The Long Term Investor

Ten Year yield is down today.....part of the reason that the markets opened in the green.

 

OH NO.......another critical shortage strikes the US economy.

There’s a big Girl Scouts cookie shortage

https://www.cnbc.com/2023/03/09/girl-scouts-cookie-shortage-baker.html

 

The more general markets today.

Stock market news today: Stocks open higher after weak initial claims data

https://finance.yahoo.com/news/stock-market-news-today-live-updates-march-9-2023-135006552.html

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

"Stocks opened Thursday's trading session higher following labor market data that was weaker than expected and ahead of Friday morning's key February jobs report.

Shortly after the opening bell the S&P 500 (^GSPC) was up 0.2%, Dow Jones Industrial Average (^DJI) was higher by 0.4%, and the Nasdaq Composite (^IXIC) was up 0.1%.

The weekly report on initial filings for unemployment insurance Thursday morning showed 211,000 claims were filed last week, an increase of 21,000 from the prior weak and what economists at Oxford Economics called the "first hint of weakness" in this data.

"The jump in jobless claims to 211k last week from 190k is the first sign of weakness in the claims data this year but is still well short of the 300k+ level that would be consistent with a recession," Michael Pearce, Lead U.S. Economist at Oxford Economics wrote in a note to clients. "As the Fed presses ahead with more rate hikes, we expect layoffs to eventually rise significantly."

Thursday's trading session will serve as a bridge between two eventful days of testimony from Federal Reserve Chair Jerome Powell and Friday morning's key February jobs report.

Stocks finished Wednesday's trading session mixed after a sell-off Tuesday that was triggered by comments from Powell suggesting the Fed will need to raise rates higher than previously forecasted amid stubborn inflation.

"I was surprised by Powell’s willingness to accelerate the policy tightening pace, but I am not surprised by the admission that terminal rates will need to rise further," said Neil Dutta, head of economics at Renaissance Macro.

"At present, the futures market is priced for a [50 basis point] move in March. There is no point cracking open a door if you don’t intend to walk through." Data from the CME Group shows markets placing an 80% on the Fed raising rates by 0.50% later this month.

Elsewhere in markets, the price of crude oil was flat early Thursday near $76.70 a barrel after falling earlier this week from closer to $80.

Investors will also keep a close eye on the Treasury market, where the 10-year yield was standing near 3.97% early Thursday with a deepening inversion of the yield curve garnering headlines earlier in the week.

In single-stock news, shares of Silvergate (SI) were in focus early Thursday after the bank said late Wednesday it would liquidate and wind down its operations after suffering heavy losses amid huge deposit outflows from its digital asset client base.

Shares of Silvergate, which have lost more than 95% over the last year, were down 38% in early trading.

Other stocks on the move early Thursday included MongoDB (MDB), down about 9% following a disappointing quarterly report.

On the flip side, shares of Asana (ASAN) were up as much as 20% shortly after the opening bell."

MY COMMENT

I STILL dont see any chance of a recession. The economy is strong, small business is begging for workers, and people are spending money.

I do believe there is a good chance....perhaps even a likelihood of a 0.50% rate increase when the FED meets later in March. They will see it as a final "shock and awe" to the economy and the markets. Unfortunately for them it will have ZERO impact on the economy but will cause a nasty market drop for a few days. After that they will do one or two increases at 0.25%. The alternative is three 0.25% increases. In other words......nothing has changed in the slightest.

 

I have been saying for a long time that the final FED range is 5.5% to 6%.

Stock market could ‘take it hard’ as expectations grow for a 6% fed funds rate

https://www.marketwatch.com/story/s...for-a-6-fed-funds-rate-73ec1ac5?siteid=yhoof2

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

"U.S. stock investors are clearly not too happy with what Federal Reserve Chairman Jerome Powell has said in the past two days. And there’s reason to think they’ll get even more dissatisfied in the weeks and months to come amid growing expectations that the fed funds rate may reach 6% this year, one of the highest levels in the past two decades.

Rick Rieder, chief investment officer of global fixed income for New York-based BlackRock Inc. BLK, -0.43%, put a 6% level for U.S. interest rates on the map following Powell’s first day of testimony to Congress on Tuesday. BlackRock is the world’s largest asset manager, overseeing almost $8.6 trillion as of December. Its view has only gained further traction as Powell testified again on Wednesday, according to FHN Financial’s Chief Economist Chris Low and Ben Emons, a senior portfolio manager at NewEdge Wealth, who are both in New York.

