The Long Term Investor

At least much of the so called "news".....media sensationalism, opinion and speculation.....that we have been dealing with lately is turning into FACT now.

Narrative Confusion’ Is New Only If You Shun History
Stocks are dealing with a lot of news right now—and most always.

https://www.fisherinvestments.com/e...ive-confusion-is-new-only-if-you-shun-history

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

"In recent days, we have seen a rather novel twist on the this time is different mentality that often surges during stock market corrections (sharp, sentiment-fueled drops of -10% to -20%): the claim that investors have to deal with a multitude of competing market-related narratives, and that this is somehow new. One Wall Street Journal piece positing this called it “narrative uncertainty.” Supposedly until now, stocks have had only one big story at a time—making the conflux of Ukraine, oil prices, inflation, rate hikes and China’s latest regional lockdown a perplexing conundrum.[ii] Competing, colliding narratives, the story goes, mean heightened volatility and struggling stocks. And, well, we agree shifting headlines are probably contributing to stocks’ yo-yoing this week—that is par for the course during corrections, when emotions run hot. But take a trip with us down memory lane, and you will see this time isn’t different—there are rarely periods in which investors have only one narrative to grapple with.

For instance, consider 2013. The eurozone was still in recession when that year began, with headlines shrieking over possible defaults of sovereign nations like Italy leading to the euro currency’s splintering. That was also the year the US and UK briefly flirted with intervening in Syria’s civil war and the Fed signaled its plans to taper quantitative easing bond purchases (QE). Cyprus endured its banking crisis and bailout, terrorists bombed the Boston Marathon, and the US had a government shutdown and a pretty hyperbolic debt ceiling standoff. That is a heck of a lot of narrative uncertainty! Yet global stocks topped 25% that year, and the S&P 500 topped 30%.[iii]

Or, how about 2012? That was the year Greece defaulted twice, terrorists struck America’s Libyan embassy, MERS erupted and the Fed felt compelled to roll out a third round of quantitative easing—such was sentiment about the allegedly weak US economy still needing life support. There was also a contentious US presidential election, which came amid frequent handwringing over the expiration of Bush tax cuts and automated “sequester” spending cuts—a frightful combination none other than then-Fed head Ben Bernanke dubbed a “fiscal cliff.” The UK was flirting with a double-dip recession, the eurozone was still contracting, and Japan was struggling to find economic momentum. Pundits now portray this as a year when Fed bond purchases made stocks an easy, one-way decision, but we have receipts! We tracked developments on these very pages throughout! Sentiment was the polar opposite at the time, and stocks endured a correction that spring. Yet even with that volatility and a drumbeat of bad news on the economic and geopolitical fronts, global stocks delivered 15.8% and the S&P 500 rose 16.0%.[iv]

A look back at 2009, 2010, 2016, 2017 and 2019 would show similarly nice returns flying in the face of everything from North Korean intercontinental ballistic missile tests to new tariffs to even more contentious elections as bad news and strong economic fundamentals continued playing what might have looked like a game of tug of war. Yes, there were some not-so-great headline-filled years, like 2015—a year when the S&P 500 was only slightly positive, with a correction in the year’s second half paring returns. That year, we had Vladimir Putin bringing Russia’s military into Syria’s civil war. A popping stock market bubble in China and a shock devaluation of the yuan. A Greek election that brought a self-described radical leftist party into power—followed by rejected bailout terms, a national referendum that almost took the country out of the euro, and the country’s third default of its debt crisis. Oh, and that December we had the Fed’s first rate hike of the 2009 – 2020 bull market—and the start of the ECB’s quantitative easing program, sparking fears of divergent monetary policy. But the issue for stocks wasn’t that headlines were tugging markets in different directions. Indeed, stocks rose nicely through the events in Greece and in the wake of Russia’s formal intervention in Syria. The year’s negativity concentrated in a short, painful burst when China shifted its currency policy—everything else was just part of the backdrop wall of worry.

Which is the point. It is a human compulsion to focus on narratives. But markets don’t think like that—they are a lot colder and, over more meaningful stretches of time, a lot more rational. Headlines can jar sentiment and stock prices in the short run. But beyond that—say, over the next 3 – 30 months—stocks do an excellent job of filtering out the static and focusing on what actually matters to expected earnings. That includes relevant political and economic drivers. There will always be competing variables—some negative, some positive. But the market’s collective wisdom efficiently assigns probabilities to both the good and bad and discounts their impact. The sum total of that good and bad, in general—and how it relates to expectations—is what ultimately pushes stocks higher in a bull market and lower in a bear market.

