The Long Term Investor

Discussion in 'Investing' started by WXYZ, Oct 2, 2018.

  1. T0rm3nted

    T0rm3nted Moderator
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    I'm curious why people wouldn't believe China's COVID data to be honest. Have you not seen accounts of normal people who have basically said "I live in X city in China. When we have more than one case, we lockdown entirely and it's physically enforced by the cops". Obviously that's overboard and I'm not in support of China's government, but I fully and completely trust their COVID cases reports as they are a police state that can enforce total and complete shutdowns. I'm sure you've all seen pictures from China with everyone wearing basically astronaut suits in airports and hospitals, etc.
     
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  2. zukodany

    zukodany Well-Known Member

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    Because they have a population of 1.4 billion people, the majority of which live in 3rd world country standard lifestyle with ZERO medical facilities for normal treatments. There is absolutely NOTHING you can do with containing a pandemic at a contagious level such as this as you have witnessed.
    there simply isn’t a “magic” wand that you can swing which will make the virus contained in china FULLY disappear, while at the same time spread worldwide like wildfire.
    Unless of course… you’re the one spreading it
     
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  3. WXYZ

    WXYZ Well-Known Member

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    Well said Zukodany.....EXACTLY.
     
  4. WXYZ

    WXYZ Well-Known Member

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    BUT.....moving on......to the markets. Not sure why.....since it is just a re-hash of the norm for 2022. I DO like this little article.

    On Inflation, Trust the Market
    No indicator is perfect, but the market is right a lot more often than the zeitgeist.

    https://www.fisherinvestments.com/en-us/marketminder/on-inflation-trust-the-market

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

    "Ouch. That about sums up the collective reaction to the news that December’s US CPI inflation rate hit 7.0% y/y—the fastest rate since 1982. Considering the inflation rate a year prior was just 1.4%, the sharp acceleration has jarred many households and businesses, which are wrestling with higher costs.[ii] But if you were invested in stocks over the past year, it is worth noting your investments probably provided a nice hedge, as global markets rose much faster than consumer prices. In our view, this is critical to remember as inflation continues topping the list of investors’ fears in 2022.

    US inflation has morphed into a hot button political issue in recent months, with people on both sides of the aisle trying to spin it to their advantage. Even the discussion of its causes has become hotly politicized. So please understand that when we discuss inflation and its stock market implications, we aren’t making ideological or political statements. This isn’t even about whether faster inflation is good or bad—obviously, if prices rise 7% in a year and make it harder for people and small businesses to make ends meet, that isn’t good. Yet at times like this, it is crucial to think about events and risks as markets do. Stocks don’t view things in terms of “good” or “bad” in the absolute sense. That debate is squarely in the human, societal realm. For stocks, the question is at once more simple and more complex: Is there any material trouble left that markets haven’t already priced in? Is there any negative surprise power left? A strong likelihood of a bad outcome that investors haven’t already considered?

    That last question is the linchpin, in our view. It is almost cliché to say markets are efficient and forward-looking, so please don’t get annoyed with us for going there. But overwhelmingly, we have found that in any sufficiently liquid market, be it stocks, bonds or what have you, prices reflect all widely known information at any given time. “Information” includes facts, figures and data. It also includes interpretations of those facts, figures and data, and the hopes and fears that emerge from that analysis. And it includes forecasts, which are really just opinions on how said facts, figures and data will evolve in the future—and, perhaps, what that evolution will mean for asset prices.

    Now, no one can prove this scientifically, beyond a shadow of a doubt. But simple logic and reason can get us close enough: People buy and sell constantly, with heads full of knowledge, viewpoints, biases and forecasts. Since last April, when the BLS announced the CPI inflation rate crossed above 2.0% for the first time in a while, investors have bought and sold stocks and bonds with full knowledge of inflation’s acceleration. In more recent months, supply chain issues have loomed large in the market’s hive mind, as has the Fed’s decision to stop using the word “transitory” to describe accelerating inflation—a shift we still think was an attempt to be more clear, but which most interpreted as a public confession that the Fed’s earlier views were wrong. Thus the prospect of inflation staying higher for longer became the dominant view. Now the end of quantitative easing (QE) asset purchases looms large, as do potential short-term interest rate hikes. All of which people generally view quite negatively. This pessimism has played into the purchase or sale prices that so many investors have decided to accept, whether consciously or not. Therefore, we can reason that these fears are all reflected in prices, also known as being “priced in.”

