The Long Term Investor

I am hesitant to even post this since today will be all about the FED this afternoon.....but here you go.

Stock market news live updates: Stocks nudge higher as rate decision from Fed looms

https://finance.yahoo.com/news/stock-market-news-live-updates-december-14-2022-111241774.html

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

"U.S. stocks posted modest gains at Wednesday's open as investors face the Federal Reserve’s seventh and final interest rate increase of 2022.

The central bank is expected to deliver a half-percentage-point hike at the conclusion of its two-day policy meeting at 2 p.m. ET. The increase is set to bring its key federal funds rate to a new range of 4.25% to 4.5%, the highest level since December 2007.

The S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) each inched up 0.2%. The technology-focused Nasdaq Composite (^IXIC) rose about 0.1%. In other markets, U.S. Treasuries dipped after climbing on Wednesday, and the U.S. dollar index retreated. West Texas Crude Oil (WTI) futures rose 1% to trade above $76 per barrel.

Investors will assess remarks from Fed Chair Jerome Powell at 2:30 p.m. ET in the aftermath of the rate announcement. Economic projections from policymakers and the latest dot plot showing each member’s forecast for the U.S. short-term interest rate will also serve as guidance to investors on the Federal Reserve’s path forward.

The decision will follow Wednesday’s closely watched November Consumer Price Index (CPI), which rose at an annual 7.1% clip last month, the second consecutive downside surprise in inflation data. Stocks closed higher following the report, but Wall Street’s reaction was underwhelming, with uncertainty still ahead around how much further rates need to go to quell prices that remain persistently high.

While a downshift in inflation was welcome on Wednesday, equity markets pared much of the gains that came immediately following the print as traders thought, “what now?,” BMO Wealth Management’s Chief Investment Strategist Yung-Yu Ma said in an emailed note.

“The Fed is still going to focus on the labor market imbalance, a dovish pivot is still a long way off, and in the meantime, companies and consumers have to recalibrate to the impact of higher interest rates and a slowing economy,” Ma added. “It’s all a balancing act, which we believe points to near-term choppy markets even though the improving inflation backdrop adds a positive bias.”

That view was echoed by other Wall Street strategists, including Bank of America Chief U.S. Economist Michael Gapen, who indicated that although November’s consumer price report reflected a faster retracement in core goods inflation than expected, services inflation remains sticky.

“This is unlikely to affect the Fed's December decision – we continue to expect them to hike by 50 basis points – however, it may bring up discussions of another downshift in February,” Gapen said in a note penned along with his team at BofA. “We still think they go by 50 basis points given the tightness in the labor market and elevated wage growth, but the debate should be livelier especially if we get another soft December inflation report.”

This week marks what is perhaps the last week of major U.S. economic events of the year for investors, with the government’s retail sales report also on the docket for Thursday. Even as a jam-packed economic calendar keeps traders busy domestically, traders will watch moves by central banks overseas, with policymakers from the U.K. Bank of England, Mexico, Norway, the Philippines, Switzerland, and Taiwan, all set to carry out their own rate decisions on Thursday.

The U.K. received its own inflation reading Tuesday: A rapid rise in consumer prices decelerated slightly to 10.7% from a year earlier in November, down from a 41-year high of 11.1% during the prior month. U.K. equities retreated as investors awaited the U.S. Federal Reserve's messaging later today and the Bank of England's rate decision Thursday. The pound traded near its highest level since June.

Back on this side of the Atlantic, all eyes were also on the latest developments in cryptoworld, with former CEO of fallen cryptocurrency exchange FTX Sam Bankman-Fried facing a wave of criminal charges for his handling of customer and investor assets.

On the corporate front, earnings from companies including Lennar (LEN), Trip.com (TCOM), and Weber (WEBR) are scheduled for release on Wednesday."

MY COMMENT

I still have an EARNINGS release that I am waiting for. NIKE reports next week.

