The Long Term Investor

I do note that in my local area....gas prices seem to have leveled off lately and have actually been dropping a very small amount for the past few weeks.

 

This article seems somewhat familiar to me......but I will take the risk of posting the same article in this thread.....in order to put this.......IMPORTANT.... information out there for others.

How to invest during a bear market, according to investment advisors

https://finance.yahoo.com/news/invest-during-bear-market-according-120000810.html

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

"There’s a “hurricane” coming for the U.S. economy, and investors should brace themselves for more volatility.

At least that’s what JPMorgan Chase CEO Jamie Dimon said earlier this month at an annual conference sponsored by AllianceBernstein. Dimon, often considered the voice of the banking industry, is just one of many Wall Street titans painting a less-than-rosy economic picture.

From hedge fund billionaire Leon Cooperman to Morgan Stanley’s CEO James Gorman, bearish predictions about a continued economic downturn, or even an outright recession, have flooded headlines in recent months.

That’s not exactly surprising given the macroeconomic woes facing the nation. Rising consumer prices continue to be a thorn in the side of the Federal Reserve, with inflation hitting a fresh four-decade high in May despite multiple interest rate hikes. The war in Ukraine is wreaking havoc on global commodities markets, pushing the prices of food and fuel to unsustainable levels worldwide. And now, there are worrying signs of a slowdown in U.S. consumer spending, after retail sales unexpectedly fell last month.

All of these bearish economic indicators and recession predictions have consumers and economists spooked, too. More than 80% of Americans believe a recession will hit this year, and 70% of leading economists polled by the Financial Times last week said they expect a recession by the end of 2023.

On top of that, the S&P 500 is now down more than 23% since the start of the year after officially entering a bear market this week.

For stock market investors, these are trying times, to say the least. But it’s important to remember that bear markets aren’t the end of the world. In fact, they’re a normal part of how the stock market operates.

From the end of World War II through last year, the S&P 500 has experienced 14 official bear markets, or one every 5.4 years on average. The most successful investors understand that bear markets can be navigated without panic, and may even present opportunities.

Here’s what several top investment advisors and wealth managers recommend investors do to avoid major losses and make it through this year’s bear market.

Stick to a long-term investment plan that fits your goals

The first and most important tip for any investor looking to weather a bear market is to stick to a long-term investment plan.

“Assuming that a client has a well-thought-out investment plan that is consistent with their goals, objectives, time horizon, and risk tolerance, they should stay the course,” Gerald Goldberg, CEO and co-founder of the investment advisor GYL Financial Synergies, told Fortune.

Consistent doom and gloom headlines are common during bear markets, but seasoned investors understand that it’s important to ignore the noise and focus on long-term returns.

Over the past decade, barring brief blips in 2020 and 2018, finding successful stock market investments wasn’t exactly a challenge. After all, the S&P 500's average annual returns over the past decade, not including 2022, were roughly 14.7%. That’s led many younger investors to become undisciplined in their approach to investing.

Instead of focusing on long-term goals like retirement, building up enough money for a down payment on a home, or paying for kids’ education, these short-term focused traders often want to quickly change strategies amid a bear market, hoping to “protect their portfolios” or maximize profits.

But the reality is, if a bear market has already begun, it may be too late to change your asset allocation without locking in serious losses. Remember, the tech-heavy Nasdaq is already down 32% this year alone.

Financial advisors recommend investors trust that their financial strategy will work over the long-term as it was intended.

“In our view, closing the proverbial barn doors after the horses have run out, by somehow deciding that now is the time to ‘protect’ portfolios, is part of the reason that so many investors end up with mediocre long-term returns,” John Buckingham a portfolio manager at the investment firm Kovitz, told Fortune.

“History shows that those who have patience and discipline can mitigate the risk of permanent loss of capital (i.e. protect their money) by increasing the length of their holding period. The key, of course, is to ensure that short-term-oriented dollars [a.k.a. the money you need for expenses] are not invested, so that stocks can be held through thick and thin,” he added.

Inexperienced investors often forget their financial plans when stocks are falling, but investing shouldn’t be an emotional game.

“Avoid acting out of emotion and not logic. A knot in your stomach is not a good sell signal!” Emerson Ham III, a senior partner at the wealth management firm Sound View Wealth Advisors, told Fortune.

Avoid timing market entries and exits

Another key to bear market investing success is to avoid trying to time market entries and exits.

“Attempting to time the market is a fool’s errand,” GYL Financial Synergies’ Goldberg said. “For every investment undertaken, you need to be right not just once but twice (entry and exit).”

Goldberg noted that while the current price of a stock and its relative valuation to industry peers does matter, retail traders often make mistakes when they attempt to avoid bear markets by selling shares.

“As we like to say, the only problem with market timing is getting the timing right. Yes, some may be able to get out ahead of a downturn, but the truly difficult task is knowing when to get back in, as stocks usually begin sharp moves higher when conditions look awful,” Kovitz’s John Buckingham said.

Buckingham noted that, historically, the average investor is often the most bearish ahead of stock market rallies, making them unlikely to invest at the right time to maximize profits. That may mean it makes more sense to dollar cost average—or invest a fixed dollar amount on a regular basis regardless of the share price—into stocks with strong fundamentals, rather than timing big entries and exits.

“By our way of thinking, if there were changes to be made in an asset allocation plan, we would be steering money toward equities as stocks fall as opposed to hoping that we could have success jumping out and back into stocks,” Buckingham said.

