The Long Term Investor

I dont care about Twitter. I dont use the service nor will I. I try to stay totally anonymous when it comes to the computer and social media. This site is my......ONE exception.

BUT.....Elon Musk. I give him credit.

His recent email to employees is causing many to SELF-FIRE themselves. In other words.....QUIT. This is a genius move to weed out the employees that are the least productive in terms of his vision for the company. In addition since they......"quit"....they will not be entitled to unemployment.....and Twitter will not take a big hit with their unemployment system premiums and payments. They will also be in the clear with all the various state and federal laws that apply to laying off or firing employees since these people voluntarily quit. I assume they will also be ahead of the game in terms of other benefits that they would have to provide to a "FIRED" employee.

 

Nice to see all the averages in the green today......even though the NASDAQ was green by only 0.01%. I was personally in the red today by less than $700. The stocks that helped me to hold value in my account today.....and were in the green..... were the non-tech stocks, NKE, COST, HD, HON and on the tech side AAPL.

I got beat by the SP500 today by 0.60%.

 

The week was uniformly in the RED.....but it does not seem that bad compared to how it felt.

DOW year to date (-7.13%)
DOW for the week (-0.01%)

SP500 year to date (-16.80%)
SP500 for the week (-0.69%)

NASDAQ 100 year to date (-28.76%)
NASDAQ 100 for the week (-1.185)

NASDAQ year to date (-28.76%)
NASDAQ for the week (-1.57%)

RUSSELL year to date (-17.62%)
RUSSELL for the week (-1.75%)

SIX WEEKS to go for year 2022. It will be very nice to close the books on this year and start fresh at ZERO.

 

I am right now at about (-24%) year to date. I dont think it will happen.....but....if I could get down to about (-20%) by year end....that would be a major victory. There is STILL a slight....outside chance.....that the DOW could end the year positive. The rest of the averages have ZERO chance.

 

We have been in a snake-bit....Rodney Dangerfield....." I dont get now respect".....market all year. Any time stocks have tried to make a run something comes up....or out of nowhere....to knock them back.

The other day was a perfect example.....the markets had a really good gain going.....than BAM, out of the blue......in the last hour or so, the news reports of Russia sending missiles into Poland hit the wire and down we go. Just a day or so ago we were looking ok.....and BOOM......out come the FED minions and tank the markets.

This has been the norm all year......every time there is a good day or a rally.....something pops up out of nowhere and...... BINGO......the markets tank or the rally is killed.

Thank goodness we are now no longer on page.....666.....of this thread.

 

I am waiting.....on the bubble.....to see if my show tomorrow gets canceled. We will be playing outside in the evening and the weather is supposed to be about 40-42 degrees. We have played in those cold conditions many times.....but.....Rain is also in the forecast for tomorrow in the area where we will be playing. It it is raining we will probably be canceled.

Since I have about a 100 mile drive to get there........I will wait till the last minute and than take off.

 

REST up everyone.....we want to come back FRESH and STRONG next week. It will take all of our energy to sit and do nothing.

ACTUALLY.....sit and do nothing has been my investment style for so long now......it is pretty easy.

 

This is a great article. It is about the early formative years of Warren Buffett. Basically he was a FANATIC....when it comes to money, earning money, and business. It is long so I will just post the link.

The Hustler: Lessons from a Young Warren Buffett

https://neckar.substack.com/p/the-hustler-lessons-from-a-young

HERE is the summary at the end of the article.

"

• Everything starts with the discovery of your innate curiosity. This is not something you can model. For Buffett it revolves around how businesses work and how to value them. Whatever it is for you, follow that thread.
  
  
• Go deep. Read everything you can find and allow yourself to dig for obscure and overlooked sources of information. Once you’re armed with some knowledge and genuine interest, reach out to experts and practitioners. Remember: “Hi, I’m Warren B. and I’m here to learn.”
  
  
• Seek out the best teachers, dead and alive. Perhaps you can find community among their students as well.
  
  
• Share what you learn. Put yourself out there.
  
  
• Pay attention to fear and resistance. Find help in conquering what is holding you back.
  
  
• Look for adjacent games to practice your skills. You will climb the learning curve even faster.
  
  
• If you don’t have capital, focus on building an initial stake. This may take hard work, dedication, creativity, and frugality. Once you have capital, learn how to let it work for you. Invest and be patient.
  
  
• Find a rational investment philosophy that works for you. It has to fit your temperament and your level of skill and interest. Don’t try to blindly adopt anyone else’s philosophy.
  

