For anyone that wants to RELIVE the week or that was not paying attention to what was going on.....here you go. Dow closes 400 points higher, but snaps four-week win streak on rising rate fears https://www.cnbc.com/2022/11/03/stock-market-futures-open-to-close-news.html
everything is hunky dory and yes my employer is doing pretty darned good. i stop in and browse, just haven't had much to add to mix lately. letting my long-term stuff do its thing but have been having some fun with call options in my play account. will be out of town next week. little nervous about leaving the market to you and zuk. will try to check in and calm things if i need to.
oh, there is one thing. every time i read about musk and twitter this song pops in my head. turn it up! loud!
This little article.....forced me.....to post today. 12 Lessons on Money and More From Warren Buffett and Charlie Munger Wisdom from two of the world’s most successful investors. https://www.morningstar.com/article...d-more-from-warren-buffett-and-charlie-munger (BOLD is my opinion OR what I consider important content) "It’s easy for me to make a list of ideas from Warren Buffett and his partner Charlie Munger at Berkshire Hathaway that have influenced my own thinking and that of my fellow Buffett-heads here at Morningstar. The hard thing is confining the list to only 12. But here goes. 1) Be Skeptical of Exotic Financial Instruments Buffett and Munger have been consistent critics of derivatives, catastrophe bonds, crypto, and other types of financial “innovation.” The way they run Berkshire Hathaway reflects this prudence. The company operates with very little debt and a large cushion of cash and investments, an approach that has influenced the way Morningstar manages its own balance sheet. The skepticism of Wall Street’s creativity in new-product development has influenced our analysts over the years when faced with the latest and greatest product offering from asset managers or investment banks. One of my favorite Buffett quotes is, “If you’ve been playing poker for a half an hour and you still don’t know who the patsy is, you’re the patsy.” Unfortunately, the financial industry is chock-full of players eager to induce you to play the game on their terms, always with a hefty entry fee attached. To this day, I’ll admit I’ve never bought or sold an option, shorted a stock, bought a triple-inverse-short ETF or 130/30 fund, dabbled in structured notes, or invested in a variable annuity. Simplicity is good. It certainly lowers costs. 2) Inflation Is Another Reason to Favor Moats Until 2022, it had been easy to ignore inflation for about 40 years. But any student of Buffett’s writings knows that inflation was a regular topic of his in the 1970s and early 1980s. What he emphasized then was the difficulty for companies, especially those most exposed to inflationary cost pressures, to earn decent returns for shareholders in a period of high inflation. Very few companies—those with strong economic moats—can raise prices to offset the erosion of purchasing power. This underlying pricing power is one reason we like wide-moat companies so much. They’re better able to withstand what the macro environment throws their way. Now that inflation is back with a vengeance, it’s a good time to reread Buffett’s sobering inflation commentary. 3) Volatility Is Not Risk My longtime boss at Morningstar was a Buffett and Munger fan, and the first words I ever heard out of her mouth were: “Beta is bullshit.” (I knew then that Morningstar would be an interesting place to work.) Given that writing massive insurance policies is a significant part of Berkshire Hathaway’s business, it’s no surprise that risk has consumed a large part of Buffett’s and Munger’s attention. They have a very different conception of risk than academic finance and its emphasis on metrics like beta or standard deviation. Financial academics like using volatility as a proxy for risk (largely because it’s so easy to measure), but that has the perverse effect of implyingthat an asset becomes riskier when it drops in price—the exact opposite of how a rational buyer thinks about a lower price. Risk, says Buffett, is the chance you suffer a permanent loss of capital. I’ve also appreciated that Buffett and Munger have consistently emphasized systemic and existential risks—for example, the risk that derivatives cause a series of financial institutions with interlocking exposures to collapse like dominoes, or the risk of nuclear war or biological infection (natural or otherwise). As investors and citizens, we need to acknowledge these risks and do what we can to minimize them. 4) Integrity Made Simple Buffett famously said to the employees of Salomon Brothers when he stepped in to run the company in 1991: “Lose money for the firm, and I’ll be understanding. Lose a shred of reputation for the firm, and I’ll be ruthless.” He also suggested the following as a guide to behavior: If you would be comfortable having your actions described in detail on the front page of your local newspaper, where your family and friends will read it, go ahead and do it. At Morningstar, we modified this to: Would you be comfortable with this appearing on page C1 of The Wall Street Journal? 5) Fund Boards Are Lap Dogs That was Buffett’s conclusion in his classic 2002 letter to shareholders, and it certainly jibes with what Morningstar has seen over the years. Despite their explicit role as guardians for fund shareholders, fund directors—even independent directors—rarely push back against fund managers, and almost never vote to fire the fund manager. Buffett criticized corporate boards for the same reason: Their culture of rubber-stamping what management or compensation consultants put in front of them. (He’s even been critical of his own performance as a board member.) The lesson: Look for board members with business experience and skin in the game (in the form of meaningful ownership in the company they oversee), but even then don’t expect much. Most important is that the management team and other employees have integrity (see previous point). Hoping that a board of directors, no matter how independent on paper, can effectively police a management team is a pipe dream. 