The Long Term Investor

By the way....here is the FED schedule for the rest of the year:

May
2-3

June
13-14*

July
25-26

September
19-20*

Oct/Nov
31-1

December
12-13*

Right now we will have about SIX WEEKS of peace....before the FED is back.

 

Thank you roadtonowhere.

I will say....anyone that wishes needs to post on here. The best content for everyone.....me included.....is a variety of opinions on any investing topic. The best way for ALL of us to learn and thrive as investors is to be exposed to different opinions....especially those that are different then our own.

 

NOW....today. A GREAT open today. ALL the averages are UP nicely and very strong. This is a reflection of the FED doing exactly what most people expected and the dissipation of the banking failure panic.

We now have a nice six week span with NO FED activity other than constant talking and hectoring. Nicely the little banking issue has somewhat muzzled the FED. They now have to walk a finer line.

It is also apparent that the end of their rate hikes is now probably one more increase from reality.

I heard an "expert" on business TV today saying the same thing....that the FED would only do one more increase so......NOW.....was the time to come back into the markets......"even though they have been down". Of course.....the markets have NOT been down. They have generally been UP this year and the SP500 has generally been UP since July of 2022. Anyone that has been sitting out till now has lost a lot of money by missing the current RALLY.

SO.....he was wrong as most of the "experts" usually are....but...his comment was confirmation that the Wall Street types are now coming around to the view that the FED is nearly done and the markets as a result will have a......"PROBABILITY".....of being nicely positive.

Of course....those of us that are LONG TERM INVESTORS.....have captured all the gains of the past six months and are going to thrive going forward.

 

I like this little article.

Clouds and Silver Linings on Bank Fears and Inflation

https://www.fisherinvestments.com/e...nd-silver-linings-on-bank-fears-and-inflation

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

"The Fed’s latest rate hike teaches some lessons.

For a week and a half, investors have wondered how the Fed would balance competing fears of inflation and a bank panic. Now we know the answer: Hike rates by a quarter point. Any more than that, and they would get accused of being aloof to the risk of a bank run. But if they did nothing, they would give the appearance of being more worried about the banks than they have let on. When in doubt, take the non-committal third way! Markets waffled at first, flipping between a small rise and small decline, but stocks fell in the last hour of trading for the S&P 500 to finish down -1.7% on the day. We wouldn’t read into that, given post-Fed moves stem mostly from day traders’ models competing with one another, especially when many such traders likely also watched Treasury Secretary Janet Yellen’s concurrent comments to the Senate. Instead, we suggest taking advantage of a small learning opportunity in the Fed’s statement.

We refer to paragraph two, sentences one and two: “The U.S. banking system is sound and resilient. Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation.” This sort of jibes with a New York Times article we read this morning titled, “How the Banking Crisis Has Had the Same Effect as a Fed Rate Increase.” The Fed seems to be trying to convince us all that it doesn’t need to continue with bigger rate hikes because banking jitters are doing its job for it.

That may come true in part. As we have noted in our coverage of the banking sector’s travails, the failure of Silicon Valley Bank and continued worries about regional banks could prompt institutions to take less risk. As long as people are talking about deposit flight—and weighing tightening regulations or reinstating reserve requirements—there is a strong case for banks to decide a dollar in reserve is better than a dollar lent. The first batch of post-Silicon Valley Bank lending data comes out on Friday and could very well show some tightening.

However, we find it a bit puzzling that this would dictate a darned thing about interest rate policy. You see, the Fed has raised the fed-funds target range from 0.0 – 0.25% to 4.75 – 5.0% since last March. That is very nearly five full percentage points. Yet in the week ending March 8, bank lending was 10.4% above the same period a year prior.[ii] That is twice the growth rate in the first full week of March 2022, 5.2% y/y.[iii] So while the Fed “tightened,” loan growth accelerated bigtime.

Seems to us a better way to look at this is to say banking jitters have the actual potential to do what everyone incorrectly believed Fed rate hikes would do. They could slow lending and economic growth, further tamping down the inflation rate. Rate hikes didn’t and, in our view, weren’t likely to do this. Those who argue they would presume that the fed-funds rate is the price of money. In reality, the fed-funds rate affects only the rate at which banks borrow from one another. That gave it some influence before 2008, when regulations incentivized banks to rely less on deposits for funding. Now, in a post-2008, post Dodd-Frank world, they are much more deposit-reliant. Notwithstanding potential changes over the past week, they also had far more in deposits than they needed or wanted, so they didn’t have to raise rates to keep customers put.