Most importantly, whether it’s the journey of compounding wisdom or wealth, don’t be afraid to go your own way. And while it’s great to have an early start like good old Warren, it’s never too late to apply the lessons of his life to yours."

 

LOL.....a rare event....our show tonight was just moved indoors. It will be a very intimate setting. It is now about 42 degrees and pouring rain all day.

 

Trying to trade or play the rigged FED game is impossible. These people are all over the place. This is a continuation of what we have seen from them ever since they have been doing messaging about inflation. The FED communication failure is a total symptom of their incompetence. These people simply have no idea what they are doing.....so they are constantly jerked around by short term events and economic data.

Here is the latest.......I am not going to post the actual article since it is WORTHLESS FED GIBBERISH as usual. This might.....however be a market driver on Monday......at least until some other FED member pops up with more remarks.

Fed's Bostic: Ready to 'move away' from large rate increases at next meeting

https://finance.yahoo.com/news/feds-bostic-ready-move-away-190410112.html

 

AMAZING. I was at our Walmart today. When I drove in I wondered what was going on......the parking lot was extremely full of cars. Inside the store was the same....way more people than normal for a Sunday. They had a big number of registers open as well as a couple of self checkout areas.

This makes me think that the media is WAY underestimating the Holiday shopping season this year. I dont know if Walmart is already doing Black Friday sale prices.....early this year. I dont follow any of the sale flyers for Walmart.

 

Yes.....I just saw that story. It will be interesting to watch.

 

We will have a short week this week. The markets will be CLOSED on Thanksgiving Day. They will also close early on Black Friday.....I believe at 1:00. I dont think many of the Wall Street professionals will be at work on Friday.

 

Futures were green today....but.....after the open the markets quickly went red. Mild red so far to start a very short market week. It will basically be three days.....even though the markets are open for about half a day on Friday.

Over many decades we have now evolved to where most schools give the entire week off. Not much on the calendar this week and with Thanksgiving and kids out of school and NO focus on the markets.......it could be a real SNOOZER of a week.......with a slight negative tilt......since....that is the general direction right now anyway.

 

Sounds good to me.

Leading Indicators Point to Slowing Inflation Ahead
Beyond price measures themselves, signs of improvement in one of this bear market’s big fears abound.

https://www.fisherinvestments.com/e...g-indicators-point-to-slowing-inflation-ahead

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

"Recent US inflation readings have slowed some, offering investors a modicum of relief. But worry still abounds. Many fear that high inflation won’t subside anytime soon, with October’s readings a false dawn. Pundits say it is “too soon to celebrate” and argue the Fed has more work to do. Perhaps. Monthly inflation data variability is unpredictable. However, we see growing evidence inflation is likely to slow—and defang one of the bear market’s biggest fears this year.

From the headline consumer price index (CPI) and “core” CPI excluding food and energy to producer prices and import prices, inflation has come off the boil since the summer. Yet many argue other measures—like the median CPI or the “sticky price” CPI (a gauge of less-volatile prices)—continue to rise.[ii] While we agree about not reading too much into short-term wiggles, we don’t think various inflation measures—or subsets of them—are any more telling than others. For example, as we showed in February, producer prices don’t reliably lead CPI. They are coincident, rising and falling together. Instead of poring over backward-looking inflation data—past prices, which never predict—we think it is more helpful to take cues from forward-looking measures, which indicate inflation is likely to subside over the coming year.

Exhibits 1 through 3 show a few leading inflation indicators. Now, as the charts also show, these aren’t super-precise gauges. Their lead times to CPI can vary—sometimes by a lot. They won’t pinpoint inflation’s peak, but together, we think the preponderance of evidence they provide gives a good sense of CPI’s likely general direction ahead.

Let us start with money supply. Monetarist theory states that inflation is always and everywhere a monetary phenomenon. So consider M4, the broadest measure of money including highly liquid “near money” substitutes like Treasury bills. Whatever you think of the accuracy of money supply measures, which seem somewhat questionable, the pattern is telling. M4’s most recent spike to over 30% y/y occurred in June 2020. Inflation began escalating about a year later as reopening commenced and demand surged, but M4 growth has since slowed dramatically. It crawled 1.9% y/y in September. Less money sloshing around the system means fewer dollars chasing (up until recently) supply-constrained goods.

