The Long Term Investor

For those that are TRULY....long term investors......this little slight DIP is meaningless. Enjoy your day and forget about it. Or....if you are an observer of human behavior....enjoy watching the financial media ramp up the fear mongering.....and the running of the LEMMINGS.

I continue to be fully invested for the long term as usual.

 

Well.....a day like this is a useful tool for an investor. I doubt that anyone that posts on here really cares.......but for any readers.....it is a good time to do a little bit of RISK TOLERANCE ANALYSIS.

Many investors....over time....slowly take on more and more risk. Often more than they wish. SO.....if you are freaking out today....or....starting to get a little bit of panic.....or.....starting to think about going to cash....it might be a good time to evaluate your portfolio....your goals.....and the amount of risk that is right for you. Today is a MINOR BUMP.....but if it is bothering you....you may need to dial back the risk in your portfolio.....or.....readjust your holdings. Perhaps lessen your individual stock exposure......or perhaps hold more in cash or safe investments that are not exposed to the stock markets. Perhaps you have some relatively short term money.......1-2 years.....that you dont want to lose or risk.....so, it might be time to get it out of the markets.....for example house down payment money. Nothing wrong with periodically doing a mental health check.

 

While Evergrande is in the news this week.......here is a bit more information.

Here's the biggest risk from the Evergrande crisis, says Goldman Sachs

https://finance.yahoo.com/news/here...ande-crisis-says-goldman-sachs-173014015.html

(BOLD is my opinion OR what I consider important content)
"The biggest fear investors should have with the crisis gripping overly indebted Chinese real estate developer Evergrande is global contagion, argues Goldman Sachs.

"The danger is precisely the contagion effect, should a default occur without clear 'ring-fencing' of spillovers to other parts of the real economy or financial sector. Events over the past week suggest risks of inching toward that direction," said Goldman Sachs Hui Shan in a research note on Monday.

Shan points out that he is already seeing signs of "contagion" — a word that skyrocketed into financial media lexicon during the Great Financial Crisis when the liquidation of Lehman Brothers pressured all asset markets globally — related to Evergrande.

"Equities and bonds issued by other developers with high leverage have sold off. Protests at Evergrande offices across China may cause reluctance among potential homebuyers more broadly. Financing pressure faced by property developers has contributed to failed land auctions in a number of cities," said Shan.

An initial whiff of contagion blew through U.S. markets to kick off this week's trading.

By early afternoon trading, all major stock indices were at session lows. The Dow Jones Industrial Average plunged more than 800 points. The CBOE Volatility Index (VIX) spiked to levels not seen since May.

U.S. companies with outsized China exposure such as Apple and Tesla sold off hard, and were some of the most actively trafficked ticker pages on the Yahoo Finance platform. The concerns around Evergrande also triggered a nearly 10% sell-off in bitcoin (usually seen as a safe-haven play during bouts of stock market volatility), which spread to shares of crypto mining tech seller Nvidia.

"When something like this occurs, it is hard to get your arms around what it is and what contagion means. Think back to that stuff during the European or Asian financial crises," said Baird strategist Michael Antonelli on Yahoo Finance Live.

Goldman's Shan outlined several potential scenarios for China's economic growth from the troubles at Evergrande, all of which will only stoke fears of contagion to global asset markets.

Explains Shan, "In the first scenario, the total negative impact would depress the level of output by 1.4% of GDP, with the direct impact playing the most important role. In the second scenario, the total negative impact increases to 2.5% of GDP. In the third scenario, the total negative impact is as large as 4.1% of GDP, with the financial conditions channel contributing the most to the total impact, highlighting the importance of the financial spillover effect on the economy in this most bearish scenario. Note that this is a partial equilibrium exercise which does not take into consideration potential monetary and fiscal policy easing in response to the property market declines."

MY COMMENT

Not a lot helpful above....just a bit of info. It might be helpful to know what USA or EU banks or investment companies have BIG exposure to this Chinese company. Personally....I dont care about the Chinese economy......the numbers are so suspect and so much of it is FAKE......who knows what is actually going on over there.

One possible situation that can come from this sort of event as we saw back in 2008/2009 is DEFLATION.

 

I am down about 3% today in my TECH HEAVY portfolio.......so far. I am now down about 4.70% from my year to date performance high. STILL......nowhere near being a correction. I could see where we....."might" end up in correction territory within a week or two. OR....we might not.

