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The Long Term Investor

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

  1. WXYZ

    WXYZ Well-Known Member

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    Definitely agree with:

    "Really hope that the country will stop fighting against itself and recognize that ITS OVER and let’s move on to bigger and better things!"

    A VERY NICE day today to start the new week. Lets hope this sets the theme for the week and those that missed out on today will be doing some buying tomorrow and the next day and helping to BOOST the markets this week. I KNOW I got SMOKED by the SP500 today.......although....I do not have final figures for the day yet. BUT.....the GAINS today more than make up for it. AND....with my extremely concentrated stock portfolio, I do not always follow the averages, especially short term.
     
    #1261 WXYZ, May 18, 2020
    Last edited: May 18, 2020
    zukodany likes this.
  2. WXYZ

    WXYZ Well-Known Member

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    To COMPLETE the post above.........The SP500 GOT ME by .78% today. ALTHOUGH I often post the daily SP500 versus my portfolio......I am NOT obsessive or particularly worried about this in the short term. I am more interested in how my portfolio performs versus the SP500 over 3, 5, 10, 15, or 20 years. In other words.......the LONG TERM result. I follow the daily, weekly, and other time periods for fun and short term distraction.
     
    zukodany likes this.
  3. WXYZ

    WXYZ Well-Known Member

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    HERE is the article that those in the MEDIA are uniformly saying tanked the market today. NOT going to post it all but here is the link. I went back and read the original vaccine article reporting the testing results on the antibodies and the eight patients that they had data for....so far. I also read this article that is the basis for ALL the media attention today. The article today is either TOTALLY fluff with no facts other than speculation OR is an actual HIT JOB on the markets, or the good news on the vaccine.(in my opinion)

    In any event, just the typical MEDIA short term fluff. As a result......assuming that this STUFF even had anything to do with the markets today.......which I am suspicious of....I was in the red today ending up at (-.59%) for the day. The ONLY positive......which seems to happen a lot lately on down days.......I BEAT the SP500 by .46% today with the SP500 being down (-1.05%) for the day.

    Vaccine experts say Moderna didn’t produce data critical to assessing Covid-19 vaccine

    https://www.statnews.com/2020/05/19...-data-critical-to-assessing-covid-19-vaccine/

    HERE is the article on the vaccine success announcement by the same author a day earlier, on Monday:

    Early data show Moderna Covid-19 vaccine generates immune response

    https://www.statnews.com/2020/05/18...a-covid-19-vaccine-generates-immune-response/

    The author of BOTH articles....the positive and factual one on Monday and the one today that is all speculation and fluff.....was SKEWERED in the comments to today's article on the Stat site.......before they closed the comments.

    I post this as a perfect example (in my opinion) of the type of short term BS from an obscure media site being picked up and RUN by the MEDIA and how such "STUFF" can impact the markets short term.

    ACTUALLY.....I would say......personally.....If I was in the MEDIA......that it is more likely that HD missing on earnings was the ONLY real event today. At least......until....the media went crazy on this vaccine BS. THIS is the difference between the early part of the day today when the markets were flirting with being positive and later in the day heading to the close when the negativity of this story STUNK UP the averages.

    As to HD.......ACTUALLY.....pretty good numbers except for the impact of the expanded employee benefits on earnings....... caused by the virus.

    "Costs add up for Home Depot

    Home improvement retailer Home Depot saw solid demand in the first quarter, but earnings took a hit from the pandemic. Sales were up 7.1% to $28.3 billion, ahead of analyst estimates by $690 million. Comps jumped 6.4%, with U.S. comps rising 7.5%.

    The bottom line was a different story. Home Depot took a $640 million after-tax hit due to its response to the pandemic, which included expanded paid time off for hourly employees, weekly bonuses, and extended dependent-care benefits. Earnings per share came in at $2.08, down from $2.27 in the prior-year period and $0.18 below analyst expectations."

    ALL IN ALL.....in my opinion a pretty positive report for HD.
     
  4. WXYZ

    WXYZ Well-Known Member

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    I have NO OPINION on the validity of the various lawsuits based on Talc baby powder. BUT......JNJ today did what it HAD TO DO today and put into place an end date to stop the BLEEDING:

    Johnson & Johnson to Stop Selling Talc-Based Baby Powder in US, Canada

    https://www.newsmax.com/finance/streettalk/johnson-talc-powder-baby/2020/05/19/id/968073/

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

    "Johnson & Johnson discontinued its legacy talc-based baby-powder products in the U.S. and Canada after thousands of suits alleging asbestos contamination led to a decline in sales.

