The Long Term Investor

MUST SAY.......I agree that whatever the outcome or why, to the markets, over the next few months.....it is LIKELY that we will see a nice recovery by year end.

 

Personally I am at about........MINUS 26%..........it could be worse. ACTUALLY, over the short term there is a good chance it will get worse. I am guessing that the bottom will come in April.....especially, mid April to the end of April. Earnings will be coming in hot and heavy. Add in forward looking statements and this will be a volatile time. Just my GUESS, for FUN. No one can predict anything to do with stocks other than long term compounding.

 

NIKE reported QUARTERLY earnings after the bell today. SOMEWHAT instructive....but....the time period does include some weeks before this "little crisis" struck on about February 20, 2020.

Nike sales beat analysts’ estimates, but earnings fall, hurt by coronavirus pandemic

https://www.cnbc.com/2020/03/24/nike-nke-reports-q3-fiscal-2020-earnings.html

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

"Nike reported quarterly sales that topped analysts’ expectations, thanks to a boost from its digital business and growth in North America, which helped to offset weakness in China due to COVID-19.

Its shares shot up more than 8%in after-hours trading Tuesday following the release.

Chief Executive Officer John Donahoe said the business is starting to see a “recovery” in China, where the coronavirus originated, following a period of store closures. During the fiscal third quarter, Nike’s sales dropped 5% in Greater China, following 22 consecutive quarters of double-digit growth.

The company said that at a peak in February, roughly 75% of Nike stores in Greater China were closed, with others open on reduced hours. As of Tuesday, however, nearly 80% of its stores in Greater China are open, Nike said.

“We now have a playbook that we can use elsewhere,” Donahoe told analysts.

He said Nike took what it learned from China and deployed a similar strategy in Japan and South Korea. He said the company will now do the same in the U.S. and across Europe.

The Portland, Oregon-based sneaker giant announced this past Sunday that it would be shutting all of its stores in the U.S., Canada, Western Europe, Australia and New Zealand through March 27, at least, to try to help halt the spread of COVID-19.

“We know this is a moment in society where the private sector has to play a major role,” Donahoe added, during a post-earnings conference call. For example, Nike is looking at some designs for personal protective equipment to help hospitals and other health-care workers in need, he said.

Despite reporting an increase in sales, Nike’s earnings fell, hurt by the coronavirus pandemic.

Net income shrank to $847 million, or 53 cents per share, compared with $1.1 billion, or 68 cents per share, a year ago.

Earnings in the latest period included a 25-cent charge related to the company transitioning its businesses in Brazil, Argentina, Chile and Uruguay to a different distributor model.

Revenue climbed 5% during the quarter ended Feb. 29, to $10.1 billion from $9.6 billion a year ago. Analysts were calling for sales of $9.8 billion, based on data from Refinitiv.

Nike’s direct-to-consumer business grew 13% during the quarter. Digital sales overall were up 36%. Nike said digital sales in Greater China were up more than 30%.

“We know it’s in times like these that strong brands get even stronger. ... No one is better equipped than Nike to navigate the current climate,” Donahoe said Tuesday.

Nike’s revenue in North America climbed 4% during the quarter, driven by strength in footwear and apparel.

Sales for the Converse brand were up 9%.

Some analysts are more optimistic about Nike compared with peers Under Armour and Adidas, especially in times of so much uncertainty.

“We believe Nike remains the key brand that wholesale customers shift orders to in times of distress and should also benefit from its superior sourcing capabilities, with a vertically integrated supply chain and more consolidated supplier base,” Bank of America analyst Robert Ohmes said in a research note ahead of the earnings report.

“An overall challenging environment could enhance Nike’s global market share momentum,” he added.

As the Dow rebounded Tuesday to have its best day since 1933, Nike shares closed up more than 15%. Nike’s stock has fallen roughly 30% this year. It has a market cap of about $112.6 billion.

