The Long Term Investor

NICE close today. The markets showed STRENGTH and GUTS through the day. There were MANY points today that the markets could have turned to the DARK SIDE. Investors by now are getting used to this current investing and market environment. It has become the.....NEW NORMAL. For a short time....at least. I would guess....shorter than many people think. I STILL believe there is good POTENTIAL for a nice recovery by year end. What will drive it.....I dont know. Perhaps a vaccine, or treatment options that work well, or the virus backing off for the summer, or all the DOOM&GLOOM statistics being shown to be WRONG, etc, etc. It WILL be something......we just dont know what while we are in the middle of this short term mess.

DOW year to date (-24.97%)
SP500 year to date (-21.79)

 

Got some trades in about 15 to 20 minutes before the close.

In the FIRST account, AAPL, AMZN, COST, HON, and MSFT. ALL were positive by the close.

In the SECOND account, that has cash, bought some of EVERY POSITION on the stock side and put in orders for all three mutual funds to be filled after the close. About half of these were positive at the actual close. The REST were very very slightly negative at the close.

I could tell that the markets were moving to the POSITIVE as I was making those trades in the SECOND account......starting about 12 minutes to the close to 5 minutes to the close.

The Second account is now about 40% reinvested. The FIRST account which is MY primary account is now about 46% reinvested.

I just looked and the DOW moved about 234 points UP as I was hurrying to get the trades done in the Second account. BUT....still closed down. LOOKS LIKE there was a good amount of bargain buying in the last TEN minutes before the close. I......by random chance....hit the low of the day in the trades in the FIRST account. I was about half and half in the SECOND account.

THANK GOODNESS.......we are now done with another week........and.......so far.......we have NOT tested the prior LOW. I STILL believe that the potential to test the prior low will come in the middle of April to early May. EVERY WEEK that goes by is a good thing as people and investors adapt and get used to the current.....NEW NORMAL. In addition we are STARTING to pile up some economic data that overlaps with this crisis.......using a start point of about February 20, 2020. So.....little by little.......the UNKNOWN is starting to become the KNOWN.

 

Time for a......WEEKEND UPDATE. PLUS....nothing else to do at about 10:30 on a rainy Saturday morning. This little article is a pretty nice summary of where we are right now:

Wall Street Week Ahead: Investors look to coronavirus data to support stabilizing markets

https://www.reuters.com/article/us-...-to-support-stabilizing-markets-idUSKBN21L31Q

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

"NEW YORK (Reuters) - Investors are parsing a broad range of signals, from infection counts to more traditional indicators, for clues on the trajectory markets may take in coming weeks as the pandemic caused by the novel coronavirus continues to spread.

Some point to signs that the worst of a vicious sell-off that took the S&P 500 down as much as 34% from its record closing high may be fading, though markets remain turbulent and far off their highs.

Volatility has eased from its March peaks. Fewer U.S. stocks are hitting new 52-week lows. Liquidity in fixed-income markets has improved, and credit spreads, while still wide, have come in from their March highs.

“Most of the damaging, indiscriminate selling was reached in mid-March,” said Keith Lerner, chief market strategist at Truist/SunTrust Advisory Services in Atlanta.

Economic indicators like employment data are only beginning to factor in the scale of economic damage wrought by the pandemic, leaving investors looking to various corners of the markets and information on the virus’ spread to gauge the direction asset prices are likely to take.

Investor sentiment, often seen as a contrarian indicator, is one signal pointing to an eventual turnaround in U.S. stocks. Bank of America Global Research’s Sell Side Indicator in March dropped to 54.9%. At that level or lower, U.S. stock returns over the following 12 months have been positive 94% of the time, the bank’s analysts wrote.

Contrarian indicator means bearish investors may presage a bullish market - and vice-versa.

Some investors have also noticed parallels between the spread of COVID-19, the disease caused by the novel coronavirus, and movements in the Cboe Volatility Index , known as Wall Street’s fear gauge.

The VIX, which climbed to its highest levels since 2008 amid the market sell-off, has closely tracked the number of countries where the daily growth of coronavirus cases exceeds 10%, according to Jason Hunter, head of global fixed income and U.S. equity technical strategy at J.P. Morgan.

