullback isn’t yet a correction, which is a sentiment-fueled drop of -10% to -20% or so from a prior high. Maybe it spirals into one, maybe not—there is no way to know. Corrections don’t operate on schedules, and volatility doesn’t predict volatility. If the market’s day-to-day whims were foreseeable, the investment hall of fame would be full of people who timed corrections repeatedly, selling precisely at their tops and buying back at their depths. But that wing of the hall is empty. Predicting short-term volatility is impossible, and anyone who preaches otherwise is selling you a bill of goods.

In our experience, those who try to circumnavigate corrections most often wind up selling low and buying high. That is a recipe for missing returns, not reaching a set of long-term investment goals. So if your gut is telling you it is time to sell to miss further declines, remind it that you could also miss a big rebound that renders the last three days invisible on a chart of any material timeframe. Remembering your long-term goals at times like this is critical.

Also critical? Taking headline fears in stride. Yes, inflation jumped. Yes, April’s year-over-year rate is the highest since the global financial crisis in 2008. But reacting to this after markets have already reacted to the news is wrong. Goodness knows Fed officials aren’t always right, but we do think they are correct that this inflation jump is likely temporary. As we have shown in past commentary, we were virtually assured to see a month-over-month pop as more and more states reopened. Jumpy prices are also normal early in economic recoveries. The last time CPI rose 0.8% m/m, as it did in April? June 2009—when the US was exiting recession.[iii] That usually happens because demand improves while producers are still running at low capacity after recessionary cutbacks. Today’s situation is a pandemic version of that. Beyond used cars, whose prices soared, shelter (particularly lodging away from home), airfares and recreation were key contributors to the rise. That looks like a reopening bounce, as areas most impacted by the pandemic drove up prices. That probably won’t last as the initial pent-up demand boom fades.

As for the year-over-year figure getting so much ink, that is mostly garbage right now due to the denominator in that year-over-year calculation. April 2020 is when prices hit their nadir during lockdowns, which skews the math considerably. The question today is, how long will this persist? We doubt it will be anywhere near as long as fearful headlines claim today, considering the flawed logic underpinning their arguments. But that is an article for another day. For now, we will simply point out that with inflation dread swirling for as long as it has, surprise power is largely spent. That makes runaway inflation unlikely to end this bull market in the near future.

In the meantime, use this opportunity to set expectations, because even if this volatility doesn’t escalate into a correction, we will get one eventually. Actually, this bull market has already gone longer without a correction than its predecessors. The March 2009 – February 2020 bull market got its first correction in April 2010. Before that, the October 2002 – October 2009 bull market notched its first correction in November 2002. The 92.7% rise between March’s low and last Friday’s most recent high without a major interruption could have skewed anyone’s perspective, making speedbumps look unusual.[iv] They aren’t.

Volatility is part and parcel of bull markets, and in our view, pullbacks are healthy. They help keep sentiment from getting overstretched, taming euphoria as it starts to simmer. That can lengthen bull markets’ lifespan, helping the party last longer than it otherwise might. All bull markets end eventually, and this one will, too. But last year’s lockdown shock aside, bull markets usually end with a whimper, not a bang. So give it time, and keep your eye on the prize: stocks’ high long-term returns, which include all negativity along the way."


MY COMMENT

The above reads like half this thread. This one little article hits ALL the bases. The short term negativity......the fear mongering of inflation......investors reacting to short term BALONEY. I LOVE the reference to the INVESTOR HALL OF FAME....yeah....the wing dedicated to ALL the successful market timers and short term traders is EMPTY. There is ONE simple reason......no one can do it.