The Long Term Investor

Discussion in 'Investing' started by WXYZ, Oct 2, 2018.

  1. WXYZ

    WXYZ Well-Known Member

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    I DO like this little article.

    The Relationship Between Rates and Stocks Isn’t as Straightforward as Many Think
    Long-term interest rates—whether rising or falling—don’t have a reliable impact on stock market direction.

    https://www.fisherinvestments.com/e...-stocks-isnt-as-straightforward-as-many-think

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

    "In a week with monetary policy meetings scheduled in Norway, Switzerland, Sweden, Japan, the UK—oh, and the US—it was perhaps inevitable interest rates would feature prominently in financial commentary. Then, on Monday, the US 10-year Treasury yield hit 3.489%, its highest close since April 2011, triggering even more headlines. Many presume the rise in long-term yields is poison for stocks, and fear of rising rates seemingly has played a role in this year’s market decline. We don’t dismiss how challenging this market environment has been, as interest rate concerns have been one of at least eight stories weighing on sentiment over the past nine months. Yet in our view, it is an error to extrapolate forward this effect—chiefly a sentiment function—and presume rates simply must fall for a new bull market to begin.

    Arguments positing the upturn in long rates undercuts stocks generally go like this: Low yields in the not-so-distant past presumably buoyed stocks. Proponents of this take said, “there is no alternative” (aka, TINA) to stocks providing a reasonable return. So, they argue, low rates lured more people out of bonds and into stocks. Still others carry this a bit further into theoretical territory, noting that, because rising interest rates reduce the current value of future revenues and profits, higher yields now weigh on stocks’ appeal.

    Today, with most people projecting rates’ rise this year into ever-higher yields to come, many conclude there is more trouble ahead for stocks. There is an alternative now, they say, even if yields at 3.5% are far below inflation and further rises in yields would hit bond prices (which move inversely to yields).

    Yes, yields are up, and that has coincided with sliding stocks this year. But be careful about assuming this past is prelude. For one, the idea rates must fall for stocks to rise is at odds with historical data. Since 1962, the S&P 500 has a correlation of -0.05 to weekly changes in 10-year Treasury yields. Considering 1.00 means identical movement and -1.00 exact opposite, that shows you there is next to no reliable relationship. Rates and stocks rise and fall concurrently quite often through history—about as often as they don’t. Exhibit 1 shows this another way, tallying the count of years that yields and stocks rose together, diverged and fell together. As you can see, there isn’t much of an identifiable relationship here—nothing to hang your hat on.

    Exhibit 1: 10-Year Yields and Stocks—No Set Relationship

    [​IMG]
    Source: Global Financial Data, Inc. and FactSet, as of 9/19/2022. Annual change in 10-year Constant-Maturity Treasury Yield and S&P 500 total return, 1962 – 2021.

    Even during the hotly inflationary 1970s, this lack of relationship exists. (Exhibit 2) The idea we must see rates fall for a recovery seems questionable.

    Exhibit 2: Rates and Stocks in the 1970s by Year

    [​IMG]
    Source: Global Financial Data, Inc. and FactSet, as of 9/19/2022. Annual change in 10-year Constant-Maturity Treasury Yield and S&P 500 total return, 1970 – 1979.

    Why is this relationship so flimsy? We suspect it is because rates are just one of many things influencing stocks—a key blindspot for theories about rates reducing future profits’ and revenues’ values. That argument may or may not hold if all else is equal, but all else almost never is, undercutting the theory.

    As for TINA, we have different quibbles. For one, the correlation between stocks and bond yields during the 2009 – 2020 bull market was positive 0.40.[ii] That means they moved together more often than not over this span. Beyond that, if there was a huge exodus from bonds to stocks when rates fell over the course of the 2009 – 2020 bull market, we should see this in fund flow data. A reversal should also feature prominently in more recent data. Neither holds. During the 2009 – 2020 bull market, net flows into bond mutual funds and exchange-traded funds (ETFs) dwarfed net flows into stock funds and ETFs.[iii] This year, while yields have climbed—theoretically giving investors a viable alternative to stocks—bond fund outflows have topped stocks. Fund flows are, of course, not a complete look at what investors are buying or selling. But we would expect to find some sign of TINA here if that theory were true. There isn’t.