The index has fallen as the number of countries with a sharp rise in cases has abated.

“Any improvements in that trajectory have the potential to limit the severity of an equity index retest this spring,” Hunter wrote in a research note. “More importantly, how the outbreak story evolves over the summer and into the fall will likely dictate the overall duration and magnitude of the bear market.”

Tracking the number of U.S. states with 10% or higher daily growth in confirmed cases reveals a similar pattern, Hunter found. The index on Friday stood at 48.43, below its all-time closing high of 82.69 on Mar. 16.

For now, the overall numbers look grim. Confirmed U.S. cases surpassed 256,000 on Friday. More than 6,500 Americans have died, according to a Reuters tally of official data, and more than a quarter of those deaths have been in New York City.

Economic data have been just as dour. On Friday, the Labor Department’s monthly payrolls report showed the U.S. economy shed 701,000 jobs in March, ending a record 113 straight months of job growth. The previous day, the Labor Department reported that weekly U.S. jobless claims hit a record 6.6. million.

That scale of market disruption has made some market participants more doubtful. Investors may be overly optimistic in their expectations for a sharp market rebound even if the number of U.S. coronavirus cases flatlines earlier than expected, said Nancy Perez, senior portfolio manager at Boston Private.

“The market has discounted a V-shaped recovery,” she said. “I don’t know if it’s discounted a U-shaped recovery. When people figure out it’s going to be more U-shaped, we may start giving some of (these gains) back.”"

MY COMMENT

For those that want the NEGATIVE view of the markets going forward, I think this one is pretty realistic........although.....NO ONE really knows where we are headed......AND....I think some of the data and indicators that the author uses are not really particularly relevant to this ONE OFF situation of economic disconnect that we are in:

Investor who called coronavirus collapse: Stocks aren't even close to a bottom

https://finance.yahoo.com/news/inve...ere-not-even-close-to-a-bottom-110659642.html

 

SO.....over the past 11 calendar days and 7 trading days I have reinvested cash in two accounts. Looking at MY primary account after the close yesterday......it is NOW 46% reinvested. The SECOND account that I am reinvesting cash in is NOW at 40% reinvested. I started the reinvestment process on March 26, 2020. After 7 trading days......as of TODAY (Sunday).........the CASH holdings, STOCK holdings and MUTUAL funds in MY primary account show a LOSS of about.....ONE HALF.......OF ONE PERCENT. So......after the past one and a half weeks and seven trading days......I am ABOUT even.....compared to where the account was in cash before I started the reinvestment.

I consider that a......short term VICTORY. I have managed to get 46% of the funds back invested in the USUAL stocks and mutual funds at little to no loss in this CRAZY market environment. SHORT TERM I anticipate that I MIGHT have the potential for as much as 10-12% in losses going forward to a bottom. Of course, I might be UNDERESTIMATING the severity of the DOWN side potential for the markets over the near term future. I NEED to be.......very CLINICAL and CAREFUL.......with the remaining 44% of the cash that is still waiting to reinvest to get the account back to MY USUAL.......100% fully invested. At the moment I would guess that there is more down-side potential than up-side potential over the next 5-10 weeks. THAT is fine with me........IF......I can match up reinvesting my remaining cash with the time period to the bottom.

BUT........all the above....EXCEPT....for the actual account data is SIMPLY short term guesswork. NO ONE has the slightest clue where we are headed over the next month or two......or for that matter.....over the next 6-12 months. (from an investment standpoint, NOT from a virus standpoint)

DISCLOSURE: POSTS like this one are NOT any sort of advice.....simply documenting my thinking and "feelings" right now for future reference and consideration as a student of HUMAN BEHAVIOR and investing intuition.

 

From a PERSONAL LIFE standpoint......so far since MARCH 14 (my last show)......and through the end of April, I anticipate that.....as a professional musician........I have LOST at least 14 shows that I would have played in that time period. I DONT depend on that money for income.....BUT......it IS impacting my SANITY........not being able to leave the house or car or do my USUAL daily life over the past 3 weeks. BUT.....we are ALL in that particular BOAT at the moment.......AND......there is a LOT to be thankful for even in the current mess.

