The Long Term Investor

I was AMAZED just now when I went into the largest portfolio that I manage and calculated the gain or loss, year to date. Of course......it has a loss...Duh. What amazed me is the fact that that portfolio year to date is (-4.63%). The SP500 is (-7.04%) So that portfolio....which is invested in the same stocks and funds and using the same style as my PORTFOLIO MODEL and all of my portfolios....is beating the SP500, year to date by.........2.41%.......AMAZING. I don't plan to do any portfolio analysis to see why the SIGNIFICANT difference. Mainly because this is a very SHORT TERM difference and it is therefore irrelevant.

I knew I was consistently doing better than the SP500, but did not expect this large of a difference. PROBABLY just random luck of the draw with the particular stock mix and funds.......BUT....nice to see. After everything that has occurred over the pat few weeks, I am surprised. Whatever market pressures or or quirks is causing that performance difference is......FINE WITH ME.

 

I MUST SAY......I AGREE with the analysis expressed in the articles below. I was in my portfolio and watching the averages and markets when the Fed announcement was made and during the conference. It was obvious that the interest rate cut tanked the markets. It DEFINITELY surprised me and came out of left field with no warning or expectation. It WAS a shock to the markets.

Fed's rate cut timing a 'mistake' that 'undermined confidence': Moody's chief economist

https://finance.yahoo.com/news/moodys-mark-zandi-calls-fed-rate-cut-timing-a-mistake-215058448.html

AND

Strategist 'at a loss' over emergency Fed cut, says lack of rationale fed market panic

https://finance.yahoo.com/news/vincent-reinhart-on-fed-emergency-rate-cut-202144802.html

MY COMMENT

I dont mind the cut. BUT....I agree that the seemingly hasty nature of the cut and the size of the cut made it seem like a panic move. I also agree that it would have been better to announce the cut following a regularly scheduled meeting. This FED has a way of making a positive move into a negative. They need to STFU. Every time Powell speaks the markets listen......and usually are UNDERWHELMED.....even if the action should be a positive. Ten year Treasury is at .981%......WOW.

 

We are certainly ON A TEAR in the market at the open today. Not that it means anything till we actually get to the close at the end of the day. THIS is the PRIMARY reason that I pulled the plug quickly on my attempt to trade on anticipated panic. First, I was not seeing panic after the initial surge. Most people I have contact with seemed to be going on with their daily lives with little to no impact at all. BUT....the BIG FACTOR in pulling the trade and going back into the markets.....ALL IN...with the percentage of funds that I took to cash for the trade....was the explosive UP moves we saw on Monday and now today.

I believe the PRIMARY reason the average investor......that is trying to market time, trade the markets,or dollar cost average in, or is afraid to invest, etc, etc,.....STRONGLY UNDERPERFORMS the market averages is the fact that they miss the explosive UP days. These sorts of moves do NOT happen when you think they should and they often happen when you dont think they should. They are OBSCURE and can NOT be anticipated.

I have been following along through the few posts on the thread in this forum:

"Mrs. optionslayer's ROBINHOOD acct."

I notice that there have been serious issues with access during this crisis. I personally would NEVER have a brokerage account at some 8 year start up. I look at their web site at all the photos of the typical tech start up office with all the perks and frills to appeal to Millenials. It looks like something out of the comedy Silicon Valley. They tout their engineering background on their site as a selling point, yet they crash in the first big crisis they have to deal with. I would personally NEVER deal with a brokerage that is just an app. I want a full service DISCOUNT brokerage that has a long history of being in business.....Schwab, Fidelity, Vanguard, etc, etc. When I am talking about MY MONEY......I want the REAL THING.......NOT a phone app that might be gone in a few years if they dont make it in business. I am not saying you would lose your money......but, I want a brokerage that I can deal with FOR LIFE. One that has been in business for a long time and has staff and employees with long term experience in the business and investing worlds. TRENDY and WOKE are NOT what I care to have for a brokerage for MY money.

NICE.....so far.......BEATING the SP500 by .31% today. One of my primary investing goals long term is to beat the SP500 each year. A very difficult, often not achievable goal. BUT.....I like challenges. Some times I make this goal and some years I dont. I dont CHURN my portfolio to try to CHASE this goal. I invest for the LONG TERM in the fashion that I have ALLAYS done which has worked for me for 45+ years. That is why I have my second, PRIMARY, goal......to achieve a minimum 10% total return.....over the long term. I am satisfied to double my money every 7 years.

 

I have been looking at house prices in our neighborhood. It is a desirable, close in suburban neighborhood. This time of the year we normally have about 95 homes for sale. There are 3600 homes in the neighborhood. THIS YEAR there are 12 listings ranging from a low of $360,000 to a high of $1,150,000. We also have 3 three listings ranging from $2,500,000 to $4,000,000. So in all 15 listings, with the 3 being out of reach of the vast majority of buyers. In this part of Texas we are in a BOOMING sellers market. The GREAT mortgage rates are nice, but there is NOTHING to buy......at least close in to the city in a desirable neighborhood. If this keeps up I am expecting a HUGE bump up in prices over this selling season.

On a related topic.......Treasury rates:

US Treasury yields drop to the lowest level in 150 years

https://qz.com/1812588/treasury-yields-drop-to-the-lowest-level-in-150-years/

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

"Ten-year US Treasury yields—the benchmark for global financing—got a shove below 1% after the Federal Reserve made an emergency cut to its target rate yesterday. It’s the lowest rate ever, according to records going back to 1871 compiled by Yale University economist Robert Shiller.

The Fed and other policy makers around the world are looking for ways to propel economic growth as Covid-19, the disease caused by the new coronavirus, sparks worker shortages and disrupts supply chains. G7 officials held a conference call yesterday to discuss a response, but it was the Fed that took action. Fixed-income traders expect Fed chair Jerome Powell to reduce the target rate, now set at 1% to 1.25%, even more in the near future.