Counterintuitively, we think it is bullish that pundits’ biggest instinct right now seems to be to throw up their hands in pessimistic confusion—that is a classic correction reaction. The big story or stories can easily blind people to history and what actually matters to stocks. That is what enables sentiment to overshoot and tee up the rebound that follows. So don’t fall for the umm … narrative … of narrative confusion. Just remember that eventually, stocks shift from being a voting machine to a weighing machine, and even with today’s bad news, there are plenty of drivers in place to propel earnings growth for stocks to weigh. "

MY COMMENT

It is amazing how often the.....short term narrative.....is simply WRONG. Over, and over, and over. People that write about investing often simply are NOT investors or dont have much experience with actual investing or life for that matter. Now with much of the media writers under age 36.......EVERYTHING is unheard of and never seen before.

WELL DUH......if you are young much of what happens has never happened or been seen before......by YOU. The rest of the population that has invested for decades and lived through many markets.....HAS.....seen it before and invested through it before.

Add in the ever present and escalating....failure of education.....the quickly escalating lack of older people in the work place.....the elimination of mentoring with younger employees working and hiding from home.....and.....everything is scary and never seen before.

Just grow up and deal with it......just because "you".....using the term "you" as a collective.......have not seen or experienced it before does not mean it never happened. We are now a narcissistic society with no real grasp of history or past events. AND.....it continues to be the FACT that those that write about something do not necessarily have the knowledge or experience as an actual participant in what they write about.

Everything is NOT a......new normal.....the worst ever......the first time......etc, etc, etc. Investor behaviors remain the same. the stocks and companies might change but the human behaviors that make investors FAIL remain the same as always.

The ONLY thing that brings CLARITY and REASON is........the long term.

 

This seems so simple and intuitive......but when it comes to anything.....that means it is obscure and very difficult for HUMANS to grasp.

What Happens When You Buy Stocks in a Bear Market?

https://awealthofcommonsense.com/2022/03/what-happens-when-you-buy-stocks-in-a-bear-market/

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

"As of the close this past Monday the Nasdaq Composite was in bear market territory, down nearly 22%:


Over the next four days there was a furious rally, with the tech-heavy index up more than 10% from the lows.


That could be the bottom. Or it could be a vicious bear market rally. We’ll see.

By my count, there have been 12 bear markets1 in the Nasdaq going back to 1970 before the current downturn:


The average loss on this table is -37.6%.

You can see some nasty crashes on this list along with some more run-of-the-mill bear markets.

The problem with down markets is you never know which ones will turn into a full-fledged vaporization and which ones will be merely a flesh wound.


That applies to the current situation as well of course.


So what if you would have bought the Nasdaq in the past every time it entered a bear market without the foresight to know if it was going to get worse or not?

Let’s say you bought the Nasdaq every time it fell 20%. What would your returns be?

Here’s a look at the forward one, three, five and ten-year returns if you would have bought the Nasdaq right after it fell into bear market territory2:


The averages are quite good especially when you consider the fact that many of these bear markets went much deeper than 20% losses. This is what happened after the initial 20% flush:


Even though returns were good in most cases there were those crashes that lasted much longer than most investors have the stomach for.

Returns were still negative one and three years out following the 1973-1974 bear. And you would have still been down one-third on your investment ten years after the dot-com blow-up. And that was after it had already fallen 20%!

Some thoughts on this data:

Buying when stocks are in a bear market is generally a good strategy. Newsflash — buying stocks when they’re on sale tends to be a winning strategy over the long run.

Even if you have to eat some further losses, buying stocks after they have already fallen 20% has led to nice returns historically.

I know every correction feels like it’s going to be the end of the world, but most of the time the world does not in fact come to an end.

Nothing works all the time. Most of the time when you buy stocks when they are down quite a bit, your forward returns are good. However, sometimes investors need to be reminded that risk can mean years of awful returns in stocks.

From 2000 to 2009, the S&P 500 was down 9.1% in total even after accounting for dividends. It was a lost decade for the biggest companies in the U.S stock market.

During this same decade, the Nasdaq was down more than 41%. That’s an entire decade where investors got annihilated.

It’s probably worth mentioning, this terrible, horrible, no good, very bad decade was preceded by total returns of 3,688% (19.9% per year) and 2,583% (17.9% per year) from 1980-1999, respectively for the Nasdaq and S&P.

It’s hard to know when it will happen, but extraordinary performance in the stock market is often followed by awful returns.


So goes risk.

If there were no risks involved in buying stocks there would be no rewards.

Maybe this is like the end of the dot-com bubble but maybe not. I know a lot of people who feel the run-up in tech stocks in the 2010s was eerily similar to the 1990s blow-off top that less to the massive losses that started at the turn of the century.

That’s certainly possible. The Nasdaq was up more than 1,000% (20.7% per year) from 2009 to 2021.

That’s a pretty good run.

Maybe the 2020s will see another prolonged bear market that leads to a lost decade.

