The Long Term Investor

When an article ties in with a recent post.......it is simply CHANCE. See post above and see article below. I dont plan out any of the posts in this thread. It is ALL based on random daily thoughts, and random daily reading. Stream of consciousness. In any event, here is a little article that is relevant to where we are at this moment in time and space:

Everyone is losing their mind about the possibility of the recession, but in reality the US economy is fine

https://www.businessinsider.com/us-economy-recession-fears-overblown-job-market-data-2019-8

(BOLD represents my opinion and what I consider important content)


"The asymmetry in economic reporting has always been obvious. Bad news tends to get amplified and good news tends to be underreported.

Still, in the past week or two, things have gone a bit overboard. I'll concede that President Donald Trump hasn't helped his cause, but I'd argue recession talk has gained much more traction than warranted based on the available evidence.

The natural state of the US and global economies is growth. If that condition looks at risk, of course the news media will bring attention to it. Accidents are covered; the regular flow of traffic is not.

The US economy is on solid footing, and while there are dangers out there, a recession is not on the near horizon.

People are worried about the idea of a recession, but not about the economy
Internet searches largely bear out the idea that the recession fears are mostly narrative-driven, rather than data-driven. Google searches on "recession" have spiked quite notably recently, but searches on "unemployment benefits" have not.

Compare this to the period leading up to the 2008 recession. Searches on "unemployment benefits" were rising steadily before searches on "recession" spiked. Perhaps one could argue that benefits are filed only after someone loses their job, but it is pretty clear that the contemporaneous correlation between these two series is much lower today than it was between 2008 and 2009. Despite the concern over recession, consumers continue to point to a strong jobs market.

Similarly, search interest appears to be somewhat higher in the US than the rest of the world, even though the global economy is widely believed to be far more fragile than the US.

Yutong Yuan/Business Insider
Actual economic data is still strong
The Washington Post, under the headline "The month Trump's economy faltered," reported that "bad economic news continued" as "US Steel could be temporary laying off up to 200 workers at Michigan facility."

We understand why this exposes a political vulnerability for the president in a state he barely won in 2016. But if layoffs are the concern, perhaps context is important. The level of initial jobless claims has been running at near-record lows for months on end, even after the trade war got going in earnest in early 2018.

Similarly, on "Meet the Press," Chuck Todd said: "Manufacturing declined in August. Why is this important? It's the first time that production has shown a contraction in almost a decade." Again, the idea is to expose a political vulnerability for Trump in a critical industry in states Trump needs to win.

But in reality, while manufacturing production has contracted modestly, the performance over the past year has held up better than the 2015-to-2016 period. Employment in manufacturing is actually up this year. Todd adds that "perception is almost as important as the reality." He is playing a small part in shaping that perception.

Yutong Yuan/Business Insider
The high-frequency data are not exactly screaming recession either. We were struck by a recent Bloomberg News report that said "the US economy has sputtered in recent days." This was a curious statement, since in the week before the article's release, estimates for current quarter GDP tracking were moving up because of a strong retail sales report.

Yes, there have been pockets of weakness such as manufacturing, but the recent recession chatter has been surprising since economic data is generally coming in better than economists' expectations, as evidenced by an upturn across a number of different data surprise indicators. Of course this could change, but it is admittedly odd to be discussing recession as the US data beats consensus estimates.

The market also undercuts the idea of an impending recession
The Treasury yield curve has also garnered a fair bit of coverage. Trump himself has brought attention to this, lamenting the "crazy inverted yield curve." So we'd expect the press to highlight this. Moreover, the curve has been a reliable indicator for a recession, as many reporters are also quick to highlight.

But nuance is important. Typically, ahead of a recession, we see a bear flattening of the yield curve as short-term rates rise more rapidly than long-term rates. In the past two recession, the Federal Reserve hiked interest rates even after the yield curve inverted! That's decidedly not what is happening today.

Instead, we've seen a bull flattening of the yield curve. That is, long-end rates have dropped more rapidly than front-end rates. Three-month bill yields have dropped 50 basis points over the past year as 10-year yields have plunged over a full percentage point. The Fed has cut following this inversion, and that is expected to continue.

Interestingly, other swaths of the asset markets are not nearly as priced for recession as the Treasury market.

Corporate credit is a good example. A measure of risk-taking in the corporate credit market, the excess bond premium has been shown to be a fairly useful recession indicator. The odds today are quite low.

Yutong Yuan/Business Insider
Equity volatility has picked up somewhat but has certainly been higher in the recent past. Stocks are off about 6% from their recent highs. We've seen similar sell-offs in equities no fewer than 15 times since 2010.

None of this is to let the president off the hook. Indeed, a continued escalation in the trade war could tip the US into recession in the next year, but that is still very much a forecast. Let's not talk about it as if it were a present-day reality."

MY COMMENT

OBVIOUSLY..........DUH. ANYONE that is looking at the data, being honest with what they are seeing and living in REALITY knows that the are in the middle of a historic BOOM. Long term investors will ignore this short term political chatter and focus on the real economic indicators in the WHOLE, not just some single indicator being flogged to back up a personal BIAS as we see daily in the news and press.

 

SO FAR all the trade war DOOM&GLOOM as been nothing more than media BLATHER. The impact on our country and business has been......nothing. I am sure there are some companies that are using this as an excuse for poor performance and poor management, but that is irrelevant. IN FACT, the more the better. It is HIGH TIME that we stopped the BS that China has been doing to us and the rest of the world for the past 15 years since they were let into the WTO. Considering the extremely SMALL amount of pain we have suffered compared to what we might gain, it is WELL WORTH IT and as is usually the norm now, we continue to see that all the media FEAR MONGERING is nothing more than political hacks spouting opinion with the actual facts NOT backing up what they are claiming. INVESTORS BEWARE this "stuff" as usual, stay focused on your investing plan.

Wall Street Weekahead: Retailers in spotlight as tariffs on consumer products kick in

https://www.reuters.com/article/us-...fs-on-consumer-products-kick-in-idUSKCN1VK1ZF

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

"SAN FRANCISCO (Reuters) - U.S. retailers will be front and center on Wall Street next week as the United States imposes new tariffs on $300 billion worth of Chinese imports, including clothing, televisions and jewelry.

The upcoming tariffs on Chinese goods will hit consumers more directly than duties already levied against $250 billion worth of imports. Retailers are scrambling to cut costs and find ways to minimize the damage to their bottom lines, while Wall Street analysts try to identify those best positioned to weather the taxes.

The U.S. government is set impose tariffs on the newest list of products starting Sept. 1, with tariffs on about half of those goods delayed until Dec. 15 in a bid to soften their impact on holiday shoppers. President Donald Trump last week upped the tariffs to 15% from an originally planned 10%.

Trump’s aggressive stance and often mixed signals in his trade war with China have taken a toll across Wall Street in recent weeks, especially on the shares of companies that rely heavily on the world’s second-largest economy.

