These job cuts are starting to add up to real numbers. Google parent to lay off 12,000 workers as AI focus intensifies https://finance.yahoo.com/news/exclusive-google-parent-lay-off-102322977.html (BOLD is my opinion OR what I consider important content) "(Reuters) -Google's parent Alphabet Inc is cutting about 12,000 jobs, or 6% of its workforce, it said in a staff memo Friday, as the technology sector reels from layoffs and companies stake their futures on artificial intelligence (AI). Alphabet's shares were up nearly 3% in pre-market trading. The cuts come at a delicate moment for the U.S. company, which has long been the leader in key areas of AI research. Alphabet now faces a challenge from Microsoft Corp in a branch of tech that can, for instance, create virtually any content a user can think up and type in a text box. Microsoft this week said recession worries were forcing it to shed 10,000 jobs, less than 5% of its workforce, and it would focus on imbuing its products with more AI going forward -- a point Alphabet's CEO Sundar Pichai echoed in the memo. Alphabet faced "a different economic reality" from the past two years when it rapidly expanded headcount, decisions for which Pichai said he took "full responsibility." Pichai became Alphabet CEO in 2019. Still, he said, Google was gearing up "to share some entirely new experiences for users, developers and businesses," and the company has "a substantial opportunity in front of us with AI across our products." The company has been working on a major AI launch, two people familiar with the matter told Reuters. One of the sources said it would take place in the spring of this year. Susannah Streeter, an analyst with Hargreaves Lansdown, said Alphabet's advertising business, which underpins Google's search engine and YouTube, was not immune to economic turbulence. "Ad growth has come off the boil, a sharp contrast from the busy days of the post-pandemic re-opening which saw a surge in consumer spending," she said. The company faces competitive and regulatory threats as well, she said. It was unclear if Alphabet would take a one-time financial charge related to the job cuts. Microsoft's severance packages, lease consolidation and hardware-lineup changes will cost it more than $1 billion, it said earlier this week. Alphabet's layoffs followed a review of its people and priorities, leading to a workforce reduction hitting various geographies, Pichai said. Among those losing their jobs are recruiters, corporate staff and people working on engineering and product teams, he added. In the United States, where Alphabet has already emailed affected employees, staff would receive severance and six months of healthcare as well as immigration support. One person who said he worked on Google's Chrome browser posted on Twitter that he had lost his job even as he stepped into a leadership position on a project. Overseas, layoff notifications will take longer due to local employment laws and practices, Pichai said in the memo." MY COMMENT I welcome these job cuts as a shareholder. ALL of these companies got too bloated and out of control. It is time to swing back the other way and go for productivity. As a shareholder I welcome management constantly reviewing employee needs versus business results.
Earnings estimates......a joke. I dont care what some so called expert thinks earnings will be. ALL......I care about is the real thing....actual results. No one will remember the estimates over the long term. Earnings estimates keep falling, which might be no problem for stocks: Morning Brief https://finance.yahoo.com/news/earn...oblem-for-stocks-morning-brief-101825444.html (BOLD is my opinion OR what I consider important content) "Corporate earnings season will be in full swing by the end of next week. Big banks, airlines, and Netflix (NFLX) have all released results so far. And company-level results often surface compelling commentary on the state of consumers and the economy. But Wall Street strategists looking at aggregate corporate profits for this quarter and the quarters ahead see one clear through line: Expectations are coming down. Writing in a note to clients on Wednesday, FactSet's John Butters noted earnings for S&P 500 companies are now expected to fall 3.9% during fourth-quarter earnings season. This would set up the benchmark index for its first aggregate drop in profits since the third quarter of 2020. And the news doesn't get much better looking further out. "Looking ahead to the first quarter and beyond, what are analyst expectations for year-over-year earnings? Do analysts believe earnings declines will continue in 2023? The answer is yes," Butters wrote. "Over the past few weeks, earnings expectations for the first quarter and the second quarter of 2023 switched from year-over-year growth to year-over-year declines." At first glance, a reduction in corporate profits — the ultimate long-term driver of stock prices — might seem like an obvious negative for the stock market this year. A report from Jeffrey Buchbinder and the team at LPL Research released Thursday, however, suggests near-term earnings drops aren't quite a death knell for current-year stock performance. In fact, quite the opposite. "In years when earnings fall ... stocks are actually more likely to rise than fall," Buchbinder wrote. "This may be surprising to many of you, but when earnings fall, stocks are more than twice as likely to rise as they are to fall." Stocks often rally in years S&P 500 earnings decline, data from LPL Research shows. (Source: LPL Research) And as LPL's chart shows, not only are stocks more likely to rise than fall when earnings are falling, but in years the market is down it is also more likely than not corporate earnings actually rise. (Which is why there are more dots in the bottom-right than bottom-left quadrant.) "This may seem counterintuitive, but it makes sense when we remind ourselves that markets are forward looking," Buchbinder writes. "The markets generally price in earnings declines well before they happen—maybe two or three quarters ahead. By the time earnings declines are in the books, stocks have moved higher in anticipation of the next earnings upcycle." And when it comes to the all-consuming question of whether the U.S. economy enters a recession this year or not, Buchbinder thinks the market has already cast its vote. "This is similar to the explanation for why stocks have historically been little changed, on average, during recessions," Buchbinder said. "It’s because the big declines tend to come before the recession occurs, in anticipation of the downturn. That is essentially what stocks were doing in 2022 — pricing in a downturn in 2023 from Federal Reserve over-tightening."" MY COMMENT This little article starts out talking about earnings estimates and ends up talking about actual earnings. Plus it is mostly short term to medium term commentary. Interesting data.....but not much else. As a long term investor.....keep your eye on the ball......actual long term earnings and fundamentals.
The markets today. Stocks waver as Wall Street looks to rebound https://finance.yahoo.com/news/stock-market-news-live-updates-january-20-2023-123518063.html (BOLD is my opinion OR what I consider important content) "U.S. stocks wavered at the open Friday, with some signs suggesting that indexes could wrap up the week on an upbeat note as technology stocks head for modest gains. The S&P 500 (^GSPC) added 0.2%, while the Dow Jones Industrial Average (^DJI) was little changed. The technology-heavy Nasdaq Composite (^IXIC) rose by roughly 0.4%. The yield on the benchmark 10-year U.S. Treasury note rose to 3.437% from 3.397% Thursday. The dollar index added 0.4%, trading at $102.44 Friday morning. Stocks extended a string of losses Thursday as investors dissected economic data and corporate earnings reports, clouding their views of the health of the U.S. economy. Despite concerns about the economy, markets have been fairly resilient and moved mostly higher this year, according to the U.S. Market Intelligence team at JP Morgan. However, the team doesn’t believe a recession is currently priced in in equity markets. “We do not agree with the argument that because a recession is consensus,” the team wrote, "The market and economic outcome have to be better.” The S&P 500 is expected to report a year-over-year decline in earnings of 3.9% for the fourth quarter, according to data from FactSet Research. This would mark the first year-over-year decline in earnings reported by the index since 2020 if realized. Wall Street navigated another round of data and Fedspeak on Thursday. Federal Reserve Bank of New York President John Williams said Thursday the central bank has more rate hikes ahead “to bring inflation down to our 2% goal on a sustained basis.” Federal Reserve Vice Chair Lael Brainard and Federal Reserve Bank of Boston President Susan Collins expressed similar remarks Thursday ahead of the Fed's next monetary policy meeting, which starts Jan. 31. Philadelphia Fed President Patrick Harker repeated his view on Friday morning to shift to 25-basis-point rate hikes. On the economic front, sales of previously owned US homes fell for the 11th consecutive month in December, extending the record decline further as high mortgage rates and limited inventory stifled affordability. Contract closings decreased 1.5% from November's reading, to an annualized pace of 4.02 million last month, according to data from the National Association of Realtors on Friday. The pace of purchases seasonally adjusted was 34% lower than December 2021, the slowest pace since November of 2010. In corporate news, Netflix (NFLX) CEO Reed Hastings announced Thursday that he is stepping down. After a two-decade run, he’s leaving the streaming platform in the hands of co-CEO Ted Sarandos and COO Greg Peters after reporting a strong end of 2022. And the era of password sharing will soon end. The streaming giant will be enforcing password-sharing rules “more broadly” toward the end of the first quarter of 2023, Netflix announced in its earnings report on Thursday. Shares jumped nearly 6% Friday morning. Google parent Alphabet Inc. (GOOG, GOOGL) said it’s laying off 12,000 workers, or more than 6% of its global workforce, becoming the latest tech company to trim staff after rapid expansions during the pandemic. Google parent Alphabet Inc. shares added 3% at the open. In the commodities market, oil prices ticked up. Brent crude, the global benchmark, rose nearly 0.6% to $86.64 a barrel, and WTI, the US benchmark, added 0.5% to about $80.72. Both could end the week with another gain, driven by optimism about demand rebound in China. Meanwhile, in the crypto market, Genesis Global Capital filed for bankruptcy protection late Thursday in U.S. Bankruptcy Court for the Southern District of New York. The move comes after the company could not raise cash for its troubled lending unit and cut 30% of staff in a fresh round of layoffs in early January." MY COMMENT YEP.....same old, same old. Nothing new except for a new year and a more rational market so far this year. We are moving forward......in erratic spurts......since the market bottom last June. My....."feel"....of the markets today......a nice positive close.
