The Long Term Investor

I would call today a.....CONSOLIDATION DAY....in the markets. There is really no negative news out there.

Stock market news live updates: Stocks down despite record-low jobless claims

https://finance.yahoo.com/news/stock-market-news-live-updates-december-9-2021-001847397.html

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

"Markets retreated from a rally that spanned three trading sessions, opening lower Thursday morning, despite fresh data from the U.S. Labor Department that showed the number of Americans filing initial jobless claims fell to the lowest level in five decades.

All major U.S. indexes were down in early trading, led by a 165.80 point drop in the Dow to 35,597. The S&P 500 pulled back 11.09 points after climbing earlier this week to a near record high, and the tech-focused Nasdaq opened 11.23 points lower to 16,324.75.

Weekly jobless claims fell to their lowest level since September 1969, below the pre-pandemic average of about 220,000 per week, further signaling a tight labor market as employers seek to retain workers.

Investors continue to assess the risks of Omicron infections, with mixed news about the severity of illness and its response to vaccines. Bloomberg reported that the COVID-19 strain was found to be 4.2 times more transmissible in its early stage than the Delta variant.

The news follows consecutive gains in the last three trading sessions after investor concerns around the Omicron variant were eased by reports of less severe infection and early lab results from Pfizer Inc. and BioNTech showed a third dose of their coronavirus vaccine "neutralizes" the variant.

“We do think that there is fundamental support there for markets to continue to move higher here," Emily Roland, co-chief investment strategist at John Hancock investment management, told Yahoo Finance Live on Tuesday. "Obviously we had a couple of things spook us over the last week or so, the emergence of the Omicron variant as well as this pivot from the Fed, potentially seeing them accelerating their tapering of asset purchases here. But the bottom line is that the economy is strong."

With virus concerns diminishing, investors are pivoting their attention back to economic data, awaiting Consumer Price Index (CPI) figures on Friday to assess the extent inflationary pressures will persist.

“If the Omicron variant was to lead to a resurgence in goods spending at the expense of services or to further complicate supply disruptions, there could be a clear inflationary impact, too,” wrote HSBC economist James Pomeroy earlier this week in a research note to clients. “The inflation news in the past few weeks has been decidedly mixed — with upside surprises in both the U.S. and eurozone being offset by the possibility of some of the supply chain issues starting to alleviate, while energy prices have fallen sharply in recent days.

11:00 a.m. ET: Wholesale inventories rise above estimates ahead of holidays
US wholesale inventories climbed above estimates in October as companies stock up for holiday season demand.

Latest figures from the Commerce Department released Thursday showed wholesale inventories rose 2.3%, slightly more than the 2.2% estimated last month and 14.4% up from a year earlier.

The rise in inventories at wholesalers suggests restocking of warehouses could support economic growth this quarter. U.S. businesses recently struggled to hold inventories on hand due to supply chain delays and strong sales.

10:45 a.m. ET: Gamestop (GME) trades lower following disappointing earnings
Shares of Gamestop (GME) dropped in early trading after the video game retailer posted Q3 earnings Wednesday reflecting widening quarterly losses that disappointed investors. The stock was down by as much as 6% after markets opened on Thursday.

Wedbush analyst Michael Pachter cut his price target from $45 to $50, attributing the downgrade to lack of clarity from management on a digital transformation plan for the company promised in the past that “has yet to crystalize.”

“Another quarter, still no turnaround strategy in sight,” Pachter wrote in a note to clients.

The video game company and meme-stock darling reported a quarterly loss of $1.39 per share, higher than consensus estimates."

MY COMMENT

The quote above totally reflects my short and long term view......not that the short term view matters:

"...there is fundamental support there for markets to continue to move higher here," ........ "Obviously we had a couple of things spook us over the last week or so, the emergence of the Omicron variant as well as this pivot from the Fed, potentially seeing them accelerating their tapering of asset purchases here. But the bottom line is that the economy is strong."

Sounds good to me. I am expecting another round of very good earnings when the forth quarter reporting starts after the first of the year. What actually counts.....in spite of the constant daily gossip, speculation, and opinion......is fundamental business results. After all......we are all actually buying various businesses when we invest in stocks and funds.

 

It is a good thing that the investing day ended......I was moving in the wrong direction today as the day went on. RED.......moderate red....is how I ended the day. PLUS.....I got beat by the SP500 by 0.45%.

Just one of those days. No particular news......probably today was a rest or consolidation day for the markets. Last day of the week tomorrow.......lets at least end the week on a good note. probably about a 50/50 shot at that. I cold see us having another day like today.......or.....with all the big tech names down today, I could see them in the BUY ZONE tomorrow. We will find out in about 24 hours.

 

As to the markets today.....well:

US STOCKS-Nasdaq, S&P 500 in the red ahead of inflation data, Fed meeting

https://finance.yahoo.com/news/us-stocks-nasdaq-p-500-200401875.html

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

"Nasdaq and the S&P 500 were losing ground on Thursday as investors banked some profits after three straight days of gains and turned their focus toward upcoming inflation data and how it might influence the Federal Reserve's meeting next week.

With fears abating about the latest coronavirus variant Omicron, the Nasdaq had rallied 4.7% in the last three sessions while the S&P had advanced 3.6% and the Dow, which was still rising on Thursday, had gained 3.4%.

Nasdaq was leading percentage declines among the major averages, and investors appeared to be in a waiting game ahead of the consumer prices index data due Friday morning. A higher-than-expected reading would strengthen the case for policy tightening ahead of the U.S. central bank's meeting on Dec. 15.

"There seems to be some profit taking after the three days of gains. Also there may be a little risk-off trade ahead of the CPI number on Friday," said Joe Quinlan Chief market strategist for the CIO office of Bank of Amercia, noting investors may be closing out short positions or pausing buying ahead of the data.

"If it comes in hotter than expected it really shines the light and the focus on the Fed meeting. The pressure would build on the Fed for a faster tapering," he said. Fed Chair Powell signaled last week that the meeting would include a discussion about a faster tapering of bond-buying.

"It would reaffirm in many people's minds that the Fed is behind the curve," said Quinlan.

If the inflation number implies a need to hike rates faster, this "would put pressure on technology and give a bid to cyclicals" he said.

"You'd want to buy the companies that could pass on these higher costs to consumers. That undermines the growth story. You want to own more cyclicals and value than growth," said Quinlan.