Wall Street rallied on Thursday after China's commerce ministry said both sides were discussing the next round of talks. Still, since Aug. 1, when Trump announced the September tariffs, the SPDR S&P Retail ETF (XRT.P) has slumped 6%, while the broader S&P 500 .SPX has fallen 2%.

The Sept. 1 tariffs include consumer electronics worth $52 billion, including smart speakers, earbuds and televisions, according to the Consumer Technology Association, an industry group.

Tariffs kicking in on Dec. 15 include consumer electronics worth $115 billion. That includes smartphones, laptops and videogame consoles, directly hitting tech companies, including Apple Inc (AAPL.O), Microsoft Corp (MSFT.O) and HP Inc (HPQ.N).

Investors are looking for retailers most able to hold prices steady without hurting their margins, or increase prices without hurting demand for their products. They are also looking for companies that rely less on China for their wares.

“We’re leaning in on quality across our Hardline Retail universe, favoring retailers with scale, pricing power in respective categories, less elastic products, and a greater focus on (professional) influenced sales and initiatives,” Wells Fargo Securities analyst Zachary Fadem wrote in a report this week.

On that basis, Home Depot Inc (HD.N) and Lowe’s Companies Inc (LOW.N) are best-positioned to weather the tariffs, relying on China for 10% or less of their cost of goods sold, Fadem wrote.

At the other extreme, Best Buy Co Inc (BBY.N) on Thursday gave a lower-than-expected full-year outlook, blaming tariffs and uncertainty about future consumer behavior, sending its stock down 8% and extending its loss to 17% in August.

Executives on Best Buy’s analyst call said about 60% of the consumer electronics retailer’s cost of goods sold comes from China, and that it was working on lowering that to 40% next year.

A basket of companies impacted by the trade war, created by Barclays, has fallen around 8% this month, underperforming the S&P 500. Barclays’ basket includes consumer-facing companies that it estimates receive over 40% of their sales from products imported from China, including Apple, Nike Inc (NKE.N) and Whirlpool Corp (WHR.N).

Tariffs starting on Sept. 1 will affect $39 billion worth of footwear and clothing, with the December tariffs affecting another $12 billion worth of such products, according to the American Apparel & Footwear Association.

Heavyweight retailers, including Walmart Inc (WMT.N), Costco Wholesale Corp (COST.O), Target Corp (TGT.N) and Home Depot, can adjust their global supply chains and use their clout to force suppliers to accept smaller margins to offset the tariffs, giving them an advantage over smaller competitors.

Showing that investors are willing to buy retailers positioned to weather the trade war, Walmart has gained 7% since its quarterly report on Aug. 15, when it said it had raised the prices of some of its items due to tariffs but was not passing all the cost pressure it faces on to consumers.

Target has surged 26% since its Aug. 21 quarterly report, when it boosted its full-year profit outlook, even after accounting for potential additional tariffs.

A letter this week to Trump from over 200 U.S. footwear companies, including Adidas (ADSGn.DE) and Foot Locker Inc (FL.N), warned that the upcoming tariffs would exacerbate economic uncertainty and could drive up prices in other countries that produce footwear, given limited production capacities.

Abercrombie & Fitch Co (ANF.N) slumped 15% on Thursday after the apparel retailer cut its full-year sales forecast in anticipation of the new tariffs"

MY COMMENT

FORTUNATELY most of this tariff "stuff" is based on.......could, should, might, possible, etc, etc, etc. The impact on our economy and businesses has been MINIMAL. Any short term pain is well worth the price and will in the medium to long run be a great benefit to American business. It is asinine that our corporate leaders......I use the word leaders loosely....are willing to sacrifice TRILLIONS in corporate technology, product development, and product security to get short term cheaper goods. The tariffs are having exactly the impact that they should....they are driving companies to seek other sources of business outside China. It is interesting and totally expected, at least by me, that businesses that are successful and have proper management, like many mentioned in the article above are actually having NO issues and doing very well in this environment. I happen to own some of these companies......HD, and COST. I continue to be fully invested for the LONG TERM as usual.

 

WELL.......the world in general is stuck in a deflationary depression. So far we have been able to avoid that fate and the insane low interest rates, often negative, that the rest of the world in their usual delusional fashion thinks is going to make a difference. Actually those rates being seen around the EU and the world will just drag them further into the quagmire. Japan is the current KING of the deflationary castle, having been in a deflationary depression since 1989.....30 years and counting.

On a side........but very important personal note. I started payments on my income annuities a month ago. I structured my personal assets (taxable) so that I will NOT have any need to draw on personal stock accounts or mutual funds over the remainder of my life. My wife and I will have the income of 6 income annuities along with Social Security for life. The annuities were purchased 5 years ago from three different companies with three in my name and three in her name in a way so as to be covered by the state insurance guarantee fund. This income for life allows me to be fully invested all the time for life with no concern for having to use any of my stock market funds. When I purchased the six annuities I took the gamble that interest rates would NOT be higher five years down the road. Now that we are actually at that point I am so glad that I made that purchase at that time. Rates are well below what they were and there has never been a time over that five years when I would have been able to produce as much income as the annuities are producing now. So.......I have converted some of my personal funds to a private pension that will pay out till the last of us dies. I put a guaranteed payment rider on the income contracts that guarantees that the annuities will pay out, at a minimum, to our heirs, the amount of the premium that we paid for the contracts in the event we both die before those payments equal the premium paid.

I should mention that we intentionally used up all IRA and Keogh account funds first in retirement. I could see that our taxes were going to be a real HUGE pain in the pocket book FOREVER so those tax deferred accounts were the first to be used up. This allowed us to continue to grow the taxable accounts that went into the annuities. With the annuities only being partially taxable (return of principle, premium, is not subject to income tax) our tax hit will drop from the usual $25,000 - $30,000 per year to about $8,000 - $10,000 per year. This will also drop our "extra" medicare premium and drug plan "extra" premium that is based on taxable income to "0" extra from here on. With the tax savings and medicare savings we should be able to put $20,000 to $30,000 annually from our income into our personal taxable accounts. Of course, we will continue to reinvest all dividends and capital gains in the stock accounts for life.

The lesson for others in all this........LONG TERM PLANING is just as good a thing as LONG TERM INVESTING when it comes to financial success. The KEY to a good plan for us:

1. A paid off personal residence (since our mid 30's)
2. Significant savings and growth in taxable brokerage accounts over our lives using what I EXPOUND on in this thread.
3. Significant personal hard assets as the third leg of the plan.

NOTE: These are simple, deferred, income annuities.......NOT the various types of annuities that are sold to the public with nose bleed fees, etc, etc,.......the "bad" annuities. NO.......I would NEVER purchase those types of annuities.

 

On the subject of planing.......we recently down-sized to a single story, 3600 sqft home from our larger home that is two story and has many stairs. We really did not have much need for five bedrooms and six bathrooms for just the two of us. Same neighborhood. We are currently sweating out the sale of the big home which is under contract and will close the first week of October. The funds from the sale of that home will replace the funds that we temporarily pulled from one of our accounts to purchase the new home.