Yes, this topic is seen quite often in the investing world. You bring up some good points. As has been said here many times and other places, it really depends on the individual and many factors throughout ones investing timeframe. This is why it is so important for each investor to have an individual plan about how and what they are doing over the long haul. By doing so, it will allow one to prepare as time goes along and evaluate it in a measured way. Plus, experience gained over time through bear markets and other market environments can be valuable lessons early on.
A killer day in the markets for me today. this year the first three weeks of the year have been significantly different from last year. I am UP year to date by +5.38%. I have also seen very nice gains on the last couple of purchases that I made. On my NVIDIA purchase of 9-20-22 I have now made a gain of +53.15%......on my TSLA purchase on 1-9-23 I have now made +9.47%. Today I made a very nice gain in my ten stocks.....ALL were in the green. I also got in a big beat on the SP500 by 1.06% today. COURAGE........ENDURE. Are still my market themes for the short term. the long term needs no theme it will take care of itself.
EVERY average is positive for the year.....although....it was a mixed bag for the short week this week. DOW year to date +0.69% DOW for the week (-2.70%) SP500 year to date +3.47% SP500 for the week (-0.63%) NASDAQ 100 year to date +6.20% NASDAQ 100 for the week (-0.70%) NASDAQ year to date +6.44% NASDAQ for the week +0.58% RUSSELL year to date +6.02% RUSSELL for the week (-1.02%) Seems like we are back into an......old normal.....for the markets so far this year. It is the NEW BULL market that we have been in since about June of 2022? Time will tell. As a long term investor I have all the time in the world.
The end to the week and the day. Nasdaq jumps 2.7% as tech leads big Friday stock rally https://finance.yahoo.com/news/stock-market-news-live-updates-january-20-2023-123518063.html (BOLD is my opinion OR what I consider important content) "U.S. stocks rallied on Friday, closing out the week on an upbeat note, led by strong gains in the tech sector. The S&P 500 (^GSPC) finished Friday up 1.9%, though it still closed the week down 0.7%. The Dow Jones Industrial Average (^DJI) increased 1.0% on Friday. The technology-heavy Nasdaq Composite (^IXIC) closed up 2.9%, its biggest one-day gain since the end of November. The yield on the benchmark 10-year U.S. Treasury note rose to 3.482% from 3.397% Thursday. The dollar index was little changed. The moves up Friday closed out what had been a rough week for Wall Street. Stocks had extended a string of losses Thursday as investors dissected economic data and corporate earnings reports, clouding their views of the health of the U.S. economy. Despite concerns about the economy, markets have been fairly resilient and moved mostly higher this year, according to the U.S. Market Intelligence team at JP Morgan. However, the team doesn’t believe a recession is currently priced in in equity markets." MY COMMENT The rest of this little article is the same as I posted earlier in the day. We need to see confirmation of this positive trend next week to close out the month. After last year investors are still extremely jumpy and gun-shy........and no doubt the markets will be very erratic in 2023.
I like this trend. These companies all got too fat.....time to go on a diet and get lean and mean. Google, Microsoft, and more: 2023 tech layoffs are already piling up https://finance.yahoo.com/news/goog...-layoffs-are-already-piling-up-172344517.html (BOLD is my opinion OR what I consider important content) "As Big Tech continues to reel from its massively difficult 2022, some of the sector's biggest names are beginning 2023 by laying off employees by the thousands. In 2022, companies like Meta (META), Amazon (AMZN), and Intel (INTC) announced major job cuts following years of expansion. There's hope that Big Tech is set up for a better year in 2023, but high interest rates, inflation, a hawkish Fed, and spending slowdowns among both advertisers and consumers have created a storm that's not passing just yet. Google parent Alphabet (GOOG, GOOGL) is the latest of Big Tech's titans to slash employees in droves. To date, tech's biggest names have slashed almost 50,000 jobs. Here's a roundup of major layoffs that have rattled the sector just a few weeks into the new year. Alphabet Alphabet announced today that it's slashing 12,000 jobs—the company's largest-ever round of layoffs. The layoffs are set to affect the company across the board, but are likely to focus outside the company's core businesses. Layoffs have already affected areas like health-centric group Verily, which Google re-branded from its Life Sciences Division in 2015. Yahoo Finance reported in December that Alphabet was likely to conduct layoffs. Alphabet CEO Sundar Pichai told employees in a memo that these layoffs are a byproduct of the massive growth Google was preparing for amid the pandemic – an expansion that never fully materialized. "Over the past two years we’ve seen periods of dramatic growth," he wrote. "To match and fuel that growth, we hired for a different economic reality than the one we face today," he said. Microsoft Microsoft (MSFT) said on Jan. 18 that it's laying off 10,000 workers as it seeks to cut costs. These cuts affect about 4.5% of Microsoft's total corporate workforce of 221,000. The Redmond-based giant reportedly also shed jobs in October, according to Axios, and did a small number of layoffs over the summer. "We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one," said Microsoft CEO Satya Nadella in a statement. Amazon Though Amazon began its layoffs last year, CEO Andy Jassy wrote on Jan. 4 that the e-commerce giant plans to lay off 18,000 employees in its corporate workforce. It's an even higher number than company watchers were perhaps expecting, as The New York Times reported that Amazon was laying off 10,000 employees. The company began its cuts back in November, and then as now, it's all about cutting costs. "Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so," Jassy told employees in a statement. "These changes will help us pursue our long-term opportunities with a stronger cost structure." Salesforce Salesforce (CRM) is laying off about 8,000 workers, or about 10% of its workforce, and the company's simultaneously planning to cut office space. The news came on Jan. 4, when CEO Marc Benioff wrote that "the environment remains challenging, and our customers are taking a more measured approach to their purchasing decisions." Salesforce notably lost co-CEO Bret Taylor in late November. Coinbase Coinbase (COIN) said on Jan. 10, that it's cutting off 20% of its workforce, approximately 950 employees. This marked the crypto company's second major set of layoffs within the last few months, as it also cut jobs back in June. At that time, Coinbase CEO Brian Armstrong said that the company was adjusting to a "crypto winter" and preparing for a possible recession. This time, Armstrong said that Coinbase is under escalating pressure in the aftermath of the collapse of FTX. “The FTX collapse and the resulting contagion has created a black eye for the industry,” he told CNBC." MY COMMENT Add in all the other tech related job cuts over the past six months and you have a significant number of highly paid individuals losing their jobs. Unfortunate......but necessary to make these companies more lean and productive. I welcome this as a shareholder and see it as a sign of management doing what is necessary. A little warning for young employees that think the tail wags the dog. I wonder what percentage of these job losses are foreign workers here on various types of work visas?
AND.....related to the post above. Twitter is down to fewer than 550 full-time engineers https://www.cnbc.com/2023/01/20/twitter-is-down-to-fewer-than-550-full-time-engineers.html "Key Points Internal records show that Twitter has shed about 80% of its employees since Elon Musk took over and headcount is hovering around 1,300 employees today. With fewer than 550 full-time engineers now, one former Twitter engineer says the remaining team will be spread thin, and will likely have a hard time maintaining the service while adding new features. In addition to the 1,300 full-time Twitter employees, new owner and CEO Elon Musk has authorized about 130 people from his other companies, including Tesla, SpaceX and The Boring Co., to work for the social media business." MY COMMENT I guess in the end we will find out how bloated these tech companies really are......and.....how many of these employees were really necessary to run the business. Although this is a private company so data will not be as robust as in a public company.