The SP500 is STILL at +14.86% year to date......a very much above average gain with three months to go. As of a few moments ago my primary account was at +18.10% year to date......again a very nice number......with room to go down further and STILL be a realistic gain for 9 months.

WHATEVER.

 

I cant believe anyone would be RUNNING to bonds with these yields.....but.

10-year Treasury yield slides below 1.31% as investors crowd into bonds amid sell-off

https://www.cnbc.com/2021/09/20/us-...-investors-look-ahead-to-new-fed-meeting.html

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

"U.S. Treasury prices jumped and yields declined as investors rushed into the safety of U.S. government bonds amid a global sell-off in financial markets.

At 1:35 p.m. ET, the yield on the benchmark 10-year Treasury note dropped 6 basis points to 1.304% and the yield on the 30-year Treasury bond fell nearly 6 basis points to 1.842%. Yields move inversely to prices.

Treasurys
TICKER COMPANY YIELD CHANGE %CHANGE
US3M U.S. 3 Month Treasury 0.03 -0.008 0
US1Y U.S. 1 Year Treasury 0.068 -0.003 0
US2Y U.S. 2 Year Treasury 0.214 -0.012 0
US5Y U.S. 5 Year Treasury 0.819 -0.047 0
US10Y U.S. 10 Year Treasury 1.306 -0.064 0
US30Y U.S. 30 Year Treasury 1.844 -0.066 0

China’s second-largest property developer, Evergrande, is on the brink of default and sending shockwaves across markets as some analysts warn the pain that could come from its collapse would extend beyond China.

“By no means are we anticipating any Evergrande contagion will trigger a similar dynamic in the current episode, but the feedback loop between equity vol, financial conditions, monetary policy, and US rates is nonetheless worth highlighting as the market’s collective angst grows more pronounced,” said Ian Lyngen of BMO Capital Markets.

Homebuilder sentiment improved for first time in three months, according to data released by the National Association of Home Builders Monday morning, following a big drop in lumber prices.

Meanwhile, U.S. Treasury Secretary Janet Yellen asked Congress on Sunday to raise the federal debt ceiling. In an opinion article with the Wall Street Journal, Yellen said failing to raise the debt ceiling could spark a historic financial crisis.

Furthermore, investors are looking ahead to a new Federal Reserve meeting, with Chairman Jerome Powell due to speak on Wednesday. Powell has previously said the central bank could start lifting monetary stimulus before the end of the year and investors will be looking for clues about the tapering process."

MY COMMENT

YELLEN again......not helping what is going on. That lady is TOTALLY tone deaf. She needs to shut up....absolutely DISMAL TIMING.......to her statements to the media.

 

Yeah typical.....Emmett.

 

Well at least we came back nicely at the close compared to the lows of the day. At least there is something positive about today.

Every one of my holdings was in the RED today....as expected. Plus....I got beat by the SP500 by 0.33%......compiments of my tech heavy portfolio.

Move on....nothing to see here.

 

Evergrande? Well how about Sinic?

Chinese Property Developer Sinic Halts Trading After Sinking 87%

https://finance.yahoo.com/news/chinese-property-developer-halts-trading-080415576.html

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

"Sinic Holdings Group Co. has halted trading after an 87% slump in its shares Monday afternoon.

The Shanghai-based developer didn’t give any reason for the trading halt in Hong Kong. The sudden selloff in the last two hours leading up to the suspension was accompanied by a surge in trading volume that was about 14 times its average in the past year, according to Bloomberg-compiled data.

The company has a 9.5% $246 million bond due on Oct. 18 and Fitch Ratings revised its outlook to negative last week. The Monday share plunge has slashed its market value to just under $230 million, which is tiny for a listed developer in the city. An officer at the firm’s Hong Kong office said there’s no one to attend to media inquires.

“It’s the same story as everywhere else -- investors are concerned about the liquidity,” said Philip Tse, director and head of Hong Kong and China property research at Bocom International Holdings Co Ltd. “I think there are most likely some margin calls on some of the major shareholders” by looking at Sinic’s stock price pattern this afternoon.

The move comes as Hong Kong’s property gauge dropped the most since May 2020 amid growing investor angst about China’s real estate crackdown and worries that Beijing may tighten grip on the city’s property sector in its “Common Prosperity” campaign.

