By July 9......I was feeling better: "I believe that the good news now is that the markets are pretty well sold out and have now settled into more of a range bound market. It was nice to end the week NOT at the bottom of the range. Now we have to move forward and try to NOT extend the bottom end of that range over the rest of the year."
I finally made a little more of a call on July 15. "Is this a temporary reprieve......or......did we hit a bottom and are now lingering? We will find out in the future when we look back. I would give it about 50/50 odds either way. We may have found a bottom. Even if we are at a market bottom that does not mean that we will never test the lows in the remainder of this year. If I had to bet my life on it.....I would say we are at a short term market bottom......the market direction is now much more neutral.....although over the rest of the year there is potential for another 10-15% drop depending on short term news events"
AND....by about July 18....I had bought into the rally. "At the moment I am tempted to call the market bottom as July 1, 2022. BUT.....I still believe there is a potential 10-15% more room to the downside of the averages going forward. So I will say.......I believe that the worst is OVER......and the PROBABILITIES are that we are at.......or.......close to the bottom of this market event. With what is still going on in the economy......I anticipate that......the recovery from the bottom, this time around, could take longer than people expect. One thing is clear......as usual.....when the markets turn positive the move UP will be EXPLOSIVE. I definitely want to participate in those early market gains that usually happen before investors are aware that the markets have turned. So, I will continue to be fully invested for the long term as usual."
That is my EVOLUTION above.....from negative to positive.....as we saw this little rally extend to today.
BUT.....I give Emmett credit.....for being right on point with his call of the bottom. That is why some of us on STOCKAHOLICS simply call Emmett........THE MAN.
Well you are.....THE MAN....tomorrow. I have to go to a museum that is out of town tomorrow. I should be back by the close. SO.....you got the market EMMETT. Make us proud.
ONE.....quick post before I have to go. HOME DEPOT.....love the earnings. Home Depot’s second-quarter earnings beat expectations, company stands by 2022 guidance https://www.cnbc.com/2022/08/16/home-depot-hd-q2-2022-earnings.html (BOLD is my opinion OR what I consider important content) "Key Points Home Depot reported quarterly earnings and revenue that beats analyst expectations. CEO Ted Decker said the results reflect continued strength in demand for home improvement projects. "Home Depot on Tuesday reported quarterly earnings and revenue that beat analysts’ expectations as the company cited continued strength in demand for home improvement projects. “Our team has done a fantastic job serving our customers, while continuing to navigate a challenging and dynamic environment,” Home Depot CEO and President Ted Decker said in a statement. Here’s what the Atlanta-based company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv: Earnings per share: $5.05, adjusted, vs. $4.94 expected Revenue: $43.79 billion vs. $43.36 billion expected Same store sales rose 5.8% in the quarter, topping analyst expectations for growth of 4.9%, according to FactSet. Total customer transactions in the period slipped to 467.4 million, from 481.7 million in the year-ago period, while average ticket grew 9% to $90.02 from $82.48. Professional contractors tend to make fewer visits and purchase in higher quantities. Sales per retail square foot grew 5.7% compared to the same quarter last year. During the pandemic, many people took on DIY projects to spruce up their living spaces as they spent more time hunkered down at home. Investors have been watching to see whether people are still prioritizing such projects in a tightening macroeconomic environment. For the three-month period ended July 31, Home Depot said net income rose to $5.17 billion, up 7.6% from the prior year. Net sales grew 6.5% from a year ago, which the company said marked its highest-ever quarterly sales. Home Depot said it still expects total sales for 2022 to grow about 3% from a year ago. Shares of the company were down about 2% in pre-market trading." MY COMMENT An AMAZING earnings BEAT. As one of my ten stocks this is a CORE company for me. I double ant triple it up in my portfolio when you consider that it is a key holding in both of my funds. The absolute STUPIDITY of the markets is shown by the fact that it is DOWN in pre-market trading. Why is it down? What I have seen is......excess inventory. How DUMB is that.....this is not some department store with excess women's spring blouses or a Walmart with excess seasonal stuff. This is a hardware store......I dont see any reason that they will have to significantly discount a bunch of tools, tape, nails, lumber, etc, etc, etc in order to get rid of it. In fact this should help their future results as they have now written all this stuff off as inventory and they will simply reduce their orders over the near term as they sell all this stuff at full price or near full price.
