The Long Term Investor

UNFORTUNATELY this move by APPLE is EXACTLY what they used to accuse IBM of when they were a young fresh company. As an investor...I will continue to own the stock. Time will tell if I continue to use their products.



"WHY "1984" wont be like "1984""......NO......"2021" will be the start of "1984" when you look back in 30 years.

 

I know we have some card collectors on here. We also have Zukodany and probably some other sellers and collectors of comic books. I am sure we have various other sorts of collectors....myself included.

Trading cards are big business now. Blame the adults.
Pokémon cards, baseball cards, even Magic: The Gathering cards can all be worth thousands.

https://www.vox.com/the-goods/22607818/trading-cards-pokemon-magic-baseball

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

"Andrew Caroselli, an 18-year-old in Philadelphia, has built an empire by tearing open sports card packs on TikTok. He carefully pleats back the foil at the corners and surgically extracts the cardboard, hoping to find a rarity — Aaron Rodgers, LeBron James, Mike Trout — hiding inside. “Steady, steady,” he repeats, as he unsheathes a Panini Prizm Justin Herbert autographed rookie, with an estimated value around $2,000, from its plastic sleeve before carefully encasing it in a thick cardholder.

Caroselli is not a longtime card-shop hermit. Instead, he tells me, he first became interested in the card business by listening to the advice of serial entrepreneur, YouTuber, and hustle-guy extraordinaire Gary Vaynerchuk, a.k.a. Gary Vee. Over the past year, Vaynerchuk has published dozens of videos to his YouTube channel preaching about the lucrativeness of the sports card sector. The goal, as always, is to identify certain athletes whose associated memorabilia will escalate in value as their legacy grows — if you think Luka Doncic is an MVP, now is a great time to start purchasing Doncic rookie cards.

Once those social media power brokers started storming the market, says Caroselli, people like him were soon to follow.

“If you told me four or five years ago that you were collecting cards, I’d be like, ‘Okay, that’s kinda weird.’ I collected cards as a kid, but then I grew out of it,” he says. “But I think when guys like Gary Vee talked up cards, they became culturally relevant. [That endorsement] is gonna cause a boom.”

When I called Caroselli in late June, he was moving into a brand new office in north Philly. This recent high school graduate is the proud owner of his very own startup — called Vortex Sportscards — which specializes in a somewhat esoteric money-making operation. Basically, Caroselli purchases expensive sealed boxes of cards off the internet, and opens them live on either Instagram or TikTok. Customers of Vortex Sportscards can reserve certain packs inside the case for a flat fee. (Like, say, $150.) You tune in, watch Caroselli leaf through the cards, and hope that your assigned slot will contain enough shimmering paperboard to exceed the price of admission. (Caroselli mails the cards to each of the buyers after the stream.) Or you strike out, and hope for better luck next time. This is called a “box break,” and it’s one of the many different ways card collecting has infected the internet.

Caroselli is far from the only young person working this corner. The card mania is white hot, and thousands of impresarios are leveraging this confusing, chaotic era of social media to breathe new life into a prehistoric hobby.

“Everyone thinks cards are cool now. Everyone wants to get into it. All my friends want to get into it and are asking to work with me,” says Caroselli. “It’s crazy what’s happened in six months.”

“Everyone thinks cards are cool now. Everyone wants to get into it.”
There’s no apt way to articulate the warp speed momentum that made cards relevant again, so instead, let me tell you about some numbers. In late April, a LeBron James rookie card sold for $5.2 million in a record-breaking private exchange. That sort of news used to be novel — sports card prices, on the high end, have been steady for decades — but Sports Illustrated notes that 23 of the 24 most expensive transactions in the sports card industry have occurred since February of 2020. This is, in that sense, a brand new trend; in the ’80s and ’90s, card printers like Topps and Upper Deck flooded the market with mass-produced paperboard, which lopsided the supply-and-demand duality and caused the industry’s investment value to take a nosedive. That all appears to be a distant memory today, when nobody is quite sure how high the numbers could go.

The same zeitgeist has carried over into all avenues of the card-collecting hobby. In May, Target announced (and then reversed) a policy banning the sale of Pokémon cards due to the huge number of scalpers who would camp out overnight to cop a hot new set. It’s easy to see why: A shrink-wrapped booster box of Pokémon sleeves went for $360,000 at auction last November. Two months earlier, a similar set changed hands for $198,000.

There have been a lot of theories that attempt to diagnose the ongoing card market volatility. Many have pointed to the coronavirus pandemic, which has kept a lot of people isolated at home with plenty of time to pick up a new hobby. Team Whistle, a sports broadcasting company, conducted a study in the middle of our long quarantine winter which found that 77 percent of millennials and Gen Zers felt a desire to engage with “comfortable content that will give them a break from the news,” with 73 percent reporting that they’ve spent money on a hobby “within the last month.” (A majority of the same sample reported card collecting to be more “comfortable” than, say, reading comic books or playing video games.)

That appetite combines neatly with the unsteady economy, which was in total freefall at the beginning of the pandemic and has shown signs of a faltering recovery in 2021. With an eroding trust in American financial systems, many people are turning to alternative means — like crypto or collectibles — to stow away their savings.

“The pandemic caused a lot of people to reevaluate what their interests were,” says Justin Goodman, a devotee of antique baseball cards who hosts the collector-centric podcast The Monster. “Collecting cards brought people happiness and comfort in a time of a lot of uncertainty and fear. The internet gave people a forum to jump right back into the scene, when the rest of the world was shut down. That was the way to live vicariously.”