It is worth noting the returns of other asset classes the last time we had a lost decade:


The Nasdaq may have another lost decade upcoming. Maybe the S&P 500 will too. There could be a stock market somewhere around the globe that goes nowhere for decades like Japan since the late-1980s.


It’s not the answer most investors are looking for but we simply do not know when long-term risk is going to show up in certain segments of the stock market.


The only answer I can come up with to prepare for these types of risks is diversification."

MY COMMENT

As usual the thing that brings clarity and at the same time great compounding of positive returns is long term investing.

As to "diversification". The way it is usually practiced is DUMB. More is better. I own 1000 stocks...or I own 30 mutual funds.....or....I own 10 indexes.....or....I own 3000 stocks. The way most people diversify....they may as well just own a total stock market fund.

On this topic....diversification.....I obviously agree with BUFFETT that too much just kills your returns. In my view a portfolio can be diversified with only 15-20 stocks.....or......an index and a couple of funds.

Personally I dont even attempt to be diversified the way many people define the term. I......INTENTIONALLY....dont invest outside the USA.....I stick to BIG CAP GROWTH companies that are ICONIC names.......I only own 10-15 stocks.......I double and tipple up on my holdings in the Index and mutual fund that I hold in my portfolio......I NEVER invest in emerging or undeveloped markets and countries.....I dont and never will own any bonds.......I avoid must small cap and most mid cap companies....etc, etc, etc. Yet......at the same time......with about 40% of my money in the SP500 and the one mutual fund that I own and my usual big cap 10-15 stocks.....I consider myself well diversified.

To me the best measure of any portfolio.....remains....can you beat the unmanaged Indexes.......over the long term.

 

Well I see that.....at the moment....the SP500 and NASDAQ are now slightly positive. I continue to see the mild open today as a good indicator. There is a good......"possibility".....to end the day in the green. I have not looked at BOEING but I assume that much of the loss in the DOW is due to the Boeing crash in China. Is it not a good thing when one of your planes.....especially a 737......plummets straight down from 30,000 feet in the air.

 

Having posted the above I had to check on Boeing today. It is down about 4%. What a waste of a perfectly good company. They should be in a position to MINT MONEY. They should EASILY be the ONLY real manufacturer of airplanes in the world. They should be vastly dominant in their little.....TWO COMPANY......business world. Yet they simply.....SUCK.

I have to put the blame on MANAGEMENT. This company should have EVERY advantage......yet they just can not perform.

 

OK......lets make some money today.

 

Oldmanram.....is back in the house.

I see that POWELL could not keep his mouth shut and tanked the markets today.

Stock market news live updates: Stocks turn lower, oil prices extend gains

https://finance.yahoo.com/news/stock-market-news-live-updates-march-21-2022-114152788.html

"Stocks fell on Monday to give back some gains after last week's advances, while energy prices resumed a march higher.

The S&P 500, Dow and Nasdaq traded lower Monday afternoon in a choppy session. The major indexes extended losses after Federal Reserve Chair Jerome Powell said the Fed would "adjust policy as needed" to bring down inflation, including by speeding up interest rate hikes if necessary. Treasury yields added to earlier gains across the curve, and the benchmark 10-year yield rose to near 2.3%........."

 

A VERY MILD loss today in the markets and for me. I suspect if POWELL could have kept his big mouth shut......we would have been in the green. As it was i ended.....slightly....in the red. AND.....I got beat by the SP500 by 0.24%.

I am looking for a GREEN day tomorrow......my wild ass guess.......is that that is what we are going to see.

 

HERE are the NIKE earnings that I have been waiting for.

Nike shares rise as earnings top estimates on strong North America demand

https://www.cnbc.com/2022/03/21/nike-nke-reports-fiscal-q3-2022-earnings.html

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

"Key Points

• Nike reported earnings and sales for the fiscal third quarter that topped analysts’ estimates, thanks to robust demand in North America as consumers headed back to stores.
• The better-than-expected results proved Nike’s ability to operate in a volatile environment, said CEO John Donahoe.

Nike on Monday reported earnings and sales for the fiscal third quarter that topped analysts’ estimates, thanks to robust demand in North America as consumers headed back to stores.

The better-than-expected results proved Nike’s ability to operate in a volatile environment, CEO John Donahoe said in a press release. “Marketplace demand continues to significantly exceed available inventory supply,” he added.

Shares rose more than 6% in after-hours trading.

Here’s how Nike did in its fiscal third quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

• Earnings per share: 87 centsvs. 71 cents expected
• Revenue: $10.87 billion vs. $10.59 billion expected

Nike reported net income for the three-month period ended Feb. 28 of $1.4 billion, or 87 cents per share, compared with $1.45 billion, or 90 cents a share, a year earlier. That topped profit estimates for 71 cents a share, according to Refinitiv data.

Sales rose 5% to $10.87 billion from $10.36 billion a year earlier, beating analysts’ expectations for $10.59 billion.

