The Long Term Investor

The DOW is having issues staying positive today. So far the other averages are hanging in there.

I find is interesting....but not unexpected....that the 10 year yield is at 2.418%. About 6-12 months ago the markets were freaking out at the yield being at about 1.7%. Now......who cares. I certainly dont care......I dont see the ten year yield having much impact on the markets over the next 12-24 months as yields raise. We need to get rates back to normal and the BALONEY you see about yields impacting the BIG CAP GROWTH stocks is going to be shown to be ridiculous. ALL that is going to matter for those companies is earnings and fundamentals......as usual.

 

The markets look like they are doing well.....actually strengthening into the close. So........I guess it is safe for me to go and get an oil change and a haircut. Actually.......the oil change is for the car and the haircut is for me.

 

WOW.....today was a really nice way to start off the week. We now have a cushion toward a positive week. I was solidly in the green today with only one.....slightly down stock......Costco. I got a BIG beat on the SP500 by 0.94% today.

 

If this becomes rampant it.....might....create some headwinds for Amazon.

Amazon workers won the company's first US union — here's what happens next

https://finance.yahoo.com/news/amaz...-union-heres-what-happens-next-201212328.html

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

"Amazon (AMZN) warehouse workers at a Staten Island, N.Y., facility on Friday established the first U.S. union in the company's 28-year history, delivering a blow to the e-commerce giant and intensifying a wave of labor organizing nationwide.

The astonishing victory of a worker-led, crowdfunded union over the nation's second-largest employer became an immediate symbol for resurgent worker strength. But for now, a symbol is just about all that it is.

In the coming days, the Amazon Labor Union may face a challenge from Amazon over the legitimacy of the election results that, if successful, could overturn the outcome. If the union survives that potential challenge, it will enter negotiations with the company over the contours of a union contract at the facility that will likely stretch on for months.

These next steps will determine the staying power of the union and, ultimately, whether it can achieve the historic feat of a U.S. Amazon facility where pay, benefits, and working conditions are shaped by an agreement between the company and its employees.

The outcome of the coming weeks and months could also determine whether the victory inspires more labor organizing or ends up being a landmark moment with little to show for it. For Amazon, what happens next could either upend their employment model altogether or merely bring some temporary negative attention to the working conditions at their facilities.

First off, as soon as this week, the Amazon Labor Union (ALU) and the company may enter a dispute over the legitimacy of the election results. Unsurprisingly, the union has appeared to accept the results, since it won. But Amazon responded to the results on Friday with disapproval, suggesting it may formally object to the outcome.

In a statement, the company said it's weighing options that include "filing objections based on the inappropriate and undue influence" of the National Labor Relations (NLRB) Board, the federal agency that carried out the election.

The company said the National Retail Federation and U.S. Chamber of Commerce had also witnessed the inappropriate conduct.

Amazon has not provided further details about the allegation, but objections must be filed to the NLRB regional office by Friday. The company did not immediately respond to a request for comment.

The union received 2,654 "yes" votes and 2,131 "no" votes, a margin of 523 votes in favor of unionization that amounts to 10.9% of the total ballots cast.

Seth Goldstein, an attorney at the Office and Professional Employees International Union who's working pro-bono for the Amazon Labor Union, called a potential objection to the election results from Amazon “outrageous."

"It would be a shame if they try to act like Donald Trump and try to steal the mandate," Goldstein said.

An objection to the results could bring hearings at the NLRB or in court that could take months to resolve.

If Amazon foregoes a challenge of the results or the results withstand the challenge, the company and the union will then begin bargaining a contract that would set terms of employment at the warehouse, like pay, benefits, and working conditions.

Federal law requires employers to bargain with representatives of unionized employees in "good faith," but the penalties for violating the law are "negligible at best," said Sharon Block, a former Biden administration official and the executive director of Harvard Law School’s Labor and Worklife Program.

In turn, the bargaining process can last for months or even years. Contract negotiations between a newly formed union and an employer last an average of 409 days, according to a Bloomberg Law study released last June.

The ALU released a statement on Saturday calling for contract negotiations to begin in early May. When asked about the quick turnaround for negotiations, Goldstein said, "Amazon always calls itself nimble and innovative, we think that for an organization like Amazon with so many lawyers and HR people, it’s completely reasonable and something that should be done because our members want to get to a contract.”

A union contract at the Amazon warehouse on Staten Island would prove "hugely significant," said Block. A contract would spur labor organizing at Amazon and other companies that some observers have perceived as "unorganizable," she said.

The ALU, led by former warehouse worker Chris Smalls, has drawn attention for an unorthodox approach to organizing that included offering workers homemade food and posting updates on TikTok. The union will carry a similar approach over to collective bargaining, Block said.

