The Long Term Investor

Another PERFECT day for me....perfectly RED.....every single position. AND.....as an added bonus.....I got beat by the SP500 by 0.90% today. Yesterday was EASY COME......today was EASY GO.

 

Today was nearly half a correction......with some of the BIG CAP giants down by 4% or more. It put a big CRIMP into APPLES plans to celebrate a market cap of $3 TRILLION.

Is this a little HISSY FIT to the dumping of the BUILD BACK BETTER plan? I think it might be......sorry that free money is not going to happen now, at least this year. As to 2022.....it is an election year and will probably not be very favorable to this sort of GIANT bill.

No real news today....just a continuation of the market EXHAUSTION and worn out investors......add in some year end selling pressure and a chance to take back some of the gains yesterday and you have today.

BAH HUMBUG........to the markets.

 

Looks like we will have a short investing week next week. If I am seeing correctly the markets will be closed on Friday since Christmas falls on a Saturday. So we are down to the final TEN DAYS for the markets this year.

We are in the.....FINAL COUNTDOWN.

 

Welcome to the thread Sundance. Sounds like you are of the older generation if you remember the 1970's and Billy beer. Feel free to post any time and give us your investing experiences.

 

I have been charting out some new material for a rehearsal this weekend. A few songs that we will add for New Years Eve. I have been doing the charting mentally and by ear and will have to spend an hour or so with them tomorrow with a guitar in my hand to get ready for the rehearsal. I have been putting it off since I know that I have them in my head.

New Years is not a favorite day to play for many musicians.....myself included. Too many drunks on the road.......and too much potential for drama.

We have about 40 shows on the calendar so far for 2022. It is nice to see things starting to open back up after the Covid closures. That is a good start and hopefully we will end up with at least 100 at the minimum. My sweet spot for shows is about 120 per year.

 

Another day in the market neighborhood. We are DOWN again.......is it a SANTA CORRECTION? Perhaps.....I think that now this pretty well ends any hope for a year end rally.

I know what all the....."experts" are saying.....but....here are my general thoughts about the economy right now. Keep in mind that I TOTALLY SEPARATE the markets from the general economy.

1. The WORLD economy is a total mess. The pandemic and all the easy money was superimposed on top of a DEFLATIONARY DEPRESSION environment. That environment has been in place for at least ten years now. That Deflationary environment is STILL in place and will continue for the imaginable future.

2. In the USA the general economic environment is ALSO deflationary.....the current supply chain and demand based inflation is on top of that longer term deflationary trend.

3. The world economy and the economy here in the USA is nowhere near as strong as people think it is. In fact the economy right now here in the USA is FRAGILE and it is at least a 50/50 chance that the actions of the FED over the next 6-12 months will put us into a RECESSION.

4. The reverse reaction of interest rates to what all the "experts" would expect are showing that the above is true. The Ten Year Treasury today has fallen to 1.39%. This is in spite of the FACT that we are looking at three rate increases over the next year. In addition the yield curve has UNEXPECTEDLY steepened....contrary to what the "experts" thought should happen.

5. Looking at the total returns of the SP500 over the past 12 years we are way past due for a down year in the markets......and....probably way past due for a REAL recession. Not the little one or two month corrections that investors have been spoiled by lately.......but a one year or more RECESSION.

6. The reactions of government, especially local government to the VIRUS has now become TOTALLY insane and irrational. The continued shut downs and mandates by government WILL continue to KILL the general economy and create much FEAR and DEPRESSION in people. The country is already EXHAUSTED by the pandemic and especially by the response of government. WORLD government reaction to the virus is even MORE insane and irrational than here....and that is saying a lot.

7. Build Back Better.....is DEAD. It is not going to happen this year. It is not going to happen next year in an election year. AND....it is unlikely to happen with the hew congress after next year. THE FREE MONEY IS OVER.

BOTTOM LINE.......we are in one of those time periods where those in charge of the economy and the world are going to drive a FRAGILE economic environment into the TOILET. We are going to look back in the future and be amazed at the OBVIOUS mistakes that were committed by the so called "experts".

NOW.....does this mean that my view of investing and the markets for the long term has changed......NO, not at all. LUCKILY the markets are not the general economy and DOWN years and recessions are just part of investing reality. I will continue to stay invested for the long term as usual.

