The Long Term Investor

We will be able to look back in future years and say we were investing when a NEW and EXCITING financial product hit the shelf for the first time ever. YES.......the Bitcoin ETF. A historic day tomorrow.

This could make bitcoin bigger than ever

https://www.cnn.com/2021/10/18/investing/premarket-stocks-trading/index.html

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

"London (CNN Business)This year, cryptocurrencies have been up. They've been down. But they never seem to be entirely out.

What's happening: Hype around bitcoin is building again, with a financial tool that could boost public exposure to the digital currency poised to make its debut this week.
After plunging this spring, bitcoin is now trading above $60,000 — not far off the all-time high of more than $64,800 achieved in April. It's jumped more than 40% so far this month.

Driving the gains: Investors are excited about the anticipated launch of the first bitcoin futures exchange-traded fund. The ProShares Bitcoin Strategy ETF will go live on Tuesday, according to the company.
The fund will provide an entry point for investors who are interested in cryptocurrencies but don't want to deal with buying and selling the tokens themselves.

The SEC signaled last week that it could finally approve such an instrument, which the crypto industry has long lobbied for.
"Before investing in a fund that holds bitcoin futures contracts, make sure you carefully weigh the potential risks and benefits," the agency tweeted.

Should it go ahead, the ETF could supercharge bitcoin's recent rally.
"We view the approval of a Bitcoin futures ETF as a positive step for the digital asset space," Isaac Boltansky, BTIG's director of policy research, said in a recent note to clients.

That doesn't mean regulators are completely ditching their distrust of cryptocurrencies. Boltansky noted that a futures ETF is different from an ETF that buys and sells bitcoin directly. On that front, the SEC appears to remain skeptical.
And the rollout of stricter global rules continues to loom. Oversight bodies face more pressure to act as the pool of investment grows.

In a recent speech, Bank of England official Jon Cunliffe noted that the collapse of the $1.2 trillion market in subprime mortgage-backed securities triggered the 2008 financial crisis. Crypto assets, meanwhile, have grown to $2.3 trillion.
"$2.3 trillion of course needs to be seen in the context of the $250 trillion global financial system," Cunliffe said. "But as the financial crisis showed us, you don't have to account for a large proportion of the financial sector to trigger financial stability problems."

Some industry players see the writing on the wall. Coinbase published a proposal for regulating digital assets last Thursday. The company, which went public earlier this year, called for a designated US body to monitor crypto assets.
"Where new policy questions or challenges arise, the ability of a single dedicated regulatory body to respond in an efficient and timely manner benefits everyone," Coinbase said in a research paper.

MY COMMENT

NO.....I will not.....EVER....be putting money (I will not use the term "investing") in this futures ETF. I am NOT going to play with futures.....in any asset....but, ESPECIALLY Bitcoin.

For those that are fans of Bitcoin.....this might turn out to.........NOT........be what they are now cheering. It will definitely open the door for more and more government regulation of Crypto....under the guise of protecting the investing public.

I suspect that short term this event will trigger a very strong Bitcoin rally. But over the longer term.....this event may have the opposite effect. ANYWAY....this is an important step for CRYPTO......the last BIG step will be the mainstream adoption of Crypto mutual funds and ETF's that buy and sell directly. This is the first step in that direction and I have no doubt that it WILL happen.

 

Markets are trying to make a come-back. NASDAQ is now very slightly positive.....being led by the BIG TECH monster stocks. The SP500 is slightly negative. The DOW is cutting its early losses.

Hand to hand combat at the moment in the markets between the buyers and the sellers. I note that the Ten Year treasury yield is now back over 1.6%. Not that I care in the slightest about the ten year yield.

 

I like and agree with this little article.