Home Depot and Wal-Mart both got in earnings beats...so this should help out some as well. Maybe we can keep making some progress. Fuel has came down in my area, but grocery items are still high.
We have discussed a few times in this thread the WFH issue that many companies deal with. Here is a small bit on Apple....only 3 days though. (Reuters) -Apple Inc has set a Sept. 5 deadline for corporate employees to return to office at least three days a week, a Bloomberg News report said on Monday. The company, which told its employees of the new plan on Monday, will require employees to work from the office on Tuesdays, Thursdays and a regular third day that will be determined by individual teams, the report said. The iPhone maker did not immediately respond to Reuters request for comment. Apple joins several technology and finance companies that have begun mandating a return to office as COVID cases ease. Earlier in June, Tesla Inc Chief Executive Elon Musk has asked employees to return to the office or leave the company, according to an email sent to employees and seen by Reuters. (Reporting by Tiyashi Datta in Bengaluru; Editing by Arun Koyyur)
Many here follow the EV industry and all things TSLA. This industry is developing rapidly and everyone from autos, mineral mining, and batteries are constantly jockeying for position in the US and many other countries as well. The EV industry is included in the latest "Inflation Reduction Act" bill...yes the politicians really named it that. Here is some news about the "tax credit" which now appears to have become entangled in the often inefficient and overly complex hand of legislation. Some interesting details/restrictions on battery sourcing and critical minerals, which would basically eliminate any incentive currently. WASHINGTON, Aug 12 (Reuters). U.S. automakers and dealers are scrambling to figure out if they can still offer $7,500 tax credits to would-be buyers of electric vehicles (EVs), as Congress prepares for final votes today on a bill that includes a top-to-bottom overhaul of Washington's clean vehicle policies. Under the $430 billion climate, health care and tax bill that the House of Representatives is set to vote on Friday, rules governing the current $7,500 EV tax credit aimed at persuading consumers to buy the vehicles would be replaced by incentives designed to bring more battery and EV manufacturing into the United States. Manufacturers, dealers and consumers do not have answers to many basic questions about how the new rules will affect the way clean vehicles aimed at consumers - including fully electric and hybrid models - will be bought, sold and built, automakers, consultants and lobbyists said. However, industry executives were more positive about proposed incentives of up to $40,000 per vehicle for larger commercial electric vehicles, such as Tesla Inc's (TSLA.O) Semi or electric commercial vans developed by several manufacturers. The provisions in the Inflation Reduction Act are "a powerful tail wind in the commercial space," said RJ Scaringe, chief executive of Rivian which has an agreement to deliver up to 100,000 large vans to shareholder Amazon.com Inc (AMZN.O). The legislation brings "a significant change in value chain requirements, in a very short period of time, that affects an industry where supply chain development ... is measured in years," said John Loehr, a managing director with consulting firm AlixPartners. The most immediate effect of the Inflation Reduction Act would be a ban on tax credits for vehicles assembled outside North America. That would mean about 70% of the 72 current EV and plug-in hybrids on the U.S. market would no longer be eligible, said the Alliance for Automotive Innovation, which warned the change "will surprise and disappoint customers in the market for a new vehicle" and "jeopardize" EV sales goals. However, U.S. Transportation Secretary Pete Buttigieg told Reuters in an interview this week: "This is ... going to be a very important long-term transformational policy to accelerate the EV revolution and to make sure it is a 'Made in America' EV revolution." "Industry is capable of sometimes more than they will at first see," Buttigieg added. The Biden administration must still write and finalize implementing regulations to handle some of the complex questions raised by the quick rewrite of the tax credit. New restrictions on battery sourcing and critical minerals, along with price caps and income caps, take effect on Jan. 1, which will potentially make all current EVs ineligible for the full $7,500 credit. A Congressional Budget Office forecast estimated as few as 11,000 EVs may qualify for the tax credit in 2023. read more The domestic content requirements ratchet up over the next six years. Volvo Car North America said just one of its models that currently qualify for EV tax credits will still qualify after the bill is signed. The only one in the short term that will qualify is the S60 Recharge, that is assembled in South Carolina, and even that may not qualify after Jan. 1. Several automakers, including startups Rivian and Fisker, this week began urging would-be customers to get off the fence and commit to buying