    The health-care giant said Tuesday it had stopped shipping hundreds of talc-based items in the U.S. and Canada after coming to a “commercial decision” to discontinue them. J&J will wind down sales in those markets over the coming months, said Kathleen Widmer, chairman of the company’s North America consumer unit. All existing inventory will continue to be sold through retailers until supplies run out, she said. J&J first began selling baby-powder products in the 1890s, according to a company blog.

    J&J has faced lawsuits accusing it of hiding the cancer risks tied its talc-based version of baby powder since 2014. Juries across the U.S. have hit the company with billions of dollars in actual and punishment damages over their handling of the product. J&J has been successful in getting many of those verdicts reduced or wiped out on appeal.

    Shares of the New Brunswick, New Jersey-based company (JNJ) declined 0.3% in late trading to $148.55. Since the start of this year, the shares had gained 2.2% through Tuesday’s close.

    J&J’s cornstarch-based baby powder, which has been on the market since 1980, will continue to be sold in the U.S. and Canada. Widmer said 75% of its U.S. baby-power customers use the cornstach product, while 25% rely on the talc-based product. Outside the U.S. those numbers are reversed, Widmer said, and the talc-based product will continue to be distributed abroad.

    Johnson’s Baby Powder currently accounts for less than 1% of the company’s U.S. consumer-health revenue. It has seen a 60% decline in sales since 2017 as consumer habits have changed, Widmer said. The company blames “misinformation around the safety of the product and a constant barrage of litigation advertising” for the drop in demand, according to a statement.

    “We’re not in the business of confusing customers,” Widmer said.

    The decision to discontinue was made during a portfolio assessment related to Covid-19 in March.

    “We needed to skinny down” to free up space in manufacturing plants to allow for appropriate social distancing, Widmer said. “We probably would have waited a couple of months otherwise. But we knew the business, which is already small in scale, would continue to decline.”

    Legacy Product

    Talcum powder has long been a mainstay of baby products because the mineral keeps skin dry and prevents diaper rash. Talc mines, however, can also yield asbestos, a mineral once used in products such as building insulation. Some companies have found corn starch can offer the same benefits of talc without the asbestos risk.

    In October, J&J said it would pull a single lot of 33,000 bottles off the market after a Food and Drug Administration-conducted test uncovered tiny amounts of the contaminant in one bottle of baby powder. But the company said lab tests it commissioned found no sign of asbestos in the recalled lot, putting it at odds with U.S. health regulators who stuck by their test results.

    The standoff occurred as lawsuits against the company continued to climb. J&J officials said last month they’d had a 15% increase in the number of suits alleging baby powder causes different kinds of cancer. Discontinuing its talc-based baby powder in the U.S. could limit the number of cancer lawsuits the 127-year-old product generates each year.

    J&J is likely seeking an “end date for talc claims,” said Leigh O’Dell, an Alabama-based lawyer who is overseeing more than 16,000 suits in federal court in New Jersey blaming the product for causing ovarian cancer. The move to discontinue sales “puts a fence around the litigation for them.”

    Last year, Bausch Health Cos., maker of Shower to Shower powder, said it reformulated the product to replace talc with corn starch as the active ingredient. The firm hadn’t disclosed the switch until Bloomberg News asked about it.

    J&J previously owned Shower to Shower but sold it to Bausch predecessor Valeant Pharmaceuticals International."

    MY COMMENT

    A GOOD management decision REGARDLESS of the science. This product was irretrievably damaged as a baby product with millennial mothers and as a personal hygiene product. BEST course of action is to cut it off early and move on to their other baby powder that is not talc based. It is interesting that this decision will ONLY apply in the USA and Canada. The talc based powder will still be marketed around the rest of the world.

    As an owner of this stock I am glad to see management do the right thing as a marketing and business decision. As I said, I have no opinion as to the claims. BUT.......as a SIDE BENEFIT.....if there is any truth to the claims, than it is a good thing that the product is being pulled and the damage to peoples health going forward is being limited. A win/win for JNJ.
     