Shhh … Elevated Inflation Rates Still Look ‘Transitory’
Pundits and policymakers alike seem fooled by statistical skew in September’s CPI.

https://www.fisherinvestments.com/e...levated-inflation-rates-still-look-transitory

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

"Transitory – adjective.
‘tran-zә-tȯr-ē

Definition:

1. Of brief duration; temporary
2. Tending to pass away; not persistent

Those are the two definitions Merriam Webster’s dictionary offers for transitory, but it seems Atlanta Fed President Raphael Bostic wants to add an interpretation to the above: a … shhh … “swear word.”[ii]

It isn’t, of course.[iii] But on the heels of Wednesday’s US consumer price index (CPI) release for September—which exceeded estimates with a 5.4% y/y rise—pundits and policymakers are increasingly questioning whether elevated inflation rates are really so transitory (oops).[iv] But in our view, most signs point to the recent spate of high year-over-year readings fading before long, including the September CPI’s details.

First, so that we are clear, when we use the term transitory, we aren’t suggesting CPI will turn negative and erase the uptick we have seen in recent months. Rather, we are suggesting the currently elevated, year-over-year rate of change noted above won’t persist far into the future. Inflation should slow; the rate of price increases should fall. So perhaps Fed officials’ error in deploying the term was being unclear in using it.

Still, we continue to believe that, using this definition of the forbidden term, hot inflation will prove to be of brief duration, subsiding to rates more akin to the sub-2% year-over-year pre-pandemic rates most pundits decried as too slow. The difference isn’t semantic. Prices compounding at a non-transitory (sorry) 2% rate for years on end have a very, very different effect than prices compounding at 5%. Exhibit 1 shows you a hypothetical change in prices of a $100 widget over 10 years’ time at these two consistent rates.

Exhibit 1: Hypothetical Effect of Two Inflation Rates on Prices


Source: Math and Microsoft Excel, as of 10/13/2021.

So the pertinent question, in our view, is: Do the currently elevated inflation rates last or fade? We have long argued the latter, and we see little here that changes our opinion.

To see why, dig into the data a little deeper. First, to use what is another inflation-related curse word to many, core CPI—prices excluding food and energy—rose 4.0% y/y, matching August’s rate. (Exhibit 2)

Exhibit 2: Headline and Core CPI


Source: US Bureau of Labor Statistics, as of 10/13/2021. January 2018 – September 2021.

Yes, we realize that you must buy food and energy to survive, so excluding them may not really reflect your spending. However, the CPI doesn’t aim to do that anyway. It is supposed to be a broad measure of price movement across the economy—something to help guide economic policymakers. The trouble with food and energy prices is that they are quite volatile, with swings often resulting from factors like weather—beyond the influence of policy. Furthermore, as we have discussed here several times, you must consider base-effect skew in year-over-year data.

While that is mostly behind us for the overall headline rate, various major categories—energy prices in particular—are still showing big base effects from last year’s lockdown-induced depressed levels. (Exhibit 3) They aren’t the only ones. The year-over-year change in prices for “food at home”—groceries—also shows a lagged base effect. These prices jumped during and just after lockdowns, but they fell back during summer and fall 2020. That is now the denominator used in calculating the food prices’ impact on the headline year-over-year rate, skewing the data.[v] It is somewhat ironic that, despite policymakers and pundits going to great lengths to warn correctly of statistical skew in CPI in the spring, they are now chucking the lesson out the window just when the world needs it.

Exhibit 3: Energy Prices Still Showing Base-Effect Skew


Source: US Bureau of Labor Statistics, as of 10/13/2021. January 2011 – September 2021.

We think it remains more telling to look past the big year-over-year numbers that inspire most coverage and focus on the trend in month-over-month data. These tell a more interesting story in our view—one of moderating price increases. (Exhibit 4)

Exhibit 4: Headline and Core CPI Moderation


Source: Federal Reserve Bank of St. Louis, as of 10/13/2021. January 2018 – September 2021. Recession dating as per the National Bureau of Economic Research, the official arbiter of American business cycles.

Viewed that way, the elevated inflation we have seen in recent months actually does look transitory. (There is that word again. We must wash our mouths out with soap.) Some choppiness should be expected, and it will take longer for lingering base effects in various underlying series to fall out of the data. But we think it remains a mistake to extrapolate today’s elevated surface-level, year-over-year inflation rates forward. All in all, today’s increasingly common fears of lasting, hot inflation rates look false—which should be a source of relief and positive surprise as this unfolds in the coming months, in our view."