6) In Investing, It’s OK to Do Nothing Buffett compared investing to a baseball hitter waiting for a fat pitch—a nice straight ball down the heart of the plate. But unlike in baseball, in investing you’re not called out after three strikes. You can let as many pitches whiz past as you want. This concept of patience has influenced the way we rate stocks at Morningstar in that we have no minimum number of stocks we have to rate 5-stars; sometimes we have very few stocks we recommend. In my personal portfolio, I’ve never felt pressure to swing if I’m not comfortable. Letting cash pile up is fine. There will usually be a market correction at some point to bring prices down again to attractive levels. 7) Always Be Learning Both Buffett and Munger are always reading, and Munger in particular emphasizes the importance of science—including an understanding of evolution—as essential for understanding what makes people tick. Many of my favorite books were Munger recommendations, including Influence: The Psychology of Persuasion, by Robert Cialdini, The Selfish Gene by Richard Dawkins, and Guns, Germs, and Steel by Jared Diamond. Such eclecticism has always influenced the hiring philosophy at Morningstar. We’d much rather hire someone with intellectual curiosity than a narrow focus on finance. Munger once said, “You’d be amazed at how much Warren reads—at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.” 8) The Markets Are Good, but Not Perfect Having studied economics at the University of Chicago, I started my professional career with a firm faith in the wisdom of markets. Fortunately (at least in retrospect), my first job was analyzing Japanese stocks just as the bubble in Japanese asset prices, arguably the most egregious asset-price bubble in history, was bursting. It was an early lesson that sometimes markets go haywire—or more precisely, the people who make up markets go haywire and come to believe that trees grow to the sky. It’s amusing now to think about it now, but serious people in the late 1980s and early 1990s concocted stories about why price/earnings ratios of 80 or 90, which were common in Japan at the time, were reasonable, or recommended allocating 30% or 40% of a portfolio to Japanese stocks because that offered the optimal mix of risk and reward. Reading Buffett and the kinds of books Buffett and Munger recommend, you come to internalize that while markets usually do a wonderful job of allocating capital, they’re only as reliable as the (imperfect) humans making up the market. 9) Index Funds Are a Wonderful Invention This may appear at odds with the previous point about imperfect markets, but it’s actually not. Markets may sometimes go haywire, but it’s still mighty hard to outperform them. When I started at Morningstar in 1991, it seemed the only fans of index funds were Jack Bogle, a few university professors, and a handful of academically minded financial advisors. Index funds made up a tiny percentage of overall fund assets. My, how things have changed. One might think Buffett—the quintessential active investor—would have been among the biggest detractors of index funds. I remember many Morningstar conferences at which active managers pooh-poohed index funds as un-American or as settling for mediocrity. (Most of these managers are long gone.) Buffett, by contrast, has consistently heaped praise on index funds as the best way for most investors to gain exposure to the stock market. He repeatedly singled out Bogle for special praise for launching the index revolution. Buffett showed that intellectually you can embrace both active and passive investing—it’s not either/or. 10) No Good Investor Is Either “Value” or “Growth” Munger famously helped induce Buffett to move beyond Ben Graham’s cigar-butt-style of value investing (which consists of looking for stocks with one good puff left in them) and embrace great companies—even if it means paying higher prices for them. The key insight is that the worth of any company is a function of its growth prospects and how confident one can be that the growth will materialize. You shouldn’t analyze a “value” company any differently than a “growth” company. While we popularized the distinction between growth and value with the Morningstar Style Box—and it is a helpful shorthand to see what kind of companies a particular fund manager favors—from the perspective of a stock investor, to think of value and growth as separate investing styles is a mistake. 11) What It Means to Win the Birth Lottery The final two lessons apply to life in general and not just the little corner of life we spend investing. Buffett has emphasized how lucky he was to be born where he was (the United States) and when he was (the 20th century). Had he been born in another time and place, his somewhat specialized talents of company assessment would have been worthless. He’s called this the birth lottery. It’s a good reminder to all of us the role luck has played in our lives. If you’re reading this, chances are you’ve been pretty darn lucky. I know I have. 12) The Key to Happiness The key to a happy marriage isn’t a beautiful spouse, smart kids, or pleasant conversation. No, say Buffett and Munger, the key to a happy marriage is finding someone with low expectations. The same holds for reading articles like this one; I hope you clicked on it with sufficiently low expectations. And the same holds true for investment success. I make a habit of mentally lopping off 30% of whatever my portfolio value happens to be, simply because stuff happens. Generalizing this bit of wisdom, I’d suggest that low expectations are pretty much the best way to ensure a lack of regrets on one’s deathbed. And the best way not to be disappointed after death, too!" MY COMMENT Here you have some good advice from a couple of ICONIC.......long term investors. They have both spent their entire life investing for the long term. In investing it is often a good thing to....emulate the habits and methods of successful people.....within reason.
