The Long Term Investor

WELL.....the late day FADE got me today. Although I have no idea if my particular stocks were up earlier in the day. I ended the day in the RED with all ten stocks being down for the day. I also got beat by the SP500 by 0.35%.

Tax selling, tax loss harvesting, re-balencing, window dressing, general market exhaustion? I have no idea. I know that I am enough ahead of the SP500 that there is no danger of falling behind it for the year. (yeah right....I have now probably jinxed us for a 10% sell-off tomorrow)

This is it.......THE FINAL DAY....of 2021 and the markets tomorrow. SHOW ME THE MONEY.....or.....DONT SHOW ME THE MONEY......whatever.

 

I put in the order for my little bit of gold yesterday......a couple of one ounce Gold Buffalo coins. I prefer the Buffalo coins since they are US government issue and are 100% pure. I also put in my order for my uncirculated Silver Eagle coins that I give to each kid and their spouses for each birthday and Christmas. I pay by wire transfer and it always makes me nervous with all the wire fraud these days. My larger concern is that I will get the account number or the routing number wrong due to my OLD eyes. It is always nice to call and hear that the wire got there and the order is paid for.

I keep the "stuff" off site since I do not have a safe. One of my siblings has a nice big safe bolted to the concrete slab of their house. Since they trust me to handle their VERY HIGH DOLLAR brokerage account and all their investments.....I guess I can trust them with a little bit of metal.

This material is part of my EMERGENCY planing. There is probably ZERO chance that it would ever be needed.....but.....it is nice to have a little backup plan just in case.

 

We started the day with all the averages in the GREEN.........and....we ended the day with all the averages in the RED. I am glad that I did not waste my time following any of this stuff all day.

I am REALLY looking forward to a new year. I am TIRED of this year.

Stock market news live updates: Stock rally pauses to close lower after S&P and Dow set records

https://finance.yahoo.com/news/stock-market-news-live-updates-december-30-2021-234405035.html

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

"In an abrupt reversal, markets closed down on Thursday in the penultimate session of 2021 as a thinly-traded last week of the year for Wall Street comes to a close.

Investors mulled fresh jobs data out of Washington and rising cases of COVID-19 across the globe, which hit a record earlier this week in the latest wave of the virus, driven by the Omicron variant. Studies have shown that the strain, though more transmissible than previous ones, may cause milder disease and is less likely to lead to hospitalizations.

The developments on Omicron have helped markets largely shake off earlier concerns after a volatile December. Instead, inflation and potential moves by the Federal Reserve to mitigate surging prices, are expected to be front-and-center for investors heading into the new year.

“What’s not changed is the focus on inflation, that’s the biggest risk,” Brigg Macadam Founding Partner Greg Swenson told Yahoo Finance Live.

“I’m not worried about COVID at this point,” he said. “I think we’re past the worst phase of that, but we have inflation now.”

With inflationary pressures encouraging a more hawkish Federal Reserve, the composition of the policy-setting Federal Open Market Committee will play a key role in dictating the pace of interest rate hikes in 2022. The Biden administration is set to name its picks for three vacant seats on the central banks role Board of Governors next year.

Meanwhile, on the jobs front, the Labor Department released its latest report on initial and continuing jobless claims. First-time unemployment filings fell further from last week’s reading, coming in at 198,000 — below the expected 206,000. Earlier in December, jobless claims fell to 188,000 — its lowest level since 1969.

The claims, which fell by 8,000 from the previous week’s reading, mark the second lowest print during the pandemic and signal continued recovery in the labor market as high demand for workers pours into the new year.

While markets mostly powered on in Thursday’s session, travel stocks were impacted by virus-related developments.

JetBlue Airways Corp (JBLU) said it expects to cut 1,280 flights, scaling down its schedule due to a surge in personnel who have fallen sick. The company’s stock closed down -0.97% in early afternoon trading to $14.24 per share. Delta Air Lines (DAL) reported cancellations of an additional 250 flights on Wednesday after thousands of halted and delayed flights by major airlines during the Christmas weekend. Airline stocks have taken a hit all week amid growing flight disruptions caused by the latest virus wave and winter weather.

Delta ended Thursday's session -0.31% at $39.04 and American Airlines (AAL) closed up 0.11% to $18.07 per share. United Airlines (UAL) saw the session end 0.68% lower at $44.13.