The other impetus is more ethereal. There is simply a frenetic, anxious excitement in the air for card collecting, in the same way that every insurgent fad drives people to their extremes. At his ridiculous showdown with Floyd Mayweather, the YouTuber Logan Paul walked to the boxing ring with a PSA Grade 10 Charizard wrapped around his neck like a Jesus piece. (Those go for around $200,000 on the open market.) Post Malone made TMZ headlines earlier this year when he dropped thousands of dollars on Magic: The Gathering cards at a Los Angeles trade show. (He also appeared on Late Night With Seth Meyers donning a Magic-themed button-up.) Rob Kardashian is picking up six-figure-value Tom Brady holographics and guesting on celebrity box openings for charity with Steve Aoki. Card collecting has been popular in the past, but this is the first time the hobby is accompanied by legitimate A-list cosigners — draining all of its latent nerdiness away.

The wire-pullers at the top of the industry haven’t slowed down either. Card publishers continue to drive up the prices of their product with limited print runs and a wide network of quality tiers. Today, it’s possible to spend $22,000 — at retail — on a single case of baseball cards. It is that artificial stringency that powers the virality that someone like Caroselli chases; it’s fun to watch someone pan for gold, even as this business grows unseemly and excessive.

That attitude is reflected in the rest of the YouTubers and podcasters creating fresh content about cards. Their thumbnails are splashed in all caps, showing off the astronomical figures they either found inside their latest suite of boosters. “ONE OF MY BEST BOXES EVER,” reads one, punctuated by a flame emoji. “$2,000.”

Goodman returned to baseball card collecting as an adult, and he has no recollection of the sheer envy that the modern card scene can inspire. When everyone is opening packs online, when the realities of endemic scarcity are bearing down on you from all angles, you can start to feel a blind capital panic that’s far more intense than a weekly trip to the local memorabilia store.

“It creates a sense of urgency that you didn’t know existed before. In the past, you might’ve been looking around for a card that you wanted, but you didn’t know that there were 10 other people doing the same thing,” he says. “If you have a compulsion for things, it can certainly create a climate where you can get obsessed way more easily, because there’s more outlets for that energy.”

That gets at the lingering question I had for all the movers and shakers in the midst of the card boom. When the profit expectations associated with paperboard double and triple in value overnight — when Logan Paul is turning Charizards into jewelry — what impact does that have on all the young people watching from the sidelines? Every zeitgeist eventually recedes; if you’re of a certain age, you remember the reign of the Beanie Babies, or the vintage comic books, or hell, the baseball card surge in the ’80s and ’90s.

So as collectibles metastasize through YouTube and TikTok — carrying the stamp of approval from verified Money Guys like Gary Vaynerchuk — I do worry if an impressionable population is getting in over their head. Caroselli tells me he’s already received a few angry emails from moms and dads, whose children pilfered their credit cards in order to become Vortex Sportscards’ latest customers. “When they email me [asking about the charges] I’m like, ‘Do you have any kids? Maybe talk to them,’” he says. “There’s no way I can tell who is buying.”

That might be the biggest tragedy of the increased financialization of the hobby. Card collecting is supposed to be for kids. The 1986 Fleer basketball card set — which remains one of the most beloved catalogues in industry history — was originally packed with a stick of gum. Card companies have left that market behind as they focus nigh-exclusively on the hustlers. (The Sporting News notes that Topps priced its flagship card box at $170 this year. Good luck affording that with your allowance.) The investment kickbacks are great, but haven’t we forgotten why people love this hobby in the first place?

I put that question to Nate Rico, a veteran Pokémon fan who’s been uploading pack openings on YouTube since 2014, long before the scene became supercharged. Like Caroselli, Rico spends his time online tearing open foil and calling out any high-value targets he finds along the way. Those questions of responsibility have become more pertinent to him over the last year, as this scene gravitates away from the hobbyists and toward the profiteers. It’s easy to understand why Rico is still adjusting to that new normal.

“If I pull an ultra rare or something like that, I’ll put the value in the corner of my video. And I did that long before this boom happened. But I’m very, very careful,” says Rico. “My content is something that I would want to watch, and I want to make it fun. It’s stuff that takes me back to when I was a kid. I built my Pokémon card binder as a kid, and I do the exact same thing on the channel.”

That’s the refrain that Rico reiterates over and over again throughout our interview. He’s just a guy who loves Pokémon, and he misses the salad days. He tells me about the 2000s and early 2010s, when he could comfortably go to his local department store, buy up a few packs, and peacefully open them at home. No zeitgeist, no lunacy, no mind-boggling inflated price points, just his private zen. The rest of the people who’ve bought into his community have not loved the hobby for nearly as long as Rico, and he hopes that Pokémon will survive their destabilizing influence.

“If your main goal is to sell things and you aren’t collecting, you probably see this as a total positive,” he says. “But as someone who’s been collecting cards since the ’90s, this is a huge negative.”


That’s the paradox of the card renaissance: Despite the many people who want to see the numbers keep going up, there are a few holding out for the day they start to go down."

MY COMMENT

There are a HUGE number of PASSIONATE collectors out there today.....in all sorts of collecting categories. In many categories it has become INVESTING and SPECULATION.....for BIG BUCKS.

My number one rule.....collect and buy what you love....it is supposed to be FUN. My number two rule...buy the ABSOLUTE best quality you can afford.

 

Some food for thought in a nice little article.....the NEW power of the retail investor.

How the Robinhood Era Is Changing Stock-Market Investing
When investor communities, not institutions, drive security pricing.

https://www.morningstar.com/article...inhood-era-is-changing-stock-market-investing

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

"Not Fully Convincing
Last summer, when I puzzled over the reasons behind the U.S. stock market's spectacular recovery--which struck me as premature, given that the economy was in a deep recession, with no signs that the COVID-19 virus would be eradicated anytime soon--several readers proposed the following:

1. The U.S. government had flooded the system with cash.
2. This cash had not only supported asset prices, but had also fueled investment speculation.
3. This speculation came from retail investors, who were feeling flush because they had cut their spending while maintaining their income. In addition, some had received $1,200 checks courtesy of the Cares Act.

