The Long Term Investor

I will mention.....since it is a HOT TOPIC....that I also DO NOT do Crypto. I am of the view that it is not an investment vehicle and is simply for the most part GAMBLING........and......classic herd behavior. From what I have seen all the predictions of how Crypto would react to various economic events have NOT been proven at all.

I do however......own a fraction of one Bitcoin. I have not looked at it in a long time.....it is in a Coinbase Account. I think I have somewhere between 1/2 to 1 Bitcoin. I was at one time putting a small amount of money into it each month with the goal to get up to 1 Bitcoin. I figured I would do that as a fun FLYER......just in case somehow all the glowing predictions of million dollar Bitcoin came true. It has been a while since I added anything to that account. Perhaps now is a good time to start putting $50 to $100 a month in the account to try to get up to that ONE BITCOIN. PROBABLY....simply a waste of money.

 

Talk about having a bad day or two.

Bankman-Fried’s Assets Plummet From $16 Billion to Zero in Days

https://finance.yahoo.com/news/bankman-fried-assets-plummet-16-080320755.html

"(Bloomberg) -- The entire $16 billion fortune of former FTX co-founder Sam Bankman-Fried has been wiped out, one of history’s greatest-ever destructions of wealth.

The downfall of his crypto empire -- which filed for bankruptcy on Friday along with his resignation -- means assets owned by the mogul once likened to John Pierpont Morgan have become worthless. At the peak, the 30-year-old was worth $26 billion, and he was still worth almost $16 billion at the start of the week.

The Bloomberg Billionaires Index now values FTX’s US business -- of which Bankman-Fried owns about 70% -- at $1 because of a potential trading halt, from $8 billion in a January fundraising round. Bankman-Fried’s stake in Robinhood Markets Inc. valued at more than $500 million was also removed from his wealth calculation after Reuters reported it was held through his trading house, Alameda Research, and may have been used as collateral for loans. FTX.US and Alameda were also part of the bankruptcy filing.

In announcing it was filing for Chapter 11 bankruptcy, FTX said Friday in a statement that Bankman-Fried has resigned as chief executive officer and will be succeeded by John J. Ray III. Employees are expected to continue with the company and “assist Mr. Ray and independent professionals” during bankruptcy.

Read more: FTX Empire Goes Bankrupt After Exchange’s Rapid Downfall

Bankman-Fried’s empire crumbled this week after a liquidity crunch at one of its affiliates. Its US exchange, FTX.US, said on Thursday that customers should close out any positions they want to and that trading may be halted in a few days. In the Bahamas, where FTX.com is based, authorities froze the assets of its local trading subsidiary and related parties.

It’s possible Bankman-Fried owns assets not tracked by the Bloomberg index. Alameda made about $1 billion in profits last year and FTX made hundreds of millions more.

Tech news website The Information reported on Thursday that he had more than $500 million invested in funds managed by Sequoia and other venture capital firms, and was also an investor in media startup Semafor. But if those assets are held through Alameda they might be wiped out by its losses.

For his part, Bankman-Fried is being investigated by the US Securities and Exchange Commission for potential violations of securities rules, a person familiar with the matter said."

MY COMMENT

What a shame....but.....this is what happens with EXTREME SPECULATION. I am content to sit and do my boring little long term investing.....with ZERO LEVERAGE.

 

Today is a HOT MARKET....especially considering the massive gains yesterday. You wold think there would be profit taking today. BUT....I did not get that feeling this morning and I have not had that feeling this afternoon. The markets simply WANT to go up.....so they are going up.

I continue to see these gains as racking up a nice cushion.....as protection from breaching my prior year lows when/if the markets decide to go back down.

In any event.....we are slowly but surely grinding down the bear market. At some point we will be able to look back in hindsight and say it is over.

 

Thirty minutes to the close.