    Furthermore, there really isn’t anything that says rates mustkeep rising from here. While many point to that plethora of central banks hiking rates, they mostly move short rates, not long. (Quantitative Tightening, the Fed’s allowing bonds purchased under its past “stimulus” efforts to mature without reinvesting the proceeds, does, but it is largely a known quantity and markets likely reflect its influence to a great extent already.) Counterintuitively, rate hikes can drag down investors’ inflation expectations, which is a force potentially lowering interest rates. Inflation expectations have already begun cooling, which could spell lower long rates before long. But even if they don’t, we think it is a mistake to presume long rates climbing from here assures more downside for stocks."

    MY COMMENT

    There is a SINGLE factor that will determine the long term future for companies and business......FUNDAMENTALS. EARNINGS. It is a total fools errand to try to invest based on all the various economic data including rates.

    Bottom line.....MUCH if not MOST.....of the blather that you see day after day about what investors should consider and take into account.......and WHY it is important......is simply RIDICULOUS.
     
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  2. WXYZ

    WXYZ Well-Known Member

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    So far today.....no problem man.

    Stock market news live updates: Stocks push higher ahead of rate decision

    https://finance.yahoo.com/news/stock-market-news-live-updates-september-21-2022-095724724.html

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

    "U.S. stocks gained at Wednesday's open as the Federal Reserve’s highly-anticipated rate announcement kept investors on edge.

    The benchmark S&P 500 rose 0.5% early into the session, while the Dow Jones Industrial Average added 170 points, or 0.6%. The technology-heavy Nasdaq Composite advanced roughly 0.4%.

    Moves in the early trade come after all three major averages retreated roughly 1% in the previous session and the VIX – Wall Street’s volatility gauge – edged up 5.4% to 27.16.

    Activity across the bond market has been closely watched all week. Treasury yields paused a perilous climb Wednesday morning but remained near fresh highs. The benchmark U.S. 10-year note held above 3.5%, its highest level since 2011, while the 2-year Treasury note was well above a 15-year high of 3.9%.

    Among market movers early Wednesday was General Mills (GIS), which rose nearly 4% at open after the company reported better-than-expected quarterly earnings and raised its full-year sales outlook as it benefits from higher prices on breakfast cereals, snack bars and pet food.

    Beyond Meat (BYND) shares gained more than 2% after announcing a partnership with Taco Bell (YUM) on their first menu collaboration: Beyond Carne Asada Steak. The news helped BYND claw back from a nearly 3% drop pre-market after the meat substitute producer suspended Chief Operating Officer Doug Ramsey over his arrest for allegedly biting a man’s nose this weekend in a road rage incident.

    Stitch Fix (SFIX) shares tanked nearly 5% after the company reported disappointing fourth-quarter revenue expectations and sales guidance and posted a drop in active clients.

    U.S. central bank officials are set to deliver a third-consecutive 75-basis-point increase to their benchmark policy rate Wednesday at 2 p.m. ET. at the conclusion of policy-setting discussions.

    Market participants will also tune in to remarks from Fed Chair Jerome Powell following the meeting, along with the economic projections of U.S. central bank members and the latest dot plot showing each official’s forecast for the Fed’s short-term interest rate.

    “The meeting-by-meeting and data-dependent approach that central banks around the world have adopted will allow for some easing in the pace of monetary policy tightening in the coming months, but central bankers have warned that such action would only happen if, and when there is compelling evidence of inflation cooling,” EY Parthenon Chief Economist Gregory Daco said in a note.

    Across the Atlantic, Russian President Vladimir Putin announced a “partial mobilization” of Ukraine and vowed to annex occupied territories. In a televised message, he called the moves “urgent, necessary steps to defend the sovereignty, security and territorial integrity of Russia.”

    The threat of an escalation in Russia’s war against Ukraine rattled markets. Oil prices climbed, with West Texas Intermediate (WTI) crude futures up 2.5% to $86.07 per barrel and Brent crude oil 2.4% higher at $92.81 per barrel. The dollar rallied toward a fresh record high while the euro slid. In crypto markets, bitcoin (BTC-USD) fell back below $19,000."

    MY COMMENT

    SAME OLD....SAME OLD.

    LOL.....treasury yields are in a "PERILOUS CLIMB". Well.....DUH......the FED is in the middle to a huge raise in rates that will continue for many more months. NO.....it is not perilous......it is what the FED intends and is doing.

