The Long Term Investor

I missed the close today to go to a rehearsal. Looks like I missed a good one. I gained back all of my losses from yesterday. I was TOTAL green today......with a nice 0.50% beat on the SP500. Seven of my ten stocks were +1% or higher today. Among those was NVDA +3.64% and MSFT +2%.

Nice recovery from Monday.

 

Of course the futures are down big. BUT....they are RARELY relevant by morning.

 

We should see the debt ceiling "stuff"......make that capital "STUFF".....resolved soon over the next week or two. It should be resolved either by a reconciliation bill or the elimination of the filibuster for debt ceiling bills. That WILL remove one of the greatest impediments to the markets at this moment. We need to get beyond this government "stuff" so we can focus on EARNINGS.

 

The markets are in a.....PHASE.......right now. Lurching up one day and down the next. That is the short term norm at the moment. The buyers come in and drive the markets one day.......and....the sellers/traders come in and drive it down the next. Just the price of admission to be an ACTUAL investor.....not a short term trader, speculator, or market timer. We know from the academic research that the short term actions.....trading, speculating, market timing......translate into very sub-par returns over the longer term.

Bottom line.....each investor just has to do what they think is right for themselves. As usual the events of the past month or so are a......RISK TOLERANCE INDICATOR. This little market drop and the day to day volatility are a good indicator for investors to double check their risk tolerance.......and......make adjustments as needed.

 

A nice little article as usual......common sense for investors.

The Behavioral Quirk Recent Choppiness Reveals
Pundits’ reaction to volatility says a lot about sentiment.

https://www.fisherinvestments.com/en-us/marketminder/the-behavioral-quirk-recent-choppiness-reveals

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

"The pullback that began in September isn’t over yet, as Monday’s -1.3% drop added to the S&P 500’s rough patch. As with all short-term volatility, we think it is impossible to know when it will end. But we have already seen an age-old truth play out: When pundits call for the stock market to do X and it does Y, they pout. Yet when it complies, they don’t cheer, either. Understanding this behavioral quirk can help make headlines easier to navigate.

This is a regular occurrence in bull markets. If stocks rise as forecast, headlines will call them overvalued. If pundits say the market is overvalued and needs a pullback to let some froth out, they will inevitably treat an actual decline as a sign the bottom is about to fall out. This isn’t universal—there are always exceptions—but it happens often enough.

The latter is what we are seeing now. Over the summer, we saw oodles of articles observing that the S&P 500 hadn’t had a -5% pullback since last autumn and warning the market was too calm—ignoring the Delta variant, inflation, supply shortages and all the other ghost stories hogging headlines daily.[ii] The implication was that some volatility would be healthy, bringing prices more in line with reality.

Now we have that volatility, and US stocks have broken that -5% threshold. To be precise, the S&P 500 is now down -5.2% in price terms since its September 2 high. So naturally headlines are proclaiming that the stock market is now rational and everything is fine, right? Well, not exactly. They are now warning this is only the tip of the iceberg and things will get worse as rising costs wreck corporate earnings, the Fed reduces its quantitative easing (QE) bond purchases, supply shortages power lasting inflation and hammer the global economy and Congress fails to provide fiscal stimulus. We have taken all of these issues on in detail at one time or another and won’t rehash them here, not least because it would be a 2,500-word detour. But suffice it to say we think all are either false fears (QE’s end, lack of fiscal stimulus), unlikely to have as large and prolonged an impact as headlines allege (supply shortages and cost pressures) or likely too widely known to deliver a negative shock even if they linger a while longer (inflation).

In our view, from a sentiment standpoint, the rationale behind pundits’ newfound negativity matters less than the spreading of said negativity—its proliferation shows sentiment has retreated quite a bit since springtime. If investors were universally optimistic or spilling into euphoria, then commentators’ universal take would be along the lines of, this is a buying opportunity! But when pundits are able to see both rising and falling stock markets as problematic, the cognitive dissonance is a classic hallmark of more universally skeptical sentiment. It is a stock market version of people’s tendency to fear a weakening dollar one month and a strengthening dollar the next—which, as it happens, we also saw in headlines today. The tendency suggests a bit of dug-in fear people can’t shake.