S&P 500, Nasdaq press on after biggest one-day surge since 2020

https://finance.yahoo.com/news/stock-market-news-live-updates-november-11-2022-115914717.html

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

"U.S. stocks extended a dramatic ascent on Friday after deceleration in CPI inflation data ignited the most intense rally on Wall Street since early 2020.

The S&P 500 (^GSPC) rose 1%, while the technology-heavy Nasdaq Composite (^IXIC) gained 2%. The Dow Jones Industrial Average (^DJI) turned positive heading into the close after lagging behind the other indexes for much of the session. Treasury yields held steady following their steepest one-day decline Thursday in more than a decade.

A reversal in China's Zero-COVID policy to reduce the amount of time in quarantine travelers to the country spend buoyed sentiment in early trading. Oil markets advanced as traders speculated the move may stoke a boost to commodity demand, with West Texas Intermediate (WTI) futures bouncing nearly 3% to above $88 per barrel........"

MY COMMENT

The rest of the story remains the same.....as we seem to be POWERING into the close.

 

To myself and others on here......it is investing 101......to simply remain fully invested all the time. I learned many decades ago that the data shows that missing the critical BIG MOVE UP days significantly cuts your long term returns.

I would love to see someone on some board somewhere......posting the UP days in advance. It is simply impossible....no matter how much someone tells you they can predict or time the markets.

The best way to handle it is.......to simply stay invested for the long term all the time. That requires.......rational investment picks, rational risk management and risk tolerance,........and critically........an ACTUAL long term investing plan and horizan. So often it is the person that thinks they are a long term investor.....when they are not.....that is driven out of the markets by short term events.

This is why I consider long term to be.......5-7 YEARS......at the minimum. Rational market and investing expectations......equals......investing success.

 

AND.....yes......in spite of ZERO coverage.....it is still earnings season. there are some big ones on line for next week.

Home Depot, Walmart Kick Off Busy Week Of Retail Earnings; Tech Investors Eye Results from Cisco, Nvidia, AMAT

https://www.investors.com/research/...ye-results-from-cisco-nvidia-amat/?src=A00220

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

"Dow Jones stocks Home Depot (HD) and Walmart (WMT) headline a busy week of retail earnings reports as Wall Street weighs the impact of higher interest rates on the economy.

Big box retailer Walmart surged above its 200-day moving average last month and has been holding gains well. Meanwhile, home improvement giant Home Depot jumped above its 200-day line Thursday in heavy volume after the October consumer price index showed cooling inflation.

Walmart's earnings report is due Tuesday before the open. WMT stock gapped up sharply Aug. 16 after the company reported adjusted profit of $1.77 per share, down 1% year over year, but above the $1.62 consensus. Revenue growth accelerated for the second straight quarter, up 8% $152.9 billion. Revenue exceeded consensus by about $2 billion.



CFO John David Rainey said the retail giant has been seeing increased traffic from middle- and higher-income customers seeking relief from stubbornly high inflation. He noted that three-quarters of Walmart's market share gains came from customers with annual household incomes of at least $100,000. Inventories rose nearly 26% in the quarter.

For the current quarter, Zack's Investment Research is forecasting an adjusted profit of $1.31 per share, down 10% year over year. Revenue is seen rising 5% to $147.4 billion.

Home Depot Surges Ahead Of Results

Despite a weak housing market, Home Depot is expected to deliver another quarter of top and bottom-line growth. The retailer also reports early Tuesday.

HD stock surged Aug. 16 after the company reported better-than-expected fiscal second-quarter results. Adjusted profit increased 11% to $5.05 per share, with revenue up 7% to $43.8 billion. The results were helped by continued strong demand for home-improvement projects. Same-store sales rose 5.8%, above the 4.9% consensus.

Like Walmart, Home Depot is also stuck with bloated inventories, which rose more than 35% year over year.

HD stock has a modest 76 Composite Rating, weighed down by slowing earnings growth in recent quarters, and a 64 Relative Strength Rating. The stock's three-month RS Rating looks better at 82.