Despite Fed rate hikes, the average savings account rate is up from 0.06% a year ago to just 0.37% now.[iv] Average CD rates are modestly higher than that but far below comparable maturity Treasury yields, and banks don’t get most of their funding from time deposits. So with most of their funding base costing little, they have been able to lend at higher profits as higher 10-year US Treasury yields boosted mortgage and business lending rates. Hence, much faster loan growth. That is good news from an economic standpoint, as it means rate hikes alone don’t have the power to slow growth or cause recession. We think it is a big reason why GDP closed last year at new highs.

But that continued growth also created the perception that the Fed had to do more to slow inflation. It created a good news is bad news mentality toward economic data released in February and March—stronger-than-expected results, according to most observers, meant more rate hikes and eventual pain. So to the extent that bank jitters slow the pace of rate hikes, maybe that helps sentiment. Everyone says the Fed is bailing out the banks right now. Maybe, in reality, the banks are bailing out the Fed. Maybe their heightened risk aversion will finally make the Fed look like it has some modicum of control over borrowing and that will enable everyone to move on from inflation dread.

Yet we would be remiss not to point out a potential cloud in this silver lining. Lending is the lifeblood of economic growth. It is the source of a big chunk of investment capital. We wouldn’t be surprised to see it slow some from currently quick rates. But if it slows sharply, whether through voluntary bank deleveraging or new regulations, we could finally get the big recession everyone has been on high alert for over the past year. If that comes as a surprise to people who are cheering slower inflation, it could mean bad times for stocks. Make no mistake: We aren’t bearish now. We think a new bull market is close by, if not underway since last October’s low. We think bank fears are out of step with reality. But we also aren’t blind, and lending will deserve a close look over the period ahead. "

MY COMMENT

YEP the banking issue that is likely to cause a pull back in lending and perhaps somewhat of a credit crunch.....has potential to do what the FED can not do. Cause a drop in inflation. No doubt banks will now pull in their head and focus on safety and survival.....especially the small banks. Even though most banks are not in trouble they will become more conservative.

This will impact small business. Small business is the REAL guts of the economy. This has the potential to be another problem for small business which has already been struggling with worker issues and other problems due to the economic shut down.

For BIG banks and BIG business....I dont see much changing.

I DO agree that the "LIKELY" course is that we are in fact in a BULL MARKET and the banking panic is out of step with REALITY. However....there will be some drag on the economy due to the psychological impact on small bank management pulling back.

As an investor and observer......I think the FED may get a little bit of a drop in inflation due to the banks....but...there is no way in the world they are going to get anywhere near their....ridiculous target.....of 2% inflation. It is a different topic....but....my view of the sweet spot in the economy is inflation of 3-4%. That would be in line with historic norms.

 

WOW the averages are BOOMING right now. The NASDAQ is UP by 2.20%. The SP500 by 1.54%.

We are seeing the......"sudden"....realization that the FED is now nearly or even perhaps ....even .....done with rate hikes. It is always a shock when the Wall Street experts......suddenly.......see what has been apparent for a long time. They are the ultimate herd animals......and...that will be a very good thing for investors that stood firm for the long term over the past 18 months. They are going to FLOOD into the markets.

We are already seeing the dismal results and losses last year getting ERASED from the statistics and data. For example today the SP500:

5 days +1.06%
1 month +0.11%
3 month +4.69%
6 month +6.51%
YTD +4.23%
1 year (-10.19%)
3 year +57.48%
5 year +54.62%

As we move forward the impact of last year will continue to lessen and lessen. That is what happens when you are talking about many years of investing results....the long term....versus focus on one bad year (2022).....the short term.

 

To continue with the above little theme.

Stocks open higher after Fed signals rate hikes nearing end: Stock market news today

https://finance.yahoo.com/news/stock-market-news-today-march-23-133206761.html

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

"Stocks opened higher Thursday morning after the Federal Reserve on Wednesday signaled its rate hiking campaign may be nearing an end amid concerns about stability in the global banking system.

Shortly after the opening bell on Thursday, the S&P 500 (^GSPC) was up 0.9%, the Dow Jones Industrial Average (^DJI) higher by 0.6%, and the technology-heavy Nasdaq Composite (^IXIC) led the way, rising as much as 1.3%.

Other major assets on the move on Thursday included WTI crude oil, off 0.6% to trade near $70.50 a barrel. Crude oil slumped to its lowest level in nearly two years earlier this week amid worries over global demand and a rally in the dollar.

The 10-year Treasury yield was little-changed early Thursday, down about one basis point to trade near 3.49% after yields moved lower on Wednesday following the Fed's latest economic forecasts suggested rate hikes are closer to ending than previously expected.