Powell took pains on Wednesday to clarify that policy makers have not yet made any decision about the size of March’s rate hike and are not on a “pre-set” course, helping to take some of the sting out of his otherwise hawkish message this week. U.S. stocks finished mostly higher, though the policy-sensitive 2-year Treasury yield TMUBMUSD02Y, 4.986% inched further above 5%, and the Treasury curve went more deeply negative in a worrisome sign about the economic outlook. The ICE U.S. Dollar Index DXY, -0.36% rose to its highest level of the year, and traders factored in an 77.9% chance of a half-percentage-point Fed rate hike on March 22.

With investors and traders largely focused on the size of the Fed’s next interest rate hike in two weeks, it’s the most likely path for interest rates over the next handful of months that has the potential to roil financial markets even further. Fed funds futures traders now see a 46.6% chance that the fed funds rate will get to 5.75%-6% or higher by July, and a 50.2% chance of that happening by September, according to the CME FedWatch Tool. That’s up from a current fed funds rate target range of between 4.5% and 4.75%.

Meanwhile, more economists are revising their fed funds rate forecasts to 5.75%-6%, according to FHN’s Low.

“Powell’s comments this week certainly suggested that the equity markets have been a little too overconfident in the prospects of a soft landing through the course of 2023,” David Keller, chief market strategist at StockCharts.com in Redmond, Washington, said in an email to MarketWatch on Wednesday.

“Growth stocks, in particular, have thrived on the expectation that inflation would quickly become a non-issue and equities would resume a more normal growth-driven rally phase,” Keller said. “Our main equity benchmarks, like the S&P 500 and Nasdaq Composite, are very growth-oriented, so higher rates suggest limited upside for these benchmarks until interest rates have reached their peak for the cycle. After what we have heard this week, it appears that the finish line is farther away than investors thought.”

Growing expectations for a 6% fed funds rate threaten to undermine the S&P 500 and Nasdaq Composite, which are off to their best start to a year since 2019. The S&P 500 SPX, 0.48% is up 4% for the year through Wednesday, versus 9.42% through the same period in 2019. The Nasdaq Composite COMP, 0.67% is up 10.6% on a year-to-date basis, versus 11.65% over the same time three years ago.

The risk of a 6% fed funds rate has been around since at least last April and resurfaced again in February, when it emerged as a slim chance in fed funds futures trading. Until Powell’s testimony this week, financial markets largely ignored the risk. The fed funds rate hasn’t been at or above 6% since March 2000 to January 2001, when Alan Greenspan led the Fed.

“A 6.0% terminal rate expectation, if widespread, would likely see the dollar extend the recovery that began in February,” said Marc Chandler, managing director at Bannockburn Global Forex in New York.

In addition, “the stock market would take it hard,” with the S&P 500 likely to fall near 3,800-3,850 — the level that corresponds to the “congestion” seen at the end of last year, he said. “It is an educated guess on momentum and psychology more than a statement about earnings or growth.” Such a move could occur quickly and be triggered by more hawkish comments or rate expectations from the Fed, a high reading on the next consumer price index, and “another very strong employment report.”

The 2-year yield “could head toward 5.50% if not a little higher,” while the 10-year yield may not rise much above 4.25% — implying a further inversion of the spread between those two rates, Chandler said in an email to MarketWatch. Moreover, “the market would judge a hard landing [as] more likely.”

On Tuesday, the S&P 500 and Dow industrials DJIA, 0.46% booked their worst day in two weeks after Powell told the Senate Banking Committee that the ultimate level of rates is likely to be higher than previously thought, and that the Fed would be prepared to accelerate the pace of rate hikes if needed. The Nasdaq also dropped 1.3%.

Powell reiterated the same message to the House Financial Services Committee on Wednesday, yet couched it in more flexible terms.

At New York-based NewEdge, which oversees about $12 billion in assets, Emons said that the chairman has nonetheless “accomplished one thing with his pragmatic messaging: a 6% fed funds rate is quickly becoming the consensus.”"

MY COMMENT

DUH......with inflation not moving significantly after what......7 or so rate increases.......it is pretty obvious that the media continues to downplay where we are headed with rates. I dont see the economy paying much attention to the past increases at all.

