The Long Term Investor

NO....not anywhere near a correction.....at least in the general averages. The SP500 is down by about 3.4% at this moment. The NASDAQ is down by 6.54%. Minimum level for a correction would be the markets down by 10% minimum. I put correction range......like most investors.....as losses of 10% to 20%. I would put a BEAR MARKET as losses over 20%......and I would add in ......that the event lasts longer than a month.

(I am using year to date figures above.....that is all I care about....last year is over and gone)

What we are seeing for the past 7-8 market days is a VERY SMALL example of what it might feel like in a BEAR MARKET.....except you would need to extend what is happening now to many months if not years. Gives you an idea of the SOUL SUCKING nature of a bad BEAR market.

What we are seeing now is simply........an IRRATIONAL market in my view......which means IRRATIONAL investors. No one ever said that short term markets are rational. People are so focused on interest rates and the FED.....that they are not evaluating whether what they are hearing and what is happening makes sense. I am primarily talking about the......"professionals".......the most herd bound, irrational, of all investors. They are totally short term focused, they chase the hot sectors, they trade, they create constant self fulfilling prophesy.

 

SORRY......my wish for a down day today.....is selfish. I have $5000 going into the SP500 at the end of the day and it looks like I am going to get a nice drop for my purchase. I will be investing the reminder of my new funds......$10,000.....in early February.

I am NOT trying to time the markets with there purchases. The money is simply available now and in early February.....I would be purchasing regardless of whether the markets were down or up.

Personally I think the markets are getting way carried away in this little downturn......especially today. But you cant fight the tape.....you cant fight the FED.

I actually think this little event is simply SILLY. The drop in the BIG CAP ICONIC companies is way beyond reason. Earnings are going to show us this in the coming weeks. BUT.....no one cares.....everything has been ECLIPSED by the FED and rates. So.....like many others.....I will simply sit and wait for the future.

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

 

This little article seems very appropriate for today.

Look Beyond 2022’s Rocky Start
The bull market looks likely to continue this year.

https://www.fisherinvestments.com/en-us/marketminder/look-beyond-2022s-rocky-start

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

"Editors’ Note: Our commentary is politically agnostic, as we prefer neither party nor any politician. We assess political trends for their potential economic and market impact only."


Less than one week in, and 2022 probably feels a lot different from 2021. After finishing last year on a massive upswing, stocks have stumbled in the young New Year. Where stocks entered 2021 in a blaze of optimism, sentiment is now more muted, with fears seemingly lurking around every corner. Our advice: Take a deep breath. For while we think this bull market is very likely to continue and deliver solid full-year returns, the bulk of those returns probably come later in the year, with much more of a grind early on. For long-term growth investors needing market-like returns to meet their goals, we suspect patience is the watchword.

Note: This doesn’t mean the early part of the year is destined to be bad, or that the recent sentiment-driven swings are indicative of how it will play out. As we will show you shortly, midterm election years are routinely back-end-loaded, averaging small positive returns early, with more variability, before a second-half surge.

US politics—particularly midterm elections—go a long way to explaining stocks’ likely trajectory this year, in our view. As Exhibit 1 shows, the second year of a president’s term has the lowest average return of all four years in the presidential cycle—not because it is regularly weak, but because returns are more variable. The S&P 500 is usually up big or down, without much between. In our view, the positive years usually happen when midterms increase gridlock, which reduces stocks’ legislative risk aversion. That typically brings big tailwinds late in the year—which carry on into year three, historically the best of the cycle.

Exhibit 1: The Presidential Term Anomaly


Source: Global Financial Data, Inc. and FactSet, as of 1/4/2022. S&P 500 total returns by calendar year, 1925 – 2021.

But the path to that late-year boom usually isn’t smooth. As Exhibit 2 shows, returns are usually a grind for the first three quarters of the midterm year, which are positive only 57% of the time. That is better than 50/50—and not a reason to avoid stocks, in our view, but it is also below stocks’ average frequency of positivity in calendar quarters. It isn’t until stocks start pricing in the high likelihood of increased gridlock later in the year that the party really starts. This, of course, isn’t a timing tool. We could get stellar midterm returns earlier than this. But we think the pattern is instructive and can help you frame expectations.

Exhibit 2: Midterm Years Are Usually Back-End Loaded


Source: Global Financial Data, Inc., as of 8/10/2021. S&P 500 Index price returns in second and third years of the presidential cycle, 1925 – 2019.

We think the midterm campaigns have a lot to do with this grind, as politicians’ shouting about contentious issues raises uncertainty. All the noise can make it hard for people to see the simple truth that midterms usually favor the party in opposition to the president. That isn’t an ideological statement, mind you—we thought 2018’s midterms favored Democrats, and now we think sitting in opposition gives Republicans the edge. That edge gets a boost this year from a factor we think likely contributes to weaker sentiment early on: redistricting. Thus far, the new electoral maps appear to have created a few more Republican seats, but notably, they have also added safe seats on both sides while reducing the number of swing districts.