MY COMMENT

I agree TOTALLY. What we are seeing as inflation right now will not last. It is NOT the dismal......wage/price spiral.....driven inflation of the late 1970's and early 1980's. In fact my view remains that the danger for the USA and business in the future will be......drum roll please......DEFLATION. We will get back to the point where we struggle to see inflation over 2%. In other words a lingering deflationary environment.

The above.....assumes....the the FED and the government dont overreact and push us into a deflationary situation that becomes the modern definition of STAGFLATION. At the moment I dont see this as likely.

 

I dont know Zukodany.....I might be up today.....we might BOTH be up today at this moment. I have not looked yet since I am in the middle to my morning reading with the business TV in the background. Now I have to go look......since you made me curious.

 

Well I looked. After nearly an hour....for me....it is as though the markets never opened. I am DEAD FLAT.....with a loss of less than $100 for the day. Statistically about......"0%" change so far today. We need to let the day age and mature before we will have some clue how we might end up today.

 

I see that the markets....at least according to the financial media.....are doing what they are doing based on EXACTLY what I expected.

Stock market news live updates: Stocks drop as inflation concerns outweigh earnings optimism

https://finance.yahoo.com/news/stock-market-news-live-updates-october-18-2021-113809831.html

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

"Stocks fell Monday to give back some gains after the S&P 500's best week since July, with investors' concerns over elevated inflation offsetting hopes that more companies will follow the lead of the big banks last week and post strong quarterly earnings results.

The Dow, S&P 500 and Nasdaq each moved to the downside. The moves tracked a drop in overseas equities after China reported its slowest GDP growth rate since last year for the third quarter, as energy shortages and property-sector turmoil dragged down economic activity in the world's second-largest economy. West Texas intermediate crude oil futures (CL=F) jumped above $83 per barrel to hover at their highest level since 2014, and the benchmark 10-year Treasury yield broke back above 1.6%.

This week, investors are looking ahead to a packed slate of corporate earnings results, which will help offer more insights into how companies across various industries have navigated inflationary trends, widespread labor scarcities and lingering virus-related disruptions. Remarks from some executives have further confirmed the weight of these issues. Fastenal (FAST) CEO Daniel Florness said during last week's earnings call that "product and shipping cost inflation is not just high, it's brutally high."

But an otherwise strong start to earnings season last week helped fuel optimism that corporate profits held up more strongly than anticipated across the board, even in the face of a myriad supply-related challenges. Big banks from Morgan Stanley (MS) to Bank of America (BAC) and Goldman Sachs (GS) handily topped estimates in their third quarter results last week, and many of these companies' executive offered upbeat assessments of the state of the U.S. consumer, or the demand engine of the U.S. economy. These remarks had helped affirm trends seen in recent economic data, with U.S. retail sales unexpectedly posting a monthly gain of 0.9% in September, government data last week showed.

"We started off this week really strong. The banks have done great ... That started to relieve a little bit of people's concerns, especially when you had the CEOs of the bank saying the consumer looks strong," Victoria Fernandez, Crossmark Global Investments chief market strategist, told Yahoo Finance Live on Friday. "And that, I think, is going to be the key for the market going forward. If the consumer is there and they're willing to spend — which we've seen in the month of September [when] retail sales started to come back a little bit — then I think that gives a little more optimism to the market that as we continue to reopen, as earnings are strong, the consumer will be there, and the equity markets will continue to trend higher."

As of Friday, the expected earnings growth rate for the S&P 500 was 30%, according to FactSet. That figure — based on both actual earnings from companies that have reported so far and expectations for future results — represented an increase from the prior week, when the anticipated earnings growth rate for the third quarter stood at about 27.6%.

7:58 a.m. ET: Bitcoin prices hover near six-month high as first-ever bitcoin futures ETF readies for launch
Bitcoin (BTC) prices hovered around $60,700 Monday morning after breaking above the $60,000 mark for the first time since April last week.

The jump came alongside reports that the Security and Exchange Commission was unlikely to block a new futures-based bitcoin exchange-traded fund (ETF) from launching on the New York Stock Exchange on Tuesday. ETF-provider ProShares confirmed to the New York Times on Monday that the fund will launch as planned, making it the first-ever bitcoin futures ETF on the public exchange. The ETF will offer investors exposure to bitcoin futures contracts, allowing them to bet on expected price changes rather than on the spot crypto prices themselves."