I dont care about the typical PIVOT talk that is starting up again. BUT.....I do care about the FACT that we have now turned the corner on the rate increases after today. We are going to be on the downhill side of the rate increases starting after today. That has got to be good news for investors going forward.

 

THIS......is a big problem in investing today. Or.....I should say speculating. People should NOT be thinking they are investing money based on Social Media.......guess what.....I am sorry to tell you.....all that Social Media Influencer baloney is ALL FAKE.

SEC charges social media influencers in alleged $100 million stock pump and dump scheme

https://www.cnbc.com/2022/12/14/sec...cers-in-alleged-100-million-fraud-scheme.html

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

"Key Points

• The Securities and Exchange Commission charged seven social media influencers with using Twitter and Discord to commit securities fraud and an additional influencer with aiding and abetting the alleged $100 million scheme.
• Through widely-followed accounts and chatrooms, the defendants allegedly “promoted themselves as successful traders,” according to an SEC press release and allegedly encouraged followers to buy stocks that they also purchased.
• But they did not disclose to their followers while promoting those stocks that they allegedly planned to later sell shares once prices or trading volumes rose, according to the complaint.

The Securities and Exchange Commission charged seven social media influencers with using Twitter and Discord to commit securities fraud and an additional influencer with aiding and abetting the alleged $100 million scheme, the agency announced on Wednesday.

The seven charged with securities fraud used the social media platforms to manipulate exchange-traded stocks in a scheme going back to at least January 2020, the SEC alleged. Through widely-followed Twitter accounts and stock trading chatrooms on Discord, the defendants allegedly “promoted themselves as successful traders,” according to an SEC press release and allegedly encouraged followers to buy stocks that they also purchased.

But they did not disclose to their followers while promoting those stocks that they allegedly planned to later sell shares once prices or trading volumes rose, according to the complaint. The influencers allegedly gained a profit by pumping the stock prices and then selling once they rose, earning about $100 million in total, the SEC claims.

The eight also face criminal charges from the Department of Justice’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.

Each of the defendants had well over 100,000 Twitter followers as of this month, the complaint states. One of those accounts, @PJ_Matlock, run by Texas resident Perry Matlock who calls himself the CEO of Atlas Trading, no longer exists as of Wednesday. The other primary defendants accused of securities fraud (and their Twitter handles) are Edward Constantin (@MrZackMorris), Thomas Cooperman (@ohheytommy), Gary Deel (@notoriousalerts), Mitchell Hennessey (@Hugh_Henne), Stefan Hrvatin (@LadeBackk) and John Rybarcyzk (@Ultra_Calls).

Daniel Knight (@DipDeity) was charged with aiding and abetting the alleged scheme, in part by co-hosting a podcast that promoted some of the primary defendants as expert traders. The SEC alleged Knight also traded with the other defendants and saw profits from the scheme.

Some of the defendants’ Twitter bios include disclaimers at least as of Wednesday that appear to try to mitigate their legal risks. For example, Constantin’s account says “All my tweets are just my opinions. I’m still not a financial advisor. Parody account.” Hennessey’s says, “Everything is my opinion.I actively trade positions.Not a pro,Not Financial Advice,probably do the opposite.” Rybarcyzk’s reads “DISCLAIMER: My tweets are NOT recommendations to enter a stock. - Ideas shared on Twitter are NOT buy or sell signals. DO NOT TRADE BASED ON SOCIAL MEDIA.”


Knight’s bio says, “don’t buy/sell off my tweets EVER.”

Twitter and Discord did not immediately respond to requests for comment. Three of the influencers charged in the scheme who had open direct messages on Twitter, Deel, Rybarcyzk and Knight, did not immediately respond to CNBC’s requests for comment. Matlock, who deleted his Twitter account, did not immediately respond to a request for comment sent to his Instagram account. Contact information for the other four defendants could not immediately be found."