    Stocks move on political as well as economic drivers, so some will argue there are too many confounding variables to use stocks’ big 2021 as a counterpoint to inflation fears. The counterfactual—how stocks would be faring if inflation were milder—is also unknowable. But bonds have a more direct relationship with inflation, which erodes the future value of fixed interest payments as well as the bond’s face value at maturity. So in general, the higher the expected inflation rate, the higher the interest rate investors will charge to preserve purchasing power. If inflation were likely to stay high enough for long enough to cause big problems, we should see it in elevated long-term Treasury yields. Yet, much as everyone is hyping the new year’s recent yield climb, as Exhibit 1 shows, the 10-year Treasury yield hasn’t jumped alongside the inflation rate. It actually fell for a good four months as the inflation rate accelerated past 5.0%. Following a brief uptick, it fell again as the Fed started reining in QE, a development everyone thought would bring higher rates. Even with the recent uptick, today’s 1.73% 10-year yield is right around where it was in late March, when the inflation rate was much, much lower.

    Exhibit 1: 10-Year US Treasury Yield, the Fed and Inflation

    [​IMG]
    Source: FactSet, as of 1/12/2022. 10-year US Treasury yield (constant maturity), 12/31/2016 – 1/12/2022.

    The market knows inflation hit 7.0% last month, and it likely priced that outcome well before today’s data confirmed it. It knows people worry about the implications. It knows that one political party is blaming corporate greed while the other party is blaming its opponent’s spending plans. Yet it also knows that the culprit most apparent in the data—the supply chain crisis—is starting to ease up. It knows people surveyed in December purchasing managers’ indexes across the US and Europe reported cost and logistics pressures are starting to moderate. It has seen numerous businesses’ investments in increased capacity. It has seen the push toward vertical integration that larger companies are using in hopes of controlling their costs and destiny. And it has seen the inflation math evolve over the past year, so it knows that in a few months, lockdown-deflated early-2021 prices will be out of the denominator in the year-over-year calculation, removing the funky math helping skew the inflation rate higher. It has seen all of this and, based on where yields are, it has decided inflation isn’t a major problem for stocks. This, coming from the most efficient pricing and forecasting mechanism on earth.

    Yes, markets can be inefficient in the short-term—this is where corrections and bubbles alike come from. But it isn’t in markets’ nature to ignore something as big as inflation for over half a year. So, in our view, the most rational conclusion when the hype says one thing and the market says another is that the market is right. If it knows where inflation is and how people and businesses are responding to it and long-term yields aren’t soaring, that is a powerful signal. Take a deep breath, and trust it."

    MY COMMENT

    NONE of the economic data is any sort of a shock or a secret. We have been OBSESSING over the same issues for a year or two now. AND.....stocks as shown by their gains.....did not care. Earnings over that entire time have been GREAT and SIGNIFICANTLY exceeded expectations.

    Inflation.......whatever. It is simply NOT going to significantly impact business. Business is very smart about dealing with this sort of issue. In addition ALL the rates from the Ten Year to the Thirty Year are STILL in the range of historic lows.

    Much of the short term DRAMA over rates and the action in the short term markets is simply TRADING. AI trading, high frequency trading, micro trading.....along with ALL the massive "legal" ways that traders attempt to push what they are doing.
     
  5. duckleberry_fin

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    Agreed. My own personal gauge for whether we are "back to normal" is if I can walk into a Target, Walmart, GameStop, etc. and buy myself a PlayStation 5 off the shelves. I had hopes that maybe sometime in 2022 that would be possible, but now it's looking much more like 2023.
     
  6. WXYZ

    WXYZ Well-Known Member

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    Here is a little article on what is happening in the markets today.....I am primarily posting this to summarize the earnings that were reported today by the BIG BANKS.

    Stock market news live updates: S&P 500, Dow fall amid mixed bank earnings, retail sales miss

    https://finance.yahoo.com/news/stock-market-news-live-updates-january-14-2022-231330809.html

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

    "Stocks were mostly lower Friday at the end of a volatile week, with investors monitoring a mixed set of bank earnings and a bigger-than-expected drop in U.S. retail sales.