I DO see the country RAMPING UP and MOBILIZING in a way that I would have NOT thought possible in such a short time. We ARE doing what we always do......as AMERICA ......in any sort of war or world wide crisis. Our industry and manufacturing base is mobilizing to produce what is needed and people in general seem to be holding up and going through this mess with a STIFF UPPER LIP and a sense of humor and HOPE.....considering the economic impact of this mess to date. Day by day....step by step....we WILL move forward and deal with whatever we ALL have to deal with.

 

SAW this post on a site. ANY musicians on here will recognize the TRUTH:

"I MISS being able to gig....so I did a gig simulation:

"I loaded up the car with all my gear. Drove around for an hour then came back home. Unloaded all my gear, took it up three flights to my attic and set it all up. Sat around for an hour and ate some cold chicken wings. Played along with studio tracks of classic rock standards for three hours, but all sped up about 5 bpm, pausing about halfway through to pour a beer on my amp and for Tina, who has conveniently had a few, to come in, knock over the stage lights and fall over a stage monitor. Packed up all my gear, left a $50 to cover what was left of the tab after I got paid, took all my gear down three flights and loaded it into the car, drove around for an hour and came back home, unpacked all my gear, came in, ate like a pig and watched old movies til 4am."

 

I was THINKING last night about whether the markets have MADE A LOW........and whether or not......that low will be tested some time in the future.

I BELIEVE that this situation is ACTUALLY two market events.

The FIRST market event is the fear driven, panic driven, VIRUS sell-off and how it hammered the markets. I believe that event is NOW over and the low that was made on about March 23 will NOT be retested or exceeded. This first event was market wide and indiscriminate. This event is basically OVER....people have now adapted and moved on. The fear and panic is mostly over with.

The SECOND market event is an ECONOMIC event caused by politicians and bureaucratic doctors working for the government. That economic event is basically the shutting down of the US economy. The impact of this second event is.......yet to come. It will come as we see earnings and economic data over the next 1-4 months and are able to evaluate the impact on individual businesses and the economy. ANY market low for this second event is yet to come and unknown at this time.

I see ENTIRE situation as a "U....U" shaped event. The first dip to a low has already been made. We have had a partial recovery from that first dip. The second dip will come as the business impact becomes CLEAR in the NEAR future. The second dip and recovery will be simply economic in nature. The severity or lack of severity of the second event is unknown at this time due to lack of data....primarily earnings. The severity of the second dip will VARY from investor to investor depending on their holdings and basis in their holdings.

NOT that it really matters......what will matter is where we are about a YEAR from now when ALL this STUFF is over with.

 

FILE this one under.....RANDOM MEANINGLESS STATISTIC. With the nice rally today....out of 56 trades (ALL purchases)......since and including March 26.....53 are now POSITIVE and 3 are NEGATIVE. These are the trades where I have been reinvesting CASH in two accounts.....MY primary account and one other account. ALL 3 trades that are still negative......are negative by less than $1 per share. This TELLS ME that my reinvesting has been pretty successful at capturing shares during the DOWN days over the past couple of weeks. It also tells me that these shares have ANOTHER 25% to 30% UPSIDE......very quickly........ONCE this little drama is over with.

TODAY was....BIG TIME....market strength. The markets today were BUILT on top of the, last ten minutes in the trading day, rally at the close on Friday that was over 200 points in about 15 minutes.

We will probably see a little bit of profit taking and selling at the open tomorrow. BUT....I would NOT be surprised at all to see the averages in POSITIVE territory tomorrow....moving from the strength today. I would ALSO.....not be surprised to see at least one or two DOWN days this week as we continue the UP and DOWN market action that we seem to have STABILIZED into recently.