I was dubious. For the most part, I adhere to conventional finance theory, which emphasizes rationality. It was not that investors had behaved rashly. Rather, I had failed by being too slow to recognize the impending economic recovery. Also, the rally was global, meaning that U.S.-centric explanations were not sufficient.

To that point: In the second quarter of 2020, U.S. stocks rebounded 45% from their lows, German stocks 57%, Japanese equities 46%, and U.K. stocks 32%. To be sure, when U.S. stocks sneeze other bourses reach for their handkerchiefs, thereby spreading the effect of American policies, but one cannot explain the S&P 500's rise by pointing solely, or even predominantly, to domestic actions.

A Kernel of Truth
That said, the readers had a point; the significance of today's retail investors should not be dismissed. As demonstrated by the GameStop (GME) saga, they don't necessarily operate according to academic rules, and their clout is increasing. This makes for a different stock market environment, with corresponding lessons.

Recently, two researchers for the Swiss Finance Institute, Philippe van der Beck and Coralie Jaunin, supported this contention. In "The Equity Market Implications of the Retail Investment Boom," the duo found that Robinhood's clients contributed handsomely to the second-quarter 2020 U.S. rally, especially for smaller-company shares.

The authors used a (now-dormant) website called Robintrack to measure the activity of Robinhood's customers. The site provided the number of Robinhood accounts that held each stock, updated several times daily, throughout the second quarter of 2020. Although Robintrack did not provide the account sizes, the authors roughly knew the amount of assets that Robinhood controlled, and thus were able to "reverse-engineer" (better translated as "guesstimate") how demand from Robinhood's customers increased for each stock during the second quarter.

(In addition to tracking the activities of Robinhood investors, the authors cataloged various institutional shareholders, such as hedge funds, banks, pension funds, investment advisors, and insurance companies. They used such information to derive an estimate of each stock's price elasticity, which, in turn, affected their estimate of how Robinhood's trades affected that stock's price.)

A Skeptic's Reaction
It is an imprecise process, in many ways, which leads me to discount the authors' estimates. They calculated that demand from Robinhood clients boosted the value of the overall U.S. stock market by 1.0% during the second quarter. This came after their actions had added 0.6% to U.S. stocks' first-quarter results. Those figures are high. If annualized, they imply that Robinhood's trades contributed 3 percentage points to the Wilshire 5000 Index's total return in 2020. That seems … optimistic.

So, too, does the authors' claim that "Robinhood demand accounted for 20% of the aggregate market capitalization of the [smallest 20% of stocks in the U.S. market]." No doubt Robinhood's customers punch above their weight, but given that they control only roughly 0.2% of U.S. equity assets, it's hard to believe they exert that much influence over one fifth of the nation's publicly listed stocks.

(Then again, Robintrack omitted Robinhood's options transactions, which also affect stock prices. In that respect, the authors' estimates are conservative.)

But such quibbles belong elsewhere. The point is that however cautiously one treats the authors' estimates, something remains. Both their research and the anecdotal evidence, such as the surprising performances of Robinhood favorites GameStop, Hertz Global Holdings (HTZZ), Eastman Kodak (KODK), and AMC Entertainment (AMC), indicate that, at least with smaller companies, there's a new game afoot.
Looking Ahead
This trend figures to extend. Small-company index funds continue to gain market share from their actively run rivals, meaning that fewer small-company shares are held by active investment professionals. It therefore seems that individual buyers and not portfolio managers will increasingly be tasked with pricing small-company stocks. The "Robinhoodization" of secondary stocks looks to be in its early stage.

One should not exaggerate the current effect, but the phenomenon must be taken into consideration. The expanding influence of retail stock investors induces behavior that confounds traditional expectations, and it doesn't appear to be going away anytime soon.

Implications

1. Small-company stocks will act ever more erratically.
   Perhaps "erratically" is pejorative, but the adverb strikes me as accurate. I don't know how else to describe the performance of Robinhood favorites, which frequently experience dramatic price changes without corresponding corporate news. Small stocks will march ever more loudly to their own drummer.
2. Small-company stocks will be better portfolio diversifiers.
   Different behavior means lower correlations. From 2015 through 2019, the performance of Vanguard Total Stock Market Index (VTSAX), which represents the overall U.S. stock market, never diverged by as much as 5 percentage points in a calendar quarter from that of Vanguard Small Cap Index (VSMAX). Last year, the two funds deviated by 9 percentage points in the second quarter and 13 percentage points during the fourth.
3. Regulatory scrutiny will increase.
   Over the past three decades, regulators have targeted institutions and not retail shareholders. For example, the SEC's 2000 rule, Selective Disclosure and Insider Trading, sought to protect the interests of everyday investors by restricting the ability of companies to "whisper" advance news to their institutional followers. The commission's focus has long been on Wall Street, not Main Street.

But what if retail investors are colluding on message boards, pooling their resources with the express purpose of altering security prices? The SEC will not and should not ignore those activities. What is good for the goose will be good for the gander. Along with greater investor power will come the call for greater investor responsibility.

Closing Note: After initially stagnating, Robinhood's stock price doubled during this week's first three days, before retreating on Thursday. How much of that gain owes to individual investor enthusiasm, as opposed to to institutional activities, remains to be seen. However, if institutions have been the primary buyers, it surely is because they hope to make a quick buck by reselling the security. Appropriately, Robinhood's own stock is very much a Robinhood-era security.


Virtual investment communities are here to stay. Younger investors prefer technology to handshakes, and while many eventually will hire financial advisors, their preferences will not change. (Most of us still believe that popular music was never better than when we entered college.) And because wealth accumulates with age, their firepower will continue to grow. Consequently, social-media discussions will increasingly determine stock performances.

In other words, the SEC's task of maintaining "fair, orderly, and efficient markets" might require it to regulate Main Street's behavior, as well as that of Wall Street. To date, regulators have not shared that view, as they have expressed concerns about Robinhood's actions--in particularly, the company's payments for order flows and "gamification" of investment services--but not those of its customers. However, these are early days yet."

