The Long Term Investor

Love your story.....similar to my story a year ago when they got my return on time but due to their GIANT BACKLOG never got to it till August and ACCUSED me of filing late. I held on the phone for two hours........and same result as yours....they CAVED.

Yeah I am up....but not as much as I expected. I am a bit under the SP500 at the moment. I am HOPING for a closing rally into the afternoon. BUT....I will be satisfied to just end with a nice moderate POSITIVE day. What I "hope" for differs from what I will be "satisfied" with.

As I said.....I skip the 2nd, 3rd, and 4th, estimated payments. It is amazing how low the penalty is considering having that money invested. NOT recommending this to anyone else......but I have been doing it for decades.

 

WELCOME PatelFSU. We always need active posters....if you are inclined. Please feel free to post on anything to do with money or investing.......actually....anything of interest. good to see you here.

 

Looking good heading to the close.....we just have to survive the DREADED last hour of the last day of the week.

 

You were right Zukodany....this was my kind of day. I had a good SOLID day with every stock being in the Green at the close. I also got a nice beat on the SP500 by 0.27%.

A VERY good couple of days to close out another week. Now....we need to see EARNINGS take center stage and drive the markets to new highs as we head toward the end of the year.

 

ALL the averages are still in a very close race to year end. Baring some unforeseen disaster we should end with very nice gains for 2021.

DOW year to date +15.32%
DOW for the week +1.58%

SP500 year to date +19.04%
SP500 for the week +1.82%

NASDAQ 100 year to date +17.52%
NASDAQ 100 for the week +2.20%

NASDAQ year to date +15.59%
NASDAQ for the week +2.18%

RUSSELL year to date +14.73%
RUSSELL for the week +1.46%

First two days of the week were negative for the SP500.....the last three days of the week hit it out of the park. The DRAMA of the short term.......as we rack up the gains for the long term.

 

HERE is a general little article that gets into the psychology of investing.

Why Some People Invest and Others Don't
What makes some people more inclined to invest than their peers?

https://www.morningstar.com/articles/1061489/why-some-people-invest-and-others-dont

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

"Overall, people invest to achieve their financial goals, because they enjoy it, or some mix of the two. But almost everyone has financial goals (and likes to do things they enjoy), so why do some people with the means and resources to do so decide to invest, while others don't?

Our researchers found that there are other factors at play that determine who is more likely to invest.

Morningstar recently published the results of research with the goal of better understanding what these factors are. It's a nationally representative study of over 1,000 people (both investors and noninvestors) that looks at the psychological predictors of investing. You can find the full report here.

The research found that some obvious factors were at play in whether people invest or not, such as income and age. But what's different about this study was its examination of what's going on inside of people's heads, including their self-identity as an investor, the emotions they feel around investing, and their focus on preventing bad outcomes or achieving good ones.

So, Who Invests?

Based on Morningstar's research, there are some distinct key factors that make some people more likely to invest than others--one of which is how they identify themselves. People who self-identify as investors are much more likely to invest in individual stocks, exchange-traded funds, and cryptocurrencies than the broader set of people who only have retirement accounts.

People who consider themselves investors are also often older Americans, higher-income Americans, and those with a longer time horizon. These groups all tend to invest across multiple asset classes.

After identity, other important factors that determine whether someone will invest are income and interest. To put it simply, it's not just a matter of having the funds to invest. One must also have an interest in investing and being more directly involved in reaching financial goals.

Overall, people who invest differ in how they think about their goals and plan for the future when compared with those who are satisfied with being automatically enrolled into a retirement account by their employer.

Understanding New Trends in Investing

While it's true that higher-income and older Americans are more likely to invest, there's plenty to discover about the investing habits of lower-income and younger Americans as well.

For example, approximately 28% of respondents reported having owned cryptocurrencies. The sample is somewhat biased toward lower-income Americans, but, nevertheless, that is an astoundingly high figure and one worth looking further into. As a result, we've conducted another study where we take a closer look at cryptocurrency investing to see what we could learn.

It's an interesting study and helps us think about investing as more than a matter of dollars and cents."

MY COMMENT

About what I expected. I personally invest because I come from a household where, as a child, this was the norm and was discussed in front of us children. So when I was in High School and College I already owned a few stocks compliments of my parents. This shows the IMPORTANCE of discussing investing and money with your children and helping them to be educated and get started in the investing world. I believe this is the single most important factor whether someone invests.