"This is a union that has shown a lot of spirit and really a willingness to think differently," Block said. "I imagine they will bring that spirit to the bargaining table.""

MY COMMENT

This will probably drag out for years....one way or another. I think it is really funny.....the union attorney calling a challenge to the election outrageous......when.....that is what the union themselves did in the prior Alabama election.

By the time this has any chance to spread company wide and impact the company.....the warehouses will be significantly robotic. I doubt that the union members at this location will see any benefits or pay any different than any other Amazon worker.

 

HERE is a little look at the markets today.

Stock market news live updates: Stocks rise as technology shares outperform

https://finance.yahoo.com/news/stock-market-news-live-updates-april-4-2022-114851715.html

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

"U.S. stocks gained on Monday as investors monitored the potential for more sanctions against Russia amid ongoing concerns over inflation and global economic growth.

The S&P 500 rose, and the Nasdaq Composite gained more than 1% as technology shares outperformed. Shares of Twitter (TWTR) soared by more than 20% after Tesla (TSLA) CEO Elon Musk disclosed he now owns an about 9.2% stake of the social media company. The Dow Jones Industrial Average joined the S&P 500 and Nasdaq in the green and shook off earlier losses.

Investors globally considered the European Union's next punitive measures against Russia as the more than month-long war in Ukraine escalated further. The EU responded Monday to apparent war crimes in Ukraine, as Russian forces allegedly now widely killed civilians and attacked civilian infrastructure in major cities, with the bloc saying in a statement it would, "as a matter of urgency, work on further sanctions against Russia." Some major European officials including Germany's defense minister said they would support banning Russian natural gas — a move previously excluded from sanctions as Russia supplies about 40% of Europe's gas energy.

U.S. crude oil prices advanced on Monday to rise for the first time in three sessions. Brent crude oil, the international standard, also gained.

JPMorgan (JPM) CEO Jamie Dimon also called attention to the war in Ukraine as one of three key risks he saw to the economic outlook, according to his widely read annual shareholder letter released Monday. The other included "the dramatic stimulus-fueled recovery from the COVID-19 pandemic" as well as "the likely need for rapidly raising rates and the required reversal of QE [quantitative easing]" from the Federal Reserve, Dimon said.

"We do not know what its outcome ultimately will be, but the hostilities in Ukraine and the sanctions on Russia are already having a substantial economic impact. They have roiled global oil, commodity and agricultural markets," Dimon said. "Our economists currently think that the euro area, highly dependent on Russia for oil and gas, will see GDP growth of roughly 2% in 2022, instead of the elevated 4.5% pace we had expected just six weeks ago. By contrast, they expect the U.S. economy to advance roughly 2.5% versus a previously estimated 3%."

Concerns over the resilience of the U.S. economy in the face of a geopolitical crisis and still-elevated inflation have been fanned further as a closely watched portion of the Treasury yield curve inverted — a move that previously has preceded recessions. As of Monday morning, the yield on the benchmark 10-year note remained below that on the shorter-term 2-year note. Such a phenomenon has occurred before each of the last eight recessions since 1969.

"Investors have been particularly concerned about the prospect of yield curve inversion as a signal for imminent recession," Goldman Sachs strategist David Kostin wrote in a note. "Our rates strategists recently raised their forecasts and now expect the 2-year UST and 10-year UST yields to end 2022 at 2.9% and 2.7%, respectively, for a 20 bp [basis point] inversion."

"However, our strategists note that the nominal curve tends to invert more easily in high inflation environments, which means that it would take a deeper nominal curve inversion than in recent cycles to produce a comparable recession signal," he added. "Asset indicators imply a 38% probability of recession within 24 months."

2:00 p.m. ET: Meta shares rise as tech stocks recover, putting shares on track to close above 50-day moving average for the first time in four months

Shares of Meta Platforms (FB) gained nearly 4% Monday afternoon as technology and growth stocks broadly recovered. The gain put the stock on track to close above its 50-day moving average — a closely watched technical indicator — for the first time since January.

"We saw the FAANG complex plus Microsoft, plus Tesla, come down to key support in March and they held. It was a hard test but they held, and since then they have exhibited upside leadership," Katie Stockton, Fairlead Strategies founder and managing partner, told Yahoo Finance Live on Monday. "That's important because obviously, that's a boon to the large-cap benchmarks especially, but even beyond that ... we do have good participation."