Retailers Lowe's (LOW), Target (TGT) and TJX Companies (TJX) report early Wednesday. Lowe's also gapped above its 200-day line Thursday, but volume was light. Target is still below its 200-day line. TJX looks the best of the three, topping a 73.11 entry Thursday in light turnover.

BJ's Wholesale Club (BJ) is one of the better looking retailers in terms of price performance. It's still in a buy zone after clearing a shallow cup-with-handle base with a 78.93 buy point. Results are due Thursday before the open, along with Kohl's (KSS) and Macy's (M).

Tech Earnings

Several high-profile technology stocks are also on the earnings calendar.

Cisco Systems (CSCO) and Nvidia (NVDA) report Wednesday after the close. Results from chip-equipment firm Applied Materials (AMAT) and security software firm Palo Alto Networks (PANW) are due Thursday after the close. All four stocks are below their 200-day lines, which means overhead supply could be an issue........"

MY COMMENT

Actually a pretty big earnings week next week. I will be looking forward to hearing from HD and NVDA.....two of my ten stocks. Earnings has been eclipsed lately by the FED, the election, and the CPI rally of the past couple of days.

 

An ICONIC person for the baby-boom generation. The wheel continues to turn.

Comedian Gallagher, famous for smashing watermelons, dies at 76

https://www.cnbc.com/2022/11/11/comedian-gallagher-famous-for-smashing-watermelons-dies-at-76.html

 

Another very nice gain for me again today....although I was spoiled by the ROCKET SHIP gains yesterday. I had 9 of 10 stocks in the green. AND....got in a good beat on the SP500 by 1.20% today. This brought my year to date LOSS down to (-24.1%)

I have been really happy with my NVIDIA buy that I made on 9-30-22. No doubt there were people when I posted that trade under my......all in all at once style......that thought it was crazy bad timing. Over the next week or two I had to sit though the stock moving steadily down.......but now......the trade is at +32.16%. I have been a firm believer in the data.....regarding going all in all at once....when you have the money to put into the markets and you are a long term ivnestor. I NEVER wait for an entry or exit point. Of course....this is all vry short term and there will be many up and down days ahead of us.

 

A STELLAR week for investors.

DOW year to date (-7.13%)
DOW for the week +4.15%

SP500 year to date (-16.22%)
SP500 for the week +5.90%

NASDAQ 100 year to date (-28.39%)
NASDAQ 100 for the week +8.40%

NASDAQ year to date (-27.62%)
NASDAQ for the week +8.10%

RUSSELL year to date (-16.15%)
RUSSELL for the week +4.60%

Look at the DOW......it is within striking distance of being POSITIVE. That is how far we have come back. The SP500 is also doing very nicely considering the dismal year we have had.

ALL the averages had MASSIVE gains for only one week this week. We move forward toward year end.

 

A GREAT couple of days and a GREAT way to go into the weekend.

I have NO shows this week. We will be rehearsing this weekend.....fine tuning songs (10 originals) for the studio for a new CD. We play so many shows....it is nice to get to hang out and rehearse. After this weekend we will be playing shows every week till year end, including New Years Eve.

BUT......the down side....many of the shows are STILL outside. So now we will be playing in the cold weather.....sometimes as low as the 40's or even the 30's.

Back when I was touring.....most of the bands would take off the time period from thanksgiving till the first of the year. The weather was bad over much of the USA and Canada in this time period.....and......after touring all year.....this was kind of a traditional break for family. We would usually head back out on the road in January or February and be out for 7-12 weeks....than home for one or two weeks, repeat, repeat, repeat.

 

I like this little article.

Capitulation Is How Bear Markets End, But Probably Not This One

https://www.realclearmarkets.com/ar...ets_end_but_probably_not_this_one_864475.html

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

"Pessimists claim it’s too soon to buy, that October and November’s stock market rally was yet another false dawn. Doomsayers see significant downside until we hit “capitulation”—a famous term meaning heavy panic selling. Capitulation is how bear markets commonly end. But several key factors make that ending unlikely this time. Let me show you.