NOTE: I am careful in posting this sort of "stuff" not to inadvertently identify myself. I do feel, however, that posting this sort of stuff as well as everything else in this thread might.......hopefully.........help others by showing that there is actually some thinking and planing process that has been going on over the past 40 years of life. HOPEFULLY what is in this thread might motivate and encourage others.

 

I picked the income annuities by using the services of immediateannuities.com.

https://www.immediateannuities.com/c/annuity-annuities-1nem.html

This web site has been the subject of hundreds, if not thousands, of comments and mentions over the years in every financial article on income annuities that you could imagine. I like the fact that they have an income annuity online quote tool that you can use to see actual figures based on REAL, actual annuities at current rates. The nice thing about their quote tool that the link above will take you to is it does NOT require any identifying information, is instant, and there will be NO contact by sales people.

When I was ready to buy the annuity contracts, I checked out the current payouts using the calculator on their web site above. I than called their office to work with one of the agents that was licensed in my state to get an actual quote. The quote contained basically a list of companies and their current payouts for the amount of money I was going to put into the income annuities. All of the various insurance companies quoted were pretty similar. I fine tuned what companies I wanted to use based on insurance company ratings that you can find online that evaluate the financial strength and safety of insurance companies. All of the insurance companies that we ended up purchasing from are HOUSEHOLD NAMES that have been around for an extremely long time.

I imagine the agent just about died when I called out of the blue with such a HUGE purchase........$1.8MIL. I may as well say it.......the amount of money the six contracts pay is $135,000 per year for life for my wife and I for as long as either of us lives. Along with social security this will give us a MINIMUM, base level, annual income for life of $175,000. Of course, Social Security will continue to go up each year with the annual cost of living raises. With a paid off home and having been retired from the business world since age 49 (21 years), other than managing family investment accounts, and having the experience of living off personal assets for those 21 years, I have a very good handle on what our expenses and needs will be over the next decades.

As I mentioned we spread the contracts among three different companies. We also placed three of the six policies in my wife's name as primary annuitant and three in my name as primary annuitant. By doing this all six policies are covered by my states insurance guarantee fund and in the event a company goes belly up we will be able to recoup just shy of the total amount from the guarantee fund.

Because of the amount of money involved.......and being very clinical and suspicious of dealing with internet strangers over the phone with big sums of money involved....I did NOT send any funds to or through the agent. I paid ALL premiums directly to each insurance company by check once the agent had the contracts all lined up. The process was easy and simple.

Of course as mentioned in the post above this one, we will be adding a significant amount to our brokerage accounts each year from the income tax savings each year. We will continue to be fully invested, all in all the time, for life. We will continue to reinvest all stock and mutual fund dividends and capital gains as they are received. If at some point in 10 or 15 years if we need more income we will simply purchase an additional income annuity or two for $100,000 or so and add more income. In the alternative, we could choose to simply take funds out of the stock accounts to get a little bit more income. I expect to add at the MINIMUM at least $20,000 to $25,000 per year to the brokerage accounts per year from this income. So, if we ever need to add more income it will NOT be a problem.

In making this decision we also took into account that in both of our families it is the norm for people to live to 90 or beyond. So, if we hit age 90-95 which is normal in both our families we will be collecting this income for 20-25 years. As a private business owner to age 49, I NEVER worked in a job that had a pension. So, I created my own lifetime pension when the time was right. This is our SAFE MONEY and allows us to take risk with our stock market money for life.

 

Trahn

Sounds like a great move. Fifteen years is way more than enough time to give an investment to perform. So......you made a lateral move of stock money from one company to another. I believe you will see FAR SUPERIOR performance over the next fifteen years with that money.

 

LOOKING at my sisters brokerage account.......which I manage.......and have structured the same as the PORTFOLIO MODEL that I have listed throughout this thread. Her largest holdings and their performance since purchase are:

COST acquired July of 2014. Gain to date, 115%.

NKE acquired July of 2011. Gain to date, 100%.

AAPL acquired July of 2014. Gain to date, 107%.

AMZN acquired June of 2016. Gain to date 76%.

I restructured her account in the summer of 2014 to match up with the portfolio model.

 

This little article just about sums up my current view for investors.........not too hot, not too cold, just right. We are in a classic GOLDILOCKS economy and investing environment. The ONLY thing we have to fear is fear itself. And......there is plenty of fear and panic just under the surface when it comes to the professional investors, traders, and the usual amateurs that are whip saw candidates. The vast MAJORITY of economic indicators as well as company financial reports are extremely positive. The negativity is actually another positive indicator. We are FAR from an overheating economy and far from a recession. As I usually say......the greatest potentially negative event on the horizon is the election in a year and a half.

Don’t fear a recession — the economy is looking solid and stable

https://nypost.com/2019/09/07/dont-fear-a-recession-the-economy-is-looking-solid-and-stable/

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

"One of the hardest things to understand about the current economy is that we are in a good, solid place — but not a perfect one.

Last week’s jobs report was a touch light on the number of jobs added, but average hourly earnings were up nicely — and, besides, August tends to be a bit of a squirrely month anyway.

This economy can best be summed up by a classic childhood fairy tale: “Goldilocks and the Three Bears.” The growth is exactly the way Goldilocks prefers her porridge: not too hot, not too cold, but “just right.”

While the nonfarm payroll growth number of 130,000 was disappointing on Friday, ADP’s private payroll growth came in way over expectations — at 195,000.

The labor force participation rate is hovering around multiyear highs, and average hourly earnings came in higher than expected — all against the resilient backdrop of a 3.7% unemployment rate.

That equals a solid, stable economy.

We are not in a recession. Nor are we in a boom. No longer are we adding 200,000 jobs a month, as in President Trump’s first two years.

It’s important to recognize why it is hard to get the unemployment down below this 3.6%-to-4% range.

Part of the reason is the Fed having been way too aggressive with its rate hikes. And part is the tensions with (and tantrums about) China — that never-ending, on-again, off-again saga.

The president needs to be pragmatic, as he was in business, because the China issue has begun to creep into business planning and spending, and that affects future growth.

But for all the ranting and tweeting and dumb opinion pieces, the economy really is just right. No recession in sight, and no boom around the corner."

MY COMMENT

It is NOT difficult to see that we are in a good place right now, especially compared to the rest of the world. This is EXACTLY why I invest ONLY in AMERICAN companies..........BIG CAP AMERICAN companies that represent the cream of the crop in growth, dividends, marketing, and long term staying power.

 

This article sounds about right to me. First buy AMERICAN companies. If I cant find good investments among AMERICAN companies, I am certainly NOT going to find them outside in the rest of the world. Our businesses and business environment are BY FAR the cream of the crop in the world, as has been the norm for the past 120+ years. Second, we are NOT on the cusp of a recession and stocks REMAIN a good buy for selective and rational long term investors.

