The Long Term Investor

Markets....what markets? Were there markets today?

Not for me. The ice storm killed our power this morning about 6:30AM. We finally got power back.....about 5:00PM.....30 minutes ago. I have been gong around getting everything connected and running again.....clocks, TV, Internet modem, phones, computers, etc, etc, etc.

So far the dishwasher is the only casualty.....dead.....breaker does nothing to help. I looked up the users manual online and did not see any sort of re-set button. I have the breaker off right now for 5 minutes than I will try again. there is a chance that the power going off damaged something.

 

Welcome to the thread.....Broteau. Nice to see your first post. Now that you have broken the ice.....feel free to post on any investing topic you wish on here.....long term or not. It is always good to have other opinions....especially those that are contrary to mine.

 

We were lucky to have a well insulated house. With no power we had no utilities at all. We were able to do some cooking on our gas stove. We closed off all the house except for the core rooms...that area got down to 63 degrees. The back areas that were closed off got to 61 degrees and held there. I still have the water dripping at all facets.

 

Doing some quick.....clean-up/catch-up....posting. Just looked at my account for the day. I got in a big beat on the SP500 by 0.84%. Nine out of ten stocks were GREEN today. The only down holding was......HON.

As a result of the good market day today I am now YTD.......+11.44%. A very good start to the year......but definately not locked in stone with eleven months to go till year end. SO.....

I CELEBRATE THE WIN.......AND MOVE FORWARD.

 

My purchase of the SP500 Index fund went through at the close yesterday in my kids account. As of the close today......after the FED..... that little trade is....+1.04%. Now all I have to do is get past the BIG CAP TECH earnings tomorrow and past Friday....and it might end the week positive. So far.....so good.

 

rg7803.....well done on the bonus......and.....having the brains to invest that money. I agree with Smokie....do what is the best move for your personal situation. Either option will be a great investment......over the long term.

Let us know which one you decided to do.

 

I have been expecting a little article like this one.

As Goes January, So Goes the Year? Let’s Hope So

https://blog.commonwealth.com/indep...as-goes-january-so-goes-the-year-lets-hope-so

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

""As goes January, so goes the year” is a well-known Wall Street maxim that, like most Wall Street maxims, is sometimes true and sometimes, well, not true. As of today, we are very much hoping it does turn out to be true this year. January has been a very good month so far, with a significant bounce back from the terrible results of 2022. It would be nice to see that bounce continue. The good news is that—while still expecting volatility—we can expect the market to continue doing well this year. Let’s walk through the reasons, starting with history.

What Does History Tell Us?

Bespoke Investment Group put together a detailed analysis of how markets performed since World War II, looking at what happened after an up January. On average, markets gained in February, the first half of the year overall, and the second half of the year. In all time periods, the average for an up January was well above what was seen after a down January. This is a good sign in itself, although averages conceal a good deal of variation.

Bespoke also looked at the two cases of extremes, like we have now, where January was up by 5 percent or more after a double-digit decline in the previous year. Here, the results are even more encouraging. Looking at the historic numbers, we could reasonably expect double-digit returns for the rest of the year—if, of course, this year is similar, on average, to prior years.

What Drives Market Performance?

Here, we need to think about what drives market outperformance. Expectations are one thing: when investors are worried or depressed, then expectations tend to be easier to beat. And when markets beat expectations, they rise.

Interest rates are another key element, enshrined in another Wall Street maxim of “don’t fight the Fed.” When interest rates rise, like they did last year, markets drop. And when rates drop, markets rise. When we look at whether markets match prior performance, these are the two things to look at closely.

In both cases, the news is good. When we look at expectations, we see the following:

• First, a potentially catastrophic debt default by the U.S. government
• Second (and this also ties into interest rates), a Fed that is committed to continuing to raise rates indefinitely
• Third, a recession that, depending on whom you talk to, could be deep and long-lasting

Investors have a full plate of significant risks, which certainly helped pull markets down last year. The Fed, with its commitment to keep raising rates, also keeps investors worried who don’t want to fight it. And when you look at all the background problems—Ukraine, energy, and so forth—it is hard to see much reason for optimism.