This can weigh on returns in the short term. As Ben Graham famously observed, stocks behave like voting machines in the near term, registering people’s feelings. But notwithstanding the short-term effects, we think the overall change in sentiment is bullish. Bull markets climb a wall of worry. When sentiment is quite warm, as it was earlier this year, and people have fewer worries, then there might not be much wall left for stocks to climb. When sentiment nosedives and fears abound, it builds a few more bricks into the wall. It resets expectations, lowering the bar results need to clear in order to deliver positive surprise. In our view, this points to the bull market lasting longer than it otherwise might have, although the counterfactual is of course unknowable.

This is why we often say that volatility is normal and healthy in bull markets. It helps keep expectations in check and prevents people from getting too far out over their skis, giving stocks more time and room to climb. The key to reaping that climb is simple, albeit difficult emotionally. Instead of reacting to headline fears, remember the time-honored maxim: Be fearful when others are greedy and greedy when others are fearful."

MY COMMENT

AMEN. The current volatility is simply news driven and NOT based on FUNDAMENTAL REALITY when it comes to the actual businesses that make up the USA stock markets.

I really dont care much what is happening right now. I have been tending lately to NOT post a lot about the day to day DRAMA. I just cant get excited about the current up and down market action. I am human.....there are times when the markets cause me concern.....but.....this current market action......NOT AT ALL. It is just MESSY and ERRATIC......but I just tend to look at it each morning and say to myself....."so what".

 

HERE is what I consider a RATIONAL view of the markets right now.

Economic Outlook: Still Rising
We think high inflation will be temporary.

https://www.morningstar.com/articles/1060464/economic-outlook-still-rising

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

"U.S. real GDP increased 1.6% (6.5% annualized) in the second quarter of 2021, putting it 0.8% above its prepandemic (fourth-quarter 2019) mark. Consumer goods spending led the recovery, boosted by stimulus checks and substitution by social-distancing consumers. Consumer services is quickly recovering, thanks to mass vaccination, but second-quarter 2021 spending was still down 3% from prepandemic levels.

We expect a gradual return to normal spending patterns over the next year, with goods spending cooling off and services spending continuing to recover. The remaining shortfall in services spending is driven by air travel, large events, and similar areas. Restaurant spending has actually fully recovered after being down 50% at the worst of the pandemic. We think the categories still in shortfall will eventually follow the complete recovery seen with restaurants but with a lag, reflecting the time needed to plan out trips and for consumers to get comfortable with larger crowds. In the short run, the services recovery should resume after the delta variant runs its course.

Over the medium to long run, the question of economic growth hinges on the supply side of the economy. We're about 3% above consensus on GDP growth through 2025, reflecting our views on the supply side. We think the U.S. economy was operating below its potential even before the pandemic (in 2019). In particular, labor force participation was still running below its long-run trend, owing to the lingering impact of the Great Recession. However, we think exceptionally tight labor markets in the next few years will provide discouraged workers the opportunity to rejoin the workforce. This incremental labor market recovery will boost GDP growth through 2025.

We still think high inflation will be temporary, as we're expecting only about 2.2% inflation in the core Personal Consumption Expenditures Price Index over 2022 to 2025. First, vehicles are driving the bulk of the excess inflation today, as supply is constrained by the semiconductor shortage. Yet we see no reason the shortage won't eventually end. Second, even if high inflation does spread to other sectors, we don't expect it to prove any more lasting than in the vehicle sector. Global supply chains have been strained by unexpectedly strong demand. But supply should catch up eventually, and pressures should also ease as consumers continue to rotate their spending from goods to services."

MY COMMENT

YEP......inflation is not at historic highs and in my view is in the HEALTHY RANGE especially considering all the disruption to the economy and labor markets right now. I would much rather see the economy run slightly HOT than see it COLD in the current situation.........where we are trying to RECOVER the economy.

 

Markets are trying to come back some at the moment. The SP500 is WELL OVER 15% year to date. The ENTIRE re-opening is ahead of us.....and....we are about to begin EARNINGS.