“It’s a controlled meltdown, put it that way,” Boyd Group International president Mike Boyd told Yahoo Finance. Airlines “know where they’re going to be short pretty much ahead of time, and then they have to adjust for it.”

Cruise line operators also edged lower after the CDC advised people to avoid cruise travel, regardless of vaccination status, following an increase in onboard COVID-19 cases. Norwegian Cruise Line Holdings (NCLH) shed 2.46% to $21.05 per share. Carnival Corp. (CCL) declined 1.25% to close at $20.53 a piece, and Royal Caribbean Cruises (RCL) ended down 1.09% to $77.37.

In a regulatory filing on Thursday, Samsung BioLogics denied earlier reports that Samsung Group was in talks to acquire U.S. drugmaker Biogen Inc. (BIIB), which was in the spotlight on Wednesday after shares of the drugmaker surged during intraday trading following a report by the Korea Economic Daily, which cited investment banking sources. The report said Biogen approached Samsung to buy its shares in a deal that could be valued at more than $42 billion.

Biogen’s stock was down 7.09% to $240.00 per share at the end of trading."

MY COMMENT

I tend to NOT think any of the above had any impact today. I suspect that the losses today were due to tax loss harvesting and other tax trades......plus.....other year end stuff. Not that it really matters......we are going to close out an AMAZING year for investors tomorrow. With everything that happened this year and all the negativity about inflation, earnings, Covid, etc, etc, etc......the returns this year have been EPIC. Anyone that has been a RATIONAL long term investor this year has captured them.....or at least enough of them.

 

TRAHN

Your boys have done great this year. Actually it is YOU that has done great for them. Your account return of +26.55% is ALSO an amazing number for only one year. Nothing to be sorry about with that number. The main thing is that as a parent you are doing a great job of securing the future for your two boys. CONGRATULATIONS.

 

The markets here is the USA will be open tomorrow.....at least for stocks. The bond markets will be closing early.

Stock market will be open New Year's Eve while bond markets close early Friday

https://finance.yahoo.com/news/stock-market-open-years-eve-171625971.html

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

"The stock market, buoyed by a Santa Claus rally and a banner year, will have one more day to extend its gains.

Both the New York Stock Exchange and Nasdaq will be open on New Year’s Eve. Bond markets will close early at 2 p.m. Friday.

The markets typically close on New Year’s Day but this year the holiday falls on a Saturday, when they would have shuttered anyway. Last week, the New York Stock Exchange and Nasdaq closed on Friday, Christmas Eve, in observance of Christmas, which also fell on a Saturday.

The Dow Jones industrial average notched gains for seven straight trading sessions through Wednesday while the Standard & Poor’s 500 closed up six of the seven sessions as both indexes powered to record highs on generally encouraging COVID-related news despite the rapid spread of the omicron variant.

The S&P 500 was up 5.1% during that period and 28% for the year.

The markets will reopen Monday, Jan. 3."

MY COMMENT

We will all do it ONE LAST TIME.....for old times sake.....tomorrow.

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

 

I am also an Eagle Scout......TireSmoke and Jwalker.......a long time ago, in the 1960's. Is that some kind of indicator that you will be an investor later in life?

 

I must say I am not a fan of how Cathie Wood does her investing. Although I do agree with many of her views and her basic investing concepts. She seems to jump in and out of companies a little too much for my taste. The next year or two will be CRITICAL for her funds.

Cathie Wood was put to the test in 2021 and next year won't be any easier

https://finance.yahoo.com/news/recapping-cathie-woods-ark-innovation-wild-ride-2021-165922730.html

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

"Like many of us, Cathie Wood has had a crazy 2021. Investors in her flagship fund might argue that the year was even crazier.

Ark Innovation (ARKK), Wood’s main ETF, is poised to end 2021 down by nearly 25%, even as the S&P 500 is up by about the same amount. But the Ark Invest CEO is staying the course with bold bets on high-flying tech companies and chiding critics who commit to benchmarks “unlikely to generate even average returns during the next 10 years” — even as her own investors reel from heavy losses.

Despite a year marked by underperformance, Wood is keeping pace with the disruptive innovation strategy that positioned her as a bull market poster child last year after her allocations to the so-called “stay-at-home” picks that benefited from COVID-19 lockdowns earned her an annual return of 150%. Even as those stocks fall out of favor, Wood, whose firm declined a request for an interview, is sticking to her plan, arguing that naysayers should instead be worried about “safe” indexes like the S&P 500 with values she says have soared above those of the underlying companies they track.