Now....many people invest passively in their 401K and their IRA. This is now BASIC knowledge. I also see a lot of younger MALE investors getting started by peer pressure. They see and hear their friends talking about trading and they get involved as a competition. Not the best way to start.....but....at least a gateway to REAL investing for some percentage of the young guys when they get tired of gambling and/or start to educate themselves.

 

For the........"HISTORICAL RECORD"......here is what and why we did what we did today.

Stock market news live updates: Stocks post best week since July after earnings, retail sales top estimates

https://finance.yahoo.com/news/stock-market-news-live-updates-october-15-2021-222304167.html

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

"Stocks rose on Friday to post a robust weekly advance, with stronger-than-expected earnings and economic data helping lift the S&P 500 for a third consecutive day. The blue-chip index closed out the week higher by about 1.8% in its best one-week increase since July.

A new report from the Commerce Department showed an unexpected rise in U.S. retail sales in September and helped further lift sentiment, with consumer spending holding up more strongly than expected even given the latest rise in prices and lingering virus-related impacts.

Shares of big bank stocks including Bank of America (BAC), Citi (C) and Morgan Stanley (MS) ticked up during the pre-market session. The stocks had jumped a day earlier, after these banks posted much stronger-than-expected third-quarter earnings results. Peer banking titan Goldman Sachs (GS) also reported much stronger-than-expected earnings results before the opening bell Friday morning, sending shares sharply higher.

This week's early batch of stronger-than-anticipated quarterly results has helped assuage investors' concerns over a sharp deceleration in corporate profits, especially as expenses mount for companies across industries in the face of higher input and labor costs.

Investors have at least temporarily looked through ongoing reports and company commentary around shipping challenges and heightened prices. Nw inflation data this week also showed price increases at both the consumer and producer levels held at historically high levels last month.

Still, other upbeat economic data helped to counterbalance these reports, with Thursday's weekly jobless claims report showing new unemployment filings fell more-than-expected to a pandemic-era low last week.

"We've had a lot of volatility recently, and I think markets are looking for any little glimpse or glimmer of good news," Jack Manley, JPMorgan Asset Management global market strategist, told Yahoo Finance Live. "The earnings season ... has been good so far, and if history suggests anything, it's only going to get better from here."

Other strategists agreed that stocks may be set up to continue marching higher as earnings season continues, given the lowered expectations many investors maintained heading into the reporting season.

"We've had a number of Wall Street strategists come out and call for a correction. If you look at things like the surprise indices, they're all trending lower ... earnings estimates for the third and fourth quarter have leveled off," Jack Janasiewicz, portfolio manager for Natixis Investment Managers, told Yahoo Finance Live. "To me it feels like the market's leaning bearish. And when we start to think about the buyer power that could come back in when everybody starts to flip positive — earnings might be that catalyst, [and] we could certainly see that upside.""

MY COMMENT

As the week rolled along the good news started to pile up and become overwhelming. Economic data was good....earnings were GREAT....the Ten Year rate went back to the mid 1.5% range. The markets just could not do anything but go up.

We had so much negative and so-so commentary about earnings that the GREAT results.....so far......have kicked off a very positive and unexpected rally.

I LOVE all the negativity and blah talk about earnings. It makes for EASY PICKINGS as the REAL earnings come in. I continue to expect BLOCKBUSTER earnings this quarter and the forth quarter.

On one hand we have the speculation....which tends negative....on the other hand we have REALITY....which is tending positive. The perfect situation for an investor....at least one that has a horizan of more than a few weeks.

When you think about it.....we are STILL at the very beginning of the re-opening. We are going to see the good, the bad, and the ugly as we go forward. BUT...the overall trend in my opinion is very positive. In fact the negativity is a catalyst for this view.

ENJOY a good weekend people.....I guess it am not supposed to use the term "guys" anymore. Anyway.....GUYS....lets come back on Monday and hit it hard.....ready to make some money and continue to watch those earnings unfold. Us long term investors.......will be doing the supremely difficult.....NOTHING....yet again next week.

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

 

PatelFSU

A business owner, a long time investor, started when you were 16......there is no reason for you to feel intimidated about posting here.

