The Long Term Investor

Stay safe Zukodany. Sounds like you have a lot of market watching in your immediate future. At least you are 5 days into it.....so probably unlikely that you will have more severe symptoms. Take care.

 

Yeah.....I am a market timing genius. My TESLA trade one day ago (FRIDAY) is now UP by $61 per share. A gain of 6.9% in one day. EXACTLY what I planed and anticipated......

NO....NOT AT ALL. Simply LUCK. I had no idea that this bump up would happen or even "might" happen. AND....stocks go up and down....no doubt at some point....probably in the next months....much of this gain will be lost due to short term action.

What I do know is......when I decide to buy something I do so.......ALL IN ALL AT ONCE......if it is going to be a long term holding. I DO NOT wait for a drop in price to give me a buying opportunity. The RESEARCH tells me that doing this.....on average......will produce a better return over the long term compared to waiting for some mythical entry point when the stock drops down. Of course going with the actual research....goes against common sense.....and what your brain tell you to do.......so very few people buy in this way.

 

I like this little article....food for thought.

There’s No ‘Supply-Chain Shortage,’ Or Inflation. There’s Just Central Planning

https://www.forbes.com/sites/johnta...theres-just-central-planning/?sh=32db401b1479

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

"It’s great that so many have copies of Adam Smith’s The Wealth of Nations, but very unfortunate that so few have read it. The alleged “supply chain” problems we’re enduring right now were explained by Smith in the book’s opening pages.

Smith wrote about a pin factory, and the then remarkable truth that one man in the factory working alone could maybe – maybe – produce one pin each day. But several men working together could produce tens of thousands.

Work divided is what enables the very work specialization that drives enormous productivity. If this was true in an 18th century pin factory, imagine how vivid the truth is today. Figure that something as basic as the creation of a pencil is the consequence of global cooperation, so what kind of remarkable global symmetry leads to the creation of an airplane, car, or computer? The kind that can’t be planned is the short answer, but more realistically the only answer.

Please keep this in mind as you read media coverage of the so-called “supply-chain disruptions” resulting in “shortages” that are said to be causing “inflation.” If you want a bigger laugh, read about what President Biden wants to do in order to get “supply” back on the market with an eye on replenishing U.S. retail shelves that are increasingly bare. He’s decreed 24-hour port operations! Yes, thanks to the 46th president we now know what held the Soviets back, and ultimately destroyed the Soviet Union: their ports weren’t open long enough; thus the shortages of everything…

All of the above would be funny if it weren’t so sad. Media members, “experts,” economists, and politicians don’t even disappoint anymore. To say they do would be to flatter them.

Either they think we have inflation, shortages, or a combination of both. Wrong on all counts. Really, who was talking about supply-chain shortages or the impossibility that is demand-driven inflation in early 2020? Very few were, and that’s because the U.S. economy was largely free then. At which point politicians panicked. And in panicking, they imposed a rather draconian form of command-and-control on the U.S. economy.

Some were free to work, some weren’t, and more still were free to work and operate their businesses within strict political limits. From freedom to central planning in a very small amount of time. At which point it’s worth considering once again the simple pin factory that Smith witnessed in the 18th century versus the global cooperation that was the norm 19 months ago.

The supply lines of February 2020 were impossibly complicated structures that no politician could ever hope to design. Think billions of individuals around the world pursuing their narrow work specialization on the way to enormous global plenty. Put another way, the shelves in economically free countries were heaving with all manner of products based on economic cooperation that was staggering in scope. Brilliant as some experts claim to be, and brilliant as some politicians think they are as they look in the mirror, they could never construct the web of trillions of economic relationships that prevailed before the lockdowns. But they could destroy the web. And they did; that, or they severely impaired it.

In which case let’s please not insult reason by talking about “shortages” or “inflation” now. Let’s instead be realistic and talk about central planning. We know from the 20th century that when politicians, authoritarians or both substitute their intensely narrow knowledge for that of the marketplace that immense want for very little (and lousy) supply is the logical result. Yes it is. When we’re not economically free, bare shelves are the inevitable result.

Conversely, product and service abundance is a certain consequence yet again of the infinite actions and trillions of economic relationships entered into by billions of people. These commercial tie-ups were constructed by consenting individuals over many years and many decades only for them to be wrecked by a political class arrogantly seeking to protect us from ourselves. That’s what happens when command-and-control replaces voluntary order. The remunerative ties that bind us fray, or vanish altogether. Consenting, profitable economic activity was suddenly illegal. Yet politicians and other experts are only now wringing their hands about a lack of supply?