Retail investors often believe they can outsmart the market and make a killing by moving in and out of stocks, but investment advisors say they’ve seen it all before, and timing market entries and exits rarely leads to outsized returns.

“Avoid the temptation to try to be a market timer. You already didn’t sell out at the top, so what makes you think you will have the foresight and fortitude to buy back in at the bottom?” Ham III said. “I have never seen anyone do this with enough consistency to add value over the long run. Never in my 30-plus-year career.”

Look for value, cash flow, and quality

For people who have some extra money and are looking to invest during a bear market, there are some key traits to look for. Firms with consistent cash flows, strong balance sheets, and, in this inflationary environment, pricing power, are likely to outperform.

Buckingham also recommended looking at so-called “value stocks” in the current environment.

“Historically speaking, stocks that trade for more inexpensive valuations have outperformed those that trade for richer valuations, or growth stocks, so I always think that gravitating toward the former makes sense. And that goes double for when the Fed is tightening [the money supply], and in higher interest rate and higher inflation environments,” he said.

With so many investors concerned about the economy’s future and falling earnings, it may also make sense to invest in companies that offer dividends and avoid unprofitable firms, Buckingham added.

One key tip here is to look at a firm’s dividend payout ratio, or the total amount of dividends paid to shareholders compared to that company’s net income, before making an investment. A high payout ratio can be an indicator that a company will be unable to maintain its dividend if earnings fall.

Sound View Wealth Advisors’ Ham III also recommended looking at “high-quality” companies that have consistent cash flows, make a reliable profit, and aren’t overburdened by debt.

“A wonderful piece of advice given to me early in my career was to always come out of a bear market with a higher quality portfolio than you entered it,” Ham III said. “It can be a wonderful time to buy some of those great companies that you have always wished you owned.”

Finally, it’s important not to give up on companies that have what Ham III calls “secular tailwinds” that could help propel them in the future, especially when the current bear market ends. While many investors are abandoning tech stocks, he argues it may make sense to look for quality companies in sectors that have been recently beaten down.

“In an environment like this, the market tends to throw out the bathwater, the baby, and the tub as well,” he said."

MY COMMENT

YEP......it is as simple as the above sounds. The most important assumption for all this stuff above to work is........REASON and RATIONALITY in picking great businesses to invest in.

I have witnesed many, many times in my 45+ years of investing.......the POWER of initial rallies following a down time period. I have also witnessed many times......a large group of investors that miss out on the EARLY and EXPLOSIVE gains because they are not sure when to get back into the markets.

As to the BIG tech companies......the monsters of the world economy......when the time comes and the markets turn you will be amazed at the huge pent up gains and how quickly them come back. That is why.....I continue to sit and wait.

As a side note......or perhaps a Freudian Slip......after I first typed the initial sentence of this post....I noticed the typo below:

"This article seems somewhat familiar to me......but I will take the risk of posting the same article in this thread.....in order to put this.......IMPOTENT.... information out there for others."

 

LETS HIT IT HARD......for the rest of this short week.

COURAGE.

 

RALLY DAY. Once in a while the markets "allow" us to replenish some of our lost money......so we can continue. Actually "we" allow ourselves....by remaining in the markets with confidence in our stock and fund picks, our investment strategy,......and.....the long term future of the markets.

As we approach the......dreaded......11:30 to 12:00 East coast time period.....all the averages are currently UP by over 2% for the day.

 

I like this little article.

Stock market strategists all want one thing right now: Morning Brief

https://finance.yahoo.com/news/morning-brief-june-21-100049088.html

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

"My dad said two interesting things to me during our brief chat on Father’s Day.

First: “Hey, when is the recession ending?” And second: “Gas will be $7 a gallon soon.”

I have long tried super hard to keep my job separate from family chats – I am not going to be the guy that offers up a stock pick or economic prediction to a family member only to watch it blow up in their face.

But with the liquid courage from a couple light beers, I took the bait this time with my dad.

Happy Father's Day.

I proudly proclaimed that, technically, we aren’t in a recession, though one may surface in early 2023, as Deutsche Bank economist Matthew Luzzetti outlined a few days ago. I then noted that, barring a hurricane this summer that pounds key oil producing assets, gas is unlikely to rise to $7 a gallon (from the current $5 or so) as economic growth slows.

For something more concrete, however, I chatted with a few of my friends on Wall Street to get their perspective on how to handle this market. And many of these folks see the investment landscape coming down to one word right now: Quality.

"Quality wins over time!” Brown Brothers Harriman Chief Investment Strategist Scott Clemons said.

"Our big focus is on quality – quality of earnings, quality of balance sheets, quality of the business model," Crossmark Chief Markets Strategist Victoria Fernandez said.

But like most folks out there, my father can only see what’s happening to his money in the here and now. Quality be damned. It’s costing him way more to drive to the golf course in Florida, his groceries are more expensive, and although he won’t tell his son, his investments have been hammered.

The S&P 500 has tanked nearly 23% so far this year, representing its worst start to the year since 1932. Last week alone, the S&P 500 dropped 5.8%, its largest decline since the COVID-19 market meltdown in March 2020. Household favorite stocks such as Apple (AAPL), Microsoft (MSFT), and Disney (DIS) have shed an astounding 25.9%, 26.4%, and 39% respectively year to date. And Walmart is selling a two-pack of no-name brand men's boxer briefs for $23 (which is pricey, in my view).

