Agreed. If we could only get them to not be obsessed with that 2%. This is where the FED has a real good chance to screw up royally. I don't know if they have it in them not to tinker though.
Since we are talking about economic data. Why the Job Market Shouldn’t Factor in Forecasts https://www.fisherinvestments.com/e...y-the-job-market-shouldnt-factor-in-forecasts (BOLD is my opinion OR what I consider important content) "Spoiler alert: It is a late-lagging indicator. “Soft landing” remains the summer’s hottest phrase, this time courtesy of July’s Employment Situation Report—better known as the US jobs or unemployment report. Slower growth in nonfarm payrolls had everyone buzzing the widely hoped-for return to slower inflation without a recession was even likelier thanks to the “goldilocks” job market. It all stems from the fallacious Phillips Curve, which (wrongly) purports wage growth drives inflation. But, to us, there is an even broader, less-technical problem at work. Simply, labor markets are late-lagging indicators. They predict nothing, and they don’t determine the economic fundamentals that help drive stocks. For a perhaps extreme example, consider Exhibit 1, which shows the monthly change in nonfarm payrolls from mid-2007 through 2010. The recession that accompanied the global financial crisis started at the end of 2007 and ran through June 2009. As you will see, employment started falling in February 2008, just by a smidge, which is actually early compared to recessions in the 1970s and 1980s. But at the other end, hiring didn’t turn positive until March 2010, nine months after the recession ended. Jobs lagged bigtime. Exhibit 1: The Lagging Job Market Source: St. Louis Fed, as of 8/4/2023. Consider this from a business owner’s perspective, and jobs’ lag makes sense. You spent a lot of money recruiting, training and keeping your employees, and they are all great. As a (hypothetical) person, maybe you even care about them. When things start turning down, the last thing you want to do is let any of these good people go. So you do everything you can to ride things out with your current headcount, like cutting hours and spending that was a nice-to-have in good times but isn’t essential. Only when all else fails and you have to let someone go for the sake of the business’s survival do you bite the bullet. Then, when things start getting better, you do everything you can to delay the expense of taking on someone new, just in case the recovery is a false dawn. It is only once you have exhausted productivity gains and can’t keep up with demand with your current crew that you will put out the Help Wanted sign. Or, more simply, economic growth creates jobs, not the reverse. So we don’t think it is correct to draw any forward-looking conclusions from July’s jobs data. The widely hyped slowdown in services hiring? Seems to us like an after-effect of Q2’s slower services spending.[ii] The Institute for Supply Management’s services Purchasing Managers’ Index has been in the low 50s since March, slowing from a mostly mid-50s range in the months before.[iii] GDP growth overall slowed in Q1 and Q2 from 2022’s second half, too, while loan growth has cooled.[iv] The vast majority of coincident and leading indicators have signaled a modest slowdown for months. To us, it seemed like a foregone conclusion that services jobs would eventually tie a shiny bow of confirmation on this. That is what we see here. We get why people want the jobs report to be predictive. It is that rare thing—a timely set of hard data. It seems like a near-instantaneous read, coming out the first Friday of the new month. But that timely release belies the late-lagging inputs, making it of no use in figuring out what comes next. So no, we wouldn’t draw big conclusions about the economy’s soft-landing chances or how Goldilocks things are. July’s jobs report simply confirms what we already knew—that the US economy was rolling onward and upward earlier this year. That is nice to know, but stocks are forward-looking and pricing in the likely economic and earnings growth over the next 3 – 30 months. Jobs won’t tell you about this." MY COMMENT ALL of the......supposed.....market reliance on economic data is totally misplaced. this STIFF does not mean anything to the real markets....the long term markets. I remember not too long ago that this economic data was NOT in the news day after day week after week. It was simply an afterthought to the markets and business news. It has just been over the last 10-15 years that this stuff has taken on more and more importance in the financial media. BUT....I dont attribute importance to something just because it is the focus of the media. I take all this economic stuff with a total grain of salt. It is all LAGGING and not really relevant to the long term results for investors.
