The Long Term Investor

All in all....a very nice way to go into the weekend. Rest up.....the fight continues next week......and.....we have a long year ahead of us.

 

A very big week coming up for earnings and a few other things.

Fed meeting, jobs data, Apple earnings: What to know this week

https://finance.yahoo.com/news/stoc...al-reserve-fomc-interest-rates-125335273.html

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

"Wall Street will face one of its busiest weeks of the year in the coming week, with earnings from Big Tech leaders, the Federal Reserve's first meeting and rate decision of 2023, and the monthly jobs report for January all set for release.

The S&P 500's most heavily-weighted components — Alphabet (GOOGL), Apple (AAPL), and Amazon (AMZN), as well as Facebook parent company Meta (FB) — are among important players scheduled to report fourth-quarter financial results through Friday.

Meanwhile, in Washington, D.C., Fed officials will meet Jan. 31-Feb 1 and are expected to raise interest rates by 0.25% in Wednesday's policy decision. A press conference held by Fed Chair Jerome Powell Wednesday afternoon will offer investors crucial signs regarding the central bank's path forward on rate increases.

Finally, rounding out the week on Friday morning will be the government's January jobs report, set for release at 8:30 a.m. ET. Economists expect 185,000 jobs were added to the economy last month, consensus estimates from Bloomberg show.

Stocks have been on a tear to start 2023, as many investors bet weakening economic data will prompt the Federal Reserve to end its rate hiking cycle sooner than expected. All three major averages closed out their fourth-straight winning week on Friday.

The S&P 500 notched a weekly gain of around 2.5%, the Dow Jones Industrial rose 1.8%, and the technology-heavy Nasdaq Composite led the way with a rally north of 4%.

The 2023 rally will face its biggest test yet this week as mega-cap technology companies report earnings at at a critical juncture for their businesses.

These results come as technology layoffs ramp up after hiring swelled during the post-pandemic boom. Last week, Alphabet announced plans to cut 12,000 jobs, while layoffs at Amazon and Meta Platforms also stand in the tens of thousands as growth comes back down to earth after surging in 2021.

On Wednesday, members of the Federal Open Market Committee (FOMC) are poised to lift rates by 25 basis points, marking another slowdown from the 0.50% rate increase the Fed announced in December, which itself was a step down from the 0.75% pace of rate hikes seen during the prior four meetings.

The FOMC will announce its decision at 2:00 p.m. ET, with Fed Chair Jerome Powell scheduled to hold a press conference beginning at 2:30 p.m. ET. The CME FedWatch Tool, which serves as a barometer for what investors believe the central bank's next move will be, shows markets are pricing in a 99.8% chance of a 25 basis point hike on Wednesday.

"As the FOMC gathers for the first time in 2023, it will face a difficult challenge: how to communicate a desire to maintain a sufficiently restrictive monetary policy stance while avoiding the risk of overtightening," EY Parthenon chief economist Gregory Daco said in a note. "And, with its dance partner – i.e. markets – desiring a much slower dance tempo, carefully crafted communication will be essential to avoid a tumble."

Elsewhere on the economic data front, the January jobs report comes out on Friday. The employment picture has moderated in recent months, but demand for workers remains high, with the labor market breezing through the Fed's monetary tightening campaign.

December's data showed the labor market added a robust 223,000 jobs during the month, and a monthly average of 375,00 during all of last year — even as 425 basis points worth of rate hikes permeated through the economy.

Strategists who have doubted market expectations for the Fed to pause rate hikes point to continued labor market tightness, as wage pressures still pose a risk to inflation, even as consumer price increases continue to slow from multi-decade highs reached in the summer of 2022.

"We need activity weakness to translate to job losses to address Powell’s preferred services ex-shelter inflation metric, where wages are the primary driver," Alexandra Wilson-Elizondo, head of Multi-Asset Retail Investing at Goldman Sachs Asset Management, said in a recent note to clients. "We continue to think that we should not fight the Fed because they will demonstrate a slow reaction function on inflationary risk management."

Overall, fourth quarter earnings season continues to be a modest disappointment, though the market's performance this year shows investors are largely not surprised.