Nike said sales in its biggest market, North America, climbed 9%. Sales in Greater China, the company’s third-biggest market behind its Europe, Middle East and Africa segment, fell 5% from the prior year.

As of Feb. 28, Nike said inventories on its balance sheet totaled $7.7 billion, up 15% from the prior-year period, in part due to ongoing supply chain disruptions that have elongated transit times, the company said. The bloated inventory levels were partially offset by robust consumer demand, it said.

Nike’s gross margins increased slightly to 46.6% from 45.6% the prior year, thanks to more full-price selling.

Nike has increasingly shifted its business away from wholesalers and instead to selling more goods directly to consumers. Foot Locker, for example, recently said it would lose a percentage of Nike merchandise in the coming years. In turn, Nike has been investing heavily in its website and flagship stores to win sales.

Wholesale revenue in the third quarter fell 1%, while Nike’s store sales rose 14% year over year, as shopper traffic “normalized,” the company said.

As of Monday’s market close, Nike shares are down 22% this year.

Find the full earnings press release from Nike here."

MY COMMENT

There are REALLY GOOD numbers.....especially considering the drop in one of their largest markets....China. As china comes back we should see some GIGANTIC numbers in one or two quarters.......farther up the road.

They are at the start of a BOOM in gross margins....as they shift away from wholesalers and non-Nike retailers. Their margins are going to explode as they keep the majority of their products at the same price and do not have to share any slices of the pie.

This is yet another factor to drive a good market day tomorrow.

 

This is a fascinating story line.....I hope it happens.

Elon Musk offers first hint at his Master Plan 3 blueprint

https://finance.yahoo.com/news/elon-musk-offers-first-hint-130710853.html

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

"Could Elon Musk’s fabled “X” holding group finally be in the works?

The visionary CEO gave the strongest hint yet he may be seriously thinking about consolidating the various business interests of his sprawling corporate empire under one roof.

Ever since Musk confided late last week that he was hard at work on Tesla’s third master plan six years after “Part Deux,” investors have been speculating furiously about what this might entail.

Early Monday morning he lifted the veil slightly to confirm, via Twitter, that SpaceX and the Boring Company would play a role in Tesla’s strategy going forward.

Musk also said he would be scaling the car business to an “extreme size,” which could be a reference to formalizing his target of selling 20 million vehicles annually in 2030. Representing more than what industry leaders Toyota Motor and Volkswagen Group together sell worldwide, this gargantuan figure represents Musk’s goal of annually replacing 1% of the world’s existing fleet of 2 billion combustion engine cars.

https://twitter.com/WholeMarsBlog/status/1505794908589756416?s=20u0026t=sEr0KhnM9E52ayeWsqb2bg

Additionally, artificial intelligence is set to play a main role, according to Musk. This could be a reference to the Optimus robot project he said would be his primary focus this year, despite a lack of any proof of concept since the idea was first floated last August.

However, when leading Tesla influencer Sawyer Merritt asked via Twitter what role Musk’s controversial brain-implant startup Neuralink might play, there was no response from the enigmatic CEO. Neuralink, which plans to conduct its first clinical test of a brain-computer interface this year, has been in the headlines recently for everything from misleading regulators to problems with its corporate culture to even killing chimpanzees.

$3 trillion market cap

Musk’s hints at part three of his master plan confirm, at least in part, some of the predictions from Morgan Stanley’s team of Tesla equity analysts. They had surmised in a research note last Thursday that the two privately owned branches of what they called the “Muskonomy”—those involved in spacefaring and tunnel-building—could dock onto the carmaker.

Referring to ties between Tesla and SpaceX’s Starlink unit, which provides broadband internet via a web of satellites in low earth orbit, they wrote: “We have long seen the link between LEO sat comms and next gen transport networks.”

Speculation about an overarching holding company that ties together the various strands of Musk’s business empire has been rife ever since the centibillionaire remarked in December 2020 that it was a good idea.

For Musk bulls, an X holding group could command the kind of 50-times-earnings valuation multiples that are typical of high growth companies, possibly positioning X as the world’s next $3 trillion market cap company after Apple.

For bears, Musk’s search for a new corporate story to pump is further proof that the actual product Musk sells is neither fully autonomous vehicles, nor rockets to Mars, nor humanoid robots, but rather the stock itself. While progress on the four pillars of the second master plan set out in 2016 has been made, arguably none has actually been achieved. Moreover, the Boring Company’s hyperloop plans for Las Vegas were heavily ratcheted back—from the original futuristic concept to a plain-vanilla underground tunnel serviced by human-driven Tesla cars.


Break the mold

The merging of different businesses has precedent at the company. In 2017, Tesla dropped the word “Motors” from its name to better reflect its expansion into ancillary services such as its oft-maligned acquisition of photovoltaic roof manufacturer SolarCity.