This matters. In swing districts, incumbents’ main task is seeing off a challenge from the other party. That gives them an incentive to tack toward the center and moderate their tone and rhetoric—an incentive that holds for both parties. But in safe seats, an incumbent’s biggest threat isn’t the other party, but a primary challenger. Many centrist Democrats face potential challenges from the party’s progressive wing (or vice-versa), while several centrist Republicans are trying to fend off challenges from the GOP’s populist flank (or vice-versa). These folks therefore have an incentive to be loud and extreme. More safe seats in 2022 therefore means a louder, more shrill campaign, with both parties spouting extreme rhetoric while the handful in swing districts beg everyone to pipe down. The added shouting probably weighs on sentiment more than a typical midterm campaign, contributing to the early-year grind. But it also likely sets sentiment very low, teeing up even bigger late-year returns than usual as increased gridlock becomes ever-more apparent.

International political drivers likely chart a similar course. France and Australia hold national elections this spring, adding to the early-year uncertainty. In the UK, Prime Minister Boris Johnson’s political capital is draining rapidly in the face of scandals and rising living costs. This has prompted a mounting rebellion within his Conservative Party, which may lead to a leadership challenge—especially if the opposition Labour Party continues gaining in the polls. This situation will eventually resolve one way or another, likely leading to falling uncertainty and more gridlock—just as the Australian and French results will bring clarity. But early on there will likely be jitters aplenty.

Politics isn’t the only factor likely to hold sentiment down. Markets’ reaction to the prospect of an early-year Fed rate hike is likely a foretaste of the grind we can expect as inflation, Omicron (and perhaps more variants), geopolitical tensions and more filter through headlines. These fears might even look right for a while, if scare stories prompt a pullback or correction (a short, sharp, sentiment-fueled drop of -10% to -20%)—which can happen at any time, for any or no reason, scare story or no.

But it won’t last forever. People will see Fed moves lack much power over the economy. The base effects that drove up the year-over-year inflation rate in 2021 will start dampening it around mid-year. Supply chain issues will even out as the world gets increasingly better at living with endemic COVID—which we are already starting to see, as the US and UK resisted Omicron lockdowns. The more people see life continuing alongside the virus—and economic indicators holding up—the more power the fears will lose. All of this clearing fog should contribute to falling uncertainty later this year—aiding returns.

So stand firm. If you need long-term growth to reach your personal goals, capturing bull market returns is vital. The precise timing of a late-year rally is unknowable, but you have to be in it to win it. We often say stocks’ long-term returns are the reward for staying patient through volatility along the way, and we think 2022 will be a shining microcosm of this. And of course, your friendly MarketMinder editors will be here to help guide you through.


May you all have a healthy and happy 2022."

MY COMMENT

AMEN. BUT......I dont worry about trying to figure out why the markets are down.....or when or why they will come back up. I just ride the wave. There is no way to anticipate when stocks will come back from a drop.

OBVIOUSLY it provides COMFORT to humans to think they know why something is happening.......but in reality who cares. Knowing why some event is happening in the markets is IMPOSSIBLE.....things just happen and are usually some combination of events, psychology, emotion, and random chance.

 

Here is the financial media take on today.

Stock market news live updates: Stocks fall as technology shares renew declines

https://finance.yahoo.com/news/stock-market-news-live-updates-january-10-2022-123740060.html

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

"Stocks slid Monday, with technology stocks under renewed pressure as investors anticipated higher interest rates this year and looked ahead to several economic data and earnings reports later this week.

The S&P 500 sank to add to losses after the blue-chip index closed out its first week of trading for the new year in the red. The Nasdaq Composite fell following its worst week since February 2021. The Dow also fell. Other risk assets also came under pressure, and Bitcoin prices fell below $40,000 for the first time in about four months.

Treasury yields climbed, and the benchmark 10-year yield topped 1.8% to reach its highest level since January 2020.

"The surge in rates since early December has crushed the valuation of stocks with high growth and low margins, but a well-ordered progression of Russell 3000 stocks implies further repricing," Goldman Sachs chief equity strategist David Kostin wrote in a note.

"We have previously shown the speed of rate moves matters for equity returns," Kostin added. "Equities typically struggle when the 5-day. or 1-month change in nominal or real rates is greater than 2 standard deviations. The magnitude of the recent yield qualifies as a 2+ standard deviation event in both cases."

The move higher in yields and volatility across U.S. equities came after the release of the Federal Reserve's December meeting minutes mid-last week. These suggested some central bank officials were eyeing a quicker start to interest rate hikes and balance sheet runoff process than many market participants had expected. Goldman Sachs economists now predict the Fed will raise interest rates four times this year — or one time more than the firm previously expected — and that the central bank's balance sheet reduction will begin in July or earlier.

Last week's "price action in 10-years was all about what the Fed will do with its balance sheet," Nicholas Colas, co-founder of DataTrek Research, wrote in a note. "We’ll know more on Tuesday, with [Federal Reserve Chair Jerome Powell’s] renomination hearing set for 10 a.m. One thing we’re confident about: equity market volatility is not over yet."

"His confirmation hearing will be a chance for him to further reassure lawmakers and the public that the Fed is focused on reducing inflation in 2022," Colas added. "We expect that to feed further market volatility this week."

In addition to Powell's confirmation hearing before the Senate Banking Committee on Tuesday, investors will also be looking ahead to a new inflation report on Wednesday. The Bureau of Labor Statistics will release the December Consumer Price Index (CPI) that day, which is expected to show an about 7.0% year-over-year jump in prices — or the biggest rise since 1982. And at the end of the week, big banks including JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) are each slated to report Friday morning before the opening bell.