    What is actually......"perilous".....is the current dot plot garbage and the focus on what every single FED member thinks and has to say about the future of the economy. These people dont have a clue what is going to happen or why it will or will not happen.

    We are humans....the way our brains are wired we LOVE to "FEEL" like there is some control over what happens in the world. SO.....we love to have so called experts as a psychological crutch. It makes us "feel" more secure. The vast majority of the economic and investing "stuff" that you see and hear is simply based on our craving to...."FEEL"....good and in control. Or at least "FEEL" like someone is in control. That....."someone"....being the FED and all the other experts you see out there talking every day.

    A simple question.....how many of the FED......the economists......and all the others.....have amassed significant wealth doing actual....INVESTING? Very few if any.
     
  3. WXYZ

    WXYZ Well-Known Member

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    Forget the FED.....here is the REAL economic story of the day.

    Existing home sales fall in August, and prices soften significantly

    https://www.cnbc.com/2022/09/21/exi...n-august-and-prices-soften-significantly.html

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

    "Key Points
    • Sales of previously owned homes fell 0.4% in August from July to a seasonally adjusted annualized rate of 4.80 million units, according to the National Association of Realtors.
    • That is the slowest sales pace since June 2020, when activity stalled very briefly due to the start of the pandemic.
    • Outside of that, it is the slowest pace since November 2015.

    Sales of previously owned homes fell 0.4% in August from July to a seasonally adjusted annualized rate of 4.80 million units, according to the National Association of Realtors. That is the slowest sales pace since June 2020, when activity stalled very briefly due to the start of the pandemic.

    Outside of that, it is the slowest pace since November 2015. Sales were 19.9% lower than in August 2021.

    The sales figures represent closings, so contracts that were likely signed in June and July, when mortgage rates spiked higher and then pulled back. The average rate on the popular 30-year fixed mortgage began June at around 5.5% and then shot up over 6% by the middle of the month, according to Mortgage News Daily. It then pulled back a bit, hanging in the 5.7% range for most of July before dropping further to the low 5% range at the end of the month.

    The 30-year fixed started this year at 3%. It is now close to 6.5%.

    Even with interest rates making housing even less affordable, prices were still higher than a year ago. The median price of an existing home sold in August was $389,500, up 7.7% from a year ago. Home prices historically drop from July to August, due to seasonality, but the drop this year was wider than usual, suggesting a significant softening.

    From June through August, prices usually decline about 2%, but this year they have fallen about 6%.

    The housing market is showing an immediate impact from the changes in monetary policy,” said Lawrence Yun, chief economist for the Realtors, noting that he will revise his annual sales forecast down further due to higher mortgage rates. “Some markets may be seeing price declines.”

    Sales fell in all price categories, but more sharply on the lower end. Sales of homes priced between $250,000 and $500,000 were down 14% year over year, while sales of those priced between $750,000 and $1 million were down just 3%. Much of that has to do with supply, which is leanest on the lower end of the market.

    Prices are still being bolstered by tight supply. There were 1.28 million homes for sale at the end of August, unchanged from a year. At the current sales pace, that represents a 3.2-month supply.

    “In July, we saw the first sign that the housing market’s refresh may affect homeowners’ eagerness to sell, and that hesitation continued in August, as the number of newly-listed homes sank by 13%,” said Danielle Hale, chief economist for Realtor.com.

    Homebuilders have been pulling back in the face of falling demand, but there was a small bump in single-family housing starts in August, according to the U.S. Census. That may have been due to a brief drop in mortgage rates during, which sparked more interest from buyers. But building permits, which are an indicator of future construction, fell as mortgage rates were expected to rise again.

    MY COMMENT

    A side issue....but....I think it is interesting that a few days ago we were seeing SCREAMING headlines that mortgages hit 6% for the first time in years. Yet....this little article....CORRECTLY....notes that they hit 6% back in June. A perfect little example of the fact that you can NOT trust what you read anymore. You have to use your own memory and common sense.

    In spite of all the above.....most of the country is still....statistically....in a sellers market although prices are softer. That softness reflects the FACT that people that dont have to sell are NOT listing their homes right now. Those that have to sell are a higher percentage of the current listings and they have their reasons for lowering their price to try to sell.

    As with EVERYTHING.......it is all about supply/demand. At the moment supply/demand in EVERYTHING is distorted and unreliable. Unless you have to sell........it is a good time to just sit and watch and wait.
     