Yet the markets have bounced. When we look at the next six months, we should get a lot more clarity. By then, we will have some sort of a deal, and the debt ceiling crisis will be behind us. Inflation is likely to be down, with the Fed that much closer (if it is not already there) to at least stopping the increases and maybe cutting rates. A recession, if we get one, will likely be underway and, therefore, closer to its end. In other words, in six months things are likely to look much better than they do now in most ways, giving the markets a boost toward year-end.

What About the Data?

Moreover, the data right now supports that conclusion. Long-term interest rates are well below their peaks and continue to drift lower. Inflation, as noted, is down and likely to keep dropping. Job growth continues to be healthy, and consumer confidence is chugging along. And earnings estimates, despite everything, are surprisingly positive. If we just look at valuations (which should improve with lower interest rates) and earnings (which are expected to rise), we can make a pretty good case for those double-digit gains.

The Real Question

Nothing is guaranteed, of course. But the real question for markets is whether things will be better or worse than they are right now. With all of the worries and things that could go wrong, it is pretty easy to make a case that things will get better. And that will certainly buoy markets even further. Will this strong January lead to a strong 2023? As of right now, both history and the data suggest it will."

MY COMMENT

As to the "three expectations" above....I have ZERO concern.

First a debt default........not going to happen. We are in the fear mongering phase on this issue by the politicians. It will NOT happen.

Second as to the FED.....they are now within one or two more rate increases of being done. At the most three more increases. The end is CLEARLY in sight.

Third....the recession....either not going to happen (my view).....or...it will be extremely mild. Either way this is meaningless to the markets at worst and at best very positive.

So....yes....I do think there is a good probability for the January superstition to happen this year. Of course.......I do not invest based on superstition. Just like the recent trade in my kids account......I ONLY.......invest based don what is proven by the academic research....in other words the probabilities that can be proven to be true.

 

The big story of the day.....for which I was AWOL.

Federal Reserve raises interest rates another 0.25% to highest since October 2007

https://finance.yahoo.com/news/federal-reserve-interest-rates-decision-february-1-174421486.html

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

"The Federal Reserve raised short-term interest rates Wednesday by a quarter percentage point, bringing its benchmark rate to a new range of 4.50% and 4.75%, the highest level since October 2007.

In its statement on Wednesday, the central bank acknowledged the slowdown in inflation as the Fed continues to assess the impact its interest rate hikes have had on consumer prices over the last year.

The 25 basis point rate hike marks a further slowdown in the Fed's pace of rate increases after the Fed raised rates by 50 basis points in December and 75 basis points at each of its four meetings from June through November — the fastest clip since the 1980s.

Fed officials acknowledged in Wednesday's statement "inflation has eased somewhat but remains elevated." The Fed no longer noted Russia's war in Ukraine as contributing upward pressure on inflation, but said this conflict is contributing to elevated global uncertainty.

Speaking in a press conference on Wednesday, Fed Chair Jerome Powell was somewhat more optimistic on the outlook for inflation, saying: "We can now say for the first time that the disinflationary process has started."

These comments sent stocks higher on Wednesday.

In its policy statement, the Fed said "ongoing increases" in interest rates will likely be appropriate to obtain a monetary policy stance that is "sufficiently restrictive" — in effect countering the recent easing in financial conditions that has resulted from higher stock prices and a moderation in rates for Treasuries and other bonds.

The Fed noted that in determining the "extent" of future rate hikes, instead of the pace, the central bank will take into account lags in monetary policy and the impact on inflation, the economy, and financial markets.

Wednesday's decision was unanimous, with all 12 members of the Federal Open Market Committee voting in favor of the rate increase.

After hitting a 40-year high last spring, the latest inflation numbers have shown easing for the past three months, though are still much higher than the Fed’s 2% target. The Fed’s preferred measure of inflation, the personal consumption expenditures index excluding food and energy, increased 4.4% in December from a year ago, down from the 4.7% reading in November — the slowest annual rate of increase since October 2021.

Meanwhile, the consumer price index, excluding food and energy prices, inched up 0.3% in December, after rising 0.2% in November. Year-over-year, core CPI rose 5.7%, down from the 6% seen in November.

Separately, as is customary at the beginning of each year, the Fed reaffirmed its commitment to its longer run goals and monetary policy strategy for stable prices, maximum employment, and moderate long-term interest rates."

MY COMMENT

I dont believe the FED really has any clue what or how to do anything. I also dont think their rate hikes are the real cause of the current reduction in inflation. BUT....this is certainly good news for stock market investors...who have taken the BRUNT of the FEDS actions and commentary.