Of the 29% of S&P 500 companies that have reported results to date, just 69% have seen earnings per share come in above estimates, below the 5-year average of 77% and 10-year average of 73%, per data from FactSet.

For Amazon, key headwinds investors will be looking for color on include softening consumer discretionary spending and decelerating growth for its cloud business, AWS, according to Arun Sundaram, senior equity analyst at CFRA Research.

"Matters on cost cutting and belt-tightening initiatives will be front and center, as CEO Andy Jassy recently confirmed plans to eliminate just over 18,000 roles, which we forecast could result in more than $3 billion in savings," Sundaram said in a note.

For Apple, momentum on iPhone demand will be one of the biggest factors monitored by investors, while markets will be looking for any clues Alphabet offers on the state of the advertising business, given its exposure to this market through its Search and YouTube segments.

Other big names set to report include Advanced Micro Devices (AMD), Caterpillar (CAT), Qualcomm (QCOM), and Ford (F).

Though with a roster of companies reporting results this deep, big splashes and surprising releases are no doubt going to be a part of the coming week's market narrative.

Outside of Friday's jobs report, the typical mix of month-end economic data will also feature, with manufacturing readouts from the Institute for Supply Management and S&P Global set for Wednesday, as well as Tuesday's reading on consumer confidence from The Conference Board, all set to be closely watched.

On the labor side, Wednesday's private payrolls data from ADP and Thursday's weekly report on initial jobless claims will set the table for Friday's nonfarm payrolls report."

MY COMMENT

Contrary to this little article....earnings are doing just fine. We have less than 200 companies reporting so far and we are now UP to 69% EPS beats a week or so ago was at 67%.....it has now gone up to 69%. The long term average is 73%....so we are moving in the right direction and not significantly below the norm. the expectations for dismal earnings are turning out to just be the USUAL BALONEY.

 

Another day, another week.....and....close to the end of another month.

The markets move forward from here. I notice that there was lots of....big black swan....talk in the media over the weekend.....Taiwan, Ukraine, WWIII with Russia or China, the UK military, etc, etc, etc.

Will we see some unexpected big black swan this year? Perhaps...it happens once in a while. Of course if you never invested out of fear of some unknown and unanticipated event....you would never invest.

Siting and watching the market futures and the open for the past 55 minutes. Everything is red....but there has been some improvement over the past 25 minutes since the markets opened.

 

While ignoring the markets today....I like this little article.

Solving the Mystery Inflation Wrought on US Equipment Investment

https://www.fisherinvestments.com/e...-inflation-wrought-on-us-equipment-investment

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

"Thursday’s GDP report shed helpful light.

In addition to confirming US output closed Q4 on an up note, yesterday’s GDP report also shed some light on a wee mystery we noted a few weeks back: How much of core capital goods orders’ 2022 growth stemmed from inflation versus higher demand? Was the series’ growth hiding some businesses’ efforts to trim excess as recession talk swirled? With 2022 data now complete for both series (pending future revisions), we have an answer: Sort of, at times. This is probably part of what stocks spent last year pricing in.

Core capital goods orders—the subset of durable goods orders that excludes volatile defense and aircraft—are widely considered a leading indicator of business investment. We think this is sort of accurate. The orders are forward-looking, but they reflect only one part of business investment—equipment—which is about 40% of the total. Core capital goods orders don’t reveal investment in structures or intellectual property (e.g., research & development and software). But investment in tangible fixed assets does tend to fluctuate with the business cycle, so we understand why core capital goods orders get a lot of mileage in financial coverage.

Yet that mileage varies. The Census Bureau’s durable goods orders dataset isn’t adjusted for inflation. It just reports the raw dollars businesses splash out every month. This doesn’t make the series problematic, considering the vast majority of expenditure-oriented measures don’t have monthly inflation adjustments. That would add complexity and delay and require much more coordination between the various government departments that tabulate data. But it does raise questions in inflationary periods like 2022. Last month, we noted that after a solid rise for most of the year, core capital goods orders cooled in the autumn—which was when inflation started easing in earnest. That raised the question: Was the slowdown from easing prices or easing demand?