  5. WXYZ

    WXYZ Well-Known Member

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    BIG gains today in the markets. I was BEAT by the SP500 by 0.1% today. BUT....the big positive was the gains in account value today. There is starting to be some talk of another delay in Income Tax returns:

    Tax day delayed again? Coronavirus concerns spark calls for October deadline
    President Trump has said he is open to additional tax deadline delay

    https://www.foxbusiness.com/personal-finance/tax-day-coronavirus-concerns-october-deadline

    Nothing definite on this issue at the moment....perhaps a trial balloon. I dont know if I would go ahead and file or wait. I owe $31,000 when I do file. I intend to file July 15. There is a point where I just want to file and pay the money and get it over with.

    HERE is GOOD NEWS and perhaps part of the markets reaction today to the POSITIVE. ALL 50 states are NOW in some form of reopening:

    Stocks rally on economic recovery optimism, all 50 states partially open
    Fed officials reiterate the damaging economic impact of the coronavirus

    https://www.foxbusiness.com/markets/us-stocks-may-20-2020

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

    "U.S. equity markets rallied Wednesday on prospects of the U.S. economy beginning its economic rebound with all 50 states now partially reopen.


    Connecticut became the last state to begin reopening from coronavirus lockdowns, allowing retail, offices, outdoor restaurants and outdoor recreation activities to resume. Delaware, Kentucky and New Jersey also eased limits imposed to curb the spread of the COVID-19 pandemic.

    The Dow Jones Industrial Average gained 369 points, or 1.52 percent, while the S&P 500 jumped 1.67 percent and the Nasdaq Composite rose over 2 percent, helped by big tech including Facebook which hit a record high.

    Investors took cautious comments from the Federal Reserve's April minutes in stride after policymakers warned the coronavirus may carry "considerable risk" for the U.S. economy.

    They also took in a bill passed by the U.S. Senate boosting oversight of companies based in China and elsewhere that could lead to their removal from American stock exchanges.

    Looking at stocks, Lowe’s comparable sales spiked 12.3 percent from a year ago as customers loaded up on essential items during the early days of the outbreak. A share price of $126.57 at the close would be the highest on record.

    Big-box retailer Target, meanwhile, reported a 64 percent drop in first-quarter profit as higher operating costs offset a surge in sales.

    Elsewhere, Johnson & Johnson said it will stop selling its talc-based baby powder once supplies run out due to declining demand for the product. The baby powder makes up about 0.5 percent of the company’s U.S. consumer health business.

    Harley-Davidson is reopening factories this week and slimming down its product line in an effort to revive sales, according to The Wall Street Journal.

    CVS Health will return $43 million received through the CARES Act Provider Relief Fund. The money was given to CVS through an automatic distribution by Health and Human Services.

    Shares of Chinese beverage chain Luckin Coffee, which have been halted since April 7, resumed trading on Wednesday. The company announced on April 2 that its chief operating officer fabricated sales, and the Nasdaq exchange issued a delisting notice on Tuesday.

    Commodities rallied, with West Texas Intermediate crude oil up 4.79 percent at $33.49 a barrel and gold climbing to $1,750.60.

    U.S. Treasurys were little changed with the yield on the 10-year note at 0.679 percent.

    In Europe, Britain’s FTSE climbed 1.08 percent, Germany's DAX advanced 1.34 percent and France’s CAC added 0.87 percent.

    MY COMMENT

    We NEED to get ALL states open as soon as is possible using logic and reason. ACCOUNTING issues and potential FRAUD by Chinese companies is starting to get the publicity and discussion it DESERVES. I........WILL NOT......invest in China or their companies. WE..........the USA......should NOT allow any Chinese company to be listed on our stock exchanges UNLESS they comply with the same accounting rules and regulations as AMERICAN companies. It is a question of fairness.....AND...more importantly protecting the reputation and stability of our exchanges and AMERICAN investors.
     
  6. WXYZ

    WXYZ Well-Known Member

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    With ALL 50 states now in some form of reopening we are heading toward the end of the INSANITY. As more and more data comes out we will see that perhaps as much as 80% of ALL deaths were in nursing homes. MOST if not ALL of those people are NOT out there in the general economy.....BUT.......no matter......in fear and panic reminiscent of the middle ages, PUSHED by MEDIA insanity, we shut down the entire economy. HERE is GOOD NEWS. As we go forward we will see the economy continue to expand and recover from this self imposed BODY BLOW. The BAD NEWS...bankruptcy courts are going to be very busy:

    Was April rock bottom for the economy? New data provides some clues

    https://www.cnn.com/2020/05/21/investing/premarket-stocks-trading/index.html

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

    "London (CNN Business)The global economy is facing its worst contraction since the Great Depression. But early economic data indicates that the slump, while historically severe, has eased this month following a brutal April.