MY COMMENT

YEP.....a typical market open for the day and the week. We are going to be caught up in these same issues and with this sort of market for a long, long, time. This is to be expected. We are just at the start of the re-opening. It will take at least 12 months if not 24 months to get totally beyond these short term events. Of course....by than....who know what other issues will be impacting the markets. It is always something. That is just the reality of investing......there are ALWAYS short term issues and events causing concern.

I prefer to see the positive in the above article....most of which I have highlighted in BOLD. Hopefully we are on the way to expected earnings growth in the SP500 of 30% or more. Seems REASONABLE to me.

 

Well stated Zukodany. I think you are reflecting the view of experienced investors.

 

Time to go take care of some business. Looks like as I sign off the markets are right where they were.....the DOW down moderately....the NASDAQ slightly green.....and the SP500 slightly red. In other words a NORMAL market day according to the conditions we have been seeing for at least half the year...if not the entire year of 2021.

As usual.....SHOW ME THE MONEY.

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

 

Definitely Emmett......I missed you lately. I was about to check my coinbase account and see how my little 1/50th of one Bitcoin was doing in this rally.

I must report that I have now gone moderately GREEN for the day.....in my primary stock account. The day being about an hour and a half.

 

Good day for me too. It started slow but obviously progressed very nicely from there. I was very well into the GREEN today. Plus a solid beat on the SP500 by.....0.77%.

I had 8 of 10 stock holdings up for the day. AND......SEVEN......at gains of +1% or better......Google, Nvidia, Home Depot, Apple, Amazon, Microsoft, and Costco. Nike just missed the cut being up today by 0.90%.

A good day for me and Zukodany on the same day......I dont know what that means......but it must mean something.

 

This is a great little article.....so true.

Time Horizon is Everything For Investors

https://awealthofcommonsense.com/2021/10/time-horizon-is-everything-for-investors/

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

"Jeff Bezos took to Twitter this week to take a victory lap over and old Barron’s cover story:


I’m sure this story didn’t go over well at Amazon’s headquarters when it came out so I’m sure he’s thought long and hard about how to dunk on this one over the years.


Well played.

This cover story ran on May 31, 1999 which was just before the tech bubble burst. Over the next 16 months or so Amazon’s stock was down more than 94%.


Bezos won over the long-term but Barron’s what kind of right over the short-term, right?

Two investors can have completely different opinions about a specific stock or the market and both can be right (or both can be wrong). It all depends on the time horizon.

This is why traders and investors may as well be living on different planets when it comes to the markets.

Take a look at the performance of various sectors and stocks over the past year:


Energy is by far the best performing sector. Small cap value stocks are crushing it as well. Amazon is basically treading water over the past year. Zoom has gotten crushed despite now being a bigger part of most of our lives.


What if we zoom out (no pun intended) and go back a little further:


Since Zoom went public in the spring of 2019, the stock is still up huge. Amazon is up almost 80%. Despite rising nearly 100% over the past year, energy stocks are still down over the last few years.

Going long energy over the past year or so has been a wonderful trade. If you were in energy stocks before then, you got your shirt handed to you.

Zoom has been an awful trade over the past year but if you got into the stock at the onset of the pandemic you still made some good money.

Your view of any sector, factor or stock will have a lot to do with the time horizon in which you’ve been invested in it.


This is true of the stock market at large as well.

The shorter your time horizon, the higher the likelihood you will experience losses. And the longer your time horizon, the higher the likelihood you will experience gains.


The U.S. stock market has never had negative returns over a 20-year window dating back to 1926. The only 15-year return that went negative was the year ending in 1944. This was a period bookended by the Great Depression and World War II.

That’s a pretty good track record.2

Of course, a high probability for success based on historical returns is no guarantee but what’s the alternative?


The hardest part of this equation is not the math but the emotions. It’s probably never been harder to have a long-term mindset when it comes to investing.