Yet while Musk fans argue the company is much more than just an automaker, 88% of Tesla’s turnover last year came from the delivery of passenger cars and related software sales, including the non-deferred revenue from its full self-driving (FSD) option.

More important, cars accounted for its entire gross profit. Taken together, the rest of Tesla’s operations, including its solar rooftop and energy storage installations, remain loss-making.

https://twitter.com/elonmusk/status/1341801143631028225?s=20u0026t=_D0XQyS394uIrwtvjDDr3g

In the note from Thursday, Morgan Stanley argued cars would have to take a back seat to other endeavors in order to justify the stock’s already hefty valuation multiples—or push them even higher.

The investment bank expects Tesla to break out of the auto industry’s traditional ownership model by shifting toward more recurring revenue from software sales, such as from monthly subscriptions to its partially automated FSD feature.

The ownership model used by legacy carmakers is based on the one-time delivery of a vehicle as the principal source of revenue. Under it, the next available revenue opportunity comes when customers trade in their existing car for a new one several years later.

“If Tesla’s share price were to multiply from here, we believe it will have rather little to do with the core business of making and selling cars in the traditional model so familiar to auto analysts,” Morgan Stanley argued.

Investors will ultimately have to wait until Musk’s next Twitter drop to learn more about Master Plan Part 3, as he will not likely attend the first-quarter earnings call at the end of next month.

This story was originally featured on Fortune.com"

MY COMMENT

The most visionary leader in corporate America at the moment. This is like Apple under Jobs on steroids.....if this article is a hint to what Musk is thinking. In my opinion this concept and the potential it holds is a very good reason to have some part of your portfolio in Tesla stock. Talk about creating shareholder value.

 

But....back to reality for now. That reality being the fact that we have MORONS in charge of the FED. The statements Powell made today about perhaps being more aggressive with rate increases is simply........stunningly......mind numbingly......DUMB. It is as though these people want to intentionally tank the markets and the economy.

What makes his comments even more STUPID is the fact that being aggressive and doing a .50% increase in rates will achieve NOTHING. All they had to do at this stage is simply set out on a path of 0.25% rate increases....over and over and over. They could easily and quickly get rates up there with little risk of recession. More aggressive increases are not going to achieve anything more than slow and steady.......but......they come with WAY MORE risk. Not that what they were signaling was really slow and steady......since they were aiming for about 6 more increases this year and increases all next year.

In addition.......the most important thing for consumer confidence and the confidence of the markets right now...... is to have a plan in place that is transparent and which takes all of the speculative fear of the unknown out of the picture. Now with the MORNONIC statements today....we are right back to the fear mongering and speculation. Powell has once again cut the legs out from under the markets by reintroducing......the unknown.

The markets accepted the 0,25% rate increase path. It would allow for plenty of opportunity to ease the economy back to normal. As usual....put a big red button in front of some semi-beurocrat and they just cant resist pushing it.

 

We seem to be in CRAZY TIMES. The FED wants to talk tough about raising rates while at the same time they continue buying bonds......inflation/deflation/stagflation.....the war.....stocks going up like a rocket and the next day dropping like a rock.....government insanity......etc, etc, etc.

The Key to Surviving All This Volatility? Keep Your Cool

https://www.realclearmarkets.com/ar...ll_this_volatility_keep_your_cool_822922.html

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

"Dizzy from world stocks’ wild whipsawing? It’s yo-yoing many investors from panic to sweet relief and back repeatedly amid frightful headlines. Who knows when the frenetic ride ends? No one possesses such clairvoyance. But history shows those maintaining your cool during corrections like this earns big rewards later. To help toward that, here is my volatility survival guide.

In January, I told you 2022’s midyear combination of US political gridlock and fading global fears spelled a great year for world stocks—but with a rocky, grinding first half to endure. No, I didn’t foresee global stocks’ near-immediate drop or Putin’s horrid invasion. Pinpointing any pullback’s start or end is a fool’s errand. But gut-churning short-term gyrations like early 2022’s are the price investors routinely pay for stocks’ high long-term returns. Volatility and stocks go hand-in-hand. Embrace it. Don’t try timing it. You can’t control it—only how you react.

None of the past month’s news—Putin’s tragic mistake in Ukraine, big headline inflation numbers, China’s COVID surge—has changed my belief stocks’ early year struggles are a bull-market correction, not a new born bear market. As I told you in late February, bear markets typically start gradually, quietly, with stocks sliding down a slope of hope—a false sense of security that sucks more people in. Unlike bear markets, corrections—fast swoons of -10% to -20% off a global peak, which stem from any or no reasons. They come and go swiftly, with most attributing the drop to one or several big, widely publicized scary stories. Today’s widely watched fears—the Ukraine war, oil, inflation, rate hikes and political wackiness—fit the profile perfectly.