"We think it will continue in part because they have some-short term breakouts on their charts. And breakouts tend to foster additional upside momentum," she added. "A breakout is essentially when a stock clears a level where sellers had stepped in, in the past. So we are seeing things like the 50-day moving averages cleared, and other previous minor peaks on their charts. And that is something that could foster additional momentum. So we would still stay the course, on the mega-cap complex."

1:07 p.m. ET: U.S. coal prices rise above $100 per ton for the first time in over a decade

Prices for U.S. coal topped $100 per ton for the first time since 2008, according to a Bloomberg report citing government data.

The move came as demand marched higher for fossil fuels in the face of Russia's war in Ukraine, which has threatened to further upend energy supplies especially in Europe. According to reports last week, Germany — one of the major importers of Russian natural gas — was already seeing increased demand for wood and coal even coming out of winter, as prices for gas soared amid geopolitical uncertainty.

11:06 a.m. ET: JPMorgan's Jamie Dimon says rates need to be raised 'substantially' to address inflation

JPMorgan CEO Jamie Dimon reaffirmed that the Federal Reserve will need to move aggressively, especially on interest rate hikes, in order to rein in inflation still running at 40-year highs.

"A Fed that reacts strongly to data and events in real time will ultimately create more confidence," Dimon said in his annual letter to shareholders. "In any case, rates will need to go up substantially."

"The stronger the recovery, the higher the rates that follow (I believe that this could be significantly higher than the markets expect) and the stronger the quantitative tightening (QT)," he added. "If the Fed gets it just right, we can have years of growth, and inflation will eventually start to recede. In any event, this process will cause lots of consternation and very volatile markets."

"The Fed should not worry about volatile markets unless they affect the actual economy," he noted (emphasis his). "A strong economy trumps market volatility.""

MY COMMENT

Fortunately nothing new on the horizan at the moment. Earnings will start soon and will ........probably........provide some significant underpinning or even a boost to the markets. I agree that the rate increases by the time they are done will probably exceed what people expect. Partly because they are going to have little impact on inflation and therefore will continue longer.......till inflation just starts to peter out on its own. PLUS......with rates still near historic 100 year lows.......we have a long way to go to normalize rates.

 

I guess we should be thanking Morgan Stanley.

Morgan Stanley Says ‘Bear Market Rally’ Is Now Over

https://finance.yahoo.com/news/morgan-stanley-says-bear-market-093807470.html

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

("Bloomberg) -- The recent rebound in equity markets will prove short-lived, one of Wall Street’s most vocal bears said on Monday, advising investors to seek refuge in bonds as economic growth slows.

“The bear market rally is over,” Morgan Stanley Chief U.S. Equity Strategist Michael Wilson wrote in a note to clients. “That leaves us more constructive on bonds than stocks over the near term as growth concerns take center stage – hence our doubling down on a defensive bias.”

Wilson’s thesis is that the economy is heading for a sharp slowdown, due to a “payback in demand from last year’s fiscal stimulus, demand destruction from high prices, food and energy price spikes from the war that serve as a tax, and inventory builds that have now caught up to demand.” This less forgiving macroeconomic backdrop will become increasingly harder for investors to ignore, as it eats away at corporate profits.

Despite concerns that the war raging in Ukraine and the ensuing sanctions targeting one of the bedrocks of global commodity supply will exacerbate record inflationary pressures, U.S. and European equities rebounded last month, paring their quarterly losses. Wilson and his team had advised investors to sell the rally, arguing that it lacks legs.

The bearish view contrasts sharply with JPMorgan Chase & Co.’s team, which has been persistently calling for more upside to equities, saying growth concerns are overblown.

“Geopolitics remains a wild card, but we do not see equities fundamental risk-reward to be as bearish as it is currently fashionable to portray,” JPMorgan strategists led by Mislav Matejka wrote in a note. While Morgan Stanley’s Wilson doubled down on his recommendation for defensive stocks, Matejka and his colleagues said traditional defensives “should not have legs to a bounce beyond the geopolitical dislocation,” advising an underweight position.

At the start of the year, Wilson had the lowest year-end target for the S&P 500 index out of all the equity strategists surveyed by Bloomberg. He had similarly bearish views in 2021, which he later acknowledged were “wrong,” amid a brisk rally that pushed the main U.S. benchmark to successive records."

MY COMMENT

GEE....the same guy that SEVERELY under-performed the SP500 last year in terms of his prediction is now telling us that the rally is over. Somehow I dont think he is going to be right this year either. BUT....if he keeps making this call eventually he will be able to claim that he was right.

This little past three months is another lesson for investors. People that held firm and did nothing are in great shape right now. We have benefited greatly from the recent 3-4 week rally. Those that sold earlier or went to cash....missed all the gains. This is yet another lessen among many in this thread....as to dealing with market corrections and bear markets. Anyone following this thread.......KNOWS......that the history of the past FOUR YEARS documented here......shows the FACT that investing for the long term and siting and doing nothing during periods of weakness......is a winning strategy.