A Reuters poll of economists predicted the Fed would raise rates by 25 basis points to 0.25-0.50% in the third quarter of next year. However, most saw the risk that a hike comes even sooner.

By 2:59PM ET, the Dow Jones Industrial Average rose 26 points, or 0.07%, to 35,780.75, the S&P 500 lost 22.4 points, or 0.48%, to 4,678.81 and the Nasdaq Composite dropped 216.11 points, or 1.37%, to 15,570.88.

Eight of the 11 major S&P sectors declined, with consumer discretionary, real estate and energy jostling for the biggest percentage loser position.

Markets have seesawed since late November when the Omicron variant was discovered, Investors worried it could upend a global recovery at a time of surging inflation with Fed commentary exacerbating volatility.

Wall Street's main indexes were supported this week by an update showing Pfizer and BioNTech's vaccine offered some protection against the Omicron variant.

The S&P 500 index is trading 1.2% below its all-time peak and has recouped nearly all its declines after falling as much as 5.24% since a record high hit on Nov. 22.

Data showed initial claims for state unemployment benefits tumbled 43,000 last week to 184,000, the lowest level in more than 52 years.

CVS Health Corp rose 4.9%, boosting the S&P 500 healthcare sector, after the drugstore operator raised its 2021 profit forecast.

Apple's shares were about $7 shy of the $182.85 price needed to reach a $3 trillion market valuation. However the iPhone maker's stock was making little progress on Thursday, last up 0.3% under $176.

GameStop Corp fell 10% after the video game retailer said it was issued a subpoena by the U.S. securities regulator back in August for documents on an investigation into its share trading activity.

Declining issues outnumbered advancing ones on the NYSE by a 2.62-to-1 ratio; on Nasdaq, a 2.76-to-1 ratio favored decliners.

The S&P 500 posted 22 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 32 new highs and 52 new lows."

MY COMMENT

OK....lets see what the CPI does to the markets tomorrow. If this is the focus....it will be a typical short term news driven day....at least to start. We will be THREE WEEKS from year end after tomorrow......I am doing well but for me it will be.....good riddance to 2021. I am tired of this year.

 

Welcome Multibagger.......sounds like we have EXACTLY the same investing strategy and philosophy. Please continue to post your thoughts and experiences.

 

I had to look early today. I have a nice.....moderate gain........and have made up most of what I lost yesterday. Of course where we are in the day makes this irrelevant.

 

This little article is a good summary of the CPI news and the open of the markets today.

Stock market news live updates: Stocks rise as investors digest inflation data

https://finance.yahoo.com/news/stock-market-news-live-updates-december-10-2021-232629842.html

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

"Stocks rose Friday morning as investors considered a key inflation report ahead of the Federal Reserve's final policy-setting meeting of the year next week.

The Labor Department's Consumer Price Index (CPI) showed yet another multi-decade high rate of inflation for November.The CPI climbed by 6.8% in November compared to last year, marking the fastest annual increase since June 1982. This rate matched consensus economists' estimates, according to Bloomberg data, but accelerated compared to the 6.2% year-over-year rate from the prior month. And even excluding more volatile food and energy prices, the so-called core CPI rose by 4.9% over last year for the fastest increase in about three decades.

"What we're looking for is a deceleration as we go forward over the course of 2022," Luke Tilley, Wilmington Trust chief economist, told Yahoo Finance Live on Thursday, ahead of the CPI print.

"That doesn't mean prices are going to go down, it's just a question of, are they going to go up as much in 2022 as in 2021 without the kind of fiscal stimulus we've had this year? And we don't think that that's going to happen, because it won't be as much of a push on the demand side," he added. "And then on the supply side, we're looking for the labor market to improve, more people returning to work, and of course the delivery and the ports to improve."

Other recent data have further underscored the present tightness on the supply side of the economy. Weekly U.S. jobless claims plunged more than expected to reach the lowest level since 1969 last week, coming in even below pre-pandemic levels. And U.S. job openings came in at more than 11 million for only the second time on record in October.

"Wage increases are probably on the agenda for next year. That's part of the broadening of inflationary pressures that we've already started to see come through in some of that CPI data," Seema Shah, Principal Global Investors chief strategist, told Yahoo Finance Live on Thursday. "But I have to say that we're not so worried because we're starting to see other parts of the inflation picture actually starting to fade. So at the end of next year, 12 months from now, we're not expecting the kind of 6-7% CPI numbers ... We're thinking more the 3% level for 12 months time."

Given the backdrop of elevated inflation, Federal Reserve officials have adopted more hawkish rhetoric about the monetary policy path forward. Some pundits suggested more rotation could occur in U.S. equity markets beneath the surface as investors price in expectations for tighter Fed policy to rein in inflation. The Federal Open Market Committee is slated to hold its final two-day monetary policy-setting meeting of the year next week.

"If we go back to the bulk of the second half of 2020 and for much of this year, the pendulum of risk-on, risk-off in the market was really simply occurring just below the surface of the index, of the S&P 500 —meaning that when there was a risk-on rally, it was value and it was cyclicals," Craig Fehr, principal and leader of investment strategy for Edward Jones, told Yahoo Finance Live on Thursday. "And when it was risk-off and the risk appetite was declining, it was tech that was the safe haven."

"What we're seeing is a transition now, particularly as the Fed is signaling a withdrawal of some of this excess liquidity and stimulus that's been in place for quite some time," he added. "The market isn't going to run directly into high-valuation, perhaps tech names broadly like it has over the past year-and-a-half. I think we're going to see more discernment."

10:12 a.m. ET: Consumer sentiment improved more than expected in early December: University of Michigan
The University of Michigan's December Surveys of Consumers saw a bigger-than-expected recovery after reaching a decade-low in November, even as respondents called out rising inflation.

The institution's headline sentiment index rose to 70.4 in its preliminary December survey compared to the 68.0 consensus economists were expecting, according to Bloomberg consensus data. This came following November's print of 67.4 — the lowest in about 10 years.

Consumers' one-year inflation expectations steadied at 4.9%, matching November's rate. For the next five to 10 years, consumers expected inflation to rise at a 3.0% clip, with this also matching November's reading.