MY COMMENT

YES....whether the speculators on social media.....or.....the tens of millions of everyday investors and 401K/IRA investors.....the retail investors are SEVERELY underestimated. "WE"....are the REAL power of the markets and have been for a long time. "WE"......are the SILENT MAJORITY of the investing world. Wall street and the "professionals" will NEVER acknowledge it. BUT...this is REALITY. AND.....we....with our little buy and hold long term strategies of various types......ROUTINELY BEAT....the returns of the "professionals" and the pension funds and the University endowments.

On top of that......"WE".......are the steady anchor of the markets.....it is the "professionals that are always RUNNING FOR THE EXIT.....over any bit of short term news or drama. At the same time....the little investors....."WE".....steadily power through whatever event it is to more and LARGER GAINS.

 

gtrudeau88.

Good to hear that the remodel is nearly done. It will be nice to see you back as an active poster.

 

That is QUITE a confession for this thread....HOW DARE YOU. Seems ok....sometimes you just have to take a walk.....ON THE WILD SIDE.

 

An ICONIC company.....actually a CONGLOMERATE.....managed by an ICONIC investor.

Berkshire Hathaway’s operating earnings jump 21% as recovering economy boosts railroad, energy units

https://www.cnbc.com/2021/08/07/berkshire-hathaway-brk-earnings-q2-2021.html

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

"Key Points

• Berkshire Hathaway reported operating earnings of $6.69 billion in the second quarter, up 21% from $5.51 billion in the same period a year ago.
• Overall earnings, which reflect Berkshire’s fluctuating equity investments, increased 6.8% year over year to $28 billion in the second quarter.
• Chairman and CEO Warren Buffett kept buying back Berkshire shares aggressively instead of making sizable acquisitions.

Berkshire Hathaway’s operating income continued to rebound as its myriad of businesses from energy to railroads benefited from the economic reopening.

The conglomerate reported operating earnings of $6.69 billion in the second quarter, up 21% from $5.51 billion in the same period a year ago, according to its earnings report released on Saturday.

Overall earnings, which reflect Berkshire’s fluctuating equity investments, increased 6.8% year over year to $28 billion in the second quarter.

Chairman and CEO Warren Buffett kept buying back Berkshire shares aggressively instead of making sizable acquisitions. The company repurchased $6 billion of its own stock in the second quarter, bringing the six month total to $12.6 billion. Berkshire bought a record $24.7 billion of its own stock last year.

At the end of June, Berkshire’s cash pile stood at $144.1 billion, holding steady from last quarter’s level and still near a record despite the company’s massive buyback program.

The results came as the conglomerate’s stock wiped out all of its 2020 losses and hit a record high in the period. So far in third quarter, Berkshire’s B shares are up another 2%, bringing their year-to-date gain to over 23%.


As economic activity continues to grind back to life from the pandemic with more commodities and goods being shipped around the country, Berkshire’s Burlington Northern Santa Fe railroad stands to benefit. Earnings for railroads, utilities and energy jumped more than 27% from a year ago in the period to $2.26 billion, Berkshire said. The conglomerate’s other businesses, including homebuilders and a paint-maker, are also seeing a boost.

Though Berkshire acknowledged the quarterly results look stellar because they are bouncing back from a low base a year ago and the company is unsure of when results will truly return to normal.

“The COVID-19 pandemic adversely affected nearly all of our operations during 2020 and in particular during the second quarter, although the effects varied significantly,” Berkshire said in the earnings report Saturday. “The extent of the effects over longer terms cannot be reasonably estimated at this time.”

At the height of the Covid crisis, Berkshire experienced a drastic slowdown with its operating income falling 10% in the second quarter of 2020 year over year and tumbling 30% in the third quarter.

Berkshire said the risks from the pandemic still remain and could impact its results in the future.

“Risks and uncertainties resulting from the pandemic that may affect our future earnings, cash flows and financial condition include the ability to vaccinate a significant number of people in the U.S. and throughout the world as well as the long-term effect from the pandemic on the demand for certain of our products and services,” the conglomerate said."

MY COMMENT

VERY NICE for the company the second quarter. They have a TON of money siting around waiting to be used.....$144.1BILLION.

 

Even though there is MUCH short term discussion on this thread day to day.....THE POINT OF THE THREAD......is LONG TERM INVESTING.

I was playing with some numbers in one of the accounts that I manage for one of my kids. This particular kid has a GREAT government pension plan. It took me a while to get them to invest. I was finally able to get them to start at $100 per month and over a short time....HARANGUED.....them into getting up to $500 per month. They were also able to put in some lump sums at various times over the years.

They are NOW getting EXCITED about investing as they have seen their account grow to about $350,000 over the past......9 years.

As an EXAMPLE of the POWER of.....passive investing.....AND......long term investing......here is some data that I pulled off Schwab today.

The account was started September 13, 2012.....so it has benefited over the course of the long BULL MARKET. The current investment mix is:

QQQ - 10.21%
Fidelity Contra Fund - 32.20%
Schwab SP500 Index fund - 57.59%

I wanted to keep things simple....so I figured that these three funds...by the time they TRIPLE up on the BIG CAP TECH names and other market leaders.......would be a SIMPLE and PASSIVE version of my Portfolio Model that I use.

HERE are the actual account results......versus......the results of the SP500. All dividends and capital gains are automatically reinvested.

Account annual return results from 9-13-2012......versus.......SP500

FROM INCEPTION........+15.93%.........VERSUS......+15.38%.

FIVE YEARS.........+18.34%.......VERSUS........+18.15%.

THREE YEARS.........+18.89%.........VERSUS........+18.03%.

ONE YEAR........+32.39%......VERSUS.....34.53%.

YEAR TO DATE........+18.78%........VERSUS......+19.12%.

THREE MONTHS........+7.47%.........VERSUS........+5.97%.