Exhibit 1 suggests it was the latter. In Q2, you will see business investment in equipment fell despite core capital goods orders’ rising all three months. So that seems like a good sign inflation was lifting orders and masking weak demand. In Q3, orders were mixed yet investment grew nicely. And in Q4, we now know core orders fell in two of three months and investment in equipment fell an inflation-adjusted (aka “real”) -0.9% q/q or -3.7% annualized. So it does indeed seem like slowing inflation allowed creeping weakness in core orders to be more visible.

Exhibit 1: Solving the Mystery of Core Capital Goods and Business Investment


Source: St. Louis Federal Reserve and FactSet, as of 1/26/2023.

All this suggests businesses may have ended 2022 by getting lean, which could mean a recession lurks. But—to the extent that is correct—it also suggests businesses aren’t waiting for that recession to become clear to do what they normally do during tough times. A recession’s primary purpose is to wring out the excess accumulated during the good times. That wringing usually manifests in falling investment and inventory reductions, and the recession typically ends as the wringing process completes. If businesses are getting a head start on this while data are mostly mixed, then it argues for any recession that does eventually materialize being shorter and shallower than most. Simply, by the time it gets underway, there will be less excess to wring out. That isn’t to dismiss the hardship endured by those who have lost jobs during this pre-emptive trimming. But a shallower, shorter recession probably speaks to a faster stock market rebound—whether or not that rebound began in October."

MY COMMENT

Perhaps a factor to consider as an economic indicator. true or not this is NOT something that I would take any investment steps based on. it is simply not relevant to the long term investor. What might be relevant to the long term investor is a very mild recession or no recession at all.

Much of the stuff that has happened in the markets and with jobs and elsewhere over the past two years is.......supply/demand distortions. Solve that issue and the economy is back to pre-covid. Easier said than done....but....it is slowly happening.

 

GEE.....who would have guessed today.....the DOW is now in the green and we have moved on to a mixed market at the moment.

 

The good old.....self-fulfilling prophesy.

What businesses do > what businesses say

https://www.tker.co/p/weekly-macro-soft-vs-hard-data

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

"Stocks rallied, with the S&P 500 climbing 2.5% last week. The index is now up 13.8% from its October 12 closing low of 3,577.03 and down 15.1% from its January 3, 2022 closing high of 4,796.56.

While the U.S. economy has been cooling off for months, the hard economic data shows growth has been pretty resilient. On Thursday, we learned GDP in Q4 rose at a 2.9% rate.

However, if you’ve only been reading sentiment-oriented business surveys (i.e., the soft data), you might think things are in much worse shape than they really are.

The ISM Manufacturing surveys have signaled contraction in November and December. The S&P Global U.S. Composite Output surveys have been signaling contraction since last July. Similarly, regional business surveys from the New York Fed, the Philly Fed, and the Dallas Fed have reflected ugly declines in activity.

Goldman Sachs economists explored this conflict between the hard and soft data in a new research note titled: “Making Sense of Scary Survey Data.”

“While contractionary soft data in January represent a downside risk for Q1 growth, we believe gloomy sentiment is currently distorting the message from business surveys, and we place less weight than usual on this negative growth signal,“ Goldman Sachs’ Spencer Hill wrote in the report published Wednesday.

Hill compared the performance of soft data against hard data using Goldman Sachs’ current activity indicators (CAIs) composites.


“Since last June, GDP and other hard indicators of economic activity have consistently outperformed business surveys, with our Hard CAI outperforming our Soft CAI by 2.3pp annualized,“ he observed.

Soft data looks much worse than hard data.
“Survey data do not provide a perfect read on growth, and they are particularly error-prone when business sentiment is euphoric or depressed,” Hill added. “Fears of imminent recession have been top of mind since the middle of last year, and as is visible in the gap between the blue and red lines in the previous exhibit, the economy outperformed the business surveys throughout the last two quarters.“

It gets even more interesting.

Hill dug into the soft survey data and separated objective findings (e.g., if orders are rising) from subjective ones (e.g., if general business conditions have improved).

“Business leaders broadly report deteriorating business conditions, but the breadth of decline reported for actual production, shipments, and employment is more modest — albeit still more negative than during most of the previous economic expansion,“ he found.


Subjective questions have gloomier answers than objective ones.

This is not to say we should be totally dismissive of soft survey data. I often include this data in the weekly review of macro crosscurrents.