I always enjoy reading about those two above. Very interesting and successful individuals for a long time. Investing can be as simple or as complex as one wants to make it. Everybody has to chart their own path and figure it out. For me, "good enough" works really well, without envy or chasing what may never come to be. I think investors can sometimes fall into feeling like "everyone" else is doing better. Whether it is in returns, specific choices, or investing in general. It's not that trying to do well is a bad thing, but over reaching can sometimes lead to one chasing their tail.
Unrelated topic, but I have never really liked the time change deal. Maybe it’s because I still work and it takes a bit to get adjusted and by the time you do, it’s back the other way.
Related to the unrelated topic above. Each year we’re advancing into modernization, the less affect I personally have on the time change, since at this point, literally everything I have at home with the exception of our old grandpa clock in the master living room is digital.
A mixed day at the moment. We had a much better open but lost a lot of it.......as the markets are trying to decide where they want to go today. So I will ignore it and put up a little article that I like. I’m Not Worried About the Fed Here’s why the Fed’s moves don’t bother me. https://investorplace.com/smartmoney/2022/11/im-not-worried-about-the-fed/ (BOLD is my opinion OR what I consider important content) "Investors can’t seem to help themselves. Once again yesterday, the market went a little crazy as everyone tried to figure out whether the latest interest-rate increase from the Fed was good news or bad news. If you weren’t following the minute-to-minute trading – and good for you if you weren’t – then here’s what happened… When the initial statement came out, investors got a little giddy as the 0.75-percentage-point increase was just as expected and the language in the Fed’s statement sounded like they were open to possibly pausing rate hikes. But if you grabbed a snack and left your phone on the counter or on your desk, the good vibes were probably gone by the time you came back. Fed Chair Jerome Powell held his press conference soon after the statement was release, and everything went south (more than it went north 30 minutes earlier) as Powell left open the possibility for additional increases. The market is much bigger than any one person or any one policy announcement, however important it may be. This kneejerk reaction from both the pros and individual investors to be the first to read the tea leaves – often wrongly – amuses me, but more than that, it disappoints me. There is a better and smarter way to view “Fed days” and to invest… Looking Ahead As I’ve said before, it’s not that the Fed’s rate hikes are irrelevant; it’s that the market puts too much emphasis on particular one-off meetings or events. The trend is what matters, and there’s no question that the interest rate trend of the last few months has been up. And we’re seeing more of that trend since the Fed hiked rates once again as of yesterday’s meeting. But we may be approaching the silver-lining stage – the moment when investors begin to believe that the Fed has accomplished its task of taming inflation. I think that moment is very close. All trends point to subsiding inflation. Energy, in terms of crude oil, is generally trending lower and experiencing more pullbacks. The supply-chain issues are clearing up. And final demand from both consumers and businesses is moderating. Because of these key disinflationary factors, I expect the market to begin “looking ahead” to when inflation concerns have diminished. I want to revisit some thoughts from July when, as they are wont to do, the Fed terrorized investors. “Fed Schmed” Trying to predict the market’s reaction to a Fed announcement is risky, especially when we’re down in the market rabbit hole when good news is bad news, and vice versa. For example, if the Fed raises rates less than expected, you would think that would be good news. And it could be… but it could also be viewed that the economy is slowing faster than expected and maybe heading for a deeper recession, which would be bad news. Or if the Fed raises rates more than expected, it could be good news that the central banks are going after inflation aggressively. On the other hand, it could mean that nothing is working so far, and inflation is on the verge of being out of control. It’s just like jobs reports. A stronger-than-expected jobs report seems like it would be nothing but good news, but if it means the economy is continuing to heat up and the Fed will need to raise rates more aggressively, it could be bad news. I think we’re likely past the tough part of figuring out where inflation and the economy stand and what the Fed will do about it. The market has already priced those factors in, so unless there is a huge surprise of some sort, today’s and tomorrow’s meetings probably won’t have the same impact as those earlier in the year. To be clear, I’m not dismissing in the importance of the Fed and monetary policy. Of course it’s critical. But unless the inflation and/or interest-rate trend has changed and the Fed shocks the heck out of us, I believe we are now in an environment where investors can put their cash to work in expectation of solid and even large profits down the road. True, you may invest in a stock that drops another 10%-20% in the current volatility, but it is unlikely you would be looking at the 50% or more shellacking that many stocks have gotten so far in 2022. Most important of all, there is now a greater chance that short-term losses will reverse and become 10%, 20%, 50%, or even bigger gains in the coming months and years – provided you’re investing in quality stocks, of course." MY COMMENT YEP.....this is a GREAT time to invest mney in the markets. We are well into the current bear market and well into the FED rate increases. My view is the same as it has been for some time now......we are at a soft bottom with perhaps another 10% drop for stocks in general if they decide to challenge the lows that we have hit so far this year. In other words......a great time to pick up bargains in quality stocks and hold for the longer term when the next bull market run happens. There are AMAZING companies on sale right now.