Really, what did they think was going to happen? While politicians couldn’t ever create or legislate billions working together around the world, they could and can surely break voluntary economic arrangements. When you have guns, handcuffs, the power to quite literally shut off power sources to the productive, not to mention the wealth produced by the productive, you have the power to impose command-and-control. And so they did, only for the “supply chains” painstakingly created in self-interested but spontaneous form over many decades to suddenly break apart. Just don’t call it inflation, or shortages.

Inflation is a devaluation of the unit of account. In our case it’s the devaluation of the dollar. And while Treasury hasn’t always done a great job as the dollar’s steward over the decades, that’s just the point. Devaluation was routine problem in the 1970s, it ceased to be in the 80s and 90s, but it reared its ugly head once again during the George W. Bush administration in the early 2000s. To say inflation is a “now” thing is to ignore that it’s more realistically been a 21st century-long thing.

We don’t suddenly have an inflation problem. To say we do is the equivalent of saying that the Soviets had inflation because all the goods worth getting were both difficult to find, and incredibly expensive if they could be found. In our case we’ve had a lockdown problem care of nail-biting politicians that suffocated commercial cooperation around the world. And with work divided less than it used to be care of government force, productivity is naturally lower than it used to be.

Please consider modern productivity in terms of Smith’s pin factory example yet again, and ask what it would do to supply. The only thing is supply shortfalls are not evidence of inflation. A rise in one price due to lack of supply implies a fall in other prices. Yes, we have a central planning problem. Were he around today, Adam Smith could diagnose this in seconds."

MY COMMENT

I agree with the above. BUT....no need to talk about it much. Everyone is going to have some opinion on what is going on right now and no one is going to change anyone else's opinion.

All I will say is at the moment we have 50 states doing their own thing.....somewhat. It is obvious to me which states are kicking ass and which states are LOSERS........it is also obvious to my...WHY.

In general the more we can get government off the back of the economy and business....the better.

SO....we will MUDDLE through the re-opening. It is just starting and will take from 12-24 months. Lets hope when we get to the end the customs and culture and freedom that built our business and economic system is still in existence.

 

A SOLID open today. I have not looked at my account so I have no idea how various sectors are doing.....but....ALL the averages are starting the day in the green.

WHOOPS......while typing this the DOW just went red by 0.01%.........WHOOPS.....it is now green again by 0.01%.

At least the SP500 and the NASDAQ have nicer gains for the day....so far.

In other words....it will be a normal volatile and erratic day till the close.

 

WOW....I should sell all my TESLA....I have a +8% gain in one day. too bad I am not a short term trader.

Thanks rg.......but not really an entry......semantics I know....but I dont do entry and exit points. I try to buy all in as soon as I decide to buy something and sell all at once as soon as I decide to sell something. The "PROBABILITY" is that this will put you ahead of the game over the long term.....assuming that you buying and selling is rational and based on reality.

Once in a while I might get hammered short term doing this.....but if you keep the long term in mind and REFUSE to look backwards....it is all good.

 

Imagine being ZUKODANY......with a HUGE percentage of his account being in Tesla. He is going to have a massive gain today. Perhaps it will extend to the rest of the week.

 

Jwalker....you know what I think.

What you are considering is EXACTLY what we did. When we saw that we had enough in the Keogh Account....using the rule of 72's....to project the compounding....and...considering that we would continue to max out the KEOGH contribution each year going forward....we put ALL other money into the taxable brokerage account. This gave us HUGE freedom to achieve financial and personal goals over the next 25-30 years.....by using that money.

The one thing about what you are planing is to MAKE SURE your retirement is set.....assuming the worst case situation.....with your money and investing. Plan for the worst.....while achieving the best.

The BIG PAYOFF was after we retired. THE MASSIVE gains in the taxable brokerage account were capital gains rather than fully taxable income. It gave us much much leeway on taxes and tax planing in retirement.

Once I hit age 59.5 we spent the next 10 years using up the KEOGH account money (which was rolled over into an IRA when I retired). We paid BIG taxes in those years. It was GREAT once we were living from the brokerage account money and now the income annuities and Social Security. Our income taxes dropped by a HUGE amount.....last year under $5,000. It is saving us a fortune on the extra Medicare and Drug premiums alone...... which are based on taxable income. It is also saving us many tens of thousands of dollars every year in income tax.

I have seen many people paying higher income taxes in retirement than they ever paid while working.....it really pisses them of.......and....they will be paying those big taxes for the rest of their life. So I fully agree with your plan. As long as a person has the discipline and ability to long term plan for the future......something that many people do NOT have......it is a good idea. From the little that I know of your background on this site.....you seem like a good candidate for what you are considering.