Exhibit 1: Money Supply Deceleration Implies Inflation Will, Too




Source: Center for Financial Stability and Federal Reserve Bank of St. Louis, as of 11/17/2022. Divisia M4 (including US Treasurys), January 1968 – September 2022, and CPI, January 1968 – October 2022.

Supply chain issues have featured prominently in this year’s hot inflation, in our view. Yet improvements are showing. We have featured the New York Fed’s Global Supply Chain Pressure Index (GSCPI) a couple times before as a good indicator price pressures are easing. The GSCPI has dropped from over 4.0 late last year to around 1.0 recently. That still shows elevated pressure, but it has eased substantially from the peak.

Exhibit 2: Global Supply Chain Pressure Easing Helps Relieve Price Pain




Source: Federal Reserve Banks of New York and St. Louis, as of 11/17/2022. Global Supply Chain Pressure Index and CPI, January 1998 – October 2022.

The Institute for Supply Management (ISM) prices paid purchasing managers’ subindex for the services sector offers a separate look at input prices firms representing 71% of GDP are seeing.[iii] Around 70% of services firms surveyed in October say the prices they pay are rising—historically elevated, like the GSCPI—but that has come down from nine straight months of readings above 80% through June. Meanwhile, the sister manufacturing survey showed more respondents noted falling input prices than rising.[iv]

Exhibit 3: Services Firms Are Also Seeing Slower Price Growth




Source: FactSet and Federal Reserve Bank of St. Louis, as of 11/17/2022. ISM services purchasing managers’ index (PMI) prices paid subindex and CPI, January 1998 – October 2022.

Markets reflect likely easing inflation pressures, too. Exhibit 4 shows the average inflation rate over the next five years implied by the difference between 5-year Treasury and Treasury Inflation-Protected Securities yields has fallen to 2.3% from a high of nearly 3.6% in March.

Exhibit 4: The Bond Market Expects Inflation to Moderate




Source: Federal Reserve Bank of St. Louis, as of 11/17/2022. 5-Year Breakeven Inflation Rate, 1/2/2003 – 11/16/2022.

Meanwhile, the S&P/Case-Shiller National Home Price Index has shown cooling prices for months now, and it typically leads shelter costs—among those “sticky” prices some warn are still rising. As Exhibit 5 shows, home prices tend to lead the CPI’s owners’ equivalent rent (OER) component—the single-largest CPI category at a nearly 25% weight—by around 15 months. Now, OER is an illusory line item in CPI, because it represents the costs of what homeowners would pay if they rented their house. The BLS imputes it from the relatively small sample size of single-family home occupants renting their primary residence. But regardless, actual rental rates have decelerated to 4.7% y/y in October, down rapidly from January’s 17.4% peak, according to Realtor.com.[v]

Exhibit 5: Home Price Growth and Rental Rates Starting to Decelerate




Source: FactSet and Federal Reserve Bank of St. Louis, as of 11/17/2022. S&P/Case-Shiller National Home Price Index, January 1988 – August 2022, and CPI: owners’ equivalent rent, January 1988 – October 2022. The Home Price Index is pulled 15 months forward for illustrative purposes.

Continually escalating grocery bills may also be in the rearview before too long. The UN Food and Agricultural Organization (FAO) Food Price Index—international prices for food commodities the FAO measures—has steadily slowed since spring. From 34% y/y in March (when Russia invaded Ukraine, both major agricultural exporters), food prices were up 2% in October.[vi] This may not yet show in falling prices you are paying, but it is an encouraging signal that upward pressure is abating.

Inflation was a key factor in souring sentiment this year, hurting stocks. We don’t think inflation itself fundamentally caused 2022’s bear market. After all, the US economy has (so far) avoided recession despite widespread fear—and an impending one in coming quarters isn’t assured. Meanwhile, corporate profit margins and investment have held up rather resiliently. But now, signs of inflation pressure ebbing suggest that dour inflation sentiment may be overdone—bringing relief. It may not come in a straight line—few economic or market factors do. But it does seem likely to come soon, almost no matter what you think drove inflation this year."

MY COMMENT

The above is more confirmation that we are......"probably"......at a soft bottom. The key question will be.....how long does it take for the economy to get over the inflation and back to normal? Will it take six months? Or....will it take two years? That is the range that I see ahead for investors......somewhere between six months and two years to get back to a bull market.

Of course no matter how long it takes.....we will see the usual up and down weeks....mostly depending on short term data and events. In the end.......those who sit and wait....will be rewarded as usual.