I like this little article.....a good basis for a little self-evaluation. Very Important and Hard to Teach https://collabfund.com/blog/very-important-and-hard-to-teach/ (BOLD is my opinion OR what I consider important content) "The most important decisions in your life may be whether to marry, who to marry, and whether to have kids. But none of those topics are taught in school. They’re hardly even discussed. How could they be? They aren’t problems you can distill down to an equation, or even a broad principle. People have different personalities, goals, experiences, and levels of chance and serendipity, all of which make universal truths hard to find and difficult to teach. No matter how smart the world becomes, the best answer will always be, “You’ve got to figure it out for yourself.” A lot of things work like that. Some of the most important topics are the hardest to teach, and real world experience is the only school. A few others: How to get along with people you disagree with. How to respect the views of people who’ve had different life experiences than you. How to recognize that your own views would be different if you were born in a different country or era. How to recognize and appreciate luck. How to deal with regret. Where to live. How to advertise your skills and accomplishments without being insufferable. How to avoid being swayed by bullshit and charlatans. How to manage the balance between confidence and ego, recognizing that you might be unique but you’re not special. How to accept your own faults without guilt. How to be curious about fields that have nothing to do with your career. How to change your mind, especially about things that were once core to your identity. How to deal with a certain level of hassle and nonsense without losing your cool. How to experience the agony of financial loss even when you’re aware of the odds of a bad outcome. How to accept critical feedback. How to be inspired by others’ success while avoiding envy. Recognizing how incentives affect your behavior, often for the worse. How to accept things that are easy to ignore because it’s painful to admit they’re true. How to recognize the long-term consequences of your actions. How to balance optimism and pessimism so you can exploit opportunities with realistic expectations. There are no easy rules to learn and memorize – you’ve got to figure those out for yourself." MY COMMENT ALL the above in some way are relevant to investing behavior. There used to be an old saying in the brokerage business....."KNOW YOUR CUSTOMER". It ties in with the requirement....well at least the former requirement....about "SUITABLE INVESTMENTS" for your customer. TODAY......I suspect that the majority of "customers".......investors.....have no advisor or broker that they rely on. They self direct their own investing. They are.....THEIR OWN CLIENT. For many people this is a good thing....but for others not so much. People churn their own account.....people invest in UNSUITABLE investments....people are victims of their own behaviors and personalities. It is critical for any investor that is self-directing to have a good handle on their personality and their behavioral habits. It is obvious that MOST investor mistakes are the result of.......behavior. One of the best ways to avoid shooting yourself in the foot as an investor is to have an INVESTING PLAN. A long term plan. Part of this is having long term GOALS that are rational and realistic. Take care of your "CUSTOMER".........since it is YOU.
As I have been reading and typing the markets have been making a come-back. We are now green with the DOW and the SP500. As usual there is no clear......short term.....direction.