“Because the global economy is undergoing the largest technological transformation in history, most benchmarks could be in harm’s way,” wrote Wood in recent market commentary on her blog. “We will not let benchmarks and tracking errors hold our strategies hostage to the existing world order.”

For now, it’s ARKK that seems to be in harm’s way. Wood promised her strategy could deliver a 40% compound annual rate of return during the next five years — a projection she later tweaked to a lower, however still-lofty 30%-40% after criticism of her statement. ARKK is down 11.22% as of Dec. 29 and more than 20% year-to-date — as the high-valued but often unprofitable technology stocks that comprise much of the fund’s holdings sour among investors growing increasingly wary of the assets that were buoyed by the pandemic as it appears to creep toward an end.

Wood, a star on Wall Street whose prescient stock picks earned her the praise, warned that the “tried and true” investment strategies that have worked in the past are likely to disappoint investors in the long-term. She argued that investors who allocate to low-risk, more predictable stocks will be thwarted by names in five inventive sectors she's set her sights on — DNA sequencing, robotics, energy storage, artificial intelligence, and blockchain technology.

“Unlike many innovation-related stocks, equity benchmarks are selling at record high prices and near record high valuations, 26x for the S&P 500 and 127x for the Nasdaq on a trailing 12-month basis,” she said, defending her high-risk, high-reward strategy.

She added that the five major innovation platforms she banks on are likely to transform the existing world order that the benchmarks represent.

“There’s some truth to that. There are two sides to every story,” said AlphaCore Wealth Advisory CEO Dick Pfister, adding that the S&P is held up by the heavily weighted mega-cap companies like Amazon, Apple and Microsoft that have led its gains, while ARKK — despite holdings of big stocks like Tesla, which also joined the mega-cap tech club this year — doesn’t have the mega, mega names.

“If the mega-cap stocks come back down to earth, depending on the time horizon, Ark could actually rally out of the S&P 500,” said Pfister.

‘Innovation stocks have entered deep value territory’

Wood points to Zoom (ZM), Teladoc Health (TDOC), and DocuSign (DOCU), three of her picks whose prices have plunged 43%, 53% and 29%, respectively, this past year, as examples of stocks that will soon outperform. The companies continue to gain in fundamental measures like quarterly revenue and EBITDA, earnings before interest, taxes, depreciation and amortization, which serves as a measure of company profitability.

Zoom, for instance, saw its revenue rise 58% and EBITDA increase 53%, since its fiscal quarter ended July 2020, she notes, even while losing popularity among investors who’ve shrugged it off as a “stay-at-home stock” likely to falter once the pandemic ends.

Wood, however, dismisses that notion, claiming that “stay at home” has evolved into “‘stay connected’ in a hybrid work world and ‘stay competitive,’” calling the shift a replacement cycle comparable to the emergence of the internet 30 years ago.

“Instead of surfacing and researching exciting investment opportunities in the burgeoning innovation space, investors seem to be hugging their benchmarks and looking to the past for future success,” she said. “Benchmarks guide investors to companies that already have enjoyed considerable success.”

Her conviction comes while ARKK’s top 10 holdings end the year mostly in the red, with all but two companies — Tesla (TSLA) and Intellia Therapeutics (NTLA) — down in 2021. Of these 10 allocations, seven saw declines of at least 20%.

“After correcting for nearly 11 months, innovation [ARKK] stocks seem to have entered deep value territory, their valuations a fraction of peak levels,” she said.

ETF Trends CEO Tom Lydon recently told Yahoo Finance Live that he believed in Wood’s long-term outlook, and the open architecture and communication her firm uses to structure active strategies.

“If there was ever a buying opportunity for future stocks, I would say it’s now, because you’re not going to see these types of companies that are long-term disruptors and innovators at these prices,” said Lydon.

A bigger asset base

But the success of Wood’s vision depends on who you ask. While some may laud her active, shoot-for-the-stars approach, others are more wary of her ability to assess risk.

Robby Greengold, a strategist for Morningstar’s U.S. equity strategies team, told Yahoo Finance earlier this year that while rivals are “benchmark aware” and have “portfolio construction parameters,” ARKK “doesn’t have very much of that.”

“They were able to navigate the coronavirus sell-off and come out fairly well — 2020 was an incredible year from a performance standpoint,” he said. “But things are different now.”