"Sentiment posted a small overall gain in early December (+4.5%), although it was still nearly identical to the average reading in the prior four months (70.6)," Richard Curtin, chief economist for the Surveys of Consumers, wrote in a press statement. "The more interesting result was the large disparity between monthly gain among households with incomes in the lowest third (+23.6%) of the income distribution compared with the modest losses among households in the middle (-3.8%) and top third (-4.3%)."

"The core of the renewed optimism among the bottom third was the expectation of income increases of 2.9% during the year ahead; the last time a higher gain for this group was expected was in 1981," he added. "This suggests an emerging wage-price spiral that could propel inflation higher in the years ahead."

He also noted that 76% of consumers selected "inflation" as "the most serious problem facing the nation," when asked directly to select between inflation and unemployment. Just 21% selected unemployment, Curtin added."

MY COMMENT

NO.....I dont care about inflation. In my view ALL this stuff is a direct result of the disruption and distortion of the economy by the FOOLISH closing of the small business and consumer side of the economy. Of course......it is just about impossible to name ANY big company that was shut down.

The CPI number came in AS EXPECTED by the economic experts.....assuming that there is such a thing as an "economic expert". I hope this little quote above is correct and that over time we settle into an inflation rate of 3-4%. that is a HEALTHY rate for the worlds greatest economic power. In my view......a rate of 1.5% to 2.5% is TOO LOW and keeps us lingering on the edge of DEFLATION. Back in the OLD DAYS........the 1970's and 1980's......a rate of 3-4% was considered NORMAL. I believe it is STILL normal and is a good thing for the economy.

What is good and healthy in terms of an inflation level has not changed....what has changed is the thinking of people as to what is a healthy inflation rate. Over recent years.....for whatever reason....the media and others have driven the view that about 2% is a good inflation rate. I dont buy it and dont believe it.

THANK GOODNESS.....that next week is the LAST FED meeting of the year. It will be nice to be done with that foolishness......at least for a few weeks. Although......you can bet they will not be able to resist the usual BLABBERING in the media.

The consumer sentiment number was also a nice positive.

 

I......actually....think and hope that the FED starts TAPERING as soon as possible. It is not their job to buy all the government debt. The sooner they TAPER and end that program the better the economy will be. The LAST thing we need is for the FED to think they have the brains or ability to control and direct the economy.

It will also be a good thing when they begin to raise interest rates. I think tapering should start and get done ASAP. As to interest rates.....I would prefer to see them start to raise in perhaps a year.....not sooner. We need to give the economy a chance to re-open and see where we are at that point in time.

Time to turn off all the free money and government goodies.......to people, the big banks, and anyone else. There is way too much easy money sloshing around.

NO.....I dont believe that TAPERING will be an issue to stocks and funds at all......other than a few days here and there. It will be NON-ISSUE once it starts and people get used to the idea. From my lifetime experience the interest rates being raised will be the same. Each raise will have an impact for a few days....than stocks and investors will simply move on. Even with increased rates.....there is NO alternative to stocks and funds.

 

From China......the worlds most brutal communist dictatorship.....comes this.........fully anticipated...... news.

Evergrande can't pay its debts. China is scrambling to contain the fallout

https://www.cnn.com/2021/12/10/business/evergrande-government-intervention-intl-hnk/index.html

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

"Hong Kong (CNN Business) Evergrande has defaulted on its debt. Now Beijing is intervening to prevent a disorderly collapse of the indebted real estate group that could wreak havoc on the world's second biggest economy.

Fitch Ratings on Thursday declared that the embattled property developer has entered "restricted default," reflecting the company's inability to pay overdue interest earlier this week on two dollar bonds. The payments were due a month ago, and grace periods lapsed Monday.

Evergrande's apparent failure to pay that interest has revived fears about the future of the company, which is reeling under more than $300 billion of total liabilities. Evergrande is massive — it has about 200,000 employees, raked in more than $110 billion in sales last year, and owns more than 1,300 developments in more than 280 cities, according to the company.

Analysts have long been concerned that a collapse could trigger wider risks for China's property market, hurting homeowners and the broader financial system. Real estate and related industries account for as much as 30% of GDP.

Chinese authorities have so far downplayed the prospect of spillover risks.
"China's leadership is attempting to play it cool, but the circumstances surrounding Evergrande's downward spiral raises serious questions about [Chinese President] Xi Jinping's stewardship over China's rapidly cooling economy," said Craig Singleton, an adjunct fellow in the China Program at the Foundation for Defense of Democracies, a research institute based in Washington, D.C.


There's already plenty of evidence that Beijing is taking a leading role in guiding Evergrande through a restructuring of its debt and sprawling business operations.

The local government in Guangdong province, where Evergrande is based, said late last week that it would send officials into the firm to oversee risk management, strengthen internal controls and maintain normal operations.

And earlier this week, Evergrande announced it would set up a risk management committee,including government representatives, to focus on "mitigating and eliminating" future risks. Among its members are top officials from major state-owned enterprises in Guangdong, as well as an executive from a major bad debt manager owned by the central government.
Chinese authorities have taken other steps as well. The central bank on Monday announced that it would pump $188 billion into the economy, apparently to counter the real estate slump.

"These latest interventions, by both the central government and officials in Guangdong, suggest Chinese officials now begrudgingly accept that Evergrande is, in fact, 'too big to fail,'" Singleton said.

Global investors may 'take a hair cut'

The massive restructuring is going to come with some pain, at least for global bond holders.

Beijing has made it clear that its priority is protecting the thousands of Chinese people who have bought unfinished apartments, along with construction workers, suppliers and small investors. It also wants to limit the risk of other real estate firms going under. Investor fears over Evergrande's default have pushed up financing costs for other developers, as yields on offshore Chinese corporate debt surge.

At the same time, the government has been trying for more than a year to rein in excessive borrowing by developers —and so won't want to dilute that message.

That means the government may be "happy to see the firm itself go under and investors take a haircut," said Louis Kuijs, head of Asia economics at Oxford Economics, in a research note on Friday.

Chinese regulators have blamed Evergrande's crisis on the company's leaders.Its problems were the result of "poor management and blind expansion," the central bank and the country's securities regulator said Monday in public statements, reiterating previous criticisms.

Yi's comments on Thursday, made during a video speech to a forum in Hong Kong, underscore the government's priorities. He noted that Evergrande's problems would be handled in "a market-oriented way."
That "reinforces the ongoing stance from authorities of not turning to any bailout," said Yeap Jun Rong, market strategist for IG Group.