Corrections’ biggest danger isn’t the market drop itself. Far worse is enduring the slide… only to throw in the towel and sell before the rebound. Bounces off the bottom are fast and furious, whipsawing those seeking to sidestep full-fledged bear markets that never materialize.

Defining and dating bull market corrections’ beginnings and ends—especially in the pre-war period—is as much art as science. But by my count, since good data start in 1925, we get one about every two years. The median decline? -13.8% over a 2.1 month span, not including dividends. But the rebounds came about as fast—the median recovery took just 2.8 months.

Crucially, correction bounces don’t usually stop there. As scare stories dissipate, stocks keep soaring past prior highs. Again since 1925, the median S&P 500 gain six months after a correction low is 23%! A year after the low? 30%. Two years? 44.0%!

This isn’t ancient history, either. There have been 10 S&P 500 corrections in the last 25 years. “Causes” ranged from the Asian financial crisis and Russia’s 1998 default to the second Iraq War and Europe’s sovereign debt crisis. The median decline was -14.4%, and lasted 2.6 months. Recovery took a median 3.6 months, with stocks rocketing 29.3% in the 12 months off the low—24 months later they were up 48.9%.

But what about Russia? Europe’s energy crunch? Inflation? Rate hikes? Remember: Corrections always bring scary this time is different—first and worst narratives. They grow exponentially more frightening when war is included—hence why it is so important to stay cool.

Ask yourself: Even if these worries have significant economic impact, are they unknown to markets—hence not yet factored in to prices? Doubtful—these have been headlined for many weeks. Bank of America’s March survey shows global fund managers as dour on equities as any time since March 2020, with inflation and geopolitics their big concerns. Polls from German investor confidence to US consumer sentiment absolutely tanked after Putin invaded.

Historically, instead of a V-shaped bottom, about a third of corrections feature a W-double- bottom. So maybe 2022’s correction ended with mid-March’s big bounce. Or maybe it was a head-fake. For portfolio decisions, that means zilch. While short-term wobbles may persist, acting on them is folly. In my 50th year managing money professionally, I have never seen anyone who could time such volatility. Who can time pure sentiment swings? Feelings are fickle.

Yet investors repeatedly try timing volatility and fail. Give it up. Instead, remember three critical points:

● First, if your goals need stocks’ high long-term returns, they’re your baseline investment. Deviate only if you see a huge, probable negative others don’t. That is rare—and different from today’s clearly seen Ukraine, inflation or rate hike worries.

● Second, remember: Volatility cuts both ways—down and up. Bull markets feature much more of the latter. In the long 2009 – 2020 bull market, world stocks endured 7 corrections and 11 other down moves exceeding -5%. Despite this, global stocks soared 341.8%.

● Third, if watching markets’ super-swings keeps you up at night, stop watching! Quit checking your portfolio regularly. Steer clear of the non-stop news drama. Tune out the shrill yak-yak-yak. Take a hike. Watch every Kay Francis movie ever. Play with the grandkids. Do whatever it takes to keep from selling low and missing those post-correction parties.

You won’t get equity-like returns with less than equity-like volatility. So embrace gyrations. Stay cool. Patience rewards."

MY COMMENT

Welcome to the club. Welcome to the real world. You are now an investor. That means that you have to be able to mentally and psychologically deal with bear markets, corrections, and recessions. You also have to be able to deal with all the bull markets, and booming market times.

BOTH extremes are dangerous times for your money. In the boom times people get carried away and do dumb things trying to jump on the latest fad or the latest hot investment. In the down times people panic and operate out of fear. IGNORE IT ALL.

Here in this little thread you have over FIVE HUNDRED PAGES of information in support of long term investing. Five hundred pages in support of standing firm. Five hundred pages showing why trading, market timing, short and medium term investing.....do NOT produce results. BELIEVE.

If you have doubts.....show me all of the studies and research and proven content that shows that trading, technical analysis, market timing actually work and can be done by the majority of investors successfully.....over the long term and result in lifetime family wealth. It does not exist.

 

Here we are......one hour in today......with a nice little boom going on today. Part of this is the "green" that we left on the table yesterday due to Powell flapping his gums. Part of it is the great Nike earnings and the positive comments from Elon Musk. Much of this little week and a half boom is simply the markets catching up to great fundamental news in the recent earnings and the fact that what drove the markets down lately was OUTSIDE news items......not.......market or business news items.

I see no reason that we can not rack up more good gains this week and end the week nicely in the green. String together a few weeks like this and we are on the way to exiting this little correction.

I see the greatest market danger at the moment as being the WAR. This is the potential source of some black swan short term market driving event. I do NOT thing it is......"probable".....but is is mildly possible.

 

I like this little article......we battle on week to week.