 

Well what can I say.....half of my ten stock portfolio is BIG CAP TECH STOCKS......MSFT, NVDA, GOOGL, AAPL, and AMZN. I own and would own all of them.....even though they are now getting to be mature companies.

As for META.....no thanks.....I dont like that company......never have. I dont like their leadership or management......and......I dont like their vision of the future. In addition......If I was looking at them I would not like the fact that they are "yesterdays" social media company. So not for me....regardless of the current earnings.

For those that do own it....well.....the futures look really BIG....so enjoy. I hope they pull up the NASDAQ and SP500 tomorrow for all of us.

 

LOL.....expensive cars, motorcycles....not for me. I put so many miles on cars....they are just a commodity. My go to car.....a medium size SUV at a reasonable price....that I can get at least 250,000 to 300,000 miles out of over about 6-7 years.

 

I have been siting and watching the markets since the open today. The markets are ON FIRE. The META earnings has kicked off a HUGE tech rally in the SP500 and NASDAQ.

BUT beware.....this is a perfect day to see an extreme late day FADE in the markets as we near the close and the release of the BIG CAP TECH earnings today.

 

You know....I say all the time that investing is so simple....it is humans and their behavior that make it obscure and complex.

Simple, But Hard

https://ritholtz.com/2023/01/simple-but-hard/

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

"We live in an age of contextless slogans. It is the stock in trade of Instagram Influencers, TikTok Investors, and grinding side hustles.

It’s a new flavor of bullshit designed to sell unwitting dupes some garbage product or worse, a destructive half-assed philosophy.

In 2020, all you had to do was Hodl Meme stocks; In 2021, it was day trade your way to wealth; before that, just be a Crypto bro, or you can “Have fun being poor!” The latest effort at EZ-Money requires no skilz, very little capital, and almost no time: Passive Income.

All of these easy get-rich schemes use similar themes: Making it look simple to earn lots of money without much experience, expertise, or effort. The NYT took a look at the latest flavor: What’s Passive Income? It’s Not What Influencers Say It Is.

Remember the Dunning Kruger couple (video) we discussed in September 2021? (Whatever happened to them?) They revealed their unique trading approach by channeling Will Rogers: “Here’s my strategy in a nutshell: I see a stock going up, and I buy it, and I just watch it until it stops growing up and then I sell it. I do that over and over and it pays for our whole lifestyle.”

Those rare folks who day-trade, or flip houses, or garner passive incomes as a route to wealth1 are busy doing those things. Those that want to sell you a newsletter or a seminar or some product to show how to become rich (but do not earn their living that way) have revealed the flaw in their pitch. It’s a shame this gets overlooked by so many. The people who would benefit from debunking this silliness have already spent their time and have been separated from their money; for everyone else, it’s an after the fact tsk-tsk moment.

One cannot help but notice that the influencers pitching this lifestyle DO NOT MAKE THEIR INCOME this way, but rather selling “How To” kits.2

* sigh *

A few economic truisms:

Anything worthwhile requires time and effort.


Putting in time and effort is hard, but it gives you experience.


Learning from your experiences is difficult, but can lead to expertise.


Applying expertise over time is not easy, but can lead to rewards.

“Simple, but hard” is not the worst lesson one can learn from the internet. Simple, in terms of creating a path to follow; hard because a typical rewarding path is filled with pitfalls, psychological challenges and true competition.


“Simple and easy?”


“Have fun being poor” indeed."

MY COMMENT

"Have fun being poor"......I love it. We are in an era of ridiculous stupidity......I dont know if it is the internet, or the schools, or whatever. At the least the internet multiplies the impact of marketing to ignorant and/or stupid people.

DO NOT FALL FOR THIS STUFF. It is actually really simple how to be successful in investing. Just put as much money as you can into the SP500 on a regular basis.......hold it for life......and......let the returns compound. No work necessary. No real knowledge necessary. No experience necessary. Just live your life and forget about it.

You cant get much simpler than that. The hard part is having the self awareness and ability to recognize the TRUTH and take the first step.

 

As to the above....I have seen many variations of this little comment:

"Back in the days, every village used to have a village idiot. They did no harm, cause the reasonable folk told them the right way. Then came the internet and all village idiots started to network."

