The Long Term Investor

Good posts above. AND......we are in a good place right now with a BIG market recovery so far today. This is another one of those days that I talk about once in a while where the market STRENGTH and UPWARD BIAS is clear and visible. This has been an EPIC turn around today. We went from being down 600 or more to being up by 265. There is some REAL money moving into the markets right now. BUT....keep in mind that if things get too carried away with the day traders and Robinhood stuff and we get into a manic market.......that will be a sign that the BULL MARKET is getting very old.

BUT......regardless.....I do think that THIS ONE TIME, for a brief time we are in a TEMPORARY new normal. There is so much business activity that is pent up and so much stimulus sloshing around. I believe that is ALL that will matter for at least a year or two.

Remember......it is easy for me to speculate about this sort of short and medium term stuff because I dont care if I am right or wrong. Well.......actually, I do care, I like to be right. BUT.......,I DO NOT make short of medium term bets.........and.........I will NOT market time. I am fully invested for the long term as usual.

 

The more things change.......the more they stay the same. We saw this same STUFF in the DOT-COM BUBBLE in the late 1990's. By the same stuff I mean......young males....short term trading stocks and thinking that they are the.......WORLDS GREATEST TRADER. It is REALLY easy to be a GREAT trader when the markets are going UP.

My personal.......brief.......time trading occurred in about 1990/1991. I got into some short term MOMENTUM trading at that time for about 6 months or so. There was NO internet trading to speak of at that time. So I would buy and sell by using the phone key pad rather than having to call a broker. I would call an 800 number at Schwab and key in my account number, hit the symbol for make a trade, hit the symbol for buy a stock, key in the stock symbol, number of shares, and hit the right key to make the trade. IMAGINE trading over an old dial telephone. At the time it was high tech to be able to trade without having to call a broker.

I had my usual LONG TERM account which I did not touch. I used the account balance in my long term account to trade on margin.

What is RELEVANT to all the young male traders TODAY is the lesson I learned over about 6 months. I usually traded COSTCO or STARBUCKS. Once in while MICROSOFT or AMGEN. My normal trade was to watch SBUX or COST and when the stock took a small dip I would buy 1000 shares on margin. Than I would hold for 1-5 days and sell. My average profit was about $2000 per trade. It was a rising market for hot stocks like those that I was trading. I traded to the point where I had 25 positive trades in a row without a single loss. One of those trades was in AMGEN. At that time Amgen was in a BIG LAWSUIT with a company called Genetics Institute over their PRIMARY product, EPO. I remember being on I-5 to Seattle and hearing on the radio that Amgen had won the lawsuit and that the stock was up about $25 per share. I made about $25,000 on that one trade......pure luck.....I had no way of knowing that the lawsuit would end during the trade. At my peak I was positive for 25 trades in a row with a profit of about $70,000. That was BIG money at that time.

Like ALL TRADERS it was ALL GOOD and I was on fire.......I had a REALLY GOOD feel for the stocks I was trading.........until it collapsed in a single trade. I cant remember what stock it was.......some computer or tech company. I did my usual 1000 shares on margin just before earnings release. I expected the stock to POP after the earnings release. It was a sure thing. EXCEPT....it tanked after earnings......even though the earnings were pretty good. In a couple of days I was down by $60,000. I white knuckled that trade on margin for 3-4 weeks and finally closed it with a loss of about $45,000. That was it for me.......LESSON LEARNED.

THAT is what MOST of the current crop of short term traders will ALL learn.....sooner or later. They will have success. They will take risk like margin or leverage. They will have a bunch of profitable trades in a row. It will be easy. They will be stock market and trading geniuses. THAN.....they will make that one trade that seems so sure.....and it will HAMMER them. The majority of any profits they had will VANISH. The few SMART ones will learn from that trade and will realize the EXTREME DANGER of what they are doing. The MAJORITY will NOT learn and will chase after their former trading glory and will end up losing anything they made and probably more.

Of course.......NO ONE......will think this can happen to them. BUT....it will.

 

Yes, B Russ

BUT.......I had been a successful long term investor for many many years before doing those trades. I DID NOT dip into my long term account to make the trades. I had the same long term account before and after. AND......I did make SOME net profit from the totality of the trades.......although I lost $45,000 on the last trade. AND.....in doing those trades I was intentionally trading on the environment CREATED by people that had no idea of the risk they were taking. AND.....I did understand the risk of what I was doing. BUT.....that risk was THEORY, and easy to ignore.....once I got hit by that last trade it became REALITY and was driven home to me. It was NOT worth the risk.