Can it really be this simple? Pretty much. ‘It’s not easy to get rich quick’ — but stealing these 3 frugal habits from Warren Buffett can help speed up the process https://finance.yahoo.com/news/not-easy-rich-quick-stealing-140000321.html (BOLD is my opinion OR what I consider important content) "Warren Buffett is widely considered one of the most successful investors of our time. From 1964 to 2021, his company Berkshire Hathaway delivered compounded annual gains of 20.1% — substantially outperforming the S&P 500’s compounded annual return of 10.5% during the same period. Buffett’s legendary investment career has also made him one of the richest people on earth, with a net worth of over $110 billion, according to Forbes. Yet despite his massive wealth, Buffett doesn’t live a lavish lifestyle. In fact, he still lives in the same house in Omaha that he bought back in 1958 for $31,500. As for his eating habits, he’s not splashing out on champagne and caviar every day — he prefers to patronize McDonald’s and Dairy Queen instead. In an era where we’re constantly exposed to images and videos of influencers’ opulent lifestyles, it’s important to remember that when it comes to building wealth, the boring approaches are often the best. Here’s a look at three valuable lessons from Buffett’s famously frugal approach to money. Learn the habit of saving It’s not easy to save money in today’s economic climate. White-hot inflation continues to deplete savings. And companies are announcing major layoffs. According to data from the Federal Reserve Bank of St. Louis, the personal savings of Americans plummeted to $507.65 billion in Q3 of 2022 — a substantial drop from the $4.85 trillion from the same period just two years before. Savings are now below even pre-pandemic levels and living paycheck to paycheck has become the norm for many. That’s not what Buffett wants to see. During an episode of the Dan Patrick Show, Buffett was asked what he thought was the biggest mistake people make when it comes to money. “Not learning the habits of saving properly early,” the legendary investor replied. “Because saving is a habit. And then, trying to get rich quick. It's pretty easy to get well-to-do slowly. But it's not easy to get rich quick.” In other words, instead of trying to become a millionaire overnight, it’s probably wiser to get into the habit of saving and building a nest egg slowly but steadily. Forget that Lambo If money is no object, what car would you drive? Mercedes, Bentley, or perhaps the prancing horse from Maranello? Those might be what we think of as “rich people cars,” but you won’t find them in Buffett’s garage. In fact, he’s known for being especially frugal with cars. “You’ve got to understand, he keeps cars until I tell him, ‘This is getting embarrassing — time for a new car,’” his daughter said in a documentary. After all, we’re talking about the man who once had a vanity license plate that read “THRIFTY.” There are many reasons why you might want to think twice before purchasing a luxury vehicle. The first is depreciation. Cars start losing their value the moment you drive off the lot. According to U.S. News, the average depreciation for all vehicles over the first five years is 49.1%, while luxury brands can lose a lot more than that. The average five-year depreciation for a Mercedes S-Class is 67.1%. For a BMW 7 Series, it’s a whopping 72.6%. Moreover, luxury cars can cost more to maintain and insure than economy cars. So you have to fork up not just the purchasing price. And once luxury cars run out of warranty, they can also be more expensive to repair. Don’t forget, there’s opportunity cost as well. The money you spend on an expensive vehicle could have been put into your investment portfolio and earn a return year after year. That potential return — which can get compounded as time goes by — is your opportunity cost. And it can add up. Buy quality and value Buffett’s frugality is particularly evident in his investing style. “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down,” he wrote in his 2008 Berkshire Hathaway shareholder letter. In particular, Buffett is a proponent of value investing, which is a strategy that involves buying stocks that are trading below their intrinsic value. It’s clear where he got that idea: Buffett was a student of Benjamin Graham, widely known as the “father of value investing.” “Long ago, Ben Graham taught me that ‘Price is what you pay; value is what you get,’” Buffett wrote in 2008. By purchasing stocks of companies that are trading at a discount to their intrinsic value, investors can achieve a margin of safety. But that doesn’t mean Buffett will pick up just any stock on the floor. The Oracle of Omaha also looks for companies that have a durable competitive advantage. A look at Buffett’s portfolio can give you an idea of what those companies might be. Berkshire’s largest publicly traded holdings are Apple, Bank of America, Chevron, Coca-Cola and American Express — companies with deeply entrenched positions in their respective industries. So what if you have to choose between quality and price? It’s probably better to focus on quality, as long as the price is “fair.” In Buffett’s own words, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”" MY COMMENT It is unfortunate that the headline of this article talks about........get rich quick. That is really not the point of this little article. In spite of the headline it is GREAT advice and very simple to follow.......if you have some DISCIPLINE. First......saving. You can not invest if you dont have any money. It is that simple. Everyone needs to save something every month. Even if it is just $10. Everyone has something in their monthly spending that can be cut back or eliminated to generate some level of savings. It is a question of........PAY YOURSELF FIRST. OK......your car. I cant believe how many people I see driving a car that is equal to or more than many of the house payments that I have had in my life. It is not unusual for a two person household to have two car payments of at least $500 to $600 per car. That is $1000 to $1200 per month. That is a huge chunk of money. A car is nothing more than a commodity. It is trading money for miles. I prefer to get the most miles for the least amount of money. The best way to do this is to buy a moderate car or a used car and drive the wheels off. I drive a mid size American SUV.....far from a luxury car. That six year old car has 195,000 miles on it and I intend to get at least a minimum of 250,000 to 300,000 miles before it has to be replaced. The last thing I want to waste money on is a car. I would rather have a big bank account than a fancy car. Third.....investing. I totally agree with value investing for the long term. BUT....I also agree that it is better to focus on QUALITY as long as the price is FAIR. YES....."It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”" This is EXACTLY why I try to totally focus on.....BIG CAP, AMERICAN, WORLD WIDE MARKET LEADING, ICONIC PRODUCT, DOMINANT, companies in my investing. I want companies that are the dominant world wide leader in their business that will have the staying power to be dominant for a long, long, time. I want companies that I can ride and let run wild for a long, long, time.
This thread is now EXTREMELY LONG......over 600 pages. There is a HUGE amount of good solid info buried in those pages that are probably not read by many people. So this being the weekend I am going to post an......old post. I will probably start to do this on weekends. I will go back and find an old post that covers some.....classic..... topic and post it. I hate to re-hash some topic that I have discussed in the past......and.....at the same time those topics or issues are important. So.....I will simply take a little time on weekends......once in a while.....to re-port some topic that I have discussed long ago in this thread.....for the benefit of current readers that dont have time to read 600 pages. Here is the first. FROM PAGE THREE OF THIS THREAD: "How I maintain CLINICAL FOCUS on my investing. 1. The BIG ONE, this is just my emotional style and make up as a person. It is my basic personality. Whether it was school, sports, running a business, investing, a hobby......that is just how I am. 2. The way I invest is how MY FAMILY has invested for a long time, going back three generations including myself. My grandfather was a businessman and stock investor. He had a portfolio of about 15 LARGE CAP, dividend paying stocks that he held LONG TERM. His largest holding was Phillip Morris. My mom had four brothers and sisters and when her parents died she inherited one fifth of each holding in his portfolio about $14,000. (early 1960's) She continued to hold those stocks for the next 49 years till her death. She had started mutual fund investing in the 1950's. It was EXTREMELY RARE for people to own funds or stocks in the 1950's and into the 1960's and 1970's and even after that up to the 1990's. ONLY 4.2% OF THE US POPULATION OWNED A STOCK IN THE EARLY 1950'S AND ONLY 20% BY 1990. The advent of the IRA in 1974 opened the door to mutual fund and stock investing for the masses BUT it was not until the corporate policy of traditional pensions being replaced by the 401K in the 1990's and 2000's that the general American public became stock and fund owners. Even now stock or fund ownership is probably about 50% to 60%. SO......I was exposed to this environment as a child and throughout my life, something that was VERY MUCH OUT OF THE ORDINARY at the time for most people. My mom and dad became MILLIONAIRE NEXT DOOR types. Living on a regular income and holding their stocks and mutual funds for the very LONG TERM with no changes.....EXTREME buy and hold investing. By the time both of them were dead their account was at about $4 MIL. That original position of 14 shares of Phillip Morris with reinvesting of dividends and splits grew to over 15,000 shares. I eventually started to manage my moms accounts as well as those of my in-laws, siblings, children, a family trust, etc, etc. in the mid 1990's. As an aside, I did at that point start to cut back on the Phillip Morris reinvesting and did diversify their account into more modern holdings. BUT, I continued with the BIG CAP, DIVIDEND PAYING, AMERICAN, ICONIC COMPANY AND PRODUCT, GREAT MANAGEMENT, style of investing. I got used to dealing with large sums of money and being responsible for other peoples money and found that the responsibility of dealing with others money and large sums did not bother me in the least. I have 20+ years experience establishing and managing a very successful small business as a businessman. I did the same thing in business, I did the same thing over, and over, and over. I stuck with what worked and did not try to jump on every fad of the moment. I got used to taking risk with my personal assets as a business owner over my entire working life. My entire work life I have been responsible for my own success or failure, retirement, etc, etc. SO.....my childhood, young adult years, and business years, have contributed to my investment personality. 