I like this little article. Against Cassandras: The performance impact of Cassandras https://klementoninvesting.substack.com/p/against-cassandras-the-performance (BOLD is my opinion OR what I consider important content) "I have discussed several common themes promoted by Cassandras and doomsayers over the past couple of weeks and why I think fears about these issues are overblown: The US Dollar Interest rate normalisation The government debt bomb Inflation The Euro World War III They may come to pass, but I think it is unlikely that they will. But of course, these themes tend to be tail risks. If they materialise, the damage to investment portfolios will be large, so even if they have a small probability of happening, isn’t it worthwhile listening to these Cassandras to prepare for such events? The argument about the usefulness of tail risk hedging has been going on for decades and reasonable people can come up with different conclusions, but in the opinion of your humble writer, the performance track record of tail risk strategies is so poor that you would be ill-advised to even think about hedging such extreme events. I want to make my point both with the help of a practical example and a simulated performance. First, let’s look at a fund manager who has become famous for hedging his portfolio in the run-up to the 2008 financial crisis and not losing money for his clients during this fateful episode. John Hussman has been running his Strategic Growth Fund for more than two decades. His fund tries to beat the S&P 500 through two components. First, he is a traditional stock picker, selecting stocks in the US that he thinks will outperform the index overall. Second, he can temporarily hedge all or parts of his portfolio against downside risks through the use of derivatives. Before 2008, Hussman was convinced that US equity markets were overvalued and he hedged his portfolio against downside risks, which is why he was so successful in preserving capital for his investors. Unfortunately, Hussman has been convinced since 2010 that US equity markets are overvalued once again. By 2020, with the onset of the pandemic and then the bear market of 2022, one could argue, Hussman has eventually been proven right. So how did his fund perform? The chart below shows the performance of the Strategic Growth Fund taken from Hussman’s home page. He shows the performance of the S&P 500 together with his portfolio of selected stocks (i.e. his track record as a stock picker) and the performance of the portfolio with tail risk hedges. As you can see, Hussman is a good stock picker and has outperformed the S&P 500 by a significant margin before the tail hedges were implemented. Unfortunately, his clients didn’t get to enjoy this performance, because what they got by investing in the fund was the stock selection including the protection against downturns in expensive markets. And that performance isn’t pretty. Over the three years ending 28 February 2023, the annual return of the Strategic Growth Fund was 6.95% compared to 12.15% for the S&P 500. Since the inception of the fund, the annual return of the fund was 0.99% compared to 6.54% for the S&P 500. Performance of Hussman Strategic Growth Fund Source: Hussman Funds But I don’t want to pick on John Hussman. He is a fund manager who I admire for his intellectual prowess and who does his best and puts his money where his mouth is. And that is much more than can be said of all the doom and gloom prophets who write investment letters but never show the performance of their recommendations or who sometimes even invest in contradiction to their pessimistic outlook. So, let us look at a more systematic analysis of tail hedging strategies done by Roni Israelov and David Nze Ndong. They looked at the performance of three different ways to protect a portfolio against extremely unlikely but potentially severe losses and how they performed in the years of the Covid pandemic and the bear market of 2022. To be precise they looked at a simple put protection strategy where investors buy the S&P 500 together with out-of-the-money put options as a first strategy. The second strategy was to buy straddles and strangles that allow gaining long volatility exposure (something akin to what many hedge funds do to hedge tail risks). And finally, they tested a simple strategy of going long VIX futures. In the end, they found that neither of these tail hedging strategies worked well over the 2020-2022 period despite markets going through the worst turmoil since the financial crisis. In fact, the authors note that the performance of the different tail hedging strategies varied by a large amount and was timing and path dependent. In other words, if you can time the markets well, tail hedging can be profitable. To which I say that if you can time the markets well, you don’t need tail hedging because you can simply sell your stock holdings and then buy them back when the turmoil is over… To give you an example of what these tail hedging strategies do to a portfolio take a look at the chart below. It shows the total return of the S&P 500 together with two put protection strategies. The monthly strategy buys 5% out of the money puts every month, while the quarterly strategy buys 10% out of the money put options that expire every quarter. So, you are protecting your portfolio every month or quarter against large losses. Here is the performance since 2004: Protective put strategies since 2004 Source: Liberum, Bloomberg The average annual return of the S&P 500 since 2004 was 9.2% compared to 6.6% for the monthly put protection strategy and 7.0% for the quarterly put protection strategy. Even if you somehow had the genius to not hedge your portfolio until the start of 2020 and then implement the put protection and keep it in place until today, you would have lost money compared to just holding the S&P 500. And that is in a period when we had the worst pandemic in 100 years and a bear market in the S&P 500 as well as a spike in inflation to 40-year highs. In fact, the outperformance you accumulated during the pandemic year 2020 was gone by mid-2021. In order to make money, the Cassandras would have to be able to time both the start and the end of the pandemic with very high precision. Protective put strategies since 2020 Source: Liberum, Bloomberg In sum, if you listen to Cassandras, I am very confident, you will lose money in the long run. The only way to make money with doom and gloom forecasts is to time them both on the way in and on the way out very precisely. And I know nobody, who can do that. In fact, the simple observation that the Cassandras all seem to be bearish all the time should tell you one thing: The only ones making money from these doom and gloom forecasts are the ones who make them." MY COMMENT Does the list of fear mongering topics at the start of this article look familiar? could you add a few more items to that list? YES......these are the ever rotating daily fear topics for the financial media. Many of these topics are pushed by the very short term traders to drive their trading profits. they are NOT relevant to long term investors.....not because they do not matter.....but because many of them represent extremely rare events that will NOT happen. If you want to be a NEGATIVE investor......there is some MONSTER UNDER THE BED for you to worry about every day. I prefer to be a POSITIVE investor that recognizes the power of long term investing based on business results......and the academic research. In other words actual......PROBABILITY. AND......NO......."you" can not time the markets. I invite anyone that thinks they can, to start a thread here and post each market timing entry and exit point for their portfolio...........in real time. I have NEVER seen anyone do this whether they are a professional or a retail investor......it is IMPOSSIBLE.
Watching Linda Yaccarino talk on Squawk about Elon’s X … Just got me thinking… Boss you should open a social platform and call it W
A very strong day for the markets at this moment. Of course we are only talking about the first 50 minutes of the market day.