    Each of the S&P 500 and Dow fell, while the Nasdaq recovered some losses after a 2.5% drop on Thursday.

    The Dow underperformed, dropping more than 1% just after market open as the index's bank stock components declined after delivering earnings. JPMorgan Chase (JPM) shares fell more than 5% after the company posted lower-than-expected fourth-quarter trading revenues and rising costs as compensation expenses increased. The stock drop marked JPMorgan's worst post-earnings decline since 2011, based on Bloomberg data. Citigroup (C) shares also fell after posting a similar miss on fixed-income and equities trading revenues for the quarter.

    Peer bank Wells Fargo (WFC) shares rose, on the other hand, after posting quarterly revenue that topped estimates as both commercial and consumer loans picked up at the end of last year.

    New economic data came in weaker-than-expected on Friday, adding to the risk-off tone in markets. U.S. retail sales fell 1.9% in December month-on-month, missing estimates for an only 0.1% dip and marking the biggest drop since February 2021. November's sales were also downwardly revised to show 0.2% monthly increase, compared to the 0.3% rise previously reported.

    Investors this week have been weighing concerning signs of lingering price pressures across the U.S. economy against assertions from key central bank officials that the Federal Reserve is ready to take action to bring down inflation. JPMorgan Chase CEO Jamie Dimon said during this morning's earnings call that

    In Fed Governor Lael Brainard's hearing before the Senate Banking Committee on Thursday, she suggested the central bank could begin raising interest rates — a move that would tighten financial conditions and help bring down inflation — "as soon as asset purchases are terminated." The Federal Reserve is currently set to end its asset-purchase tapering process in March.

    What we’re seeing right now is a repricing of the markets, given anticipated rate hikes… That’s going to be the catalyst driving down the market,” WealthWise Financial CEO Loreen Gilbert told Yahoo Finance Live on Thursday. It’s going to be a wild ride.”

    And the bevy of recent inflation data has so far helped strengthen the case for a near-term move on monetary policy, many economists suggested. Thursday's Producer Price Index (PPI) showed the biggest annual rise in wholesale prices on record, in data going back to 2010, even as monthly price gains moderated slightly. And this report came just a day following the December Consumer Price Index (CPI) showing the biggest surge in inflation since 1982. Many economists suggested inflationary pressures would continue at least through the first months of this year before gradually easing.

    “Two of the biggest things have been the supply chain disruptions and the fiscal stimulus,” Matthew Miskin, John Hancock Investment Management co-chief investment strategist, told Yahoo Finance Live. “As the pandemic comes more under control this year, as the Omicron wave hopefully dissipates, we likely see the supply chain disruptions come off, and then we’re not going to get more fiscal stimulus ... That in our view does cause inflation to come down over the course of the year."

    Rising prices have also been hitting companies' profits as labor costs jump. Of the nearly two dozen S&P 500 companies that had reported fourth-quarter earnings results as of mid-week, 60% of these cited a negative impact from higher labor costs or shortages to sales or profits, according to FactSet.

    10:15 a.m. ET: Manufacturing production unexpectedly falls in December

    The U.S. manufacturing sector showed more signs of slipping amid the latest surge in COVID-19 cases and materials shortages.

    According to new Federal Reserve data Friday, manufacturing output declined by 0.3% in December to reverse course after a 0.6% rise in November. Consensus economists were looking for a 0.3% monthly rise in production in December, based on Bloomberg data. Manufacturing accounts for about 12% of overall economic activity in the U.S.

    A drop in auto production contributed heavily to the headline decline, with ongoing chip shortages impacting the industry. Vehicle production was down 1.3% in December following a rise of 1.7% in November.

    10:11 a.m. ET: University of Michigan sentiment index drops to 68.8 in January, in second-lowest reading in a decade

    Consumer sentiment fell more than expected in early January to reach one of its lowest readings in 10 years, as concerns over the inflation outlook and COVID-19 weighed on optimism.

    The University of Michigan's preliminary January Surveys of Consumers index came in at 68.8, falling from December's 70.6. This was below consensus estimates for a reading of 70.0, according to Bloomberg data.

    "While the Delta and Omicron variants certainly contributed to this downward shift, the decline was also due to an escalating inflation rate," Richard Curtin, chief economist for t he Surveys of Consumers, wrote in a statement. "Three-quarters of consumers in early January ranked inflation, compared with unemployment, as the more serious problem facing the nation."