MY COMMENT

You just can not make this stuff up. Look at those disclaimers above. YET......you have people following these guys and trading the stocks they talk about. INSANITY.

I will say the same thing about this thread......PLEASE.....THIS thread is not intended as financial advice. It is a discussion of long term and other investing. It is a message board. It is a way to follow along and watch "MY"..... REAL TIME and ACTUAL investing moves and results. It is a learning tool for ALL of us.

This thread is basically my investing blog/record. It is my thoughts and feelings about the markets and long term investing on a day by day basis. THAT IS ALL IT IS.......nothing more nothing less.

 

I will say......ANYONE......feel free to post on this thread. Any post on anything to do with investing or economics or the markets is welcome.

 

Yep....that is where we are. Elon is now on the black-list and will be canceled if possible. Unfortunately for the cancel warriors......there are probably many, many more people that are publicly or privately cheering him on. In the end it will ALL be about TSLA earnings and production.

As long as he does not give in to the BULLIES......they will give up soon and move on to an easier target.

 

Today is the perfect example of current market......INSANITY. this is the short term stuff.

We have the markets UP till the FED announcement. Following that they tank.......why? Well....because the FED did exactly what everyone in the entire world knew they would do a rate increase of 0.50%. They also came out with a HAWKISH message......once again what everyone with a half a brain knew they would do.

So.....NOTHING happened. Yet the media.....to a small degree since they have worn this BS out....tried to push the narrative of the PIVOT........so the AI trading platforms and others went crazy and sold the news of a HAWKISH FED.

The last hours of the market day were a JOKE.

 

I was in the RED today. Earlier in the day I was of course green.....but the FED did exactly what was expected so the markets sold off at the end. I had a moderate loss and got beat by the SP500 by 0.27% today. I did have two stocks UP today.....HD and MSFT.

 

We now have the FED BALONEY behind us for the rest of the year. Of course they will be out in force in the media over the next week or two trying to tank the markets with their comments.

The GOOD NEWS.......they dont have much farther that they can raise rates......so the end of the FED power to do anything is close to the end..........but.......we will have to live with the FED FEAR MONGERING for a long time to come.

 

I like this little article.

Plan For Change Or Change Your Plan

https://tonyisola.com/2022/12/plan-for-change-or-change-your-plan/

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

"Getting lost is stressful.


The financial markets are unchartered territory—anxiety compounds when uncertainty rears its head.

The same goes for becoming disorientated in the woods.

Every year, some hikers enter the woods and never return. Refusing to change their mental model leads to panic. Deadly consequences result from unrealistic perceptions. Change isn’t acknowledged, and the effects are lethal.


Disappearing in the forest or mountains is more common than people think. Our expectations create a world that doesn’t exist. Instead of modeling for current circumstances, we stick to the world we wish existed. Research suggests there are five stages people go through when lost.

1. Denial and pressing one despite overwhelming evidence to the contrary happens first.
2. The next stage involves realistically assessing the situation and panicking, resulting in frantic and unproductive behavior.
3. Stage three results in a false mental model due to injury or exhaustion. You believe you’re on the right track, not accepting your true fate.
4. After stage three, the truth seeps in, and you deteriorate mentally and physically.
5. Finally, you become resigned to your plight.

The last part is critical. Things can go either way. Either you quietly wait to die or become proactive and save yourself.

Laurence Gonzales details this paradox. He discusses a lost hiker’s choice that ended up saving his life.

Killip had entered the final stage that separates the quick from dead, not helpless resignation but a pragmatic acceptance of, and even a wonder of, the world in which he found himself. He had at least begun to model and map his natural environment instead of the one he wished for. He had worked out his salvation. He had discovered the rule of life. Be here now.

People and companies don’t need the forest to get lost. How many men leave a good marriage for someone half their age and proceed to ruin their life?

Companies follow the wrong path and abandon core business’s to chase the latest shiny object. Often they never recover, destroying all stakeholders.