vehicles before the current rules are replaced. The bill does allow consumers to still get the credit if they buy before Biden signs the bill into law, but must have a "written binding contract" to purchase. Rivian encouraged would-be buyers in a letter to make $100 of their deposits non-refundable in order to qualify for the credit. Rivian executives said Thursday customers are ordering R1 trucks and SUVs with average prices of $93,000 - well above the cut-offs in the proposal before the House. "We cannot guarantee that the IRS (Internal Revenue Service) will approve tax credit eligibility as we interpret the terms of the Inflation Reduction Act," Rivian cautioned in its letter. Mercedes-Benz said it is "reviewing the proposal in anticipation of the new provisions becoming final in the coming week." European Union and South Korean government officials on Thursday said they were concerned the domestic content and manufacturing requirements in the Inflation Reduction Act could violate World Trade Organization rules. read more U.S. electric vehicle market leader Tesla and General Motors Co (GM.N) already sell their EVs without a federal tax credit, because they hit the 200,000 vehicle cap under the current law. Tesla and GM may not become eligible to offer tax credits under the new law until Jan. 1. And even then, it is not clear which models - if any - will get the full $7,500 by meeting requirements that 40% of battery minerals come only from North America, or countries with which the United States has free trade agreements. The proposed subsidy limits would hit hardest on automakers and battery makers with corporate parents in China. Starting in 2024, rules will take effect that make vehicles ineligible for any credit if they have content from an "foreign entity of concern," a term that could include Chinese firms.
Looks like you have lots of satisfied customers with your market management today....EMMETT. I just got a chance to look at my account. I got a nice moderate gain today so green. I also beat the SP500 by 0.45%. Looking forward to tomorrow....especially if the Walmart and Home Depot earnings settle in nicely with the media and opinion writers.
HERE is a nice little article on RISK TOLERANCE.....a very important aspect of long term investing. Weekly Market Pulse: Regrets https://alhambrapartners.com/2022/08/15/weekly-market-pulse-regrets/ (BOLD is my opinion OR what I consider important content) "Over the last few months, as the outlook for the economy turned more sour, I’ve used these weekly commentaries to warn you not to get too negative. Long-term investors need to have a strategy they can stick with no matter what happens, a strategy that keeps them on an even keel. If you were so nervous that you sold out near the recent bottom, you need to reassess your risk tolerance; you were obviously carrying more risk than you were comfortable with – or you wouldn’t have sold. Strategy has nothing to do with trying to time tops and bottoms. That is the province of traders and despite years of evidence that it can’t be done consistently, there are those who keep trying. We aren’t one of them. And you shouldn’t be either. The S&P 500 is 17.7% off the mid-June low and if you sold anytime between the low and mid-July, you are probably feeling a little sick to your stomach right now. You’re probably saying, well, this won’t last, I’ll just wait for it to come back down and then I’ll do some buying (which you won’t because it will be some bad news that brings it back down). Or, the economy is still headed for recession so it’s only a matter of time before stocks really do go down 50% like they did in the last two real recessions (the COVID recession was a special situation). Or any number of other things designed to make yourself feel better about your poor decision. That’s the wrong way to think about it. It wasn’t a poor decision because the market went up after you sold. It was a poor decision because you made it under duress. You had a strategy (well, certainly Alhambra clients did and do) and you couldn’t stick with it when things got tough. Your poor decision was the one you made when you decided how much risk you could take. But having made that mistake you shouldn’t compound it by making another poor decision when the loss hurts more than you thought it would. Once made, you need to ride out the tough times and make an adjustment when things are better. Then you’ll avoid turning a temporary loss into a permanent one. Investing is hard and determining your risk tolerance is far from an exact science. I have said for years that I never really know what a client’s risk tolerance is until they suffer some losses. And if you are really a long-term investor you will suffer some losses with the emphasis on suffer. I hate being down over any time frame and it is always painful when it happens. But I also know that our strategy has proven its worth through all kinds of markets and economic environments. That doesn’t mean it doesn’t suffer losses occasionally and it doesn’t mean that you (I) won’t question whether it will work this time when it does. The only investment strategy that won’t ever make you uncomfortable is one that