    #12443 WXYZ, Sep 21, 2022
    Last edited: Sep 21, 2022
  4. WXYZ

    WXYZ Well-Known Member

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    I am once again today hearing how.....the most successful businesses in the world....are the most sensitive to rate increases. Those companies at the moment happen to be BIG TECH companies.

    I remember the OLD DAYS.....then the most successful businesses in the world happened to be BIG CAP CONSUMER companies and conglomerates......Proctor & Gamble, GE, COKE, AT&T, Phillip Morris, and many others. Back than....when there was economic turmoil....including interest rates.....investors would FLEE to these stocks for SAFETY.

    NO......we are not in some new normal. The most successful businesses in the world are not less safe during economic turmoil than in the past. What has changed is the constant delusional "stuff" that is spouted every day. The successful BIG CAP TECH companies are where people should be fleeing at the moment. These are the companies with the revenue, profits, fundamentals, resources, management, etc, etc,....that are in the best position to come out the other side of what is going on now as DOMINANT companies with great business results. These companies have the resources to GAIN market share right now. They have the resources to NOT have to borrow money. In FACT.....most of them are siting on HUGE HOARDS of CASH.....at historic levels.

    It is simply IRRATIONAL. (LOL.....that last little sentence makes me sound like.....SEVEN OF NINE)
     
  5. WXYZ

    WXYZ Well-Known Member

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    For those that dont know.....that last little bit above is a Star Trek reference. I am NOT a Trekkie.....it just beamed into my mind for some random reason.
     
  6. WXYZ

    WXYZ Well-Known Member

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    Speaking of housing a few posts above. Here in my little local area of 4200 homes......we are holding steady at 52 active listings. So, not much inventory. Prices range from a low of $575,000 to a high of about $8MILLION. The market is definately slower, homes are not going pending in just a day or two.....but prices are not going down......yet.
     
  7. WXYZ

    WXYZ Well-Known Member

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    I will mention that TODAY....it is a total waste of time to watch anything to do with the markets. The entire day will HAPPEN in the last hour. Anything before that is just.....PRE-FED.....fluff.
     
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  8. Smokie

    Smokie Active Member

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    Agree completely. They are right about one thing in the article sort of at the very end about investors needing to "Watch Out." Yes, watch out for these type of articles and financial managers that want to manage your money or put you on the next great thing. They simply have been getting their asses kicked for some time. They know it and thankfully a whole bunch of individual investors know it. I remember when the index funds were relatively new and the "big wigs" poked fun and told everyone they would never work. Jack Bogle was scrutinized quite a bit by the big elite fund managers. We know who was right out of that argument hands down.

    Here is a little blip of why we still on occasion see shade thrown at index investing:
    A portfolio equally divided among the eight stocks Kiplinger’s recommended for 2021 would have returned 8.2% last year, trailing the 25.6% gain in the Vanguard Total Stock Market Index ETF (VTI) by an embarrassing amount.
    • A portfolio equally divided among the five stocks that Kiplinger’s advised readers to avoid or sell last January would have returned 22.6% last year. (Vectors Jan 2022).


    And this:

    Index investing affords investors tax efficient, low-cost access to almost any financial market. According to Morningstar, as has been the case for the past several years, investors continued to favor index investing over active management for the 12-month period ended June 30th . Index mutual funds and ETFs reported estimated net inflows totaling $744 billion for the period and active funds reported estimated net outflows totaling $373 billion. (Vectors 2022).

    So they can cry and crow all they want. The index investing has worked brilliantly in both performance and costs. Of course they want to instill the "boogeyman" about index investing. What else do they have to offer? The vast majority of them never beat it. Even if a few of them manage to (which is rare) it is not long term and the fees they charge to do so will leave you with less return and money.

    I love to see these articles pop up every once in awhile. It doesn't happen much, because they realize a lot of self direct individual investors will see the simple stupidity of their case. Usually they show up around/during a bear market because fear and insanity is at an all time high. What better time to get investors to buy into some irrational witches brew of a scheme. Don't fall for it friends.
     
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  9. Smokie

    Smokie Active Member

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    To add another bit to some of the above/previous posts about the over abundance of predictions, financial media, and just simply all of the NOISE that investors are currently being overdosed on. Does it seem like it is worse than usual? The answer is a resounding YES. The reason is simple in my opinion. There is a ton of money to be made during irrational/unpredictable times. When there is fear and unknown being cast about like a snake oil salesman at a cheap carnival....these people come out in droves.