The Big Picture
The market to remain at battle stations

https://www.briefing.com/the-big-picture

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

"The stock market appeared to catch lightning in a bottle this week, rallying strongly despite reports that there hasn't been any major progress in the peace talks between Russia and Ukraine, despite word that China was locking down cities to deal with rising COVID cases, and despite a projection from the Federal Reserve that it is likely to raise the target range for the fed funds rate seven times in 2022, including the rate hike it announced this past week -- the first of its kind since December 2018.

Market participants also stared at a Producer Price Index report showing a 10.0% year-over-year increase in the index for final demand... and won.

They watched the 10-yr note yield hit 2.25% immediately after the Fed decision and the 5s10s spread invert... and won.

There seemed to be no stopping the stock market, which had an inclination to get off the mat and start fighting again. It fought the good fight, and it won the battle, but the war is far from over.

Sensing an Opportunity

What hit home for many participants this week is that the stock market was oversold on a short-term basis, and even on a longer-term basis for many stocks that have cratered from last year's highs.

At Monday's lows, the Nasdaq Composite was down 19.8% for the year and the S&P 500 was down 12.7%. That reality was paired with reports discussing how negative investor sentiment has gotten, how high cash positions have gotten, and how much fund managers have reduced their exposure to stocks, which effectively made a case to wage a contrarian battle for supremacy of the tape.

Sure enough, many of the best-performing stocks this week have been among the hardest-hit stocks this year and/or since their highs last year.

Sensing an opportunity to squeeze short sellers and to take advantage of oversold positions, market participants took an inch of any seemingly good news and went a foot with it.

As of this writing, the Nasdaq Composite, Russell 2000, S&P 500, and Dow Jones Industrial Average were up 10.4%, 7.5%, 7.0%, and 5.5%, respectively, from their lows on Monday. Even so, they were still down 11.4%, 7.4%, 6.5%, and 4.9%, respectively, for the year.

For some added context, Hong Kong's Hang Seng Index at Friday's close was up 17.4% from its low on Tuesday but was still down 8.5% for the year.

Briefly, the Hang Seng went parabolic following reports that Chinese officials were talking up support for the economy, for the markets, for the real estate sector, and for overseas Chinese listings. The latter contributed to the positive-minded action in the U.S. stock market.

It was an undeniably terrific week for the major indices, which comes on the heels of many undeniably bad weeks for most of 2022 so far.

Battle Fronts

Naturally, the question everyone is asking is, will this last? What happens between Russia and Ukraine holds some important answers, but no one knows for sure yet what will happen between Russia and Ukraine, so the answer on that matter is inconclusive.

There is a hope that a ceasefire agreement can be reached and that the conflict will end. There is a fear that Russian President Putin has much different aims for agreeing to a ceasefire than Ukraine does, meaning there is a fear that the tug of war in Ukraine will linger as a battle for investor sentiment that won't be won easily.

The same rings true for a host of other factors that hold answers for where the stock market is headed.

To be sure, there are a lot of battles for sentiment being fought right now. Those battles are being waged on the following fronts:

• Inflation and where it is headed
• The Federal Reserve and whether it is on track to "thread the needle" removing its policy accommodation or on course to make a policy mistake that tips the economy into recession
• The ceiling for interest rates
• The trajectory of earnings growth estimates
• COVID and how long it will linger as a drag on productivity and disruptor of supply chains
• The matter of valuations

The volatility we have seen so far in 2022 is a byproduct of the heightened uncertainty regarding the outcome of these battles.

The war Russia is waging on Ukraine is the most real battle of all. That's a life and death battle and so is COVID for some sufferers. The other items are battles in metaphorical terms, which nonetheless are fought in the markets each day.

They matter for investor sentiment, and how those battles are fought and won matter for the direction the capital markets will take.

Running Away

The stock market won the battle this week. It was not defeated by the PPI report, it was not defeated by the lockdown of Chinese cities, and it was not defeated by the Federal Reserve's hawkish-sounding tone.

It was not defeated because it had already been feeling the agony of defeat in a big way. So, it ran with the hope that a ceasefire agreement between Russia and Ukraine can be reached; it ran with the relief Chinese authorities provided for Chinese stocks; it ran with a sense that China's COVID-related lockdown won't last as long nor be as economically disruptive as past lockdowns; and it ran with the idea that the seven rate hikes projected by the Fed for 2022 were already priced into the market.

It ran on short-covering activity; it ran on investment activity; and it ran on just plain old momentum fueled by a fear of missing out on further gains.

It may very well have more room to run before this latest engagement gets bogged down -- but we do expect it to get bogged down.

What It All Means

The silliest battle cry we heard this week was a suggestion that the stock market rallied because it was looking ahead to rate cuts in 2023 that would be necessary because the rate hikes in 2022 will choke off economic growth.

That was not the reason.