Goldman Manager Tells Rich Clients to Put American Stocks First

https://www.newsmax.com/finance/streettalk/goldman-american-stocks-rich/2019/09/10/id/932034/

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

"Goldman Sachs Group Inc. has a simple yet firm message for its wealthy clients: stick with U.S. equities.

“As we’ve gone through various crises, we’ve still told clients to stay invested and not get out of U.S. equities, it’s too early,” said Sharmin Mossavar-Rahmani, chief investment officer for Goldman’s Private Wealth Management, which oversees about $500 billion and caters to high-net-worth individuals, families and endowments.


“There’s a strong message there -- the preponderance of assets in the U.S. at the expense of other developed and emerging-market assets.”

Mossavar-Rahmani’s advice makes her a contrarian amid this year’s record $683 billion surge of cash into bonds as traders searched for havens amid trade-war-related growth concerns. In 2019 alone, despite the MSCI World Index posting a 16% return, investors have pulled $349 billion from global stocks, exceeding the crisis-hit 2008 redemptions by 40%, according to EPFR Global data.


“It’s really remarkable how geopolitical issues have taken so much mind share and dominate what people are doing with their portfolios,” Mossavar-Rahmani told reporters in London on Tuesday. “It’s incredible to us how money has gone into the worst-performing assets.'

The Bloomberg Barclays Global Aggregate Bond Index has returned 28% since September 2009, compared with a total return of 250% for the S&P 500 Index. Many investors have preferred to stay on the sidelines of this year’s stock rally as they fear that elevated valuations pose a risk at the end of the cycle.


Goldman Wealth Management dismisses the fears as unwarranted. The strength of U.S. labor productivity, innovation and demographics make the asset manager rate the probability of a recession at just 30% over the next 12 months. And with the S&P 500 trading at a 10% discount to its 2017 highs on a forward price-to-earnings basis and equity funds bleeding cash, there’s little risk of over-crowding despite the rally, says Mossavar-Rahmani.


“There hasn’t been that much overvaluation in equities nor that much hype,” she said. “People don’t like U.S. equities. It’s remarkable considering the outperformance. We’re nowhere near dotcom bubble levels.'

While bonds can give investors exposure to lower rates, Goldman’s Private Wealth Management recommends being underweight fixed income to fund investments in U.S. equities and other areas, Mossavar-Rahmani said."

MY COMMENT

LONG TERM INVESTORS know that we are currently in a very sweet spot with quality, AMERICAN, companies. Personally I see NOTHING that would give me any reason to ever contemplate selling out of stocks or funds. Trying to time the markets whether or not you are rich or whether or not you have a big fancy bank advisor telling you their view is IDIOCY. YES.......as in everything, SIMPLE is the key.

 

I post this every once in while as a disclosure and for others to follow if they wish. I thought I would put this up since the post that follows this one is about some of these stocks as is the discussion.

MODEL PORTFOLIO:

"Here is my "PORTFOLIO MODEL" for all accounts managed which is the basis for MUCH of my discussion in this thread. I am re-posting this since I often talk in this thread about my portfolio model. My custom in the past on this sort of thread was to re-post my portfolio model every once in a while since I will tend to talk about it once in a while. I "manage" six portfolios for various family including a trust. ALL are set up in this fashion. If I was starting this portfolio today, lets say with $200,000. I would put half the money into the stock side of the portfolio, with an equal amount going into each stock. The other half of the money would go into the fund side of the portfolio, with an equal amount going into each fund. As is my long time custom, I would than let the portfolio run as it wished with NO re-balancing, in other words, I would let the winners run. Over the LONG TERM of investing in this style (at least in my actual portfolios), the stock side seems to reach and settle in at about 55% of the total portfolio and the fund side at about 45% of the total portfolio over time. That is a GOOD THING since it tells me that my stock picks are generally beating the funds over the longer term. AND....since the funds in the account generally meet or beat the SP500, that is a VERY good thing.

As mentioned in a post in this thread, I include the funds in the portfolio as a counter-balance to my investing BIAS and stock picking BIAS and to add a VALUE style component (Dodge & Cox Stock Fund), a top active management fund that often beats the SP500 (Fidelity Contra Fund) and a SP500 Index Fund to get broad exposure to the best 500 companies in AMERICAN business and economy. The funds also give me broad diversification as a counter-balance to my very concentrated 12 stock portfolio.

STOCKS:

Alphabet Inc
Amazon
Apple
Boeing
Chevron
Costco
Home Depot
Honeywell
Johnson & Johnson
Nike
3M
MSFT

MUTUAL FUNDS:

SP500 Index Fund
Fidelity Contra Fund
Dodge & Cox Stock Fund

CAUTION: This is a moderate aggressive to aggressive portfolio on the stock side with the small concentration of stocks and the mix of stocks that I hold and with the concentration of big name tech stocks. Especially for my age group. (65+). So for anyone considering this sort of portfolio, be careful and consider your risk tolerance and where you are in your life and financial needs. I am able to do this sort of portfolio since my stock market account is NOT needed for my retirement income AND I have a fairly HIGH RISK TOLERANCE. In addition I am a fully invested, all the time, LONG TERM investor. (LONG TERM meaning many years, 5, 10, 20, years or more)"
ost

 

My portfolio model is obviously on the aggressive side of growth. I can get away with this since I am a LONG TERM INVESTOR with no time limits to my portfolio. I am fully invested, all in, all the time. My portfolio does contain a pretty large concentration of BIG CAP tech.......MSFT, GOOGL, AAPL, and AMZN (cloud services). The other BIG stock in this area.....FB......I have ZERO interest in owning. My opinion is that the four stocks above have HUGE room to run.....BUT.....there is an obvious danger to ALL of them, especially GOOGL and AAPL. Both companies are heavily involved with CHINA and both companies are subject to management and employee political correctness and politics alienating a large slice of consumers, not to mention anti trust and other concerns. I will continue to hold these companies but would be more satisfied with them if they would STOP the political BS and concentrate on producing and selling cutting edge consumer products. I would also like to see them cut CHINA out of their supply chains to the MAXIMUM. As I say often, any CEO and company that sucks up to China and makes China their primary manufacturing partner should be sued by shareholders for DESTROYING shareholder value by giving away their technology and partnering with a CRIMINAL, COMMUNIST DICTATORSHIP as a partner.

The $1 trillion companies: Microsoft is still bigger and better than Apple

https://www.marketwatch.com/story/t...han-apple-2019-09-12?siteid=yhoof2&yptr=yahoo

(Bold is my opinion and what I consider important content)

"Late last year as Apple, Amazon, and Microsoft were trading the top spot for world’s most valuable company, I wrote about why Microsoft was the best positioned to solidify its position as No. 1.

One year later and Microsoft MSFT, +0.96% is still on top; its current market capitalization is sitting around $1.04 trillion while Apple AAPL, +0.48% moved back above $1 trillion Wednesday.

While these numbers are closer than they have been in the past three months, there is no question that Microsoft is better positioned to remain on top. Apple’s latest product launch serves as a strong testimonial to why this is the case and why Microsoft looks like the better long-term bet for investors.