Since I put the odds of a REAL recession at about 50/50......my market view continues to be POSITIVE for next year.....same as always. I prefer to ERROR on the side of market positivity......it is just my psychological make up as an investor. Why not.....I am simply going to stay fully invested anyway.....and it is a waste of time and psychic energy to worry about the future of the economy.

 

Here is the "expert" view of things going on now.

Stock market news live updates: S&P 500, Dow drop to extend sell-off

https://finance.yahoo.com/news/stock-market-news-live-updates-december-17-2021-231504646.html

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

"Stocks fell on Friday to extend Thursday's losses, as investors turned away from growth shares in anticipation of tighter monetary policy next year.

The S&P 500 and Dow declined while the Nasdaq turned slightly positive. The Dow was the biggest laggard on the day, shedding more than 1% as shares of financials including Goldman Sachs (GS), and JPMorgan Chase (JPM) lagged.

Shares of FedEx (FDX) jumped after the shipping giant raised its full-year earnings forecast, delivered better-than-expected fiscal second-quarter results and authorized a new $5 billion stock buyback program. Rivian (RIVN), meanwhile, saw shares sink following its first quarterly report since its IPO last month. The electric-vehicle maker said in its shareholder letter it expected to be "a few hundred vehicles short" of its prior target of producing 1,200 units by the end of this year.

Investors' main focus this week has remained fixed on the Federal Reserve's updated outlook on monetary policy for next year, with the central bank's projections delivered mid-week suggesting the Fed could hike interest rates three times next year.

The specter of higher rates — and a lower-liquidity environment as the central bank also speeds up the tapering process of its asset purchases — has continued to weigh heavily on longer-duration technology and growth stocks valued heavily on future earnings potential. The Nasdaq Composite had underperformed to drop 2.5% on Thursday and give back all of its gains after a rally on Wednesday.The index has fallen by 5% over the past month through Thursday's close. And shares of some notable technology stocks extended declines on Friday, with Apple (AAPL) shares dropping by about 1% after a nearly 4% decrease on Thursday.

On the other hand, cyclical stocks in the energy and financials sectors outperformed on Thursday, with the prospects of higher interest rates and stronger growth seen as benefitting these sectors.

"The thing investors have to understand is, we're going through a major transition in monetary policy," Troy Gayeski, FS Investments chief market strategist, told Yahoo Finance Live on Thursday. "The Fed has been running emergency policies arguably far longer than they should have been, and as that money supply growth slows down as they ease off the balance sheet expansion and ultimately hike next year, one would at least expect more volatility in markets. And that's really what we've been seeing the last month."

"The biggest difference between now and six months ago, or even more than a year ago, is you could pretty much go long anything and you were confident it was going to go up. The economy was booming, we had a lot of fiscal stimulus, we still had unprecedented monetary policy stimulus," he added. "And it's a very different environment in 2022 where you're going to have to pick and choose much more carefully." "

MY COMMENT

At the moment the markets are IRRATIONAL. There is absolutely NO REASON to view the BIG CAP tech companies as young growth companies. All these companies are MATURE and have been around for decades. They are being IRRATIONALLY punished by the interest rate arguments in the article above.

I dont see any reason these companies would be more sensitive to rate increases. They are the FOUNDATION of the world economy and are going to do just fine....better in fact than any other businesses in a negative environment. If their stock prices take a hit...this will simply BETTER their fundamentals when future earnings are reported.

We are about to get back to a TOTALLY FUNDAMENTAL based environment. REAL companies with real earnings and a real business model will be just fine. The BIG LOSERS of the near term future......emerging markets, international investments, meme stocks, companies with poor fundamentals or non-existent fundamentals, etc, etc, etc.

The stocks that I want to hold as we move forward are EXACTLY what I hold.......BIG CAP, ICONIC PRODUCT, GREAT MANAGEMENT, AMERICAN, WORLD WIDE SALES, DOMINANT.......companies. I want to hold the best of the best in a good environment and ESPECIALLY in an economic environment that has potential to struggle.

 

So...moving on.....I like this little article.