This is the perfect example of the POWER of long term investing and the POWER of compounding......over a term of 9 years.

These are REAL LIFE......ACTUAL.....numbers. This person had little to no interest in investing.....but.....has now seen the light. A BIG CHUNK of money.....can have that affect. They are in a high stress job with little time to spend on investing or managing an account........SO.......the monthly contribution of $500 and all reinvesting is.....AUTOMATIC. They dont have to do.....or think.....about anything. Current age is.........36. By the time they hit age 61.......the account value should be APPROXIMATELY......COMPLIMENTS of the power of compounding as reflected in the RULE OF 72's.......about $5MILLION PLUS. I am assuming that they will continue to do the $500 per month for life......and......will get a lifetime total return of about 10% per year average to age 61. I am being conservative with the projected value of $5MILLION.......it will PROBABLY in reality be between $5.5MILLION and $6MILLION.

By starting to put money away at the young age of 26........a VERY good thing.........and staying on AUTOMATIC PILOT for life......another VERY good thing......they will have a totally secure future.

THE LESSON........"YOU"......can do the same thing. Start NOW.....regardless of your age. Taking that first step is the HARDEST......it gets easier as you go along.

I was a brand new......young...... business owner way back in 1977. An acquaintance that was a HIGH ROLLER property developer.....gave me some advice one day....."PAY YOURSELF FIRST". I had never heard that phrase before......but it really made sense to me as a business owner and has STUCK with me all these years as a......MANTRA. I emphasize it to my kids all the time. The above is an EXAMPLE of that MANTRA in action.

By the way....that HIGH ROLLER developer.....went bankrupt shortly after he gave me that advice....but that is a different financial story.

 

I......wonder....how many people investing in Chinese companies.....realize that they are ACTUALLY investing in a shell company in the Cayman Islands.......with NO actual ownership interest in the REAL company in China?

The risky loophole Chinese companies have been using for years

https://www.cnn.com/2021/08/08/investing/stocks-week-ahead/index.html

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

"London CNN Business —
"When investors purchase a stock, what they’re doing is buying a percentage of the company. Right?

Wrong! At least when it comes to many of the Chinese companies listed on the Nasdaq and the New York Stock Exchange.

That’s because Chinese companies use a structure called a variable interest entity, or VIE, in order to raise money from foreign investors.

What’s a VIE? The structure uses two entities. The first is a shell company based somewhere outside China, usually the Cayman Islands. The second is a Chinese company that holds the licenses needed to do business in the country. The two entities are connected via a series of contracts.

When foreign investors buy shares in a company that uses a VIE, they’re purchasing stock in the foreign shell company — not the business in China.

For example, when US investors buy shares in Chinese ride-hailing firm Didi, which went public in June on the New York Stock Exchange, what they’re actually doing is buying stock in a Cayman Islands company called Didi Global.

Didi Global doesn’t own the business in China that connects riders to drivers. But it does have contracts in place that entitle its shareholders to the economic benefits produced by that business.

The upshot: When Americans fire up their trading app and buy shares in Didi, they are not getting a direct equity stake in the Chinese company. This arrangement is explained in Didi’s prospectus, but not everyone is aware. Alibaba, Pinduoduo and JD.com also use VIEs, to name a few.

Why use a VIE?
Chinese firms have been using the structure for decades because foreign investors are not really allowed to own stakes in local firms in industries including tech. Still, Chinese companies want to raise money abroad.

Creating an offshore holding company that goes public helps Chinese companies get around those rules. Wall Street and US regulators have long been cool with the arrangement, which gives American investors easy exposure to dynamic companies that are powering the world’s second largest economy.

But there are huge risks. First, it’s not clear that the contracts that entitle foreign investors to the economic benefits produced by Chinese companies are enforceable. It’s also not clear whether VIEs are legal under Chinese law.

Here’s what Didi says about the arrangement: Didi says in its prospectus that its legal counsel believes that its VIE “is not in violation of mandatory provisions of applicable PRC [Chinese] laws,” and that its contracts are “valid and binding.”

But it also included a warning to potential investors.

“We have been further advised by our PRC legal counsel that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations,” Didi cautioned. “The PRC government may ultimately take a view contrary to the opinion of our PRC legal counsel.”

Think about the problem this way: Chinese companies are essentially telling Beijing that they are 100% owned by Chinese citizens. Meanwhile, the same companies are telling foreign shareholders that they’re the real owners.

After decades of both Chinese and US regulators taking a relaxed approach, there are signs that both are becoming uncomfortable with VIEs.

Hello, regulators: US Securities and Exchange Commission boss Gary Gensler announced new disclosure rules on July 30 targeting VIEs, saying Chinese companies need to be clearer with US investors about the risks.

“I worry that average investors may not realize that they hold stock in a shell company rather than a China-based operating company,” he said.

One of the new SEC provisions will require Chinese companies to disclose “whether the operating company and the issuer, when applicable, received or were denied permission from Chinese authorities to list on US exchanges.”

That provision appears to be aimed at Didi. Just days after its massive IPO, Chinese regulators targeted the company with a cybersecurity investigation after it reportedly went ahead with the listing despite Beijing’s objections.

“I believe these changes will enhance the overall quality of disclosure in registration statements of offshore issuers that have affiliations with China-based operating companies,” Gensler said.

China is also taking a closer look at foreign listings. The powerful Cyberspace Administration of China proposed in July that any company with data on more than 1 million users must seek the agency’s approval before listing its shares overseas.

Investors, beware."

MY COMMENT

This little article talks about buying Chinese companies.......I mean Cayman Island Shell Cmpanies.......the same way I do....."INVESTORS BEWARE".

So....the bottom line.....not only do you NOT own an interest in the actual company.....but.....the way you are buying the shell company is contrary to the law of a country run by.......THE WORLDS MOST BRUTAL COMMUNIST DICTATORSHIP. Do you think they will care in the slightest.....when they decide to cancel your little shell company because it is ILLEGAL under Chinese law? Of course.....Chinese law is whatever the government of China......THE WORLDS MOST BRUTAL COMMUNIST DICTATORSHIP....says it is.