“The pessimism must be coming from somewhere, and to a certain extent should be self-fulfilling,” Bloomberg’s John Authers wrote regarding the same research note. “So maybe the recession is just behind schedule.”

“Or alternatively, after years of economic weirdness, people in business have lost their nerve and will soon snap out of it,” Authers added. “It would be nice to believe the second.“

The good news is the hard data on business finances and consumer finances look pretty strong. So the economy appears to have the capacity to keep growing.

But if the negative vibes persist, we could face an unfortunate economic downturn where businesses and consumers rein in activity when they don’t have to."

MY COMMENT

The FED, the financial media, and many short term oriented traders and big bans have been over-weight negative for many quarters now. There is safety in being negative....versus....being wrong to the positive side when dealing with customers.

I very much believe there is a HUGE amount of this going on in business at the moment:

"Or alternatively, after years of economic weirdness, people in business have lost their nerve and will soon snap out of it"

Yes economic weirdness is rampant....but....so is wimpy and passively detached management. Especially from what the actual customer wants and needs. When I say passively detached management I mean management that does not have the guts to focus......solely on business factors.......versus all the various social, political, and other factors going on in the country and the world that have NOTHING to do with business.

 

Sounds about normal to me.

Why it's such a bizarre moment for investors rights now: Morning Brief

https://finance.yahoo.com/news/why-...stors-rights-now-morning-brief-102900570.html

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

"The markets are off to a rocking start this year, making this a bizarre time to be an investor.

Bizarre primarily because stocks are logging gains (see Tesla up 44% YTD), and yet the view from Corporate America could not be more different than what the stock market is saying right now.

Sure, the old saying on Wall Street is that stocks often "climb a wall of worry." And maybe that's what is happening in January. But honestly, is anyone paying attention to the economic data (beyond inflation) or the ongoing earnings season?

"Yield curve Inversion, contracting M2 and PMIs, soft homebuilder and trucking surveys, and falling leading economic indicators all present a conundrum to [Federal Reserve Chairman] Jay Powell," Evercore ISI's Julian Emanuel noted recently. "While the soft landing vs. recession debate has intensified ahead of the Fed [meeting] on Feb. 1, there is reason to believe that recession is likely in the second half of the year."

And here are some earnings season data out of FactSet:

• 69% of S&P 500 companies have reported a positive EPS surprise for the fourth quarter, which is below the five-year average of 77%.
  
• S&P 500 companies are beating EPS estimates for the fourth quarter by 1.5% in the aggregate, which is below the five-year average of 8.6%.
  
• The blended earnings decline for the fourth quarter for the S&P 500 is -5.0%. If -5.0% is the actual decline for the quarter, it will mark the first year on year drop reported by the index since the third quarter of 2020.
  

Miserable reads on the health of Corporate America. Guidance has generally been poor as well: Just take a gander at the skimpy forecasts put out by 3M and Sherwin-Williams last week.

Anecdotally, execs are sounding quite bearish to me in our chats.

Intel CEO Pat Gelsinger struck a downbeat note on the economy in our chat last Friday. American Express CEO Stephen Squeri was more upbeat in our talk, but it wasn't a perfect quarter for the credit card giant given downshifts in the economy.

Furthermore, we're seeing signs of layoffs spreading beyond tech.

About 219 companies have laid off more than 68,000 tech employees this month, according to layoffs tracking website Layoffs.fyi. That's 68,000 people that may be contributing less to economic growth in the months ahead. And then there is the likes of Newell Rubbermaid, for one, is laying off 13% of its office workers.

Now, the market awaits whether Apple, which reports earnings later this week, will join its rivals Microsoft and Amazon by trimming amid what appears to be a slowdown in iPhone demand.

But who knows, Apple cutbacks may only fuel the current market.

A bizarre moment in time for investors. We'll see what February brings.

Happy trading!"

MY COMMENT

There is a reason that I say "BOLD" content is either my opinion or what I think is important content. Keep in mind that OFTEN what I bold as important content is NOT my opinion.

This little article is a perfect example. Talk about cherry picking data and facts to push a narrative.....the negative narrative of course.

