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The Long Term Investor

Discussion in 'Investing' started by WXYZ, Oct 2, 2018.

  1. WXYZ

    WXYZ Well-Known Member

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    That is the reason I have about half of each portfolio in my three funds. It gives me diversification from my very concentrated stock selections and on that portion of my account I let others do the work. The funds also serve as a balance to my personal bias as an investor......sort of a second opinion. It has been many decades since I have had more than 15 stocks in my portfolio. For a long time now it seems to be generally in the 10-15 company range.
     
  2. WXYZ

    WXYZ Well-Known Member

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    YET ANOTHER positive building block for the general economy and stock markets.

    Consumer Price Index Surprise: Everyone Has Jobs and Prices on Many Things Are Falling

    https://www.breitbart.com/economy/2020/01/14/consumer-price-index-shows-very-low-inflation-persists/

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


    "U.S. consumer prices barely rose in December despite record low unemployment, indicating that inflationary pressures remain very muted.

    The Labor Department’s Consumer price index increased 0.2 percent in the last month of 2019, a slowing of the pace of prices from the 0.3 percent rise in November and the 0.4 percent rise in October. The December figure was below the consensus forecast of a 0.3 percent gain.

    Core CPI, which excludes the volatile categories of food and energy, rose by just 0.1 percent.

    In the 12 months through December, the CPI rose 2.3 percent. There was no change to either the annual figure when food and energy are excluded.

    That likely means that inflation as measured by the Federal Reserve’s preferred metric, the personal consumption expenditure index minus food and energy, is running below the Fed’s two percent target. Core PCE inflation tends to run a half a percentage point below CPI.

    Last week’s employment report showed that wages had increased by less than three percent on a 12-month basis in December despite unemployment holding at 3.5 percent, a 50-year low. This suggests that the U.S. labor market still has slack and undermines arguments from corporate lobbyists in Washington, D.C. that businesses need higher levels of immigration to fill jobs.

    Many items that attract a lot of attention from consumers are down in price. Televisions are down more than 20 percent compared with a year ago. Apparel prices have fallen 1.2 percent, with women’s clothing prices down 2.2 percent. Major appliances are down 7 percent. Prices of fresh fruits and vegetables are down 1.8 percent.

    The price of cars and trucks are up just one-tenth of a percentage point. Even drug price inflation is low, with prices rising just 3 percent."

    MY COMMENT

    Pretty good. BUT......the bias is STILL on the deflationary side of things. A slowing economy with deflationary tendency would not be a good thing. Look at Japan and the EU and others in the world and you will see that DEFLATION is extremely difficult to get out of once it takes hold. It can linger for a long long time.

    Mixed markets today. Dow up 32. SP500 and NASDAQ down. Supposedly due to China deal signing tomorrow and bank earnings being reported today.
     
  3. WXYZ

    WXYZ Well-Known Member

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    I hate these sorts of POSITIVE news and market days........when you think "I am going to have a nice gain today" and you look at your account and you not only dont have any gain at all,.....but a small loss. I have five or six stocks down today in spite of all the positives. So.....I have a loss of about $500-$600 at the moment. That is the price you or in this case...."I"....pay (once in a while) for having a very concentrated stock side to my portfolios.

    INTERESTING.......the majority of sites and news papers that I have looked at today have ABSOLUTELY NOTHING about the trade agreement. Kind of like the old tree falling in the forest........if positive economic news happens and no one reports it, did it really happen? I would guess that at least half to two thirds of the country no longer looks at any sort of TV news or newspaper any more. NOT a good thing if you are an investor. KNOWLEDGE is power.
     
  4. WXYZ

    WXYZ Well-Known Member

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    Well by the end of the day with all the funds reporting......I had a gain today of a little over $400. At LEAST I was able to squeeze out a little gain rather than a loss. Onward and upward for the rest of the week. We have had a really nice open to 2020 to date:

    DOW year to date +1.72%
    SP500 year to date +1.81%
    My Portfolio year to date +2.48%

    Earnings will pick up over the next six weeks and will be the primary driver of the general markets. There is a BIG PILE of money siting on the sidelines that might serve to drive the markets over the first part of the year. Seems that many companies tried to tamp down expectations last time they reported and were pretty conservative in forward looking statements. Lets hope this makes earnings a BIG market driver.
     