THIS is the SCAM of the century.....sell a bunch of DUMB AMERICANS.....shares in a worthless Cayman Island shell company with no assets and actually no fundamentals.......and send the money to China to fund their plans for the world. Shares......that can be made worthless with absolutely NO compensation or even any right or way to dispute it......whenever the REAL owners of the company.....the Chinese government.......decides it has had enough.

NO.....I dont think the lawsuits are going to help much in the Chinese.......GOVERNMENT.....court system.

AS I always say about investing in Chinese.....WHOOPS sorry......Cayman Island shell companies......BEWARE.....WHAT COULD POSSIBLY GO WRONG.

 

LOL......duckleberry_fin.....I avoid posting on political topics and......try....to also avoid social topics that tend to be tied to politics. I could put up a page long post on the topic above.....but....all I will say is...

I would be glad to see a $50,000 write off of student loan debt.......IF........ FIRST.....EVERYONE else in the country was sent a check from the government for $50,000. AND....second.....those with student loans got a $50,000 credit against their loan balance......BUT.....NO option to take the cash instead.

 

I like this little EUPHORIC article.

What Investors Can Learn From 2021’s Frothy Pockets
Early 2021 provided a windowpane into euphoria—what does it mean for investors?

https://www.fisherinvestments.com/e...investors-can-learn-from-2021s-frothy-pockets

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

"An app-based brokerage at the center of January’s “meme stock” chaos made its trading debut last Thursday … and promptly laid an egg, before its share price soared this week. That seesaw action typified the price movement of the “hot” investments—e.g., cryptocurrencies and special-purpose acquisition companies (SPACs)—from earlier this year. While many of those categories have since imploded, global stocks have continued to climb and register record highs. In our view, that suggests frothy euphoria hasn’t spilled over to stocks—a sign that we aren’t yet at a market peak.

Take a stroll with us down memory lane, dear reader, to early 2021, when bitcoin’s pandemic boom went nuts: It soared from $29,001 to $40,797 in January’s first eight days—and then gave back most of those gains by month end. The coin’s volatile ascent continued over the next several months, closing at an all-time high of $63,503 on April 13.[ii] Proponents declared bitcoin and its crypto brethren’s moment had arrived—an irrational excitement perhaps best exemplified by dogecoin, a joke cryptocurrency that jumped over 800% in 24 hours in late January.[iii]

The enthusiasm wasn’t confined to crypto. Billionaires and celebrities heralded SPACs as a ticket to owning early stage, cutting-edge businesses (e.g., electric vehicles and space travel)—and quick riches. Non-fungible tokens (NFTs)—digital collectibles—fetched millions. Online forums touted meme stocks, sending the share price of a brick-and-mortar video game store to the moon. Anecdotally, your friendly MarketMinder Editorial Staff received many questions about these topics—a sign regular folks were curious (and perhaps tempted to buy) these hot assets.

Fast forward to the present, and what was hot is now … not. After peaking on April 13, bitcoin fell -53.1% to $29,807 on July 20—not far off where it started the year (it is around $41,000 as of this writing).[iv] Other cryptocurrencies have fallen even more dramatically, including Dogecoin (down -71.4% from its May 7 high).[v] SPACs have struggled, too. Issuance has slowed since Q1, and high-profile SPAC acquisitions have flopped. The futures of electric vehicle companies Lordstown Motors and Canoo—both of which ousted their founders and CEOs—look hazy, and their share prices have plummeted (-70.4% and -44.6% year to date, respectively).[vi] Another EV startup that went public via SPAC, Nikola, faces an almost equally uncertain future, as its founder faces fraud charges.

Regulatory uncertainty appears to be a big headwind for both categories. Chinese regulators intensified their crypto crackdown in May, roiling sentiment.[vii] Similarly, the SEC surprised SPACs in April with an order to adjust their financial reporting—leading to the disclosure of more serious problems.[viii] These wild movements—both up and down—over the past seven months recall legendary investor Benjamin Graham’s quote: “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.” That is, sentiment can buoy investor excitement in the short term, but over the longer term, fundamentals win out.

Now, at the time, many pundits equated the early-2021 environment to the 2000 tech bubble. But despite the publicity, frothy sentiment seemed confined to narrow slices of the market—and pockets of froth aren’t uncommon during bull markets. During 2009 – 2020’s bull market, gold and silver had a moment in the early 2010s; biotech stocks in 2014; bitcoin (the first time) in 2017. That irrational enthusiasm didn’t infect broader markets. This time, even in the case of meme stocks’ January surge, raging euphoria didn’t dominate the space. Some investors were chasing pie-in-the-sky visions, to be sure, but others seemed to be applying fundamental analysis and traditional value investing, not blinded by greedy emotion.

If the euphoria we saw this year was widespread and had broadly infected stocks, we would expect to see broad equity indexes fall alongside the highfliers. Since its April 13 high, bitcoin is down -39.9%—yet global stocks are up 6.2% over the same stretch.[ix] The broader SPAC space isn’t faring as poorly as bitcoin, but the IPOX SPAC Index is down -6.5% year to date through July.[x] Over that period the S&P 500 and MSCI World rose 18.0% and 15.1%, respectively.[xi] Meme stocks have alternated from boom to bust and back, but much broader global markets have seen a relatively smooth climb to those solid returns.

Though euphoria may not have taken hold broadly yet, we do think investors should be vigilant in monitoring for it—especially because we see plenty of signs that stocks are behaving like it is a late-stage bull market. If investor sentiment follows its typical path in a maturing bull market, optimism will eventually burgeon into euphoria. To be clear, we don’t think we are there yet. But the rise—and implosion—of cryptocurrencies, SPACs and other hot investments from earlier this year gave you a windowpane into true euphoria.