Spillover to growth

It's a "delicate balancing act" to allow Evergrande to fail while minimizing any economic or financial impact, Kujis said, especially given the broader downturn in real estate that has already seen several other developers default, including Kaisa Group this week.
New home prices in China fell in October for the second consecutive month, according to figures from the National Bureau of Statistics. The fall in September was the first insix years on a month-on-month basis.

A major slowdown in the property sector, along with other factors, could drag China's GDP growth next year down to 4.3%, according to Ting Lu, Nomura's chief China economist. That's much lower than the firm's estimated growth for 2021 of 7.8%.
During an online conference Friday, Lu also warned that the government shouldn't suddenly reverse its curbs on real estate finance. Such a turnaround would hurt Beijing's long-term goals, he added, pointing to its desire to reducethe economy's reliance on property and divertresources away from property into other sectors, such astech.

Kuijs from Oxford Economics expects Beijing to take targeted policy measures for homeowners, troubled developers, or banks that are exposed to debt risks. He suggested such moves could include making it easier for developers to raise funds on the capital market, adjusting land policies, and increasing the construction of rental units.

"We also expect broader easing of fiscal and monetary policy," he said. "And it is likely the government will take steps to contain ripple effects in the financial system, including possibly ring-fencing banks particularly exposed to developers in trouble."
Singleton warned, though, that the real estate crisis remains a looming threat for China.

"The possibility of contagion in other parts of China's vast economy remains very real," he said. "And, it is on this issue where China's central bank faces its biggest constraint — while it may be able to contain the financial implications from a housing default, it cannot offset the housing market's impact on China's real economy.""

MY COMMENT

I LOVE how all the commentators talk like China is a free market economy. That is a pipe-dream. The Chinese government controls EVERYTHING......it is a communist dictatorship. they will handle this however they wish....and.....one thing is sure.....they dont give a damn about outside bond holders or what anyone in the world thinks they should do.

Other than those FOOLISH enough to invest in China and Chinese bonds.....who cares about this default or the Chinese economy. ACTUALLY.....it is probably better for American business and all the companies that manufacture in China when they are suffering economic problems. It gives us and the rest of the world more leverage.

 

I dont do this.....but it is probably a good idea for many investors and families.

A Year-End Portfolio Review in 7 Easy Steps
Check up on your portfolio's health--and that of your whole plan--as the year winds down.

https://www.morningstar.com/articles/839091/a-year-end-portfolio-review-in-7-easy-steps

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

"As 2021 winds down, investors can look back on yet another excellent year. While investors have had plenty to worry about--especially inflation and the delta and omicron variants of the coronavirus--that hasn't stopped U.S. stocks from posting a tremendous rally. Foreign stocks have paled in comparison (again) but are poised to end the year with respectable gains. High-quality bonds have fallen back a bit as the Federal Reserve has signaled that it may accelerate its tightening program because of higher inflation and a robust recovery. But losses on most high-quality bond funds have been quite mild, and lower-quality bonds have managed gains.

If you're a disciplined investor, you can use an annual portfolio review as a way to check up on your portfolio--and potentially make some changes--within the context of your well-thought-out plan. After all, even if you haven't actively made changes to your portfolio mix, the contents of your portfolio may have shifted.

I like the idea of thinking of your annual portfolio review as an inverted pyramid, with the most important jobs on the top and the least important ones at the bottom. That way, if you run out of time and need to give something short shrift, you'll have attended to the most important considerations first.

Here are the key steps to take.

Step 1: Conduct a 'Wellness Check'

Begin your portfolio checkup by answering the question: "How am I doing on my progress to my goals?"

For accumulators, that means checking up on whether your current portfolio balance, combined with your savings rate, puts you on track to reach whatever goal you're working toward. Tally your various contributions across all accounts so far in 2021: A decent baseline savings rate is 15%, but higher-income folks will want to aim for 20% or even higher. Not only will high earners need to supply more of their retirement cash flows with their own salaries (Social Security will replace less of their working incomes), but they should also have more room in their budgets to target a higher savings rate. You'll also need to aim higher if you're saving for goals other than retirement, such as college funding for children or a home down payment. If your 2021 savings rate will fall short of what you'd like it to be, take a closer look at your household budget for spots to economize. In addition to assessing savings rate, take a look at your portfolio balance: Fidelity Investments has developed helpful benchmarks to gauge nest-egg adequacy at various life stages. (Also be sure to read Amy Arnott's helpful discussion of the pros and cons of these benchmarks.)

If you're retired, the key gauge of the health of your total plan is your withdrawal rate--all of your portfolio withdrawals for this year, divided by your total portfolio balance at the beginning of the year. The "right" withdrawal rate will be apparent only in hindsight, but if you're just embarking on retirement, our recent research on withdrawal rates should provide good food for thought.

All-in-one retirement calculators can also be useful when assessing the viability of all aspects of your plan. Tools like T. Rowe Price's Retirement Income Calculator and Vanguard's Retirement Nest Egg Calculator bring all of the key variables together and help you identify areas for improvement.

Step 2: Assess Your Asset Allocation
Once you've evaluated the health of your overall plan, turn your attention to your actual portfolio. Morningstar's X-Ray view--accessible to investors who have their portfolios stored on Morningstar.com or via Morningstar's Instant X-Ray tool--provides a look at your total portfolio's mix of stocks, bonds, and cash. (You can also see a lot of other data through X-Ray, which I'll get to in a second.) You can then compare your actual allocations to your targets. If you don't have targets, the Morningstar Lifetime Allocation Indexes are useful benchmarking tools. High-quality target-date series such as BlackRock LifePath Index can serve a similar role for benchmarking asset allocation; focus on the vintage that roughly matches your anticipated retirement date. My model portfolios can also help with the benchmarking process.

Given stocks' very robust performance in 2021, many investors' portfolios are heavy on equities. That's not a huge deal for younger investors with many years until retirement, but it is a far more significant risk factor for investors who are nearing or in drawdown mode: Insufficient cash and high-quality bond assets to serve as ballast could force withdrawals of stocks when they're in a trough, thereby permanently impairing a portfolio's sustainability. If your portfolio is notably equity-heavy relative to any reasonable measure and you're within 10 years of retirement, derisking by shifting more money to bonds and cash is more urgent. You could make the adjustment all in one go or gradually via a dollar-cost averaging plan. Just be sure to mind the tax consequences of lightening up on stocks as you're shifting money into safer assets; focus on tax-sheltered accounts to move the needle on your total portfolio's asset allocation.