For those that care.....anymore. TOTAL deaths from the virus.....IN THE WORLD....are 74,105. How and why, in the world, we are expecting to double or triple this in just the USA is beyond my poor little brain.....WTF. The numbers being used by our health care people are.....CRAZY INACCURATE. In the USA right NOW we have 360,000 cases with.......only......10,662 deaths. We have tested nearly 2,000,000 people that were presumptive positive. I would bet that EVERY state has hospitals that are nearly empty with NOTHING going on. EVEN Washington state today sent 500 ventilators to New York since they did not need them.

HERE is some DATA....that you WILL NOT see in most of the media......BUT...regardless of the source, it is accurate and can be checked online:

"On Monday the Institute for Health Metrics and Evaluation (IHME) model cited by the White House Coronavirus Task Force lowered its projections of coronavirus deaths in the United States by August 4 to 81,776, down more than ten percent from the 93,765 projected on April 1....."

"The model also lowered projections of the number of states that will not have enough regular or ICU hospital beds to admit all identified coronavirus patients at the peak in their states from 37 in the April 1 projection to 20 in Monday’s projections."

"The IHME model projections have consistently overstated the number of hospital beds required for coronavirus patients in most states. Indeed, the most recent data from a number of states indicates that the number of new hospitalizations has been on the decline for several days."

https://www.breitbart.com/politics/2020/04/06/ihme-model-lowers-u-s-coronavirus-death-projections/

MY COMMENT

It is LIKELY......simply my own opinion.....that we are NOW at the start of the recovery from this virus event. Multiple states are showing decreasing statistics as are other countries. TO DATE......ALL of the statistics that have been thrown around for the USA based on various MODELS have been show to be GROSSLY, HIGHLY, INACCURATE on the UP side of the numbers.

For comparison........I refer you to the 2018 FLU season HERE in the USA which was a NASTY ONE and produced 80,000 deaths and 400,000 to 500,000 hospitalizations . https://www.statnews.com/2018/09/26/cdc-us-flu-deaths-winter/

Remember hearing ANYTHING about that 2018 FLU? Or the 400,000 to 500,000 hospitalizations? In fact, how did our medical system handle all those hospitalizations in that 6-8 month time period? As to NOW.....well we are now in the MIDDLE of a GREAT BIG MONEY GRAB by every form of governmental entity you can imagine from hospital systems, to schools, to local government, to everyone and anyone that has access, etc, etc, etc.

Come to think of it......I dont remember anyone closing down the economy in 2018. The level of SCIENTIFIC and logical thinking has gone into the TOILET over the past 10-20 years in this country and around the world.....PROBABLY compliments of the internet. BUT....that is a GOOD THING for those that can STILL cut through all the modern MEDIA BULL and PR driven CRAP that is pushed onto the public daily.

BUT.......whats done, is done....the economy is closed. Jobs are being lost. The entire country is being thrown into turmoil. We have reached......economic HELL....with politicians and government health bureaucrats and MEDIA sensationalism.......directing the economy. I have NO DOUBT that in the end.......THEY......government health bureaucrats, the MEDIA, politicians, etc, etc, will all be congratulating each other on the great job and how "we dodged a bullet on that one". In REALITY.....they did nothing that made any difference and we will have ended up EXACTLY where you would have thought we would end up, if you looked at this little event with some logic and REAL scientific thinking. AT LEAST....that is what my OPINION is as to where we are heading.

 

SO.......after today we are at:

DOW year to date (-20.53%)
SP500 year to date (-17.55%)

AND......after today the SP500 is NOW.......NOT.....in a BEAR market any longer, it is now in the correction range. The DOW is SLIGHTLY in BEAR market range (loss of at least 20%). We will see tomorrow if these hold for more than a day.

 

HERE is the CATALYST for a BIG.......UP.....market move tomorrow........"IF"......big IF.....the MEDIA will report the FACTS:

"On Monday, New York Gov. Andrew Cuomo told reporters that in his state alone, the epicenter of the viral outbreak in the United States, new coronavirus hospitalizations dropped by about 75 percent, from 1,427 four days ago to 358 on Sunday."

"Alex Berenson, former New York Times reporter who has been following the U.S. outbreak closely, observed on Twitter on Monday: “It’s over, guys. It’s already over.”