I have been vocal over the past year about Apple’s innovation issues. The company is struggling to come up with anything new or original and has instead turned to copying and/or iteration to develop new markets. I have previously highlighted that the new iPhones, iPads, and MacBook have been nothing more than iterative over the last few launches. Tuesday’s unveiling was no different, as it delivered nothing surprising and nothing inventive. Instead it was personified by small changes the company nonetheless hopes will inspire customers to part with hard-earned dollars for an almost identical device and user experience.

True, Microsoft and Apple aren’t direct competitors in many of their core technology products and solutions. The growing popularity of the Microsoft Surface laptop has led to some competitive instances with iPad and MacBook, but the companies are largely approaching the broader market in different ways. It is because of these differences that Microsoft is far better positioned to maintain its lead.

Difference 1: Apple’s biggest profit and revenue source is declining while Microsoft’s is growing.

This past year, Canalys marked Apple’s iPhone sales down 17% for the year. The signs of slowing continue with the iterative launch and the lack of a 5G offering. Its most compelling growth areas have been AirPods (60% of market, per Counterpoint) and Apple Watch (46% of market, per Strategy Analytics), but the margins on those aren’t nearly as lucrative as the iPhone. Meanwhile, Microsoft Azure has seen over 60% growth in each of the past four quarters and its Dynamics 365 CRM business, is also growing over 40%. Surface is growing at a 14% clip year over year as it continues to gain momentum.

Difference 2: The markets for Enterprise SaaS, Cloud, and AI are screaming opportunities, while Consumer Subscription Services are quickly becoming oversaturated.

Microsoft is a recurring revenue machine for enterprise and consumers with its productivity suite of services. It is also at the heart of the Big Data and Artificial intelligence evolution, with Azure and Power Platform, as well as a growing Dynamics 365 business in enterprise CRM. These businesses will power the future of AI and automation and has a certain amount of recession resilience.

Apple is a luxury product that has ridden a decade of growth, and its continued growth is dependent on users buying the most expensive, semi-outdated devices based upon brand affinity and/or subscribing to a set of crowded consumer services where people aren’t clamoring for anything new.

Difference 3: Microsoft has already made the services pivot, while Apple is still midstream in its transformation.

With over a billion subscribers to 365, combined with a robust and quickly-growing infrastructure-as-a-service business (Azure) that is the only company in the space taking market share from Amazon.com AMZN, +1.18%, Microsoft is well beyond the pivot point.

Meanwhile, Apple is still testing the waters with Arcade, TV Plus, Apple Credit Card, and Music Services, all of which have significant competitors (Spotify SPOT, -0.06%, Netflix NFLX, +0.88%, Amazon) that are much further along in terms of product and market growth.

Difference 4: Microsoft’s CEO is a dynamic risk-taker while Apple’s CEO is playing it safe.

Satya Nadella started changing things almost the moment he walked into the role. This was especially true with the shift from a software licensing business to a cloud company. Tim Cook has been slow and methodical, streamlining operations, enhancing margins through pricing adjustments, and rolling out iterative and copycat products that Apple knows it can sell.

These products, as Tuesday’s announcements showed, are boring, and certainly neither innovative nor transformative.

Here are my quick takes on the five new products and services Apple unveiled:

• Apple Arcade is a subscription gaming service on iOS that offers as many questions as answers. Most high-end gamers are looking for much more immersive gaming experiences, while recreational gamers are often drawn to ad-supported free games.

• Apple TV+ is another Netflix-type of service that also is competing with Disney DIS, +0.73%, Hulu, Amazon, and a plethora of sports, movie and other content services.

• The seventh-generation iPad offers a small increase in screen size, updated processor and a very rudimentary multitask capability. It’s a little less expensive than Microsoft’s Surface, but not even on the same plane for productivity.

• The fifth-generation Apple Watch was the best product of the day and potentially the strongest category, together with AirPods, for Apple going forward.

• iPhone 11 and iPhone 11 Pro have small improvements to camera, processing, and battery life. Will anyone with an iPhone 8 or newer really be clamoring to get one? Sure, it will sell, but I find it hard to believe it will drive fourth-quarter business the way it has in the past. I think the 12 with 5G is Apple’s best shot to get the iPhone back on track.

While the race to be the biggest company by stock-market value is close today, Apple will need something disruptive in the coming four quarters to catch up in the long run. If Tuesday’s launch is an indication of what to expect from Cupertino, Microsoft looks the part of a company fit to stay on top."

MY COMMENT

It is amazing how management has driven MSFT to their current position. The current management at MSFT is excellent and on top of business. They HAVE made the transition to become a dominant service company in the tech area. APPLE.......management is just pretty dull and average at best. BUT, when you look at their customer base, they have a HUGE number of users. If they can make use of that base to drive the service area they also have a very bright future. I believe they will eventually make the transition to a service driven versus a product driven company, but it will be slow going with lots of spurts forward and backward in the process.......at least with current management. I will continue to hold both companies.

 

TomB16........muddy away all you want. This thread is for discussion, NOT a personal blog. I enjoy and prefer discussion and content by others whether they agree or not.

On the topic of LONG TERM INVESTING. The BOTTOM LINE for me in investing style is simply........PROBABILITY. By stay ing fully invested all the time for the long term the probabilities are continuously in favor of gain in value. In simple terms.....the markets are up more than they are down over the long term. Just like the HOUSE in any gambling game......it is the players that are gambling, the house is NOT gambling, they have the probabilities in their favor and are operating based on logic and reality.

The Long-Term Market Odds Call for You to Stay Invested

https://www.realclearmarkets.com/ar...dds_call_for_you_to_stay_invested_103909.html

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

In a headline driven, volatile market like we’ve been traversing, it’s easy for investors to try to overcorrect their positioning. I’m referring to the whole “risk on, risk off” mentality.

A casual market observer probably sees a binary narrative. It seems like everything rides on a U.S./China trade deal.

President Trump sends a negative tweet about China, the market plummets.

A few days later, a meeting is announced, and the market reflexively bounces to the upside.

Yes—it’s annoying. But it’s also easy to forget that markets have always been emotional.

It’s important to not overreact to short-term market noise. Even if you think the market setup is binary, and strongly believe you know how events will unfold.

Case in point: the second week of August was an easy time to be a seller. Lots of negative headlines swirling and investor sentiment was depressed. A mere 21% of those polled in AAII’s Investor Sentiment Survey reported a bullish outlook on U.S. equities

Considering the S&P 500 was then only a few percentage points off the all-time high, it’s surprising sentiment was so dire. Yet the market bounced, as it often does when bearish sentiment is lopsided.

At extremes, sentiment surveys can be an excellent contrarian indicator. Out of curiosity, I did a study analyzing historical S&P 500 performance when sentiment dipped to similar levels as reported in August. Since 2004, it has happened on 15 separate occasions. If you fast forward three months later, the market was at a higher level 80% of the time with an average return of 7.3%.