The capitulation thesis stems from the notion investors aren’t fearful enough for stocks to bottom. History shows violent selling often characterizes bottoms, as panicked investors purge stocks preferring liquid “safe havens” like bonds, gold and cash. Outflows from stock mutual funds and exchange-traded funds surge, as demoralized investors’ last gasps of hope vanish—capitulation!

Yes, bear markets usually end in capitulation, though that is only crystal clear in hindsight. And, clearly we haven’t seen capitulation so far. Despite many sentiment measures like Bank of America’s global fund manager survey hitting extreme lows in October, fund flows have been muted. The week of October 7—days before this bear market’s lowest point so far—US investors pulled an estimated $25.9 billion from equity mutual funds and ETFs. But consider: The week of March 27, 2020, as stocks hit their COVID-lockdown low, US investors dumped $41.8 billion in stock funds. Pessimists conclude necessary panic selling looms.

However, rote reliance on history is always a mistake. History is quite useful in analyzing probabilities, but it isn’t a roadmap or destiny. Yes, bear markets commonly end in capitulation, but not always. Some—like 1966 and 1982—prove that.

I suspect this will become another example. For one, global stocks’ peak-to-trough drop in dollars thus far is -26.1%—a minor bear market historically. Meanwhile, Fed hikes led to the dollar surging. That caused what I call the Dollarization of Terror. It maximizes the fear and decline for dollar-denominated equity investors but minimizes it for others. In euros, British pounds and Japanese yen, world stocks haven’t even hit bear market levels. And sector make-up means major indexes in Canada, Britain, Australia and Japan are down only mildly. Without the extremes normally driving panic, why would these investors freak out? That is one reason we won’t see capitulation this time.

Another? “Safe havens” look perilous. Consider bonds, an all-time favorite one. Their year-to-date outflows dwarf stocks’. Little wonder, when the Bloomberg Global Aggregate Bond Index, a gauge of corporate and government debt from 24 nations, is down -22% from March 2020’s high—mirroring world stocks’ decline since last January. US Treasurys? The ICE BofA US Treasury Index is down -19% since March 2020 highs, including interest and price movement. Long-term Treasurys are even worse—down -41% since their most recent high. Rising rates also hit intermediate-term Treasury Inflation-Protected Securities, off -17% from this past March’s high. Most people are convinced rates must rise higher for longer now—meaning bond prices would fall further. Why sell stocks to buy bonds now? Plus, inflation—widely feared everywhere—would erode bond interest payments’ value.

That applies to cash also. Why pile into cash when it pays little and will be worth far less soon if today’s inflation rates persist? Even if inflation has peaked, savings yields won’t offset its eroding effects. Banks, flush with deposits, don’t need to lure even more with higher rates. According to Bankrate, the average US savings account pays nearly nothing: 0.16% yield as of November 2. High-yield savings accounts hover around 3.0% or less. Both are severely negative after inflation. That means exiting stocks to lock in a certain loss.

Gold, maybe the most famous “safe haven” of all, should be faring great if myths about it hedging inflation, bear markets and chaos were true. But after shining through early March, gold has tarnished, dropping over -20%—nearly doubling global stocks’ -10.7% over the same span.

Crypto? Bitcoin’s -73% drop from November 2021’s high through September 21’s low killed talk of digital safe havens. It may or may not rise spectacularly, but it is speculative, not a safe haven.

Real estate offers little safety, given mortgage rates’ rise has hit demand hard in an overall high-price environment. Both homebuilders and would-be buyers expect lower housing prices ahead. Regardless, real estate lacks liquidity—adding more risk.

With nowhere to run and hide, we probably won’t see classic capitulation this time. As I have told you, the stock market—The Great Humiliator—wants to fool as many as possible … for as long as possible … for as much money as possible. It has certainly done a good job on me this year. But a new bull market stealthily starting while many await capitulation would fool almost everyone now. Maybe the rally since October means it has already begun.