3. Education is a big factor in how I invest. I have a degree in Psychology, I took many business classes, including accounting, as an undergrad and went to a year of grad school in business. My emphasis was on marketing with a minor interest in managing people in business. I have a law degree, although I am not licensed. Of course these reflect my underlying personality. Although, I have seen over my life many very educated people that were TERRIBLE with money. 4. As a young adult in my 20's I discovered the rule of 72's and was able to use this to VISUALIZE the results of LONG TERM thinking and investing. I have used VISUALIZATION and GOAL SETTING through my life and have found these concepts to be very powerful. 5. Many other similar factors, many of which are just my individual nature. I have NEVER been a fad follower in any aspect of my life. So, I guess the bottom line, is I invest in a way that fits me as an individual and having been very successful doing so, my investor behavior has been rewarded and reinforced over many many years and is now set in stone. 6. I learned along the way how to make hard decisions very quickly and decisively and to impliment them as soon as made. The hardest thing for many investors and business people is knowing when to sell and DOING IT without looking back. If I make a bad investing decision, once I see it, I sell and move on, I consider selling a non performing investment as a lateral move and an opportunity. 7. I was lucky enough to realize at an early age that I had a talent for BUSINESS which the things I did over my lifetime in hindsight added to. Even as a kid I was very business oriented. In school I was always UNDERESTIMATED and in sports and other activities and interests and aspects of my life have overachieved through very hard work and practice even though I might not start out as the best. I guess for me it came down to a DRIVE to achieve, which I have done. 8. LIFE IS NOT ONE UPWARD CURVE. I made various mistakes, had setbacks, lost at times in various aspects of my life, but learned from these and always had the DRIVE and work ethic to move forward and upward. Of course, there are points in my life that in hindsight were turning points and by LUCK I happened to take a particular ROAD. 9. By this time, I have lived through many HORRIBLE economic times....the late 1970's bear market, Stagflation of the late 1970's and early 1980's, the flash crash of 1987, the dot-com boom and crash, the banking and housing disaster of 2008/2009. AND IMPORTANTLY if you see one of my posts above, I do NOT depend on my investments or investment results for current or retirement income. I have set up my financial life to NOT be dependent on my investments which allows me to invest for the LONG TERM with NO FEAR and no need to have any limit on the risk I can take or the potential disasters I can weather as an investor. 10. Etc, etc, etc. SORRY FOR THE LONG RAMBLING ANSWER........... SO..........there is no magic answer. I look at the above and in answer to your question think......"WTF.....hell if Iknow". That is why I like to say......ALL INVESTING IS PERSONAL. AS An Aside........Here is some interesting reading for the majority of people that have no clue what investing was like before the year 2000. (bold parts are done by me) "Stocks Then And Now: The 1950s And 1970s" https://www.investopedia.com/articles/stocks/09/stocks-1950s-1970s.as ""In many respects, advances in communications and technology have made the world a smaller place than it was 50 years ago. Nowhere is this more evident than in the field of investing, where technological advances have completely transformed the investment process. At the same time, regulatory changes have blurred the lines between banks and brokerages in recent decades. These changes, and the increase in globalization since the 1980s, have advanced the opportunities available to investors. But these increased opportunities have also been accompanied by greater risks. As a result, investing is now a more challenging exercise than it was in previous decades - specifically, the 1950s and 1970s. Investing in the 1950s According to the first share owner census undertaken by the New York Stock Exchange (NYSE) in 1952, only 6.5 million Americans owned common stock (about 4.2% of the U.S. population). With a generation scarred by the market crash of 1929 and the Great Depression of the 1930s, most people in the 1950s stayed away from stocks. In fact, it was only in 1954 that the Dow Jones Industrial Average (DJIA) surpassed its 1929 peak, a full 25 years after the crash. The process of investing was also more time consuming and expensive in the 1950s than it is now. Thanks to the Glass-Steagall Act of 1933, which prohibited commercial banks from doing business on Wall Street, stock brokerages were independent entities. (To learn more, see What Was The Glass-Steagall Act?) Fixed commissions were the norm, and limited competition meant that these commissions were quite high and non-negotiable. The limitations of technology in those days meant that the execution of stock trades, from initial contact between an investor and a broker, to the time the trade ticket was created and executed, took a considerable amount of time. Investment choices in the 1950s were also quite limited. The great mutual fund boom was still years away, and the concept of overseas investing was non-existent. Active stock prices were also somewhat difficult to obtain; an investor who wanted a current price quotation on a stock had few alternatives but to get in touch with a stockbroker. Although thin trading volumes reflected the relative novelty of stock investing at the time, things were already beginning to change by the mid-1950s. 1953 marked the last year in which daily trading volumes on the NYSE were below one million shares. In 1954, the NYSE announced its monthly investment plan program, which allowed investors to invest as little as $40 per month. This development was the precursor to the monthly investment programs that were marketed by most mutual funds years later, which in turn led to the widespread adoption of stock investing among the U.S. population in the 1970s and 1980s. Investing in the 1970s The process of change, as far as investing was concerned, accelerated in the 1970s, although the U.S.stock market meandered through this decade of stagflation. The DJIA, which was just above 800 at the start of the 1970s, had only advanced to about 839 by the end of the decade, an overall gain of 5% over this 10-year period. (For details see, Stagflation, 1970s Style.) However, mutual funds were growing in popularity, following the creation of individual retirement accounts (IRA) by the Employee Retirement Income Security Act (ERISA) of 1974, as well as the introduction of the first index fund in 1976. In 1974, trading hours on the NYSE were extended by 30 minutes to accommodate the growth of the market. (For further reading on the ERISA, see our special feature on Individual Retirement Accounts.) Perhaps the biggest change for investors this decade was the increasing settlement of securities trades electronically, rather than in physical form. The Central Certificate Service, which was introduced in 1968 to handle surging trading volumes, was replaced by the Depository Trust Company in 1973. This meant that, rather than physical stock certificates, investors were now more likely to have their stocks held in electronic form at a central depository. In 1971, Merrill Lynch became the first member organization of the NYSE to list its shares on the exchange. In 1975, in a landmark development, the Securities and Exchange Commission banned fixed minimum commission rates, which had hitherto been a cornerstone of U.S. securities markets and exchanges throughout the world. (For more on the SEC, see Securities And Exchange Commission: Policing The Securities Market.) These changes, coupled with the dramatic improvement in trade processing and settlement due to the increasing use of automation and technology, laid the foundation for significantly higher trading volume and the increasing popularity of stock investing in the years ahead. In 1982, daily trading volume on the NYSE reached 100 million for the first time. By 1990, the NYSE census revealed that more than 51 million Americans owned stocks - more than 20% of the U.S. population. Investing in the New Millennium Investing is a much easier process than it was in earlier decades, with investors having the capability to trade esoteric securities in faraway markets with the click of a mouse. The array of investment choices is now so huge that it can be intimidating and confusing to new investors. Primarily credited to technological advancements, a number of developments over the past two decades have contributed to the new investing paradigm. First, the proliferation of economical personal computers and the internet made it possible for almost any investor to take control of daily investing. Second, the popularity of online brokerages enabled investors to pay lower commissions on trades than they would have paid at full-service brokerages. Lower commissions facilitated more rapid trading, and in some instances, this has led to individuals pursuing day trading as a full-time occupation. Third, the bid-ask spread has also narrowed considerably (another development that facilitates rapid trading), thanks to the implementation of decimal pricing for all stocks in 2001. Finally, exchange-traded funds (ETF) have made it easy for any investor to trade securities, commodities and currencies on local and overseas markets; these ETFs have also made it easier for investors to implement relatively advanced strategies such as short sales. (To learn how to short sell, read the Short Selling Tutorial.) These factors have led to trading volumes soaring in the new millennium. On January 4, 2001, trading volume on the NYSE exceeded 2 billion shares for the first time. On February 27, 2007, volume on the NYSE set a new record, with over 4 billion shares traded. The Bottom Line While investors now have a plethora of investment opportunities, the accompanying risks are also greater. The globalization trend has led to a closer relationship between world markets, as is demonstrated by the synchronized correction in global markets during the "tech wreck" of the early 2000s, and the credit crisis of the late 2000s. This means that, in a global storm, there may be virtually no safe haven. The investing world is also much more complex now than it has ever been; a seemingly small event in an obscure overseas market can trigger a global reaction worldwide. As a result of these developments, investing is a more challenging (but convenient) exercise now than it was in the 1950s and 1970s.""