Takeaway: Warren Buffett is right about the whole “Be greedy when others are fearful” thing.

You don’t have to be contrarian to do well as an investor, though. Simply sticking with a sound long-term strategy during rocky times is enough.

Problem is, many folks tend to overcorrect their positioning after they get stung by a volatility surge. Some may even liquidate their entire portfolio. I’ve seen it happen, usually at the wrong times.

Reactionary market timing moves like that are a dangerous proposition for several reasons.

First, the market rises more frequently than it falls. The S&P 500 has finished positive in 32 of 39 years since 1980, averaging over an 11% return.

Second, there are taxes and other expenses to consider.

Third, even if you happen to exit at a good spot, almost no one gets back in near a bottom. People like to wait until things “settle down,” which usually means buying back in after prices are higher.

If you want to actively manage your asset allocation, the best way to do it is by making modest tactical adjustments within a predefined strategic risk range.

A Lesson from the Golf Range

Like investing, golf is a complex game.

“Shank” is a particularly dreaded word among golfers. A shank is where a shot goes directly sideways—often out of bounds.

I’ve been golfing since I was 11 years old. And I’ve never had “the shanks.” Until recently.

The weirdest thing about it is you feel like you’re swinging normally. The ball just doesn’t go where it’s supposed to.

I tried to self-correct the problem by watching YouTube videos and experimenting with swing adjustments. But it only made me more confused and compounded the problem.

Finally, I signed up for a lesson with a pro. He advised me to disregard the YouTube videos and just show him my natural swing. I hit a couple good shots. The third was a shank.

“Why does that happen,” I asked?

“You’re hunching over too much, which breeds inconsistent ball-striking,” he said. “Do everything the same, just stand up straighter and pull your shoulders back.”

I did as he instructed and smashed five perfect shots in a row. Haven’t shanked a ball since.

Turns out, I was overthinking the whole thing, and overcorrecting as a result.

How to Hedge the Risk of Getting Whipsawed by the Market

Getting whipsawed in the market can feel a lot like shanking a ball on a golf course. It’s frustrating, confusing, and bad for your scorecard.

If you want to avoid getting whipsawed by getting too bearish at the wrong time—like many of the folks AAII polled in August—try using a risk range. Similar to the tip I received on the golf range, it’s a way to make modest tactical adjustments.

I think of a risk range as a strategic boundary for market exposure that aligns with your long-term goals. It handcuffs you from tilting too aggressive or defensive at the wrong time. In other words, it safeguards you from yourself.

For example, in my U.S. equity strategy, I target an ex-ante beta of 1.0 when I sense opportunity and want to be aggressive. That means my expected portfolio volatility is equal to the market.

Conversely, when I see a lot of risk and want to be cautious, I move toward the low end of my risk range, which is an ex-ante beta of 0.75 (meaning I’m about 25% less volatile than the market).

A solid financial advisor can help you identify the right risk range for you.

Why don’t I go to 50% exposure when I’m bearish? Or zero?

Anytime you fade the market you’re swimming upstream. That’s because the long-term odds favor staying invested.


It’s also hard to call bear markets. They’re rare and there’s no perfect checklist to forecast them.

The Present Market Environment

In January, I shared my market outlook with RCM readers. I’ve already achieved my expected return for 2019. And since I perceive the current environment as riskier, I’m tilting closer to the low-end of my risk range.

However, I also still maintain some cyclical exposure because there are upside risks that would be foolish to ignore.

Improving market breadth. A dramatic performance reversal this week favoring small-caps and cyclical stocks has market breadth improving, which is normally a good sign for bulls.

No investor euphoria. Depressed sentiment readings the past few months show the “Wall of Worry” bull markets tend to climb is still standing.

Election Cycle supports the Q4 outlook. During the third year of a President’s first term, stocks have historically finished higher 77% of the time, averaging a 4.2% gain (source: Bloomberg).

Bottom-line: we don’t know what the future holds. So, it makes sense to position for multiple potential outcomes. A risk range can help you do that in a disciplined manner, while staying true to the target you were originally swinging for.

MY COMMENT

All the statistical research shows that the above is true. As to "risk range", I dont buy it. Simply busy work and hand holding for your brain. I prefer to cut risk by holding dominant, big cap, American, iconic product, etc, etc companies for the long term. Sure I do sell out a holding when I feel it no longer meets my criteria and I do adjust my holdings over the long term as needed. BUT the bottom line is that investing success in simply a matter of positioning yourself to take advantage of probability and having the brains and discipline to.......DO NOTHING.

 

How many time this year have we heard the DOOM&GLOOM.....run for the hills, the end is near, the sky is falling, we are heading to a recession, the trade war is killing everything, interest rates are in crisis, international economics are going to eat up the world, etc, etc. I am too lazy to go back and count, but I am sure it has been hundreds of time throughout the year, all year long.

BALONEY.......the economy is roaring along and all indicators are very strong. Stocks are BOOMING for the year. HERE is where we are year to date:

DOW year to date +16.78%

SP500 year to date +20.02%

AS to all the GARBAGE we have been subjected to all year...........NEVER MIND.

 

I was thinking and looking back today. I have been posting the same message as in this thread online for the past 22 years. First on the MSN money boards up to the time that MSFT decided to dump their boards. Than on a spin off board of former MSN investing posters which evolved into a female, male bashing, progressive/socialist forum with little to no active investing content. (so I left to come here) And, now on here. Twenty two years.......the same message, the same type of portfolio model.....of course there have been changes in the holdings over that time. And......the same results for the entire twenty two years.....great gains and great compounding.

I am thankful for this forum and the chance to continue my posting on this site. I am also thankful for all the great content put up on this site by the members.

 

Well here we are at DOW 27,094. Not too shabby considering all that has been thrown against the wall this year and virtually NOTHING has stuck to pull down the markets. Everything seems to be in place for a good close to the year. I anticipate a good chunk of change coming into one of the accounts that I manage for family in the next week or two. In my usual fashon, and in accordance with the research comparing....... all in all at once, versus dollar cost averaging, versus market timing,.......I will invest the funds all in all at once even at this point in the markets. Half the funds will be split among the stock side of the portfolio and the other half will go into the three mutual funds.

I STILL see the economy and business prospects as a.......GOLDILOCKS SITUATION.....for the rest of the year and into 2020. The economy is hitting on all cylinders and the latest rate cut will help to keep things humming along. For investors the question is whether or not the specific businesses and specific funds that you own are participating in this nice business environment.

Upbeat data suggest U.S. economy still on moderate growth path

https://www.reuters.com/article/us-...y-still-on-moderate-growth-path-idUSKBN1W41TS

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

"WASHINGTON (Reuters) - The number of Americans filing applications for unemployment benefits increased less than expected last week, pointing to strong labor market conditions that should continue to support an economy growing at a moderate pace.