Digging Into November’s Tepid Retail Sales Report
Beware drawing sweeping conclusions from any single month.

https://www.fisherinvestments.com/e...ging-into-novembers-tepid-retail-sales-report

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

"Retail sales missed expectations in November, rising just 0.3% m/m—far slower than the 0.8% rise analysts anticipated. In our view, there are a few potential reasons for the miss, which we will explore momentarily. But here is one deduction we don’t think the data support: that inflation is hurting consumer spending. Not because of anything unique to November’s report, but because of the simple fact that retail sales are but a slice of spending—and one that isn’t adjusted for inflation. (Nor would that explain big October retail sales amid similarly hot inflation readings.) We will all have to wait for November’s personal consumption expenditures report for more insight. In the meantime, though, let us look at some potential explanations for the disappointing results, which we think illustrate why investors shouldn’t lean too hard on backward-looking data.

First, high gasoline prices are doing what they normally do: pulling spending from discretionary categories. Higher gas prices can be frustrating, for consumers and retailers alike, but it also illustrates that gas prices aren’t an economic driver. Just as sales at gas stations are part of overall retail sales, spending on gas is part of overall consumer spending. Gas prices don’t detract from disposable income, which is the primary determinant of consumer spending. Rather, they just affect where that income goes. When gas prices fall, it frees up money for other purposes—saving, investing or spending on more fun things. When gas prices rise, it generally leads to people saving less or spending less on discretionary items and entertainment. That appears to have happened, at least to some extent, in November. Sales at gas stations rose 1.7% m/m, compounding October’s 3.7% rise, while sales everywhere else rose just 0.1%.[ii] Excluding gasoline and food, sales fell -0.05%.[iii]

That isn’t great, and it does suggest pricier essentials are robbing discretionary categories to some extent. But we also hesitate to read much into it, because there is a secondary explanation for weakness in discretionary categories: a funky holiday shopping season. October was quite strong for sales outside of food and gasoline, which rose 1.7% m/m.[iv] Electronics and appliances (3.1%), department stores (2.5%) and online sales (4.1%) were all strong that month.[v] But the first two reversed sharply in November, falling -4.6% m/m and -5.4%, respectively, while online sales flatlined.[vi] One potential explanation, which we highlighted on Black Friday, is retailers’ starting holiday discounts in October, far ahead of the traditional season. Another is consumers’ pulling purchases forward due to supply chain worries. With headlines warning of empty shelves come Thanksgiving, getting an early start likely seemed to be a sensible option for many.

In our view, these competing explanations show the dangers of trying to glean too much from any month’s economic data swings, whether that swing is higher or lower. No report is all-telling about the economy’s health. Sometimes data can disappoint for benign reasons. Sometimes “good” reports can be false positives. This is especially true of retail sales, which omit most services spending—a big problem, considering about two-thirds of US consumer spending is on services.[vii] That omission make retail sales a bit more volatile, so each monthly read must be approached carefully.

Trends matter more, and those often don’t become apparent for several months, by which point stocks have probably long since moved on from whatever granular takeaways you glean in hindsight. So, whether you prefer the “gas prices bit” explanation, the “holiday shopping started early” narrative or some combination of the two, don’t draw big forward-looking conclusions. Stocks aren’t hung up on how consumers behaved in November. Rather, they are looking over the next 3 – 30 months and the likelihood of a growing economy and strong corporate earnings over that span. Nothing in November’s retail sales report suggests this changed on a dime, in our view."

MY COMMENT

I agree and also believe that relying on any sort of general economic data as a long term investor is FOOLISH. this sort of weekly and monthly data is just CHAFF. Over the longer term is is IRRELEVANT.

 

If I was a young person here is where my focus would be.

What It Takes To Save $2 Million For Retirement

https://www.investors.com/etfs-and-...c-to-aim-for-2-million-in-retirement-savings/

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


Once upon a time, when it came to retirement planning and retirement savings, Americans figured they had it made if they saved $1 million for their golden years.

Now? 401(k) plan members tell Charles Schwab that, on average, they expect to need $1.9 million in retirement savings.

And that was before the annual U.S. rate of inflation hit an alarming 6.8% in November.

Retirement Savings: How To Save $2 Million

But is saving $1.9 million realistic? How hard is it really to put aside that much money for retirement?

Of course, it depends on several factors. How much time do you have before retirement? How fast will your investments grow along the way? And how much volatility can you stomach during the journey?

Let's say your portfolio grows 7% a year on average in a 401(k) account, where it grows tax-deferred. That 7% is reasonable. It's even a little conservative. The broad stock market has actually grown faster. It averaged 9.33% growth annually over the 20 years through Nov. 30, according to Morningstar Direct.

And let's say that you plan to retire at age 72. That's also conservative. Age 70 is when you become eligible for your maximum starting Social Security benefits. So the two-year delay alone after age 70 does not add anything to your starting benefit.