It’s easier than ever to trade from anywhere. There are fewer frictions to trade now that zero-dollar commissions are ubiquitous. And no one wants to wait around for the long-term anymore when so many people are getting rich in a hurry.


Having a long-term disposition will always give you an edge in the markets because it’s so difficult for others to think and act this way.


You just have to be willing to wait long enough for your time horizon to work in your favor."

MY COMMENT

That chart above......."How often is the stock market positive".....reflects one of the GLORIES of long term investing. the number one GLORY is compounding. Perhaps number two is the FACT that as you get out to being a FIVE YEAR and beyond investor your odds of having a positive result is close to 90%. (rolling monthly returns)

THIS and other.....findings.......in the data and research on long term investing....is why I am ALWAYS positive and stay fully invested all the time. the ODDS over the long term are MASSIVELY in my favor.

 

HERE is what we saw today in the markets......according to the article......and.....in my opinion it is ALL about EARNINGS.

Stock market news live updates: S&P 500 and Nasdaq post four-day winning streak as optimism builds for Q3 earnings

https://finance.yahoo.com/news/stock-market-news-live-updates-october-18-2021-113809831.html

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

"The S&P 500 and Nasdaq ended higher on Monday, rising for a fourth straight day to add to gains after the S&P 500's best week since July. Investors weighed concerns over elevated inflation against hopes that more companies will follow the lead of the big banks last week and post strong quarterly earnings results.

The Dow ended the session slightly lower as shares of Disney declined by 3%. The moves in U.S. stocks came amid a drop in overseas equities after China reported its slowest GDP growth rate since last year for the third quarter, as energy shortages and property-sector turmoil dragged down economic activity in the world's second-largest economy. West Texas intermediate crude oil futures (CL=F) hovered at their highest level since 2014, and the benchmark 10-year Treasury yield broke back above 1.6%.

This week, investors are looking ahead to a packed slate of corporate earnings results, which will help offer more insights into how companies across various industries have navigated inflationary trends, widespread labor scarcities and lingering virus-related disruptions. Remarks from some executives have further confirmed the weight of these issues. Fastenal (FAST) CEO Daniel Florness said during last week's earnings call that "product and shipping cost inflation is not just high, it's brutally high."

But an otherwise strong start to earnings season last week helped fuel optimism that corporate profits held up more strongly than anticipated across the board, even in the face of a myriad supply-related challenges. Big banks from Morgan Stanley (MS) to Bank of America (BAC) and Goldman Sachs (GS) handily topped estimates in their third quarter results last week, and many of these companies' executive offered upbeat assessments of the state of the U.S. consumer, or the demand engine of the U.S. economy. These remarks had helped affirm trends seen in recent economic data, with U.S. retail sales unexpectedly posting a monthly gain of 0.9% in September, government data last week showed.

"We started off this week really strong. The banks have done great ... That started to relieve a little bit of people's concerns, especially when you had the CEOs of the bank saying the consumer looks strong," Victoria Fernandez, Crossmark Global Investments chief market strategist, told Yahoo Finance Live on Friday. "And that, I think, is going to be the key for the market going forward. If the consumer is there and they're willing to spend — which we've seen in the month of September [when] retail sales started to come back a little bit — then I think that gives a little more optimism to the market that as we continue to reopen, as earnings are strong, the consumer will be there, and the equity markets will continue to trend higher."

As of Friday, the expected earnings growth rate for the S&P 500 was 30%, according to FactSet. That figure — based on both actual earnings from companies that have reported so far and expectations for future results — represented an increase from the prior week, when the anticipated earnings growth rate for the third quarter stood at about 27.6%.

2:20 p.m. ET: Supply chain issues will be worked out 'sooner than later': Strategist
Supply chain issues and other supply-side constraints have been a primary area of concern for the markets over the past few months, and led to worries about margin compression for major companies. However, according to at least one strategist, these concerns may be overdone.

"I do believe that pessimism coming into earnings season... was overblown," Thomas Hayes, chairman of Great Hill Capital, told Yahoo Finance Live.

"The one thing that we look at as it relates to the supply chain issues is, if these issues were going to persist and be permanent, why would net profit margins be so high? We're going to have 12.3% net profit margin in Q3 while all these issues were happening," he added. "That's the third highest in history, second to the last two quarters. And that 12.3% net profit margin compares to the last five-year average of 10.9%."