I guess that is somewhat my little theme today as i look at the posts above......the good old doom & gloom factory is working hard.

We will find out in hindsight when the next bull market is in full swing.....but....there are many people and many in business that are psychologically vested in the current bear market.

 

I am seeing a concentrated push against the positive today in the financial media......of course I dont care and am totally ignoring it. My awareness of this happening helps to make me immune to this constant fear mongering. Some times I read this stuff and it makes me smile.

Stocks Are Poised to Hit New Lows This Year, Survey of Investors Shows

https://finance.yahoo.com/news/stocks-poised-hit-lows-survey-010021690.html

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

"(Bloomberg) -- Investors have little confidence in US stocks even after this month’s surge, fearing weak corporate earnings could drag them back down.

Any weakness in outlook or quarterly results from Apple Inc., Meta Platforms Inc. and Exxon Mobil Corp. could outweigh relief over a downshift by the Federal Reserve or anything Chair Jerome Powell says Wednesday, according to respondents in the latest MLIV Pulse survey. The central bank is widely expected to deliver a quarter-point hike on Feb. 1, the smallest increase in almost a year.

Roughly 70% of the 383 respondents in the survey say the stock market has yet to hit the bottom. The biggest weighting — 35% — says the lows won’t be in until the second half of 2023.

Those responses show how shaken investors remain after last year’s pummeling in equities, with worries building over the outlook for company profits as the economy slows.

“There’s a lot of negativity and uncertainty among investors right now — and for good reason,” said Michael Sheldon, chief investment officer at RDM Financial Group. “It’s a difficult time because financial conditions have loosened in recent months with stock prices rising, which isn’t what the Fed wants since it’s trying to slow the economy to tame inflation.”

The S&P 500 Index enters this week up 6% in 2023, on pace for its best January since 2019, as signs of ebbing inflation and cooling growth have spurred bets that the Fed is close to ending its tightening cycle. Still, the most aggressive rate-hiking effort in decades, combined with a spiral of price and wage increases, has created a challenging environment for corporations to grow profits.

Roughly 90% of survey respondents expect inflation will continue to fall in 2023, but remain above the Fed’s 2% target. That dovetails with doubts about stocks as the question of how long inflation will remain elevated has made it tricky for investors to position themselves in 2023.

Stock bulls are solidly in the minority, with only 18% of survey participants saying they expect to increase their exposure to the S&P 500 in the next month. Over half say they will keep their exposure the same, while some 27% anticipate decreasing it.

The overarching question is the trajectory of growth. The US economy is showing signs of a mild slowdown that the central bank would want to see as it attempts to tame inflation without triggering a sharp downturn.

Forecasters expect US economic activity to contract in the second and third quarter.

“This could be the most anticipated recession the US has ever had, if it does occur, with some economic indicators already signaling that it’s likely,” Sheldon of RDM Financial Group said. “The stock market has probably bottomed, but I wouldn’t be surprised to see additional weakness in the spring as investors incorporate weaker economic data and lower profits.”

Bond traders expect the economic picture to be dire enough that the Fed will have to cut later this year, with swaps pricing that the US central bank first lifts its policy rate to just under 5% or less by mid-2023. Part of that wager is the expectation that inflation will keep sliding, giving the Fed room to pivot.

“History tells us, nine months after the last rate hike, the Fed tends to cut interest rates," Sam Stovall, CFRA Chief Investment Strategist, said in a Bloomberg TV interview.

That’s in contrast to the message from an array of Fed officials saying they’ll hike rates over 5% and not lower them this year.

More than half of survey participants said they agree with DoubleLine Capital LP Chief Investment Officer Jeffrey Gundlach that it’s best to watch what the bond market is saying about the Fed’s path — as opposed to signals from central bank officials.

The obvious risk is that it could turn out to be wishful thinking on the part of shareholders who got pummeled last year as the Fed responded aggressively to rampant inflation and Treasury yields soared.

Some investors warn against fighting the Fed, especially with corners of the economy — like the labor market — showing resilience in the face of steeper borrowing costs. If the Fed wins this cycle’s game of chicken, the survey’s pessimists would look prescient.