All in all, my dad is right to be concerned. And so are all of you. It’s getting ugly out there in the stock market and in the real world.

“Sentiment is negative, positioning feels depressed, and we’ve seen some signs that we’ve hit extremes,” NYSE senior market strategist Michael Reinking stated in a new note.

At moments like these, it’s best to look yourself in the mirror and realize that stocks will likely be higher 10, 20, 30, 40, 50 years from today. Believe me, I hate saying stuff like that, but it does feel appropriate. And the investment community agrees.

Here are a few more perspectives:

Keith Lerner, Co-Chief Investment Officer, Truist

“In our view, investors should focus on profitable and stable growth, companies that are still showing positive earnings revision trends, and which have lower sensitivity to economic growth. We would avoid high beta and higher leveraged companies, given the global economic slowdown and widening credit spreads.

We are overweight defensive sectors, such as healthcare and staples, which have some of the aforementioned qualities of profitable, stable growth and lower beta. We also are overweight energy and materials but that’s more reflective of the elevated geopolitical environment.”

Gabriella Santos, Global Market Strategist, J.P. Morgan Asset Management

“In a more uncertain economic backdrop, we would focus on companies with high sustainable dividends. They help to lower the beta of the equity portion as the dividend helps to offset the capital depreciation and also because these are companies that tend to be in defensive sectors like health care and staples.

We would emphasize the sustainability of the dividend though — as well as the valuation — looking at metrics like sustainable cash flow, a strong balance sheet, steady earnings, free cash flow yield , P/E, and EV/EBITDA.”

Scott Clemons, Chief Investment Strategist, Brown Brothers Harriman

“We’re trying hard to keep nervous investors in the market, reminding them that no one rings a bell at the end of a bear market, and that the recovery can be both swift and counterintuitive. In fact, the average return of the S&P 500 from the date of a bear market entry (not the trough, but the 20% trigger) is 23%. You don’t want to miss that.

However, for nervous investors, we do point to the benefit that dividends offer, not just for cash flow, but as a market of a company with plentiful free cash flow and a strong balance sheet. Quality wins over time!”

Victoria Fernandez, Chief Markets Strategist, Crossmark

“Our big focus is on quality – quality of earnings, quality of balance sheets, quality of the business model. These are the companies that we feel will hold their own against the expected volatility. We are looking for quality in fixed income as well – buying investment grade corporates with slightly longer durations to lock in some of the higher rates we are currently seeing as we expect yields will begin to moderate as we see month/month inflation begin to moderate over the coming months.

We have been picking names that fit those parameters, may not be cheap but have seen multiples come in, and score well in our values-based factor component of our large cap model. We believe in a balanced portfolio with both growth and value names to weather the uncertainty over the next couple quarters. Some of our recent purchases include Lockheed Martin (LMT), Metlife (MET), ExxonMobil (XOM) and CVS Health (CVS).”

Gargi Chaudhuri, Head of iShares Investment Strategy Americas, BlackRock

“Even after the Fed’s policy decision, inflation remains a near-term risk. We think it makes sense to consider a hedging strategy with broadly diversified commodities exposure and inflation-linked bonds.

We view front-end yields as attractive at current levels in Treasuries and in high-quality credit exposure, given that the market seems to have fully priced an aggressive Federal Reserve moving well past neutral.

Finally, with earnings growth peaking, we believe differentiation at the sub-sector level is increasingly important. We prefer exposure to the defensive sub-sectors of the equity market such as health care, infrastructure, and low volatility. Dividend payers are also an attractive way to lean into quality companies with healthy balance sheets.”"

MY COMMENT

Many good thoughts and ideas above. All in all they boil down to the one word mentioned in the article.....quality.

Of course.....the quality has to be "real".......not just a fantasy on the part of the investor or some speculative company that the investor thinks will go way up.

Top of the line old school dividend companies that are the cream of the crop are a good way to go. For others like myself, I continue to like the WORLD leaders in the Tech side of the markets....Amazon, Microsoft, Apple, Tesla, Google......in combination with a number of top 25 stocks outside tech.....Home Depot, Costco, Nike, Honeywell, etc.

As an index.....I believe that the SP500 represents TOP QUALITY and safety since it is composed of about 500 stocks of the greatest largest companies in the USA and by extension the world.

 

Here is a good summary of the day today and the start of the week.

Stock market news live updates: Stocks rise after S&P 500's worst week since March 2020

https://finance.yahoo.com/news/stock-market-news-lives-updates-june-21-2022-115746865.html

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

"U.S. stocks rose Tuesday as traders returned from a long weekend, with equities looking to steady following the S&P 500's worst week since March 2020.

The S&P 500 advanced by about 2.5% intraday to pare some losses after plunging by 5.8% last week. The Nasdaq Composite gained 3%, and the Dow added more than 500 points, or 1.8%. The S&P 500, Dow and Nasdaq were on track to post their biggest single-session gains in three weeks.

Bitcoin (BTC-USD) rose back above $21,000 after a cryptocurrency rout briefly sent prices below $18,000 for the first time since December 2020 over the weekend. Treasury yields climbed, with the benchmark 10-year yield increasing to nearly 3.3%, and U.S. crude oil prices rose by 1.5% to top $111 per barrel.