 

TODAY......once again....the markets are on fire. We are seeing some of the impact of the pent up business activity that is like a tightly coiled SPRING waiting to let go. BUT......we will continue to be in an erratic UP and DOWN market that will drive some investors crazy. LONG TERM investors will........PROBABLY....... do very nicely over the next few years.

Wall Street surges after record rise in May retail sales

https://www.reuters.com/article/us-...record-rise-in-may-retail-sales-idUSKBN23N1MI

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

"U.S. stocks jumped on Tuesday after a record rise in May retail sales revived hopes of a swift post-pandemic economic rebound, with sentiment also lifted by data showing reduced COVID-19 death rates in a trial of a generic steroid drug.

A Commerce Department report showed overall retail receipts rose 17.7% last month as Americans resumed spending after weeks of lockdown, although the rebound retraces only a fraction of the historic drops in March and April.

Retailers Kohl’s Corp and Nordstrom Inc surged 11% and 12%, respectively, leading gains on the S&P 500.

Results from a UK-led trial showed giving low doses of the generic steroid drug dexamethasone to patients admitted to hospital with COVID-19 reduced death rates by around a third among those with the most severe cases of infection.

“Looking at this morning’s number in aggregate, this is another indicator that a V-shaped recovery could be more likely than we initially thought,” said Mike Loewengart, managing director of investment strategy at E*TRADE Financial Corp.

“A potential COVID-19 steroid treatment in the UK combined with record retail sales and news of additional stimulus has been met with unbridled optimism.”

U.S. stocks ended a volatile session higher on Monday as the Federal Reserve said it would start buying corporate bonds to infuse liquidity. A report overnight said the Trump administration was preparing a nearly $1 trillion infrastructure proposal.

Investors will keep a close watch on a live telecast of Fed Chair Jerome Powell’s two-day testimony before the Congress, which is expected to begin at 10 a.m. ET.

Powell’s remarks are set to come after the U.S. central bank issued a grim outlook last week, sparking a pullback in a stock market rally that has powered the Nasdaq to fresh record highs.

The benchmark S&P 500 index is now about 7% below its record high hit four months earlier after coming within 5% of that level early last week.

At 9:40 a.m. ET, the Dow Jones Industrial Average was up 759.62 points, or 2.95%, at 26,522.78, the S&P 500 was up 79.87 points, or 2.60%, at 3,146.46. The Nasdaq Composite was up 203.36 points, or 2.09%, at 9,929.38.

All 11 S&P sub-indexes were trading higher, with economically-sensitive industrial, financial and materials climbing between 3.9% and 4.6%.

Caterpillar Inc jumped 7% and Boeing Co 7.8%, leading gains on the blue-chip Dow Jones.

Eli Lilly and Co jumped 11% after its breast cancer therapy Verzenio met the main goal of reducing the risk of it returning in the early stages in a late-stage study.

Advancing issues outnumbered decliners more than 13-to-1 on the NYSE and 7-to-1 on the Nasdaq.

The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 64 new highs and one new low.

MY COMMENT

GEE......where were ALL the commentators and analysts ahead of this data? How many predicted this result? PROBABLY......not many. The MEDIA.......as usual......including the investment media........was CONSUMED with their usual DOOM&GLOOM, politics based coverage.

From ANOTHER SOURCE.....that is NOT DOWNPLAYING the story like the article above:

https://www.cnbc.com/2020/06/16/us-retail-sales-may-2020.html

"Retail sales shattered already-lofty expectations for May as consumers freed from the coronavirus-induced lockdowns began shopping again.
The 17.7% headline gain including food sales easily topped the previous record from October 2001 and beat the 8% estimate from economists surveyed by Dow Jones."

AND

"Retail sales alone powered 16.8% higher from a month ago, more than double the estimate of 8% from Dow Jones and reversing a 16.4% plunge from a month ago. Clothing and accessories stores reported the biggest percentage gain at 188% while sporting goods, hobby, musical instruments and book stores rose 88.2%.

AND

"Excluding motor vehicles and parts, which popped by 44.1%, May’s gain came in at 12.4%, which also is the best on record going back to 1967."

AND

"After being almost completely shuttered during the lockdown, food services and drinking places saw a 29.1% rebound in May. Some states began allowing outdoor dining during the month after the establishments were limited to curbside pickup and delivery."