Step 3: Check the Adequacy of Liquid Reserves

In addition to checking up on your portfolio's long-term asset allocations, your year-end portfolio review is a good time to check your liquid reserves. If you're still working, holding at least three to six months' worth of living expenses in cash is essential; higher-income earners or those with lumpy cash flows (looking at you, "gig economy" workers) should target a year or more of living expenses in cash.

For retired people, I recommend six months to two years' worth of portfolio withdrawals in cash investments; those liquid reserves can provide a spending cushion even if stocks head south or bonds take a powder. Retirees whose portfolios are equity-heavy can use rebalancing to top up their liquid reserves.

In addition to checking up on the amount of liquid reserves that you hold, also check up on where you're holding that money. Online savings accounts are usually among the highest-yielding FDIC-insured instruments, but money market mutual funds, which aren't FDIC-insured, offer you the convenience of having your cash live side by side with your investment assets. Yields on brokerage sweep accounts, which offer convenience for traders who like to keep cash at the ready, are often stingy on the yield front.

Step 4: Assess Suballocations and Troubleshoot Other Portfolio-Level Risk Factors

While value stocks have managed solid gains thus far in 2021, growth stocks have trumped value over longer time periods. Check your portfolio's Morningstar Style Box exposure in X-Ray to see if it's tilting disproportionately to growth names. While you're at it, check up on your sector positioning; X-Ray showcases your own portfolio's sector exposures alongside those of the S&P 500 for benchmarking.

On the bond side, review your positioning to ensure that your bond portfolio will deliver ballast when you need it. Yes, high-quality bonds and bond funds often take a price hit when interest rates rise, but they have historically done a good job of holding their ground when stocks fall. If you're adjusting your fixed-income portfolio, redeploying money from higher-risk bond segments into lower-risk alternatives (think high-quality, short- and intermediate-term bond funds) will improve your total portfolio's diversification and risk level.

Step 5: Gauge Inflation Protection

Inflation was a nonissue for the better part of the past decade, but it's been on the front burner more recently. If you're still working, eligible for cost-of-living adjustments to your salary, and have ample stock exposure in your portfolio, there's no pressing reason to add in a lot of inflation protection. On the other hand, retirees with healthy shares of their portfolios in fixed-rate investments are more vulnerable, in that inflation gobbles up the purchasing power of their meager yields. Treasury Inflation-Protected Securities and I Bonds help address that risk by offering an adjustment to account for inflation. I like to group inflation-defending investments into a few key categories: broad basket (TIPS), more narrowly focused (commodities, real estate), and what I call "inflation beaters" (stocks).

Step 6: Review Holdings

In addition to checking up on allocations and suballocations, take a closer look at individual holdings. Scanning Morningstar's qualitative ratings--star ratings for stocks and Morningstar Medalist ratings for mutual funds and exchange-traded funds--is a quick way to view a holding's forward-looking prospects in a single data point.

If you're conducting your own due diligence, be on alert for red flags at the holdings level. For funds, red flags include manager and strategy changes, persistent underperformance relative to cheap index funds, and dramatically heavy stock or sector bets. For stocks, red flags include high valuations and negative moat trends.

Step 7: Attend to Tax Matters

Year-end is also your deadline for several tax-related to-dos, some of which touch your portfolio. If you're still in accumulation mode, review how much you're contributing to each of the tax-sheltered account types that are available to you: IRAs, company retirement plans, and health savings accounts. Contribution limits for 401(k)s, 403(b)s, and 457 plans will be increasing a bit in 2022, to $20,500 for workers under age 50 and $27,000 for workers who are 50-plus. The IRA contribution limit is staying the same--$6,000 for investors under age 50 and $7,000 for investors who are over 50.

In addition, retirees must take required minimum distributions from tax-deferred accounts before year-end. I'm a big believer in taking a surgical approach to RMDs, using those withdrawals to correct portfolio problem spots. Charitably inclined investors who are age 70.5 or older should take advantage of what's called a qualified charitable distribution.

In a sustained and broad-based market rally, opportunities for tax-loss selling may be scant, especially for fund investors. But investors in individual stocks or more narrowly focused funds may find opportunities for tax-loss selling. Those losses can be used to offset gains elsewhere in the portfolio."

MY COMMENT

The above is probably a good approach for many investors and families. I am NOT commenting one way or another on the Morningstar products mentioned in the article.....I left that in the post since this is......their.......article.

 

My personal year end process is very simple since I am a very informed long term investor. I will note my total return in my stocks for the year.....mentally. I dont keep this sort of data. EVERY year is a ....new beginning.

I will consider my TWO.......very simple...... investing goals:

1. TRY to beat the SP500 each year......in a passive way.......with my holdings. I dont jump around trying to hit this goal. I pick a good mix of 10-15 American companies and let them run for the long term.

2. Achieve a long term total return of 10% per year or more.

I hit goal number one often but not every year. It is more of an aspirational goal. As to goal number two......I am way above this goal for my lifetime.......and this year will be no exception.

As to my mutual funds:

I will note the total return of each fund on my little fund spread sheet. For each fund I will note the total return for the year.......a mark for whether the fund beat the SP500.......and a note for if the fund beat had a total return of 10% or more for the year. That is the TOTAL extent of my data and record keeping. I am NOT into data and other record-keeping.......it is just busy-work.

I have various tools and much data available on Schwab for each of my companies and funds and for my portfolio as a whole....so there is no need for me to keep a bunch of data. I will at various times during the year.....mainly out of curiosity or when I am just bored.......look up data on Schwab on the performance of each individual stock. Often I will post that info on here.......since the stocks I hold tend to be the BIG companies that many people own and therefore the data is of interest to many people that.....might.....read this thread.

AS USUAL......I will post my.......stock and mutual fund.......PERFORMANCE DATA for the year on here after the market year ends. I believe in TRANSPARENCY since I post all the time.

 

So....as I have been posting......the market WORM HAS TURNED......we are now in the red for the DOW and the NASDAQ. the typical mid morning slump.

COME ON MAN......I want to end the day with more money than I started with.

 

LOL.....I had to look. I am STILL moderately UP for the day in spite of the averages.