This period reminds me most of 1966’s bear market—which, as I noted earlier, ended without capitulation. Similarly, it featured fear of capitulation, big Fed rate hikes to fight inflation, a costly regional war, social unrest, no global recession (despite endless belief in one) and a US midterm election where the democrats held both Congressional chambers and the Presidency. Against that backdrop, the classic Midterm Miracle—which I wrote of in July—performed perfectly. A stealth bull market started in Q4 1966 as political uncertainty fell. The S&P 500 returned 21% in its first three quarters.

Of course, no one can be sure now will look like then. But when so many are pessimistic and fearful, it is time to be bravely optimistic."

MY COMMENT

I am not sure "CAPITULATION" is a thing anymore. The markets are very different now with massive numbers of people now investing in stocks and funds. I believe that the IRA and 401K have totally changed how concepts like "capitulation" apply to market behavior. The constant money going into those types of accounts and the NECESSITY for people to stay invested for their retirement has.....I believe....eliminated the concept of there being a clear capitulation as an end to a bear market.

In addition the financial media......short term QUANT computer trading.....the 24/7 news cycle......the rise of the wild trading based on social media....etc, etc, etc....have totally changed how investors think and act.

The facts are clear......we have seen whatever capitulation we are going to see.....already. I think we have already seen the market bottom. How long we sit and linger is the ONLY question at this point in time.

 

I like to use the SP500 as a measure of the markets. Here is some data.

First lets look at the longer term.....3 years and 5 years. Over 3 years the SP500 has a gain of +28.38%. Over 5 years the SP500 has a gain of +54.63%. These gains are in spite of the whole COVID mess and the economic shutdown, etc, etc that we have all had to live through. In addition add to these numbers the 1.5% to 2% that the dividends add each year.

In other words for 3 years and 5 years investors in the SP500 have achieved the 10% to 11% total returns that everyone talks about for the SP500.

For shorter time spans it is more of a mixed bag. Over 1 year the SP500 is at (-14.12%). For 6 months it is at (-0.77%).

Even over these extremely short time spans the index is performing exactly as you would expect. We are EXTREMELY close to being positive for the 6 month time span. The one year time span is improving and is now better than the YTD figure. Add in the dividends and the 6 month figure is close to, if not positive. Add in dividends and the 1 year figure is about (-12.5%)

It is ABSOLUTELY AMAZING.....that the SP500 continues to perform and provide long term total returns at 10% to 11%......in spite of all we have been through. This is the POWER of long term investing and having a long term view. I will take a total return of 10% to 11% all day long.

 

We continue to be in a stand-off in the real estate markets here in Central Texas. In my little general area we now have 49 active listings from about $4Million to a low of $515,000. There is nothing "pending" above $900,000 which is about the middle of the listings.

We are in a STALEMATE of a market......nothing in the higher end of the market is selling at the moment....but....prices are not going down. We are STILL showing a one year gain in prices of about 7%. It is the CLASSIC time period of holiday slow-down.

Normally our market slows down in November and December....especially the high end of the market. We usually pick right up immediately after the first of the year. I dont know if that will happen this year or not.

We are definately seeing mortgage rates close to the mid 7% range right now for a 30 year loan.

We are certainly continuing to see massive inflow of business in this area as the tech industry is adding tens of thousands of jobs. These are mostly jobs from new plants being built or companies moving into the area.

In my immediate small neighborhood.....we have one house for sale that has been on the market for about 2.5 months. It is listed for about $1.6MILLION......about the same size as my house.....although our house has more custom upgrades and is a tiny bit larger. The realtor for that house is doing a very poor job of marketing it. They have only had a single open house and that is what sells houses in this immediate area.

The local data here still also shows that prices are going up month to month....but slowing. It is still a sellers market based on the number of months of inventory......less than 3 months. Basically we seem to have normalized based on the time required to sell, prices being stable, and especially the number of homes that are NOT selling above list price and with multiple offers.