    They want to give you comfort and an answer to all of the things that worry you as an investor. They are there to "help" you through this trying time and guide you on "what you need to do." This happens fairly regular at anytime, but during bear markets and very volatile times is when they really get after it. IGNORE IT ALL. They are worse than a thief in the night about your money. Think about the sheer stupidity of it. If they knew all of what they claim to know....wouldn't it have all been known in the last bear market or down turn.

    Keep on with your long term plan that is sound and reasonable and based on facts. In the end you will have left most of them in the dust and will be enjoying a nice peaceful retirement.
     
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  10. Spud

    Spud Active Member

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    VTI. Vanguard is a good choice.Well worth noting. Thanks.
     
    #12450 Spud, Sep 21, 2022
    Last edited: Sep 21, 2022
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  11. WXYZ

    WXYZ Well-Known Member

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    I just walked in the door and have not had a chance to look at anything but the RED averages. I assume the FED tanked the markets today.....in spite of their totally expected rate increase of 0.75%.
     
    #12451 WXYZ, Sep 21, 2022
    Last edited: Sep 21, 2022
  12. WXYZ

    WXYZ Well-Known Member

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    In light of a few posts above here is a nice little article.

    Why market predictions are best ignored

    https://www.evidenceinvestor.com/market-predictions/

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

    "We’re naturally drawn to stock market predictions. When someone who appears to be an expert says, for example, that the market is about to fall or rise 20%, it’s hard not to take any notice. But, as ALEX MOFFATT explains, the best thing to do with all market predictions is simply to ignore them.

    It’s tough to make predictions, especially about the future,” the baseball player Yogi Berra is reputed to have said. The truth of this is evident every day in the world of finance.

    The uncertainty has been particularly evident this year, when we have had soaring inflation, Russia’s war on Ukraine, plunging stock markets, energy shortages, and the growing likelihood of a global recession. Investors desperately want to know what’s coming next. Did the market hit its lowest point in June, or was the summer recovery a mere blip in a continuing bear market?

    There is commentary available 24 hours a day, with experts offering their opinions on what the next step will be, on what the future holds. But much of it is contradictory and confused. It’s not much more than guesswork.

    Admitting ignorance

    I was struck by an unusually frank exchange between academic and entrepreneur Scott Galloway and economist Tyler Cowen on a recent episode of The Prof G Pod regarding the state of the economy at a point where the US had recorded two quarters of negative GDP growth. Galloway asked: “Has there been another point in economic history where we’ve had full employment, an inverted yield curve and interest rates rising this fast?”

    Cowen responded: “I have never seen this configuration of economic numbers and variables in economic history, ever. It is unique and I think we are poorly positioned to make very dogmatic predictions for that reason… So I think we are flying blind and hoping for the best.”

    It is most unusual to hear an expert being so honest about the limitations of his knowledge, which is a shame because Cowen is exactly right. The present situation involves the interplay of so many thousands of variables that no level of expertise could equip an expert to predict the future.

    A history of failure

    This difficulty is not unique to the present moment. In a 2000 paper on the accuracy of private-sector economic forecasts, IMF economist Prakash Loungani concluded: “The record of failure to predict recessions is virtually unblemished.” This was written before the dotcom crash and the Great Recession, both of which took most experts by surprise.

    Banker and financial writer Charles Morris examined a decade of forecasts from the White House Council of Economic Advisors, a collection of the most brilliant minds in the economic profession with access to all the latest data. He found that, over and over again, their forecasts were wildly wrong. The most spectacular failure was the council’s forecast for 2008, the year of the global financial crisis when the US economy shifted from spectacular growth to devastation, teetering on the brink of collapse.

    Morris writes: “The 2008 report expected slower but positive growth in the first half of the year, as investment shifted away from housing, but foresaw a nice recovery in the second half, and a decent year overall. Their outlook for 2009 and 2010 was for a sold 3 per cent real growth with low inflation and good employment numbers. In other words, they hadn’t a clue.” (This quote and similar material comes from the introduction to Dan Gardner’s excellent book Future Babble.)

    Investment adviser Peter Mallouk suggests in his book The Path: “Anytime you hear a bold stock market or economic prediction, just add the words ‘or not’ at the end of it!”