The US central bank used up valuable ammunition even though policy makers know it is of limited use against a virus, Kit Juckes of Societe Generale wrote in an email. “The Fed watches for danger and cuts rates when it sees it,” he said. ”They’re not done cutting quite yet but the end is getting closer.”

What do these low interest rates mean? They could indicate that investors are worried that economic growth will stumble, which is why they are buying risk-free government bonds instead of things like stocks and corporate bonds that have the potential for higher returns. The MSCI World Index of developed market stocks fell 1.7% yesterday, according to FactSet data, while the S&P500 Index of US equities dropped 2.8%.

“Very low yields are either a testament to the aggression of the Fed or fear,” Sebastien Galy, senior macro strategist at Nordea Asset Management, wrote in an email. “For now, it is mostly fear.”

Emergency rate cuts have a mixed record, and it’s hard to predict how they will filter through markets and the economy. The Fed reduced rates in 1998 to prop up fixed-income markets after the collapse of hedge fund Long-Term Capital Management, writes Bloomberg’s John Authers. The stock market soared 50% during the next year and a half, but the move was later seen as mistake because it helped inflate the dot-com bubble. The emergency rate in January 2008 did little if anything to stifle an intensifying financial crisis.
The ramifications of ever lower interest rates will take time to discern. A likely outcome in the coming months is more expensive housing prices, buoyed by lower borrowing costs, according to investors and strategists. Lower rates can place strain on the banking system, as lenders make less money from the spread between their deposit rates and the loans they give out to customers. That decline in profitability can make the banking sector less dynamic over time.

It may also result in more corporate acquisitions, as executives take advantage of cheap financing to buy competitors, said Alberto Gallo, a portfolio manager at Algebris Investments. “It was a policy mistake,” Gallo said on the Fed’s decision. “Everyone on the investor side is pretty in line with this view.”"

MY COMMENT

With the ten year at less than 1% I have NOW had a HUGE increase in the value of my lifetime income annuities.....at least for the short term. Of course, there is NO WAY I would consider selling that income stream on the secondary market......assuming there is a secondary market for these sorts of annuities. In hindsight my timing on purchasing these income annuities five years ago was IMPECCABLE........impeccable LUCK. At the time I wondered if I was making a big mistake, thinking that rates might rise over that five year time. In hindsight....so glad I made the purchase when I did.

As to the markets......DOW UP 1173........YES......that is right, 1173 points today. We are now at DOW 27,090. VIRUS........what virus. I should not MOCK the virus.......I will JINX things big time. BUT...I cant help it. Here we get a virus, with similar death rates to a FLU, just a little higher.........AND.....what does the general public do....run out and buy toilet paper and bottled water. IDIOTIC. Totally random, unscientific, crazy thinking and response. NO....toilet paper is NOT going to be affected by this virus and NO the public and well water systems are NOT going to be affected. In any event....have you heard about BOILING water?

ANYWAY....here is where we are at the moment:

DOW year to date (-5.07)
SP500 year to date (-3.12)

At least for one day.....the correction is OVER. We are well below the 10% loss correction definition. AND....another great day in the neighborhood for my primary portfolio stocks........UP .45% more than the SP500. Fully invested for the long term as usual.

 

Well we just moved to this house. It is our final house. The perfect floor plan for what we need. GOOD appreciation is fine for me since our property taxes are frozen. Texas does have very high property taxes, but NO income tax. It is not unusual for homes in our neighborhood to sell in one or two days. Usually at list price if they are priced right. I have NOT heard of multible offers very often, however.

 

IGNORING....the market open today. These moves that we are seeing are NOT relevant to anyone with more than a short term horizon. SO....trying to analyze them is a waste of time since they are NOT rational or relevant. Likewise the news and commentary about this virus is NOT rational or relevant......to ANYTHING. It ALL makes about as much sense as rushing out to buy TOILET PAPER when faced with what is REALLY ONLY a seasonal cold. YES, a new version and perhaps a little bit more impact for a small element of the population.......a TRAGEDY for those personally impacted by a family death.....BUT from a larger standpoint......NOTHING.

The Coronavirus and Templeton’s Four Dangerous Words
The disease may be novel, but markets’ reaction doesn’t seem to be.

https://www.fisherinvestments.com/en-us/marketminder/the-coronavirus-this-time-isnt-different

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

"With coronavirus cases rising and global stocks’ worst week in over a decade taking them into correction territory, we have seen some echoes of what Sir John Templeton famously called the four costliest words in investing: “This time it’s different.” Pundits acknowledge past outbreaks didn’t drive global bear markets or recessions, but they argue past experience is irrelevant due to unique unknowns about the novel virus. But the specifics of any market downturn are always somewhat different. How markets react, though, rarely is—and that is the point of Templeton’s sage statement. In our view, stocks are very likely to once again prove his wisdom timeless.

The this time is different claims stem from detailed analyses of fatality rates, transmission speed, geographic spread and the like. We think these deep dives miss the point, which is about how human emotions affect markets. New diseases spur worries of pandemics slashing global commerce. In response, sentiment often swoons briefly, knocking stocks. But as we wrote, markets soon move on as they realize pandemics, though tragic, are temporary. They rarely pack enough economic punch to cause even local, much less global, recession. Factory shutdowns aren’t permanent. Companies work to keep goods flowing—perhaps by drawing on inventories or shifting production to still-operating factories elsewhere—and keep taking orders in the meantime. When the scare passes, they work through those orders. Output is delayed, but doesn’t disappear. Moreover, services—which comprise the bulk of developed-world GDP—are less affected. Sure, more visible services activities like tourism, dining out and shopping at brick-and-mortar stores likely dip initially. But activities that don’t require milling about in crowded spaces—like online shopping, insurance, finance, and countless forms of digital consumption and tech-related services—needn’t suffer. Some may even gain as consumers and businesses substitute them for potentially more infectious activities.