    What's happening: The downturn in Europe continued in May, according to a closely-watched gauge of economic health. But the rate of decline slackened as some parts of the economy were allowed to reopen.

    The initial reading of the composite purchasing managers' index published by IHS Markit for the euro zone on Thursday was 30.5 — up from an all-time low of 13.6 in April. A reading below 50 indicates a drop in output from the manufacturing and services sectors.

    "The eurozone saw a further collapse of business activity in May but the survey data at least brought reassuring signs that the downturn likely bottomed out in April," said Chris Williamson, chief business economist at IHS Markit.

    In Japan, composite PMI rose slightly from 25.8 in April to 27.4 in May. Data for the United States is due later Thursday.
    The path forward for the economy still looks treacherous, with social distancing measures expected to be kept in place for some time.

    "As long as the epidemic continues in the United States, and indeed continues significantly in many parts of the world, we can't really have an economic recovery," economist Jeffrey Sachs told CNN Business' Alison Kosik on Wednesday. "We may have blips, we may have moments of optimism — but we'll have lots of moments of despair as well."

    The evidence: Ford has been forced to halt production at two US plants this week because employees tested positive for Covid-19. The factories in Chicago and Dearborn, Michigan had just restarted production on Monday after suspending operations for roughly two months.

    The PMI data failed to lift stocks on Thursday as investors showed fresh concern about the deteriorating relationship between the United States and China. President Donald Trump tweeted late Wednesday that Beijing "could have easily stopped the plague, but they didn't!" He criticized "disinformation and propaganda" to deflect blame, which he said "comes from the top."

    The remarks come as China's biggest political gathering of the year kicks off Thursday. Investors are watching to see if China announces new stimulus measures to create jobs for the tens of millions of people left unemployed by virus shutdowns."

    MY COMMENT

    It is TOTALLY OBVIOUS that we are NOT going to test the virus lows and we are SLOWLY on the way up from the bottom of this self imposed economic disaster. BUT.....it is going to take a long time for consumers to get out there and get things back to normal. We go out to eat EVERY DAY and restaurants are NOT full. Yesterday eating at about 2:30, we were the ONLY people in the place. There is STILL NO ONE in the malls. Traffic is nearly back to normal. So, people are out there.......BUT.......businesses, especially those in malls and other big shopping areas are going to see a very slow recovery. Obviously, MANY will go out of business as we continue to SLOWLY reopen.
     
  7. WXYZ

    WXYZ Well-Known Member

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    I cant help it.....I find it funny that now the CDC is saying there is NOT an issue with being infected by the virus from "surfaces".

    Coronavirus 'does not spread easily' by touching surfaces or objects, CDC says. But it still 'may be possible.'

    https://www.usatoday.com/story/news...pread-easily-surfaces-objects-cdc/5232748002/

    REMEMBER.......how the MEDIA went CRAZY about how long the virus could live on a surface and drove more FEAR and PANIC over this issue? REMEMBER.......how, "you should not wear a mask" and later, "you should wear a mask"? The so-called experts and ESPECIALLY the politicians have NO CLUE.

    EVEN in the article above you have this statement:

    "COVID-19 is a new disease and we are still learning about how it spreads," the CDC's recently updated guidelines say. "It may be possible for COVID-19 to spread in other ways, but these are not thought to be the main ways the virus spreads.""

    I CALL TOTAL BS. We are intimately and totally familiar with this sort of virus and how it spreads and reacts. THIS is the sort of daily CRAP that moves the markets up and down over the short term. Long term investors BEWARE of this sort of short term rear mongering and news headline seeking......."stuff".

    I am CURIOUS.......I have not looked......how those that follow various TECHNICAL ANALYSIS based systems of investing have done over the past 5-6 months.
     
  8. WXYZ

    WXYZ Well-Known Member

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    Dont get any RESPECT today. Portfolio in the red and JUST slightly beat the SP500......by .08%.

    BUT......I am CALLING the BOTTOM of the unemployment mess. I thought the latest figures were actually good news. We are now seeing the end of the escalating unemployment claims and SOON we will see the numbers start to go the other direction as the economy opens and people go back to work.
     