10:41. a.m. ET: U.S. wholesale inventories revised up in November as restocks pick up

Wholesale inventories in the U.S. were revised up more-than-expected for November, suggesting restocking activity increased and helped alleviate some ongoing supply chain pressures across the economy.

Wholesale inventories rose by 1.4% in the Commerce Department's final monthly print for November, coming in above the 1.2% rise previously reported. This came following a 2.5% increase in inventories in October.

10:15 a.m. ET: Bitcoin slides, falling below $40,000 for the first time in four months

Bitcoin prices sank on Monday as cryptocurrencies extended declines after a volatile start to the year.

The largest cryptocurrency by market capitalization saw prices fall more than 5% to below $40,000 at session lows Monday morning in New York, based on Yahoo Finance data. That marked the first time prices broke below that threshold since September. Prices steadied just below $41,000 as of 10:15 a.m. ET.

Other cryptocurrencies also saw prices sink. Ethereum, the second-largest cryptocurrency by market cap, dropped more than 3% to dip below $3,000."

MY COMMENT

The media and others seem to have gone silent on bitcoin and crypto. This always happens when the price drops. The REALITY is .......if you choose to "invest" in crypto......you are in for a hell of a ride and better have strong risk tolerance as well as lots of money in reserve.

We are.....unfortunately.....stuck with the FACT that the FED will be the focus of attention this week with the confirmation hearings. We are ALSO stuck with the unfortunate FACT that the majority of recessions.....in hindsight......are actually caused by the FED......screwing around with the economy. My mantra this year is........there is a significant "chance"......50/50..... that the FED will cause a recession with their tinkering.

As to IRRATIONAL market action......there is ABSOLUTELY NO REASON that the big tech stocks would be sensitive to these little rate increases that we are seeing in the ten year yield. ALL of the big tech companies are MATURE companies.....they have all been in business for decades. They are established companies. They are NOT low margin businesses. They are the most successful companies in the world. They are the STRONGEST businesses in the world and have the resources to THRIVE and survive any sort of economic event far better than any other businesses. At the same time the Ten Year Yield is STILL at historic lows.....even at 1.8%....even at 2%. We have a very long way to go to get back to NORMAL rates......not to mention high rates.

 

I decided to run some numbers from my account for this thread. OBVIOUSLY my account is on the higher risk side of things with my emphasis on only 10 stocks and outsize emphasis on the BIG TECH side of the market. This is intentional and I understand that and accept the impact that my sort of investing can have in a market environment like we have seen for the past 7-8 market days. I am.....however.....very comfortable with my portfolio make-up.

I ALSO.......now that we are in a new year......consider the market events and my account performance in 2021 as IRRELEVANT. My focus in on year 2022 and the future. When I think of corrections and market action......I start with the new year.....at least mentally.

As to my account....here is where I am at THIS moment:

Since the start of the new year.....my account value is down by 5.6%.

From my all time high (last year)......my account value is down by 7.3%.

Shocking.....NO. Actually this little drop......probably.....seems worse than that to many people. I do not consider this a serious market event. I will consider it a significant market event if the losses get to the 15% to 20% range. BUT.....I will STILL not do anything and will not lose any sleep over it. This is just the REALITY of the markets and stock investing. Get used to it.....this is how things will often go over a lifetime of investing. This is the price you pay to compound your money at a 10% to 11% rate over the long term. Of course.....I am using the long term figures for the SP500.......something that the majority of the......."professionals"....can NOT achieve long term.

The markets are the ULTIMATE........NO PAIN NO GAIN.....machine. Use the current start to the year to evaluate your portfolio risk and your risk tolerance. Use the current market to evaluate your portfolio goals. If you are on the edge of panic........after this little start to the year......you need to think about your finances and goals and risk tolerance.......and consider adjusting your holdings once we are through this little weak spot in the markets......dont make any RASH MOVES.

 

I am just amazed by the real property markets here in my little local area of 4200 homes. I posted over the weekend that we had NINE homes actively for sale. Over the past TWO days that number has now dropped to just FIVE homes for sale......as FOUR of the previous nine homes are now "pending".

The prices of the five homes for sale are:

$646,000.
$650,000.
$758,000
$898,000
$2.3MILLION.

One of these homes.....the one priced at $898,000....has been on the market for many months. It is over priced by about $75,000 to $98,000.....even in this HOT market. It is a house that someone bought and than immediately put it right back on the market at a much higher list price. They are trying to FLIP it without doing any upgrades......or perhaps....they got into financial issues or for whatever reason.......never moved in. This might be their chance to actually sell with only five homes available in this area.

Our area is basically at ZERO home inventory right now.

 

This little article is a REAL bummer.

https://www.marketwatch.com/story/t...e-a-frustrating-one-11641835408?siteid=yhoof2

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

Ready for your 2021 tax refund? Mark your calendars because January 24 is the date the Internal Revenue Service will start accepting and processing 2021 income tax returns.

The 2022 tax season will run from Monday, Jan. 24 to Monday, April 18, the Treasury Department and Internal Revenue Service said Monday — but brace yourself for potentially sluggish service as the underfunded, understaffed and backlogged IRS juggles another filing season, Treasury officials said.