While stocks may react sharply at first, they soon realize commerce won’t crater for long and bounce before data recover—hard to fathom directly after stocks’ plunge, but normal. Hence, we think the key historical lesson is how sentiment can swing sharply in response to disease speculation—and recognizing recent volatility as sentiment-driven. Sentiment temporarily undershooting reality in response to a false fear isn’t different—it is a story as old as markets.

To see this, consider the stream of “this time is different” projections during this bull market that proved false. They started early: After the 2007 – 2009 bear, many believed stocks’ history of high long-term returns was over, and a “new normal” of inferior, low single-digit stock returns had begun. Risk, proponents argued, no longer paid off. Gloomy economic predictions abounded, too—like this one from May 2010: “The world economy, and the U.S. economy, will resemble the post-bubble Japan of the 1990s—with its ‘L-shaped’ recovery writ large.”[ii] L-shaped recoveries feature stagnant GDP. The US’s 2.3% annualized average since the recession isn’t fast by historical standards, but it isn’t stagnation, either.[iii]

Fast-forward to 2011, when pundits warned S&P’s downgrading US debt meant the government couldn’t keep borrowing more without facing skeptical creditors and sharply higher interest rates. From then on, the conventional narrative went, big budget deficits would bring serious consequences. One article argued “the downgrade will force traders and investors to reconsider what has been an elemental assumption of modern finance”—that Treasurys are close to risk-free.[iv] Rates have declined further since, suggesting this wasn’t such a watershed moment. As for federal deficits and debt, they aren’t exactly smaller.

Political events can also spark dour “this time is different” forecasts. For example, many expected President Trump’s election to be uniquely disastrous for markets. Following a brief spate of volatility in overseas markets the night of the vote, one prominent editorial opined, “If the question is when markets will recover, a first-pass answer is never. … We are very probably looking at a global recession, with no end in sight.”[v] But stocks bounced back by morning and growth continued. The Brexit referendum also inspired many run-for-the-hills responses—including from the UK Treasury, which warned of a “less open, less productive and permanently poorer economy.”[vi] You can read more about overwrought Brexit forecasts here. None have come true yet, and we don’t believe they will.

Volatility—including corrections—frequently accompanied claims history didn’t apply to the most recent threat. But none ended the bull market or economic expansion. Arguing recent dangers or newfangled theories nullify stock market history isn’t unique to the current bull market, either. It is a time-honored tradition. For example, in May 1988, a New York Times article proclaimed “The Death of Investor Confidence,” not quite a decade after BusinessWeek’s legendary (and similarly morbid) cover story, “The Death of Equities.”[vii]

While imperfect, we think history helps investors frame probabilities around potential market outcomes. Ditching it altogether means striking any context for assessing them and instead drowning in an unlimited array of possible outcomes—a recipe for poor decision-making, in our view. So, yep, no two corrections or negative stretches are exactly alike. But, for markets, that doesn’t mean this time is different in any meaningful sense."

MY COMMENT

Personally....I see NOTHING shocking or world changing in this virus or the markets reaction. The lesson is......if you are positioned with a suitable match to your risk tolerance AND you have NOT gotten carried away with your allocation into the markets and stocks over the past ten years of HISTORIC BULL MARKET compared to your income, money needs, expenses, and work/family situation AND you are NOT a short term trader......the best course of action is to DO NOTHING. I suspect that a lot of people that THINK they are traders ARE and HAVE BEEN shocked by the current events. BUT....that is simply the danger of being a TRADER. TOO BAD......live with it and deal with it. Your choices are your choices.

ONE FINAL piece of advice......dont run out and buy toilet paper when there is a virus threat.....that is just plain DUMB.

 

Ten year Treasury yield is .942%. Thirty year yield is 1.596%.

What the Fed’s Big Rate Cut Does and Doesn’t Do
Today’s move might not have been necessary, but it could bring a minor benefit.

https://www.fisherinvestments.com/en-us/marketminder/what-the-feds-big-rate-cut-does-and-doesnt-do

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

"The Fed made its first “emergency” rate cut since 2008’s financial crisis this morning, slashing 50 basis points off the fed-funds target range to bring it to 1.0% – 1.25%. In his accompanying press conference, Fed head Jay Powell deemed the coronavirus a “new risk” to the economic outlook and said the central bank decided to ease monetary policy in response. He also left the door open for another move at the Fed’s next meeting in two weeks. The public reaction seemed divided. Some cheered the move as a positive step in bolstering the economy. Others saw it as a fearful sign superhuman rate-setters saw big trouble ahead. Finally, some bemoaned the fact the Fed didn’t do or promise more. We won’t wade into that debate, as there is little the Fed can do to combat coronavirus-related headwinds. However, Tuesday’s move does address one key factor getting less attention—America’s inverted yield curve—which may be a minor benefit.

On the bright side, the Fed’s move does shore up confidence that the bank is ready and willing to act when things get tough. It shows decisiveness and perhaps boosts credibility—both fine things, in general. However, an interest rate cut doesn’t directly address the potential damage from the coronavirus.

Usually, rate cuts aim to stimulate demand. But the coronavirus isn’t a headwind against demand alone—rather, it hits supply harder. A Fed rate cut cannot end quarantines in China, Korea, Japan and Europe. It cannot get folks back to work. It cannot replace the auto parts and consumer goods that aren’t flowing from China at the moment. It cannot stand in for sick workers. We guess it could help tourism-reliant businesses get over the hump if they were to encounter a short-term cash crunch, but industry estimates peg travel and tourism at around 8% of GDP annually. A short-term, localized hit to an industry that small isn’t going to move the needle much. To the extent it helps smaller businesses stay afloat and keep workers, great. But that is probably a local, micro benefit, not a macroeconomic boost.