Tuesday's early recovery rally across risk assets came as an at least brief respite amid weeks of heavy selling. The S&P 500 sank into its first bear market since the height of the pandemic last week, and the sell-off ramped even further after the Federal Reserve unleashed a larger-than-typical 75 basis point interest rate hike and signaled it would be willing to tighten further and at the expense of some economic growth to bring down rampant inflationary pressures.

Federal Reserve Chair Jerome Powell is set to deliver his semi-annual address before Congress on Wednesday and Thursday, during which he is likely to be pressed by lawmakers about the Fed's actions to bring down inflation and the extent to which these may weigh on the economy.

And already, concerns over the resilience of the economy have risen sharply. A number of economists at major Wall Street firms downgraded their growth forecasts over the past several days to reflect an increased risk of a recession. A recession is typically defined as two consecutive quarters of negative GDP growth, though the final call is made by the National Bureau of Economic Research (NBER).

"The most likely outlook is very weak growth and persistently high inflation," Bank of America economists wrote in a note Friday. "We see roughly a 40% chance of a recession next year. Our worst fears around the Fed have been confirmed: they fell way behind the curve and are now playing a dangerous game of catch up."

Others have been even more bearish. Deutsche Bank's base case calls for a recession to begin in the third quarter of 2023, following sluggish real GDP growth of just 1.2% in the U.S. in 2022, versus the 1.8% seen previously. Goldman Sachs economists "now see recession risk as higher and more front-loaded," the firm's chief economist Jan Hatzius said in a new note. He raised his recession probability to 30% from 15%.

Rising risks of a formal recession in the U.S. economy also leave the S&P 500 vulnerable to more downside, even after a more than 22% slide so far for the year-to-date. The S&P 500's bear market slides since World War II have averaged 29.6% with an average duration of 11.4 months, according to data from LPL Financial's Ryan Detrick. However, when bear markets coincide with recessions, the S&P 500 tends to fall 34.8% on average at its bear market trough and last nearly 15 months.

On the move

• Kellogg (K) shares jumped more than 5% after the opening bell Tuesday morning after the company announced it planned to split into three separate companies. The newly spun out firms will comprise a separate global snack foods company, a North American cereal firm, and pure-play plant-based foods company.
  
  
• Tesla's (TSLA) stock gained after CEO Elon Musk said the company's head count would only be reduced by as much as about 3.5% in the near-term, or a smaller percentage than previously expected. Musk confirmed that 10% of salaried workers at Tesla would be cut over the next three months, but that ongoing hiring would keep the net reduction to just 3-3.5%, he told Bloomberg News Tuesday.
  
  
• Coinbase (COIN) shares jumped more than 16% intraday on Tuesday as cryptocurrency prices bounced after reaching multi-year lows. The crypto trading platform saw its stock slide nearly 80% for the year-to-date through Friday's close, and shares have traded well below their reference price of $250 apiece from the time of Coinbase's April 2021 direct listing."

MY COMMENT

Lets not get too wild and crazy......The FED will be talking to the government on Wednesday and Thursday. A definite combination that has great potential to tank any good week we might be having.

BUT.....lets enjoy the day today for as long as we can. We get few days to CELEBRATE recently so we need to make the most of them when they happen.

SO..........celebrate, celebrate, dance to the music.

 

I agree with wanting to simply get to the bottom and get it over with.

Unfortunately the markets do not work that way....usually. AND....getting to the bottom does not mean that we start back up from there. It often means that we bounce along the bottom for an extended time.....which also wears investors down as the bottom lingers and lingers. So just going to the bottom quickly does not mean that the slow torture is over with.

I totally hope we do not go back to bail outs, wild spending, government and economic manipulation, wage and price controls, etc, etc, etc.....if so it will be a sure KILLER to the economy and any recovery.

 

I just looked......all of my stocks are up today except for Home Depot. I am now at a loss year to date of (-26%). I continue to be range bound between about (-18%) and about (-26%) in general. Once in a while my loss goes up a bit from there.

For comparison....at the moment.....the SP500 is at a year to date loss of (-21.17%)

 

Here are a couple of stories.....one perhaps good news for house hunters and the other an indication that the economy is slowing.

Sales of existing homes fell in May, and more declines are expected

https://www.cnbc.com/2022/06/21/sal...ll-in-may-and-more-declines-are-expected.html

Some of this is lack of inventory....but prices are going to soften in many areas for homes.

Chinese manufacturing orders decline by 20-30%, according to shippers, as consumers pull back on buying goods

https://www.cnbc.com/2022/06/21/chi...ers-drop-as-consumers-pull-back-on-goods.html

This is generally good news for the economy going forward. BUT....the article notes that orders are still up compared to pre-pandemic. Obviously, another indicator of the recession that has probably already started.

 

Looks like a good "chance" that this is the short term (8-24 months) future for the country.

80% of economists see ‘stagflation’ as a long-term risk. What it is and how to prepare for it

https://www.cnbc.com/2022/06/21/what-stagflation-is-and-how-to-prepare-for-it.html

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

"Key Points

• Stagflation is a term coined in the 1970s to refer to a combination of high inflation and high unemployment.
• Recent surveys show economists and fund managers see increased risks of stagflation on the horizon.
• There are steps you can take now to get in a better financial position in case stagflation or a recession does happen.

The next big risk to the U.S. economy may be summed up in one word.

And no, it’s not necessarily recession, though economists are evenly split on the risks one is coming.