    "Given that inflation's impact is regressive, the Sentiment Index fell by 9.4% among households with total incomes below $100,000 in early January, but rose by 5.7% among households with incomes over that amount," he added.

    Overall, consumers' one-year inflation expectations edged back up to 4.9%, or the highest level since 2008, from December's 4.8%.

    8:32 a.m. ET: Retail sales drop 1.9% in December, missing estimates

    Retail sales posted a large-than-expected drop in December, as consumer spending pulled back from earlier in 2021.

    The total value of U.S. retail sales was down 1.9% in December compared to November, the Commerce Department said Friday. This was the first monthly drop since July, and the biggest decline since February 2021. Consensus economists had looked for a dip of just 0.1%, according to Bloomberg data. In November, retail sales rose 0.2%, with this figure also downwardly revised. from the 0.3% rise previously. reported.

    By category, non-store retailers, or e-commerce stores, saw by far the biggest drop in monthly retail sales, with these falling 8.7% in December. Department stores also posted a 7.0% drop in sales, and furniture and home furnishing sales declined by 5.5%. Still, the weakness was broad-based in December, and nearly every category of retailer saw a monthly drop in sales. Notably, building material stores saw a nearly 1% sales rise during the month, and miscellaneous store retailers' sales rose by 1.8%.

    7:43 a.m. ET: 'The economy continues to do quite well despite headwinds related to the Omicron variant': Dimon

    JPMorgan Chase CEO Jamie Dimon struck an upbeat tone about the trajectory of the economic recovery even given the latest disruptions caused by the rapidly spreading Omicron variant.

    "The economy continues to do quite well despite headwinds related to the Omicron variant, inflation and supply chain bottlenecks," Dimon said in the bank's fourth-quarter earnings report on Friday. "Credit continues to be healthy with exceptionally low net charge-offs, and we remain optimistic on U.S. economic growth as business sentiment is upbeat and consumers are benefiting from job and wage growth."

    Both JPMorgan Chase and Wells Fargo cited an increase in loans as contributing to results at the end of last year, suggesting consumers and businesses were remaining confident in borrowing and spending.

    However, JPMorgan's fixed-income and stock-trading businesses saw sales fall over last year. Fixed income sales and trading revenue declined 16% over last year to $3.33 billion, which the bank attributed to "a challenging trading environment in rates, as well as lower revenues in credit and currencies & emerging markets compared to a strong prior year." Equities sales and trading revenue dipped 1.8% to $1.95 billion.

    Overall, adjusted revenue grew 0.6% over last year to reach $30.35 billion, topping estimates for $30.01 billion, according to Bloomberg data. Earnings per share were $3.33, exceeding expectations for $2.99.

    MY COMMENT

    Does the above sound like a RED HOT inflationary economy? Lets see......mediocre to poor big bank earnings. Falling RETAIL SALES. Manufacturing down. Consumer confidence down. The Ten Year yield is range bound in the 1.5% to 1.75% range....for the most part. ALL the Treasury Yields remain at or near historic 100 year lows. Grocery store shelves are half empty and the supply chain has been shown to be INCOMPETENT. The handwriting is on the wall regarding our dependence on China, but everyone simply ignores that fact. Etc, etc, etc.

    Once we clean away all the overhang and disruption caused by the INSANE economic shut down and lock down of the country........the BIG issue is going to be DEFLATION.

    BUT....all the above is simply economic talk....except for the bank earnings. AND.....economic talk is NOT stocks and business....at least beyond the short term FLAILING AROUND that we see driven by the news and opinion reports every day.

    What we see every day is INTERESTING.....some times even fun to watch........but......not particularly relevant to me as a long term investor. I will.....of course IGNORE all of it.....and as usual, do nothing in response.
     
  7. WXYZ

    WXYZ Well-Known Member

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    TGIF. At the end of the day we will be able to simply walk away from this week. We move forward toward better results for the markets. As Sundance said on here....the markets will be closed on Monday......MLK day. We could use a three day break for the markets to relax a bit.

    The drop today....so far is actually pretty mild. I will be interested to see how we close.
     