None of this lessens the fact that the GOOD NEWS is......we are in the final months of rate increases. No doubt we will end up between 5.5% and 6%. BUT.....it will happen over he next 4-6 months. So.....SOON....we will be done with the FED. At that point they can talk themselves blue in the face.....but no one will care.

 

We continue to see the financial media and traders totally focused on the FED. None of this stuff is relevant in the slightest to long term investors. IGNORE it all. Put your focus where it should be.......business fundamentals of the companies that you own or aspire to own.

Compared to where the markets are "likely" to be in a year or two.....current prices are still dirt cheap....even after the "stealth" rally we have been going through in the markets.

 

This has been a medium level issue in the media lately.

As Social Security reform talks heat up, changes to the retirement age, payroll tax may be on the table

https://www.cnbc.com/2023/03/04/soc...an-changes-to-retirement-age-payroll-tax.html

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

"Key Points

• Without action from Congress, Social Security may only be able to pay full benefits for another decade.
• As lawmakers weigh potential fixes, getting bipartisan agreement won’t be easy.

Lawmakers are hashing out plans to shore up Social Security’s ailing trust funds, and the possible changes will affect the benefits Americans receive.

Broadly, that comes down to two key changes: raising the retirement age and increasing the amount of annual wages subject to the Social Security payroll tax.

That could mean requiring Americans to wait until they are 70 to collect their full retirement benefits. (Current rules have set the full retirement age at 66 to 67, depending on date of birth.)

It could also mean requiring high income Americans to pay more in Social Security payroll taxes. Currently, that tax only applies to wages of up to $160,200.

Sens. Angus King, I-Maine, and Bill Cassidy, R-La., are reportedly leading a bipartisan coalition to propose changes including raising the retirement age to 70. Their plan also reportedly calls for the creation of a sovereign wealth fund that could invest Social Security’s funds in stocks. If the returns on those funds fell short, that could trigger more wages to be subject to payroll taxes, as well as higher rates on those levies.

Spokesmen for the Cassidy and King declined to provide further details, noting the plan is not finalized.

Meanwhile, Senate Democrats led by Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., last month reintroduced legislation that calls for reapplying the Social Security payroll tax on wages over $250,000. It would also require wealthy individuals to pay a 12.4% tax on business and investment income. The plan would also add $2,400 per year to benefits.

Discussion about how to shore up Social Security has increased since President Joe Biden’s State of the Union address, during which he prompted both sides of the aisle to promise not to cut the program.

We will not cut Social Security, we will not cut Medicare: Pres. Biden

“I will not cut a single Social Security or Medicare benefit,” the president vowed later that same week at an event in Florida.

Yet the clock is ticking to shore up the program.

A recent Congressional Budget Office report projected Social Security’s combined funds may run out in 2033, two years sooner than the Social Security actuaries estimated last year. Once those depletion dates are reached, that would mean benefit cuts of 23% or 20%, respectively.

Changes to prevent those cuts may have profound effects on Americans’ retirements and the U.S. wealth distribution.

Raising retirement age may be a 20% benefit cut

The Social Security full retirement age is gradually changing to 67, based on changes enacted in 1983.

Lawmakers are considering raising the full retirement age again to age 70.

“This absolutely is a benefit cut,” said Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities.

The change would result in a 20% benefit cut across the board to lifetime benefits, she noted.

People who retire at 62, the earliest eligibility age, would see a 43% reduction from their full benefit, according to Romig. A $1,000 benefit, for example, would be reduced to $570.

“It would be hard for people to absorb that cut,” she said.

While delaying benefits could help increase a beneficiary’s monthly checks, many people are not able to do that.

In 2021, 3 in 10 Social Security beneficiaries claimed at age 62. Of those who claimed at that age, about a quarter had already stopped working, Romig noted.

The most common reasons for retiring early were job losses, health issues or caregiving responsibilities.

Current beneficiaries and near retirees would likely be spared from any retirement age changes. But younger generations may feel the pinch. The Republican Study Committee budget, put forward by House leaders, has called for raising the full retirement age to 70 for people born in 1978 or later.

Payroll tax changes could target wealth inequality

In 1983, 90% of earnings were subject to Social Security taxes, which was a record high following the reforms Congress put in place, according to the Economic Policy Institute. In 2021, 81.4% of all wages were subject to Social Security taxes, as income inequality has led more earnings of high wage workers to fall over the cap.