The real benefit of this move, in our view, is that it addresses the inverted yield curve. As we wrote last week, we didn’t think this small inversion was likely to derail the expansion. A slightly deeper inversion that persisted for several months last year didn’t hit banks’ profits or lending much. But cutting rates now at least gives the impression that the Fed isn’t asleep at the wheel. We don’t think it is a coincidence that the Fed chose a 50-basis-point cut the day after the 10-year US Treasury yield closed at 1.08% and the effective fed-funds rate closed at 1.59%.[ii] A 50-basis-point cut would effectively erase that, depending on how long-term bond markets respond—something we won’t know until Wednesday’s close.

To us, this seems consistent with how the Fed has managed monetary policy in recent years. They appear to be aiming for neutral, rather than stimulus or tightening. Powell and other FOMC members have basically said as much on a number of occasions. Unlike his immediate predecessors, he also seems to be paying particular attention to the yield curve. October 2018’s Senior Loan Officer Opinion Survey included special questions asking loan officers to consider how a prolonged flat or slightly inverted yield curve would affect credit conditions. Would they be more or less likely to lend to borrowers at various credit scores? The answer: “Significant shares of banks indicated that they would tighten their standards or price terms across every major loan category if the yield curve were to invert.” It is likely no accident that the last Fed rate hike occurred weeks later, when the yield curve was still modestly positive. Nor does it seem insignificant that 2019’s cuts seemingly aimed to gradually undo the modest inversion, as Exhibit 1 shows.

Exhibit 1: Fed Rate Moves and the Yield Curve


Source: FactSet, as of 3/3/2020. 10-year US Treasury yield, constant maturity, and effective fed-funds rate, as of market close on the days before and after the date referenced. FactSet reflects interest rate moves the date they are effective, not the day of the announcement.

We guess one could quibble over whether it is logical for the Fed to cut rates in reaction to short-term volatility in Treasury markets, but that seems rather academic at this point. We are quite sure the Fed is well aware that a panicky flight to safety deserves at least some credit for 10-year Treasury yields’ journey toward, and potentially south of, 1.0%. But what better way to shore up confidence than to respond with an effective “deep inversion? Heck no, not on my watch!” To the extent that helps assuage sentiment and long rates, steepening the yield curve, so much the better.

So no, today’s move probably wasn’t necessary when you assess the facts objectively. But necessity doesn’t matter as much as whether a move is a net benefit, negative or neutral. In this case, we think it is likely neutral to a minor benefit."

MY COMMENT

YES....rates are crazy low right now. For the world......outside of the USA.....with negative rates right now...WE are the safe haven and he ONLY game in town. Businesses rationally refinancing higher debt, home buyers with low mortgage rates, etc, etc, will benefit medium to long term from the current low rates.

 

AS to this opinion above:

"I'm failing to see your rationale for thinking this is just another cold. The mortality rate for the flu is something like 0.1%, while the mortality rate for the coronavirus is 2-4% depending where you're looking. That's, best case, 20x more likely to kill you than the flu. I get that the NUMBER of deaths is low, but as it spreads, with a 20x+ higher mortality rate, it's a much bigger deal than the common cold/flu."


For those under age 80 and without underlying health issues the death rate of the virus is NOT in the 2-4% range. It is not anywhere close. Most medical experts I have seen say it will be 1-2% MAX in a country that is NOT a third world country. AND, that 1-2% death rate includes and is mostly made up of the impaired and very elderly. MY opinion is and continues to be that this is all a tempest in a teapot. STATISTICAL fear mongering at its best.

80,000 people died of the FLU in the USA last year. https://www.statnews.com/2018/09/26/cdc-us-flu-deaths-winter/

I would be EXTREMELY surprised if anywhere close to this number die in the USA from this virus. ACTUALLY I would be EXTREMELY surprised in anywhere near this number die world wide from this virus. To put it BLUNTLY we put up with tens of thousands of FLU deaths every year in the USA....and we dont blink an eye or care in the slightest.

"Another study of about 1,100 hospitalized patients in China, published Feb. 28 in the New England Journal of Medicine, found that the overall death rate was slightly lower, around 1.4%." https://www.livescience.com/new-coronavirus-compare-with-flu.html

AND...that study was of CHINA.....NOT a country like the western countries and especially the USA with a modern health system.

MY non-medical opinion is when it is all said and done there will no where near the number of seasonal FLU deaths in the USA or for that matter the world. The ACTUAL impact of this virus when it comes to the number of deaths in the USA and world wide......which is all that matters outside the panic and fear reaction of irrational people...... will in my non medical opinion be significantly LESS than an annual Flu. Saying or thinking that this virus is 20x more likely to kill you than the flu is NOT accurate in the least. If you are not impaired, like the Washington state nursing home patients and under age 80, the death rate MAY be about 1%. AND, in my opinion.......simply an opinion since no one can really know especially someone like me that is not a doctor or researcher.....it will turn out to be much less than 1% in a modern country. Many people that get a mild version of this virus or think they have a cold, or think they have flu, will not get treated, and will NEVER be counted in the statistics as people that did not die. It is OBVIOUS that this virus has been circulating for probably months here in the USA. I also believe it is probable that many if not most people that have had it never even got any treatment because they did not know they had Corona.

BUT....one thing is sure. The REALITY of this little statistical game that we are all playing and speculating about will be clear in about a year. By than we will have a vaccine and that reality.....whatever is was will not matter..... will no longer be relevant.

 

WELL......the ONLY thing I care about at the moment.....short term.....is IF I can continue to put up PERSONAL portfolio numbers that consistently beat the SP500.....UP or DOWN. After all this short term FEAR&PANIC, DOOM&GLOOM passes.....as it inevitably will...........to whatever extent I can rack up BEATS of the SP500 will mean additional profit as we head forward.