  8. zukodany

    zukodany Well-Known Member

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    And if you thought the collectible market is slowing down anytime soon….

    https://www.bbc.com/news/world-us-canada-60002289


    Single page of Spider-Man comic sells for over $3.3m

    Basically it’s the artwork of Mike Zack… not even a classic artist… he’s considered more modern, and the creation of Venom is considered to be “copper”… but that number… 3 mil for that one page…
    Just wow!
     
  9. gtrudeau88

    gtrudeau88 Active Member

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    Went up a little today so I ended up 1.57% on the week and I'm up 2.28% YTD. Have a good weekend all. S&P is down 2.17% on the year so life is ok.

    *** Life is actually ok regardless. I have a wife, daughter, and son-in-law-to-be that love me, a good job, good health, a nice home, cars that work, and more. I could never rightfully complain. Others have a lot less than I. ***
     
  10. WXYZ

    WXYZ Well-Known Member

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    I was as close to flat today as you can be. But....no matter how close...it was still red. I was down by (-0.01%). So I got beat by the SP500 by 0.09%)

    Looks like the markets staged a little come-back today while I was ignoring them. A good way to end the week and move forward.
     
  11. WXYZ

    WXYZ Well-Known Member

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    That is an UNBELIEVABLE price for that particular art work Zukodany. Must have been a HUGE bidding war between two very motivated buyers with very deep pockets.
     
  12. WXYZ

    WXYZ Well-Known Member

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    The market weakness continues for another week of the new year.

    DOW year to date (-1.17%)
    DOW for the week (-0.88%)

    SP500 year to date (-2.17%)
    SP500 for the week (-0.30%)

    NASDAQ 100 year to date (-4.34%)
    NASDAQ 100 for the week +0.12%

    NASDAQ year to date (-4.80%)
    NASDAQ for the week (-0.28%)

    RUSSELL year to date (-3.69%)
    RUSSELL for the week (-0.80%)

    The DOW continues in the lead year to date....but has fallen off this week and is being challenged by the SP500.
     
  13. gtrudeau88

    gtrudeau88 Active Member

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    I think the fickle market will continue as long as Omicron and inflation dominate the news.

     
  14. emmett kelly

    emmett kelly Well-Known Member

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    and .09% is the amount of my daily gain in the rollover IRA. i think you can logically conclude where that money is parked.
     
  15. zukodany

    zukodany Well-Known Member

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    I’m personally shocked by this… I personally see a trend here with more modern comics getting higher and higher appraisal. This will DEFINITELY cause a stir.
    In a nutshell, if you’re not a comic book nerd, the comic book collectible universe is comprised of 2 main publishers; DC and Marvel. DC owns all the classic pre 60s properties - Superman, Batman, Wonder Woman and the likes. Marvel, with the exception of Captain America, is all POST 60s stuff… Spider-Man, dr strange, hulk, fantastic four…
    Lately there has been a HUGE push to promote Marvel properties, mostly with movies and tv shows, which naturally translated to a high appreciation of those comics published by them… this basically means that now that DC is lagging in value- it mainly takes a HUGE chunk out of golden age books which were published in the 30-50s….
    This piece which sold for over 3 mil, is of a marvel property, and it was drawn in the 80s!! To put it in perspective… a frazetta painting (golden age artist) was sold for the same amount just last year.
    I’m sure that this probably troubles many golden age collectors, which spent a lot of time and money building a classic collection. Even though personally I doubt Golden comics will ever drop significantly in value
     
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  16. emmett kelly

    emmett kelly Well-Known Member

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    don't foresee any reason for lucille ball memorabilia to go up in price, but if it does the wife is sitting on quite a bit of it.
     
    WXYZ likes this.
  17. Sundance

    Sundance Member

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    I love Lucy.
     
  18. zukodany

    zukodany Well-Known Member

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    They did get a bit of a bump since the Amazon flick came out, but not by much
     
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  19. Sundance

    Sundance Member

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    Can't complain about the market. My new buy from yesterday dropped about 2% but recovered by close. Volume was less than 200,000. A lot of people see a drop and sell. If you hold a solid company ignore the noise and dont step in the bear poop. The day this market crashes the entire World markets will crash.
     
  20. andyvds

    andyvds Active Member

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    It might be a very good 2 months coming for the Big Caps. All PMO's are starting to recover and pointing to the upside.

    Holding some cash now - standing by for a big TQQQ move to the upside.
     
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