On Wednesday, the Fed raised the target range for its benchmark interest rate by 0.25% as expected, bringing the range for the fed funds rate to 4.75%-5%, the highest since October 2007.

Updated economic projections from the Fed, however, suggested only one more 0.25% rate hike is likely this year, a forecast that is in-line with what the central bank said in December but a reversal from Fed Chair Jay Powell's signaling earlier this month that rates would likely need to go "higher than previously anticipated."

"The outcome of the March Federal Open Market Committee (FOMC) meeting was broadly as we expected," wrote Bank of America economists led by Michael Gapen. "That said, the Fed has taken on board some amount of tightening in credit standards and terms as a result of the recent stresses that emerged from several regional banks."

Speaking in a press conference following Wednesday's policy announcement, Powell said some of these tighter financial conditions would have the "same effect" as raising interest rates. As a result, Powell said several Fed officials were including the bank crisis and financial market fallout in their forecast for fewer rate hikes over the balance of this year.

"Powell stuck with the Fed's narrative that there is still a path toward a soft-landing or returning inflation to target without pushing the economy into a recession," wrote Ryan Sweet, Chief U.S. economist at Oxford Economics, in a note on Wednesday. "However, that path has become narrower because of the pressure on the banking system."

Away from the index-level reaction to Wednesday's Fed news, several big tickers related to the crypto industry were on the move after news since Wednesday's close.

Coinbase (COIN) stock was down as much as 16% in early trade on Thursday after the company disclosed late Wednesday it received a Wells Notice from the SEC, which warns companies of pending action from the regulator.

Shares of Block (SQ), the payments company formerly known as Square, were also down big early Thursday, falling as much as 18% after short-seller Hindenburg Research released a new report on the company which alleged up to 75% of the company's accounts were in some form fraudulent or second accounts from existing users."

MY COMMENT

It is OBVIOUS that the FED is only going to do 1 or 2 more rate hikes. This is NOT due to the banks.....it is because they will hit their target rate of 5.5%. There is a limit to how high they can increase rates and they are now within one or two hikes of that limit. The banks are just icing on the cake.

Of course it is very difficult for the financial media to admit that the FED will soon be done. After all......this has been a great fear mongering topic for them and their clicks. BUT....yes the FED is just about done.

AND.....it is absolutely typical that the "experts" are now waking up to this FACT......that has been obvious for the past six months. The FED has been very clear in what they were going to do and how they were going to do it.

As a long term person I DO NOT invest according to the FED or the economic data. I am fully invested ALL the time. BUT.....the short term....the rest of the year.....looks like we could be in for a strong market. As usual QUALITY BUSINESSES.....with strong financial business fundamentals.... will be rewarded.

 

Speaking about the FED. We will continue to see the media and other "experts" push the ridiculous view that the FED is going to start cutting rates in 2023. This will NOT happen.

I see this as TRADER talk. This view is moronic.

I am also STILL of the view that there WILL NOT be a recession. there is simply NOTHING happening in the economy to signal a recession.

 

I guess this is as good an indicator as anything in the modern era.

Banking crisis: Goldman Sachs sees 'encouraging sign' in Google search data

https://finance.yahoo.com/news/bank...ing-sign-in-google-search-data-140432587.html

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

"Maybe Treasury Secretary Janet Yellen and Fed chief Jerome Powell have done just enough — for now — to temper consumer concerns about the state of the U.S. banking system.

Google Trends search data crunched by Goldman Sachs show that the large initial increase in the public focus on banks perceived to be under stress has cooled over the past week (chart below). Search trends related to bank withdrawals also initially increased amid the busts this month of Silicon Valley Bank (SIVB), Signature Bank (SBNY), and Credit Suisse (CS) but have since normalized.

Goldman goes on to add that broader economic confidence amid the rolling bank crisis has only experienced a moderate decline, as indicated by the investment bank's GS Twitter Economic Sentiment Index.

Goldman's chief economist Jan Hatzius says the data is an "encouraging sign."


Fear on the banking crisis normalizes a touch.
As consumer fear has pulled back a bit, bank stocks have caught a bid — particularly after Yellen promised further support for lenders if needed.

The KBW Bank ETF (KBWB) — which counts JPMorgan (JPM), Citigroup (C), and Bank of America (BAC) as its top three holdings — is up about 5% since last Friday's close. The closely watched bank ETF is down 24% in March to date, per Yahoo Finance data.

"U.S. large cap banks are cheap enough to own here, but the Fed’s stress test and CCAR process this June could pose a risk if regulators decide these firms should bolster their capital positions by cutting/merely maintaining dividends and stock repurchases," DataTrek co-founder Nicholas Colas explained on the push higher on bank names this week. "This outcome is not our own base case, but recent bank failures may spur regulators to be more cautious than they would otherwise have been."