Many investors are lost in the labyrinth of the current Bear Market. The almost year-long decline is a grind, but we’re probably closer to the end than the beginning. That isn’t the critical point.


Source: A Wealth of Common Sense

What are you going to do with your money in stage 5?

We have a choice. We can quietly resign ourselves to our fate and wait to die. Option one – Going to cash, thinking it’s the compass to locate the path to higher returns later. Basing your financial future on a mental model dependent on market timing is a path many choose to follow.


OR


We can be present and realize the market isn’t going to fulfill our desires just because we want it to. Creating a new mental model is the path back to civilization.

You can’t change the markets, but you can change yourself.

Giving up the false hope of steady, consistent returns is the first step toward financial reality.

Retirees can adapt to the new environment by spending less or revisiting their asset allocation. Focusing on investment costs and tax planning is recommended.


For those years away from retirement, the bear market is a blessing, not a curse. Increasing contributions to take advantage of discounted prices is the ultimate adaptation.

Laurence Gonzalez describes a key trait of survivor’s mentality.

Don’t fall in love with the plan. Be open to a changing world and let go of the plan when necessary to make a new plan. Then as the world and the plan go through their book of changes, you will always be ready to do the next right thing.

Plan for change or change your plan."

MY COMMENT

YES......the SP500 gives a total return of about 11% per year average over the longer term. That average is TRUE....but how people think we will get there is an ILLUSION.

The markets do NOT just steadily go up......they lurch forward and back....up and down. Fortunately the percentage of UP years is about 70%.....that leaves the other 25-30% of the years as flat to down.

It is a bumpy ride. If you know this and expect it you will do just fine. If you expect a smooth 11% ride.....you are in for a nasty shock during the inevitable bear market years.

 

We ll know what happened today.

Stocks sink after Fed hikes, Powell gives hawkish outlook

https://finance.yahoo.com/news/stock-market-news-live-updates-december-14-2022-111241774.html

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

"U.S. stocks fell in volatile trading Wednesday after the Federal Reserve delivered its seventh and final interest rate increase of 2022 and Chair Jerome Powell asserted in hawkish remarks that further tightening would come in the new year.

The central bank lifted its key policy rate by half a percentage point, slowing the pace from hikes of 75 basis points across the prior four meetings. The move brings the federal funds rate to a new range of 4.25% to 4.5%, the highest level since December 2007.

The S&P 500 (^GSPC) declined 0.6% after two days of gains, while the Dow Jones Industrial Average (^DJI) shed about 140 points, or 0.4%. The technology-heavy Nasdaq Composite (^IXIC) was off by 0.8%. U.S. Treasury yields held steady after a brief jump following the decision.

"Restoring price stability will likely require maintaining a restrictive policy stance for some time," Powell said in a speech following the rate announcement.

Fresh economic forecasts from the Fed that accompanied the decision show officials now see benchmark interest rates peaking at a median of 5.1% in 2023, 50 basis points higher than the previously projected 4.6% in September. Officials then see rates coming down to 4.1% in 2024, also slightly higher than previously projected.

"A downshift by the Fed was well-telegraphed so the hike was likely priced in, but some investors may have been surprised by the Fed’s fund forecast showing a more hawkish outlook than expected—a reminder that even though we may be approaching the finish line, we aren’t there yet," Mike Loewengart, head of model portfolio construction at Morgan Stanley, said in an emailed note.

"While it was good to see inflation come down these last two months, the Fed will need to see a few more signs over a longer time frame that inflation is under control before a full pivot."

The decision follows Wednesday’s closely watched November Consumer Price Index (CPI), which rose at an annual 7.1% clip last month, the second consecutive downside surprise in inflation data. Stocks closed higher following the report, but Wall Street’s reaction was underwhelming, with uncertainty still ahead around how much further rates need to go to quell prices that remain persistently high.