The 2022 filing season arrives as Capitol Hill negotiations over the Biden administration’s Build Back Better bill seem stalled. The bill would include adding $80 billion over a decade to the IRS budget for more staff and better technology to catch tax cheaters, as well as funding to improve customer service.

“In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees and for me,” said IRS Commissioner Chuck Rettig.

The Build Back Better bill would have also renewed the enhanced child tax credit payments through 2022. But the future of these monthly payments are in question for 2022, so the 2021 income tax refunds hitting bank accounts could be a much-needed surge in cash for many parents. The average individual refund on 2020 returns was $2,815 as of early December, according to the IRS.

Without processing delays or errors in a taxpayer’s return, the IRS should be able to hit its traditional turnaround time, which gets refunds to people within 21 days from when the agency receives the return, Treasury officials said Monday.

“Planning for the nation’s filing season process is a massive undertaking, and IRS teams have been working non-stop these past several months to prepare,” Rettig said. “The pandemic continues to create challenges, but the IRS reminds people there are important steps they can take to help ensure their tax return and refund don’t face processing delays.”

The best way to avoid a delay is to file electronically (instead of via a paper return) with direct deposit, IRS officials noted. It’s also crucial that numbers on the return are accurate to avoid snags and delays.

The IRS is sending out important letters on amounts it paid households last year for child tax credit payments and the third round of stimulus checks. It’s important to watch out for those letters, tax professionals say.

The IRS is still wading through a backlog of 2020 tax returns. As of Dec. 23, it still had 6 million unprocessed returns. Errors and “special handling” to address discrepancies in the returns are some of the reasons, the IRS said. Typically just ahead of a filing season, the IRS would have a backlog of unaddressed mail and documents below 1 million, Treasury officials said.

Taxpayers can request a filing extension through Oct. 17, the April 18 due date represents the final day to pay up on 2021 federal income taxes. After that point, the IRS can arrange installment plans. Taxpayers in Maine or Massachusetts have until April 19, 2022, to file their returns due to the Patriots’ Day holiday in those states.

Last year, tax season began on Feb. 12 and the original plan was to have the traditional April 15 deadline. Midway through the season, the IRS pushed the payment deadline to May 17, to accommodate frazzled taxpayers, tax preparers and the many twists from new tax provisions in the $1.9 trillion American Rescue Plan.

There are currently no plans to extend the filing deadline this year, Treasury officials said Monday."

MY COMMENT

I am planing to send in my tax return as soon as it is done.....hopefully about mid February. This is in spite of the fact that I will owe a few thousand after deducting the $2800 in credit that we never got and crediting the couple of thousand that I paid as a quarterly this month. I am hoping that by getting my return in early I can improve my place in the processing line.

My 2020 return is STILL caught up in the backlog of SIX MILLION returns that have not been processed yet. As I mentioned in an earlier post this is SCREWING me. Since that 2020 return has never been processed yet....Social Security is defaulting to my 2019 return.....to figure if I owe additional Medicare premiums in 2022. Under my 2020 return I would owe NO extra Medicare premiums. Under my 2019 return I will owe about $6000 in extra premiums which Social Security will deduct from my monthly payment.

I have filed an appeal with Social Security over the use of my 2019 return to preserve my rights. I will carry that appeal all the way up to an in-person hearing if I have to.

I am sure many thousands of people that are being impacted in this same way by the failure of the IRS to do their job. NOW.......with millions of additional returns starting to flow in.......the BIG MESS is going to escalate. Actually......I dont know if the IRS will ever catch up.

 

EXACTLY Sundance. Plus....I like your post about this being a WONDERFUL day. You are so right....life is good for most of us that are longer term investors. A few bad days in the markets.....a bad month.....even a bad year....can not come close to erasing all the gains and money that has been made over most of our lives.

One of my kids spouses started investing in the fall of 2019. I talked him into putting about $30,000 into the SP500 Index.

A few months later the covid shutdown began and the markets tanked by 30-40%. Imagine being a new investor that just plunked a big chunk of money into the markets for the first time in your life at that time. I mentored him through it all......but.....you never know how someone is going to react in that kind of situation as a new investor. In the end he did fine and just sat it out......he continued to add money when he could.....including......$400 per month every month to his account. He has a nice HUGE gain now.

I am not asking for a down year......and we are far from seeing a down year this year......but......even if we did.....who cares, it is way past due. Since and including 2009....we have ONLY had ONE.......yes ONLY ONE...... down year in the markets......2018. AND....that year.....2018 was a very minimal loss.......(-4.52%)

I am using the SP500 for the above comments since it represents the BEST measure for how I invest.

What a GLORIOUS world we live in......we are all BLESSED.

 

Welcome....Aquaman. Nice to see some SUPER HERO'S posting on the thread. Now......if we could only get Spiderman or Batman.

Sounds like you are a long term fundamental based investor. Good for you. Please continue to keep us up to date on your investing and your thoughts.

 

I just looked at my account for the end of the day. Looks like there was a BIG COMEBACK in the big cap tech stocks. I actually ended the day with all five of my big tech names......Apple, Microsoft, Nvidia, Google and Tesla in the green. That was not enough to give me a positive day. I ended in the rad as usual lately. I also got beat by the SP500 by 0.75%.

BUT......we are making progress. The fact that the big tech names made a late rally to close in the green is a good short term indicator that they may have gotten too oversold. We will know more tomorrow and over the rest of the week. Sooner or later we are bound to hit a POSITIVE day in the markets.