MY COMMENT

Pretty good numbers......BUT.....most of the quarter was BEFORE the "little virus" event. The Third Quarter ended February 29, so the results ONLY included 9 days of this market event. As to the markets....today was a strong day all the way around. If we can close with a gain tomorrow that would be the first two day in a row gains in a long time. Perhaps we are at a short term bottom. Who knows?

 

NICE rally in the DOW today......much of it driven by the gains in BOEING. Would I buy Boeing......ABSOLUTELY NOT. The company is STILL a disaster with more waiting to happen. I will definately consider the stock in the future....perhaps a year from now......could actually be 1-2 years down the road to "consider" the company.

OTHERWISE....nice gains in the general averages today. It will be interesting to see if the survive the......East Coast lunch hour......and to the close.

AS TO....my opinions on anything to do with the "little virus....they are UNCHANGED from anything that I previously have posted in this thread. So if you are into the.......all virus, all the time......DRAMA, feel free to look back over the more recent pages here.

AS TO.....statistics.....here is the place to look for the data for EACH COUNTRY:

https://www.worldometers.info/coronavirus/

I am LOOKING FORWARD to the jobless claims numbers tomorrow. It will be nice to start to see some REAL data on the impact of this little social experiment in closing the US economy.

 

FOR those looking for that.....FREE GOVERNMENT MONEY. Looks like it is in the Stimulus Bill, but it will take a while to get it.

"Under the plan as it was being negotiated, single Americans would receive $1,200, married couples would get $2,400, and parents would see $500 for each child under age 17.
However, the payments would start to phase out for individuals with adjusted gross incomes of more than $75,000, and those making more than $99,000 would not qualify at all. The thresholds are doubled for couples. Qualifying income levels will be based on 2019 federal tax returns, if already filed, and otherwise on 2018 returns."

https://www.cnn.com/2020/03/25/politics/senate-deal-stimulus-checks-coronavirus/index.html

NEEDLESS to say.......we will NOT be filing income tax returns in April. We will wait till July 15 or longer if the deadline is extended again. I am NOT going to send the government a BIG check than have them decide to make changes and NOT apply it to those people that have already sent money in with returns. ANYWAY........ would prefer to have my 2018 return used for the stimulus check money since our income is less on that return and we will......PROBABLY.......actually qualify as a couple.

Take care all.......

 

Hey Sunshine and others

Remember the phrase.....NO PAIN, NO GAIN..........well, this is what they mean by PAIN. One GOOD THING for anyone going through this "little experience"......this is a ONCE IN A LIFETIME event. It is highly doubtful that anyone going through this will EVER experience anything similar in their lifetime. I have personally NEVER gone through any event like this. So.....lets get it over with now and go on with the rest of our lives.

HOWEVER being age 70 I would DEFINITELY say the........Gas crisis, stagflation, out of control interest rates, inflation,etc, etc of the late 1970's to the early 1980's.....was SIGNIFICANTLY WORSE than what is going on now. That was a 3-4 year event, minimum, and was a KILLER to go through as a young person and investor in their mid to late 20's. BUT....most people have no real memory of that time period, especially as an investor,......BECAUSE......very few people back than were invested in stocks or funds. That time period was BEFORE the advent of the IRA and the 401K. The VAST majority of people back than did NOT own any investments.

That does NOT mean that there will never be BEAR MARKETS. Yes, those are part of the normal market and investing experience. Just like the various BULL MARKETS will be.

 

Sorry to hear about your friend...Zukodany.

 

I took two accounts to cash not too long ago. March 16, eight trading days. Over that time the markets have gone down and the past two days they have gone up. Net result right now at the close today is....that cash is down by 2.4% compared to where it would have been if held in the stocks and funds. So, just about even to date......and....after the GREAT two day rally we have had. I am satisfied with that considering ALL that has happened over the past two weeks.

I anticipate that I will reinvest that money some time in April or May at the latest. I have to see more data on where we are at....government data and some Quarterly reports.