As of a few moments ago I was BEATING the SP500 today by nearly 1%. That is .88%.

This is something that I have noticed for many DECADES in terms of how I structure my portfolio and why I ONLY invest (usually) in AMERICAN, BIG CAP, DOMINANT, DIVIDEND PAYING, ICONIC PRODUCT, WORLD WIDE MARKETING, companies. Over many decades now I have noticed that I do very nicely when the markets are going UP. In UP markets I am usually in the neighborhood of the SP500. FINE for me and acceptable as an investor. I ALSO for many decades, because the types of companies I only invest in are the cream of the crop and tend to be dividend paying companies, have noticed that my portfolio more often than not outperforms the SP500 in nasty markets. To me....a great portfolio mix is one that ALSO does better than average in DOWN days and markets.

 

NOT INTENDED AS INVESTMENT ADVICE.....

Lets get REAL people....

"In recent weeks, though, the number of new infections and deaths reported in China has been declining, which suggests spread of the virus may have peaked there and that transmission is slowing down."

"USA....total cases 163. Total deaths 11 (mostly in Washington state nursing home)." (out of 327,000,000 people)

95,748 confirmed coronavirus cases worldwide, with more cases popping up outside China than inside"

"3,286 deaths have been linked to the virus world wide. And 53,423 individuals have recovered from COVID-19." (out of a world population of over 7.7 Billion people)"

LAST YEARS Flu deaths in the USA which no one seems to give a sh*t about........80,000 people.

Yes, it is good to be proactive........just in case.

 

HERE is the headline of the day since we are now in a headline driven market:

"Stocks plunge 1,000 points after California declares state of emergency"

The ONLY good news today....at least for me..is my stocks continue to beat the SP500 today. As of 30 seconds ago, beating the SP500 by .92%.

 

HERE is the REAL news for actual investors. AND...NO....this is NOT........."before" the virus BS and FEAR MONGERING. I looked back I and others on here were posting about the virus in mid February and the stories were out and about all over the media in February.

Job growth smashes expectations for February as unemployment falls back to 3.5%

https://www.cnbc.com/2020/03/06/us-jobs-report-february-2020.html

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

"Key Points

• Nonfarm payrolls rose by 273,000 in February vs. a 175,000 estimate, while the unemployment rate edged lower to 3.5%.
• Job gains were widespread, with health care adding 57,000 to lead the way.
• December and January’s estimates were revised upward by a total of 243,000.

Nonfarm payrolls grew far more than expected in February as companies continued to hire leading into a growing coronavirus scare.

The Labor Department reported Friday that the U.S. economy added 273,000 new jobs during the month, while the unemployment rate was 3.5%, matching its lowest level in more than 50 years. An alternative measure of joblessness that counts those not looking for work and holding part-time jobs for economic reasons edged higher to 7%.

The January and February gains tied for best month since May 2018.

Economists surveyed by Dow Jones had been looking for payroll growth of 175,000 and a 3.5% jobless level. Average hourly earnings grew by 3% over the past year, in line with estimates, while the average work week, considered a key measure of productivity, nudged up to 34.4 hours.

There was more good news for the jobs market: The previous two months’ estimates were revised higher by a total of 85,000. December moved up from 147,000 to 184,000, while January went from 225,000 to 273,000. Those revisions brought the three-month average up to a robust 243,000 while the average monthly gain in 2019 was 178,000.

Despite the strong numbers, Wall Street was heading for more losses stemming from worries over the effects of the coronoavirus outbreak, though Friday’s futures were off their bottom after the report.

“This could be the last perfect employment report the market gets for some time,” said Chris Rupkey, chief financial economist at MUFG Union Bank.

Gains were spread across a multitude of sectors as the total employment level hit 158.8 million, near its December 2019 record.

Health care and social assistance led the way in job creation with 57,000 new positions. Food services and drinking places both added 53,000 while government employment grew by 45,000 due to Census hiring and state government education. Construction added 42,000 thanks to continued mild weather, while professional and technical services contributed 32,000 and finance rose by 26,000, part of a 160,000 gain over the past 12 months.

In the survey of households, employment rose by 126,000 while the ranks of the unemployed decreased by 105,000.

“While it’s too early to see the impact of the coronavirus on the labor market, we can say the labor market was in a good place before the virus began to spread,” said Nick Bunker, economic research director at job placement firm Indeed. “But the next few months will be a test of just how resilient this labor market is.”

Jobs market still looks strong
The jobs numbers took on particular importance in February as worries intensified over the economic impact from the novel coronavirus, though the report covered the time frame before worries over the disease intensified.

Most of the indicators thus far have shown little damage. Jobless claims remain well within their recent trend, coming in at 216,000 in the latest reading Thursday. Job placement firm Challenger, Gray & Christmas also reported Thursday that planned layoffs actually fell 16% from January. And key ISM readings on both manufacturing and services show companies still plan to hire.

“Now more than ever, we need to focus on the labor market data,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “The consumer has kind of kept things afloat.”

Most of the consumer-related data points have been good, though the reports coming in now largely cover the early stages of the coronavirus scare and the sharp recent stock market volatility.

With the large measure of uncertainty around the disease, its impacts may be felt in increments rather than suddenly. But if cracks begin to form, the first notices likely will come in employment data.

“If we start to handle things the way they’re handled in Italy and South Korea, closing schools and having mandated cancellations of travel and sporting events, I think there’s no way we don’t start to see it in the labor market and in consumer confidence and spending,” Sonders said."