At least today....in my account....the losses moderated compared to some of the recent days.

 

I think this little article is correct.........but......I still welcome the rate increases as long as the FED does not put us into a recession.
Markets brace for the possibility of four Fed interest rate hikes this year

https://finance.yahoo.com/news/mark...-four-fed-rate-hikes-this-year-201246876.html

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

"About four months ago, markets were pricing in a strong chance that there would be no interest rate hikes from the Federal Reserve in 2022.

But rising inflationary pressures and a faster-than-expected labor market recovery have tilted Fed officials toward a more aggressive path of pulling back on its pandemic-era stimulus. Goldman Sachs, Evercore ISI, and Deutsche Bank are now among the Fed watchers predicting short-term interest rates will be 100 basis points higher by the end of 2022 than where they are now.

“We revise our Fed outlook again given plummeting unemployment, strong wages, and anticipation of another hot inflation print,” said Evercore ISI’s Krishna Guha in a note Monday.

Betting markets now show a roughly 75% chance of the first interest rate hike in March, with a 30% chance of four total hikes by the end of the year.

The U.S. 10-year Treasury (^TNX), a proxy for nominal interest rates over the longer-term, also appears to be repricing Fed rate hikes.

Since the Fed announced that it would move more quickly to end its pandemic-era policies of expanding its balance sheet through open market asset purchases, the yield on the 10-year has jumped over 30 basis points, to as high as 1.81%.

One interpretation of the rapid market movements: that the Fed is playing catch-up with a U.S. economy that could be heating up. High demand and supply chain bottlenecks are leading to price increases of almost 7% on a year-over-year basis. The unemployment rate ended 2021 at 3.9%, below the forecasts of Fed Chairman Jay Powell or any other Fed policymaker.

“Even if they do raise rates four times this year and start to shrink the balance sheet – relative to where the business cycle is — unemployment, GDP, inflation, you could still argue that they're behind the curve relative to the last cycle,” MKM Chief Economist Michael Darda told Yahoo Finance.

Liftoff

If the Fed follows through on interest rate hikes this year, the central bank will have moved much faster to tighten policy than it did after the 2008 financial crisis.

In the last economic shock, the central bank took seven years to start raising interest rates. If the Fed hikes rates in March this year, it will have only taken them two years from the time COVID-19 shut down the U.S. economy.

Still, rate hike forecasts have a history of being wrong about the timing of Fed liftoff, or the first 25 basis point increase after backing rates to zero. Fed funds futures markets, the main betting markets for future Fed policies, had priced in fair odds of the first post-Great Financial Crisis rate hike as soon as 2009 (it did not happen until 2015).

But the unprecedented shutdown and rapid re-opening of a $22 trillion economy makes for different recovery dynamics, one in which the Fed may not have to be as patient to tighten the spigot on its easy money policies.

“The updated views support our argument for higher rates in 2022, mainly that the market is not pricing enough policy tightening and will need to move more in line with the Fed's projections,” Deutsche Bank wrote in a note, adding that it also sees four rate hikes this year.

The nation’s top banker, JPMorgan Chase CEO Jamie Dimon, told CNBC Monday he could see the U.S. economy absorbing more than four rate hikes this year.

Powell, who looks poised to steer the central bank for the next four years after being renominated by President Joe Biden, has said the Fed will continue to watch the data on the economy’s progress on inflation and jobs.

“I wouldn’t look at it that we’re ‘behind the curve,'’’ Powell told reporters in December. “I would look at it that we’re actually in a position now to take the steps that we’ll need to take, in a thoughtful manner, to address all of the issues — including that of too-high inflation.”"

MY COMMENT

Three or four rate increases are what I am now expecting. I dont care about situational inflation or the disrupted labor and job markets. I simply want to see more "normal" rates.

I do care about what I believe has been INCOMPETENT MESSAGING by the FED. The current market drop is due to their failure to prepare the markets for the coming rate increases. They left a lot out of their December news conference and created an UNPLEASANT surprise for the markets in January.

Time will tell how this all works out. The FED is going to have a very different make-up soon. I believe they will be MORE subject to politics.

 

WELL......the earth will probably be hit by a killer asteroid today. GASP.......my account is ACTUALLY in the green at the moment. I have SEVEN of TEN positions in the green right now. The red stocks are Nike, Costco, and Microsoft slightly red.

 

Today is FED day. Powell is being questioned in the Senate. Blah, blah, blah,.........I am so tired of FED TALK. It is not their job to control and run the economy, it is not their job to run the markets. AND....unfortunately for us regular people.....they are just as incompetent as everyone else in Washington DC.

 

Speaking of INCOMPETENCE and Washington DC.

The Post-Normal Economy

https://ritholtz.com/2022/01/the-post-normal-economy/

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

"The past week, I have been looking at some of the more interesting and unusual market charts. I started doing the same for a few of my favorite economic data series: NFP, Quits Rate, Wages, Housing Prices, Business Formation, Inflation, Retail Sales, Car sales, etc.

Pick any economic chart of your choosing; the simple truth is that nothing is “normal.” And by normal, I mean a traditional run-of-the-mill recession and recovery cycle. Everything today is aberrant and excessive, fast/strong/deep/record-breaking . . . Unprecedented.