My big concern today is NOT the markets but the weather. There is supposed to be a 50 degree temperature change over the next couple of days here. I am watching to see if I will be doing an.......OUTSIDE...... show tomorrow evening in 40 degree weather.

 

What a nice day today......and.....a great end to the week. I was big green today. AND....to cap it off I got a BIG beat on the SP500 today by 1.32%.

PARTY TIME this weekend.......well.....not really. But a beautiful end to a really good week for me and for stock investors in general.

 

These are....BIG TIME.....numbers this week. Look at those gains for the week.....WOW. Santa came early and hopefully sticks around for a few more weeks till year end.

DOW year to date +17.53%
DOW for the week +4.02%

SP500 year to date +25.45%
SP500 for the week +3.82%

NASDAQ 100 year to date +26.72%
NASDAQ 100 for the week +3.61%

NASDAQ year to date +21.28%
NASDAQ for the week +3.61%

RUSSELL year to date +12.00%
RUSSELL for the week +2.43%

Those are some MONEY MAKING numbers......talk about compounding.

 

SO......here is where we stand going into the weekend with stocks and news. We now enter the FINAL three market weeks of the year.
Stock market news live updates: Stocks close at a record as investors look beyond hot inflation

https://finance.yahoo.com/news/stock-market-news-live-updates-december-10-2021-232629842.html

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

"Stocks ended Friday at a record level as investors shrugged off a key inflation report ahead of the Federal Reserve's final policy-setting meeting of the year next week.

The S&P 500 jumped nearly 1% to log a record closing high. The Dow gained more than 200 points, or 0.6%, while the Nasdaq added 0.7%.

The Labor Department's Consumer Price Index (CPI) showed yet another multi-decade high rate of inflation for November.The CPI climbed by 6.8% in November compared to last year, marking the fastest annual increase since June 1982. This rate matched consensus economists' estimates, according to Bloomberg data, but accelerated compared to the 6.2% year-over-year rate from the prior month. And even excluding more volatile food and energy prices, the so-called core CPI rose by 4.9% over last year for the fastest increase in about three decades.

"What we're looking for is a deceleration as we go forward over the course of 2022," Luke Tilley, Wilmington Trust chief economist, told Yahoo Finance Live on Thursday, ahead of the CPI print.

"That doesn't mean prices are going to go down, it's just a question of, are they going to go up as much in 2022 as in 2021 without the kind of fiscal stimulus we've had this year? And we don't think that that's going to happen, because it won't be as much of a push on the demand side," he added. "And then on the supply side, we're looking for the labor market to improve, more people returning to work, and of course the delivery and the ports to improve."

Other recent data have further underscored the present tightness on the supply side of the economy. Weekly U.S. jobless claims plunged more than expected to reach the lowest level since 1969 last week, coming in even below pre-pandemic levels. And U.S. job openings came in at more than 11 million for only the second time on record in October.

"Wage increases are probably on the agenda for next year. That's part of the broadening of inflationary pressures that we've already started to see come through in some of that CPI data," Seema Shah, Principal Global Investors chief strategist, told Yahoo Finance Live on Thursday. "But I have to say that we're not so worried because we're starting to see other parts of the inflation picture actually starting to fade. So at the end of next year, 12 months from now, we're not expecting the kind of 6-7% CPI numbers ... We're thinking more the 3% level for 12 months time."

Given the backdrop of elevated inflation, Federal Reserve officials have adopted more hawkish rhetoric about the monetary policy path forward. Some pundits suggested more rotation could occur in U.S. equity markets beneath the surface as investors price in expectations for tighter Fed policy to rein in inflation. The Federal Open Market Committee is slated to hold its final two-day monetary policy-setting meeting of the year next week.

"The inflation print from this morning will reinforce the Fed’s resolve to accelerate tapering. With the strength in the economic recovery, it is time to take the crutches away," Anu Gaggar, global investment strategist for Commonwealth Financial Network, wrote in an email on Friday. "Supply and labor shortages will keep aggregate prices elevated for longer, keeping inflation higher than the Fed target for a while. Omicron might dent the nascent recovery in demand for services such as leisure and hospitality while widening the demand-supply imbalance for goods."

2:42 p.m. ET: Ford shares jump to the highest in two decades after founder's grandson spends $20 million in share purchases
Shares of automaker Ford (F) jumped Friday afternoon to reach their highest level since 2001.

The move came amid news that Ford's executive chairman Bill Ford, great-grandson of Ford founder Henry Ford, chose to exercise nearly 2 million of stock options at a total cost of $20.5 million as part of his executive compensation."

MY COMMENT

I like that phrase......"investors shrugged off"......and the companion phrase......."at a record level".

We have a single event to get past for the rest of the year.......the FED meeting next week. Other than that we seem to be past the OMI variation.......and....everything else is OLD NEWS. This is a good set up for a nice year end RALLY........since the events of the year are pretty much done.....and....we head into the final three weeks with a VERY NICE RALLY WEEK behind us.

There is very nice POTENTIAL for a SANTA RALLY in the range of..........4-10%......to year end.

MAKE IT SO.....ENGAGE.

 

Since it is the weekend...here....is a little history lesson. This is some of the story on how and why China has achieved what they have over the past 21 years. Very few investors under age 35 probably have any awareness of these events and how they relate to each other.

How the West invited China to eat its lunch

https://www.bbc.com/news/business-596100(BOLD is my opinion OR what I consider important content)

"There were two events in late 2001 that shook the axis of the world.

The world was preoccupied with the immediate aftermath of 9/11. But exactly three months later, on 11 December, the World Trade Organization (WTO) was at the centre of an event that was to cast as strong a shadow over the 21st century, changing more people's lives and livelihoods around the world than the attacks on America.

Yet few know it even happened, let alone its date. China's admission to the World Trade Organization changed the game for America, Europe and most of Asia, and indeed for any country in possession of industrially valuable resources, such as oil and metals.

It was a largely unnoticed event of epic geopolitical and economic importance. It was the root imbalance behind the global financial crisis. The domestic political backlash against the outsourcing of manufacturing jobs to China has reverberated around the western G7 nations.

The promise, suggested by the likes of former US President Bill Clinton, was that "importing one of democracy's most cherished values, economic freedom", would enable the world's most populous nation to follow the path of political freedom too.

"When individuals have the power not just to dream, but to realise their dreams, they will demand a greater say," he said.