Back in the old days at least the gathering of VILLAGE IDIOTS....was limited to DAVOS........ once a year. Now they run rampant over the internet.

One of the single most important lessons for any investor:

DO NOT look for or take investing advice from the internet......including this thread.

 

The BIG NEWS today......that is irrelevant to long term investors.

Stock market news live updates: Tech leads post-Fed rally, heavyweight earnings loom

https://finance.yahoo.com/news/stock-market-news-live-updates-february-2-2023-123801997.html

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

"U.S. stocks were mixed at the open on Thursday, with tech stocks leading the way up following the Federal Reserve’s latest interest rate hike and ahead of another batch of corporate earnings, most prominently from technology titans.

The S&P 500 (^GSPC) added 1.0% at the open, while the Dow Jones Industrial Average (^DJI) lagged, dipping 0.1%. The technology-heavy Nasdaq Composite (^IXIC) soared by 2.1%.

The major U.S. stock averages closed higher on Wednesday following the Federal Reserve’s highly anticipated rate hike to 25 basis points, which represented another slowdown in its inflation-fighting campaign. Chairman Jerome Powell's upbeat comments on the state of inflation moved markets higher.

The Fed’s decision follows recent economic data that shows more evidence of decelerating inflation over the past few months, though Powell stressed the Fed's campaign is far from over.

The next major event on the macroeconomic front is January’s jobs report on Friday, which will be critical for investors to further assess if there's evidence of an easing labor market.

December's jobs report showed that the labor market remains strong, as employers added a robust 233,000 jobs for the month and an average monthly increase of 375,000 throughout last year.

The number of Americans filing new unemployment claims fell to 183,000 for the week ended Jan. 28, the Labor Department said on Thursday, down from 195,000 expected by economists.

On the earnings front, Meta Platforms (META) reported fourth quarter results after the bell that topped revenue expectations, while delivering a $5 billion expense cut. It also announced a $40 billion stock buyback. Shares of the social media giant surged nearly 18% Thursday morning.

The S&P 500's most heavily weighted components — Amazon (AMZN), Apple (AAPL), Alphabet (GOOG) — are gearing up to report quarterly results on Thursday after the bell. All were up at least 2% in early trading.

Merck & Co. (MRK) posted better-than-expected fourth quarter earnings, but forecasted softer near-term profits, sending shares lower on Thursday. The company reported adjusted earnings at $1.62 per share, down 10% from the same period last year, but up from the consensus estimates of $1.54 per share. Merck said revenue rose 2% to $13.83 billion, against the forecasts of $13.67 billion.

Separately, Eli Lilly (LLY) reported stronger-than-expected fourth quarter earnings Thursday, and lifted its full-year profit forecasts. Eli Lilly said adjusted profits for the quarter came in at $2.09 per share, against consensus forecast of $1.78. Revenue fell 8.75% from last year to $7.3 billion, a slight miss of expectations of a $7.33 billion.

Overall, fourth-quarter earnings season seems to be improving, noted Andrew Tyler, US Market Intelligence team at JP Morgan. But he said the question remains: “Will investors chase the soft landing narrative and the current rally?”

The tech results come as layoffs have become evident over the last few months in this sector, as firms small and large cut staff to reckon with their slowing growth following record profits during the pandemic. The total number of tech jobs slashed has been 41,829 within the last month, the highest across industries, according to report from Challenger, Gray & Christmas Inc.

Elsewhere in markets, Carvana (CVNA) shares rallied nearly 18% Thursday morning, bringing the online used-car seller's year-to-date gains to nearly 200%.

Meanwhile, overseas, the Bank of England followed the Fed in the U.S. by lifting interest rates by 0.5% to 4%, the highest level in 14 years. The increase from 3.5% was highly expected by economists. It's the bank's 10th consecutive rate hike as it continues trying to tame record high inflation.

The European Central Bank — the central bank for the 20 countries that share the euro — raised interest rates by another half a percentage point to 2.5%, in-line with market expectations. The next rate increase would be of the same size, the ECB said."

MY COMMENT

EARNINGS are now snowballing into a big beat compared to the expectations. BUMMER.....for all the village idiots that predicted the opposite.

AND.......happy days are here again.....the FED is a few more 0.25% rate increases from being done. At that point they will just mostly sit and wait.