“The Treasury market is quite complacent,” said Tracy Chen, a portfolio manager at Brandywine Global Investment Management. “I don’t think the Fed will be cutting rates this year with them likely not happy with the job-market situation. So there could be another selloff in Treasuries.”

Markets don’t appear to be pricing in any risk related to the US debt ceiling, as more than 40% of respondents expect borrowing-limit crisis will be avoided. President Joe Biden agreed to meet House Speaker Kevin McCarthy on Feb. 1 to discuss the borrowing cap."

MY COMMENT

YES....DOOM&GLOOM Monday.

One benefit of long term investing is being able to simply IGNORE this sort of short term drama. More often than not there is some BIAS that is behind all the short term talking points. I simply do not care to have that bias imposed on my investing results......so I totally avoid any sort of short term trading or investing.

 

After talking to one of my kids and their spouse over the weekend.....they will be investing $18,000 in the SP500 Index some time this week. All in all at once. SO.....if the market is down this week......fine with me.

This is NOT one of the portfolios that I manage. I am not a proponent of market timing.....but if the market randomly hands me a good little market drop at the time money is going in....I will take it.

 

Having just looked......I have two stocks that are bucking the negative trend today......HON and COST. Better than being totally skunked....I guess.

I have 40% of my stock line-up reporting this week. HON, AAPL, GOOGL, and AMZN. Last week I had MSFT and TSLA. The tech side of my portfolio will soon be done with earnings.....except for NVDA.

 

This is as simple as it gets.......and....yes it is this easy if you have some long term focus and the ability to stick to a simple long term plan.

This janitor in Vermont amassed an $8M fortune without anyone around him knowing. Here are the 3 simple techniques that made Ronald Read rich — and can do the same for you

https://finance.yahoo.com/news/janitor-vermont-amassed-8m-fortune-140000770.html

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

"Warren Buffett is reported to have once said, “You don't need to have extraordinary effort to achieve extraordinary results. You just need to do the ordinary, everyday things exceptionally well.”

It might sound too simplistic to be true, but if you doubt the Oracle of Omaha’s wisdom, you should hear the story of Ronald Read.

Read, a retired gas station attendant and janitor in Vermont, passed away in 2015. Nothing about his life or death was extraordinary, except for the fact that his estate was revealed to be worth $8 million after he passed away.

This was a surprise to much of Read’s local community. “He was a hard worker, but I don’t think anybody had an idea that he was a multimillionaire,” his stepson told the local press after his death.

Read didn’t have the type of career path you’d typically associate with a multimillionaire. So how did he pull it off? Here’s a closer look at the three simple techniques that made him so wealthy.

Frugality

Ronald Read seems to have had a reputation for being extremely frugal. In fact, he likely could have given Buffett — who is famously frugal — a run for his money.

Read’s friends remember him driving a second-hand car and using safety pins to hold his worn-out coat together. He even continued to cut his own firewood well after his 90th birthday.

It’s a painfully straightforward approach: Spending less than you earn leaves you more to invest and generate wealth over time through investments.

“I’m sure if he earned $50 in a week, he probably invested $40 of it,” said Read’s friend and neighbor, Mark Richard, according to CNBC.

Investments

After he died, the Wall Street Journal analyzed Read’s personal portfolio. They discovered that many of his positions were held for several years — if not decades — and had delivered immense returns over that period.

In 2015, Read’s portfolio included heavyweights like Wells Fargo (NYSE:WFC), Procter & Gamble (NYSEG) and Colgate-Palmolive (NYSE:CL).

Again, here’s another parallel between Read and Buffett. If those names sound familiar it’s probably because you’ve seen some of them on Buffett’s portfolio too. In fact, Berkshire Hathaway had a sizable position in Wells Fargo for several years and Procter and Gamble is still part of the portfolio.

Both investors prioritized holding long-term positions in undervalued and overlooked companies. That’s what helped Read create his multimillion-dollar fortune. However, for both investors, the key ingredient was time — and patience.

Longevity

Ronald Read lived to 92 and Buffett is 92 years old now. Both investors have benefitted immensely from living and working longer than average. In fact, 90% of Buffett’s fortune was generated after his 60th birthday. If he’d retired early in his 50s, most people would have never heard of Warren Buffett.