Instead, 80% of economists in the same survey named stagflation as the greater long-term risk to the economy, according to the Securities Industry and Financial Markets Association. The next biggest risk they identified was deflation, with 13% of respondents.

Moreover, a recent Bank of America global fund manager survey found fears of stagflation are the highest they have been since June 2008. Stagflation is “by far and away the most popular description of what the economic backdrop will be in the next 12 months,” according to the report.

What is stagflation?

Stagflation is a term coined in the 1970s when there was simultaneous high inflation and economic stagnation or high unemployment, according to Jonathan Wright, professor of economics at Johns Hopkins University.

While there were some nasty recessions back then, many economists aren’t expecting a return to anything like that now, he said.

“The sense in which you had stagflation in the 1970s is not one that I think is at all in the cards,” Wright said.

However, high inflation is prompting the Federal Reserve to raise interest rates — known as tightening monetary policy. With that, it is “quite likely” the unemployment rate will rise “a fair bit” from the 3.6% it is at now, Wright said.

The result may at least be a mild recession, he said.

Stagflation may happen if a recession sets in before inflation has gone down to where the Fed wants it to be, Wright said. For example, if unemployment were to go up to about 5% and consumer price index inflation were also at above 5% in 2023, that would be a kind of stagflation, though not to the degree we experienced in the 1970s, he said.

“It certainly would mean that the job market would be a lot less hot than it’s been,” Wright said.

In the near term, the labor market may cool simply by having fewer vacancies, he said.

How likely is stagflation?

Despite surveys sounding the alarm on stagflation, not everyone agrees it’s inevitable.

“It doesn’t seem like a high probability,” said Josh Bivens, director of research at the Economic Policy Institute.

To have stagflation, you need both high unemployment and high inflation at the same time, which Bivens does not see as likely.

I think it’s inevitable that we’re going to hit a recession. Whether this is a mild recession or we go into stagflation will be the big question.

“If we had a situation where unemployment rose pretty sharply, I actually think that would likely cause inflation to start coming down pretty sharply,” Bivens said.

A more likely scenario is that if we end the year with a series of interest rate hikes by the Federal Reserve, we could be in a recession by 2023, he said.

“If that happens, I just expect inflation to relent pretty quickly,” Bivens said.

shrinkflation, where product companies reduce the contents of everything that we buy, is making it so people’s money just doesn’t go as far now, said Ted Jenkin, a certified financial planner and CEO of oXYGen Financial in Atlanta.

Now, stagflation is also a possibility that clients are asking about, Jenkin said.

“I think it’s inevitable that we’re going to hit a recession,” he said. “Whether this is a mild recession or we go into stagflation will be the big question.”

Consequently, now is a great time to revisit your personal financial plan.

“This is the absolute time for people to batten down the hatches and beef up the foundation of their financial house,” Jenkin said.

Try to aim for at least six months’ worth of emergency expenses in case a downturn does happen, he said. Also make sure you have prepared a recent budget to see if there are places where you can cut back.

Additionally, take a look at any adjustable-rate debt you may have — credit cards, mortgages, student loans — and see if you can pare those balances down or refinance them. Now that interest rates are poised to go up, those balances will become more expensive.

Moreover, it’s a great time to invest in yourself to be more marketable professionally if layoffs become the norm.

“Make sure you’ve really brushed up on your skills and competencies or education so that if the job market gets tighter, you’re marketable,” Jenkin said."

MY COMMENT

No one knows what or why anything will happen short term. I am surprised that about 13% of the economists agree with my view that DEFLATION is the big danger....especially long term.

 

A very nice strong day today for all the markets. I was very much in the GREEN with only one stock slightly down....Home Depot. I also got in a beat on the SP500 on a day it was up big......the beat being by 0.27%.

LETS continue where we left off tomorrow.

 

I post this primarily for the Amazon content.

9 Big Companies Already Plunged Into A Recession, Analysts Say

https://www.investors.com/etfs-and-...ged-into-a-recession-analysts-say/?src=A00220

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

"Wall Street is nervous that possibly a recession is right around the corner. But some analysts think some S&P 500 companies sank into one already.

Nine companies in the S&P 500, including consumer discretionary firms Amazon.com (AMZN) and Under Armour (UAA) plus Target (TGT), are expected to post a contraction in profit in the soon-completed second quarter. And that's coming right after their profit already dropped in the first quarter, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. All of their profit is down by at least 50% on average in the two periods.

This is the corporate version of a recession. A recession for the economy is defined as a drop in economic activity for two-straight quarters. And for these companies, two straight quarters of profit contraction has already happened, or is about to, analysts say.

"The housing market is cooling, economic weakness is hitting both manufacturing and service sector activity, and recession fears are surging," said Edward Moya, strategist at Oanda.


S&P 500: Looking For Signs Of Recession

Investors are treating an S&P 500 recession like a foregone conclusion. The S&P 500 plunged more than 22% this year, putting the much-watched big-cap index into a bear market already.

Just because the S&P 500 falls into a bear market, though, doesn't always mean a recession is coming. The S&P 500 plunged into a bear market (or nearly one) eight times since 1946 without an accompanying recession, says Ryan Detrick of LPL Financial. For instance, the S&P 500 plunged nearly 20% in the three months until Christmas Eve in 2018. But a recession never arrived.