These are the topics that count right now. NOT all the government turmoil and drama. NOT all the sensationalism and fear mongering in the financial media. It is important to keep in mind that the....financial media.....is NOT......the investing media. the financial media.....RARELY is talking about anything to do with ACTUAL investing.

 

ACTUALLY......I just looked at my account for the first time today. I was surprised to see it in the GREEN. Not by a huge amount....but it was positive by 0.05%. Half of my ten stocks are POSITIVE at the moment.......Amazon, Microsoft, Nvidia, Google, and Proctor & Gamble.

 

HERE is a bit of economic news that is a positive....but no one will care.

Companies hired at a brisk pace in September despite fears about Covid and the economy, ADP says

https://www.cnbc.com/2021/10/06/adp...568000-in-september-faster-than-expected.html

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

"Key Points

• Private jobs rose by 568,000 for the month, better than the Dow Jones estimate of 425,000.
• The leisure and hospitality sector led job creation with 226,000 hires.
• Companies with 500 and more employees led job creation with 390,000.

Companies shook off worries over the Covid delta variant and hired at a faster-than-expected pace in September, according to a report Wednesday from payroll processing firm ADP.

Private jobs rose by 568,000 for the month, better than the Dow Jones estimate from economists of 425,000 and ahead of the downwardly revised 340,000 reading in August. The initial August report showed growth of 374,000.

The data comes amid concerns about how fast hiring would grow considering ongoing fears over the delta spread and signs that the brisk economic growth of 2021 was beginning to slow heading into autumn, particularly due to supply chain bottlenecks that have driven inflation sharply higher.

“The labor market recovery continues to make progress despite a marked slowdown from the 748,000-job pace in the second quarter,” ADP Chief Economist Nela Richardson said.

Payroll growth also may have been helped by expiring enhanced unemployment benefits, according to Goldman Sachs.

Stock market futures were off their lows for the morning following the release, while government bond yields moved higher.

The critical leisure and hospitality sector led job creation with 226,000 hires. The category was hit hardest during the pandemic and has struggled to regain traction as it is the most sensitive to the economic reopening. Establishments are struggling with labor shortages despite nearly 2 million job openings.

Though the industry, which includes bars, restaurants, hotels and the like, has about 800,000 more workers employed than a year ago, its unemployment rate remains at 9.1%, compared with the national rate of 5.2%, according to Labor Department data through August.

Much of that hiring appears to have come through hotels and larger chains, as companies with 500 and more employees led job creation with 390,000. Businesses with fewer than 50 workers added just 63,000 jobs, while medium-sized firms contributed 115,000.

The faster pace of job creation comes with Covid cases on the wane nationally, despite some localized hot spots. Total U.S. cases averaged 97,909 on a seven-day rolling bases through Monday, compared to 160,284 a month ago, according to the CDC.

As usual, services dominated, with 466,000 new hires, helped by education and health services with 66,000, professional and business services with 61,000, and 54,000 from trade, transportation and utilities.

However, goods producers posted a solid 102,000 gain. Manufacturing contributed 49,000 and construction added 46,000.

The ADP report serves as a precursor for the Labor Department’s more widely watched nonfarm payrolls release Friday. The Dow Jones estimate from economists is for 500,000 new jobs after August’s letdown of just 235,000. However, the two reports can differ substantially. Through August, the ADP count of private payrolls had undershot the government’s tally by an average 37,000 per month.

MY COMMENT

YES.....good news and as should be expected. People can only go so long without working. Turn off the free money and they will come back.

The focus in this little article on COVID is just SILLY....screw covid......we are just going to have to live with the REMNANTS of this flue like disease. We have vaccines, we have treatment options, and we are quickly coming up with better and better treatment. The economy and society WILL normalize once all the goodies are shut off and people have no choice but to get on with normal life.

 

the markets REFUSED to buy into the BS today....and went positive instead. I could see it trying to happen about mid morning.

I was NICELY GREEN today. Plus got a good beat on the SP500 by 0.38%. EVERY one of my ten stocks was green today.....except for NIKE. Thanks a lot Zukodany......you jinxed the stock by buying yesterday.

I have 5 out of 10 holdings today with a gain over 1%.....Amazon, Microsoft, Nvidia, Proctor & Gamble, and Google. A powerful day when the markets just REFUSED to go down.