Taxes......yuck. Taxes: Here are the federal tax brackets for 2023 vs. 2022 https://finance.yahoo.com/news/taxe...-tax-brackets-for-2023-vs-2022-155622114.html (BOLD is my opinion OR what I consider important content) "The income thresholds for the seven federal tax brackets increased by a bigger-than-normal amount for the 2023 tax year to reflect runaway inflation seen last year. “They are just the usual changes due to inflation," Jon Whiten, from the Institute on Taxation and Economic Policy told Yahoo Finance. "More dramatic this year since inflation was also dramatic.” The inflation-adjusted amounts jumped by more than 7% from 2022, according to the Tax Policy Center, compared with last year's 3% uptick. The changes themselves are not a new development — the Internal Revenue Service adjusts its tax brackets annually for inflation. One positive outcome: Taxpayers whose income didn’t rise on par with inflation last year will likely avoid tax bracket creep in 2023 and ultimately pay lower taxes. Changes to 2023 federal income tax brackets For the 2023 tax year, there are seven federal tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Your tax bracket is determined by your taxable income and filing status and shows what tax rate you’ll pay on each portion of your income. According to the IRS, the income thresholds for all brackets will increase as follows: (Source: Internal Revenue Service) Remember: These are progressive marginal rates. It doesn't mean that, if you have $100,000 in taxable income as a single taxpayer, you're taxed at 24% on that entire amount. Instead, the first $11,000 is taxed at the 10% rate in 2023, the next dollars up to $44,725 are taxed at 12%, the next dollars up to $95,375 are taxed at 22%, and the last dollars over $95,375 are taxed at 24%. What these increases mean for you According to the latest Bureau of Labor Statistics data, wages only increased 4.4% for the 12-month run ending September 2022, up just 2.4% from a year earlier. Though some folks saw a jump in their salaries last year, most of those gains still fell behind rising inflation levels. “The whole point of adjusting tax brackets for inflation is to reduce the impact or mitigate the impact of inflation,” Eric Bronnenkant, head of tax at Betterment, told Yahoo Finance. “Let's say some people got a 10% raise in wages last year, while others may have not gotten any raise at all. Arguably, people whose income outpaced the estimated inflation hike of 7% now may be paying more taxes because their tax bracket is higher, while those with wages with little growth may be paying less.” What this means is that taxpayers whose salaries didn’t keep up with inflation are able to bypass bracket creep. According to the Tax Foundation, this occurs when inflation pushes you into a higher income tax bracket, which will reduce the value of credits, deductions, and exemptions. “You still have to remember that a 7% tax bracket increase is still a rough estimate of inflation, and it’s never about any one person’s individual situation,” Bronnenkant said. “It’s possible that inflation was low, but you lived somewhere where your landlord increased your rent 10% and your personal costs may have increased a lot. It’s not perfect for everybody, but it's the best the IRS can do to average inflation for a large amount of people.”" MY COMMENT I expect to be in the 12% bracket this year......maximum......unless my planing is off. Thanks to having no money in retirement accounts and the way my annuity payments are taxed I should have low taxable income. That was my long term plan for retirement. I intentionally managed and set up my money to reduce my taxable income from about age 70 to the end of my life. So far.....so good.
I have two comments on this article......."they always do".......and......"the answer is last June in hindsight". Actually the real answer is......they never got out of the markets to begin with so they dont have to deal with this impossible market timing decision. Investors Struggle With When to Dive Back Into US Stock Market https://finance.yahoo.com/news/investors-struggle-dive-back-us-134030157.html (BOLD is my opinion OR what I consider important content) "(Bloomberg) -- The pause in the stock market’s strong start to 2023 underscores the main question vexing much of Wall Street: When will it be safe to start buying again? Yes, markets have grown increasingly confident that the slowdown in inflation will allow the Federal Reserve to soon end the cycle of aggressive interest-rate hikes that last year drove the S&P 500 index to the worst drop since 2008. But at the same time, those higher rates could drive the economy into a recession and slam the brakes on any growth. Positioning for this financial yin-yang is tricky, to say the least. “The S&P 500 has never bottomed before the start of a recession, but it’s not clear yet whether the US economy will actually fall into a downturn,” said Ed Clissold, chief US strategist at Ned Davis Research, whose firm forecasts a 75% chance that the US will slump into an economic slowdown in the first half of 2023. “Some indicators are telling us that a soft landing isn’t off the table. All of these cross currents do make it challenging for investors to position in US stocks.” Those cross currents leave the stock market poised for a choppy start to the year as investors rely on incoming economic data and eyeball historical trends for clues. Last week, the S&P 500 dropped 0.7%, snapping a two-week winning streak, though the index rallied 1.9% Friday, thanks to a surge in tech stocks as Fed officials dialed back fears of overly aggressive policy moves. The tech-heavy Nasdaq 100 Index had its best day since Nov. 30 to eke out a 0.7% gain for the week. Clissold said the historical performance of different sectors can provide a guide to where to invest heading into a downturn. Those that tend to peak late in economic cycles, like materials producers and industrial companies, usually perform strongly in the six months ahead of a recession. The same goes for consumer-staples and health-care stocks. At the same time, stocks from rate-sensitive industries like financials, real estate, and growth-oriented technology tend to lag during that period. The problem is the scope of last year’s selloff makes historical comparisons difficult to use. In fact, last year’s big losers — like rate-sensitive tech and communications services stocks — are among the best performers this year, leaving investors wondering if the worst of the bear market decline is behind them. In the coming week, markets will sort through earnings results from Microsoft Corp., Tesla Inc. and International Business Machines Corp. that are poised to shape the direction of equities more broadly. Also, the Commerce Department on Thursday will release its first estimate of fourth-quarter US gross domestic product, which is expected to show an acceleration. To Mark Newton, head of technical strategy at Fundstrat Global Advisors, the S&P 500 likely bottomed out in mid-October. And he thinks it’s premature to completely write off beaten-down technology stocks. “I’m optimistic on US equities this year, but the biggest risk for stocks is if the Fed over hikes,” said Newton, who is monitoring whether the S&P 500 can stay above the December lows around 3,800. “Earnings this week from tech companies could be a huge catalyst. Other corners of the market are stabilizing. But if tech falls really hard, that’s a problem and the market won’t be able to broadly rally.” Forecasters surveyed by Bloomberg are predicting that the economy will contract in the second and third quarters of this year. While that would meet one standard definition of a recession, since 1979 the official arbiter — the National Bureau of Economic Research — hasn’t declared that such a contraction was underway until an average of 234 days after it started, data compiled by Bloomberg Intelligence show. So don’t hold your breath for a warning. The stock market is far more likely to be a leading indicator for when a recession starts and stops. Equity prices typically point to the risk of a recession seven months before it starts and bottom out five months before it ends, according to data since World War II compiled by research firm CFRA. “The S&P 500 may bounce back well before the announcement, as stocks typically rapidly price recessions,” according to Gillian Wolff, senior associate analyst at Bloomberg Intelligence. While the S&P 500 has priced in an earnings decline, higher borrowing costs and persistent economic uncertainty will likely hold back gains in stocks over the next year, according to Bloomberg Intelligence’s fair-value model. BI’s base-case scenario puts the index around 3,977 at the end of 2023 — roughly unchanged from where it closed Friday. But if the bullish scenario plays out, BI estimates it could hit 4,896, a gain of some 23%. Kevin Rendino, chief executive officer of 180 Degree Capital, is betting that the US recession has already begun. He’s been snapping up shares of small-cap stocks, specifically technology and discretionary shares that he sees at extremely low valuations. Small-cap stocks are historically among the first groups to bottom before the broader market bounces higher. The Russell 2000 is up 6% in January, outpacing the big-cap S&P 500’s 3.5% gain. “While everyone is running away, I’m running toward those hammered small-cap stocks,” Rendino said. “They’ll be the first to discount a recovery, and they’re already starting to do that relative to large caps. Investors are anticipating a recession, but whether we’re in one or not, we’re not headed for Armageddon.”" MY COMMENT This article is peppered with words like.......could, might, possibly, predicting, etc, etc, etc. As a long term investor......I NEVER leave the markets. I simply stay invested all in all the time. Why do I want to play market timer with when to sell and when to buy. I am not a trader.....I am an investor. I know that I have to take the bad times in order to get the good times which over the long term are the majority of years. I also know you can not predict or time the markets......they will FOOL YOU every time.