  9. WXYZ

    WXYZ Well-Known Member

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    TODAY.....so far....is one of those directionless days where the markets are just languishing and trying to decide whether to do anything....UP or DOWN. Probably some obscure news item will decide where we go today, if anywhere. NOTHING going on in my accounts.....six positions UP and five DOWN. One account has a gain of a few hundred dollars, another one has a loss of about the same. Beating the SP500 at the moment by .24%. Kind of an early holiday weekend Friday.

    BUT......the GOOD NEWS is......at this moment we are showing a five day (Monday to Friday) gain in the DOW of +2.99%. So, if today goes nowhere......IT IS ALL GOOD. SP500.....a more meaningful measure.....is showing a five day gain of +2.79%. I will TAKE that weekly result any time I can get it.

    AMERICANS are fighting to get the economy reopened and back to normal.
     
  10. WXYZ

    WXYZ Well-Known Member

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    WELL the day ended as expected.....basically unchanged.

    So......a GREAT week, SP500.

    For the week +3.20%
    One month +8.00%
    Three months -11.45%
    Six months -4.98%
    Year to date -8.52%
    One year +3.47%
    Three years +22.84%
    Five years +39.01%

    Looks GOOD to me considering the recent months.

    Adding to this post since I just checked my accounts. Matched the SP500 today. Was surprised to see eight of eleven positions positive for the day and a good, but not great, gain in each account. Even though the DOW was basically unchanged......the SP500....had a nice little gain of about +.24%. ENOUGH of these little days like today strung together and you are talking about NICE MONEY.
     
    #1270 WXYZ, May 22, 2020
    Last edited: May 22, 2020
  11. WXYZ

    WXYZ Well-Known Member

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    HERE is a nice little article for novice investors. Actually........for anyone. I TOTALLY believe in SIMPLE being best with long term investing.

    5 lies to stop telling yourself about investing

    https://www.businessinsider.com/per...rs-myths-keep-you-from-building-wealth-2020-5

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

    "Investing is an intimidating, but necessary, pursuit.

    Despite being one of the pillars of building wealth, too many people avoid the stock market because it's unfamiliar. Others approach it overconfidently, which isn't good either.

    On top of it, we all have biases and emotions that make managing money that much harder. Often our beliefs about money can lead to misperceptions that hamper our ability to achieve financial success.

    Below, five lies you should stop telling yourself about investing if you want to build long-term wealth.

    1. I don't know what I'm doing
    You don't have to be a stock-picking genius or financial whiz to invest. You really just need to know what goals you're investing for and how much risk you can stomach.

    If your investing knowledge ends at stocks and bonds, don't worry. There are loads of cost-effective online investing services, from Betterment to Wealthfront to Ellevest, that will show you the ropes and help you create a custom portfolio that aligns with your goals.

    If you're investing for retirement through an employer-sponsored plan, set up a meeting with the plan administrator or financial adviser to ask questions. Your knowledge is only limited to your desire to seek out answers.

    2. I don't have enough money
    OK — you might not have enough money to invest if you aren't maintaining an emergency fund with three to six months worth of expenses in cash or if you're paying off a lot of high-interest debt.

    But if you think you don't have enough money to invest because your net worth isn't six or seven figures and you aren't flush with cash, you're mistaken. All it takes is a few hundred dollars, if that, to get into the stock market.

    "The landscape has improved immensely just over the last decade for small investors with the proliferation of exchanged-traded funds (ETFs)," Christine Benz, director of personal finance at Morningstar, told Business Insider.

    "You have firms like Schwab and Fidelity that have zero minimum initial purchase funds. So I think that's a non-issue these days — I would set that [concern] aside. A couple of decades ago, you certainly did need $2,500 or $5,000, but that's all changed," Benz says.

    3. It's not the right time
    Face it: You'll never win if you try to time the market. Most of the biggest opportunities to make money in the stock market happen without warning. If you're waiting on the sidelines for the "best" time to invest your extra cash, you're missing out on all the potential growth in the meantime.

    "Cash isn't going to provide you with enough growth opportunities long term and the best opportunities you'll have at market growth is by being in the market," says Andrew Westlin, a certified financial planner at Betterment.