While a downshift in inflation was welcome on Wednesday, equity markets pared much of the gains that came immediately following the print as traders thought, “what now?,” BMO Wealth Management’s Chief Investment Strategist Yung-Yu Ma said in an emailed note.

“The Fed is still going to focus on the labor market imbalance, a dovish pivot is still a long way off, and in the meantime, companies and consumers have to recalibrate to the impact of higher interest rates and a slowing economy,” Ma added. “It’s all a balancing act, which we believe points to near-term choppy markets even though the improving inflation backdrop adds a positive bias.”

That view was echoed by other Wall Street strategists, including Bank of America Chief U.S. Economist Michael Gapen, who indicated that although November’s consumer price report reflected a faster retracement in core goods inflation than expected, services inflation remains sticky.

“It may bring up discussions of another downshift in February,” Gapen said in a note written along with his team at BofA. “We still think they go by 50 basis points given the tightness in the labor market and elevated wage growth, but the debate should be livelier especially if we get another soft December inflation report.”

Among specific movers in trading Wednesday, Sofi (SOFI) shares jumped more than 6% after a regulatory filing showed Chief Executive Officer Anthony Noto recently purchased $5 million worth of company shares.

Shares of Charter Communications (CHTR) tumbled a record one-day decline of 16% following a wave of downgrades that came after the telecom giant announced plans during its investor day to spend big in coming years on a high-speed internet upgrade — starting with $10.7 billion in 2023, more than analysts expected.

Tesla (TSLA) continued a recent downshift, falling 2.6% after a 4% slide in the previous session. Declines in Tesla on Wednesday came following a price cut from Goldman Sachs and continued selling pressure over concerns around CEO Elon Musk's management of Twitter.

Tesla's stock is down more than 18% this month and 50% year-to-date. Since closure of Musk's deal to acquire Twitter Oct. 27, the stock has cratered roughly 28%.

This week marks what is perhaps the last week of major U.S. economic events of the year for investors, with the government’s retail sales report also on the docket for Thursday. Even as a jam-packed economic calendar keeps traders busy domestically, traders will watch moves by central banks overseas, with policymakers from the U.K. Bank of England, Mexico, Norway, the Philippines, Switzerland, and Taiwan all set to carry out their own rate decisions on Thursday.

The U.K. received its own inflation reading Tuesday: A rapid rise in consumer prices decelerated slightly to 10.7% from a year earlier in November, down from a 41-year high of 11.1% during the prior month. U.K. equities retreated as investors awaited the U.S. Federal Reserve's messaging later today and the Bank of England's rate decision Thursday. The pound traded near its highest level since June.

Back on this side of the Atlantic, all eyes were also on the latest developments in cryptoworld, with former CEO of fallen cryptocurrency exchange FTX Sam Bankman-Fried facing a wave of criminal charges for his handling of customer and investor assets.

On the earnings front, companies including Lennar (LEN), Trip.com (TCOM), and Weber (WEBR) are scheduled for release on Wednesday."

MY COMMENT

Nothing I can say that I have not already said about today......foolishness.

As to the next rate hikes........I say we have another 0.50% hike next time. If the CPI cooperates that will probably be the last one. If the FED wants to make a point.....we might we two more instead of one. After that it will be a few random 0.25% hikes.

At that point the FED is basically out of ammunition unless they simply decide to CRUSH the markets and the economy. I dont think they are that DUMB......but than again.......

I prefer to focus on the FACT that they are nearly done.......and move on in my thinking and investing.

 

At least we now have till early February to be free of the FED....nearly a month and a half.

 

The usual today......we are caught up in a cycle of market IRRATIONALITY.

Stocks plunge as rate hikes rattle markets, retail sales miss

https://finance.yahoo.com/news/stock-market-news-live-updates-december-15-2022-114938982.html

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

"U.S. stocks descended Thursday morning as Wall Street reeled from another sizable rate hike by Federal Reserve officials and assessed similar moves by central bank officials across the Atlantic. A disappointing reading on consumer spending also weighed on sentiment.