"Jim Malatras, an aide for Gov. Cuomo, reportedly indicated that projections are now showing that New York is unlikely to need 110,000 hospital beds, as previously thought."

"The new forecasts show “a much lower demand” that stands in the estimated 20,000-30,000 range, Jesse McKinley, the New York Times bureau chief in the NY capital of Albany, wrote on Twitter on Monday."

"That means the new projections for the number of hospital beds needed in NY are between about 70 and 80 percent lower than initially estimated."

MY COMMENT

There is MUCH other news like the above online........"IF"....you can find it. AS predicted the MODELS that are STILL being used are being shown to be TOTALLY WRONG and completely unreliable.......WORTHLESS made up data......garbage in, garbage out. BUT......we may as well RIDE OUT the rest of this month just to be safe and sure. People are already resigned to doing so. I HOPE with ALL the money that is being thrown around that........a GOOD PORTION of it......actually gets to the people that have lost jobs and to the small and other businesses that ACTUALLY need the money to survive and come back from this work stoppage.

 

HERE is the impact of the above and much other good data that is out there:

Markets are surging. Here's why experts are still wary

https://www.cnn.com/2020/04/07/investing/premarket-stocks-trading/index.html

Global stocks and US futures move higher on coronavirus optimism

https://www.cnn.com/2020/04/06/investing/global-stocks/index.html

Stock futures point to more gains on optimism coronavirus cases could be slowing

https://www.foxbusiness.com/markets...n-optimism-coronavirus-cases-could-be-slowing

MY COMMENT

ONE THING about professionals in the money world.....they DONT get successful and to the top of the food chain by being STUPID. They have to ABSOLUTELY get to conclusions based on REAL news and REAL data. They dont invest on FEELINGS or personal politics.

It is WAY TOO EARLY to call the end of this mess or to just reopen everything........BUT.....the handwriting is on the wall. AND.....we still will have to deal with the reopening of the economy in a month or so as well as the lingering impact of closing everything. EARNINGS will be the big news to come and will YANK the markets around.....UP and DOWN. What will be especially CRITICAL will be all the FORWARD LOOKING STATEMENTS. After all......the earnings reports will ONLY include a few weeks of this crisis from about mid March to the end of March because everything was NOT shut down till about mid March. Companies are going to be VERY VERY conservative and probably very doom&gloom in forward looking statements. NO ONE is going to want to make fools of themselves and put their company at risk of lawsuits or to be out there leading to the POSITIVE.

YOU will know that this little event is finally over for good when the MEDIA moves on to other stories. That will mean that they are NO LONGER getting the clicks and eyeballs that they CRAVE and are ADDICTED to in order to TRY to prop up their ever decreasing ratings and relevance. They are being DEVASTATED by the internet as an industry. You cant really blame them for latching on to anything they think will help their survival even if much of it is SENSATIONALISM and what would have been considered SUPERMARKET TABLOID journalism 10-20 years ago.

AS AN INVESTOR......I try to be EXTREMELY CLINICAL in seeing the world as it is......AND....that is the basis for the statement above........NOT.....personal politics, or opinions. AND.....in spite of the BEGINNING of good news......be cautious. We STILL have a good ways to go with TAMPING DOWN this little epidemic AND the economy.......as does the WORLD. This event STILL has the potential to cause a BIG MESS around the world going forward.

This is STILL NOT a time for crazy moves with your money. Be smart and logical and clinical and conservative......AND.....look to the LONG TERM. MOST people have plenty of time to get back into the markets OR get things moving in their accounts for the future. THIS is NOT the time to......GO COMMANDO....at least with your money. Continue to EXERCISE caution.......WITH..........HOPE.

 

AT LEAST today made sense. TODAY the DOW hit a three week HIGH and peaked about 12:20.....lunchtime. SO....we were definately due for some profit taking or selling. I NEED to get more funds invested........SO.....I will not be disapointed if we see a couple of DOWN days to end the week.

 

I post this for the potential impact on the markets and investors:

"The Institute for Health Metrics and Evaluation (IHME) model cited by the White House Coronavirus Task Force lowered its projections for coronavirus deaths in the U.S. by 25 percent from 81,766 to 60,415 early Wednesday morning."