is risk-free (or nearly so). In fact, I’d go so far as to say that if you aren’t uncomfortable with your strategy sometimes, you aren’t taking enough risk. So, now that risk markets have come back, I’m going to spend a little time warning you not to get too positive, too enthusiastic about the recent rally. Emotional control is a two-way street and getting too bullish is just as dangerous as getting too bearish. At the lows, our moderate-risk clients were down about 10%* and after the recovery of the last month, they are down low to mid-single digits. That is in comparison to the standard 60/40 stock/bond portfolio that is still down nearly 10%. It is interesting – at least to me – that a 5% loss on the way up feels so much better than a 5% loss on the way down. How things have gone recently doesn’t tell us anything about how things will go from here though. I am somewhat optimistic because many of the conditions that prevailed at the lows still do. This is a rally that no one loves; there are still a lot of skeptics – this is just a bear market rally! – but not as many as there were a few weeks ago. Put/call ratios have fallen to levels that I associate with corrections. I prefer to look at what people do rather than what they say and they are buying quite a lot of calls, betting on a higher stock market. Other measures of sentiment have moderated as well, the ranks of the bears thinning a tad. One of the main underpinnings of this recovery in risk assets is the recent fall in interest rates and while that can continue for a while, I think there is a limit to how low rates can go and keep stocks on the upswing. The 10-year rate peaked on June 14th at 3.48% and closed Friday at 2.85%. (BTW, stocks bottomed on June 16th and no that isn’t coincidence.) Rates fell because expectations for Fed policy moderated and because the economic data softened some. But if the economy gets worse from here, there will come a point when falling rates are bad for stocks because it means recession is imminent. It could also be that the moderation of inflation seen in a slew of reports last week (CPI, PPI, and import and export prices) is temporary and investors start to push rates higher again. The only scenario where stocks keep going up is if economic growth prospects improve while inflation expectations continue to fall – the goldilocks scenario. That isn’t as unlikely as it seems but betting big on it would fall into that too enthusiastic category. There are still plenty of things for an investor to worry about but markets have recently pushed off the onset of any recession to at least Q2 2023 when short-term rates are expected to peak. That is a moving target though and it was only a couple of weeks ago when that date was as close as the end of this year. And it was only a few months ago when it was reckoned to be as late as Q4 2023. The market-based view – the wisdom of the crowd – is that the US economy’s prospects have improved and risk assets are responding to that. Last week I pointed out some extremes in futures market positioning for rates, the dollar, and stocks. Large speculators were very short bonds, very short stocks, and very long the dollar. Last week’s trading only changed that by a little so I’d say the likelihood the recent trends continue are pretty high. If you sold at the lows, waiting for a pullback may end up a lot like the wait for Godot. If you sold because of recession fears or whatever, you need to correct your mistake. I can’t tell you how to do that because everyone’s situation is different but trying to time the correction of your mistake is just another mistake." MY COMMENT Evaluating and understanding YOUR OWN risk tolerance is a keystone of long term investing. You will NEVER be a long term investor if you are way out over your skis with your portfolio risk.
Good little article/post above. Risk tolerance is such an individual decision for each investor. There is not a one size fits all when it comes to risk tolerance. Some may be in or near retirement or early in their careers, some may be reliant totally on their investments for retirement or have a pension to help offset some of the risk. It is important to remember your plan is for you and may not be the same for everyone. Over a period of time one will learn what that risk tolerance is through experience and it may change throughout a persons life. Mange your plan and control what you can control. As to the recent upswing in the markets. I like how the article reminds us to temper our enthusiasm in the same fashion as we would in a down turn in the market. As an investor it is important to never get too high or too low on this scale. We all appreciate the breath of fresh air the markets have provided lately, but we also realize many things are still in play as well. As an investor, it is perfectly okay to celebrate when things are looking up or are on a wild bull run, just as it is normal to feel anxious about long downturns or bear markets. We will have many more of both in the future. Learning both of these things, your risk tolerance and controlling your emotions related to the market, can go a long way in determining your success as an investor.