What's more, analysts think S&P 500 companies will post profit growth as a group in the second quarter. Adjusted earnings for the S&P 500 during the second quarter are expected to rise more than 4%, says John Butters, analyst at FactSet. Analysts, though, are cutting estimates. Now, analysts think S&P 500 companies will make nearly 1% less than what they thought in March.

But for some companies, back-to-back drops in profit are likely on the way.

Amazon In Recession? Target, Too

Remember when Amazon.com was the do-no-wrong trillion-dollar FANG stock? It's now defanged.

New CEO Andy Jassy is moving fast to downsize the e-commerce giant that ramped up during the Covid pandemic. And profit is contracting, too. Analysts think the company will earn just 76 cents a share in the second quarter. If they're right, that would mark a contraction of 78% during the period. That might not be a huge deal in itself. But that drop in profit comes after a nearly 150% plunge in Amazon's bottom line in the first quarter to a loss of 38 cents a share.

No matter this formerly leading S&P 500 stock is now down nearly 37% this year.

For once, Amazon is feeling the same misery as some other retailers. Target, too, is seen slipping into a profit recession. Analysts think the retailer will only earn 73 cents a share in the second quarter. That's down 80% from what the company made a year ago. What's more, keep in mind Target's profit already plunged 41% in the first quarter. Now you understand why shares of Target are off nearly 40% this year.

It's unclear if an official recession is here yet. But for some S&P 500 stocks, it's a reality now."

MY COMMENT

I STILL dont like what I am seeing at Amazon. Jassy will have been CEO for a year in July....that is long enough to get a pretty good feel for how he is doing. AND.....I am definately NOT happy with his leadership....or lack of it......at the moment. There seems to have been a definite drop off in the company since he took over. He seems to NOT have the vision.......or......that intangible something that makes a leader work in a company. This looks like it is going to be a good hire on paper....but not in reality.

We see this all the time with second leadership ranks in companies after the founder leaves. People severely underestimate the intangible value of a founder to a company. A few rare people have that "something" that makes them and their company a success. When they leave the MAGIC is gone with them. I see that happening at Amazon right now.

I will probably hang onto the stock for another couple of years.....but.....I think we will pretty well know the truth in about another year. If things do not turn around in 1-2 years the initial GLORY days of the company will be over. That does not mean they are done for....it means hey will be looking for new management and might have to FLAIL AROUND for a while till they hit on the right person. Similar to what Microsoft did starting around 2000 till they hit on their current management. Apple also did the same thing.

I imagine it will be a shock for the many people that have ALWAYS owned Amazon for their entire investing careers. BUT....for me.....well, I have owned many, many companies over the years that were GIANTS and than faded for management or other reasons. Some are IBM, GE, INTEL, CISCO, MICROSOFT, APPLE, etc, etc, etc. You have to be willing to cut a stock lose when it is time. The time is not here yet for Amazon....but it will be in the next year or two. it will be GUT CHECK time for the company and shareholders.

As an investor you have to be steely eyed and clinical. No emotion, no feeling sorry for a company, or practicing wishful thinking. After all.......if a company gets it back on track later.....you can always buy it again at that time once the handwriting becomes more clear on the wall. This is what I did with Microsoft.

 

Here is another relevant Amazon story.

Amazon announces Doug Herrington as CEO of Worldwide Amazon Stores

https://www.cnbc.com/2022/06/21/ama...ington-as-ceo-of-worldwide-amazon-stores.html

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

"Key Points

• Longtime Amazon executive Doug Herrington will take over as the new chief executive of Worldwide Amazon Stores, CEO Andy Jassy announced Tuesday.
• The move comes after Amazon announced earlier this month that former CEO of Worldwide Consumer Dave Clark would soon resign.
• Jassy said Amazon was changing the name of the consumer business to Amazon Stores, adding that it would also bring the operations group under a single leader, John Felton.

Longtime Amazon executive Doug Herrington will take over as the new chief executive of Worldwide Amazon Stores, CEO Andy Jassy announced Tuesday.

Herrington has served on the high-level S-team at Amazon since 2011 after initially joining the company in 2005. He started on the company’s consumables business then launched AmazonFresh in 2007 and began leading the North American consumer business in 2015, according to Amazon. Herrington developed and launched several key programs at Amazon, including its popular loyalty program for moms.

The move comes after Amazon announced earlier this month that CEO of Worldwide Consumer Dave Clark will resign on July 1. Clark later announced he’s joining supply chain software start-up Flexport as its new CEO in September.

Herrington brought deep expertise in grocery to Amazon. It’s an area the company has sought to aggressively expand into. Herrington, a former vice president at dot-com grocery flameout Webvan, helped Amazon gain ground in the space when he launched Amazon Fresh, its grocery delivery service, and Prime Pantry, another food delivery program that has since shuttered.

Herrington has become a key leader in the company. He’s part of Jassy’s S-Team, a tight-knight group of over a dozen senior executives from almost all areas of Amazon’s business, such as retail, cloud computing, advertising and operations.

Jassy said Amazon was changing the name of the consumer business to Amazon Stores, adding it would also bring the operations group under a single leader, John Felton. Felton has also served on the S-team since 2020 and been at Amazon for 18 years.

Felton, who has served in a variety of operations and logistics leadership roles at Amazon, will report to Herrington under the new structure. Herrington’s other direct reports will include leads of Amazon’s physical, international and North American stores divisions, eCommerce Foundation, pharmacy/Amazon Care/health care, Selling Partner Services, Buy with Prime and Amazon’s chief economist."