The power of compounding is magnified over longer time horizons. In other words, investing for longer is more likely to deliver better returns. Buffett’s compounded annual growth rate of 9.17% would have turned $1,000 into $9,000 in 25 years and $13,900 in 30 years.

To be fair, none of us can control how long we live. Instead, starting early and staying in the market for as long as possible is probably the best strategy. It’s also advisable to let your winners ride for longer. Taking profits too early or trading your positions too frequently adds costs and diminishes the power of compounding."

MY COMMENT

He probably took the "frugality" aspect of life a little to the extreme for most people.....but.....there is no doubt that the majority of people that start early and follow this sort of simple strategy will be able to reach assets of over $1 MILLION in their lifetimes.

It is interesting that this little article has over 1000 comments....a big number for a financial article.

 

I agree Smokie.....I am very pleased with how earnings are coming in so far and the commentary from the companies that have reported. BUT.....that does not generate as many clicks as DOOM&GLOOM.

 

Imagine being a micro-second....AI Trading platform today......way too many negative story lines with everything that is scheduled for this week. Take your pick. Just about ALL of the extremely short term trading is news and headline driven. SO.....the down day we are seeing today is pretty much what you would expect.

Best chances this week for some good market days is......a big tech earnings surprise to the positive......and/or......a 0.25% rate increase by the FED with decent commentary afterwards.

 

I EMBRACE this little article. I happen to believe that a new bull market started with the market bottom that we first hit in June of 2022. That bottom has now been tested 3-4 times with the same result each time.....a nice RALLY off the bottom.

Embrace the Stock Breakout for Colossal Gains in 2023
Everything’s getting better – and no one saw it coming

https://investorplace.com/hypergrow...he-stock-breakout-for-colossal-gains-in-2023/

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

• "The market overreacted to 2022’s uniquely bad circumstances and thought they would persist into 2023 and beyond. Those circumstances are dying here in 2023. And as they do, stocks are roaring back to life.
• Inflation will keep falling. The Fed will take its foot off the gas pedal. And the economy will restabilize.
• In the months when bear markets turn into bull markets, gains are injected with steroids.

You may not believe it. But the stock market is in full-on “breakout mode” right now.

Yesterday, stocks soared after the December PCE report confirmed that inflation continued to collapse in December. The PCE inflation rate dropped by 50 basis points to 5%, marking the second consecutive month of 50 basis points of disinflation.

At that rate, inflation will be back to “normal” by April!



In response, the market soared. The S&P 500 rose more than 0.5%, while the Nasdaq popped over 1.2%.

The rallies continue what has been a red-hot start to the year. Year-to-date, the S&P 500 is already up more than 6%, while the tech-heavy Nasdaq is up more than 10% – and it’s not even February yet.

Certain stocks are faring even better. For example, our Core Portfolio is already up almost 20% this year!

At this point, it has become pretty clear that a new bull market is emerging.

Stocks don’t do what they’re doing right now – rally day after day, week after week, to retake long-term moving averages, with widespread participation among all stocks and risk-on assets like tech, small-caps, and growth leading the way – unless they’re entering a new bull market.

If it looks like a duck, walks like a duck, and quacks like a duck, it is probably a duck.

This, folks, is probably a new bull market.

Right now, all signs are pointing up.

But why?


In a nutshell, everything’s getting better – and no one saw it coming.

Unexpectedly Favorable Macros

The market overreacted to 2022’s uniquely bad circumstances and thought they would persist into 2023 and beyond. That’s normal. When bad stuff happens, humans tend to think things won’t get better.

But things are getting better. Those uniquely bad circumstances are dying here in 2023. And as they do, stocks are roaring back to life.

For all the talk of runaway inflation, nearly every metric is collapsing, implying that inflation is set to return to “normal” levels by either March, April, or May. Just look at yesterday’s PCE numbers from December. Inflation is on track to normalize by the spring. CPI numbers tell the same story.

For all the talk of a deep recession, pretty much every consumer spending metric is staying resilient and pointing toward continued growth in the U.S. economy. Just look at Visa’s (V) and Mastercard’s (MA) quarterly earnings reports from this past week. Both pointed to continued strong spending in the last three months of 2022 and rising spend in the first month of 2023.