    Efficient markets

    The Efficient Markets Hypothesis suggests that when assets are traded in free, open markets, prices take account of all available information. By definition, any significant change in price can only be the result of new information emerging. This would make prediction impossible
    . Of course, this hypothesis has its critics (there’s the joke of two economists out walking when one of them spots a $20 bill lying on the path. “Look, $20!” says the first. But the second says no, it can’t be: “If there were a $20 bill lying there, someone would have picked it up already!”). But it’s broadly accepted that even if markets aren’t perfectly efficient, they are highly efficient and so very hard to beat.

    And much as some economists might wish it, economics can never be like physics, built on clear, unchanging natural laws that make prediction straightforward. Rather than dealing with natural forces, economists studying markets have to contend with the actions of millions of individuals, all with their own private motives and views and right and wrong ideas. That can’t be translated into hard science.

    This might seem to be straying dangerously close to William Goldman territory, the Hollywood screenwriter who concluded (of the movie business), “Nobody knows anything.” That’s a counsel of despair, enough to make you some want to cash in all their investments.

    But our ignorance isn’t total. The secret is to step back from the specifics and take a much, much broader view. Extend the timeframe and look at the market as a whole, and there’s grounds for investors to be very optimistic.

    What we know

    Investment manager Pacome Breton has an excellent blog post on this where he looks at global stock market data between January 1971 and July 2022, more than 50 years. Pick a random day from this period and invest for just 24 hours and you would have a 52.4 per cent chance of making a gain, essentially a coin flip and not much use.


    But the more you lengthen the investment period, the better the chances of a positive return become. Invest for any random quarter during the period and your chances of making a profit rise to 65.6 per cent. A one-year investment would generate a profit 72.8 per cent of the time, and a 10-year investment would deliver a profit 94.2 per cent of the time.

    So forget about clever stock-picking or close reading of the inverted yield curve in the hope that you will be able to jump out, and back into, the market at just the right moments. That’s a fool’s game. Forget the daily market commentary. Mamdouh Medhat of Dimensional Fund Advisors put it well in the Financial Times recently: “You can easily get caught up in the short-term movements. It’s like a ping-pong match and commentating on every hit of the ball.”

    All you need to do is buy into a well-diversified index fund, and hold. And the longer you hold, the better you’re likely to do. If you know you won’t be cashing in your investment for at least, say, a decade, then no amount of market chaos today needs to trouble you. The hardest part of investing is simply holding your nerve through the bad times."

    MY COMMENT

    It is just this simple. IGNORE the daily CHAFF. It is ALL simply speculation with about a 50/50 chance to be true.....or not.

    That is why in spite of the daily commentary and discussion on this thread......it is ALL ABOUT....long term investing. In the long run that is the ONLY sort of investing that actually will work.
     
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  13. WXYZ

    WXYZ Well-Known Member

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    I STILL have not looked at the specifics of what went on today.....but I know that my account was RED today. Plus....I got beat by a .....massive.....0.03% by the SP500 today.

    We move into the two last days of the week.....and into the FUTURE.
     
  14. WXYZ

    WXYZ Well-Known Member

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    Perhaps a better headline for this little article would be......"Powell tanks the markets yet again"......or......"When will the FED learn to just SHUT UP".

    Stock market news live updates: Stocks plunge after rate hike, Powell comments

    https://finance.yahoo.com/news/stock-market-news-live-updates-september-21-2022-095724724.html

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

    "U.S. stocks tumbled in volatile trading Wednesday afternoon as the Federal Reserve dealt another outsized interest rate hike in its fight against stubborn inflation.

    The U.S. central bank lifted its benchmark policy rate by 0.75% for a third consecutive time, bringing the federal funds rate to a new range of 3.0% to 3.25% — its highest level since 2008 — from a current range between 2.25% and 2.5%.


    The S&P 500 and Dow Jones Industrial Average each shed around 1.7%, while the technology-heavy Nasdaq Composite was off by 1.8%. Meanwhile, the CBOE Volatility Index (^VIX) – Wall Street’s "fear" gauge – briefly spiked above 30 for the first time since July 1.

    "Restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run," Fed Chair Powell said in his speech after the meeting. "We will keep at it until we are confident the job is done."