THESE are EPIC numbers and show that the economy and stocks will POWER BACK very quickly if the constant MEDIA opinion FOOLS would just........STFU. INVESTORS.........need to learn to just IGNORE the CHAFF. Unfortunately it is not going to go away.....it is going to get worse. We are now in the 24/7 era of TABLOID journalism. AND......that is JUST the business media. I dont even have a name for what the non-business MEDIA has become. It has gone WAY BEYOND even tabloid garbage.

The bottom line for any investor.....invest for the long term and avoid at all costs ANYTHING you see or hear in the short term media. EVERYTHING that is opinion based is TOTALLY SUSPECT. UNFORTUNATELY......"opinion based".....is NOW virtually EVERYTHING you see in any media source. Personally, I just ignore it all. I believe I do a pretty good job of sorting out the ACTUAL FACTS. BUT....many investors can NOT get beyond their own BIASES or their own POLITICS and it severely hurts their investing state of mind and results.

 

I dont know how it is going to end......but it is FUN at the moment. I am talking about the local housing market. In my local area HOUSES are BOOMING. In my little area there are 3000 homes. Out of that 3000 there are 17 active listings under $1MIL. That is INCREDIBLE.......even for Texas. Our inventory in this desirable neighborhood is close to ZERO. As to homes above $1MIL.....they are also on fire. Ranging from $1MIL to about $6.5MIL....there are WAY MORE homes in this price range than ever before. A year or two ago there would be a couple of homes LISTED above $1MIL. NOW, there are at least 20-30. AND....like the homes below $1MIL.....they are going "pending" in just a few days after listing.

We started looking at this development about 10 years ago at the peak of the real estate collapse. At that time we could have bought a lake front lot for about $600,000. We could have bought a lake front lot for about $600,000 and built a house on it for another $500,000. NOW......if we had done that......the value would be between $3MIL and $5MIL. It is a GOOD THING we did not buy that lot and build. We would be FORCED TO SELL by the current taxes on that property.....even with our SENIOR freeze......I am guessing they are now between $30,000 and $40,000 per year.

It is Unbelievable the amount of money that MUST be out there with people being able to buy and afford the homes in our area. We are living in the NEW REALITY. OUR neighborhood areas are NOT stratified by race. We are TOTALLY diverse....Chinese, Japanese, Black, Hispanic, Middle Eastern, Indian, White, etc, etc, etc. Our neighborhoods ARE STRATIFIED BY INCOME. This is the future of the world and America.

 

I have been talking about pent up business demand in various posts for a few weeks now as well as the recovery and the positive outlook for investors. HERE is more information on that topic:

More May Data Hint a Recovery May Be Underway

https://www.fisherinvestments.com/en-us/marketminder/more-may-data-hint-a-recovery-may-be-underway

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

"Has America’s economic recovery begun? The US released retail sales and industrial production on Wednesday, and both rose for the first time since most of the country went into an institutionally induced coma in hopes of slowing COVID-19’s spread. Retail sales jumped a record-high 17.7% m/m, triggering oohs and ahhs from analysts. Industrial production met far less fanfare after it rose just 1.4% m/m.[ii] We wouldn’t read much into the sizable difference in growth rates, as lockdowns hit retailers and heavy industry differently. Rather, each report offers some clues as to how the US economy is responding as states and counties begin reopening.

Exhibit 1 shows industrial production year to date. As you will see, May’s rise doesn’t come close to erasing the lockdown-driven declines. Total output remains 15.4% below its year-to-date high in February.[iii] But the headline number is a bit deceiving, as falling utilities and mining (mostly oil drilling) production skewed it downward. For utilities, this is unsurprising. Mild spring weather likely conspired with lingering business closures to sap demand for electricity. For mining, it is equally non-shocking, as the -6.8% m/m drop comes as producers likely continued responding to very low oil prices.[iv] As for manufacturing, the largest subset of industrial activity, it enjoyed a stronger rebound, at 3.8% m/m. But, like the headline number, since it crashed harder overall during the lockdowns, factory output was still -17.0% below February’s year-to-date high.[v]

Exhibit 1: Industrial Production and Selected Components, Year to Date


Source: FactSet, as of 6/16/2020. Industrial production, manufacturing production and utilities production, January 2020 – May 2020.

There are a number of potential reasons for manufacturing’s weaker rebound relative to retail sales. For one, the Commerce Department’s manufacturing report shows that, at least through April, factory inventories inched up during the pandemic. That suggests that even as factories reopened, they likely had at least a small overhang to work through. However, this is just an educated guess, as May’s report won’t be out until June 25. Inventories aside, factories don’t simply produce goods in hopes people will buy. They make goods when businesses order them, and those order books took a huge hit during lockdown. Not only did new orders stop flowing in, but customers also canceled orders left and right, wrecking factories’ backlogs of unfilled orders. You can see that in the Commerce Department’s report (which includes factory orders) as well as the Institute for Supply Management and IHS Markit’s purchasing mangers’ indexes. As these businesses reopen and work through their own inventories, they should submit new orders, bolstering factory output.