That drop has caused big revenue declines for Social Security.

Cumulative losses since 1983 mean the Social Security trust fund had 50% fewer reserves, or $1.4 trillion less, as of 2022, according to the Economic Policy Institute. Between 2019 and 2021, about $26 billion in revenue was lost.

“It’s pretty clear that we need to tax higher earners’ wages that are spilling over that Social Security cap,” said Elise Gould, senior economist at the Economic Policy Institute.

In 2023, $160,200 of earnings are subject to Social Security payroll taxes. The tax rate is 6.2% for both employees and employers, or 12.4% for workers who are self-employed.

Warren and Sanders are calling for reapplying the Social Security payroll tax to income over $250,000, while also taxing certain business and investment income at 12.4%.

At a minimum, lawmakers should consider lifting the earnings cap to a level that results in 90% of earnings being subject to Social Security taxes, the Economic Policy Institute recommends.

“If we were back to that 90%, that would significantly increase revenues,” Gould said.

Leaders face tough trade-offs as debt ceiling looms

As Democrats resist benefit cuts, and Republicans oppose higher taxes, finding a compromise to fix the program will not be easy.

It will be crucial to look at the effects of any reform package in its entirely, said Shai Akabas, director of economic policy at the Bipartisan Policy Center.

A higher retirement age may be accompanied by other changes like a robust minimum benefit, for example, that can protect people at the bottom of the income distribution, Akabas said.

Just raising payroll taxes — without any benefit cuts — could provide enough money to shore up the program.

But some experts question whether that would be responsible when other tax increases are needed to pay for the country’s needs.

“If we rely only on more revenue from high income people to fix this problem, we’re not going to be able to tap that endlessly for other priorities that we have as a country, like a massive federal debt,” Akabas said.

It’s “dangerous” to think about Social Security without looking at the entire budget, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

“It’s very easy for people to pretend there’s [an] infinity [of] resources in our budget, and there are not,” she said."

MY COMMENT

FIRST.....for all the baby boomers near retirement.....I dont see any impact on them at all. For those with a longer time span to retirement....it is pretty clear that the retirement age is going to rise whether it happens this year or some time in the near future.

I actually support raising the amount of income that is subject to the Social Security tax. Those making up to $160,000 are paying the tax on their entire income.....I believe it would be fair to apply this to everyone....at EVERY income level.

No doubt some combination of the above will happen.....but probably not till after the Presidential election. It is also CLEAR.....that no matter how much more money is raise.....IT WILL NOT MATTER. congress will continue to steal ALL the Social Security taxes that are collected every year and replace it with worthless IOU treasuries with zero market value.

 

ALL of my accounts are having a strong day today.......since they are ALL structured the same way with the same holdings. I currently am seeing 8 of 10 stocks up. My "losers" today are COST and TSLA.

Not that COST is a loser. That company is a definite CORE HOLDING for me. It is usually in the top three of my portfolio when it comes to gains and total value of the portfolio. A consistent winner over the long term with more stability than my tech holdings.

 

How many times have we seen this screaming headline:

Stocks (rise/drop) on surprise (jump/drop) of blah, blah, blah (report/data).

Seems like a daily occurrence. You wold think with all the thousands....perhaps even tens of thousands.....of market economists, experts, financial reporters, professors, BIG BANK executives, etc, etc, etc......it would be impossible to have so many surprises.

I have to see it one of two ways.....either these people are incompetent and can not predict anything at all......or......they are not telling the "little people" what they really know and are profiting off the day to day market volatility with their short term computer trading.

This post was triggered by this and other headlines I have been seeing all day today:

"Dow Jones Rises 175 Points On Surprise Jump In Jobless Claims"

 

Notice you are not hearing anything about EARNINGS. YEP....they have been coming in much better than all the experts predicted. So it will be crickets. You cant sensationalize or fear monger good news.

With the current earnings soon winding down we will....no doubt....soon be seeing the normal articles warnings us how DISMAL the earnings will be for the next couple of quarters. I dont even have to look at anything or any data to know this is NOT true.

The earnings over the next couple of quarters will in my view....."probably"....be better than this quarter and will escalate to the positive side for the rest of the year. WHY......many companies have been severely downplaying expectations in their forward looking statements.

 

A little article from a couple of days ago.