    Activity across the bond market was in focus in the aftermath of the policy announcements. Treasury yields continued their perilous climb Wednesday, with the rate-sensitive 2-year Treasury note surpassing 4.1% — the highest level since 2007. The benchmark U.S. 10-year note held above 3.5%, its highest level since 2011.

    "You can only steer the ship towards the storm for so long, but eventually there comes a time when you need to batten down the hatches and with the Fed’s third consecutive 75 basis point rate hike over the past four months, market participants should be looking for cover to weather the upcoming storm," Charlie Ripley, senior investment strategist at Allianz Investment Management said in a note. "Overall, today’s policy action is largely reflective of the economic backdrop and in order to slow the economy, the Fed clearly has to be aggressive."

    Among market movers Wednesday was General Mills (GIS), which rose nearly 6% after the company reported better-than-expected quarterly earnings and raised its full-year sales outlook as it benefits from higher prices on breakfast cereals, snack bars, and pet food.

    Beyond Meat (BYND) shares gave up an earlier gain after announcing a partnership with Taco Bell (YUM) on their first menu collaboration: Beyond Carne Asada Steak. The news came after the meat substitute producer suspended Chief Operating Officer Doug Ramsey over his arrest on allegations he bit a man’s nose this weekend in an altercation.

    Elsewhere, Stitch Fix (SFIX) shares rebounded to rise nearly 3% after the company reported disappointing fourth-quarter revenue expectations and sales guidance and posted a drop in active clients.

    Across the Atlantic, Russian President Vladimir Putin announced a “partial mobilization” of Ukraine and vowed to annex occupied territories. In a televised message, he called the moves “urgent, necessary steps to defend the sovereignty, security and territorial integrity of Russia.”

    The threat of an escalation in Russia’s war against Ukraine rattled markets. Oil prices climbed, with West Texas Intermediate (WTI) crude and Brent crude oil futures up, though both ultimately ended the day lower. The dollar also rallied toward a fresh record high while the euro slid. In crypto markets, bitcoin (BTC-USD) fell back below $19,000 before rallying to finish the day slightly higher."

    MY COMMENT

    As usual....anyone with a brain will notice that there is absolutely NOTHING new in the rate hike today or any of the commentary. But when the markets want to go down....they just go down. A nothing day in terms of events and news and in terms of the markets.

    Lets hope this FED stuff is now out of everyone's system for a few weeks and we can move on to FEAR MONGERING earnings for a while.
     
    #12454 WXYZ, Sep 21, 2022
    Last edited: Sep 21, 2022
  15. WXYZ

    WXYZ Well-Known Member

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    LOL....for those that are into REAL ESTATE investing or markets....I see that POWELL had this little gem for you.

    Fed's Powell: U.S. housing market headed for 'correction

    https://finance.yahoo.com/news/feds-powell-u-housing-market-194508055.html

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

    "(Reuters) - Federal Reserve Chair Jerome Powell on Wednesday said the U.S. housing market will probably go through a "correction" after a period of "red hot" price increases that have put home ownership out of reach for many Americans.

    "There was a big imbalance ... housing prices were going up at an unsustainably fast level," Powell said at a news conference following the Fed's decision to raise its policy rate by another 75 basis points. "For the longer term what we need is supply and demand to get better aligned so housing prices go up at a reasonable level, at a reasonable pace and people can afford houses again. We probably in the housing market have to go through a correction to get back to that place."

    The Fed's rate hikes this year have had their biggest impact on the housing sector, slowing sales and bringing prices a bit lower. Shelter inflation will remain high for some time, Powell said."

    MY COMMENT

    I see that MR SUNSHINE has now decided to spread the LOVE to those that are into real estate. He better watch out......he is on the verge of no one wanting to be seen with him on the Washington DC cocktail circuit.

    Obviously the FED is so hungry to tank the economy they have now extended their goal to JAWBONING DOWN the real estate markets. The only way they can get inflation down....and save face.....is to try to totally tank the economy.

    In the end....as usual....the cure will probably be more painful and worse than the disease.
     
    #12455 WXYZ, Sep 21, 2022
    Last edited: Sep 21, 2022
  16. WXYZ

    WXYZ Well-Known Member

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    I will not post the content but this article is good reading for anyone that has cash that they need to lock in some nice short term (two year) safe returns.