The European Central Bank and the Bank of England followed the U.S. Fed in raising interest rates by 50 basis points Thursday morning. The BoE's hike brought rates in the country to their highest since 2008.

The S&P 500 (^GSPC) slid 1.4%, while the Dow Jones Industrial Average (^DJI) shed around 380 points, or 1.1%. The technology-heavy Nasdaq Composite (^IXIC) dropped 1.7%.

Meanwhile, the government's retail sales report showed spending fell sharply in November as the key holiday shopping season kicked off. The latest retail sales reading showed a decline of 0.6% over the prior month but a 6.5% increase from November 2021.

Tesla (TSLA) opened flat Thursday after a regulatory filing showed CEO Elon Musk sold approximately 21,995,000 shares of the company, or roughly $3.6 billion worth, during the three-day period ending Dec. 14. Shares of Tesla are down about 20% in December so far and roughly 55% year-to-date after a sell-off of the electric-vehicle giant accelerated in recent days.

Shares of Lennar (LEN) were down 3% at the start of trading, even after the homebuilder reported an 11% jump in fourth-quarter profit late Wednesday.

The moves Thursday morning follow declines across the major averages in the previous trading session after the Fed delivered a 50-basis-point increase to its benchmark interest rate. Fed Chair Jerome Powell also emphasized that he and colleagues will continue to lift rates in 2023 to an upwardly revised projected terminal rate of 5.1%.

Wednesday's half-percentage point hike, which brought the Fed funds rate to a range of 4.25%-4.5%, did mark a slowdown from the 75-basis-point increases at each of the Fed’s past four policy meetings — the most aggressive stretch of hikes since the 1980s.

Despite a slowdown in the pace and magnitude of increases, Powell continuously asserted that the work by him and his colleagues to tackle stubbornly high inflation was far from over.

“Now that we’ve raised interest rates 425 basis points this year and we’re into restrictive territory, it’s now not so important how fast we go — it’s far more important to think, what is the ultimate level?” Powell said in a press conference with reporters Wednesday. “At a certain point, the question will become, how long do we remain restrictive?”

The Fed’s “dot plot,” which shows estimates by policymakers for interest rates, showed expectations the federal funds rate will increase in 2023 to between 5.1% and 5.4% and in 2024 to still be at a median rate of 4.1% from a previously estimated 3.9% – a change strategists point out is the only real surprise revision to the central bank’s outlook.

“These estimates are notably more hawkish than their previous forecasts and were not trailed well in advance as is normally the case with the Fed,” William Blair macro analyst Richard de Chazal said in a note."

MY COMMENT

I dont disagree with the FACTS above......but....I do disagree with the opinion that is scattered through this news article.

First.....this was NOT a "sizable" increase by the FED.....and....it was totally anticipated. The fact is that this is good news since it marks the end of the 0.75% increases.....probably for good.

Second.......the "hawkish comments" from the FED......again totally anticipated by anyone with half a brain. this is NOT unanticipated in any form or fashion.

BUT.....the markets are going to do what they want to do. You cant fight the TAPE or the FED.....at least over the short term....no matter how irrational the reactions of investors are.

 

To continue the above comment.

My opinion is that the markets are STUCK in a time period where they are simply REACTING to day to day events. There is ZERO ability of the markets and investors to look to the FUTURE at the moment. This means that the markets are at the mercy of day to day news and other events. It means the markets are TOTALLY focused on DRAMA and SENSATIONALISM.

Of course this is totally IRRATIONAL. Investors should be looking 6-12 months into the future.....if not more. Day to day sensationalized news coverage is not relevant to stocks or investing. What counts is the forward looking view.

The future......very bright. We are now seeing the end of the FED increases in the next 6 months. We are going to see earnings pick up steam after the next quarter or two. We are seeing the economy slowly normalize from the shut-down. We have probably seen stocks bottom two or three times over the past year.