But that strategy failed. China began its ascent to its current status as the world's second biggest economy - and is on a seemingly inevitable path to becoming the world's biggest.

Indeed the US trade representative responsible for negotiating China's WTO deal, Charlene Barshefsky, told a Washington International Trade Association panel this week that China's economic model "somewhat disproved" the Western view that "you can't have an innovative society, and political control"

"It's not to say that China's innovative capacity is enhanced by its economic model," she added. "But it is to say that what the West thought were incompatible systems may not be necessarily incompatible systems."

Up until 2000 China's global economic role had been principally as one of the world's biggest manufacturers of plastic gubbins and cheap tat. Important, yes, but neither world-beating nor world-changing.

China's accession to the top table of world trade heralded a massive global transformation. A powerful combination of China's willing workforce, its super-high-tech factories, and the special relationship between the Chinese government and Western multinational corporations changed the face of the planet.

An army of cheap Chinese labour began to produce the goods that underpin Western living standards, as China seamlessly inserted itself into the supply chains of the world's biggest companies. Economists call it a "supply shock", and its impact certainly was shocking. Its effects are still reverberating around the world.

China's integration into the world economy has seen significant economic achievements, including the eradication of extreme poverty, which stood at 500 million before WTO membership and is now basically zero as the value of the economy, in dollar terms, increased 12-fold. Foreign exchange reserves increased 16-fold to $2.3 trillion, as the world's purchases from China's workshops were banked by the Chinese state.

In 2000, China was the seventh-largest goods exporter in the world, but it quickly reached the number one spot. China's annual growth rate, already at 8%, went stratospheric at the height of the world boom, peaking at 14%, and stabilised at 15% last year.


Container ships are the juggernauts of global trade. In the five years after China joined the WTO, the number of containers on ships coming in and out of China doubled from 40 million to more than 80 million. By 2011, a decade after the country became a WTO member, the number of containers going in and out of China had more than trebled to 129 million.

Last year it was 245 million, and while about half of the containers going into China were empty, nearly all those leaving China were full of exports.

There has also been a massive expansion in China's highway network, which increased from 4,700km in 1997 to 161,000km by 2020, making it the largest network in the world, connecting 99% of cities with populations of over 200,000.

In addition to its state-of-the-art freight infrastructure, China also needs materials such as metals, minerals and fossil fuels to support its manufacturing boom. One material essential to China's burgeoning automotive and electrical appliance industries is steel. In 2005 China became, for the first time, a net exporter of steel, and has since become the world's largest exporter.

Through the 1990s, China's production of steel hovered at around 100 million tonnes per year. After WTO membership, it exploded to around 700 million tonnes by 2012 and exceeded one billion tonnes in 2020.

China now accounts for 57% of world production and produces significantly more steel on its own than the rest of the globe managed together back in 2001. The same goes for ceramic tiles, and plenty of other ingredients of industry.

In electronics, clothing, toys and furniture, China became the dominant source of supply, forcing down export prices all around the world. Economists noticed a "once-for-all" shock in global prices following China's WTO entry. China's clothing exports doubled between 2000 and 2005, and its share of the value of global trade went from one fifth to one third.

After 2005, production quotas in the textile industry were also lifted, leading to an even bigger production shift to China. However, as production in China became more expensive and production has shifted to developing countries such as Bangladesh and Vietnam, this has fallen back to 32% of clothes last year.

The Chinese minister responsible for WTO accession, Long Yongtu, made an admission reflecting on the past two decades. "I don't believe China's WTO accession was a historic job-killing mistake [for the US and the West]," he said. "However I recognise the allocation or the benefit is uneven. The complete picture is that when China got his own development, it also provided the rest of the world with a huge export market."

But there was a sting in the tail - that it was US politics that failed to account for the inevitable impact of Chinese competition on some sectors. "When the uneven distribution of wealth happens, a government should take measures to adjust that distribution through domestic policies, but it's not easy to do that," said Long Yongtu.

"Maybe blaming others much easier, but I don't think blaming others can help to solve the problem. In China's absence, the US manufacturing industry would move to Mexico."

He then relayed an anecdote of a Chinese glass manufacturer who struggled with opening a factory in the USA: "It's very difficult for him to find competitive workers there. He told me American workers' bellies are bigger than his," said the minister.

So right now we have come full circle. China has had significant economic success within the WTO. Right now the Biden administration seems in no hurry to change the obstructive policies of his predecessor there. The trade scepticism is very real. China has used WTO membership to go well beyond its earmarked role as workshop to the West.

It has, for example, strategically planned alliances to get access to significant amounts of the rare earth materials that should power the net zero climate change economic revolution. It has deployed the state behind industrial expansion around the world. The US is looking to contain China diplomatically and economically, and seeking allies in this endeavour in Europe and Asia.

As former US trade representative Barshefsky puts it, China has been "on this very divergent course for some time. What does that mean? A strengthening of a state-centric economic model fuelled by massive subsidisation to designated industries… the re-emergence of China as a great power, and the leader of what it calls the Fourth Industrial Revolution. This is a lot to handle. The WTO can't handle it."

So, 20 years on - the world transformed by a little-noticed decision. It's been a huge success for China. The intended geopolitical strategy of the West failed. Indeed, rather than China becoming more like the West politically, as a result of this decision, the West economically speaking is becoming a bit more like China."

MY COMMENT

This is the basic history of the economic domination of the world by a BRUTAL DICTATORSHIP. It was ALL allowed to happen by the West. In fact it has been encouraged by the West.

This little article.......fails to mention......much about the complicity of American and Western business in allowing china to STEAL their technology and manufacturing processes. Company after company sold their souls to China in return for cheap manufacturing and the......illusory dream/fantasy.....of access to the Chinese markets. Now we are at the point where they dont even have to steal tech.......our companies willingly give it to them.....based on their greed for cheap labor and manufacturing and the continuation of the FANTASY of access to the Chinese marketplace. A 21 year story and history of a country and it's businesses committing economic and business genocide on themselves.

 

HERE is another story that is somewhat of a warning....for the future. As we invest more and more complex technology.....that technology begins to outstrip the ability of humans to control and understand it.