We saw more reason in the suggestion that the market rallied like it did because it has been pinned to the mat for too long and discovered a burst of adrenaline that helped it get off the mat when many people least expected it.

The battle for sentiment was fought this week and it was won by the bulls, but the battle isn't over.

The call to battle stations will continue to be heard because there are so many diametrically opposed positions right now regarding the path of inflation, the path of interest rates, the path of earnings estimates, and the path of the economy.

The Federal Reserve sits in the middle of each of those paths. The message Fed Chair Powell delivered on Wednesday was deemed to be reassuring, which is odd since his prevailing message is that the Fed is determined now to use its tools to ensure that higher inflation does not become entrenched. The main tool will be interest rate hikes and the supplementary tool will be the reduction in the Fed's balance sheet.

We expect the market to remain in a tug of war between potentially good and potentially bad outcomes, which means it will remain at battle stations, giving up ground some weeks and making up ground in other weeks like this past week.

Getting back on the high ground in a more believable fashion, though, is going to require more time, because the Fed is now finally ready it seems to dig in to fight inflation at a time when financial battles and real-life battles are being fought on many disputable fronts."

MY COMMENT

We have no idea where we are going over the short term.......but......over the long term the future is very bright for investors. It always is.

 

I am now going to simply ignore the markets for the rest of the day.......and....let my portfolio do the heavy lifting for me. Nothing for me to do but mentally and psychically get out of the way and let my money work for me.

 

Not the best time to buy anything......after the past week and a half. BUT....I had a little bit of extra money today so I added four shares to my TESLA holding today. Got to buy when I am able to do so. I am not willing to wait for a better price since the academic research and market direction tell me to NOT wait for a better price.

 

The market seems to have been amazingly constant today. I stooped watching this morning and just looked at my account a few minutes ago. My gain for the day is virtually unchanged from what it was this morning. It is a nice day in my account....with only one stock down when I looked.....Nvidia. With about 45 minutes to go I am hoping that they turn positive and give me a nice.....fat.....green sweep today.

 

YES......finished with a nice gain today. I am starting to get used to these green days again. Every stock position was in the green.....except......NVIDIA. Not that I care......I am happy to have made the money that I did today. I also....beat the SP500 today by 0.42%.

The close today puts me at a LOSS this year to date of (-7.9%). The SP500 today is at a loss of (-5.3%) for the year. So I am lagging the SP500 at the moment by 2.6% for the year. Totally satisfactory to me......since.....I will continue to catch up with the SP500 on the majority of the green days going forward. Considering the nasty start to the year......I am fully satisfied with where I stand right now.

There is still....MUCH POTENTIAL.....for a very good year for investors this year. Of course there is also.......SOME POTENTIAL.....for a poor year. BUT....that is just how it is year to year.

 

This is one of the BIG stories of the day. Next up.....Austin, Texas.

Elon Musk opens Tesla’s first European factory in Berlin

https://finance.yahoo.com/news/elon-musk-opens-tesla-first-161323396.html

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

"Tesla has delivered its first European-made cars as its delayed German factory finally opens its doors.

Elon Musk, chief executive of the electric car maker, said the opening of Giga Berlin was a “great day for the factory” and “another step in the direction of a sustainable future”.

The €5bn (£4bn) plant, Tesla’s first in Europe in addition to sites in California and Shanghai, is opening eight months late and two years after it was first announced.

It has been beset by licensing delays and environmental protests over its high water use, which also marred Tuesday’s opening event. Two protesters abseiled from a motorway sign near the factory, blocking traffic after the unveiling.

The German factory is expected to produce an extra 500,000 cars a year when fully operational, equal to about half the company’s entire output last year. It will employ about 12,000 workers at peak capacity.

Mr Musk danced as 30 of the company’s Model Y vehicles were delivered to customers at Tuesday’s event, which was attended by the German Chancellor, Olaf Scholz.

Setting up in Germany puts Tesla in direct competition with Volkswagen, which sold the most electric vehicles in Europe last year.

Tesla’s Model 3 was the most popular electric car in Europe and the second most popular vehicle of any type in the UK last year.

Mr Musk has said Brexit uncertainty ruled out the UK as a destination for its European gigafactory.

On Tuesday, the US Securities and Exchange Commission (SEC) said it would continue to monitor the billionaire’s tweets despite Mr Musk’s efforts to throw out an agreement between him and the regulator.

“So long as Musk and Tesla use Musk’s Twitter account to disclose information to investors, the SEC may legitimately investigate matters relating to Tesla’s disclosure controls and procedures, including Musk’s tweets about Tesla, as well as the accuracy of Tesla’s public statements about its controls and procedures,” the SEC said."

MY COMMENT

This is a HUGE step forward in production capacity. With the coming plant in Austin production will ramp up way beyond levels seen in the recent past. It will be interesting to see the earnings reports for TESLA over the next year or two as these two plants reach full capacity.