    "In hindsight, we can always look back and see, 'Oh if I had waited a week, if I had waited a month, would I have better returns?' but none of us have that [ability to go back]. Just having the opportunity for market growth is what is most important," Westlin says.

    4. There's too much risk
    Investing in the stock market is risky. You're loosening your grip your money in order to (hopefully) multiply it. But rest assured: There are ways to reduce your overall risk and still produce a return.

    "The things you can control are the risk level you invest at, the fees you pay, the level of diversification you take on —those are all the big ones," Westlin says. "You can invest more successfully when you align your risk level of that investment with the time horizon that you have to save."

    One way to do this is through a target-date fund, Benz says. This type of all-in-one fund has built-in safeguards that minimize risk by automatically shifting to a more conservative allocation as you get closer to retirement.

    "I always say to investors: If there's a chicken way to do almost anything, think about doing that. So think about dollar-cost averaging to avoid that whole idea of what, in hindsight, might not have been the best time to invest [with a lump sum]," Benz says.

    Dollar-cost averaging is the strategy of investing invest smaller chunks of money over regular intervals rather than pouring a lump sum into the market all at once. It's the same method we use to contribute to a 401(k) or other workplace retirement plan.

    "If you can minimize the hindsight and second guessing that you might otherwise do, that can go a long way in keeping you on board with the plan," Benz says.

    5. I don't want to settle for average returns
    If you're constantly running after the lastest stock tip that promises to make you rich, you'll probably wind up disappointed, or else just spending way too much time tinkering with your investments.

    But when it comes to building long-term wealth through investing, average is exactly what you should aim for, according to financial expert Ramit Sethi.

    "You should just match the market because over the long term, the market returns typically about 8% — 8% is awesome, 8% is amazing. Eight percent lets you double your money every roughly, 10 years or so, right?" Sethi says.

    The simpler and more streamlined your investments, the better, Sethi says.

    "They're not sexy, they're not going to be in the news, but you don't want them there. You want your investments to be really simple. A target date fund is great, or a basket of index funds. That's how I would approach it," Sethi says.

    MY COMMENT

    I was thinking the other day about how investing used to be in the 1970's and 1980's. You actually NEEDED a broker. Mine was at Merrill Lynch. Things were much more complicated and much more expensive. Commissions were a real thing and were pretty high on small lots. Trades were done in round lots....100 shares. Placing an order to invest in a stock or fund was hands on with your broker or his assistant.

    There are NO BARRIERS to starting as a new or young investor today. There is NO REASON for anyone not to save some small amount of money monthly to get started. The investing world is at your fingertips with the internet and computer. Just, keep it simple, keep it reasonable and logical, dont get greedy, know your risk tolerance, think LONG TERM, do NOT touch your investment account, pay yourself first every month in your investing account, etc, etc, etc. ALL things that EVERYONE knows. Yet, how many people do it.........not many.
     
  12. WXYZ

    WXYZ Well-Known Member

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    "HAPPY DAYS ARE HERE AGAIN", blah, blah, blah......as the very old song goes. At least......for the first few hours of market activity today. I find this "little" article instructive and true on a day like today:

    Clarity' Is a Very Costly Word. Stocks Never Wait For It

    https://www.realclearmarkets.com/ar...st_words_stocks_never_wait_for_it_492477.html

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

    "Stocks’ surge from March lows may or may not sustain, but the next bull market’s base is building now. Few pundits or forecasters agree (citing near endless disastrous news) as most see the rally as “disconnected from reality,” and a limp central bank “sugar high.” They're blinded by an inability to see positives is the best market un-news of all. They’re falling prey to what I call the “Pessimism of Disbelief” which I last cited in April, 2010—a cyclical feature fueling all new bull markets. Here’s how:

    Negativity always reigns early in bull markets, as the preceding bear market crushes investors’ psyches. Typically, bear markets start slowly, later accelerating to end in a panic-inducing fury. Consider: In the 13 bear markets before 2020, the S&P 500 averaged 39.9% declines, lasting 21 months. But over half that drop—22.0%—came in the final three months. That crescendo of plunging prices leaves most investors shell-shocked, and incapable of optimism.

    This time was different only in that it started with the fastest-ever drop off an all-time high, as unprecedented global COVID-19 governmental restrictions made investors pre-price economic contraction near-instantly. The S&P 500 fell from all-time highs to bear market territory in just 16 trading days. But the backdrop—sheer crescendoed panic—is as old as stock markets themselves.