Let's make one additional conservative assumption. Let's say you're aiming for an even $2 million by retirement. Let's round up your goal from $1.9 million. After all, it's good to save extra in case you outlive your own life expectancy, says Lisa Featherngil, national director, wealth planning for Comerica Bank.

Retirement Planning: Building Your Nest Egg

So where does that leave you? If you start work at 25, to build a $2 million nest egg by the time you reach 72, you have to sock away more than $5,677 per year, according to the investment goal calculator at buyupside.com.


It works out to a monthly savings amount of $453.31.

That's definitely doable. The yearly savings of $5,677 would be merely 10% of a $56,770 annual salary. That's not an pie-in-the-sky salary.

Retirement Planning Orthodoxy

But, wait. Financial advisors are virtually unanimous in recommending that you save 15%, not just 10%, of your pay for retirement. Aiming for 15% is retirement planning orthodoxy.

If that $5,677 represents 15% of your pay, your pay would be a more modest $37,847. Would someone earning that annual salary be willing to set aside $5,677 of it for retirement? Many would not.

But if we're talking about saving inside a 401(k) plan, then 5 percentage points of that 15% could be coming from a company match or other employer contributions. And a 50% matching contribution is common.

So all you've got to pony up is 10%.

Retirement Planning Risk Taking

How hard would it be to build up $2 million in retirement savings if you start later than age 25? How much of an extra burden is that late start?

Well, if you don't start to save until age 35, then you've got to sock away $11,658 a year, or more than $948 per month.

If that's 10% of your pay, you would have to earn $116,580 a year.

That's still doable, but harder than if you start saving at age 25.

Raising Your Retirement Savings Hurdle

If you delay the start of retirement saving until much later — let's say age 45? Then you're setting a stiff challenge for yourself.

You'd have to save more than $25,000 a year to build a retirement balance of $2 million.

That would work out to saving $2,078 per month.

That would be a lot for many workers. Then again, by age 45 your annual pay should be much higher than it was at age 25.

Planning Expert Weighs In On 401(k)

So, is it practical for U.S. workers to expect to amass $2 million in retirement savings? Yes, says financial advisor Tom Wheelwright, CEO of WealthAbility. Saving in a tax-deferred account like a 401(k) is a key step, he says.

"Getting to $2 million for retirement is fairly easy if you start early and very difficult if you start late," said Wheelwright, author of the book Tax-Free Wealth. He also contributed to the "Rich Dad Success Stories" book.

Wheelwright added, "The reason it's so important to start your retirement early is compound interest. Compounding means that every year, you not only earn interest on your principal, you also earn interest on the interest you earned the previous year."

But if you start too late? "Once someone is 45 and trying to get to $2 million, the savings amount becomes too large," said Morgan Christen, CEO of Spinnaker Investment Group. "They just will not try."



MY COMMENT

We see these sorts of examples all the time. The numbers never change. The concepts never change. The key is always....start young, stick to the plan for your lifetime, use the POWER of compounding.

Since I dont need my stock market funds for living.....I am STILL doing the same thing......chasing the POWER of long term compounding.....even though year after year my horizan might be decreasing. What REAL alternative do I have for my money......where else am I going to invest? Treasuries, gold, silver, Bitcoin, bonds, etc, etc? There is really NO reasonable alternative to stocks and funds. Of course each person has to structure the stock and fund investing to their particular stage in life and their risk tolerance.

 

WELL DONE.....weight333. You are a super-saver and over your life this will add up to BIG MONEY. You are seeing that with your dividends.....it is very nice to get about $1000 per year added to your account even if you dont save a penny. You are DEFINITELY on your way to financial freedom. Keep the faith.

 

I think your thinking is RIGHT-ON duckleberry. If it was me I would do the same thing. It will be a nice feeling to know that the money for the wedding and honeymoon are siting there and it is all taken care of. I dont like to gamble with short term money....especially in the current WEIRD TIMES.

ALSO.....congratulations.....you seem to be hitting it out of the park at work. It is a good feeling to be recognized and rewarded and valued for good work. Are you an associate or some type of partner? How long do you have before you will probably make partner?

 

I was in the RED today. BUT.....hey....I beat the SP500 by 0.03%.

Looking for the positive.....the losses I ended up with were not near as bad as earlier in the day.

TGIF......TGIF.