I have been following that strategy for the past 45+ years. If it did not work I would have abandoned it long ago.

 

We dont ever lose power here.....knock on wood. It never hurts to think.

 

Here is the person that TANKED the markets today......one of the usual suspects.

Brainard: Fed 'prepared to take stronger action' on inflation

https://finance.yahoo.com/news/brai...e-stronger-action-on-inflation-140504789.html

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

"Federal Reserve Governor Lael Brainard said that the central bank can raise interest rates more aggressively to dampen the high rate of inflation felt by Americans.

Brainard, who is awaiting a confirmation vote to serve in the central bank’s number two role, added that policymakers are attuned to the disparate impacts of inflation on particularly lower-income households.

“Currently, inflation is much too high and is subject to upside risks,” Brainard said at a conference Tuesday. “The Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted.”

Inflation data released last week showed prices in the United States rising by 6.4% on a year-over-year basis in February, the fastest pace observed since 1982.

Brainard warned that aggregate figures can hide different lived experiences among various communities, suggesting that inflation may be worse among the households least able to afford it.

Citing data from the Bureau of Labor Statistics, Brainard noted that lower-income households spend 77% of their income on necessities, compared to 31% among higher-income households.

“High inflation places a burden on working families who are concerned about how far their paychecks will stretch as well as seniors living on fixed incomes,” Brainard said.

The Fed can address higher inflation by ratcheting up borrowing costs. In March, the Fed took the first steps in doing so by raising short-term interest rates 0.25% and telegraphing its intention to implement more interest rate bumps this year.

Brainard said “additional tightening” will be needed, adding that the Fed will also likely move in about a month to start shrinking its asset holdings (which could have the effect of further raising long-term interest rates).

Brainard added that inflation may not immediately abate, pointing to the war in Ukraine and COVID-related shutdowns in China likely to further exacerbate prices.

In November, President Joe Biden selected Brainard to take on the number two spot at the Fed. The Senate Banking Committee on March 16 advanced Brainard’s nomination to serve as the Fed’s vice chair. She is awaiting a full vote from the Senate, where she is expected to win confirmation."

MY COMMENT

What a MORON. Well actually......not really.....since this stuff is intentional on her part. At least I hope it is intentional or the alternative is that these people have NO CLUE what they are doing or the impact of what they say. A bunch of EGO MANIACS that can not keep their mouth shut.

The markets HATE uncertainty.....and....at the moment the FED is all over the place with these individual comments.

The short term traders and the big trading houses that trade from the news with their micro second computer trading systems LOVE this stuff. They make big money n these wild swings in the markets. The rest of us......the majority of the country and investors.....just have to put up with it.

 

I remember about 25 years ago a couple that I know that got a big chunk of money.....about $75,000. They wanted to know what to do to invest it. I told them just put it all in the SP500 Index and let it sit for the next 25-30 years. They were very hesitant to invest in stocks or funds. Their reasoning......."how do you make any money in stocks, they just go up and down".

I spent a lot of time explaining it to them and they finally put the money in the SP500 and as far as I know......they left it there. if so....the money is now worth at least $1MILLION. In the past I have given that advice to an in-law......she freaked out at the first market drop and sold out. I also gave the same advice to a nephew.....as far as I know he is still holding on.

I hear variations of this same story over and over......."how can you make money in stocks, they just go up and down"?

Well YES......that is true if you are focused on the day to day short term. Over the short term stocks DO just go up and down. BUT....over the long term the trend is positive and UP. Over the longer term the power of compounding comes into play. Reinvesting of dividends comes into play. The power of the BIG CAP side of the markets to generate positive earnings comes into play.

To be an investor and actually make money....you have to.........BELIEVE. It is like the fantasy or science fiction movie where the hero.....in order to make the magic happen.....has to actually BELIEVE.

 

I like this little article.

A Checklist for Corrections

https://compoundadvisors.com/2022/a-checklist-for-corrections

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

"The markets are volatile, the news is bad, and the value of your portfolio is going down.


You’re afraid things may get worse and you want to do something about it.

This is a perfectly normal reaction. When faced with something painful, we look for ways to ease the pain.

While such a response serves us well in many areas of life, investing is not one of them.

Why?

Because pain is an inevitable part of investing, without which there would be no gain.

The S&P 500 has returned an impressive 10% per year since 1928, but not in a straight line upward – far from it. In order to receive that 10% return, an investor would have had to incur a median intra-year drawdown of 13%.