MY COMMENT

EXACTLY. We are in a fake crisis ( the virus is real but how it is being projected in the media is fake) driven by FEAR&PANIC and DOOM&GLOOM 24/7 by the MEDIA. All of the many reports I have seen contain the same untruth that the jobs data is before the corona scare. ALL of the economic data CONTINUES to come in very nicely. The one thing that this story points out is the fact that our December and January data was WAY WRONG on the negative side. When we are changing statistics by 37,000 jobs in December and 48,000 jobs in January, our data and methods of collecting and estimating data is WAY OFF. It is interesting that ALL these corrections that I have seen for years show that the statistics are generally SEVERELY WRONG always to the negative side of things.

As to the virus.....who cares. That is MY opinion. May turn out to be wrong in the future but for now I see NO crisis other than a minimal health issue that appears to NOT be quickly escalating.

HERE is the most current data from the CDC itself:

• Total cases: 164
• Total deaths: 11
• States reporting cases: 19

"* Data include both confirmed and presumptive positive cases of COVID-19 reported to CDC or tested at CDC since January 21, 2020, with the exception of testing results for persons repatriated to the United States from Wuhan, China and Japan. State and local public health departments are now testing and publicly reporting their cases. In the event of a discrepancy between CDC cases and cases reported by state and local public health officials, data reported by states should be considered the most up to date.

† CDC is no longer reporting the number of persons under investigation (PUIs) that have been tested, as well as PUIs that have tested negative. Now that states are testing and reporting their own results, CDC’s numbers are not representative of all testing being done nationwide.

‡ As of March 5, 2020 1,583 patients had been tested at CDC. This does not include testing being done at state and local public health laboratories, which began this week.

Travel-related 36
Person-to-person spread 18
Under Investigation 110
Total cases 164"

This data covers back to January 21, 2020. Apparently now as of a few moments ago:

"The death toll in the U.S. from the coronavirus outbreak rose to 14 on Friday, with more than 225 cases confirmed across the country."

PRETTY skimpy numbers for a virulent virus that is expected to spread like wildfire and wipe out 3-4% of all people that get it. ACTUALLY, I dont think any of the above reflects fact or will turn out to even be remotely true. I DONT trust CHINA data in the slightest, but they are reporting ZERO new cases in many areas of the country. Either they are hiding tens of millions of cases and hundreds of thousands of deaths or this virus is NOT spreading rapidly in the fashion that is being FEAR-MONGERED. I NEVER trust China, but I dont think they could hide numbers as big as this.

I am NOT saying we should do nothing. I think our government is responding properly at this point in time with the many unknowns. BUT for actual investors, with a long term horizon, here is NOTHING to do but wait out the carnage and fear. I continue to be fully invested for the long term as usual.

As to today......well NEVERMIND:

Market's rollercoaster week ends with surprise comeback, oil at 3-year low

https://www.foxbusiness.com/markets/us-stocks-march-6-2020

From another story:

"The Dow Jones Industrial Average came back in a serious way, closing down 256 points on Friday, after falling 896 points at the low. The 30-stock average ended the week with a gain of 1.8%. The S&P 500 fell 1.7% and the Nasdaq Composite dropped 1.0% on Friday, but both indices ended the week with a gain."

OK.....good. On to next week and a continuation of the BREATHLESS reporting as usual.

 

Having just checked......my personal portfolio of stocks CONTINUES their recent run. Once again, beating the SP500 today by .47%. I believe I have beaten the SP500 every day this week and the majority of days in the past few weeks. This is short term stuff, but I will take it and move on to next week.

 

I have NOTHING to prove this....but I am guessing that the VAST majority of action over the past month or so has been very heavily the short term professional traders, Algorithms, and AI trading. Here is one take on the current impact of this sort of trading in the current markets:

A view from the trading floor: Algorithms having 'outsized impact' amid coronavirus panic

https://finance.yahoo.com/news/a-vi...-impact-amid-coronavirus-panic-160248892.html

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

"The coronavirus outbreak has turned global markets into the ultimate roller coaster, with panicked trading creating huge price swings and deep point losses.On the New York Stock Exchange floor, one trader recently described the mood to Yahoo Finance. During a particularly volatile week, the Dow Jones Industrial Average posted its biggest-ever point gain — only to give most of it right back the next day."

"The increase in algorithmic trading has contributed to this volatility, as this type of trading can have an outsized impact on prices," says Matt Aronowitz, an NYSE member and portfolio manager at NYAM LLC. He called the whipsaw action “an entirely new trading environment.”

Computer-driven trading algorithms — often faulted for volatile markets even during the best of times — certainly aren't helping now, Aronowitz explained.The algorithms feed off of each other, creating an environment with less liquidity.

"When market volatility increases, liquidity decreases as market makers reduce the inventory they are allowed to carry within their portfolio," the investor explained.

Those movements create escalating price moves, and higher frequency of algorithmic responses — which becomes “a vicious cycle, which is why we have had such a drastic increase in volatility in such a short time period," he said.

He predicts this will continue until we get clarity on how badly the virus will impact the market this year, which ultimately will lead to institutional investors putting money back to work and supporting the market.

Often times, prices need to go far beyond "value" before institutional money is willing to step into this type of market. "This ultimately leads to a cycle of calm and market normalcy, Aronowitz told Yahoo Finance.

But exactly when that will happen is anyone's guess."

MY COMMENT

Until this AI trading grinds back to whatever is normal we will continue to have these snowball up and down days. This is like a legal, HIGH TECH, way of FRONT RUNNING the markets for the BIG BOY trading banks and companies. They design algorithms that will react a certain way in certain situations and than they trade off the market conditions that those algorithms are helping to create as a self fulfilling prophesy. Of course, since they created the algorithm to begin with they should be able to predict how that algorithm will impact and drive the markets up or down in certain situations.......and...front run the markets by trading on the markets THEY are driving.