In our view, that view can help investors prepare for when it takes hold more broadly. If you remained disciplined and didn’t buy the hype of 2021’s early-year darlings, you deserve kudos. Remember that mindset for the future. If you gave into the hype and chased heat, don’t hang your head in shame. You fell victim to what Fisher Investments Founder and Executive Chairman Ken Fisher calls “The Great Humiliator” (TGH). The market likes nothing more than to make investors feel silly. But as Ken has written about extensively, taking TGH’s lessons to heart—accumulating regret and shunning pride—is the best thing investors can do in that case. When euphoria arises again, you might just be better prepared to handle it."

MY COMMENT

I have seen the Euphoria infect segments of the markets over the past year. FORTUNATELY.....it has been limited....or....gets knocked down fairly quickly. In the past I have also seen that EUPHORIA is a good indicator of a market top. The problem.....how do you know when euphoria is.......too much.......euphoria? It is often a....hindsight....indicator.

SO.....I dont even try to worry about or somehow predict the markets. I just stay fully invested all the time. With my portfolio and funds......tending to follow the general direction of the SP500.....I know that about 70% of the time the markets WILL be POSITIVE for me. That is good enough odds for me.

Add in the FACT that my long term total return is WELL OVER that of the SP500......and I have ZERO reason to make any changes to how or why I invest. That is the key for........EVERY INVESTOR......if your total return and portfolio performance is what.......YOU.....wish.......why change or do anything different.

 

I also....in theory.....like this little article.

Modern Economics: Mystical Academics Critiquing Mystical Academics

https://www.forbes.com/sites/johnta...ritiquing-mystical-academics/?sh=3033fd567679

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

"Carl Menger long ago observed that money was decidedly not a creation of the state. A failure among modern economists to understand this basic truth has resulted in endless waste of ink and mind as the book smart with PhDs next to their names have endeavored to plan so-called “money supply.” This is modern economics, and it has nothing to do with reality.

Back to reality, money is just a measure. It’s what actual producers producing actual goods and services came up with so that exchange could be facilitated with other producers of goods and services. In other words, barter underlies all financial transactions to this day. Money is just the trusted agreement about value that enables the transacting.

Producer A pays $150 for the product or service of Producer B, but Producer B has little interest in what Producer A makes or offers. B longs for what Producer C is advertising. Adding a little detail to the latter, the vintner pays $150 to the baker for bread and pastries, but the baker only wants the butcher’s meat. The $150 moving around reflects the actual movement of goods and services. Figure that someone desired the wines created by the vintner so that he could have the means to buy from the baker. Money flows are the flows of products and services for products and services. Always.

This is why there’s so much money in Manhattan, but so little in neighboring Bronx. The Fed didn’t create voluminous “money supply” in Manhattan, nor did it engineer comparatively little in the Bronx. The difference in dollar amounts residing in Manhattan and the Bronx is production. There’s endless amounts of it in Manhattan and comparatively little in the Bronx.

Imagine then the Fed aggressively buying interest bearing assets from Bronx banks to boost “money supply” with an eye on stimulating the borough, only for the Fed to aggressively sell interest bearing assets to Manhattan banks in order to shrink economic activity there. The Fed’s actions would logically be of zero consequence. The “money supply” increase in the Bronx would be reversed within minutes by market forces. Markets would similarly reverse the decrease in Manhattan almost instantaneously.

The above assertion is a certainty given the basic truth that money has no purpose absent production. None whatsoever. More realistically, money finds production. Money can’t stimulate as economists assume; rather money is a consequence. Money flows en masse to Manhattan because there’s so much present production of goods and services, along with the market presumption of even more voluminous production of goods and services down the line. Investment bankers and other financiers frequently based in Manhattan are paid enormous salaries and bonuses precisely based on their skill when it comes to matching talented producers with savings. It’s routinely said in this column, but what’s routinely said bears repeating: if you’re talented or entrepreneurial, or if your business has brilliant prospects, money will find you. Production, or the presumption of future production first, then money. Economists have it backwards. “Money supply” increases can’t stimulate; rather the already stimulated tend to be a magnet for what academics short on real-world knowledge refer to as “money supply.”

All of this and more came to mind last week after economists Phil Gramm and Thomas Saving co-authored an opinion piece in the Wall Street Journal about inflation. The piece included the routine assertions about “money supply” and the various Ms. On its own, the conceit of such writing was quite something. How could Gramm and Saving possibly know the proper amount of money growth, or supply? The answer is they couldn’t. Neither could the Fed. Missed by both economists is that the only closed economy is the world economy. Put another way, credit is borderless. Even if the Fed could control money supply, it would be of no consequence. See Manhattan and the Bronx. Money flows from all points global to wherever there’s production, and away from where there isn’t production. What the Fed allegedly takes, or shrinks, or adds, will be corrected by actual market forces. Money supply is production determined. Repeat this truth over and over again. The Fed can’t alter this truth.

Where it gets comical is that in response to Gramm and Saving, a number of economists wrote letters-to-the-editor critiquing the economists a few days later. Funny about this is that rather than critique the laughable notion that the Fed or any monetary body could possibly control or finesse “money supply,” the economists instead critiqued Gramm and Saving’s understanding of the various monetary aggregates, and how the Fed controls those aggregates. Yes, modern economics is mystical thinkers talking past mystical thinkers.

These thinkers seem to believe they know what’s inflationary, what isn’t, and what supply of money would render inflation a non-starter. Almost as a rule they see surges in “supply” of money as a sign of inflation. Which is logically impossible. Think about it. Money flows once again signal goods and services being exchanged for goods and services. Implicit in the deeply held belief of economists about “money supply” is that the more a certain currency is circulated, the more certain is the inflation problem. No, the thinking is backwards. The more a currency is being exchanged, the more that currency is logically trusted by producers. To believe otherwise is to believe that producers actively exchange goods and services for goods and services with “money” that’s routinely declining in value. No. Such a view isn’t serious. Really, why would a producer exchange real things for paper that will purchase fewer real things, and why would lenders lend out “money” that’s not holding its value in order to get back soggier money that buys fewer goods and services in the future?