Anyone else.....young, old, experienced, inexperienced, male, female, etc, etc, etc,......anyone......is welcome to post on here. Just put up a post, than a second, than a third and on and on.

It is not up to me to "allow" someone to post on this thread. This is a public forum.....open to ALL. In fact....this is NOT "my" thread. It belongs to ALL that post here and lurk here. I hope to post for a long time.....even if I am posting into the wind as the only person here. BUT...it is much nicer with participation and discussion and different styles and opinions. There is NO need to agree with me on here in order to post. There is no right or wrong. All I say is please be polite and respectful to other posters.

We all have our own investing style and views. So, Traders, Technical Investors, Fundamental Investors, Long term Investors......and all others......feel free to make this thread your home. If this thread is not a good fit....there are many, many, other threads on STOCKAHOLICS to consider and participate in. Participate in as many as you wish.

I say the above as a poster.....I am NOT a MOD or ADMIN on this site or this thread. BUT....I have been posting on investing boards for a long time and it is better for all when there is nice participation. I think you will find that everyone on here is helpful and welcoming.

 

Not a lot of earnings next week....but some big ones. On Tuesday we will see Johnson & Johnson, Netflix, and one of my holdings Proctor & Gamble. Wednesday the big ones with be IBM and Tesla. On Thursday Intel. Friday Honeywell reports...another one of my 10 holdings.

From next week on we will see earnings ramp up over the next five to six weeks. It will be nice to have a distraction from the same old financial news story-lines that have been pushed for the past 6 months.

 

Playing with numbers today. Total return for each of my 10 stocks.If you held each of these 10 stocks for the past.....FIVE YEARS.....here is how you would have done. For each stock I include one year, three year and five year TOTAL RETURN.

APPLE - one year +20.8%......three year +175.1%......five year +425.1%.

AMAZON - one year +2.1%......three year + 93.6%......five year +314.2%.

NIKE - one year +23.4%......three year +116.8%......five year +223.0%.

MICROSOFT - one year +39.8%......three year +193.1%......five year +472.6%.

COSTCO - one year +24.2%......three year +112.2%......five year +237.2%.

NVIDIA - one year +56.7%......three year +274.2%......five year +1244.5%.

HOME DEPOT - one year +24.6%......three year +97.1%......five year +211.5%.

HONEYWELL - one year +30.1%......three year +55.0%......five year +134.0%.

GOOGLE - one year +81.8%......three year +156.5%......five year +251.4%.

PROCTOR & GAMBLE - one year +2.9%......three year +95.1%......five year +88.4%.

Pretty IMPRESSIVE results by these ten stocks over the past......FIVE YEARS. Totally abnormal returns. We have been in an AMAZING BULL MARKET for many years now.

 

This little article SHOULD be sobering data for those that are going to be retiring in the near future and pension funds.

Reaching for Returns

https://compoundadvisors.com/2021/reaching-for-returns

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

"7.5%.


That’s been the annual return assumption of pension funds for decades.

What mix of assets is required to generate such a return?

The answer to that question has changed dramatically over the past 40 years. Let’s take a closer look…

January 1981

In 1981, short-term Treasury bills were yielding over 15%, near their highest level in history. 1


You could have put 100% of your assets in Treasury bills and achieved a return of more than double the 7.5% target.

January 1986

By 1986, interest rates had been cut in half, with Treasury bills now yielding 7.1%. To hit 7.5% you now needed to incur a little volatility, and move a portion of your portfolio into higher yielding 10-year Treasury bonds (9.1% yield at the time).


The new mix: 78% Treasury bills, 22% Treasury bonds.


January 1991

Five years later, interest rates had moved lower once again, with 3-month Treasury bills now yielding 6.2% and the 10-year Treasury at 8.0%.


The new mix: 29% Treasury bills, 71% Treasury bonds.


January 1996

By 1996, the move lower in yields had become more pronounced, with Treasury bills now yielding 5% and Treasury bonds yielding 5.6%. For the first time, this necessitated an allocation outside the safety and security of government bonds. At the time, BBB-rated corporate bonds were yielding 7.5%, meaning a 100% allocation that asset class was necessary to hit the target.

The new mix: 100% BBB Corporate bonds.