As chance would have it, that’s exactly what investors have experienced thus far in 2022.


And as one might expect, the headlines have been filled with bad news: war, tightening monetary policy, rising interest rates, plunging consumer sentiment, and the highest inflation rate in 40 years.

We naturally assume that things will only get worse, and look for ways to cauterize the wound and prevent further pain.


What immediately comes to mind?


Taking action: moving to cash and waiting for things to get better. Surely, we assume, that when the headlines are filled with positive news, it will be a safer time to invest.

The problem, of course, is there’s no such thing as a safe time to invest. Risk is always present, even if you can’t always see it.

And by moving to cash, you not only have to get the sale part right, but also the timing in buying back in. Few have shown the ability to do so on a consistent basis.

The proof: the list of billionaires, which is filled with long-term founders/investors and their stories of hardship, and devoid of market timers who sidestepped all pain.

If selling everything and moving to cash is not advisable, what should an investor be thinking about during market corrections?

Here’s a checklist to consider…

1) First, Do No Harm

As John Bogle once said: “don’t do something, just stand there!” Given the risk of a timing error, the hurdle for action should be exceedingly high.

That means having a strong, evidenced-based rationale for any change you make.

If you can’t clearly explain your process or edge in making a buy or sell decision, then there’s likely no justification for doing it.

That’s especially true when you’re under duress, with fear clouding your thinking. Instead of immediately acting on that fear, clear your head by going for a walk, reading a good book, or watching your favorite movie. The market will be there when you get back and you’ll be in a much better frame of mind to make any decision.

2) Find Your True Risk Tolerance

Everyone thinks they have a good idea of their risk tolerance until they are punched in the face with a large drawdown.

During smooth up markets with only minor pullbacks (ex: 2021), many assume their risk tolerance is higher than it actually is. You can tolerate any level of risk when risk is seemingly absent.


S&P 500 in 2021
It’s only when the correction hits and you can’t sleep at night because your portfolio is down that you begin to understand your true risk tolerance. And when it comes, you’ll probably be thinking in dollars and not percentages.

A 50% decline for someone with $10,000 invested early in their career is not going to be viewed nearly the same as a retiree that has $1 million invested. A $5,000 drawdown is more tolerable than $500,000 to almost everyone, even though the percentages are exactly the same.


If you can’t stomach a large dollar decline in your portfolio, you can’t hold large percentage of your portfolio in equities. Since 2000, we’ve seen two bear markets in the U.S. with over 50% declines. If it happened before, it can happen again.


Try to imagine the value of the equity portion of your portfolio being cut in half. If such a loss would cause you distress and increase the urge to sell everything, you need to re-evaluate your risk tolerance.

3) Make Sure You’re Really Diversified

Corrections always induce fear, but if you’re concentrated in the wrong asset class they can be downright frightening.

What’s the wrong asset class?

Nobody knows, which is why maintaining an diversified portfolio is so important.

From year to year and from decade to decade, the leaders change.

The S&P 500 was up over 18% per year during the 1990s, a cumulative return of 433%.


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The next decade it was down 9%.


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And the decade after that? Up 257% (13.6% annualized).


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If these returns seem impossible to predict, that’s because they are.

Luckily, if you’re diversified you don’t need to predict, as you’ll benefit from whatever asset class does well in the future. And more importantly, when there’s a sharp decline in any one position, there will be other holdings that mitigate the damage to your overall portfolio. True diversification helps you stay invested long enough to reap the incredible benefits of compounding.

4) Rebalance to Manage Risk and Buy Low/Sell High

Large movements in markets can lead to big changes in your portfolio and introduce risks that you may not be aware of.

The Nasdaq 100 ($QQQ ETF) has been the best performing major asset class over the last 10 years, gaining 686%. US Bonds ($AGG ETF) were up roughly 32% over the same time period.


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Due to this wide differential in performance, a 50/50 portfolio split between the Nasdaq 100 and US Bonds ($AGG ETF) back in 2012 would now have 86% in the Nasdaq 100 and only 14% in bonds. That shift means a dramatic increase in your portfolio’s volatility and risk of a large drawdown. With 86% in equities, a 50% decline would nearly cut your portfolio in half (assuming bonds were flat over that time period), and a 2000-2002 Nasdaq 100 decline (-83% from peak to trough) would lead to a more than two-thirds reduction in your portfolio (again, assuming bonds are flat).

If that’s a risk you’re not comfortable with, the time to do something about it is before the large declines commence. Rebalancing (back to target weights, in this case 50/50) is a systematic way to combat that risk, reducing volatility and the potential for drawdowns in your portfolio.