7 Tips for Long-Term Investing

https://www.forbes.com/advisor/investing/tips-for-long-term-investing/

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

"Investing is a long game. Whether you want to invest for retirement or grow your savings, when you put money to work in markets it’s best to set it and forget it.

Successful long-term investing isn’t as simple as just throwing money at the stock market—here are seven tips to help you get a handle on long-term investing.

1. Get Your Finances in Order

Before you can invest for the long term, you need to know how much money you have to invest. That means getting your finances in order.

“Just like a doctor wouldn’t write you a prescription without diagnosing you first, an investment portfolio shouldn’t be recommended until a client has gone through a comprehensive financial planning process,” says Taylor Schulte, a San Diego-based certified financial planner (CFP) and host of the Stay Wealthy Podcast.

Start by taking stock of your assets and debts, setting up a reasonable debt management plan and understanding how much you need to fully stock an emergency fund. Tackling these financial tasks first ensures that you’ll be able to put funds into long-term investments and not need to pull money out again for a while.

Withdrawing funds early from long-term investments undercuts your goals, may force you to sell at a loss and can have potentially expensive tax implications.

2. Know Your Time Horizon

Everyone has different investing goals: retirement, paying for your children’s college education, building up a home down payment.

No matter what the goal, the key to all long-term investing is understanding your time horizon, or how many years before you need the money. Typically, long-term investing means five years or more, but there’s no firm definition. By understanding when you need the funds you’re investing, you will have a better sense of appropriate investments to choose and how much risk you should take on.

For example, Derenda King, a CFP with Urban Wealth Management in El Segundo, Calif., suggests that if someone is investing in a college fund for a child who is 18 years away from being a student, they can afford to take on more risk. “They may be able to invest more aggressively because their portfolio has more time to recover from market volatility,” she says.

3. Pick a Strategy and Stick with It

Once you’ve established your investing goals and time horizon, choose an investing strategy and stick with it. It may even be helpful to break your overall time horizon into narrower segments to guide your choice of asset allocation.

Stacy Francis, president and CEO of Francis Financial in New York City, divvies long-term investing into three different buckets, based on the target date of your goal: five to 15 years away, 15 to 30 years away and more than 30 years away. The shortest timeline should be the most conservatively invested with, Francis suggests, a portfolio of 50% to 60% in stocks and the rest in bonds. The most aggressive could go up to 85% to 90% stocks.

“It’s great to have guidelines,” Francis says. “But realistically, you have to do what’s right for you.” It’s especially important to choose a portfolio of assets you’re comfortable with, so that you can be sure to stick with your strategy, no matter what.

“When there is a market downturn, there’s a lot of fear and anxiety as you see your portfolio tank,” Francis says. “But selling at that time and locking in losses is the worst thing you can do.”

4. Understand Investing Risks

To avoid knee-jerk reactions to market dips, be sure you know the risks inherent in investing in different assets before you buy them.

Stocks are typically considered riskier investments than bonds, for instance. That’s why Francis suggests trimming your stock allocation as you approach your goal. This way you can lock in some of your gains as you reach your deadline.

But even within the category of stocks, some investments are riskier than others. For example, U.S. stocks are thought to be safer than stocks from countries with still-developing economies because of the usually greater economic and political uncertainties in those regions.

Bonds can be less risky, but they’re not 100% safe. For example, corporate bonds are only as secure as the issuer’s bottom line. If the firm goes bankrupt, it may not be able to repay its debts, and bondholders would have to take the loss. To minimize this default risk, you should stick with investing in bonds from companies with high credit ratings.

Assessing risk is not always as simple as looking at credit ratings, however. Investors must also consider their own risk tolerance, or how much risk they’re able to stomach.

“It includes being able to watch the value of one’s investments going up and down without it impacting their ability to sleep at night,” King says. Even highly rated companies and bonds can underperform at certain points in time.

5. Diversify Well for Successful Long-Term Investing

Spreading your portfolio across a variety of assets allows you to hedge your bets and boost the odds you’re holding a winner at any given time over your long investing timeframe. “We don’t want two or more investments that are highly correlated and moving in the same direction,” Schulte says. “We want our investments to move in different directions, the definition of diversification.”