Greengold said the fund is not accustomed to managing the bigger asset base — about $18 billion as of Nov. 30 — it is now dealing with. Its size now could make pulling off the level of returns previously attained when it managed less money more difficult to achieve.

“I think, overall, she’s probably going to have a winning strategy, but the question is, will investors have the wherewithal to stay with it if it’s down 30, 40, 50% from its peak?” Pfister said. “She’s going to have to be able to withstand the asset withdrawals that are probably going to come along with that.”

Wood has doubled down on her stance that she can do just that, shrugging off losses and dismissing fears of a “bubble,” even as it stands to be tested by the sell-off of high-growth tech stocks likely to be worsened next year if the Federal Reserve acts on expectations to raise interest rates as many as three times, making such companies particularly vulnerable.

“In our view, these Pavlovian responses will prove just as wrong as those in the early days of the coronavirus crisis,” said Wood. “They are backward-looking and do not recognize that companies investing aggressively today are sacrificing short-term profitability for an important reason: to capitalize on an innovation age the likes of which the world has never witnessed.”

“Unlike companies paralyzed by short-term oriented shareholders demanding their profits and dividends ‘now,’ truly innovative companies are on the offense,” she added.

MY COMMENT

She may be right about some of the stocks that she owns. BUT...I dont believe she is right about INDEX investing. In fact if her stocks boom they will help to drive the SP500. If they boom as she expects they will all become highly weighted in the SP500. I prefer to take advantage of any of her stocks that do boom by having a good amount of money in the SP500. I prefer that sort of exposure to the potential for BIG losses in her fund over the short to medium term.

Over my life I have seen a number of funds that were really HOT for a while and than faded to be forgotten. I have even owned a few. I dont own any of them now and for most I only owned them for a year or two.

In addition her ONE hot year was during the peak of the pandemic and the lock-downs. It remains to be seen how her strategy works out over a more normal time period. We saw how it worked out in a more normal year.....this year. It also remains to be seen how many of her companies can ACTUALLY achieve profitability........and...... long term profitability.

 

We are LIMPING to year end today. The averages at the moment are all in the red and showing no positive momentum. Probably simply the result of very low volume and the fact that today is New Years Eve.

 

I like this little article....although I doubt the explanation for why this is happening.

US Equity Funds Receive Big Inflows as Investors Downgrade Omicron Impact: Lipper

https://www.newsmax.com/finance/streettalk/u-s-equity-mutual-funds-omicron/2021/12/31/id/1050581/

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

"U.S. equity funds received robust inflows for a second week in the seven days to Dec. 29 as investors welcomed signs that the Omicron coronavirus variant won't bring a big setback to the economy.

According to Refinitiv Lipper data, U.S. equity funds lured net purchases of $19.43 billion, compared with their average weekly inflow of $2.3 billion, received this year.

Wall Street's main indexes posted solid gains this week. The S&P 500 and the Dow marked a record high on Thursday as some early studies on Omicron cases pointed to a reduced risk of hospitalization, easing concerns about the variant's impact on the economy.

Sentiments were also boosted by reports suggesting that U.S. retailers' holiday sales were strong.

U.S. growth and value funds both posted a second straight week of inflows with net purchases of $7.69 billion and $2.36 billion respectively.

Among sector funds, financials and real estate funds drew inflows of $1.2 billion and $785 million respectively, although tech and consumer staples funds witnessed outflows of $592 million and $413 million respectively.

U.S. bond funds secured inflows of $6.31 billion, their biggest weekly inflow in seven weeks.

Investors purchased U.S. taxable bond funds of $5.27 billion, marking the biggest weekly inflow since Nov. 10, while municipal bond funds saw net buying worth $1.13 billion.

U.S. general domestic taxable fixed income funds drew inflows of $1.93 billion, the largest in seven weeks. U.S. short/intermediate government and treasury funds and inflation protected funds attracted $929 million and $637 million respectively.

Meanwhile, U.S. money market funds saw net purchases worth $32.71 billion, their biggest weekly inflow since Oct. 27."

MY COMMENT

I dont think this has anything to do with OMI. I suspect....but dont know....that this simply reflects 401K money and IRA money and other year end money coming into the various funds. That is why there is $32 billion going into money market funds......before being allocated to stock funds and other funds for investment. That is my speculation.