The opposite situation arises during bear markets, where the equity portion of your portfolio falls. A 50/50 portfolio initiated in January 2000 that was split between the Nasdaq 100 ($QQQ) and US Bonds (Bloomberg Barclays US Aggregate) would have moved to 14% in the Nasdaq 100 and 86% in Bonds at the lows in March 2009.


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The risk at that point in time would be of a different kind, that your current portfolio might not have enough equity exposure to outpace inflation and meet your future objectives. In this case, a rebalance back to 50/50 would have increased the volatility of your portfolio, but decreased the risk of a subpar long-term return.

These two real-world examples illustrate how rebalancing after large moves up or down can be a systematic way to buy low (add to asset classes that have done poorly) and sell high (reduce asset classes that have done well).

5) View Declines as Opportunities to Add to Exposure

If you are a long-term investor, every large decline should be viewed as an opportunity.

Why?

Because time is on your side. And history has shown us that the longer your holding period, the more time you have to compound, and the higher your prospective cumulative returns.


This has been true irrespective of where the market is in relation to its all-time high, but if we look ahead 15 to 20 years, we actually see higher future returns following periods with higher drawdowns.


Valuation is also a factor to consider, with lower starting valuations tending to lead to higher prospective returns. And when stocks fall sharply, they invariably get cheaper.


The S&P 500 today is in the highest decile in terms of valuation (CAPE ratio of 37), which means investors should be anticipating lower future returns. If the current correction were to deepen significantly, that would change the calculus, with the expectation of higher long-term returns.

If you have a long enough time horizon, any stock market crash should be viewed as a gift for it gives you the opportunity to add new capital and/or reinvest dividends at lower prices.

You must be cognizant of your risk tolerance, but assuming you can stomach an increase in the potential for volatility/drawdowns, the best time to add exposure is often during large declines.

The next time you’re faced with a market correction, refer to this checklist. And remember Abraham Lincoln’s favorite saying: “this, too, shall pass.”"

MY COMMENT

As usual....the above is as simple as it gets and is the key to investing success. BUT....the comments about diversification and re-balancing.....have to be realistically understood. Both are good in theory....but....many..........perhaps the majority of investors......do not understand how or when to do either one. They diversify themselves to death and re-balance way too often. It becomes a mechanical process with no real thinking or reason. They kill their returns and end up CHURNING their own portfolio.

I am NOT advocating what I do for most people......but I NEVER re-balance and I NEVER change my diversification. I let winners run. I let my portfolio have it's head and run wild. I try to NEVER micro-manage. As long as I am achieving my goals I do not mess with the vehicle that is getting me there.

 

There is absolutely NOTHING going on in the markets today that was not going on yesterday. There is NO logical reason for the markets to be down today.

The short term markets are OWNED by the traders. AND....much of the short term micro-second trading by algorithm is based on the news of the moment. Of course.....since the algorithms are created by a small CLIQUE of experts working for the Hedge funds and big banks.....they tend to all do the same thing at the same time.......they copy each other. A classic self fulfilling prophesy situation.

As a long term investor....I CHOOSE.....to not participate in their foolishness. Of course as a small investor....I am not allowed to participate in their foolishness anyway. So....I invest in a different reality.....the reality of the ACTUAL long term returns.

Two ships......passing in the night.

 

On a money related question.....what is the truth about the level of student loan debt?

This little article contains a chart that shows the percentage of student loans that would be forgiven at various levels of loan forgiveness. In other words it shows the ACTUAL amount of student loan debt as a percentage of all the student loan borrowers.

The chart shows that the REAL amount of student loan debt........based on 100% of the loans outstanding. The percentage of borrowers that would have their debt erased at particular levels is:

$5000 or less 19% of loans
$10,000 or less 36% of loans
$20,000 or less 56% of loans
$50,000 or less 80% of loans

https://finance.yahoo.com/news/stud...-mulls-extending-payment-pause-175330230.html

This information comes from the Education Department. Not exactly the crisis that we are usually led to believe.......when we see the usual EXTREME examples in the media.

In reality these people......assuming that they graduated with a degree......got pretty good value for their debt. The vast majority of college students are NOT leaving school with LIFE CRUSHING debt.

 

You can tell by the above that I am ignoring the markets today. It is a totally worthless day today.

 

So since I am ignoring the markets today.......I will pick on Cathie Wood.

Cathie Wood's ARKK is worst-performing US equity fund in Q1 2022: Morningstar

https://finance.yahoo.com/news/cath...y-fund-in-q-1-2022-morningstar-185220557.html

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

"Market watchers were taken aback when Cathie Wood’s flagship Ark Innovation fund fell 24% in 2021. This year, the widely popular ETF logged an even bigger loss in just the first quarter alone.