This is no great insight — it is wildly obvious.

It began with the externality of the pandemic, followed by a massive fiscal stimulus to accompany the ongoing monetary stimulus. And yet, it hardly warrants the appropriate mention it deserves in the financial news media and economist community. These are massive, enormous, unusual inputs, and we have simply become accustomed to them.

I have been writing about these topics for (literally) decades. I try to bring some fresh insights into any thoughts I spill about the economy. Sometimes I discuss the flaws in the data assembly process, or why the recency effect means we should not get too excited about the latest news release. Most economic data is merely a continuation of prior trends and therefore not all that important.

But as I run through all of my market and economic charts, I am continually reminded just how abnormal this economic cycle is.

Look at the red line on the employment chart (top): We had the fastest, deepest payrolls collapse in the post-war period, followed by the strongest ever recovery.

¯\_(ツ)_/¯

Whatever part of the economy you want to review, you will be hard-pressed to find a data series that looks remotely normal:

What about Retail Sales?


Personal Savings Rate?


Quits Rate?


Inflation (CPI):


Median Home Prices:


Wages:




I’ll stop there, but rest assured I could bore you with endless charts all demonstrating just how aberrant a period we are living in.

The economy is not in a “New Normal,” but rather is in a “Post-Normal” state.

What is the purpose of reminding you of something so obvious and well understood by everybody?

Spend a few hours watching FinTV or reading financial media. You might wonder where these pundits’ self-confidence comes from. How can they so self-assuredly discuss not only what is happening today, but then so very comfortably explain what comes next?

Pardon my skepticism, but I have a sneaking suspicion the pundits haven’t the slightest idea as to what is going to happen. Not about the markets or inflation or elections or pretty much anything else that will occur between today and when the ball drops again on New Year’s Eve.

I understand the game, the “fake it til you make it” aspect to all this bravado. But that does not mean I have to like it, or not remind you that much of what you hear is unadulterated bullshit (and I mean that in the technical, professor Frankfurt version of the word).

The bottom line is that consumers of financial media need to constantly remind ourselves as to what we actually know, and what is unknowable. If we do at least that we have a fighting chance to understand what is occurring around us. Or at least, not screw it up so badly as to hurt our own economic prospects and our portfolios . . ."

MY COMMENT

YES.....invest according the all the experts and predictions and prognostications and you are SCREWED. It is very telling that virtually NO ONE can beat the unmanaged averages over the long term. If YOU are doing so I assume that you follow your own course and manage to operate outside the world of the so called "experts". I think most retail investors on some level know this instinctively.......so......they just IGNORE all the media and expert NOISE around them every day.

That is what I do. I am a news junkie and like to know what is going on.....but....at the same time I have always....through my entire life.....done my own thing in my own way. That is one BIG key to investing and life success.....KNOW YOURSELF and BE TRUE TO YOURSELF. Have the self awareness to appreciate what makes YOU tick and dont worry about what or how others are doing anything.

 

Just to stick with the same general theme.....but with more of a business focus.

Don’t Give Up on the Charismatic CEO
The charismatic style of business leadership has taken a beating lately, but it remains essential to revolutionizing productivity and the boundaries of the possible.

https://www.bloomberg.com/opinion/a...t-give-up-on-the-charismatic-ceo?srnd=opinion

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

"For the past 60 or so years we have lived in an age of charismatic capitalists. The paragon of the species was Steve Jobs. I happened to be in Moscow when he died on October 5th, 2011, and I remember watching as a giant poster of his face was unfurled on the side of a skyscraper and Russians gathered around in silence, holding candles and sometimes weeping.

But charismatics have thrived outside Silicon Valley. General Electric Co.’s Jack Welch was treated as a demigod for supposedly reviving the conglomerate form. Michael Milken was revered (and reviled) for spinning junk bonds into gold. Enron Corp.’s Jeffrey Skilling told a beguiling story of freeing natural gas from “the constraints of molecules and movement.” At Alibaba Holding Group’s 18th birthday party the company founder, Jack Ma, dressed as Michael Jackson and danced to the song “Billie Jean” in front of 40,000 cheering employees.


In his new book, “The Emergence of Charismatic Business Leadership,” Richard Tedlow, a legendary professor at Harvard Business School who is now on the faculty of Apple University, argues that charismatic business leaders are more than just larger-than-life personalities. Sam Walton was deliberately folksy and self-effacing. Milken comes across as the class nerd.

What distinguishes them is a combination of personal magnetism and reality distortion. You want to follow them even against your better judgment: One of Milken’s employees opined that “someone like Mike comes along once every five hundred years.” And you are captured by their vision of the world: Guy “Bud” Tribble, a leading member of the team that designed the Mac, said that in Jobs’s presence “reality is malleable. He can convince anyone of practically anything…It was dangerous to get caught in Steve’s distortion field, but it was what led him to actually be able to change reality.”

These charismatic figures exploded on the business world after an era in which capitalism had degenerated into gray bureaucracy. The greatest manager of the era, Alfred P. Sloan, prided himself on turning General Motors Co. into “an objective organization, as distinguished from the type that get lost in the subjectivity of personalities.” The most telling book was William H. Whyte’s “The Organization Man” (1956), which includes the wonderful phrase lifted from a documentary film produced for Monsanto Chemical Company: “no geniuses here; just a bunch of average Americans working together.” This was the world of the corner office, the gray flannel suit and the annual upgrade of the same old product.