MY COMMENT

Even though they are not saying it.....this looks like a restructuring of leadership at Amazon to me. Jassy is putting his people into the key positions and on the S-Team that has all the key leadership.

Looks like the executives mentioned above are all being shuffled around. This is a lot of moving pieces at a company that at the moment seems to be foundering a little bit.

As to the new promotion for Herrington, I dont believe that his expertise in the grocery side of the business, has produced much in the way of real results.

As I said......two years is my watch time and deadline to see......some..... results. If things go down the tube quicker I will pull the plug quicker. if things pick up nicely before that time......it will all be good and they will be off my two year watch list.

 

Succession is a BITCH at these companies like Amazon. I will hate to see the founder and current CEO leave Nvidia. That will be a very dangerous time for that company. Same for Microsoft....I am not looking forward to the day their top people retire or move on.

BUT.....that is the life of a long term investor. Over a lifetime of investing companies come and companies go. You have to keep current and not live in the past. There is ZERO SENTIMENTALITY in investing. It is all about positioning yourself to make the most money with the fewest moves over the long term. You ride a stock till it drops and than you move on. With luck....you get to ride them a long time.

 

Seattle is the home of Amazon. I found this article today in the Seattle newspaper. It is more evidence of an executive/leadership shake up going on at Amazon. Looks to me like a consolidation of power by the new CEO.

2 Black executives leave Amazon amid changes in leadership

https://www.seattlepi.com/business/...mes-new-head-for-troubled-retail-17255534.php

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

"Two Black executives at Amazon are leaving the company, the e-commerce juggernaut confirmed Tuesday, hours after CEO Andy Jassy named a new head for the company’s troubled retail business.

Alicia Boler Davis, a senior vice president who oversees the company’s warehouses, and David Bozeman, the vice president of the Amazon’s Transportation Services, have decided “to explore new opportunities outside Amazon,” John Felton, an Amazon executive who’s taking over the company’s operations organization, said in an email to employees. Boler Davis’ departure means there are no more Black executives on Amazon’s senior leadership team, which has been criticized for a lack of diversity.

“They scaled our operations, launched new capabilities and programs, and demonstrated relentless passion to make our operations better each and every day,” Felton said in the email.

Amazon did not give further details on the reasons behind the two executives leaving the company and neither could be immediately reached for comment.

News of their departure came following an announcement from Jassy earlier in the day that Doug Herrington will become the new CEO of Worldwide Amazon Stores, the company's former “consumer” division that is dealing with a glut of warehouse space after a massive expansion during the pandemic. Jassy had also announced earlier Amazon's operations organization would be united under Felton, who will manage the company's warehouses and delivery networks and report to Herrington.

Herrington is stepping into the role after leading the company’s North American Consumer business for seven years. He replaces Dave Clark, who announced his surprise resignation from the company earlier this month after 23 years. Days later, Clark said he would join the logistics startup Flexport as its new CEO in September.

In a note to employees that was later posted on the company’s website, Jassy said Herrington “is a builder of great teams and brings substantial retail, grocery, demand generation, product development, and Amazon experience to bear,”

The change come as Jassy is looking to return a “healthy level of profitability” to the Seattle-based company amid rising costs and a slowdown in demand that has left the e-commerce behemoth with too many workers and too much warehouse space.

Amazon saw its profits soar during most of the pandemic, when homebound shoppers turned to online shopping for goods. In response, the company massively expanded its warehousing capacity.

But as COVID-19 cases eased, demand also slowed. The company now expects excess space to contribute to $10 billion in additional costs in the first half of 2022. And to mitigate some of those costs, it has reportedly been planning to end some of its leases and sublease warehouse space.

Herrington joined Amazon’s senior leadership team in 2011, six years after joining the company to build out its Consumables business, a group that focuses on consumer packaged goods. He launched Amazon Fresh in 2007.

Boler Davis joined Amazon in 2019 from General Motors, where she was also an executive. Arguably, she oversaw one of the most contentious parts of the company's business — warehouses where workers routinely called out poor working conditions and high injury rates. The frustration led to a labor win during a union election at a warehouse on Staten Island, New York, in April. The company is currently seeking to redo the vote.


Bozeman joined Amazon in 2017 from Caterpillar, where he served as a senior vice president."

MY COMMENT

In my opinion we are clearly seeing a leadership shake-up at Amazon. The executive team is now going to be very different than it was under Bezos. This sort of shake-up in my view has at best about a 50/50 chance of success for the company.

As the article mentions there has been rising costs and a slowdown in demand and an obvious profit crunch. This is the result at the end of the first year of leadership by Jassy.

I am sure there is MUCH internal turmoil and gossip among employees about the stuff that has been going on recently.

I have no comment about the racial content of this article.....I only care about the executive changes happening at the company at the moment.

 

I have been sitting here this morning watching the markets come back from the lows earlier in the day. The event of the day.......who would ever guess......the FED talking to congress. Always a dangerous event.

I see that the DOW has now turned green. The SP500 and NASDAQ are also green at the moment. A good start to the day for stocks and funds......and the investors that own them.

 

I like this take on the current markets.

Analysts remain 'unusually bullish' about S&P 500 stocks despite downturn: FactSet

https://finance.yahoo.com/news/analyst-ratings-unusually-bullish-stocks-114638373.html

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

"Recession calls are permeating Wall Street, Corporate America is laying off workers to prepare, and the S&P 500 is in a bear market.