"So like Jamie Dimon, the CEO of JPMorgan said last week, he said this is going to be a non-issue as we head into Q1 of 2022," Hayes said. "And this will work itself out ... Our bet is that it's going to be fixed sooner than later."

2:05 p.m. ET: Apple unveils new MacBook Pro with M1 Pro and M1 Max chips, new AirPods
Apple (AAPL) shares gained intraday on Monday after the company unveiled new versions of its MacBook Pro laptops and other hardware.

The company debuted 14- and 16-inch MacBook Pro models equipped with new M1 Pro and M1 Max chips, which both comprise upgrades compared to the original Apple-made M1 chip introduced last November. The new laptops can be ordered today and will be available next week, starting at $1,999 for the 14-inch computer and $2,499 for the 16-inch version.

Apple also introduced new entry-level AirPods, which include audio features like Adaptive EQ for a personalized listening experience, a new contour design and water resistance. This product begins at $179, while the previous model of entry-level AirPods was cut to $129.

Other announcements at Apple's event included an Apple Music Voice Plan, or subscription for Apple Music that is only enabled through Siri voice recognition. The voice-only plan costs $4.99, versus $9.99 for the flagship individual plan on Apple Music, and will be available in multiple countries starting later this fall.

12:33 p.m. ET: Investors could see a a new S&P 500 high by year-end: Strategist
Stocks have rallied back after a weak September, with hopes that corporate America will surprise to the upside on earnings helping push equities higher. Persistently accommodative monetary policies from the Federal Reserve have also helped support stocks.

"I think investors are looking at last week's reports from the big financials as a really positive sign for quarter 3, and what we can expect maybe from some other sectors," Jimmy Lee, CEO of The Wealth Consulting Group, told Yahoo Finance Live on Monday. "We saw a positive report also on the retail sales number, and my opinion is that the consumer is going to end up being stronger than a lot of people think coming into December and holiday spending. Of course, a lot of that depends on the supply shortages ... and hopefully as the supply constraints are being resolved, there'll be enough goods for people to spend money on."

"I think we're going to have a really good positive Q3," He added. "It's very tough to fight against low interest rates, and I think equity prices continue to go higher. And maybe we see new highs before year-end."

11:31 a.m. ET: Homebuilder sentiment unexpectedly jumped in October: NAHB
Optimism among U.S. homebuilders posted a surprise jump in October, with strong demand for homes helping offset ongoing supply chain and labor issues in the housing market.

The National Association of Home Builders' October Housing Market Index jumped to 80 in October from 76 in September. This index, which tracks confidence among domestic homebuilders, was expected to fall to 75 in the latest reading, according to Bloomberg consensus data. At 80, the index came in above the average of 70 throughout 2020 and 66 in 2019.

“Although demand and home sales remain strong, builders continue to grapple with ongoing supply chain disruptions and labor shortages that are delaying completion times and putting upward pressure on building material and home prices,” NAHB Chairman Chuck Fowke said in a press statement.

“Building material price increases and bottlenecks persist and interest rates are expected to rise in coming months as the Fed begins to taper its purchase of U.S. Treasuries and mortgage-backed debt. Policymakers must focus on fixing the broken supply chain," Fowke added. "This will spur more construction and help ease upward pressure on home prices.”

MY COMMENT

LOTS of good positive news in the article above and the various items that are summarized. Good news for the short term which sooner or later will translate into nice gains for long term investors. At the moment you can take either the NEGATIVE side of things.....or....the POSITIVE side of things....I prefer the positive side.

We have seen the constant NEGATIVITY about earnings and fundamental business results for at least FOUR or FIVE quarters now....same old "stuff". AND....the negativity has been consistently WRONG. I expect it to continue to be WRONG for this quarter and the 4th quarter. In addition I expect NEXT YEAR to be a very good year for business. We will be getting into the GUTS of the re-opening and all the issues that business and especially small business are having now should be resolving over the next 6-12 months. We will have the POTENTIAL for a real ECONOMIC BOOM next year.