Your asset allocation likely starts with a mix of stocks and bonds, but diversifying drills deeper than that. Within the stock portion of your portfolio, you may consider the following types of investments, among others:

• Large-company stocks, or large-cap stocks, are shares of companies that typically have a total market capitalization of more than $10 billion.
• Mid-company stocks, or mid-cap stocks, are shares of companies with market caps between $2 billion and $10 billion.
• Small-company stocks, or small-cap stocks, are shares of companies with market caps below $2 billion.
• Growth stocks are shares of companies that are experiencing frothy gains in profits or revenues.
• Value stocks are shares that are priced below what analysts (or you) determine to be the true worth of a company, usually as reflected in a low price-to-earnings or price-to-book ratio.

Stocks may be classified as a combination of the above, blending size and investing style. You might, for example, have large-value stocks or small-growth stocks. The greater mix of different types of investments you have, generally speaking, the greater your odds for positive long-term returns.

Diversification via Mutual Funds and ETFs

To boost your diversification, you may choose to invest in funds instead of individual stocks and bonds. Mutual funds and exchange-traded funds (ETFs) allow you to easily build a well-diversified portfolio with exposure to hundreds or thousands of individual stocks and bonds.

“To have true broad exposure, you need to own a whole lot of individual stocks, and for most individuals, they don’t necessarily have the amount of money to be able to do that,” Francis says. “So one of the most wonderful ways that you can get that diversification is through mutual funds and exchange-traded funds.” That’s why most experts, including the likes of Warren Buffett, recommend average people invest in index funds that provide cheap, broad exposure to hundreds of companies’ stocks.

6. Mind the Costs of Investing

Investing costs can eat into your gains and feed into your losses. When you invest, you generally have two main fees to keep in mind: the expense ratio of the funds you invest in and any management fees advisors charge. In the past, you also had to pay for trading fees each time you bought individual stocks, ETFs or mutual funds, but these are much less common now.

Fund Expense Ratios

When it comes to investing in mutual funds and ETFs, you have to pay an annual expense ratio, which is what it costs to run a fund each year. These are usually expressed as a percentage of the total assets you hold with a fund.

Schulte suggests seeking investments with expense ratios below 0.25% a year. Some funds might also add sales charges (also called front-end or back-end loads, depending on whether they’re charged when you buy or sell), surrender charges (if you sell before a specified timeframe) or both. If you’re looking to invest with low-cost index funds, you can generally avoid these kinds of fees.

Financial Advisory Fees
If you receive advice on your financial and investment decisions, you may incur more charges. Financial advisors, who can offer in-depth guidance on a range of money matters, often charge an annual management fee, expressed as a percentage of the value of the assets you hold with them. This is typically 1% to 2% a year.

Robo-advisors are a more affordable option, at 0% to 0.25% of the assets they hold for you, but they tend to offer a more limited number of services and investment options.

Long-Term Impact of Fees

Though any of these investing costs might seem small independently, they compound immensely over time.

Consider if you invested $100,000 over 20 years. Assuming a 4% annual return, paying 1% in annual fees leaves you with almost $30,000 less than if you’d kept your costs down to 0.25% in annual fees, according to the U.S. Securities and Exchange Commission. If you’d been able to leave that sum invested, with the same 4% annual return, you’d have earned an extra $12,000, meaning you would have over $40,000 more with the lower cost investments.

7. Review Your Strategy Regularly

Even though you’ve committed to sticking with your investing strategy, you still need to check in periodically and make adjustments. Francis and her team of analysts do an in-depth review of their clients’ portfolios and their underlying assets on a quarterly basis. You can do the same with your portfolio. While you may not need to check in quarterly if you’re passively investing in index funds, most advisors recommend at least an annual check in.

When you check up on your portfolio, you want to make sure your allocations are still on target. In hot markets, stocks might quickly outgrow their intended portion of your portfolio, for example, and need to be pared back. If you don’t update your holdings, you might end up taking on more (or less) risk with your money than you intend, which carries risks of its own. That’s why regular rebalancing is an important part of sticking with your strategy.

You might also double-check your holdings to ensure they’re still performing as expected. Francis recently discovered a bond fund in some clients’ portfolios that had veered from its stated investment objective and boosted returns by investing in junk bonds (which have the lowest credit ratings, making them the riskiest of bonds). That was more risk than they were looking for in their bond allocation, so she dumped it.

Look for changes in your own situation, too. “A financial plan is a living breathing document,” Schulte says. “Things can change quickly in a client’s life, so it’s important to have those review meetings periodically to be sure a change in their situation doesn’t prompt a change with how their money is being invested.”"