    Dread makes people forget one simple truth: Bull markets always follow bear markets—but start sneakily, when battered investors don’t expect it. With expectations already ultra low, virtually any outcomes boost stocks. In route, most investors disavow any rebound as a sucker’s rally. They over emphasize bad news but spin potential positives into negatives. That’s the Pessimism of Disbelief.

    When the March, 2009 bull market started, the longest ever, few believed so-called “stimulus” programs would buoy stocks. Regardless of those plans’ efficacy, or your views of them, it’s the Pessimism of Disbelief making people think it won’t work in the real world that makes it work for stocks. Back then, stock forecasters believed these plans would drive massive inflation or a debt calamity. Didn’t happen.

    Most believed the plans were also insufficient, fearing a second shoe dropping would stoke the dread mythological “double-dip” recession. Yet 2010 saw growth. American industrial production grew 5.5%. Retail sales jumped 5.7%. GDP grew 2.6%. Despite similar results globally, few cheered. Instead, worries morphed to fretting that improving economies would cause central banks to tighten, squashing stocks. Pessimists dismissed any optimism as Pollyannaish.

    The Pessimism of Disbelief appears after every bull market’s start. It’s building now. Any good news quickly suffers negative spinning. One example: Pundits once fretted this contraction would last into 2021. Now, many forecasts call for 2020 third quarter GDP growth. The negative spin? Most say a rebound is only possible because Q3 GDP is compared to Q2—a deeply depressed base. True—but also true of every recovery ever. That is arithmetic, not analysis. They talk of a long crawl for GDP to regain pre-recession highs. Maybe true, but irrelevant to stocks.

    Most fixate on current economic data, like April’s staggering -21.2% y/y U.S. retail sales plunge, or America’s historically horrendous unemployment data. Few can imagine stocks rising as data like these pulverize us. They forget the March, 2009 super bull market began when US industrial production plunged -14.6% y/y. Retail sales were down -13.3% y/y. Q1 2009 GDP? -4.4% annualized. Growth didn’t resume until Q3—and even then, GDP grew just 1.5%. But the S&P 500 and global markets were already up 36.9% and 41.5%, respectively. Most investors, myopically hyper-focused on a dreadfully dreary present, couldn’t contemplate that rise. Just like now.

    Remember: Stocks always look ahead, often fairly far. For them, the question isn’t whether new data are good, bad or putrid. It’s more a question of are they way worse than expected? The further expectations fall, the harder it becomes to answer “yes”—making it easier for stocks to rise. Ditto for any potential second COVID wave. While that could be very bad, would it be worse than feared? If the Pessimism of Disbelief persists in bludgeoning sentiment, that would take an awful lot.

    What those blinded by the Pessimism of Disbelief crave is clarity—that the bull began in earnest and they won’t be suckers, buying in too soon. But “clarity” is among investing’s costliest words. Stocks never wait for it. Too many investors do and, as a result, miss big early gains. Don’t be among them.

    MY COMMENT

    I could NOT agree more. This simple..........yet prescient article........is EXACTLY on point. I am FULLY INVESTED as usual and the main reason is what is outlined above. I have LIVED my life seeing the POWER of being fully invested and having a total, clinical, focus on the long term.

    For a couple of weeks in the "virus crisis" I took a couple of accounts to cash. BUT.....this was for a very specific reason. Once that reason was no longer valid, I RUSHED as quickly as possible to get back fully invested in those accounts. I RUSHED and PUSHED to reinvest, even though at that time I would have said........and did in this thread......that I believed that we would see a retesting of the lows at the peak of earnings reports. (mid to the end of April) I DO trust my instincts and approach to investing for the long term. I do NOT trust (well, I actually do, but I dont act on short term "stuff") my day to day and week to week predictions or guesses as to short term market behavior. I KNOW and TRUST that explosive gains and moves in the markets can NOT be predicted with accuracy so I ALWAYS place myself in the position to prosper from market gains.

    I personally REFUSE to try to time the markets or predict the future. I KNOW that I will do better over the long term than the VAST MAJORITY of traders or investors by simply being fully invested..........ALL THE TIME.