 

Yeah Zukodany....Japan. they were BOOMING in the late 1980's.....in fact they were booming till about 1991. I remember that era very well.....they were buying EVERYTHING in the USA......office buildings, companies, literally everything. In fact there was much concern that they were going to totally eclipse us and would end up owning the entire country. Than quickly....it all came to a grinding halt. The BUBBLE burst and they went into a deflationary spiral. That DEFLATION lasted all the way till this year. They just could never seem to pull out of it.

"Lost Decades
From Wikipedia, the free encyclopedia

The Lost Decades (失われた十年, Ushinawareta Jūnen) refers to a period of economic stagnation in Japan caused by the asset price bubble's collapse in late 1991. The term originally referred to the years from 1991 to 2001,[1] but the decade from 2001 to 2011 (Lost 20 Years)[2] and the decade from 2011 to 2021 (Lost 30 Years 失われた30年)[3][4][5] have been included by commentators.[4]"

https://en.wikipedia.org/wiki/Lost_Decades

See the above article for more.

 

ACTUALLY.....what I saw first hand over many decades with Japan, the EU, and other economies.....has made me fear DEFLATION much more than inflation. Just about the entire world was caught up in moderate to severe DEFLATION following the 2008/2009 near world banking collapse. Younger people have no memory of the DIRE SITUATION in Italy, Greece, Spain, Portugal and the rest of the EU following 2008/2009.

 

This is the sort of financial media article that is.....ABSOLUTE INSANITY and FEAR MONGERING. It is so EXTREME it makes me wonder if Goldman is trying to push the markets and benefit in their short term trading by putting this stuff out there in the media. JUST WORTHLESS INTENTIONAL............BULL SH*T.........and BLATANT POLITICS.....posing as news. Of course YELLEN is right out there with them.....as usual. JUST PATHETIC. I will not even put up the article.....but here it is.

Goldman Sachs warns of a 'real risk' that America could default on its debt

https://www.cnn.com/2021/10/06/business/goldman-debt-ceiling-miss/index.html

What is SAD is the fact that none of the companies or entities above care one bit how this GARBAGE is going to impact the short term markets and small investors.

 

Speaking of Japan.....they are booming right now.....after 30 years of horrible economy.

It's All Over for Japan (and That's Good)

https://www.schwab.com/resource-center/insights/content/its-all-over-japan-and-thats-good?cmp=em-QYC

HERE is a little summary of the article.....there is much more content in the article if you are interested in the jpanese markets and economy.

"Key Points

• Japanese stocks have rebounded to 30-year highs and became the world’s best performers in September and the third quarter.
• Gains were likely aided by the end of the Olympics, the leadership of Prime Minister Suga and the delta surge in COVID-19 cases.
• The performance momentum could continue with the reopening of the nation’s capital reinvigorating economic growth, the strong upward trend in revisions to analysts’ earnings estimates for Japanese companies, lower relative valuations, and a historically bullish pre-election period."

"No coincidence
The end of these events and the beginning of Japan’s strong market performance wasn’t likely a coincidence:

• The unpopular and divisive hosting of the summer Olympics has passed. Over the past 30 years, six of the eight countries that hosted the Olympics had subsequently outperformed the MSCI ACWI index in the following six months (with the two exceptions being China (Beijing) in 2008 during the beginning of the Great Financial Crisis and the UK (London) in 2012 during the European debt crisis).

• The unpopular Prime Minister Yoshihide Suga announced that he would resign. All leading candidates have pledged to promote more fiscal stimulus, giving a likely boost to the growth outlook

• COVID cases have retreated all the way back to pre-delta levels, alleviating a source of anxiety and need for continued restrictions, and their potentially negative economic consequences. The delta surge prompted Japan to reach sought after immunity levels (over 80% of the population getting the vaccine), despite initially lagging the U.S. in vaccination rates, limiting the likelihood for economically impactful restrictions going forward."

MY COMMENT

FINALLY after 30 years of deflationary depression Japan MIGHT have a chance to break free and become a strong economy again. NOT that I have any interest in any Japanese company as an investor.