January 2001

In 2001, the story remained very much the same, with Treasury yields around 5% and BBB corporates moving up to 8%. This gave some room to include Treasury bonds in the portfolio again while still hitting the 7.5% target.


The new mix: 15% Treasury bonds, 85% BBB Corporate bonds


January 2006

By 2006, yields had moved lower once again, with the 3-month at 4.2%, 10-Year at 4.5%, and Corporate Bonds at 6.1%. With all three below the 7.5% hurdle, a move into equities was now required (note: using a 10% return assumption for U.S. equities).


The new mix: 66% Corporate bonds, 34% Stocks


January 2011

By 2011, the Fed’s 0% interest rate policy was in full effect, and Treasury bills were yielding almost nothing.


Corporate bond yields had moved down to 6.1%, requiring more in equities to hit the target.


The new mix: 63% Corporate bonds, 37% Stocks


January 2016

By 2016, Corporate bond yields had moved down to 5.5%, and the shift into equities continued.


The new mix: 55% Corporate bonds, 45% Stocks


January 2021

Which brings us to the start of this year, where short-term rates were once again near 0%, Treasury bonds at just over 1%, and Corporate bond yields at record lows (3.2%). For the first time, more than half the portfolio would need to be in equities to have a chance at hitting 7.5%.


The new mix: 36% Corporate bonds, 64% Stocks


A 40-Year Transformation
Over the last 40 years, we’ve seen a complete transformation in the portfolio mix necessary to hit a 7.5% return, from 100% Treasury bills in 1981 to 100% in Corporate bonds in 1996 to more than half of the portfolio in equities today.


Note: Assuming 10% Equity Return
The result has been a significant move up the risk curve, with higher volatility and the potential for much larger drawdowns.


And this assumes a 10% return for equities, which is far from a guarantee going forward. At current valuation levels, the historical precedent has been below average future returns (see here).



This is important because even if we move the equity return assumption down slightly to 8%, that would require a portfolio of nearly 90% equities.


Note: Assuming 8% Equity Return
And if we use more pessimistic assumptions (ex: Vanguard’s estimate of 2.4%-4.4% for U.S. equities), hitting 7.5% becomes mathematically impossible.

Reaching for Returns
The 40-year decline in interest rates has put investors today in a difficult position. They are forced to either reach for higher returns or accept the reality of lower ones.

Neither choice is optimal:

• Reaching into equities requires the ability (both psychologically and financially) to withstand a much more volatile path (see here), with no guarantee that path will be rewarded with higher returns (see here).

• On the other hand, lowering your return expectations may require some combination of the following: saving more, spending less, or retiring later.

These options may not be palatable, but they are realistic, and any successful plan needs to be grounded in reality. Confront the world as it is today and be prepared to adapt as it changes tomorrow. That’s the best you can do as an investor.

MY COMMENT

Those that will be retiring in the next 10-15 years need to WAKE UP......NOW. In the current low yield world.....it is going to be very difficult to live from your money in retirement without taking stock market risk. Some people will need to take a lot of stock market risk....or.....cut their retirement expectations WAY BACK. RISK TOLERANCE......as usual......will be the name of the game. The world has REALLY changed for those that need a good source of income with minimal risk.....those days MAY be gone for good. I would guess that MOST people do NOT appreciate what this is going to mean for them in retirement.

HOW do you deal with this.......PLANING, PLANING, PLANING. You MUST anticipate this and other potential market conditions at least.....TEN YEARS.....before retirement.

 

Well.....we had three days of market REALITY, but now....we are right back tot he same old open for the markets for the same old reasons. I dont even have to read anything yet today....it is inflation, supply chain issues, fear that earnings might not meet expectations, economic reports that will come out this week, the Ten Year Treasury yield, the FED, and the general economy. Add in the fear mongering about Christmas and supermarket shelves.....sub issues in the above.....and you have the open today.

We have been dealing with and living with ALL the above issues for at least SIX MONTHS now. In terms of actual business and actual individual stocks....I would guess that most of these issues are FULLY baked in by now. I am sure the short term traders must LOVE the current markets. It is their kind of environment. BUT......when I look at the YTD return of the SP500.....I see that AT THE SAME TIME......it has been a GREAT year for long term investors.