AFTER this two day rally here is where we are:

DOW year to date (-25.71%)

SP500 year to date (-23.38%)

It has been a WILD RIDE.....but where we are is not too bad considering.

 

I was busy today.

I REINVESTED about 1/3 of the cash in my two accounts. I NO LONGER see a concern for preservation of funds. I NO LONGER see a significant risk to the banking, credit, sectors. I BELIEVE that the risk of immediate to short term movement down in the markets is about another 5 - 12% . I am WILLING to take that risk.

The package being put in place by congress.......along with the steps that the FED has now taken......along with the market reaction the past three days to these steps.......along with the lack of reaction to the unemployment numbers.....along with Ford and other auto makers going to open their factories in April...tell me it is time to START to reenter the markets over the next 2-4 weeks.

Over the day, that reinvestment money made about 2% gain.

The FED has...for once...done a great job of stepping into this event and is obviously willing to do anything necessary going forward. All day on TV and RADIO, I am hearing and seeing advertising directed at consumers from the standpoint of what is happening around the country. BIG BUSINESS is definately ALREADY adjusting to this reality very quickly. I believe the package being put in place by Congress is a good one and there will be more if needed.

AND......MOST important.....I believe that the American people are going to adapt to this situation and within 2-4 weeks will be back to work in many areas around the country. I ALSO BELIEVE.....that my take on this virus is going to be accurate and the impact in terms of sick, and dead, will be much less than most in the MEDIA and elsewhere are projecting. In any event, they are WEARING PEOPLE out and they will start to just tune it out and return to LIFE.

As to the other 2/3 of the CASH......I will look at everything FRESH next week and decide whether or not to reinvest another 1/3 or perhaps 1/6. I plan to have this money back INVESTED over the next 2-4 weeks......UNLESS.......something happens or comes up that causes me to PAUSE. I DONT LIKE being out of the markets.

FOR ME......PRESERVATION OF CAPITAL is not the same as accumulating cash to trade. Preservation of capital for me is a concern ONLY when I see something SO EXTREME and ABERRANT happening in or to the economy that there is a......POSSIBILITY (15-25% chance)....of severe disruption. I saw that in 2008/2009. It did NOT come to fruition than. AND.....I thought I saw it a few weeks ago. I dont think it is going to happen now......so time to get back in........FOR ME..........NOT advising anyone else as to what they should do.

 

HERE is a relevant little article:

Trading Psychology, The 14 Stages of Investor Emotions

https://www.stocktrader.com/2009/05/14/trading-psychology-stages-investor-emotions/

"Efficient markets are based on the assumption that rational people enter transactions with the intent to maximize gains and minimize losses. While this theory is sound, most investors are not the purely rational robots that efficient markets rely upon. Instead, emotions often cloud our decision-making and prevent us from acting in a rational manner.

Knowing we can never conquer our inherent emotional biases, we should seek to understand the range of emotions we may experience as investors and how it affects our interactions with the market. A common market psychology cycle exists that shines light on how emotions evolve and the effect they have on our decisions. By understanding the stages of this cycle, we can tame the emotional roller coaster. The fourteen stages are:

1. Optimism – A positive outlook encourages us about the future, leading us to buy stocks.
2. Excitement – Having seen some of our initial ideas work, we begin considering what our market success could allow us to accomplish.
3. Thrill – At this point we investors cannot believe our success and begin to comment on how smart we are.
4. Euphoria – This marks the point of maximum financial risk. Having seen every decision result in quick, easy profits, we begin to ignore risk and expect every trade to become profitable.
5. Anxiety – For the first time the market moves against us. Having never stared at unrealized losses, we tell ourselves we are long-term investors and that all our ideas will eventually work.
6. Denial – When markets have not rebounded, yet we do not know how to respond, we begin denying either that we made poor choices or that things will not improve shortly.
7. Fear – The market realities become confusing. We believe the stocks we own will never move in our favor.
8. Desperation – Not knowing how to act, we grasp at any idea that will allow us to get back to breakeven.
9. Panic – Having exhausted all ideas, we are at a loss for what to do next.
10. Capitulation – Deciding our portfolio will never increase again, we sell all our stocks to avoid any future losses.
11. Despondency – After exiting the markets we do not want to buy stocks ever again. This often marks the moment of greatest financial opportunity.
12. Depression – Not knowing how we could be so foolish, we are left trying to understand our actions.
13. Hope – Eventually we return to the realization that markets move in cycles, and we begin looking for our next opportunity.
14. Relief – Having bought a stock that turned profitable, we renew our faith that there is a future in investing.