Charismatic capitalism was produced by the most powerful forces of the new capitalism unleashed by the Reagan-Thatcher revolution. Technological innovation allowed a few first-movers — geniuses rather than average Americans — to build world-spanning empires, just as Andrew Carnegie and John D. Rockefeller had done in the second half of the 19th century. Deregulation forced established businesses to become more agile. The explosion of executive pay persuaded even run-of-the-mill CEOs that they were geniuses who deserved to be splashed on the cover of Forbes. Why else would the average CEO at the top 350 U.S. firms ranked by sales have been paid 386 times their average worker’s pay in 2000, compared with 45 times in 1989. And changing mores allowed members of out-groups, most notably Oprah Winfrey, to turn charisma into towering fortunes.

Are we now witnessing the end of charismatic capitalism and a return to the politically correct version of Whyte’s “organization man?” Elizabeth Holmes’s conviction has launched an armada of articles decrying Silicon Valley’s “fake it until you make it” culture. The Holmes story is particularly interesting because she started out not by faking her products but by faking the charismatic style of leadership — wearing a Steve Jobs-style black turtleneck, lowering her voice an octave to sound more like him and mastering the art of not blinking.

But in truth she is only the most recent example of charismatics gone bad. In 2019, Adam Neumann saw his dream of taking WeWork public collapse when IPO paperwork revealed both his unchecked power and numerous conflicts of interest. In 2017, Uber Technologies Inc. replaced Travis Kalanick, a controversy magnet and visionary, with Dara Khosrowshahi, whom few outside Silicon Valley had heard of.And in 2006, Jeffrey Skilling was imprisoned for 24 years when Enron turned out to be a gigantic scam. As for Jack Welch, his reputation has fallen faster than GE’s market capitalization.

The best answer to the end-of-the-era question is the one given by an obsequious flunky to the charismatic press baron in Evelyn Waugh’s “Scoop”: “up to a point, Lord Copper.” The charismatic style is certainly being marginalized. Many of the great companies of the tech revolution are now run by today’s equivalent of men in gray flannel suits. Think of Sundar Pichai at Alphabet Inc., Satya Nadella at Microsoft Corp. and Tim Cook at Apple. The Sarbanes-Oxley Act of 2002, introduced in the wake of the Enron scandal, has simultaneously increased the penalties for outrageous behavior and boosted the demand for corporate bureaucrats. China has made clear to entrepreneurs that it has only room for one charismatic leader: Mr. Ma is now spending his time playing golf, reading Taoist texts and learning how to paint in oils rather than hobnobbing with world leaders. Most Western CEOs are so terrified of seeing their careers destroyed by a politically incorrect remark that, if they speak at all rather than relying on their PR teams, they confine themselves to feel-good banalities about “embracing diversity in a fast changing world.”

But charismatic capitalists will not disappear from the scene. The most obvious reason for this is that the tech revolution is continuing to gather pace and spread to new areas. Elon Musk, who not only founded the first successful American car company since Chrysler in 1925 but also is leading the urgent transition from the internal combustion engine to electricity, is routinely forgiven his bizarre behavior and rule-testing outbursts because he is so spectacularly successful. We may well see Musk-like figures emerging in all sorts of areas of the old economy, from the military-industrial complex, which is surely ripe for disruption, to agriculture.

There is also a more subtle reason: In eras of disruption, leadership is more about making meaning than it is about getting the trains to run on time. Innovative leaders need to be able dream the biggest dreams possible — inventing the metaverse or colonizing Mars as a hedge against the destruction of the Earth. And they need to be able to tempt highly talented people to join them by creating an irresistible story — engaging in what Tribble called “reality distortion” and Samuel Taylor Coleridge dubbed “the willing suspension of disbelief.” “Charisma turns a market exchange — you work and I pay you — into a social exchange — follow me and you will be a more fulfilled human being,” as Tedlow puts it."

MY COMMENT

Some of the above I agree with.....some of the above I TOTALLY do not agree with. I HATE the modern celebrity, glad-handing, CEO model. It is all about virtue signaling, the big ranch in Montana, hanging out with celebrities, etc, etc, etc. The buck....NEVER...seems to get to the CEO desk. There is RAMPANT incompetence and even worse......a TOTAL disconnect from the "little People".

I MUCH prefer the leaders mentioned above: "Think of Sundar Pichai at Alphabet Inc., Satya Nadella at Microsoft Corp. and Tim Cook at Apple." These people are FIRST, competent. Second, they are all about the product, the company, and the job.

They become celebrities BECAUSE of their success and competence in running a business. Their passion is for the business....not themselves. Elon Musk is a perfect example. He does not care about the trappings of celebrity. He seems to be......genuinely.....driven by the engineering challenges and building his business. He is the perfect example of a BUSINESS SAVANT........who has achieved celebrity recognition due to his success....not the other way around. You are not going to see him jumping around from company to company as the latest, greatest leader being brought in to INSPIRE.....always at HUGE pay and usually with DISMAL results.