Risk-off sentiment in financial markets was widespread on Monday. Junk-rated Chinese dollar bonds slid by as much as 2 cents. The Hong Kong dollar fell to the lowest level this month."

MY COMMENT

In general Chinese companies CAN NOT BE TRUSTED. Their financials are TRASH. Business FRAUD is rampant in China. Reporting and regulation are WORTHLESS. It will be interesting to watch what the Chinese Dictatorship does with the worsening business and financial climate in China in the coming weeks. Owners of Chinese companies are going to have some thinking to do......glad I am NOT one of them.

 

Yeah good day for me too.....I just got done charting out a song that I had been avoiding. I thought I might be up late with this one.

I had been imagining and stewing over the chords in my head for the past day or two......before siting down with it this evening. In reality it turned out to be much easier than I thought. A very instinctive song in the end....it just came to me quickly once I started. The benefits of being able to hear and see a song mentally......and...let the subconscious brain do the work ahead of time. Had a chord that I have not used very often......G/B. A G chord with a B base.

Ok...right....this is investing talk. Yeah TomB16......a good day to get a couple of fills.

 

All the futures are GREEN at the moment.

 

Back to China.

China expert: 'There’s going to be a lot of pain' before Evergrande saga is over

https://finance.yahoo.com/news/china-expert-pain-evergrande-saga-202657436.html

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

"Markets sold off on Monday amid worries about Chinese property giant Evergrande's massive debt load, and one expert warns that there is more agony coming for anyone connected to Evergrande.

"There's going to be a lot of pain — almost everybody involved with this is going to get a chunk taken out of them, if not worse," Leland Miller, CEO of China Beige Book, told Yahoo Finance (video above).

Evergrande currently has over $305 billion in liabilities, and some worry about the potential risks to the Chinese financial system and global contagion were the company to fold.

"At the end of the day, there will be the ability of the [Chinese] government to step in and create an outcome that avoids worst-case scenarios... but I don't think it wants to step in just yet," said Miller. "They want to make sure there's plenty of pain... and everyone involved in Evergrande... [needs] to learn their lesson. And then at a certain point, the government will step in, but it's going to be ugly — there's no question about that."

The Evegrande saga comes amid a Chinese government crackdown on various sectors, and Miller noted that Beijing wants to teach the domestic market a lesson without causing too much damage globally.

"If you want to teach a lesson, you have to cause pain," Miller said. "But at the end of the day, you don't want the contagion to hit all sides of the Chinese economy. And one of the things that Beijing can do ... is be able to step in and order lenders to lend and order suppliers to supply and order bond holders to negotiate."

Some Western investors are worried about a possible slide into socialism after decades of capitalist-style policies and tremendous growth.

"I think this crisis will move along, I think it will fade into the background, markets will recover pretty quickly, maybe as quickly as tomorrow," Giles Coghlan, chief analyst at HYCM, told Yahoo Finance Live in a separate interview. "But the wider issue is: Is this a bigger from President Xi? Is he moving away from Western-style capitalism, back more closely to socialism? ... That on a medium-term perspective may be more worrying for investors."

Miller noted that Beijing is ultimately trying to address perceived risks to the country's economy.

"Right now, there is a paradigm shift going on right now where China is willing to accept lower growth in order to de-risk the system," he said. "It's been a reform effort that has pushed off for years, but it looks like it's begun.""

MY COMMENT

First......what planet do these people live on? WTF......saying that China may slide back into SOCIALISM. You have got to be kidding......they are off the rails into communism and dictatorship......they are WAY beyond Socialism. It is INSANITY to think of them as any sort of capitalist country or system.

I also think....that FANTASIZING that the Chinese DICTATOR can magically time the crisis perfectly and step in at the right time after teaching a lesson with a little pain is.....TOTAL FANTASY. It is more likely they will totally screw up the timing of whatever they try to do and set off HUGE SPIRAL of pain for their own country.......and their own financial and economic system.

This whole thing should be a BIG LESSON to all investors, banks, businesses, etc, etc, outside of China about the dangers of interacting with China......BUT NO.....no matter how bad it gets GREED will overcome everything and the Western banks, companies, and investors will be right back in there.....they will never learn. SO.....I have NO SYMPATHY for them or China.