Because this "stuff" is black box and legal, short term traders are either big enough to be part of this process or those too small to be part just have to play the edges. In my NON-TRADER opinion this puts the bug boys FIRMLY in control of the short term trading game. (they were anyway, but this stacks things more-so in their favor short term in my opinion)

The ONLY way to beat them when the markets are being legally manipulated is to GO LONG. Long term investors can and will be able to win out over long term time periods. All the data shows that the professionals can NOT beat the averages long term. The....very difficult.....trick for long term investors is to be able to equal or beat the averages, at worst slightly under-perform them. The data also shows us that the average "little" investor does not come anywhere close to the averages. SO......a difficult goal for most investors. Not impossible, but difficult.

 

WELL.....as we prepare for another investing week we should be ready for a continuation of the Corona MEDIA panic. Much of which is SIMPLY Political. NEEDLESS to say I agree with Elon Musk and his tweet the other day:

"Elon Musk isn’t worried about coronavirus — and doesn’t think anybody else should be either.
“The coronavirus panic is dumb,” the Tesla boss tweeted Friday."

I am starting to......at least a little bit....see some coverage that is not wall to wall DOOM&GLOOM panic mongering. Here is one example.

The flu has killed far more people than coronavirus. So why all the frenzy about COVID-19?

https://www.latimes.com/science/story/2020-03-05/flu-killed-more-people-coronavirus-covid-19

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

"You’ve seen it on social media, heard it at a dinner party, and maybe you’ve even said it yourself.

“The flu has killed tens of thousands more people,” the line goes. “So why is everyone freaking out about the coronavirus?”

It’s a reasonable question. After all, both viruses produce similar symptoms — fever, body aches, cough, fatigue — and if you live in the United States, you are currently much more likely to catch the flu than the new coronavirus that originated in China late last year.

An estimated 32 million Americans have come down with influenza since this year’s flu season began in late September, resulting in about 18,000 deaths, according to the Centers for Disease Control and Prevention.

In contrast, as of Thursday, health officials have confirmed 97,876 cases of coronavirus infection resulting in 3,347 deaths across the entire globe.

In the U.S., the number of reported coronavirus infections is significantly smaller, with 177 reported cases and 11 deaths. That is a minuscule fraction of the nearly 330 million people living in the country today.

So why all the warnings from the CDC and other public health agencies about self-quarantines, school closures and other daily disruptions when we live through flu season each year?

What are we so scared about?

“I think a big part of it is fear of the unknown,” said Dr. Otto Yang, an infectious disease expert at UCLA. “The enemy you don’t know is much scarier than the enemy you know.”

No vaccines, no medications
Humanity has been contending with seasonal flu for centuries, so scientists have had a long time to study the influenza strains that circulate in the winter months.

This research has led to the development of annual vaccines that protect large swaths of the population from getting the flu and reduce its severity in those who do become infected. In addition, there are medications available that can treat influenza symptoms and sometimes shorten the duration of the illness.

Also, when individuals come down with the flu, their bodies build up immunity. That means not everyone who is exposed to the flu virus gets sick.

But the coronavirus responsible for COVID-19 has been in existence for only about three months, so there is no natural immunity in the population.

And unfortunately, there isn’t a vaccine that can pick up the slack. Although several experimental vaccines are in the works, none will be ready to roll out for at least 18 months, said Dr. Hilary Marston, a policy advisor at the National Institutes of Health.

Nor are there any medications specifically designed to target this coronavirus, though researchers are testing existing antiviral medications to see if they can help patients with COVID-19.

“Public health measures are what we are going to need to focus on for the foreseeable future,” Marston said. That includes basics like washing your hands and covering your cough, as well as more disruptive things like closing schools, canceling public gatherings and implementing quarantines for those who may have been exposed.

Still learning how it spreads
For public health officials, another cause for concern is the lack of information about how easily the coronavirus spreads.

Scientists know that influenza is transmitted from person to person by droplets that leave a sick person’s mouth when they cough, sneeze or talk. Those droplets can travel three to six feet and infect anyone in their path.

The coronavirus spreads through droplets as well, researchers say, and it may be capable of airborne transmission too. Airborne viruses, like measles and chickenpox, can drift from person to person in even smaller droplets that can travel on air currents.

“That’s a very different thing,” said Abigail Carlson, an epidemiologist at Washington University School of Medicine in St. Louis. Among other things, it implies that an infected person can spread the virus to someone who is more than six feet away, “so that is also part of the rationale for keeping people at a distance from one another.”

And researchers are still trying to determine how long the new virus can live on surfaces like handrails, doorknobs and elevator buttons that may be touched by hundreds or even thousands of people each day.

It isn’t yet clear whether the coronavirus spreads as easily as the flu, but it has moved quickly. It has reached six continents in a matter of weeks with confirmed cases of COVID-19 in 89 countries and territories. Some of those patients became infected despite having no contact with anyone known to be exposed to the virus.

Higher fatality rate than seasonal flu
And here’s another reason health officials are sounding the alarm: It appears that COVID-19 has a higher fatality rate than the flu.

Although four out of five cases of COVID-19 result in mild illness, the director-general of the World Health Organization said this week that the mortality rate of COVID-19 could be as high as 3.4%.

That would be higher than the mortality rate of the 1918 Spanish flu, which is estimated to have killed at least 50 million people worldwide over two years. Among those who were infected, the death rate was around 2.5%.

However, experts said the observed COVID-19 death rate is almost certainly an overestimate.

That’s because the only people being tested for the coronavirus are those showing symptoms of infection. There could be just as many people — and perhaps even more — who have the virus but show no signs of infection, or have symptoms so mild they were not tested.

Yang said it’s certainly possible that the true number of people who are infected is 10 times greater than the number of people who have confirmed cases of COVID-19. In that case, the true fatality rate would be closer to 0.2%, he said.