I have had a very unusual life. I have lived among the CEO and professional athlete types, I have met lots of politicians, Congress people, Senators, some Governors, some Supreme Court Judges, etc, etc, etc. I dont hang out with those people......but I have circulated on the fringes of those groups. My personality leads me to......NOT.....want to be part of their CLIQUE. I have played music at a high professional level.....as a side musician, band member......so I have seen LOTS of very successful FRONT PEOPLE.....performers.

The ONE.....single...trait that I have seen in all the above.....MOST of the above.....they are uniformly......EXTREME EGO MANIACS. I am totally convinced that is what causes the trait that we know as "CHARISMA". I do believe that CHARISMA is totally real. I have seen many people at the highest levels of many professions that literally GLOW.....I mean REALLY GLOW.......but.....as I said I am convinced it is a function of being born with HIGHLY ABERRANT EGO MANIA.

Success in politics, music, and many other types of work......as the FRONT PERSON.......at the highest levels, usually requires that EXTREME EGO MANIA. BUT....that does not mean they are smart, it does not mean they can be a leader, it does not mean that they can run an organization. It is simply something that very, very, few people are BORN WITH......and some......are able to bootstrap that personality DEFECT into celebrity.

In business I MUCH PREFER the type of leader that is a celebrity based on their competence. I prefer that SUCCESS AS A LEADER and manager is what caused them to be noticed and touted as an OUTLIER in their field.....a sought after person......compared to the......too often TYPICAL ........celebrity leader that is nothing more than a GIANT overblown ego maniac with no real competence other than self promotion.

UNFORTUNATELY.....our society....which spills over into the business world......is becoming more and more shallow. That is why we see many modern examples of people that are in HIGH positions but can not really LEAD.....they have no personal or business competence.

 

WOW.....while I have been typing like a MANIAC......the markets have actually turned GREEN across the board. Here is the media take on what is going on today in the world of Investing.

Stock market news live updates: S&P 500, Nasdaq gain as investors mull Powell testimony

https://finance.yahoo.com/news/stock-market-news-live-updates-january-11-2022-234301102.html

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

"Wall Street’s main indexes had a choppy start to trading on Tuesday, advancing after earlier declines as investors weight testimony from Federal Reserve Chair Jerome Powell.

The S&P 500 and Nasdaq clawed back from morning drops, building on a comeback that began late Monday.

Federal Reserve Chairman Jerome Powell told Congress in his confirmation testimony on Tuesday that if the pace of price increases fails to slow, the central bank will get more aggressive with raising short-term borrowing costs.

Worries over sooner-than-expected interest rate hikes have tempered investors’ optimism heading into the new year, placing equity markets in a risk-off mood so far in 2022. Meanwhile, Treasury yields have climbed, with the benchmark 10-year yield topping 1.8% to reach its highest level since January 2020.

“We’re seeing across the board a re-rating of what the Federal Reserve will do,” Steven Wieting, global chief investment strategist at Citi Private Bank told Yahoo Finance Live.

“The likelihood is very clear that the Fed will succeed in sinking inflation,” Wieting said. “That was going to happen one way or the other and we are just trying to gather how actively the Fed will be doing that.”

Goldman Sachs, Evercore ISI, and Deutsche Bank are now among Fed watchers repricing the Federal Reserve’s pace on rate hikes. The firms recently predicted short-term interest rates will be 100 basis points higher by the end of 2022 than where they are now.

“We revise our Fed outlook again given plummeting unemployment, strong wages, and anticipation of another hot inflation print,” said Evercore ISI’s Krishna Guha in a note.

In an interview with CNBC on Monday, JPMorgan Chief Executive Officer Jamie Dimon said he hoped for a “soft landing,” by the central bank as it gets ready to begin raising its benchmark federal funds rate in March.

“It’s going to be a little bit like threading a needle,” said Dimon, though adding that it was possible inflation is worse than the Fed believes and rates could be increased more than currently anticipated.

“I’d personally be surprised if it’s just four increases,” Dimon said. “Four increases of 25 basis points is a very, very little amount, and very easy for the economy to absorb.”

The central bank’s monetary policy will remain in focus this week, with the Bureau of Labor Statistics' (BLS) latest Consumer Price Index (CPI) in the spotlight as investors continue to gauge inflationary pressures and the Fed’s potential response.

Another red-hot read on the latest number is expected, with economists forecasting a print of 7.1% in December based on Bloomberg consensus data, up even more from November's 6.8% year-over-year clip.

Bank earnings are also underway, with BlackRock (BLK), Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) set to report fourth-quarter results before market open on Friday.

11:13 a.m. ET: U.S.-listed Chinese stocks rally following upbeat trade talks

Chinese stocks in the U.S. surged officials vowed to stabilize trade and called on financial institutions to further boost credit support to companies, according to Bloomberg.

The Nasdaq Golden Dragon China Index (^HXC) rose as much as 4.7% in morning trading after declining over 45% over the past year, per Bloomberg data.

Large-cap Chinese tech stocks saw the biggest moves: Alibaba (BABA) was up 3.74% to $133.10 per share, JD.com (JD) soared 8.83% to $75.75 per share, Pinduoduo (PDD) was up 6.91% to $60.93 per share, and DiDi (DIDI) gained 5.34% to trade at $4.73."

MY COMMENT

We are looking very good at this moment in the markets. Will it hold to the close? Have we started to break the back of this little market drop? We will find out as we go through the rest of the day and the week. At least it is a NICE change to see some green today.