Why in the world anyone would be buying BOND FUNDS is beyond me. The rates are at historic lows and the loss of capital will be extreme as rates rise.

 

Here is an appropriate little article for today.

The Champagne Indicator

https://americanconsequences.com/trish-regan-the-champagne-indicator/

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

"“No discount on champagne.”

The red-lettered sign caught my eye as I shopped at my local wine store this week.

I was picking up some bottles of bubbly in preparation for a New Year’s Eve dinner I’m hosting, and that sign piqued my interest.

The store owner explained to me that typically around the holidays, they’d offer sales on champagne… But this year is different.

You see, prices on bubbly have increased, and given that he was already selling his goods at the lowest possible margin, his normal 10% case discount wasn’t applicable.

Yet even without the discount, he told me he can barely keep it in stock. Apparently, there’s been a run on French champagne this holiday season…


Well, if that isn’t a good indication of a prosperous new year, then what is?

Get ready… Many market economic indicators are pointing toward a thriving 2022, suggesting this could be the cusp of a powerful and transformative decade.

Starbucks, Bubbly, and New Businesses

Longtime readers know I’ve often cited Starbucks’ in-store sales as a kind of economic indicator worth watching.

After all, if consumers are willing to drop five bucks on a cup of coffee, then that suggests they’re feeling confident about their economic futures…

But the good news is these days, people are willing to spend a lot more than $5 to help them ring in the new year, and if this euphoria holds… that’s a very good thing for our markets and economy.

As 2021 comes to an end, champagne sales have surged to record highs.

According to the champagne industry group UMC, champagne sales in 2021 are expected to top $6.2 billion, considerably ahead of where they were prior to the pandemic – and this is despite numerous supply-chain headaches.

Perhaps folks want to celebrate making it through another tough year. Everyone’s been through hell and back, first with the initial onset of the coronavirus, then the Delta variant, and now with Omicron… Yet the virus and its dire consequences have not stopped our economy, our markets, or our businesses from succeeding.

Assuming our Federal Reserve doesn’t do anything to mess it all up, there are more bullish signs for the U.S. economy…

Retail sales soared this holiday season, with e-commerce achieving massive gains. Mastercard reported over the weekend an 8.5% jump during this year’s holiday shopping season from November 1 through December 24, and online sales increased 11% as well.

Jewelry sales surged 32% from 2020 levels, suggesting a significant increase in people’s willingness to buy luxury items.

Meanwhile, it was reported last week that the Conference Board’s Leading Economic Index increased 1.1% in the month of November. That follows its 0.9% rise in October – implying economic activity will continue to expand in the near term.

But perhaps the greatest indicator of all is the rate at which new businesses have begun to form.

I love this stat… Because when new businesses are created, this helps encourage a virtuous cycle within our economy.

According to the U.S. Census Bureau, more than 4.4 million new businesses were created in 2020 – the highest total ever recorded. It’s also a 24.3% increase over 2019 and 51% higher than the 2010 through2019 average.

And while the 2021 numbers aren’t in yet, more than 500,000 businesses were started in the first half of 2021 alone.

These are all positive indicators for this country’s strong economic future.

Of course, there are naysayers… Goldman Sachs lowered its forecast of growth to 2% in the first quarter, down from 3%. Goldman believes the Fed will move too aggressively on rates, and that – combined with the most recent COVID variant – will be problematic.

And, yes, if the Fed overreacts with too much too late in the way of higher rates and its tapering, there could be issues. I’ve expressed my concerns repeatedly about an overactive Fed.

But when people are opening businesses at record rates, retail sales hit new records, and the local wine purveyor can’t keep pricey champagne in stock?


These are all good signs that what’s coming will be positive.

Our economy is going through another kind of structural change – complete with a new appreciation for the role that technology will play in our daily lives. A massive emerging trend is developing… as well as the opportunities it’s creating for investors.

There will be many more opportunities for Americans in the coming years…


Who wouldn’t want to toast to that?


Cheers, everyone… And Happy New Year!"

MY COMMENT

YES.....another market indicator for investors to use. I would prefer to use champagne for drinking personally. BUT....I do STRONGLY agree with the sentiment at the end of this article.

"There will be many more opportunities for Americans in the coming years…

Who wouldn’t want to toast to that?

Cheers, everyone… And Happy New Year!""

 

My show tonight got canceled.....due to Covid.....so I guess I will have some time later this evening to look at some investing results for the year. I will post 2021 results later this evening.