For all the talk of an ultra-hawkish Fed, over the past few weeks, almost every single Fed member has said that their job is close to done.

And for all the talk of another 20%-plus crash in stocks, nearly every technical indicator is suggesting the stock market is in breakout mode right now. Just look at the textbook technical breakout the S&P 500 is staging!



Everyone thought things were going to get worse. Now they’re getting better. So, the stock market is in breakout mode.

And this breakout has legs.

The Stock Breakout Has Staying Power

The prevailing economic conditions will continue to improve as we push deeper into 2023. Inflation will keep falling. The Fed will take its foot off the gas pedal. And the economy will restabilize.


As all that happens, stocks will keep soaring.


The gains won’t be small.


Remember: Fortunes are made in bear markets.

Specifically, fortunes are made in the months when bear markets suddenly turn into new bull markets. And that’s exactly what is happening right now!

History says the S&P 500 rises about 10% every year. In a really good year, the market will pop 20%.

But in the months when bear markets turn into bull markets, those gains are injected with steroids.

For example, in the raging bull market of 2019, the S&P 500 rose about 25% over the course of a year. But when the COVID-19 crash turned into a new bull market in March 2020, the S&P 500 rose more than 60% over the next five months!



In the three years of the bull market leading up to the 2008 financial crisis, the S&P 500 rose about 40%. But when the crisis ended and turned into a new bull market in March 2009, the S&P 500 popped about 80% over the next year.



Even in the last two years of the biggest raging bull market ever – the dot-com boom of the late 1990s – the S&P 500 still only rose about 25%. But after the dot-com crash bottomed and became a new bull market in late 2002, the S&P 500 rose about 50% over the next year and change.



You get the point…

The biggest returns in Wall Street history almost always happen when bear markets turn into bull markets.

The Final Word

And that’s exactly what is happening right now.

Therefore, at this very moment, you are being presented with a generational opportunity to secure huge gains in the stock market.


Will you capitalize on this opportunity?"

MY COMMENT

This month, this year....any year......I will put money into the markets according to my model portfolio. BUT.....I do see the current moment and especially the next few months as great times to invest money for the long term. I see....WITH NO PERSONAL DOUBT....that we are either at a market bottom or within 10% of one.....AT WORST. I will take that any time, all day long. If I can get money to work in the markets within 10% of a bear market bottom....that is great for me. At best we are at the start of what could be a multi-year bull market run.

Of course since I dont do market timing or try to guess entry points.......I just put the money in when I have it....all in all at once. AND......the general FACT that the markets.....especially what I invest in the BIG CAP side of the markets and the SP500.....goes up about 70% of all years.....makes this a sure thing for me over the long term.

What if I am wrong? Well no harm no foul......since I am fully invested for the long term and will remain so regardless of whether my view is proven correct or not.

 

Well the markets continue to worsen as the day moves on.

GOOD NEWS......for one of my kids that will be investing $18,000 into the SP500 Index this week. As soon as I see the money appear in their account....probably Wednesday.....I will put in the trade for them. All in, all at once, into the SP500 Index Fund in their account.

They will divide these funds into their two brokerage accounts......same investment ($9,000) in each account. I generally do the orders in my kids account while their spouse does their own orders and account. They both....however....generally follow what I advise for them. They have....each..... been automatically investing $500 each per month into the SP500 Index Fund for years now.

With these monthly investments and other funds from various sources....they have managed to rack up about $380,000 (at this bear market moment) at age 38 and age 41.

This is very significant for them considering the compounding that they will get over the next 20-25 years.....and....especially considering the great pension plan they are both under......which at age 54 will allow....EACH....of them to retire with 100% of their final income for life.

Nicely....they are also contributing to Social Security. So they should be well set in retirement. Their two brokerage accounts will be the icing on the cake.....some really thick and very tasty icing.

Of course the final asset that will be nice for them will be the inheritance (one half of our estate and one half of my siblings estate) that they some day get as primary heirs for my wife and I and from my sibling.......who has no kids and is not married. My other kid will get the other half of each estate......some day......far, far, far, in the future.

SO....at this moment.....I have them all set up on a long term plan for some large multiple income streams in retirement. All they have to do is ride the wave and let the magic of compounding do it's thing.