Of course.....younger people have the option of the ROTH IRA and the ROTH 401K. I would strongly recommend both of those retirement vehicles.

The guys I know that are real estate investors.....also.....have nice ability to avoid taxes (legally).

 

I hear from the business TV in the background that the SP500 just hit another intra-day ALL TIME HIGH. No doubt the impact of Tesla today.

The markets are looking good as we settle into mid-morning.

 

I am seeing many....."trial balloons" on this tax proposal lately:

"Congressional Democrats are weighing a new tax on the income and assets of the nation’s leading billionaires — a provision many believe can help get President Biden’s multi-trillion-dollar expansion of the federal safety net across the finish line.

Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, is drafting the proposal with input from the White House and congressional leadership. Democrats hope the plan will raise sufficient revenue to fund the more than $2 trillion in dollars in taxpayer spending they are proposing.

While the plan has yet to be finalized, it would tax billionaires annually on any increase in the value of their assets, like stocks and real estate. The tax would apply to individuals with assets in the billion-dollar range and those with annual incomes greater than $100 million over a three-year period."

MY COMMENT

Anyone that is young will.......CURSE THE DAY......later in life......if......this is actually put forward and passed by congress. I dont see how it could pass....but.....who knows. SUPPOSEDLY....this will only apply to about 700 people in the entire USA. BUT....those of us that have some concept of history....know that this is EXACTLY how the income tax was started.....with the argument that it would ONLY apply to the top !% or less of the USA population.

We know......or at least those of us that understand how these sorts of things work.....that once this sort of thing passes and comes into existence it will slowly but surely be applied to more and more people and within a short time.....perhaps 10-20 years....will apply to just about everyone....It will become a MONSTER.

I see this proposal as one of the greatest DANGERS to anyone that works and invests for their future.....after the Constitutional amendments and legislation that created the current income tax system. ACTUALLY......I see this as a GREATER danger to our economic system than the current income tax system.

FORTUNATELY......I am still hopeful that this MONSTER can not pass in the current congress.

 

Stepping down from my soapbox....and back to investing.....here is what we are doing in the markets today.

Stock market news live updates: Stocks edge higher ahead of technology earnings

https://finance.yahoo.com/news/stock-market-news-live-updates-october-25-2021-114606349.html

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

"Stocks moved slightly higher on Monday as investors awaited a slew of earnings results from the Big Tech companies, as well as a myriad of other corporations across industries this week.

The Dow edged up, hovering near a record after the 30-stock index set an all-time closing high on Friday. The S&P 500 also ticked up after reaching a record intraday high last week. The Nasdaq gained, and shares of Tesla (TSLA) rallied to an all-time high.

U.S. West Texas intermediate (CL=F) crude oil prices topped $85 per barrel, reaching the highest level since 2014. The move tracked gains in Brent crude (BZ=F), the international benchmark, which jumped above $86 per barrel for its highest level since 2018 after Saudi Arabia's energy minister suggested in a Bloomberg interview that oil producers exercise caution in boosting output despite fast-rising prices.

The benchmark 10-year Treasury yield hovered around 1.64%, or near its highest level since May, as inflation concerns remained front and center for investors amid rising energy and commodity prices and other price gains across the recovering economy. Last week, Federal Reserve Chair Jerome Powell said the elevated inflationary pressures spurred by supply chain constraints were "likely to last longer than previously expected, likely well into next year."

A number of individual companies have also flagged the impacts of rising costs in their earnings reports over the past couple weeks. Kevin Boone, executive vice president of sales and marketing for freight railroad company CSX Transportation (CSX), said during the company's earnings call last week that cost inflation has jumped over the last year, and "expectations have risen and are rising in the next year." And likewise, Whirlpool (WHRL) CEO Marc Bitzer said on the appliance company's earnings call he did not "expect that the inflation will quickly fall off" heading into next year.

This week's earnings results will center on those from the Big Tech companies including Facebook (FB), Apple (AAPL), Amazon (AMZN) and Alphabet (GOOGL). These comprise some of the most heavily weighted components of the S&P 500. Most have underperformed the market this year after significant rallies in 2020 at the height of stay-in-place orders and demand for technology to stay connected.

Investors are hoping to see these companies echo the performance of some other earlier reporters and post estimates-topping results despite ongoing supply-side challenges. For the technology companies, these concerns will likely center on the impact of global chip shortages, as well as the impact of rising labor costs given their substantial workforces.