HERE is the markets today. Stocks nudge higher ahead of midterms, CPI report https://finance.yahoo.com/news/stock-market-news-live-updates-november-7-2022-110101325.html (BOLD is my opinion OR what I consider important content) "U.S. stocks rose modestly Monday morning as investors geared up for another week of potentially market-moving events: the Nov. 8 midterm elections and October consumer price data. The S&P 500 (^GSPC) advanced 0.3%, while the Dow Jones Industrial Average (^DJI) gained 150 points, or roughly 0.5%. The technology-heavy Nasdaq Composite (^IXIC) was up 0.4% after the index posted its worst weekly loss since January. A batch of downbeat corporate news has renewed focus on the wreck across technology stocks after disappointing earnings last week dragged the sector's heaviest hitters — Apple (AAPL), Amazon.com (AMZN), and Alphabet (GOOGL) — to losses of more than 10% each. Apple (AAPL) shares slumped 1% at the open after the company said in a statement Sunday it expects fewer shipments of its newest premium iPhones than previously anticipated, citing COVID lockdowns in China that dented operations at its biggest smartphone maker Foxconn's factory. Elsewhere among tech giants, Facebook parent Meta (META), which was down 73% year-to-date as of Friday's close and is the worst performer in the S&P 500 index this year, is now expected to begin large-scale layoffs this week, according to a report from the Wall Street Journal on Sunday. Shares rose nearly 4% at the start of trading. Election Day may keep investors on edge as dozens of key races determine which political party has control over the congressional agenda. Wall Street has historically preferred a split Congress or White House, with gridlock making it difficult to execute any potentially unfavorable legislation. “Going back to 1929 and excluding the Great Depression, some of the best annual returns for the S&P 500 have been seen when the sitting President does not have full control over both sides of Congress,” Verdence Capital Advisors CIO Megan Horneman and CEO Leo Kelly said in emailed commentary. “This may be because markets do not expect major changes to law with a split Congress.” While political campaigns have placed fiscal leadership into the spotlight, some strategists argue that midterm outcomes rarely influence financial markets outside of short-term volatility. “The markets are influenced more by expected financial conditions and economic catalysts than by midterm elections,” Morningstar Chief U.S. Market Strategists Dave Sekera said in a recent note. “Historically, some analysis has shown that equity markets have tended to underperform in the runup to midterms and then outperform thereafter.” October’s Consumer Price Index (CPI) out Thursday, however, is sure to sway equity markets. Another hot inflation reading may solidify expectations that the Federal Reserve will raise its key interest rate more than initially forecast. Economists surveyed by Bloomberg see headline CPI at an annual 7.9% for the month, a moderation from September’s year-over-year increase of 8.2%. Core CPI, which strips out the volatile food and energy components of the measure, is projected to come in at 6.5%, little changed from 6.6% last month. “Headline inflation has likely peaked, but core inflation hit its post-pandemic high just last month,” Baird Investment Strategy Analyst Ross Mayfield said in an emailed note. “While the Fed has hinted that they see reasons to slow their pace, the rate of inflation – even if it has peaked – remains far too high for comfort.” “Until the Fed signals the 'pivot' is near, things could remain challenging,” he added." MY COMMENT In other words....NOTHING new as usual. The election tomorrow will PROBABLY result in grid-lock for the government. A very good thing for the markets. Apple and China manufacturing issues......well that is what you get when you decide to tie the future of your business to the worlds most brutal communist dictatorship.....China. They and ALL other USA companies....need to get out of China as quickly as possible. META? Poor META. That company is so screwed. I have one rhetorical question for anyone thinking about investing in this company.......if you were a business owner, would you tie your entire future to the management skills, reasoning ability, people skills, etc, etc.....of Zuckerberg? Personally....I would not hire that guy to manage anything. I might have hired him to do coding earlier in his life......but as a corporate manager or executive.....NO WAY. If you invest in META.....under their stock structure....you have virtually NO SAY. The entire company is the personal toy of Zuckerberg. Sorry....anyone that is a META investor....I just do not like that company or how it is managed.
Yup I agree, I totally see another 10% drop in the market and then a slight rebound. sure that rebound may come even sooner then the drop, maybe because of the elections outcome, who knows, but sadly I don’t think it would last too long… there are too many uncertainties to suggest that a bottom is nearby. as to individual company analyzation… you already know my opinion. I don’t think that any one company is doing well right now. I can pick on Amazon, meta, Netflix, NVDA, Tesla… any of them… and say that there are major flaws there which will give me an excuse to think that they are being punished right now. But the true reason why we see major big cap companies in dreadful declines is because the market as a whole, the overall doom and gloom sentiment, inflation etc etc The ONLY one company that I can tell you is failing because of poor leadership is this company - our country
I might could make these markets do a turn around if I could have the amount of money the politicians are spending on all of these political ads. Wouldn't that be a chunk to add to your plan.
The markets ended nicely today......another BEAUTIFUL DAY.....once we got the FED out of the way for the month. I had a nice little gain today in my account....a green day. BUT....a loss to the SP500 today by 0.42%. I really dont mind a loss to the SP500 on a day when I make positive money.