BUT.....just like everything in the internet based world......there is NO ability of people to look past the day to day DRAMA of the breathless media and social media. It is simply the......ME, ME, ME,.....market and investing. What we are seeing is the same as other aspects of life now.......the NARCISSIST WORLD. Everything is about the immediate present.....how many followers you have TODAY at this second.....how many LIKES......etc, etc, etc. It is all caught up in the moment.

This sort of focus creates an IRRATIONAL market. It is a symptom of the current day to day world where everyone is glued to their screens. Very few people EVER take the time to simply sit and think.....with NO media.

We are heading down the other side of the mountain. Regardless of whether or not the FED increases have any real impact on inflation.....they will soon end. At that point much of the relevance of the FED is gone.....especially in light of the refusal of government to help fight inflation in the slightest.

 

Looking ahead to the new year.

How Often is the Market Down in Consecutive Years?

https://awealthofcommonsense.com/2022/12/how-often-is-the-market-down-in-consecutive-years/

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

"Unless we get a Christmas miracle, the U.S. stock market is going to finish the year with double-digit losses.

If this downturn holds, it would be the 12th time in the past 95 years this has happened.

So it’s relatively rare but not completely out of the range of possibilities.

There’s nothing special about calendar year returns. It’s not like market cycles die on December 31st and are born again each year on January 1st.1


But you also can’t predict what’s going to happen in a given year based on what happened in the previous year. Markets are not that easy.

Since 1928, the S&P 500 is up roughly 55% of the time following a year that preceded it with a gain. This makes sense when you consider the market is up around 3 out of every 4 years on average.

The stock market has been down following an up year 18% of the time. It was also up 18% of the time following a down year.

That leaves just 9% of the time when stocks were down one year and then down the next year for consecutive losses.


You can see from the yearly returns that the losses do cluster at times but not all that often:


There were 4 down years in a row from 1929-1932. The market was down 3 years in a row from 1939-1941. It didn’t happen again until back-to-back down years in 1973 and 1974.

The last time the stock market posted a string of bad years was in the 2000-2002 bear market when each year it fell more than the previous year.2

From an investor psychology standpoint, a prolonged bear market is probably more difficult to stomach than a severe crash that ends in short order.

For example, most investors would prefer we finish this year down 30% and move onto a new bull market rather than sit through a down 15% year in 2022 and another down 15% in 2023.

I suppose the risk of this occurring is one of the biggest reasons stocks have a return premium to other asset classes in the first place.

Consecutive down years in the bond market are even more infrequent than the stock market:


In fact, before back-to-back down years in 2021 and 2022, the only other time this has happened in the past nine-plus decades was in 1955-1956 and 1958-1959 (which coincidentally was another time when rates rose from a low starting point).

Shockingly, if it holds, 2022 would be the worst year for 10 year treasuries in modern financial market history. The only other time we witnessed a double-digit loss on the benchmark U.S. government bond was in 2009.

If you want to look at the bright side of things from a diversification perspective, there has never been a period where both stocks and bonds were both down in consecutive years at the same time.3

I don’t know what’s going to happen to stocks or bonds next year. The fact that both are down big this year could mean next year is a good one for financial markets.


But short-term returns are promised to no one. It’s not out of the realm of possibility for markets to have a handful of bad years in a row.

Most of the time good stuff happens in the markets.

But sometimes bad stuff happens too.

To survive over the long-run you need to make sure you bake both outcomes into your expectations.

MY COMMENT

I like the general commentary above.....but....I dont invest according to statistical guesses on market direction. It is likely that the markets will be up next year.....that fits all the data and PROBABILITIES. But in investing like life there are....NO GUARANTEES......especially over the short term.

 

Here is more detail on the retail sales data....not that it matters.....the Holiday shopping season will make it all irrelevant....one way or another.