According to financial analytics firm Morningstar, Ark Innovation (ARKK) was the worst performing U.S. equity fund in its universe of coverage during the first quarter of 2022. The exchange-traded fund registered a loss of 29.9% in the three months ended March 31, dragged down by a sell-off in high-growth, technology stocks during the period.

U.S. tech funds bore the brunt of declines last quarter at an average loss of 13.7% — the worst quarter since 2018, per Morningstar data. Still, ARKK fared worse than its stylistic peers. By comparison, the QQQ Nasdaq 100 ETF, used as a proxy for tech stocks, was down roughly 9.7% through the same period, and the Russell Midcap Growth Index registered a 12.6% drop.


ARK Innovation ETF (ARKK) continued a sharp decline that started in late 2021, logging a first-quarter loss of 29.9%.
ARKK was dragged down by sharp losses in some of its biggest holdings: streaming company Roku (ROKU), which represented 6.5% of the fund as of March 30, lost more than 45% for the year-to-date; Zoom Video Communications (ZM), a 6.3% holding, fell more than 40%; and Shopify (SHOP), comprising a 2.7% stake, was down more than 50%, per Morningstar.

Tesla Inc. (TSLA), which at 9.8% makes up ARKK's biggest position, has been a relative outperformer, closing the quarter out only 1% lower year-to-date as of March 31, though holding onto gains from 2021 and masking the performance of some of Ark Innovation's smaller components. The picture could have been much worse without ARKK's stake in Tesla.

Inflationary pressures, subsequent Federal Reserve interest rates increases, and Russia’s invasion of Ukraine weighed more broadly on U.S. equities to start the year, but value stocks held up far better than shares of growth companies. The Morningstar US Value Index gained 2.4%, while the Morningstar US Growth Index lost 12.0%, the firm indicated.

On top of its struggling performance, Morningstar downgraded its analyst rating on ARKK from Neutral to Negative last week, citing issues with the fund's risk management and ability to navigate the space it aims to explore.

“The firm favors companies that are often unprofitable and whose stock prices are highly correlated,” Morningstar strategist Robby Greengold wrote in a note. “Rather than gauge the portfolio’s aggregate risk exposures and simulate their effects during a variety of market conditions, the firm uses its past as a guide to the future and views risk almost exclusively through the lens of its bottom-up research into individual companies.”

Despite losses and criticism of her approach, Wood has stayed the course and continues to promise that her bets on disruptive, innovation-focused companies will pay off in the long term.

“Manager Cathie Wood has since doubled down on her perilous approach in hopes of a repeat of 2020,” Greengold wrote, when high-growth stocks helped the fund notch a return of more than 150%. He notes, however, that Wood’s reliance on her instincts to construct the portfolio is a liability.

Also adding to its reason for the downgrade, Morningstar pointed out that Ark has a poor succession plan for Wood, 66, the firm's majority owner and lone portfolio manager. The firm’s director of research Brett Winton is in line to succeed Wood if needed but lacks the portfolio management experience, posing a “key-person risk.” Moreover, Morningstar pointed out that Ark Invest struggles to retain talent and sees analysts come and go, many of which “lack deep industry experience.”

“Wood has suggested that risk management lies not with her but with those who invest in ARK’s funds,” Greengold wrote. “It’s tough to see why that should be so.”

“ARK could do more to avert severe drawdowns of wealth, and its carelessness on the topic has hurt many investors of late,” he added. “It could hurt more in the future.”

ARKK was down 5.45% to $66.66 as of 1:40 p.m. ET on Tuesday."

MY COMMENT

Being down 5.93% for one day (today) is a HUGE drop for a single day for a fund. This fund is in a real spiral.

I did not realize that Cathie Wood was 66 years old. That fact along with the performance of the fund......now that we have a little bit of time and performance data.........makes this an EXTREME RISK investment. I doubt........personally........that this fund will ever recover to the point where it makes sense as an investment.

This shows the DANGER of chasing the latest and greatest hot investment. By the time the media is jumping all over it........it is probably too late going forward. As always......slow and steady wins the race.

 

So......while I am picking on things......lets pick on MMT....Modern Monetary Theory.

Verdict is in' on modern monetary theory, strategist says

https://finance.yahoo.com/news/verd...onetary-theory-strategist-says-194714165.html

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

"Tick off a loss for the modern monetary theorists amid rising inflation, says InfraCap Founder and CEO Jay Hatfield.

Modern Monetary Theory (MMT) is a macroeconomic lens which prescribes that monetarily sovereign countries like the U.S. are unaffected by financial constraints as long as they control their currencies. With roots dating back to the early 20th century, MMT was first popularized in its modern form by Warren Mosler, an American investment fund manager.