MY COMMENT

I guess in the modern era.....the Google Search Trends......and...the Twitter Sentiment Index....are now the best indicators of the economy and consumer sentiment. Says a lot about where we are right now in society......and in the world of economics.

In this specific case I do believe that this is a positive indicator of the PSYCHOLOGICAL impact of all the banking stories lessening and moving to irrelevance.

 

This is the sensational story of the day.

Block shares plunge 19% after short seller Hindenburg says Jack Dorsey’s company facilitates fraud

https://www.cnbc.com/2023/03/23/block-shares-plunge-after-hindenburg-says-jack-dorseys.html

MY COMMENT

I really have no comment. I dont follow this company.

 

For many this is an important issue.

Retirement vs. emergency savings: How to prioritize in a shaky economy

https://www.cnbc.com/2023/03/23/retirement-savings-vs-emergency-fund-how-to-prioritize.html

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

"Key Points

• When you’re on a tight budget, It can be tough to decide between retirement savings and your emergency fund — especially during periods of economic uncertainty.
• Although the 401(k) contribution limit jumped to $22,500 for 2023, experts say you shouldn’t forgo emergency savings to max out your plan.

When you’re on a tight budget, It can be tough to decide between contributing to your retirement savings or to your emergency fund — especially during periods of economic uncertainty.

And the banking crisis has added to fears of a recession, with further stock market volatility triggered by the collapse of Silicon Valley Bank and Signature Bank.

Although the 401(k) contribution limit jumped to $22,500 for 2023, experts say you shouldn’t forgo emergency savings to max out your plan.

More than half of savers are prioritizing short-term financial goals in 2023, including emergency savings, according to a recent study from Fidelity Investments. And a recent Personal Capital survey found building an emergency fund is a top priority for 2023.

“It’s always a balance,” said certified financial planner Catherine Valega, founder of Green Bee Advisory in Boston. While maxing out your 401(k) should be the goal, your emergency savings is also important, she said.

Aim for your full 401(k) match

Leslie Beck, a Rutherford, New Jersey-based CFP and owner of Compass Wealth Management, said she has a “rule of thumb” for how to decide between retirement and emergency savings.

She always recommends contributing enough money to your 401(k) to get the full company match. If your emergency savings are short after that, you should “definitely” divert any additional funds to build up that cash reserve, she said.

If you’re single, Beck suggests keeping “close to a year’s worth of essential expenses” to cover necessities such as your home, food and utilities. Other advisers have recommended three months to one year of expenses, depending on your situation.

“You should have a year’s worth [of essential expenses] in case there’s a downturn in the employment market, which we may or may not be heading into,” she said, noting that it often takes longer than expected to find a job after a layoff, especially for higher-compensated employees.

However, her recommendation changes for dual-earning couples. “I cut that back to six months, maybe even three months, depending on what industry you’re employed in,” she said.

And there may be some flexibility if you have access to a home equity line of credit, which may be another source of cash for emergency expenses, Beck said. But you need to be “very judicious” when tapping equity because borrowing after a job loss can put your home at risk, she said.

Valega suggests an emergency fund of 12 to 18 months of expenses, admitting that she’s “more conservative than most,” but says the exact number depends on your career sector and personal preference. For example, she may encourage clients in tech to set aside more than health-care workers.'

MY COMMENT

My view is that the number one priority should be to capture that FREE MONEY that is the 401K match. After that other financial needs can come into play and take priority.

 

You seem to have bought the.....long term ticket......Smokie. Or is it called......the lifetime pass.

Your comment seems right to me. I was not watching the markets in mid-day. But I glanced at my phone and saw that the averages had backed off from the morning highs. I hate to have that money dangled in front of me and than have it snatched away by day end.

I actually STILL had a very nice medium gain today. My only down stock was HON. ALL of the other nine were nicely positive. As a result I beat the SP500 by 0.76% today in my ten stocks.

 

I do like the turmoil that the banking issue has created for the FED......in terms of them trash talking the markets....a little confusion is a good thing. It will hopefully either shut them up....or....cause them to moderate their comments. In any event we are now looking into the jaws of the FINAL RATE HIKES.

 

As I said......I was out of touch most of the day today. Looking at a chart of the SP500 I see that at one point about an hour and forty minutes before the close the SP500 went RED. How disgusting....LOL. I am glad I was not paying attention. Looks like the traders or speculators or short sellers jumped in and caused a big sell off. We were lucky that it recovered before the close.