I have posted the below a few times over the course of this thread. It is the perfect summary of my investing style. It very accurately reflects my theory behind my portfolio and stock picking. THIS POST HAS BEEN REPEATED NUMEROUS TIMES IN THIS THREAD. Here is a GREAT ARTICLE. As I was reading this I was mentally yelling.....YES...YES. This article reflects my views on LONG TERM investing. My portfolio was ALL the BIG CAP, ICONIC, AMERICAN, EIVIDEND PAYING companies, all the big names PG, KO, GIS, MO, etc, etc. But about four or five years ago it became apparent that the millennial generation was starting to create a change in society, product preference, digital life, etc, etc. So I have modernized my portfolio into the current model that is previously in this thread. BUT....this is a GREAT ARTICLE, the writing and the investing story and philosophy. So....I am posting the whole thing: "An Evolve-or-Die Moment for the World's Great Investors The dominance of tech stocks has forced some of the best investing minds—including Warren Buffett himself—to reexamine their thinking. Who will adapt and survive?" http://www.fortune.com/longform/value-investing-warren-buffett-tech-stocks/ "At this year’s annual Berkshire Hathaway meeting in Omaha, Warren Buffett, the high priest of value investing, uttered words that would have been grounds for excommunication if they had come from anyone but him. Buffett began his career nearly 70 years ago by investing in drab, beaten-up companies trading for less than the liquidation value of their assets—that’s how he came to own Berkshire Hathaway, a rundown New England textile mill that became the platform for his investment empire. Buffett later shifted his focus to branded companies that could earn good returns and also to insurance companies, which were boring but generated lots of cash he could reinvest. Consumer products giants like Coca-Cola, insurers like Geico—reliable, knowable, and familiar—that’s what Buffett has favored for decades, and that’s what for decades his followers have too. Now, in front of roughly 40,000 shareholders and fans, he was intimating that we should become familiar with a new reality: The world was changing, and the tech companies that value investors used to haughtily dismiss were here to stay—and were immensely valuable. “The four largest companies today by market value do not need any net tangible assets,” he said. “They are not like AT&T, GM, or Exxon Mobil, requiring lots of capital to produce earnings. We have become an asset-light economy.” Buffett went on to say that Berkshire had erred by not buying Alphabet, parent of Google. He also discussed his position in Apple, which he began buying in early 2016. At roughly $50 billion, that Apple stake represents Buffett’s single largest holding—by a factor of two. At the cocktail parties afterward, however, all the talk I heard was about insurance companies—traditional value plays, and the very kind of mature, capital-intensive businesses that Buffett had just said were receding in the rearview mirror. As a professional money manager and a Berkshire shareholder myself, it struck me: Had anyone heard their guru suggesting that they look forward rather than behind? There is a deep and important debate going on in the investment community, one with profound repercussions for both professional money managers and their clients. Some believe that Buffett is right—that we have become an asset-light economy and that value investors need to adapt to accommodate such changes. Noted value managers like Tom Gayner of Markel Corp. and Bill Nygren of Oakmark Funds, for instance, count companies like Amazon and Alphabet among their top holdings. The fact that these stocks often trade at above-market valuations—a factor that once scared away orthodox value investors—hasn’t deterred them, because the companies’ futures are so bright that they’re worth it. Other value managers like David Einhorn at Greenlight Capital and Bruce Berkowitz at Fairholme are betting on the very same old-economy companies that Buffett long favored. Berkowitz, Morningstar’s domestic equities Manager of the Decade from 2000–10, has seen his performance suffer this decade, thanks to positions in AT&T and, most notably, Sears Holdings, which declared bankruptcy earlier this fall. Einhorn’s performance has also suffered; his largest position is GM, and he says he has been short what he calls a “bubble basket” that includes Tesla, Netflix, and Amazon. All value investors continue to agree that price is an important component of value—that’s why we’re called value investors. What’s happening now is a debate about what the drivers of value are—of what constitutes value in the 21st-century economy—and what will drive both the economy and the market forward over the next generation. Value investors are just that—we hunt for value, and our focus on price in relation to a business’s value makes us easily distinguishable from other investors. Momentum investors, for example, care about price only insofar as they can sell whatever they’ve bought to someone else at a higher one—the so-called greater-fool approach. Then there’s growth investing, in which price takes a distant second place to a business’s prospects for rapid expansion. Because weighing price vs. value is paramount in value investing, those in this school have a reputation of being long-term-oriented, self-denying cheapskates. The father of value investing was Ben Graham, who gave birth to it roughly 100 years ago, when 100% of the components of the Dow Jones industrial average were just that—industrials. Hard assets were what drove companies like Anaconda Copper and National Lead. Consumer marketing was in its infancy; in 1915, the closest thing the Dow had to a consumer products company was General Motors (or maybe American Beet Sugar). The year before, Graham had graduated second in his class from Columbia University with such a gifted intellect that he was offered teaching positions in three departments: philosophy, mathematics, and English. Acquainted with poverty at an early age, however, Graham chose a career in finance. The market of his day was dominated by tipsters, schemers, and speculators; stock operators trying to corner the market in United Copper had caused the Panic of 1907, which wiped out Graham’s widowed mother’s savings. Graham loathed such speculations, but he was attracted to the upside of equities. He saw them for what they were: a fractional ownership of a company’s business. Driven by both his academic temperament and practical necessity, Graham set about trying to figure out a predictable, systematic way to make money in stocks. For an answer, he turned to corporate financial statements and the tangible assets represented therein. Graham saw that while equities went up and down in the short run according to the whims of the market, a company’s tangible assets—its forges and its foundries and the inventory they produced—had a solid, knowable value. Graham began to calculate that value in a precise, mathematical way. He asked himself: What would a company be worth if it were to liquidate its assets and pay off its liabilities? Sometimes the liquidation would actually occur; other times it would be a theoretical exercise that gave Graham what he termed a “margin of safety” when buying a security. By quantifying value and then juxtaposing it with price, Graham found he could make sense of markets. Thus was born security analysis and, with it, value investing. From the beginning, value investing focused on the quantitative and tangible aspects of a business. Graham was an intellectual who lived in abstractions; he didn’t want to know about the products the companies made. Irving Kahn, one of Graham’s assistants, told Buffett biographer Roger Lowenstein that if someone began to describe to Graham what a company actually did, he would get bored and look out the window. With his focus on liquidation value, Graham tended to buy boring, beaten-down businesses—cigar butts, they came to be known, good for only a few extra puffs. Walter Schloss, a Graham analyst who later became a legendary value investor in his own right, once pitched Graham on Haloid, which owned the rights to a promising technology that would one day become the Xerox machine. While there is no record as to whether Graham looked out the window, he nevertheless said no. “Walter,” he said, “it’s just not cheap enough.” One of Graham’s acolytes was a young man from Omaha who was born into the Depression but came of age during America’s large, optimistic postwar expansion. As a teenager, Warren Buffett tried to understand the stock market by studying charts and other technical indicators; when he came upon Graham’s writings, he said that he felt “like Paul on the road to Damascus.” Buffett came East for business school to study under Graham, who by then was teaching at Columbia, and he briefly worked for Graham after graduation. The classic middle-American boy, however, Buffett soon quit New York for his beloved hometown. Surveying the economy of the mid-1950s with his own partnership, Buffett saw that it was vastly different from the one Graham had encountered as a young man. While the Dow Jones industrial average was still dominated by industrials, it also contained Procter & Gamble, Sears Roebuck, and General Foods. These companies were fundamentally different from an industrial company: The primary driver of their business value had little to do with hard assets. Rather, the value had to do with the company’s brands—with the loyalty and familiarity that customers felt for Ivory Soap and Jell-O gelatin. These emotional ties, encouraged and cemented by mass marketing, allowed businesses to charge high prices for relatively mundane goods. The great enabler of such businesses was the rise of national television, which both emanated from and reinforced a culture of homogeneity. Market-leading brands used scale in a very different but no less effective way than manufacturing companies. A beer, shampoo, or cola brand with dominant share could flood the three major TV networks with more advertising than their competition, yet still spend less than the competition as a percentage of absolute sales dollars. This set up a virtuous circle for dominant brands and a vicious circle for those less fortunate. Brands like Budweiser went from strength to strength; strong regional brands like Narragansett beer, once the No. 1 seller in New England, slowly but surely withered away. Value 3.0 Rules of the Road Even in an economy transformed by technology, many of Warren Buffett’s principles of value investing apply. Here, some dos and dont’s. Dos ■ Always look for a business with a clear-cut competitive advantage. If you can’t explain to your spouse what makes a company special as a long-term moneymaker, it probably isn’t. Amazon has a stranglehold on e-commerce; Google owns search; Sherwin-Williams, in which my fund owns a stake, dominates brick-and-mortar paint stores. What makes a company able to earn outsize profits over the next generation? ■ Try to find companies with a small market share, a huge addressable market, and a large competitive advantage. This was Warren Buffett’s recipe for success with Geico, a once-tiny auto insurer that sold directly to consumers rather than pay agents’ commissions. These traits may be present in GrubHub (pictured above), the first mover in the food-delivery market, which my fund also owns. It has an industry-leading market share yet still has less than a 1% share of all American restaurant meals consumed each year. Still TBD: whether consumers will continue to migrate away from in-restaurant dining, and whether Uber and Amazon will try to eat GrubHub’s lunch. Don’ts ■ As Buffett has said, never confuse a growing industry with a profitable one. One cautionary tale from the 2000s: Vonage, a pioneer in routing phone calls over the Internet. Business exploded over the past decade, but so did competition. Profits for everyone imploded, and the big winner (as is so often the case) has been the consumer. Vonage’s stock has never gotten back to its $17/share IPO price. ■ Avoid businesses whose best days are behind them. This is true even if you’re paying a cheap price relative to current earnings or book value because, in the long run, underlying business quality trumps price. Exhibit A: Sears Holdings looked cheap all the way down until it declared bankruptcy earlier this fall. You can still buy a fractional interest in Sears’s future today for a very cheap price, by the way—36¢ a share, as of this writing. With the help of his partner Charlie Munger, Buffett studied and came to deeply understand this ecosystem—for that’s what it was, an ecosystem, even though there was no such term at the time. Over the next several decades, he and Munger engaged in a series of lucrative investments in branded companies and the television networks and advertising agencies that enabled them. While Graham’s cigar-butt investing remained a staple of his trade, Buffett understood that the big money lay elsewhere. As he wrote in 1967, “Although I consider myself to be primarily in the quantitative school, the really sensational ideas I have had over the years have been heavily weighted toward the qualitative side, where I have had a ‘high-probability insight.’ This is what causes the cash register to really sing.” Thus was born what Chris Begg, CEO of Essex, Mass., money manager East Coast Asset Management, calls Value 2.0: finding a superior business and paying a reasonable price for it. The margin of safety lies not in the tangible assets but rather in the sustainability of the business itself. Key to this was the “high-probability insight”—that the company was so dominant, its future so stable, that the multiple one paid in terms of current earnings would not only hold but perhaps also expand. Revolutionary though the insight was at the time, to Buffett this was just math: The more assured the profits in the future, the higher the price you could pay today. This explains why for decades Buffett avoided technology stocks. There was growth in tech, for sure, but there was little certainty. Things changed too quickly; every boom was accompanied by a bust. In the midst of such flux, who could find a high-probability insight? “I know as much about semiconductors or integrated circuits as I do of the mating habits of the chrzaszcz,” Buffett wrote in 1967, referring to an obscure Polish beetle. Thirty years later, writing to a friend who recommended that he look at Microsoft, Buffett said that while it appeared the company had a long runway of protected growth, “to calibrate whether my certainty is 80% or 55% … for a 20-year run would be folly.” Now, however, Apple is Buffett’s largest investment. Indeed, it’s more than double the value of his No. 2 holding, old-economy stalwart Bank of America. Why? Not because Buffett has changed. The world has. And quite suddenly: Ten years ago, the top four companies in the world by market capitalization were Exxon Mobil, PetroChina, General Electric, and Gazprom—three energy companies and an industrial conglomerate. Now they are all “tech”—Apple, Amazon, Microsoft, and Alphabet—but not in the same way that semiconductors and integrated circuits are tech. These businesses, in fact, have much more in common with the durable, dominant consumer franchises of the postwar period. Their products and services are woven into the everyday fabric of the lives of billions of people. Thanks to daily usage and good, old-fashioned human habit, this interweaving will only deepen with the passage of time. Explaining his Apple investment to CNBC, Buffett recalled making such a connection while taking his great-grandchildren and their friends to Dairy Queen; they were so immersed in their iPhones that it was difficult to find out what kind of ice cream they wanted. “I didn’t go into Apple because it was a tech stock in the least,” Buffett said at this year’s annual meeting. “I went into Apple because … of the value of their ecosystem and how permanent that ecosystem could be.” If the postwar era was about consumer brands operating at scale, the early 21st century is about what we might call digital platforms. Like the branded enterprises before them, they have the permanence and probability that make for a good long-term value investment. Innovation scholar Carlota Perez has written about how at least five times in Western civilization, new technologies have erupted, gone through a speculative frenzy, and then busted, only to settle down after a shakeout into a long, protracted period of stability. We’ve had the high-tech eruption, we’ve had the frenzy of the dotcom boom, and we’ve had the bust. Now we are in what Jonathan Haskel and Stian Westlake, authors of Capitalism Without Capital, call the “bedding-in” phase. Unlike branded companies, digital businesses often benefit from network effects: the tendency of consumers to standardize on a single platform, which reinforces both consumer preference and the platform’s value. Because of this, the market shares of these platform companies dwarf those of the consumer products giants; software businesses like these are often characterized by a “winner take all” or “winner take most” dynamic. Combine this with the fact that they require little to no capital to grow, and you have Value 3.0—business models that are both radically new and enormously valuable. “In the past you would’ve needed a tremendous amount of capital to achieve global scale,” says Oakmark’s Nygren, whose top position in his Oakmark Fund is Alphabet, “but these companies have done it just by writing code and pressing ‘send.’ ” Like their branded predecessors, the platform companies are wisely reinvesting their vast profit streams into not only their core business but entirely new platforms as well. Take Alphabet, which my fund also owns: It began with search, a classic two-sided market in which consumers looking for goods and services are paired with advertisers who want to reach them. Google gained an early edge thanks to a superior search algorithm; with the word “google” now routinely used as a verb, it commands 95% of all mobile search. Google tweaks its algorithm twice a day to maintain its search superiority; meanwhile, the cash flow from this asset-less platform is so abundant that the parent can afford to spend $20 billion a year on research and development. That’s more than the annual earnings of Coca-Cola and American Express combined. It’s going into not only the core franchise but also nascent platforms like YouTube (user-generated video content), Android (smartphone operating systems), and Waymo (driverless cars). None of these businesses earns much now, but they may soon do so, and they are funded entirely by Google’s search platform. Little wonder that Amazon founder Jeff Bezos once told a colleague, “Treat Google like a mountain. You can climb the mountain, but you can’t move it.” Meanwhile, Bezos has built a mountain or two of his own. As the first big mover in e-commerce, he created a network of warehouses and logistics capabilities that now allows him to deliver packages to more than 100 million Prime customers in two days or less. He too has chosen to reinvest Amazon’s profits back into the business in various forms: lower prices for customers, ancillary services like Prime Video, and entirely new industries like Amazon Web Services, which provides outsourced, essential computational “plumbing” for the next generation of digital startups. In its core retail business, Amazon still has only a roughly 5% share of U.S. retail commerce despite being at it for more than 20 years. Amazon’s stock may be overvalued today—but with its dual moats of immense customer loyalty and low-cost provider status, there is no argument that it is very valuable. As these platform companies create billions in value, they are simultaneously undermining the postwar ecosystem that Buffett has understood and profited from. Entire swaths of the economy are now at risk, and investors would do well not only to consider Value 3.0 prospectively but also to give some thought to what might be vulnerable in their Value 2.0 portfolios. Some of these risks, such as those facing retail, are obvious (RIP, Sears). More important, what might be called the Media-Consumer Products Industrial Complex is slowly but surely withering away. As recently as 20 years ago, big brands could use network television to reach millions of Americans who tuned in simultaneously to watch shows like Friends and Home Improvement. Then came specialized cable networks, which turned broadcasting into narrowcasting. Now Google and Facebook can target advertising to a single individual, which means that in a little more than a generation we have gone from broadcasting to narrowcasting to mono-casting. As a result, the network effects of the TV ecosystem are largely defunct. This has dangerous implications not only for legacy media companies but also for all the brands that thrived in it. Millennials, now the largest demographic in the U.S., are tuning out both ad-based television and megabrands. Johnson & Johnson’s baby products, for example, including its iconic No More Tears shampoo, have lost more than 10 points of market share in the last five years—an astonishingly sharp shift in a once terrarium-like category. Meanwhile, Amazon and other Internet retailers have introduced price transparency and frictionless choice. Americans are also becoming more health conscious and more locally oriented, trends that favor niche brands. Even Narragansett beer is making a comeback. With volume growth, pricing power, and, above all, the hold these brands once had on us all in doubt, it’s appropriate to ask: What’s the fair price for a consumer “franchise”? To be sure, some of the digital-disruption rhetoric is overdone. Cryptocurrency replacing the bank system? Not likely. David Einhorn’s bearish calls on Tesla and Netflix may well be right, not because the stocks are expensive but because they face rising competition. And for all the hype about autonomous vehicles, they’re not anywhere close to being here—yet. But a lot can change in half a generation. If you google “Easter Day Parade, New York City 1900” and then “Easter Day Parade, New York City 1913” and look at the pictures that appear, you will see that the former has nearly 100% horse-drawn carriages while the latter has nearly 100% horseless carriages—i.e., automobiles. And when driverless cars do arrive, what happens to the auto industry? What happens to the auto-insurance industry—that cuddly, capital-intensive commodity business that value investors love to talk about at cocktail parties? Long-term investors need to be thinking about such shifts, and they need to position their portfolios in accordance with them rather than against them. Darwin is often misunderstood, says Markel’s Gayner, who counts both Amazon and Alphabet among his holdings. “It’s not survival of the fittest, but those who are most adaptable to change, that make it through.” MY COMMENT This little article is the best article I have found over the years to describe how I view stock picking and investing. The reasoning here is why my focus is......BIG CAP, AMERICAN, ICONIC PRODUCT, WORLD WIDE DOMINANCE, GREAT MANAGEMENT, companies. #103
A....very big show.....in the markets this week. I am talking about earnings. This week we will hear from MICROSOFT and TESLA. Next week will be another big one for me......APPLE, HONEYWELL, and AMAZON. HERE is a list of some of the BIG earnings in the coming week. "Tuesday: General Electric, 3M, Union Pacific, Microsoft General Electric Q4 2022 earnings release at 6:30 a.m. ET; conference call at 8 a.m. ET Projected EPS: $1.15 Projected revenue: $21.25 billion. 3M Q4 2022 earnings release at 6:30 a.m. ET; conference call at 9 a.m. ET Projected EPS: $2.37 Projected revenue: $8.04 billion. Union Pacific Q4 2022 earnings release at 7:45 a.m. ET; conference call at 8:45 a.m. ET Projected EPS: $2.78 Projected revenue: $6.31 billion. Microsoft Q2 2023 earnings release at 4:05 p.m. ET; conference call at 5:30 p.m. ET Projected EPS: $2.30 Projected revenue: $53.13 billion. Wednesday: Boeing, IBM, ServiceNow Boeing Q4 2022 earnings release at 7:30 a.m. ET; conference call at 10:30 a.m. ET Projected EPS: 22 cents Projected revenue: $20.24 billion. IBM Q4 2022 earnings release at 4:08 p.m. ET; conference call at 5 p.m. ET Projected EPS: $3.59 Projected revenue: $16.13 billion. ServiceNow Q4 2022 earnings release at 4:10 p.m. ET; conference call at 5 p.m. ET Projected EPS: $2.02 Projected revenue: $1.94 billion. Thursday: Dow, Southwest Airlines Dow Q4 2022 earnings release at 6 a.m. ET; conference call at 8 a.m. ET Projected EPS: 58 cents Projected revenue: $12.05 billion Southwest Airlines Q4 2022 earnings release at 6:30 a.m. ET; conference call at 12:30 p.m. ET Projected loss: 7 cents per share Projected revenue: $6.22 billion Friday: American Express Q4 2022 earnings release at 7 a.m. ET; conference call at 8:30 a.m. ET Projected EPS: $2.23 Projected revenue: $14.23 billion https://www.cnbc.com/2023/01/20/cramers-week-ahead-be-on-your-toes-this-earnings-period.html
Some really good and interesting posts on some of the history and valuable lessons. Quite a bit can be learned from those that came before us. It is amazing the change over a period of time. Yet, the basics of good fundamental investing remains the same for the most part and have stood the test of time. Then there are these guys even back then.... Todays investing world is loaded with "tipsters, schemers, and speculators." Beware, they want your hard earned money even more today. And this little gem should not be overlooked as well in regard to equities...