Under MMT, the risk of inflation is considered minimal as governments that fully control their fiat currencies are believed to be able to control price levels, provided they can meet consumer demand.

The past few months have seen inflation skyrocket to 40-year highs, with the latest consumer price index report showing an annual price increase of almost 8%.

“The Fed policy … has been extraordinarily erratic, really dating back to when Powell took over and almost created a recession in 2018,” John Kicklighter, chief strategist at DailyFX, added. “But the 82% increase in the monetary base was an experiment to see if we could get away with, effectively, modern monetary theory. And now the verdict is in. You can't.”

The money supply has risen consistently since the dawn of the 21st century, but growth was accelerated amid the $2.3 trillion and $1.9 trillion stimulus bills passed by President Trump and President Biden, respectively. The Fed increased the M2 monetary base from just over $9 trillion in April of 2011, to over $15 trillion in February 2020, to over $21.8 trillion in February 2022, two years after the start of the coronavirus pandemic. The M2 base consists of money in circulation as well as short-term time deposits.

“[Increasing the monetary base has created] almost double digit inflation, if you marked rents to market or housing to market,” Hatfield said. “And so they clearly have a problem. The only issue is how much patience [the Fed will] have. We're optimistic that they'll have that patience.”

Hatfield is part of a camp of economists and economic strategists that view the country’s ongoing struggles as partially caused by MMT’s creep into mainstream Federal Reserve policy over the past couple of years. The backlash to the economic theory has long identified high inflation and burgeoning deficits as weights on economic well-being.

Even so, a growing number of economists support MMT and view the recent historical record as proof of its success.

In answering the question ‘has MMT failed?’, “The answer is an unequivocal no,” according to Stephanie Kelton, professor of economics and public policy at Stony Brook University and one of the leading experts on modern monetary theory.

“MMT offers a descriptive framework—a lens—through which to evaluate fiscal and monetary policy,” she wrote on her website back in January. The specific policies taken by certain administrations were made under a framework which does not regard deficits with the same importance as was commonplace even a few years ago.

“The point is, you can’t blame “MMT” for stoking inflation any more than you can blame an optometrist if her patient runs off the road while driving without wearing their prescription lenses,” she wrote. “MMT doesn’t tell us that the world is an open road, free of hazards or the need for caution. It doesn’t reject fiscal responsibility, it redefines it so that our eyes stay focused on the real limits on spending.”"

MY COMMENT

A perfect example that.....economic theory.......is just that.....theory. It is not fact and it is not proven. In fact it is NOT science in the slightest. It is simply opinion....usually on the part of pie in the sky.....ivory tower academics that have no real record of success in business or the real world. In other words........academics and government workers.

This stuff is also the perfect example of yet another......."NEW NORMAL". Any time I hear the phrase....."new normal"........I run for the hills. It never pans out.

When it comes to economic theory and the FED.....usually it means.....that they have come up with a........."new model ".......that will allow the government to spend like maniacs and run up debt.

 

Well that took me to the market close. It was as wasted of a day as expected. I was in the red of course....and....the markets took back much of my gain from yesterday. BUT.....I did gain some ground on the SP500 over the past couple of days since today I......"only"......lagged the SP500 by 0.46%.

Today was a perfect MIRROR IMAGE of yesterday. Yesterday I was in the green with 9 positions and in the red with one......Costco. Today I was in the red with 9 positions and in the green with one.....Costco.

Oh well......at least I was able to find a few quirks to enjoy in comparing today to yesterday. AND......we have today out of the way so we move forward from here.

Like oldmanram.......my loss year to date is in the 5-6% range now. I have come back from a double digit loss to being stuck between (-4.5%) and about (-6%). One of these days I am expecting to break positive and move on from there. I STILL have......"high hopes".......for a nice positive year by year end.

Around year end we will see if I really had "high hopes" that worked out.......or if my hopes were just because I was......."high".

 

I see a lot of articles about this FED IDIOCY today.

A Fed Official’s Speech Just Sank Markets. Here’s Why.

https://www.barrons.com/articles/fed-reserve-tech-stocks-treasury-yield-51649178288?siteid=yhoof2

The sad thing is....the markets really dont care if the FED does 0.25% or 0.50% raises or if they clear their balance sheet. What the markets do care about is consistency and being able to predict and count on what the FED is going to do. Instead the FED is now all over the board with comments flying out in every direction. They are creating UNCERTAINTY.

On one financial page I now see.......18 articles......about the comments today from Ms Brainard........we are governed by.......MORONS.