  5. WXYZ

    WXYZ Well-Known Member

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    YES.....the markets are going to be DRIVEN by reports and earnings over the next six weeks. I am leaning to the side that financials will be good and with the new China deal, forward statements will be less wishy washy.

    Stock Market Jumps On Strong Retail Sales; Morgan Stanley Surges, But Tesla Dives On Downgrade

    https://www.investors.com/market-tr...-tesla-stock-downgrade/?src=A00220&yptr=yahoo

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

    "The stock market got back on track early Thursday with record-setting gains on strong U.S. retail sales data and corporate earnings results. The Dow Jones Industrial Average gained more than 170 points in today's stock market amid boosts from Dow Jones stocks Apple, Goldman Sachs (GS) and Intel.

    Dow Jones stocks Apple (AAPL) and Intel (INTC) were among the top-performing stocks on the Dow Jones Industrial Average, lifted partly by bullish results from Taiwan Semiconductor (TSM). Meanwhile, financial stocks Charles Schwab (SCHW) and Morgan Stanley (MS) reported earnings results. Stock market leader Tesla (TSLA) dove as much as 5% after an analyst downgrade. Lastly, PayPal (PYPL) shows a new buy point in a new formation. (Check out Wednesday's IBD Investing Action Plan for more important stock market events and other earnings results.)

    Dow Jones Sets Record High In Current Stock Market Rally
    The Nasdaq composite rose 0.9% in morning trade. The S&P 500 moved up 0.6%, while the Dow Jones industrials also rose 0.6%. All three major indexes set fresh all-time highs Thursday, as the current uptrend continues.

    Among exchange traded funds, the VanEck Vectors Semiconductor ETF (SMH) jumped 1.6% as chip stocks rallied behind the TSMC report.

    The Innovator IBD 50 (FFTY) ETF gained 0.5% Thursday. The ETF of top growth stocks is above a 35.52 buy point after last week's breakout.

    Dow Jones Stocks: Apple, Goldman, Intel Lead
    Among the Dow Jones stocks, Apple gained about 1%, as it looks to halt a two-day slide. The iPhone maker is about 40% from a 221.47 buy point in a flat base.

    Intel stock rose 0.8%, as it tries to retake a 59.23 buy point in a cup with handle, according to MarketSmith chart analysis.

    Elsewhere, Goldman Sachs rallied almost 1% after Wednesday's volatile session — fueled by its Q4 earnings results. Shares are about 12% above a 222.34 entry in a flat base."

    MY COMMENT

    It is hard to see what I bolded in the above with all highlights in the original article. BUT, most of what I highlighted is the small statements in the article that deal with earnings reports and why the markets are UP today. We are in an AMAZING period right now in terms of all the indicators and the stock markets. It will either be a HISTORIC MARKET making a major move up.......OR.......some unknown event or happening will come out of nowhere and we will see everything fall apart and end up in a correction. In other words short term........who knows?
     
  6. WXYZ

    WXYZ Well-Known Member

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    HERE is confirmation of what I was talking about in the posts above. We are in a very RARE GOLDEN time for stock and fund investors. UNFORTUNATELY the one big ugly event that will loom over the markets more and more as the year progresses is the election. All in all the various economic factors and busines news is EXTREMELY positive.

    (BOLD is my opinion or what I consider important content)
    The market's earnings losing streak may be about to end

    https://www.cnn.com/2020/01/17/investing/earnings-fourth-quarter-preview/index.html

    "Earnings season is off to a strong start. We haven't been able to say that in a long time.

    JPMorgan Chase (JPM), Citigroup (C), BlackRock (BLK) and Morgan Stanley (MS) all reported results for the fourth quarter that topped forecasts. So did Delta (DAL) and Dow component UnitedHealth (UNH).

    If the trend of companies surpassing Wall Street's estimates continues, Corporate America may break its earnings recession — a streak of three consecutive quarters in which profits dropped year-over-year.

    Analysts are currently predicting another decline in earnings for the S&P 500 in the fourth quarter -- but of only about 2.1% according to estimates from FactSet Research. So if companies wind up beating forecasts, as they often do, then that will mean that earnings may finally go up again.