The steady economic growth pace was also underscored by other data on Thursday showing home resales rising in August to a 17-month high. While factory activity in the mid-Atlantic region slowed in September, orders remained solid, leading manufacturers in the region to increase employment and boost hours for workers.

The reports suggested that housing and manufacturing, the two weak spots in the economy, were stabilizing. The Federal Reserve cut interest rates by another 25 basis points on Wednesday, citing risks to the longest economic expansion in history from a year-long U.S.-China trade war and slowing economic growth overseas.

Fed Chair Jerome Powell said he expected the economy, now in its 11th year of expansion, to continue to “expand at a moderate rate,” but noted trade tensions were “weighing on U.S. investment and exports.”

The U.S. central bank cut rates in July for the first time since 2008. The Fed offered mixed signals on further monetary policy easing. Data, including retail sales, so far in the third quarter suggest the economy is growing close to the April-June quarter’s 2.0% annualized rate.

Financial markets have been flagging a recession. The Atlanta Fed is estimating gross domestic product rising at a 1.9% pace this quarter.

“Fed officials are done cutting interest rates for the rest of this year and one of the reasons for this is that the economic data continue to surprise us on the upside,” said Chris Rupkey, chief economist at MUFG in New York.

Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 208,000 for the week ended Sept. 14, the government said. Economists polled by Reuters had forecast claims increasing to 213,000 in the latest week.

Layoffs remain low despite the trade tensions, which have weighed on business investment and manufacturing. But there are concerns that slowing job growth could take some shine off robust consumer spending, which is largely driving the economy.

Last week’s claims data covered the survey period for the nonfarm payrolls component of September’s employment report. Claims were little changed between the August and September survey periods suggesting a steady pace of job growth this month.

The economy created 130,000 jobs in August. Economists say it is unclear whether the loss of momentum in hiring is due to ebbing demand for labor or a shortage of qualified workers.

Job gains have averaged 158,000 per month this year, still above the roughly 100,000 per month needed to keep up with growth in the working age population and sustain a healthy pace of consumer spending.

“If there was a problem in the labor market it would be visible in initial claims and they are not raising any red flags,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Though business confidence has dropped noticeably this year, it hasn’t led businesses to lay off workers yet.”

The dollar fell against a basket of currencies, while prices for U.S. Treasuries rose. Stocks on Wall Street were trading higher, with Microsoft’s planned share buy-back helping to push the benchmark S&P 500 within striking distance of its record high.

SOLID HOME SALES
In a second report on Thursday, the National Association of Realtors said existing home sales increased 1.3% to a seasonally adjusted annual rate of 5.49 million units last month.

That was the second straight monthly gain in sales and confounded economists expectations for a 0.4% drop to 5.37 million units.

The increase in home resales, which make up about 90 percent of U.S. home sales, came on the heels of data on Wednesday showing housing starts and building permits surged to a more than 12-year high in August. The housing market, which hit a soft patch last year, is being lifted by lower mortgage rates.

But the sector is not yet out of the woods as builders continue to grapple with land and labor shortages, which have constrained their ability to construct more of the sought-after lower-priced homes.

“It appears that the housing market is gaining some momentum as autumn approaches,” said Matthew Speakman, an economist at online real estate database company Zillow. “Even stronger sales volumes may be around the corner given that mortgage rates plummeted in August.”

In a third report, the Philadelphia Fed said its business conditions index fell to a reading of 12.0 in September from 16.8 in August. The survey’s measure of new orders dipped to 24.8 this month from 25.8.

Its measure of factory employment in the region that covers eastern Pennsylvania, southern New Jersey and Delaware jumped to a reading of 15.8 in September from 3.6 in the prior month. A gauge of the factory workweek increased to a reading of 13.0 from 6.8 in August.

Manufacturing, which makes up about 11% of the economy, has shouldered the brunt of the U.S.-China trade war. A measure of national manufacturing activity contracted in August for the first time in three years.

While factory surveys have remained weak, so-called hard data have suggested the manufacturing downturn could soon run its course. Manufacturing production rebounded 0.5% in August after falling 0.4% in July, the Fed reported on Tuesday.

“It is hard to explain the month-to-month changes in the different business surveys and the differences across the various measures, but with manufacturing output rising in recent months, some of the other surveys that have been weak may start to firm up and look more like the Philadelphia Fed survey,” said Daniel Silver, an economist at JPMorgan in New York."

MY COMMENT

I dont think you could ask for a more POSITIVE general economic situation in general. Of course, that does not mean that it will translate into corporate profits for specific individual businesses. But.....earnings in the SP500 have been strong, in spite of the attempts by many to push the markets down for political and personal agenda. At the moment WE are the business GIANT of the world. As usual, I have NO INTEREST in any sort of international investing. As usual, I continue to be fully invested for the long term in ALL accounts........the LONG TERM being 10 to 20 years.

 

I have noticed lately.......the past year especially......that on the many business and investing and market sites that I scan and read from daily that there are fewer and fewer articles that deal with actual investing, money management, strategy, financial research, company fundamentals, etc, etc, etc. What seems to have taken their place is many articles that approach investing from a simple headline of the day approach........and NOT investing, company, or financial headlines. I am talking about all the politics, doom & gloom garbage, political correctness garbage, climate garbage, etc, etc. Is this how younger people are seeming and interpreting investing? I suspect it is. I suspect this is what and how people are now looking at when it comes to investing. In other words.....garbage in, garbage out. I used to find five to ten or more articles daily to post, now I am lucky if I can find one or two a week. I suspect this is a symptom of the limited attention span generations, the screen generations, the social media generations. It also seems to reflect the tabloid nature of the modern media.......all soap opera, all the time. Of course, at the BIG firms with their AI and program trading, they are trading all this short term garbage constantly.

NOW.....back to reality....at least MY reality. Of course, reality is what and how society defines it and if investing behavior comes to be defined by trading daily soap opera headlines with little connection to reality or truth.......well so be it. It will make what those of us that invest the OLD FASHIONED way do very mysterious and obscure to the majority. The NEGATIVE potential is that this sort of activity and investing if adopted by the vast majority will severely skew the markets and results.

NKE, a long time holding KICKED ASS on their earnings:

Nike Earnings Crush Views As Digital Sales Jump 42%; Dow Jones Giant Signals Breakout

https://www.investors.com/news/nike-earnings-q1-2020-nike-stock-stalks-buy-point-results/

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

"Nike (NKE) reported much-better-than-expected fiscal Q1 earnings after Tuesday's stock market close, helped by strong digital and back-to-school sales. The Dow Jones athletic gear giant shot up after hours, signaling a breakout to a new high.

Nike Earnings
Estimates: Wall Street expected Nike earnings per share to rise 6% to 71 cents, according to Zacks Investment Research. Revenue was projected to tick up 5% to $10.45 billion. In the prior quarter, Nike earnings fell for the first time in several years while sales growth slowed for a second straight quarter.

Results: Nike earnings jumped 29% to 86 cents a share, its best year-over-year gain in several years. Revenue grew 7% to $10.66 billion. North America sales climbed 4% to $4.293 billion. China sales shot up 22% to $1.679 billion, or 27% excluding currency shifts.