Retail sales, by contrast, have fewer prerequisites for a recovery. All they need is for stores to reopen, which began happening in much of the country in May. In our view, this explains retail sales’ much larger rebound.

Exhibit 2: Retail Sales’ V-Shaped Recovery?


Source: FactSet, as of 6/16/2020. Retail and food services sales and retail sales, January 2020 – May 2020.

You can see the impact of reopenings best if you look at the various subcategories. The biggest rebound came in pure clothing and accessories stores, where sales rose 188% m/m.[vi] Yes, that is 188% m/m. Sporting goods, hobby, book and music shops bounced 88.2%.[vii] These huge percentage jumps in non-essential stores’ sales far outpaced food, general merchandise (think: Target and Wal-Mart) and home improvement stores, many of which were deemed essential and open during shelter-in-place. Sales at restaurants and bars, meanwhile, rose only 29.1% and remain 41% below their January high.[viii] Compare that with pure retail, which is nearly back at breakeven. We think the discrepancy is pretty easy to explain.

While most shops are now open provided they follow social distancing guidelines in counties that are further behind the reopening curve, restaurants and bars are mostly limited to outside dining, some indoor dining in certain areas, and takeout. This has led many restaurants to delay reopening, as they just don’t have enough tables to justify the overhead costs if they were to go back to business. Others got very little notice on their counties’ guidelines, requiring them to delay for a few weeks to rearrange tables to accommodate social distancing and adopt new sanitation procedures.

The main takeaway from this report, in our view, is that there is perhaps more pent-up demand than many expected. Before the report came out, there was a lot of talk about record-high unemployment, COVID fears and overall lack of animal spirits keeping people at home even as stores reopened. Overall and on average, that doesn’t seem to be the case. Note, too, that California’s major metro areas didn’t let shops reopen until early June. Some metro centers in other states, including Portland, Oregon, haven’t reopened yet. New York City just began reopening earlier this month! To us, that suggests it was a lack of shopping opportunities, rather than a lack of shoppers, that kept sales from bouncing higher in May.

Not that demand is back at pre-pandemic levels even where shops are open. The Bay Area contingent of your friendly MarketMinder editors has done some boots-on-the-ground research since our shops opened, and we have noticed plenty of hustle and bustle in our towns, but not near normal levels for this time of year. There were plenty of people strolling with shopping bags, our shopkeepers were encouraged by how many sales they had made, and most restaurants with open outdoor seating were filled to their limited capacity at brunch. At the same time, parking was a little too easy to come by, and it was easy to social distance on the sidewalks. So while a recovery does seem to be underway, it is early, with much room to improve.

On the bright side, most pundits seem to echo our cautious optimism. Retail sales’ improvement didn’t send sentiment and expectations soaring. There was a lot of “yah it was good but” in the press’s commentary, even as many credited retail sales for stocks’ rise on Tuesday. To us, that is good news. It leaves more room for the recovery to continue delivering positive surprise, especially as people continue fearing a second wave of the virus and another round of lockdowns, such as China is currently dealing with in Beijing. In our view, the combination of tame expectations and a decent recovery should provide plenty of fuel for stocks.

MY COMMENT

YES.......the MAJORITY of the data that is starting to come out is showing the HUGE POTENTIAL for the economy and business going forward over the next 6-12 months. Many are......STILL.....hiding at home. And......many politicians are STILL delaying reopening. BUT...people are out and about now and the genie is out of the bottle. We WILL see business and the economy ESCALATE over the rest of the summer. GOOD NEWS for investors, especially long term investors that will ride out the reopening and capture the BIG GAINS.

 

I WILL TAKE any day that is GREEN......even a small one like today. Added bonus.....a 0.43% BEAT of the SP500. So for me.....at least for today......the few days win streak of the market averages is STILL intact.

 

WELL......the REAL question Brontide is.......what are YOU doing about any investments? Are you going with your personal view and doing NO investing? Are you invested in anything at all? Are you investing with the expectation that you are averaging down? Have you participated in the 20-30% gains of the past few months? Or.....are you simply a short term trader? Are you waiting for the RIGHT TIME to invest again?Are you simply holding what investments you have and not adding to them? Are you waiting for the markets to retest the lows?