Individuals clearly follow this cycle in their decision making process. Since broad indices like the S&P 500 are comprised of the decision of millions of individuals, we should expect index prices to track this pattern as well. If we are aware of the stage of the cycle we are experiencing at a given point in time we will have a greater grasp of how our emotions are affecting our investment decisions. This knowledge will help us manage our own investment portfolios as well as predict the next step for the broad market."

MY COMMENT

Where are YOU in these steps? PROBABLY somewhere in the neighborhood of numbers...7, 8, 9, or 10. I ALSO like to apply the five steps of GRIEF to investing behavior.......denial, anger, bargaining, depression and acceptance. I personally am now FULLY in "ACCEPTANCE" mode. Moving forward and NOTHING going forward is going to matter......I am FULLY committed to the LONG TERM and will soon be back fully invested in ALL portfolios. It is WEIRD.......NOT being fully invested makes me REALLY nervous and jumpy.

 

NOW that I am REINVESTING cash......nice to see a market drop today. I will divide the cash into smaller and smaller lots. I want to make it last so I can filter it into the markets over down days till the end of April minimum. That is my ideal goal. If things go further SOUTH, I will try to stretch it out even longer.

 

COMPLETED my VERY SMALL buys today with the markets down close to 4%. I will continue to do so on down days to......at least.....the end of April and perhaps into May, if necessary. I will adjust as needed as I see how things are going.

My GOAL will be to put back into place the exact same stocks and funds that were sold to cash. Those stocks and funds are the same as my usual portfolio model.

AAPL
AMSN
COST
GOOGL
HD
HON
JNJ
MMM
MSFT
NKE
PG
FIDELITY CONTRA FUND
SP500 INDEX FUND
DODGE & COX STOCK FUND

 

TODAY....was a good day for the buys that I made. I ONLY bought about $20,000 worth. BUT...my primary OVERALL portfolio BEAT the SP500 by about 1%. AND.....nicely....of the small positions I bought today by the end of the day I had a gain in three of the 11. The other 8......had a loss of about 1.6% to 1.5%% for 2 holdings and the other 6 holdings ALL had a loss of less than .4% for the day. So......SIGNIFICANTLY better than the SP500 which lost over 3.37% today.

SO.....time will tell if this little BUYING program that I am doing is too early. I STILL believe that the market BOTTOM was either already made........OR.....will come some time in April. There is a chance that the bottom might push into May. AND....of course......there is still a chance that I am wrong and it......the bottom..... will be some months ahead over the summer or even into the fall.....since I am NOT a stock market PSYCHIC.

As I mentioned above.....I will be making small BUYS all through April and perhaps into May....as we have DOWN DAYS in the markets.

FOR those that are into 24/7 virus "stuff" here is the latest data:

https://www.worldometers.info/coronavirus/

I DID find it interesting that MOST of the MEDIA was HYPING the story that we now have more virus cases than any other country including China. NO.....WRONG. You cant just take the number of cases in a country and compare to another country. You have to look at number of virus cases per million of population in each country. If YOU do that for accuracy......Italy, Spain, Germany, France, Iran, Netherlands, and Belgium have more cases in proportion to their population than we do. And as to deaths per million of population.....WE are.......19th in the world with 5 deaths per MILLION of population.......OR.....a TOTAL of 1,567 deaths as of today. (SORRY could not resist putting up some TRUTH about the virus.......I will try to AVOID this "little virus" garbage in the future)