We are starting to see more and more little bits of positive news on this situation daily....recently. Numbers of projected respirators needed, hospital beds being used and hospitals siting empty, projected deaths, etc, etc. The time WILL come in 3, 4, 5, weeks when the economy is once again UNLEASHED......and if we continue on the track that we seem to be on now......we will see some BIG stock market potential.

ONE word of caution......well, many words actually.....the above model has been shown to be HIGHLY inaccurate FICTION with EXTREMELY inaccurate HIGH numbers predicted. It MAY be JUST AS inaccurate as it predicts lower numbers. In fact this and other models may be completely DISCONNECTED from reality and will have absolutely no predictive value when we look back after this event is over. So.......this is one piece of data, but only one, that has been shown to be highly inaccurate. So....I would not make any big moves based on this one data point.

I have been reinvesting cash starting on March 26. I believe that it is definitely NOW safe to start to get back into the water. BUT......use caution when buying.......and.......try to use logic and reason. We are STILL in a highly volatile market situation and it is likely there will still be many short term erratic moves UP and DOWN in the markets.

AND.....at the moment:

DOW year to date (-20.02%)
SP500 year to date (-17.07%)

SP500 is NOW firmly below BEAR market levels and simply in correction range. DOW has potential today to leave bear market range and go into simple correction range. BUT.....these are simply man-made concepts that really have ZERO meaning other than as synthetic model points to describe market levels up or down. I would....however.......with no real knowledge if this is true....assume that traders and AI trading systems will take into account this sort of "thing". To get the DOW back to historic record levels we will need to see about 25% gains from this point. SO......lots of potential UP side and money to be made on the UP side with stocks and funds.

Name of the game right now is....CAUTIOUS optimism.....with emphasis on the word "cautious". TOTALLY a guess, but I am thinking that earnings will generally be much better than many are expecting. BUT....as I said previously, it will be the forward looking statements that are the big driver of prices up or down short term. Levels and types of corporate DEBT will also be a big item in the earnings and financial data.

Not a lot of earnings that are significant this week....here is one example;
Levi's reports solid quarterly earnings, CEO says jeans maker will come out of coronavirus stronger

https://finance.yahoo.com/news/levi...me-out-of-coronavirus-stronger-201532549.html

The REAL impact on earnings will be seen in the second quarter reports.....

 

As of 10:00AM today....the purchases I have made starting on March 26, 2020 are now positive by a little more than 2%. However, a few days ago they were slightly negative........so, essentially meaningless EXCEPT for the fact that long term market direction is significantly positive from the levels we are at right now.

 

Been doing some selective BUYING this week INCLUDING today earlier in the day. I am BUYING mutual funds at the close today in both accounts with cash. BOTH of those accounts will be reinvested about 58% at the close today. I STRONGLY anticipate that the remaining 42% WILL be reinvested over the next three weeks perhaps even sooner. The LONG TERM market potential is SO COMPELLING at the levels we are at right now.....I am starting to REVERT to my usual thinking of........all in all at once.....in accordance with what the data shows works, versus dollar cost averaging in. HOWEVER, NOTE.....by "starting" to revert.......I mean that I will probably shorten up the reinvesting to cover a 1-3 week time period.....NOT throw everything back in today or tomorrow. I still hope to have some down days to selectively hit-up certain stocks. BUT.....at the moment......I see the LONG TERM market potential as SIGNIFICANTLY positive. ACTUALLY the LONG term potential is ALWAYS positive....but right now at the levels we are at I see the potential as SIGNIFICANT.

I would rather ERROR on the side of investing TOO SOON, short term, versus not being in the markets for the coming BIG medium to long term gains.

 

At this....ONE MOMENT.....in time both the DOW and the SP500 are NO LONGER in bear market territory. BOTH are now in correction territory year to date. I am using the typical definitions for....correction, down 10-20%.....bear market, down 20% or more. Keep in mind that with the big market moves we are seeing lately that the markets can easily flip from one to the other daily or weekly.