    This is ALSO one reason that I do NOT do bonds. I am and will continue for my lifetime to be a 100% fully invested in......STOCKS.....investor. Personally.....I believe the security and hedge against stock market risk that is all the rage in articles over the past ten years calling for some percentage in bonds linked to your age......is total BALONEY. Bonds have their own sort of risk and long periods of extreme under-performance. I DO.......however......believe in the pot of money approach as a person nears retirement. Two to three years of living money should be segregated from the stock market and put into something safe like a CD.
     
    #1272 WXYZ, May 26, 2020 at 12:15 PM
    Last edited: May 26, 2020 at 12:23 PM
    Bigmalx likes this.
  13. WXYZ

    WXYZ Well-Known Member

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    Wow........BIG WOW. The SP500 is.....right now at......year to date (-7.01%) Not only WELL below the typical criteria for a correction.....BUT....also in the range for a typical year......little dip....about this time of the year. OBVIOUSLY.....there is a VERY SIGNIFICANT probability that the SP500 will be nicely positive for 2020. Primary factors that could impact things to the negative:

    The election.
    The MEDIA, pushing there usual negativity and fear mongering.
    DELUSIONAL politicians trying to delay the re-opening and kill the economy out of fear, or worse, for political benefit.
     
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  14. tonica

    tonica New Member

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    I like this tread, thank you guys
     
  15. Bigmalx

    Bigmalx New Member

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    Thanks, I enjoy reading your post.
     
  16. WXYZ

    WXYZ Well-Known Member

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    Tonica and Bigmaix.......welcome. Feel free to post here, anything about investing. It does not matter what your style. Portfolio make up, results, thoughts on the markets, etc, etc, etc are ALL welcome. it helps everyone to read about the experiences of others.
     
  17. zukodany

    zukodany Member

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    Can you explain this? In other words... what would the year look like on an average at this time if there were no “fears” or “tension”. Below the s&p or on par with it today
     
  18. zukodany

    zukodany Member

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    This thread is definitely by far the best read on the internet and anywhere really with honest perspective and insight into a no nonsense balls to the walls investing diary. I’ve learned a ton from reading your thread and have received guidance and confidence with my current investments. Thank you for the wealth of knowledge you share with us freely on a daily basis!!
     
  19. WXYZ

    WXYZ Well-Known Member

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    Thank you Zukodany. Doing this thread helps me focus and clarify my own thinking. I appreciate what others share and REALLY appreciate this Stockoholics site. This is a REALLY GOOD investing site.

    What I was trying to say above is:

    The SP500 is now at minus 7 percent. I have seen MANY, average, even typical years, in my life where the markets started out up nicely, and than had a little correction around April or May. Than as the year progressed the markets ended Up by year end by 10-20%. I think....WOW...here we are in that same position as a sometimes, typical year,.....IN SPITE OF....the economic disaster we have just lived and invested through.

    I see BIG STRENGTH in the economy and the markets to be able to take a HUGE hit like we just did and.......yet.......we are now at JUST minus 7% year to date. That is NOT even correction territory. I believe this market strength shows that we have a BIG SHOT at a nice positive close by year end. Of course the three items I named as possible negatives have the potential to screw things up, especially in the fall.

    ALL IN ALL......I am VERY POSITIVE with where we are right now. I believe if this virus "stuff" had not happened we would be at +15-25% right now year to date. This event has now covered about two and a half months months.......wiped out HUGE GAINS for the start of the year............drove us WAY into a HUGE NEGATIVE hole for the year.....yet....here we are at ONLY minus 7% year to date. AMAZING......we are BELOW correction levels......even after all that has occurred.
     
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  20. zukodany

    zukodany Member

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    That’s kinda what I was taking from it as well. Thank you for clarifying for us non savvy investors!
    I was looking at the past 2-3 months myself and it’s amazing how much of a drop the market sustained. Of course looking at it now, one can only ask themselves why, WHHHYYYY didn’t I get in when it was down at the bottom. But experiencing it AND ACTIVELY BUYING through that nuclear avalanche was mentally tormenting. Almost like trying to jump off a cliff. I had many sleepless nights after buying and watching the market open the next day in an even worse shape than before. But I’m so glad I did.
    But I think there’s plenty more room to grow and if I had more money left to invest I think there are many more opportunities out there I would love to invest in!
    My portfolio is up 10% now which I’m really happy with. With many positions with strong double digit points (tsla being triple digits)
    I can clearly see more room to grow with my DIS ED LAMR TWTR & JPM even with half of these being in strong green territory for me already. Let’s see where this journey takes me!
     

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