MY COMMENT

In general how to invest for the long term is laid out above. It is so simple in theory.....but in reality....human emotions and behavior get in the way for many people.

Of course....the 401K or IRA is your basic first step to long term investing.

ALSO......the above are not hard and fast rules.....the bottom line is what works for YOU and what allows YOU to achieve your financial goals over the long term to provide financial security to your family. For example....."I"......do not diversify the way most articles suggest. I prefer to have a fairly concentrated portfolio and to focus on the BIG CAP GIANTS of the world economy. I also RARELY re-balance......I let winners run for as long as I own them.

BUT.....the main thing is to take that first step.......and educate yourself over the years about investing in funds, ETS's and stocks. EVERY investor at one time was a BEGINNER......no one starts out with inborn knowledge about investing. TAKE THAT FIRST STEP for your self and your family. DO IT TODAY.

 

I have not said much about my little local real estate market lately because it is.....BORING. It is a tale of two cities.......houses above a $1MILLION are just sitting. Those below are selling.....somewhat.

Of course the above is ALL subject to the reality that in my area of 4200 homes.....that there is NO INVENTORY.

Here we are near mid March and right now we have a TOTAL of only THIRTY ONE active listings. At least half of them are over $1MILLION.....the rest are clustered between about $900,000 and $650,000.

It will be interesting to see if we get any bump up in listings when we get closer to the end of the school year and the traditional corporate moving season.

I did see that the ten year plan is to get rid of a couple of schools in my little area. The population in my little area is skewing upward in age as the prices of homes in this area goes up and there are less young kids.

In spite of what is going on in the market.....I DO NOT see any drop in prices in my area or in the general Austin Tx or Central Tx area. In fact we are STILL seeing price increases happening.....but.....not as crazy as a year ago, obviously.

 

LOL.....quite a nasty little freak out in the markets today. Every one of my stocks is now in the red. Here is the "excuse".

Stock market news today: Stocks fall ahead of crucial February jobs report

https://finance.yahoo.com/news/stock-market-news-today-live-updates-march-9-2023-135006552.html

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

"Stocks were lower Thursday afternoon during a trading session that began higher following weak initial claims data but has seen investors grow more cautious ahead of Friday's key February jobs report.

Near 1:40 p.m. ET, the S&P 500 (^GSPC) was down 0.7%, Dow Jones Industrial Average (^DJI) was off by 0.6%, or 198 points, and the Nasdaq Composite (^IXIC) was down by 0.9%. All three major averages were making new lows in the early afternoon trade.

The weekly report on initial filings for unemployment insurance Thursday morning showed 211,000 claims were filed last week, an increase of 21,000 from the prior weak and what economists at Oxford Economics called the "first hint of weakness" in this data.

"The jump in jobless claims to 211k last week from 190k is the first sign of weakness in the claims data this year but is still well short of the 300k+ level that would be consistent with a recession," Michael Pearce, lead U.S. economist at Oxford Economics, wrote in a note to clients. "As the Fed presses ahead with more rate hikes, we expect layoffs to eventually rise significantly."

The initial pop from stocks following this data came after two days of testimony from Federal Reserve Chair Jerome Powell made clear interest rates are likely to go higher than expected amid strong labor market and inflation data."

etc, etc, etc.

MY COMMENT

I dont see any reason for the dip today. Just a market freak out.

I bet the masters of the markets.....the New York short term computer traders.....got their computer trading programs panties tied in a knot over the chance of a 0.50% FED increase combined with the useless.....inaccurate....jobs report tomorrow.

 

This certainly did not hep the day today.....as the banks went into panic mode over the failure......or potential failure......of a couple of irrelevant BITCOIN banks. I remember the old days when bankers were very conservative. NOW.......they are raging lunatics. Any bank that gets taken down by any sort of Bitcoin collapse or other financial collapse did not deserve to be in business. Absolutely no ability to evaluate and judge risk....so they dont deserve to be in business.

Banks tumble as SVB ignites capitalization fears

https://finance.yahoo.com/news/banks-tumble-svb-ignites-broader-173433069.html

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

"(Reuters) - The S&P 500 bank index tumbled nearly 6% on Thursday in its biggest one-day drop in over two years as investors fled the industry following SVB Financial Group's share sale announcement and crypto bank Silvergate's decision to wind down operations.