    "Earnings expectations for this quarter are quite low so it should be somewhat easier to beat them. We should have a decent earnings season," said John Praveen, a managing director and portfolio manager with QMA.
    That could be a good sign, especially if companies are confident enough to raise their outlooks for 2020 as well.

    Rebound in profits coming this year?
    Analysts now predict earnings in the first quarter will be up nearly 5% from a year ago, according to FactSet. The earnings momentum should build throughout the year. Analysts expect a 9.5% jump in profits for all of 2020.
    Praveen told CNN Business that earnings growth of about 10% this year seems like an achievable target thanks to stronger global growth forecasts. Big multinational companies should benefit the most from revenue and profit gains in their overseas businesses, he said.

    The fact that many big financial companies are doing so well -- State Street (STT), Charles Schwab (SCHW) and US Bancorp (USB) also topped analysts' earnings forecasts -- is a good sign for the rest of the market and broader economy as well.

    "We could see more strength for the rest of Corporate America," said Mark Doctoroff, global co-head of the financial institutions group at MUFG. "The earnings recession may be over."
    Doctoroff said in an interview with CNN Business that it was particularly encouraging to see how many banks reported solid results from their consumer lending units. The combination of a healthy job market and lower tax rates for many Americans is helping offset the Federal Reserve's three interest rate cuts last year that have hurt profit margins for some banks.
    Still, companies in other sectors also need to report strong results for the earnings recession to finally end.

    Busy week of earnings lies ahead
    More blue chips will release their earnings during next week's holiday-shortened trading session. (US markets are closed Monday for Martin Luther King, Jr., Day.)
    On tap are IBM (IBM), Netflix (NFLX), Johnson & Johnson (JNJ), Comcast (CMCSA), Procter & Gamble (PG), United (UAL), Southwest (LUV) and Intel (INTC), just to name a few.

    "It's pretty clear that the earnings slowdown is probably coming to an end and we're probably headed for a modest recovery. The economy continues to do okay," said Ed Clissold, chief US strategist with Ned Davis Research. "But we'll get a better feel when we get earnings from more tech and consumer companies in the coming weeks."
    Clissold added that investors are hoping that even more blue collar manufacturing sectors start to show strong growth. That could push stocks, which are currently at all-time highs, to keep hitting new records since it would justify the broader market rally.
    "What could make earnings go from good to great would be a bigger pickup from traditional sectors like energy, materials and industrials," Clissold said.""

    MY COMMENT

    In my opinion we are in for a very good earnings season. I also believe that the view of weak earnings over the past year or two is NOT entirely accurate. My view is that earnings have been stronger than expected in general over the past year or two. Much of what is called weakness is simply NIT PICKING of earnings reports.....especially forward looking statements. We have been in an environment where everyone is looking for any sign of weakness and hammering companies for a few days after earnings as a result. The REAL STRENGTH of the economy and business is the fact that the dip that is often seen after earnings are reported is usually only for a few days to a week or two. The recovery in stock price comes quickly. It would be nice to see a market where the BIG PICTURE is once again the focus, rather than nit picking some obscure or out of context data in an earnings report. All in all in my opinion the year looks MASSIVELY POSITIVE for stock and fund investors an business. I continue to be fully invested for the long term as usual.
     
  7. WXYZ

    WXYZ Well-Known Member

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    Three weeks into the new year the markets are BOOMING. STILL, I would not be surprised at all to see a little correction some time around April or so. In the meantime, I will continue to take everything the markets want to give me. At the moment we are at:

    DOW year to date +2.84%
    SP500 year to date +3.06%
    MY PORTFOLIO year to date +3.44%

    Be AWARE, these sorts of returns are short term historical aberration. Things will smooth out as usual as the year continues. There will be one or two corrections this year. This is normal market behavior. HOWEVER, at the moment the general market direction is UP. You cant fight the fed, you cant fight the tape, you cant fight all the economic indicators that are STRONGLY positive at the moment. I have seen many market predictions that this year will be a low average year.......5-9% by year end. I believe these predictions are LOW....my "guess" would be 12-18% for 2020 by year end. The key event will of course be the election.
     

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