FINAL day of the week tomorrow. As of the close today we are heading to a positive week for the SP500. We need to hang on and finish out the week in style tomorrow. Just like in sports.....the markets need to FINISH STRONG tomorrow. We do NOT need to snatch defeat from the jaws of victory.

 

No doubt the first REALLY BIG MILESTONE for any investor is to hit the first $100,000 mark. I remember it well. It seemed to take forever and when I got close it would be snatched away from me by a down market for a while. It took me some time to hit that $100,000 mark and than exceed it by enough that I was not dragged back below it again.

BUT.....once you hit and breach that level.....the next milestone and all after will come quicker and quicker.

'It's a b----, but you gotta do it': Charlie Munger says that your first $100K is the toughest to earn — but most crucial for building wealth. Here's why it's such a magical milestone

https://finance.yahoo.com/news/b-gotta-charlie-munger-says-140000516.html

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

"Ah, the sweet sound of six figures.

Respected investment and money management experts agree that amassing your first $100,000 is a critical early milestone on the path to long-term wealth.

Billionaire investor Charlie Munger may be the most famous advocate for the theory, based on his colorful advice offered more than two decades ago to an audience member at an annual meeting of Berkshire Hathaway shareholders.

“It’s a b—-, but you gotta do it,” Munger said. “I don’t care what you have to do — if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.”

Why $100K matters so much

Why is that figure so important — especially when you consider that for many investors and savers, the goal is often much higher?

After all, $100,000 back in 2002 now amounts to roughly $166,000 in today’s dollars. And with inflation in the U.S. still high, that sum doesn’t go as far as when Munger delivered his cheeky take.

Then again, Munger didn’t elaborate on just how much that first $100,000 could grow over time, even if left alone. Invested at a modest 5% return, you wouldn’t have needed to add a single penny over 21 years to see that stash grow to $278,596, per compound interest calculators like this one.

The lesson? What comes before — and after — that first $100,000 makes all the difference.

Consider this example: Debbie, a young worker who diligently saves and invests $10,000 a year through her employer’s 401(k) plan and nets an annual return of 7%, would need slightly less than eight years to reach a net worth of $100,000.

This is where things get interesting: The same annual investment, at the same rate of return, would produce Debbie’s next $100,000 in only about five years. Reaching the next uptick on that sixth digit would take even less time.

As a result, Debbie learns that consistent saving — fueled by compound interest — can get you to that $100,000 level and rocket your net worth if you stay the course.

It’s fair to wonder: What’s so important about $100,000 versus, say, $90,000 or $95,000? Besides the literal extra $5,000 or $10,000, there’s plenty of hustle and psychology at play.

Here’s what Munger and others stress.

Working for it

People love round numbers; maybe you do, too. Of course there’s no tangible trigger at which $100,000 becomes a more meaningful driver of wealth than $99,999. But there’s also no denying the satisfying psychological metric of $100,000. It’s six figures versus five, making it a desired milestone for salary or other accumulations of monetary worth.

Getting to $100,000, especially in one’s younger years, isn’t easy. Most of us can’t get there quickly from a standstill. Reaching it usually means earning promotions and salary bumps at work; significantly underspending your income; or good old-fashioned side hustling like driving for a ride-hailing service or taking on freelance assignments.

But if wealth accumulation begins with more income and less expenses, compound interest does the heavy, heavy lifting.

Then not working for it

The earlier you start to save and invest, the more time you’ll have to grow your money. It’s much like a garden, where you don’t have to hover obsessively over a grapevine to let time do its work. Invested money can earn interest, dividends and capital gains. That’s why Debbie’s time between her first $100,000 and $200,000 is far less than when she went from zero to $100,000.

Earning your first $100,000 can provide financial stability to help you weather unexpected financial storms. But there’s more: It can also give you confidence to take calculated chances with your investments by allowing for more high-risk, high-reward opportunities.

By no means is $100,000 a license for recklessness. And that number, let’s face it, can feel a bit intoxicating, a temptation to spend big. But viewed properly, $100,000 can provide a goal to shoot for, a foundation for wealth building, and the opening chapter of your incredible financial success story.

MY COMMENT

We have all been there. If you are still reaching for that first BIG MILESTONE.....take heart....you will get there. It is simply a function of TIME.....SAVING......and....INVESTING in a rational and reasonable fashion.

YOU CAN DO IT.

 

Good article about JP Morgan and other Smokie. They should tell their employees this.....since they are the ones that will have to pick up the pieces if things go really haywire.

Or it may just be a PR move as they privately tell their employees to POACH AWAY.