Shares of SVB, whose operating segments include Silicon Valley Bank, slumped over 50% in their deepest one-day drop on record after the company announced a $1.75 billion share sale late on Wednesday. SVB is battling cash burn due to declining deposits from startups struggling with a venture capital funding drought.

San Francisco headquartered First Republic slumped 15% after hitting its lowest level since October 2020.

The SPDR S&P regional banking ETF dropped more than 7% to its lowest level since January 2021.

Major U.S. banks were also hit, with JPMorgan and Bank of America both down more than 5%.

First Republic and SVB were the S&P 500's deepest percentage decliners in Thursday's trading session, while JPMorgan's loss weighed more than any other stock on the S&P 500's 1.1% decline at mid-day.

"The Silicon Valley raise got everybody nervous about people's capital levels and what deposits are doing. A lot of institutional investors don't feel great about owning certain banks right now," said R.J. Grant, head of trading at Keefe, Bruyette & Woods in New York.

"It just gets people freaked out because Silicon Valley, historically has been a very strong, well-run bank. If they're having issues right now, people are wondering what about other banks that are lesser quality and that don't have the reputation that Silicon Valley Bank has."

Investors were also grappling with the decline of cryptocurrency-focused lender Silvergate Capital, which dropped 22% after saying late on Thursday it planned to wind down operations and voluntarily liquidate after it was hit with losses following the collapse of crypto exchange FTX.

Shares in Silvergate peer Signature bank fell 9.4%."

MY COMMENT

BANKS and FINANCIAL COMPANIES are one category of stocks that I will NEVER buy. The good old days of banks being steady and reliable companies to own has been long gone for a good while now.

These businesses seem to have lost all ability to evaluate risk. They seem to just have no clue what they are funding or trading in.

 

Looks like we had the same thought Smokie as the posts above crossed each other.

 

All in all what we are seeing today.....a total inability of companies and executives and leaders to evaluate risk and plan for long term business success.......seems to be becoming the norm. You just throw everything against the wall and hope for the best.

Of anything I have seen over the past 20-30 years......and all the talk over that time of a "NEW NORMAL" in the markets.....I believe that this might actually be the........new normal. By this I mean the short term day to day markets lurching from crisis to crisis and freak out, to freak out, as short term traders get crazier and crazier.

As a result the gap between the short term and the long term WILL grow more and more extreme.

There seems to be a real and significant....lack of business ability and common sense becoming the norm in our society today. Business leaders are just swinging for the fences and hoping that somehow it all works out. Analysis of risk seems to be a lost art. We are also seeing the ability of business leaders.......to project and extrapolate the future...becoming a lost art.

When I was a business owner....I would say that the primary characteristic that separated the really successful businesses from the failures and those that just muddled along......was the ability of the owner or management to......"SEE".....the future years in advance. I can honestly say I NEVER had a situation of being surprised by business conditions or events a few years down the road.

This is simply extremely POOR MANAGEMENT and POOR PLANING. My view is that the reliance on computers has now stripped many managers and executives and business owners of any ability to evaluate and plan for FUTURE financial conditions. It is all short term vision now with no ability to.....SEE THE FUTURE.

The same thing is happening in all aspects of our society. Take medicine as an example. In the old days you had to be able to diagnose based on your physical exam, your knowledge, your experience, and most importantly your instincts......the "ART" of medicine Now you go to the DR and they have their nose buried in the computer and most of them dont seem to have any old fashioned medical common sense. I see this happening in all sorts of professions and businesses. They are so tied to the computer telling them the answer that no one seems to have any instinctual, inherent, abilities anymore.

I used to say....put me in any business.....regardless of knowing anything about it at all.....and....give me free access to go anywhere and talk to anyone.......and.... within 1-2 days I could tell you their weaknesses and their strengths and formulate a basic plan for the success of that business. I knew many business people like this. NOW.....those days appear to be LONG GONE. You cant run a business as a TECHNICIAN......you have to have instincts and a feel for business.....in addition to the management, marketing, and financial skills.

Of course......dont even get me started on what our EDUCATION SYSTEM has been pumping out over the past 10 years.

This is why when a visionary leader like ELON MUSK comes along....everyone is surprised at what they can achieve. The reliance on a computer telling you the answer is totally misplaced and a BIG JOKE. You can stare at that screen all day long.....and it will not help you one bit if you have no inherent business instinct and ability to operate a business.