Outlook: Management expects Q2 reported revenue growth in line with Q1 growth, dampened by currency headwinds, and warned that the impact of tariffs will be "most pronounced" in Q2. Nike sees high-single-digit, full-year sales growth, with gross margins expanding by 50-75 basis points.

Nike Digital
In a conference call with analysts, CEO Mark Parker touted 42% growth in digital sales, saying mobile is "leading the way." More than 50% digital growth came from Nike members, with personalization at scale as the goal.

CFO Andy Campion said Nike has moved to a more nimble, cloud-based architecture that enables better digital offerings more quickly, and credited the recent acquisition of predictive analytics firm Celect.

Management also said it sees accelerating growth in Nike digital, and wants to reshape marketplace over the long term so the company is connecting directly through digital and with retail partners.

Nike plans to leverage Facebook's (FB) Instagram and Tencent's (TCEHY) WeChat with its digital offerings, using insights from data to offer better design product. Nike's partnership with Walmart's (WMT) Jet e-commerce unit is at an early stage, management said.

Other Highlights From Nike Earnings Call

• The Air Max React was a big driver for the quarter, with the Air Max 270 up by triple digits
• A strong kids business helped fuel the company's biggest back to school season ever.
• Nike had double-digit growth in women's sales, and revenue from the Women's World Cup was four times bigger than the last one.
• Nike is looking to service a wider range of athletes and noted the success of its plus-size line.
• Nike will offer new designs in its Jordan line based around hot NBA rookie Zion Williamson.
• The Converse brand brand "returned to growth" in Europe.

Nike Stock
Nike stock jumped 5.1% to 91.65 late, signaling a move above an 89.45 buy point from a cup-with-handle base. The Dow Jones stock is signaling all-time highs

Shares closed down 0.6% at 87.18 on the stock market today.

In early August, Nike stock plunged below its 50-day and 200-day moving average, but it's rebounded to take both those key levels.

The relative strength line for NKE stock, though recently picking up, has trended lower over the past six months. The RS line, the blue line in the chart above, tracks a stock's performance vs. the S&P 500 index.

Meanwhile, a poor IBD Composite Rating of 52 gives reason for caution on Nike stock. The Stock Checkup Tool shows earnings are lagging the stock's performance on the market. EPS has grown by an anemic 1% on average over the past three quarters, including the last quarter's. Nike earnings are up an annual average of 5% over the past three years. This is far below the CAN SLIM benchmark for 25% growth.

Investors will be keen to get an update on the progress of the Dow Jones stock's Consumer Direct Offense strategy, which has been helping it outperform the broader industry in 2019. A healthy pipeline of new products has also been buoying Nike stock.

Nike has been a footwear market leader in China, with the popularity of the NBA in the communist country acting as a key tailwind.

Among rivals, Under Armour (UAA) closed down1.9%, continuing a recent slide. Adidas (ADDYY) rose 0.2%, still hitting resistance at its 50-day. Athleisure leader Lululemon Athletica (LULU) dipped 0.7%, just below buy point once again.

Analyst Rates Dow Jones Stock
Wedbush Securities analyst Christopher Svezia rated the Dow Jones stock as outperform with a 96 target heading into earnings. However he believes currency headwinds may offset a stronger sales growth outlook.

"In the end, shares may react negatively to reduced revenue guidance and FX is offsetting upside, though NKE continues to innovate and execute with several opportunities (Euro Cup, Tokyo 2020, women's, sustainability merch, digital, and more) to generate stronger underlying performance than initially guided for FY20," he said in a research note."

AND....see:

Nike shares hit all-time high as new products drive sales, earnings top expectations

https://www.cnbc.com/2019/09/24/nike-nke-reports-fiscal-q1-2020-earnings.html

"Nike’s fiscal first quarter earnings and sales topped analysts’ expectations, as investments to sell more sneakers and apparel in its stores and on its website showed signs of paying off.

Its shares rose more than 5.5% in after-hours trading on the news, topping its previous all-time high of $90.

Here’s how the company did for the first quarter in fiscal 2020 compared with what analysts were expecting, based on a poll by Refinitiv:

• Earnings per share: 86 cents vs. 70 cents expected
• Revenue: $10.66 billion vs. $10.44 billion expected

CEO Mark Parker said that product innovation,like a new Joyride running shoe, and a stronger e-commerce business helped boost results. During a call with analysts, he said online sales were up 42% during the quarter, while Nike’s women’s business grew at a double-digit clip. Nike has vowed to do a better job at making gear for female shoppers, and it hopes efforts like working with tennis champion Serena Williams as an ambassador will help.

Parker also said Nike had its biggest back-to-school season ever for kids, on the heels of it launching a subscription box for children’s sneakers.

Net income for the quarter ended Aug. 31 climbed to $1.37 billion, or 86 cents a share, from $1.09 billion, or 67 cents per share, a year ago. That was better than expectations of 70 cents reported by Refinitiv.

Revenue was up 7.2% to $10.66 billion from $9.95 billion a year ago, topping expectations for $10.44 billion.

The company said sales in North America were up 4%, excluding any currency changes, while those in Greater China surged 27%.

Despite trade headwinds, Nike has still managed to keep a strong footing in China and has actually doubled down on the region, opening its first House of Innovation store, which sells one-of-a-kind merchandise and personalized gear, in Shanghai last year.

During the latest quarter, Nike said footwear sales for its namesake brand were up 11%, equipment sales were up 11% and apparel sales climbed 9% overall. Sales at Converse rose 8%.

Nike said gross margins grew to 45.7%, as the company has been selling more items at full price. Part of its strategy, known as “Nike Direct,” has been to sell more in its own stores and website versus in discounted outlets. But it still keeps key relationships with retailers like Foot Locker, Nordstrom and Dick’s Sporting Goods.

Nike shares, as of Tuesday’s market close, have climbed more than 17% this year. The stock had closed the day down about 0.6%.

For the current fiscal year, analysts are calling for Nike to report earnings per share in a range of $2.73 to $3.00, on sales of $42.09 billion.

Nike said Tuesday it expects revenue growth for the year to be up a high-single-digit range, slightly topping sales growth in fiscal 2019.

“I think there is an expectation the numbers get better from here,” Liz Dunn, founder and CEO of Pro4ma, told CNBC Tuesday evening. She said that’s especially the case as Nike heads into the 2020 Summer Olympics in Tokyo."

MY COMMENT

A CORE holding of mine for many many years now. This business is a KILLER in their market area. LIKE a number of companies that I own, I DO NOT like their politics or their habit of getting involved in political and social issues that have nothing to do with business, but as long as they perform on the bottom line, that is what I care about. Earnings will now be pouring in daily and I suspect that the percentage of earnings BEATS will be above average this reporting period. In fact, the numbers that many companies will hit may set us up for a BOOMING end to the year when it comes to the general averages and stocks in general.