"We continue to strongly believe despite the lingering black cloud chip shortage that 3Q tech earnings will be standouts this week thus helping drive the sector higher into year-end as the Street continues to underestimate the fundamentals of this multi-trillion digital transformation playing out among consumer and enterprise tech names," Wedbush analyst Dan Ives wrote in a note on Sunday.

Still, this week overall will be a busy one for earnings season, with a total of about 165 companies in the S&P 500 posting results, according to data from Deutsche Bank.

As of Friday, about 23% of S&P 500 companies had reported actual results for the third quarter, and of these, 84% topped Wall Street's expectations for earnings per share (EPS), according to data from FactSet. The estimated earnings growth rate for the S&P 500 was 32.7%, based on actual results and expectations for companies still yet to report as of last week. If maintained through the end of third-quarter earnings season, that would mark the third-highest earnings growth rate posted for the index since 2010.

10:31 a.m. ET: 'Consumers are out spending money': BofA's Moynihan
Bank of America CEO Brian Moynihan struck an upbeat tone on the state of the U.S. consumer, noting that spending has increased across a broad range of methods, and personal savings remain robust. This has in turn led to robust economic activity, he said.

“A lot of people focus on credit card and debit card payments, but that's only about 20 to 25% of all the ways consumers spend money,” Moynihan said during Yahoo Finance's All Markets Summit on Monday. “If you actually look across how consumers spend money – writing checks, taking money out of the ATM, Zelle payments, ACH payments, wires, everything – that's for us so far through October, year-to-date of 2021, is about $2.8 trillion of activity.”

He added that that sum was up about 20% over 2020, and by more than 20% compared to the same period in 2019.

“That's a very strong growth rate, the strongest we've seen in the last many, many years … So the consumers are out spending money," Moynihan added. "All in all, the simple fact is, the economy is as big as it was in 2019 nominally. It’s growing, predicted to grow at two to three times the rate it was predicted grow then. Consumers are spending at really twice the growth rate.

"The question is, is it all because of stimulus and the money? If you actually look at our consumer checking accounts, the last six months, people have average deposits of $10,000, even $15,000 or less. Their deposit balance has grown the last six months in each month," he said. "And then even in the last month of August and September, [it] grew by a couple percent, which means, even after stimulus largely stopped, you're still seeing their accounts grow, which means they're accumulating cash at excess of their spending.”

“It's a pretty strong backbone for the economy, which is driven by the consumer,” he added. “It's a fairly good picture, as long as, as long as the COVID virus stays in check.”

9:41 a.m. ET: 'There's a lot of speculative activity': SEC Chair on cryptocurrency trading
Securities and Exchange Commission Chair Gary Gensler restated a cautious tone on cryptocurrencies, suggesting that trading activity in the space needs to come under tighter regulatory oversight.

“The concern for the investing public is the crypto asset space [is] $2.5 trillion. Most of it has not come within investor protection remit. And thus, investors aren’t protected the way they are whether they go into the stock or bond markets that we’ve overseen for so long,” Gensler said during Yahoo Finance’s All Markets Summit on Monday. “Without that I think it really is, as I’ve said to others, a bit of the Wild West. And these markets largely around the globe, 24 hours a day, seven days a week, don’t have the similar protections against fraud and manipulations front-running and other abuses.”

Gensler declined to comment on whether the SEC was becoming more amenable to the idea of a fund tracking spot prices of Bitcoin, following the launch of the first-ever U.S.-listed bitcoin futures ETF on the New York Stock Exchange last week, or the ProShares Bitcoin Strategy ETF (BITO). This fund — which allows investors to bet on futures contracts, or expected price changes in bitcoin — does not provide investments in bitcoin (BTC-USD) directly.

Gensler also suggested the SEC could tighten controls over cryptocurrency companies issuing stable coins. The Wall Street Journal reported earlier this month that the Biden administration was eyeing such a move, which could include a special-purpose charter for stable-coin issuers.

“There’s about $130 billion in stable coins today. That's up nearly 10-fold in the last year, and they are intertwined inside of crypto exchanges, crypto lending platforms, so-called DeFi,” Gensler said. “Those ‘poker chips,’ so to speak, are facilitating 80% of the volume. So they're only 5% of the crypto market but 80% of the volume in this token-to-token, crypto-to-crypto trading. So I think there's a lot of speculative activity. And again, it’s best to bring that inside regulatory investor protection remit.”"

MY COMMENT

We will find out in a few days how all the earnings this week work out. I would expect that ALL the big tech names will hit it out of the park.

I really LIKE the consumer spending content above. In spite of everything.......consumers are really active and spending. to me....this is the single best way to survey what people think about the economy....their own spending.....versus...what they say.