Amazon Says ‘Unexpected Behavior’ Caused Huge Cloud Outage

https://finance.yahoo.com/news/amazon-says-unexpected-behavior-caused-003144464.html

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

"Amazon.com Inc. said automated processes in its cloud computing business caused cascading outages across the internet this week, affecting everything from Disney amusement parks and Netflix videos to robot vacuums and Adele ticket sales.

In a statement Friday, Amazon said the problem began Dec. 7 when an automated computer program -- designed to make its network more reliable -- ended up causing a “large number” of its systems to unexpectedly behave strangely. That, in turn, created a surge of activity on Amazon’s networks, ultimately preventing users from accessing some of its cloud services.

“Basically, a bad piece of code was executed automatically and it caused a snowball effect,” Forrester analyst Brent Ellis said. The outage persisted “because their internal controls and monitoring systems were taken offline by the storm of traffic caused by the original problem.”

Amazon explained the failure in a highly technical statement posted online. The problems began about 10:30 a.m. New York time on Dec. 7 and lasted several hours before Amazon managed to fix the problem. In the meantime, social media lit up with complaints from consumers angered that their smart home gadgetry and other internet-connected services had suddenly ceased to work.

Some experts said the explanation doesn’t help users fully understand what went wrong.

“They don’t explain what this unexpected behavior was and they didn’t know what it was. So they were guessing when trying to fix it,which is why it took so long,” said Corey Quinn, cloud economist at Duckbill Group.

AWS is generally a reliable service. Amazon’s cloud division last suffered a major incident in 2017, when an employee accidentally turned off more servers than intended during repairs of a billing system. Still, the latest outage reminded the world how many products and services are centralized in common data centers run by just a handful of big tech companies like Amazon, Microsoft Corp. and Alphabet Inc.’s Google.

There is no easy fix to the problem. Some analysts believe companies should duplicate their services across multiple cloud computing providers so no one crash puts them out of commission. Others say a “multi-cloud” strategy would be impractical and could make companies even more vulnerable because they would be exposed to everyone’s outages, not just AWS’s.

“We know this event impacted many customers in significant ways,” the company said in the jargon-filled statement. “We will do everything we can to learn from this event and use it to improve our availability even further.”"

MY COMMENT

A WARNING....about reliance on the web and technology to do simple things and connecting everything in your life to the internet. I may be OLD SCHOOL.....but I have ZERO interest in connecting my ENTIRE daily life to the internet. I can lock my own door, turn on my own lights. I dont need a refrigerator keeping track of how much milk I have. I have NO interest in running my entire life from my phone. I prefer an old fashioned controller for my irrigation system. Etc, etc, etc, etc.

I DO use technology for many things in my life....but there has to be a basic level of necessity that is required.

As we move forward.....and we adapt tech to EVERYTHING.....we are one programing screw-up.....or one EMP event.....from being blasted (figuratively) back to the distant past.

 

The last three weeks of the year........Christmas is a couple of weeks away. What is the outlook for investors?

Why we have exactly the fuel we need for a year-end rally

https://finance.yahoo.com/news/why-...l-we-need-for-a-year-end-rally-125224451.html

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

"Market participants are trying to make sense of the recent stock market volatility. They want to know why it happened, why was there a significant drop in so many growth stocks, and was this recent sharp pullback just a shakeout before a year-end rally or the start of a bigger correction? Of course, no one knows the answer to the last question, but I’m leaning towards a year-end rally for the following reasons.

Technicals – During the recent drop, the S&P 500 and Nasdaq Composite found support around their 50-day moving averages. Since this is traditionally an area of institutional support, it is important to note that the large institutions were buying near these levels.


Chart is provided by MarketSmith.
Strong Seasonality — November, December, and January are historically three of the stronger months of the year. Specifically, the second half of December tends to be strong, as seen in the chart below (courtesy of @RyanDetrick)


Stock Leadership — It’s hard to get bearish when many Mega Cap growth leaders such as Microsoft (MSFT), Alphabet (GOOG, GOOGL) and Tesla (TSLA) continue to hold logical support levels. In addition, Apple (AAPL) is the most widely held stock and it surged to an all-time high this week. Finally, I consider Semiconductors as a true indicator of the economy, and many stocks in this sector are approaching or already at new highs.

Sentiment — Many sentiment measures reached extreme bearish levels last week. A casual observer might not understand why this happened with the major indexes near all-time highs, but beneath the surface, it has been a bloodbath. Most people don’t just own the index. They own growth stocks, and especially get married to the ones that have greatly appreciated in price over the past year or two. When these stocks become “too crowded,” the market conveniently destroys these names, and that kills the morale of many traders.

This leads me to the first two questions I posed at the beginning of this article. The selloff was partially related to uncertainty fears around the new Omicron variant, and it was also a normal pullback to shake out some of the excess created in the prior six weeks. However, the main reason had to do with Fed Chair Powell changing his tune from dovish to more hawkish.

Since early April 2020, I’ve been writing articles to stay bullish because of the insane amount of liquidity the Fed was pumping into the system. In the spring of 2020, the Fed made more Treasury purchases in the six weeks following the pandemic than they did in the nine years combined between 2009-2018. They continued with $120 billion in monthly bond purchases, but now need to reduce or “taper” these purchases. In last week’s testimony to Congress, Fed Chair Powell discussed speeding up the taper and the market interpreted his language as hawkish and started to price in two to three rate hikes in 2022. There’s a reason why Wall Street legend Martin Zweig created the phrase “Don’t fight the Fed.”

Many people are concerned that we might see a all of 2018 scenario. In October 2018, Fed Chair Powell said he planned on raising rates 3 to 4 times in the upcoming year. The market clearly could not handle this and then proceeded to drop 20% in the following few months. In January 2019, Powell took back his words and that ended the market correction. I don’t see this scenario happening now because even if the Fed tapers more quickly than people expect, they are still providing a low-interest rate and equity-friendly environment. In fact, Powell never really has to raise rates. He can just say that he will, watch the market drop, and then retract his words.

Bottom line, the strong technicals combined with the favorable seasonality and extremely negative sentiment could be the fuel needed for a year-end rally. As far as 2022 goes, we’ll worry about that next year."

MY COMMENT

Unfortunately the article does not live up to the promise of the headline. Pretty basic stuff and not a lot of detail or analysis. But....here it is anyway. I have outlined a number of reasons over the past few pages of posts that I believe we are heading to a......VERY NICE.....SANTA CLAUS RALLY. I STILL hold that view.