Despite this downbeat outlook, analysts remain the most confident about the companies they cover in more than a decade.

According to data from FactSet, stocks in the S&P 500 continue to have an "unusually high" percentage of Buy or equivalent ratings, exceeding most periods since 2011 even amid current macro headwinds.

The percentage of companies with a Buy ratings from analysts represents 56.9% the 10,708 ratings on stocks in the S&P 500, as of June 17. Only 5.4% have a sell rating.

This bullishness towards individuals companies persists as the S&P 500 index tipped into a bear market earlier this month.

The number of Buy ratings has slightly retreated from its February peak of 57.4%, but still comprises a historically high share of analyst ratings.

Barring a wholesale shift in analyst sentiment, June will mark the 15th straight month in which the percentage of Buy ratings on S&P 500 stocks finishes above 56%. Before the recent surge in analyst ratings that began in 2021, the month-end percentage of Buy ratings hadn't topped 55% since September 2011.

The 5-year average month-end percentage of Buy ratings for S&P 500 companies is 53.3%.

At the sector level, Information Technology (XLK), Energy (XLE), and Communication Services (XLC) stocks comprise the highest share of Buy ratings at 65%, 64%, and 61%, respectively. Meanwhile, analysts appear least optimistic about Consumer Staples (XLP), which has the lowest percentage of Buy ratings at 39%.

Alphabet (GOOGL), Microsoft (MSFT), and S&P Global (SPGI) were among the companies viewed most positively by Wall Street, with 98%, 95%, and 95% of analysts covering these companies, respectively, maintaining a Buy rating on shares.

Although analysts have slightly tempered their expectations for second quarter earnings, they have continued to increase earnings estimates for companies in aggregate for the full calendar year and for 2023, per FactSet data.

And some strategists have argued that earnings forecasts are too high given the current economic environment, including Morgan Stanley's Mike Wilson.

"Over the past several months, we've been highlighting the declining trend in earnings revision breadth," Wilson wrote in an early June note to clients. "We thought it would turn outright negative during Q1 earnings season and that's where we are. However, it's been a slow bleed toward 0%. This is why forward 12 month EPS estimates continue to grind higher for the S&P 500.""

MY COMMENT

I dont take analyst opinions into account in buying or selecting a company. If an analyst has crunched all the fundamental data on a company I might look at it and take it into account if I think it is accurate. There is no need for me to do a bunch of number crunching busy work if it is easily available on the internet.

BUT......analyst OPINIONS.......who cares. A bunch of lemmings that unfortunately are usually.....number one.....more concerned about their job and reputation and being part of the pack than anything else.

BUT......I like the POSITIVITY of this article and these days anything that might give people some hope and strength to get through the current conditions is ok with me.

 

Here is the....take....on why the markets turned positive today.

Stocks Erase Losses as Powell Restates Promise: Markets Wrap

https://finance.yahoo.com/news/stocks-asia-may-tailwind-us-221730180.html

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

"(Bloomberg) -- US stocks erased earlier losses and Treasuries advanced after Federal Reserve Chair Jerome Powell reiterated his commitment to curb inflation during his congressional testimony, reigniting fears that the central bank’s aggressive path of interest rate hikes could tip the economy into a recession.

The S&P 500 and the tech-heavy Nasdaq 100 rose. Treasury yields declined with the 10-year yield hovering around 3.15%. The dollar fell after earlier gains while other safe haven assets like gold climbed.

The S&P 500 is poised for its worst first half since Richard Nixon’s presidency as optimism evaporates that policy makers can achieve a soft landing as they navigate a course of aggressive monetary tightening to tame inflation. Powell, on Wednesday, said that the central bank will keep raising interest rates to tamp down on inflation, mostly restating his comments from a last week. He made no reference to the size of future hikes during his testimony.

“Such aggressive tightening will make a soft landing very difficult to engineer and those fears of recession or at least significantly slower growth are hitting demand for equities,” Fiona Cincotta, senior financial markets analyst at City Index, said in a note.

The market continues to be skeptical about the outlook for risk assets. Deutsche Bank AG’s Chief Executive Officer Christian Sewing joined a growing chorus of executives and policy makers who warn that the global economy may be headed for a recession as central banks step up efforts to curb inflation.

West Texas Intermediate crude tumbled below $103 a barrel, with prices falling alongside other raw materials including copper. Concerns about a broad economic slowdown are eclipsing the fallout from the war in Ukraine and signs of still-tight supply.

President Joe Biden plans call on Congress to enact a gasoline tax holiday to cool soaring pump prices and alleviate the pressure on consumers.

In Europe, stocks fell for the first day this week as miners and energy tumbled with commodity prices.

How will the second half of this year play out for major asset classes? We are re-running MLIV’s 2022 asset survey from December to see how street views have evolved amid the turmoil and volatility in the past few months. Click here to participate anonymously."

MY COMMENT

I dont see anything.....at all.....in this little article to explain the green markets today....at least in terms of Powell.

The actual reason that might be true is the drop in the price of oil.

the other thing in the article that might explain the markets doing somewhat better is the uniform opinion that the FED will be a FAILURE......as usual.....in engineering a soft landing. In other words they will FAIL as usual and either crash the economy or cause a recession.......and....it is that crash or recession that will solve the inflation issue.