NOT saying any of the above is necessarily bad.......everyone has to do what they think is best for them. Just trying to get a feel for how YOU are applying your personal view that we are NOT seeing a recovery.

FOR "ME".......it is pretty obvious from this thread........I ABSOLUTELY DO NOT share your view. BUT....being a long term investor, I am NOT concerned with where we are next month or some other short term time span. We are in the early stages of the reopening. It is going to happen in spurts.

The election is a HUGE overhang for the reopening because there are "certain political groups" that do NOT want things to reopen and are going to use the virus situation to try to gain political advantage........AND.......will do everything possible to talk down the economy and the recovery. That is just the current reality of where we are right now with our......."leaders" or those that wish to be our "leaders" in this country.

BUT.....in spite of everything.....our businesses........including small businesses......ARE going to reopen and many, if not most, will survive and will get back to WHERE THEY WERE before this closing the economy IDIOCY. That does not mean that all will be successful.....it just means they will get back to whatever level they were operating at before this "stuff". Over the next six months........and especially over the next year.....the economy is going to GROW........a lot. I DONT buy ANY of the DOOM&GLOOM stuff.

I am concerned with where we are in 2 or 3 or 5 or 10 years from now. In the meantime......I have NEVER seen market timing work except in random cases. I have RARELY seen a short term trader make anywhere near the unmanaged averages. I have RARELY seen Technical Analysis or other stock systems work. AND....the vast majority of academic and other investing research......seems to me......to show the same thing. That is why I am a long term FUNDAMENTAL investor. That is why I try......and have for over four decades......to be a fully invested all the time long term investor.

BUT....this is just MY personal view and personal opinion. "I" invest and live according to "MY" view. I do like to hear other views........like yours........and would like to see you expand on your views and how you are investing in this thread. My personal style on this type of forum is to NOT argue with anyone about this sort of stuff. It is simply a waste of time. EVERYONE has their own opinion and we all have to do what is right for ourselves based on our own opinions.

 

JUST ran into this little article. It is mainly opinion based rather than substantive.

The virus vs. economy race is on, and the economy is winning right now

https://www.washingtonexaminer.com/...ce-is-on-and-the-economy-is-winning-right-now

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

"A vital race is on between the coronavirus and the economy, and right now, it looks as though the economy (and all of us whose well-being depend on it) is winning. But let’s not celebrate too soon. There are some long laps ahead, and a lot can happen along the way.

The economy provided a taste of victory when the Census Bureau announced that May retail sales were up 17.7%, following an April 14.7% decline. Sales were still down slightly on a year-over-year basis, but even with auto shipments removed, there was still a 12.4% gain. This means auto production will soon be accelerating. There were large sales increases reported for clothing (up 188%), furniture (rising 89.7%), and sporting goods (up 88.2%). There’s no doubt about it: Consumers were out there shopping again.

The good news doesn’t end here, thankfully. Remember, there were 2.5 million names added to the nation’s payrolls in May. To put one more item on the “let’s be happy” list, housing markets are again becoming lively.

This said, we must recognize that until a vaccine is available, the coronavirus is still in the race, and recent news on a surge in new cases across 10 states tells us it is not down and out. We can see the effects of this in data reported by OpenTable. Available U.S. restaurant seats were just beginning to tighten again a couple of weeks ago as people went back to dining out. Then there was a reversal, and more seats opened on June 14. When the virus surges, people seem to react quickly.

Meanwhile, in tracking the race, we must keep an eye on the calendar. While the virus is still chugging away, the timing with which the economy opens is critical. For example, the $600 weekly federal unemployment supplement received by furloughed and discharged workers expires at the end of July. The approximately $600 billion in potentially forgivable Paycheck Protection Plan small-business loans that have largely been made must be spent, and primarily on wages, by the end of the year. Yet the $600 supplement stands in the way of rehiring workers, some of whom are understandably happier with the unemployment compensation than working for less, so that the wage-dedicated loans can be spent. That makes July 31 and then December 30 critical dates in the race.

Enriched by stimulus funds and enhanced unemployment benefits, personal income for everyone in the country taken together has surged. But most of the money is still in the bank. The reopening of retail shops, restaurants, and other places to spend money is a major accelerator for getting the economy, and all of us, ahead of the virus.

We can all hope that the economy continues to gain speed and that the virus count will head south, permanently."

 

OK......Brontide.

It is a good thing for me and others to have a handle on how and why different people invest. After all......that is the point of a thread like this......discussion. So thanks for the reply. Please continue to post your investing experiences and views.