    2-year Treasury yield surges above 4.1% after Fed hike, highest level since 2007

    https://www.cnbc.com/2022/09/21/tre...f-federal-reserve-interest-rate-decision.html

    MY COMMENT

    I am assuming that the Two Year rate and the Ten Year rates after the increase today are the primary reason for the market tanking....even though no one is saying that.

    The best way for most people that are going to hold to maturity....to park cash in a totally safe Two Year Treasury....is through a Treasury Direct Account. I had an account many, many, years ago....back in the dark ages of computers. I have not had one since....but I am sure it is relatively simple.

    How to Buy Treasury Bonds and Bills

    https://www.investopedia.com/articles/bonds/08/treasuries-fed.asp

    There are several ways to buy Treasuries. For many people, TreasuryDirect is a good option. However, retirement savers and investors who already have brokerage accounts are often better off buying bonds on the secondary market or with exchange-traded funds (ETFs). Treasury money market accounts also offer more convenience and liquidity than TreasuryDirect.

    I have also bought 30 year Treasuries through my broker way back in the ancient early 1980's to lock in those GIANT rates back than. Back than you had to go through the "bond desk" to buy or sell them at your broker. I dont know what the process is now.....but I am sure it is ALSO very simple.
     
    #12456 WXYZ, Sep 21, 2022
    Last edited: Sep 21, 2022
    Spud likes this.
  17. WXYZ

    WXYZ Well-Known Member

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    And if all the other BAD NEWS today was not enough.....tell me it's not true.....not the flying car too.

    Google co-founder’s flying car startup is winding down

    https://www.cnbc.com/2022/09/21/google-co-founders-flying-car-start-up-is-winding-down.html

    Oh my God....now what. First they take the stock markets away from us today. Than they take the real estate markets. THAT WAS BAD ENOUGH. But NOW......they yank my flying car right out of my garage.

    All my life they have been promising me a flying car. (STOMPING FEET)......I WANT MY FLYING CAR.
     
    #12457 WXYZ, Sep 21, 2022
    Last edited: Sep 21, 2022
    Smokie likes this.
  18. WXYZ

    WXYZ Well-Known Member

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    I have to go up to Dallas tomorrow.....so no markets for me. I will leave before they open and get back after they close. If you are around.....you got the markets on Thursday....EMMETT.

    You guys.....make me some money on Thursday while I am out of touch.
     
  19. Smokie

    Smokie Active Member

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    Well the FED deal went as expected with another .75 hike. No real news there, most rational investors had figured this all along despite the chatter otherwise. I figure they will keep doing something until something breaks as usual. For those interested in the plan/projection here is an article/chart about it below from Charles Schwab.

    The Federal Reserve delivered another jumbo-sized rate hike at its meeting this week, lifting the upper bound of the fed funds target range by 75 basis points to 3.25%. Citing the need to bring down inflation and keep it down, the Fed's projection indicates that it's likely to continue raising the rate to a peak level of 4.6% in 2023, implying roughly 150 basis points in additional hikes.

    The "dot plot" which is a summary of estimates about the path of the fed funds rate by the 19 members of the Federal Reserve Open Market Committee (FOMC), shows a median expectation for the path or interest rates. It's a marked increase from the June estimates which suggested a peak rate (terminal rate) of 3.75% followed by a modest decline in 2024.


    [​IMG]

    However, it's notable that the Fed's projection still shows the expectation that short-term rates will drop in modestly in 2024 and further in 2025. It's not the "hike and hold for a long-time" scenario many were expecting. It's indicating a sharper, shorter cycle with short-term rates falling back toward 2.5% over the long-run. Of course, these are just projections, as of today and there is a wide dispersion of views at the Fed. Nonetheless, it appears that the majority at the Fed see rates falling in 2024.
     
  20. Smokie

    Smokie Active Member

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    Overall another day in the red is what we got today. Nothing really surprising in that aspect. It is just what we are having to endure at this point and time. We can look at it and study it from every angle, but it is what it is.

    Do not despair though and get discouraged. Do not get weighted down by all of the fear pushing narratives. It will serve no actionable purpose to do so. Many that frequent this thread already know that, but I like to offer encouragement anyway. I like to counter the negative side of things. There is plenty of that already out there to last us into the next millennium. We can acknowledge the difficult times, but we do not have to wallow in it. We are going to do alright. It is just going to take some time and patience to get there. Stick to the plan.
     

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