Yes, we see the daily narrative switching gears from "get out, get out, run to the exits" to "how to time entry, get back in, rotate to this, buy here." Of course, this may change next week or with any subtle move or comment. I cannot imagine the time and energy devoted to managing a plan based on so many unknown variables. This type of narrative seems to always easily dismiss the fact that one has to be able to accomplish this on a consistent basis over ones investing lifetime. Just a tip...the odds of doing that long term are not in your favor.
Siting here and watching the nice open. What a difference a new year makes. LOVING this year so far. I am very curious whether the FED will do 0.50% or 0.25%. It really does not matter much....they will get to about the same target over the next four months one way or another. It is mainly a psychological thing. My main focus is the ......new bull market.....that started in June but is not confirmed yet and is uniformly denied in the mainstream financial media as they wait for the recession they have all been predicting and talking about for the past year. Classic long term focus versus short term focus stuff. One thing is......SURE......we have now ENDURED the worst of the bear market. That does not mean it is smooth sailing ahead.....it never is.
On the same topic as above. The 2023 Recovery We Anticipate https://www.fisherinvestments.com/en-us/insights/market-commentary/the-2023-recovery-we-anticipate (BOLD is my opinion OR what I consider important content) "In our view, this year should bring relief after a difficult 2022. What next? After last year’s parallel stock bear market and bond rout, that question is on many investors’ minds. In the very short term, anything is possible—near-term volatility is unpredictable. But we think stocks and bonds are primed to rebound this year as uncertainty fades and last year’s fears prove to have overshot the emerging reality. How so? Read on. Bear markets are always painful to endure, and 2022 was no exception. But late in bear markets, patience is usually rewarded, as recoveries begin with typically sharp jumps. We believe that likely occurs this year, if it didn’t begin with the global rally dating to October 12. Since then, the MSCI World Index is up 15.0%, even with December’s back-and-forth and the last few days’ slide. Maybe that was the V’s start. Or maybe more downside lurks, from a new fear or investors’ working out some last spurt of angst. Debt ceiling chatter is certainly trying to hit sentiment hard now. So are economic fears. Yet even if there is a recession, as many expect, it isn’t likely to sway stocks materially. Markets—and CEOs—largely expect a downturn, based on available surveys and data. Stocks ordinarily bottom before growth returns. In all cases, while the timing is impossible to pinpoint, we think the conditions are ripe for a new bull market to get cooking in 2023. Stocks’ three main drivers—politics, economics and sentiment—point positively. Politically, the presidential cycle’s third year supports better-than-average returns. Now, as always, MarketMinder is nonpartisan, favoring no party nor any politician, with our analysis assessing political developments’ potential market effects only. So what matters isn’t the partisan particulars but the fact that midterms brought a split Congress, ensuring gridlock for the next two years. This ushers in what we call the Midterm Miracle for stocks. Midterms often deepen gridlock, reducing the risk government enacts anything radical to upset markets. The typical backdrop reigns now. The nine months starting in midterm years’ fourth quarters are US stocks’ most positive stretch since good data begin in 1925—and the effect ripples globally. Last quarter was no exception, with the S&P 500 up 6.6%, in line with midterm Q4s’ average, while world stocks rose 9.8%.[ii] We aren’t saying that is all midterms. But we suspect they contributed. In full, year three US stock returns typically follow through with the electoral cycle’s highest average return of 18.4%.[iii] It also has the highest frequency of positive returns at 91.7%.[iv] Except for 1931 (Great Depression) and 1939 (WWII’s onset), no third year has been negative from when reliable records start. Absent a world-shaking wallop no one foresees, the Midterm Miracle likely helps kickstart a new bull market sooner rather than later this year, in our view—again, if it didn’t start in October. Another big reason: The economy likely exceeds expectations. Most everyone thinks recession is imminent. From business leader and company surveys to economist and consumer polls, there is widespread agreement contraction is here or soon to come. Three-quarters of Americans thought recession was occurring last fall.[v] According to The Conference Board’s poll, 98% of CEOs see US recession in 2023.[vi] The investment community has been near-universally on Recession Watch for months, after Q1 and Q2 2022 GDP both inched lower—a watch that intensified later despite Q3’s 3.2% annualized GDP rebound.[vii] So if it happens, it wouldn’t shock. But also, CEOs expecting recession prepare for it, blunting the impact and likely making it milder than most anticipate. As Fisher Investments founder and Executive Chairman Ken Fisher likes to say, “anticipation is mitigation.” Any contraction would likely be short-lived because wringing out past excesses drives recessions—and firms have largely done that already. Perhaps there is more to come, but the measures taken in advance suggest they would be mild and expected. Then, if there isn’t a recession, that would positively surprise. Separately, overall and on average, households remain flush with cash. One timely way to see this: Despite fears to the contrary, the S&P/Experian Consumer Credit Default Index—which tallies default rates across autos, credit cards and first and second mortgages—was at 0.63 in December.[viii] That is up from lows seen in 2021, but noticeably below any level seen from when data start in May 2004 through May 2020. Many economists and pundits also misread supposed recession signs, like the inverted yield curve, raising the likelihood of a better-than-feared outcome. With overnight fed-funds and 3-month rates well above 10-year Treasury yields, many fear inversion screams recession. But most rest these claims on mere correlation without exploring causation. The yield curve normally matters because banks borrow short term to lend long, making short rates a proxy for funding costs and long rates a proxy for loan revenue. Inversion normally stresses loan profitability. But today, a flood of bank deposits provides banks ample funding at rates well below fed-funds. With long rates rising in 2022, lending is likely increasingly profitable. Bank lending has surged as a result. Yet few if any acknowledge this strong counterpoint. The fixation on negatives to the exclusion of nearly everything else is a hallmark of what Ken calls the “pessimism of disbelief,” which we find runs rampant as bear markets end. For example, reflecting escalating recession fears last June, the University of Michigan’s Consumer Sentiment Index hit a record low from the series’ 1952 inception and has been pinned near there since. Besides consumer confidence, business and investment sentiment indicators across the world have plumbed new depths. But look at it from a market perspective. As legendary investor Sir John Templeton astutely observed: “Bull markets are born on pessimism.” When pessimism becomes excessive, overshooting reality far to the downside, and people widely ignore or dismiss signs of improvement, conditions for a bull market recovery’s initial V-shaped rebound are ripe. All the negative sentiment has many overlooking a key point: Many of last year’s fears should fade. Take a major one: inflation. Input prices fell sharply in 2022’s second half, and they are now showing in inflation rates. The US consumer price index (CPI) peaked at 9.1% y/y last June (coincident with consumer gloom), but by December, it decelerated to 6.5%.[ix] Meanwhile, core CPI excluding food and energy, which some think better represents inflation’s underlying trend, hit a high of 6.6% y/y in September and retreated to 5.7% in December. That should continue. And, since inflation expectations influence long rates, 10-year Treasury yields have followed suit, falling from October’s 4.2% peak to sit at 3.4% now.[x] Since bond prices and yields move inversely, that should provide some relief to bond markets, too. Notably, credit spreads tracking corporations’ perceived financial health are narrowing as rates subside. So our outlook for 2023 is bright—partly because many others view it dimly and can’t see the improving backdrop around them. We see a wide gap between reality and expectations today—ample fuel for upside surprise to drive a new bull market this year." MY COMMENT My view of this year is based on two.....feelings. First earnings will generally be better this year than expected. Second......prices of the leading most iconic companies are WAY TOO LOW at the moment and there is way more room to run UP than DOWN. The top companies in the USA are on sale for bargain basement prices right now. Sooner or later....this year.....there will be a flood of buyers for these companies as........"the professionals"..... wake up and realize that they are about to be left in the dust. As usual they will react like the lemmings they are and flood into the BIG CAP market leaders. So I say.......COURAGE.....ENDURE.....for a little more time, and reap the rewards of hanging in there as a long term investor.