Stating the obvious, the most debased, most inflationary money is logically the money that is least circulated. Conversely, the best, most trusted money is the money that’s being devalued the least. Marks were logically scarce in post-WWI Germany after their horrific devaluation, much as Lebanese pounds are logically scarce today. What’s not trusted is little “supplied.”

The sad truth is that what’s basic is lost on economists. Just remember this the next time you’re forced to suffer commentary about the Ms or “money supply” as a cruel reward for your past sins. They can’t possibly know what the aggregates they drool about could be, or what amount would be inflationary. Inflation is a policy choice, not a supply phenomenon. And heavily circulated money is logically not a sign of inflation to begin with."

MY COMMENT

AMEN.....nothing worse that a bunch of esoteric economic "theory". I will take the REAL WORLD any day. My view of the real world.....the long term markets. The success or failure of business. The success or failure of actual PEOPLE....investing, saving, and producing. GOVERNMENT.....produces nothing economically....other than a DISTORTION of reality by trying to manipulate the economy........the producers and the consumers........in other words....BUSINESS.

My definition of government stimulus.....taking money from one group of people and spending or giving it to another group of people.

 

A nice.....BLAH....open today. At least the NASDAQ is UP at the moment. I dont know if this is a benefit to me since I have not looked at any stocks that I own. HERE......are the short term factors that are being said to have something to do with where the markets are at.......THIS short term MOMENT......in time.

Stock market news live updates: S&P 500, Dow dip amid oil price declines as virus concerns rise

https://finance.yahoo.com/news/stock-market-news-live-updates-august-9-2021-114633247.html

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

"Stocks fell Monday, losing some steam after rising to all-time highs late last week. Commodity prices tumbled as concerns over the coronavirus's spread resurged, with crude oil prices moving sharply to the downside.

The S&P 500 fell as shares of oil companies including Occidental Petroleum (OXY), Apache Corporation (APA) and Diamondback Energy (FANG) dropped. The Dow also dipped, weighed down by a decline in shares of Chevron (CVX).

U.S. West Texas intermediate crude oil futures (CL=F) dropped more than 4% at session lows Monday morning to hover around $65 per barrel, extending a more than 7.5% weekly decline last week. Brent crude (BZ=F), the international standard, also dropped. Other commodities also dipped Monday morning, including with copper, silver and gold futures each moving lower by at least 1%. Treasury yields fell across the curve, and the benchmark 10-year yield retreated to below 1.28%.

The moves came amid mounting concerns over coronavirus infection rates and new restrictions in China, a major demand center for global commodities.

The world's second-largest economy has implemented new measures including flight cancellations and other curbs on travel in some of the country's hardest-hit areas to try and limit the spread of the virus. China's National Health Commission last confirmed 125 new infections as of Sunday, up from 96 from a day prior.

"Virus numbers are still very low compared to other countries. But the spread of the Delta variant calls into question China’s ‘zero-COVID’ approach. Whereas most governments are now starting to acknowledge that we are likely to have to live with the coronavirus for the long term, China’s ambition remains to keep it out of the country altogether," Neil Shearing, group chief economist for Capital Economics, wrote in a note Monday morning.

"Without a shift in approach, this suggests that China will have to continue with occasional local lockdowns and restrictions on movement," he added. "This in turn will prevent a full return to pre-pandemic norms of consumer and business behavior, and is likely to mean that restrictions on foreign travel remain in place for some time to come."

Concern over the Delta variant has also been evident in the quarterly earnings calls for a host of major corporations, raising the specter of another deceleration in consumer spending on services. Booking Holdings (BKNG) CEO Glenn Fogel said last week that rising COVID case counts and newly imposed travel restrictions "have led to a modest pullback" in travel booking trends in July compared to June. Likewise, Lumber Liquidator Holdings (LL) suggested investors "plan for slowing comparable sales" as the home renovation retailer works through potential consumer demand shifts and the potential impact of the COVID-19 delta variant," Chief Financial Officer Nancy Walsh said during the company's earnings call last week.

Still, however, a number of economists have underscored the ongoing strength in the U.S. economic recovery, even as new risks around the virus emerge. The U.S. economy added back more than 900,000 jobs in both July and June, last Friday's jobs report showed, and separate surveys on manufacturing and services sector activity have pointed to continued expansion.

U.S. corporate earnings results, on the whole, have also been strong. As of Friday, 89% of companies in the S&P 500 had reported second-quarter earnings results, with 87% of these having topped Wall Street's estimates for earnings per share, according to FactSet data. If this proportion holds, it would be the highest percentage of S&P 500 companies topping earnings estimates since at least 2008.

Quarterly earnings season continues this week with companies from Coinbase (COIN) to Disney (DIS) reporting results.

10:00 a.m. ET: Job openings surged to a record high in June, topping 10 million
Job openings in the U.S. raced to an all-time high in June, further underscoring the extent of the labor shortages and demand still weighing on the overall pace of the economic recovery.

The Labor Department's monthly Job Openings and Labor Turnover report showed that openings increased to 10.1 million in June. Consensus economists were looking for just under 9.3 million, according to Bloomberg data. May's job openings were also upwardly revised to nearly 9.5 million, up from the 9.2 million reported previously.

The largest increases in job openings came in professional and business services at 227,000. Other areas of the service economy also posted elevated levels of job openings, with retail trade and food services job openings each at more than 120,000 as of the end of June.

The layoffs rate was unchanged in June versus May at 0.9%, which marked the lowest level on record."

MY COMMENT

A TYPICAL market day....for the current times. In other words......NORMAL. What will count is where we end the day. What will REALLY count is where we end for the......YEAR.