U.S. retail sales fall more than expected in November; weekly jobless claims decrease

https://finance.yahoo.com/news/u-retail-sales-fall-more-134439503.html

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

"WASHINGTON, Dec 15 (Reuters) - U.S. retail sales fell more than expected in November, likely payback after surging in the prior month, while the labor market remains tight, with the number of Americans filing for unemployment benefits declining last week.

The Commerce Department said on Thursday that retail sales dropped 0.6% last month. Data for October was unrevised to show sales accelerating 1.3%. Economists polled by Reuters had forecast sales dipping 0.1%.

Retail sales are mostly goods and are not adjusted for inflation. Last month's decline in sales suggests holiday shopping was pulled forward into October. Motor vehicle shortages also depressed sales at auto dealerships.

The boost from one-time tax refunds in California, which saw some households receiving as much as $1,050 in stimulus checks in October and Amazon's second Prime Day faded last month. Other factors which hurt sales included the rotation in spending back to services and discounting by retailers eager to lure cash-strapped consumers to clear unwanted inventory.

High inflation and rising interest rates are squeezing household budgets, though consumer spending has remained resilient, thanks to a strong labor market. Consumers have also been drawing down savings to fund purchases. The saving rate was at 2.3% in October, the lowest since July 2005.

The Federal Reserve on Wednesday raised its policy rate by half a percentage point and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023. This rate has been hiked by 425 basis points this year from near zero to a 4.25%-4.50% range, the highest since late 2007.

Excluding automobiles, gasoline, building materials and food services, retail sales slipped 0.2% last month. Data for October was revised lower to show these so-called core retail sales increasing 0.5% instead of 0.7% as previously reported.

STRUCTURAL LABOR SHORTAGE

Core retail sales correspond most closely with the consumer spending component of gross domestic product.

The weakness in core retail sales is likely to be offset by gains in services outlays, keeping consumer spending and the overall economy on a moderate growth path this quarter. The economy grew at a 2.9% annualized rate in the third quarter after contracting in the first half of the year.

Consumer spending continues to be underpinned by labor market tightness, which is keeping wages elevated.

A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits decreased 20,000 to a seasonally adjusted 211,000 during the week ended Dec. 10. Economists had forecast 230,000 claims for the latest week.

Claims are volatile at the start of the holiday season as companies temporarily close or slow hiring. They shot up to a three-month high a week before the Thanksgiving holiday, only to almost unwind the surge in the following week.

Claims have stayed below the 270,000 threshold, which economists said would raise a red flag for the labor market, despite a wave of layoffs in the technology sector.

Businesses are generally reluctant to lay off workers, having struggled to find labor in the aftermath of the COVID-19 pandemic, a fact that was acknowledged by Fed Chair Jerome Powell on Wednesday. Powell described the labor market as "extremely tight," adding "it feels like we have a structural labor shortage out there." There were 1.7 job openings for every unemployed person in October."

MY COMMENT

YES....hindsight data. What will count is the Christmas shopping data.....and only for a short time. BEWARE the typical news headline that.........GASP......."Holiday Sales DOWN". It is typical to see this sort of screaming headline and article.....because.....the media usually IGNORES the online sales and online sales growth.

 

This plus mortgage rates are the REAL impact of the FED increases. Makes me glad that we live a DEBT FREE life.....we have no mortgage, car payments, or other debt. We also tend to pay off the balance on credit cards each month. I know this is not possible for many younger people. BUT......the money you are investing and saving right now.....WILL....allow you to get to this point later in your life.

For most American businesses, new Fed rate means loans now start at 10%-plus interest

https://www.cnbc.com/2022/12/14/fed...over-10percent-for-first-time-since-2007.html

 

A total waste of a market day today. Like most everyone.....I was RED today. Not as bad as I expected but still solidly. I had a single UP stock today....TSLA. I got beat by the SP500 by 0.95%.