But even that’s still higher than the seasonal flu, which had a fatality rate of up to 0.14% last flu season, according to data from the CDC.

Ultimately, said Yang of UCLA,you might think of the coronavirus as a very bad flu that can infect a lot of people. That’s still cause for worry.

“The flu is variable,” he said. “There are some horrible flus like the 1918 pandemic, and some mild ones. Coronavirus has the potential to be very bad.”

Containment still worth a try
And here’s one more reason to try to contain the coronavirus: Because we just might be able to do it.

“We don’t even talk about containment for seasonal flu — it’s just not possible,” said Tedros Adhanom Ghebreyesus, director-general of the WHO. “But it is possible for COVID-19.”

And if taking basic precautions saves even a few lives, isn’t that worth it?"

MY COMMENT

This article is a CLASSIC example. The ONLY real reason for the panic ACTUALLY listed is......drum roll please......"fear of the unknown". In other words nothing more than human superstition based panic reaction. The article notes....dryly....that the death rate is overblown in reporting due to lack of reporting of mild cases. The article notes that both this virus and flu spread the same way. The number of cases in the USA is MINUSCULE. ACTUALLY the article makes the case that there really is very little that is different from the FLU......except for the fact that FLU kills 20,000 to 80,000 people just in the USA EVERY YEAR.

It is INTERESTING to me that there is nearly NOTHING of real hard scientific value in this article to justify the reaction to this virus by the media and others. Parts of the article that try to justify this situation and why it is any different than simple flu are for the most part the comments and opinion language inserted by the author........like:

"it has moved quickly." (not really, it has infected only about 100,000 in months)

"Some of those patients became infected despite having no contact with anyone known to be exposed to the virus." (SCARY...they got it out of thin air...NO..obviously they came in contact with someone infected)

"That’s still cause for worry." (why?)

I am waiting for something that will change my opinion of this virus situation. I still see NOTHING that is going to change my mind on this issue. When there is something, some data, anything that says this is the killer, wide spread world event, that is being depicted daily in the MEDIA, I will JUMP ON BOARD. Till than.....as usual....I dont see it. BUT.....from an investing and life standpoint.......this is one of those times when nothing matters but the fear and panic. I DO think our government response to date is correct. Especially in a potential panic situation steps must be taken. Prepare for the best outcome and the worst outcome. This is what I do with ANY decision I make. I clinically evaluate the worst outcome and the best outcome and if I can live with that range of possibilities I am good to go.

People live under a VENEER of false confidence that they are actually in control. Fear of the unknown and a situation like now removes some of that confidence and exposes underlying human superstition. That is why we dont even give the FLU a second thought. I will continue to be fully invested for the long term as usual. AND...looking at my portfolio model over this weekend....I am STILL above where I was in early October of 2019. So about 5 months of the past 10+ years of gains have gone away. I AM NOT saying we are at a market bottom. Who knows. We may be, or there may be another 5-15% ahead of us on the down side. I TEND to think that we are at or near a bottom with the VERY erratic UP and DOWN moves we were seeing last week. At least we ended UP POSITIVE for the week.

Day by day, week by week, we will move forward and some time over the next 12 months we will have moved on. Once we have done so the ACTUAL FACTS of what happened with this event will be clear. Till than the vast majority of reporting on this event is simply speculation.

 

I was driving the other day and was thinking about this little site and this thread. HERE are some questions (random thread filler for a slow Sunday) that "I" might have if I was a reader:

How much time does this FOOL spend on this stuff?
I spend perhaps 20 to 30 minutes a day maximum. Mostly typing or doing copy and paste.

Is any of this "stuff" planed or written out ahead of time?
NO...is is ALL simply stream of consciousness typed off the top of my head as I go. I am NOT trying to write out articles or commentary. It is simply what catches my attention through the day as I do my various reading and thinking about money and investing.

What is this CRAZY, irritating, style of writing with all the......periods....., CAPS, and bold "stuff"?
No, I dont normally write this way if I am writing some sort of document, paper, letter, etc, etc. I write this way here because in my mind I see and hear what I am putting on this thread as.......a conversation, ( usually with myself). When people speak there are small pauses (the periods) and words are subtly emphasized (the caps). There is much context in how something is said.

Why waste the time?
Well for me this is an investing BLOG. I can look back and see what and how I was thinking on some issue or event or decision or investing environment. It also helps to clarify my investing thinking by putting it in writing and seeing it in writing.

How are the articles that are posted picked?
Random, daily chance. Simply articles that I come across in daily scanning and reading. I tend to post the ones that I think have some lesson or merit to myself and potentially others.

Is there some theme or plan to the content?
NO...it is simply random. Although, it often seems to have a theme. I assume this is some sort of subconscious happening that I tend to be focused on some issue or other and it tends to show in the thread.

WHY?
I have been posting similar thoughts and material on different investing message boards for about 25 years now. My portfolio model theory has stayed consistent over that time, although over my life many stocks have come and gone. Besides the personal benefits to "ME" from doing this little blog....I hope that posting my thoughts, my experiences, my successes and my failures (see recent attempt to trade on panic), etc, etc, will give someone else an idea, or might help someone else to clarify their own investing world. I DONT give investing advice. I AM NOT going to try to tell someone else what to do. But....by including personal "stuff", thoughts, ideas, actual numbers and investing moves.......including personal, financial, and personal info as much as possible without identifying myself......I hope that there will be some value to someone else.

 

ZUKODANY......amen brother. This virus is a tragedy on a very personal level for those that lose a family member. BUT, lets not get carried away. I see and hear your thinking and my thinking reflected in conversations with nearly EVERYONE that I know. I have yet to see anyone wearing a single face mask. I am out and about playing as a musician every week. I see NO hesitation or changes on the part of anyone in my area to go out into the public.