YES.....I am in discussions with Elon Musk about adding my "w" and also my "y and z" to his "x" brand lineup. Do you think it is a simple coincidence that Musk has now moved all his operations to the Austin Tx area......right where I live?
Looking at my account last night I see that I am still over +30% for the year to date. There has been a lot of FLAILING AROUND in the markets lately. My view.....just the normal operations of the day to day markets. That long term line rising to the right on a chart of the SP500 is made up of thousands of data points that are UP and DOWN on a weekly basis. That is just how a normal market works. The short term is erratic and dirty. The constant 24/7 modern media environment makes it even more so.
I had to look a little early today....EVERY stock is UP at this moment. Most of them are UP by over 1% for the day. BUT......there is a long way to go. SO......I have zero expectations for how we close.
You know....you guys got me thinking. Perhaps I can get Musk to agree to a tag term MMI match. The line up would be Musk and "W".....versus....Zuckerberg and Jack Dorsey. Of course since I am "old".....I would be allowed to use an ASP (no, not the snake, although that would work too) in the octagon.
OK.......on the bill.....Zukodany and Emmett.......versus.......Gates and Bezos. This bill is shaping up to be the fight of the century.
YEAH....lets make this a major media production....streaming......film rights.....etc, etc. We are lucky to have Emmett on our team to handle all the media and film. I see this as a major Netflix series.......like Formula 1.
I like this little message. A Few Stories About Big Decisions https://collabfund.com/blog/a-few-stories-about-big-decisions/ (BOLD is my opinion OR what I consider important content) "In 1964, Warren Buffett owned shares in an old industry company with fading prospects. The company’s CEO viewed Buffett’s purchase as a threat to his job security, and offered to buy the shares back at a premium. Buffett was eager to sell, tired of watching the business struggle. The two struck a deal: The company would buy all of Buffett’s stock at $11 1/2 per share. Buffett received a letter shortly after formalizing the deal. The company would still buy all of his stock, but at $11 3/8 per share. “It really burned me up,” Buffett recalled. “You know, this guy was trying to chisel an eighth of a point from having, in effect, shaken my hand saying this was the deal.” Buffett confronted the CEO, who argued there was never a deal to begin with. That made him even more incensed. So rather than selling, Buffett began buying as much of the stock as he could. He eventually purchased more than a third of the company. Biographer Alice Schroeder writes that, above all, Buffett’s motivation for buying more of the company’s stock was to stick it to the CEO who tried to screw him out of twelve cents per share. The company – Berkshire Hathaway – became Buffett’s masterpiece. A similar story: In 1955, recent college graduate Morris Chang was offered two jobs: One at Ford for a salary of $479 a month, and one at electrical company Sylvania for $480 a month. Ford seemed like the better opportunity, but Chang asked the recruiters to match his Sylvania offer – a mere $1 a month more. Ford declined. So Chang took the job at Sylvania, where he learned about – and became an expert in – the growing field of transistors and microchips. Chang eventually founded Taiwan Semiconductor, which today is worth almost half a trillion dollars and produces 60% of the world’s chips. Henry Ford knew the automobile would change the world. The rest of the world wasn’t so sure. In the early 1900s, cars looked like noisy toys for rich people. But toys are fun, so the one thing the public was crazy about was car racing. Ford had no interest in race cars – his vision was to build a cheap, quality car for the masses. But knowing that he needed to win over both investors and the public, he built the best race car in the world, and in 1902 it beat the reigning champion. “That was my first race, and it brought advertising of the only kind that people cared to read,” Ford wrote. He became known nationwide. The attention was enough to raise money from investors, and Ford Motor Company was formed eight months later. Everything is sales. Actress Gloria Swanson turned down a $1 million movie contract in 1927. The studio was stunned, and asked why she balked. “I would have been the second or third person in movie history to sign a million-dollar contract, but I was the very first to turn one down,” she said. That remark made headlines and helped her become even more famous, which, I assume, was the point. It’s the most extreme example of the career advice, “Don’t try to be the best. Be the only.” As the late author Christopher Hitchens battled esophageal cancer, the brutal side effects of chemotherapy seemed like, as Dr. Peter Attia wrote, “fair trade for a few more years of useful life.” But as Hitchens neared the end, he wrote: I lay for days on end, trying in vain to postpone the moment when I would have to swallow. Every time I did swallow, a hellish tide of pain would flow up my throat, culminating in what felt like a mule kick in the small of my back. … And then I had an unprompted rogue thought: If I had been told about all this in advance, would I have opted for the treatment? JFK and Jackie Kennedy didn’t have a great relationship. In 1955, two years after their marriage, Jack told his father, Joe Kennedy, he wanted a divorce. Joe responded: “You’re out of your mind. You’re going to be president someday. This would ruin everything. Divorce is impossible.” Jack reiterated that he and Jackie weren’t happy. His father shot back: “Can’t you get it into your head that it’s not important what you really are? The only important thing is what people think you are!” The marriage endured. Everything is sales. Sugar, milk, and eggs were all rationed during World War II. Many food companies adapted to use different, often lower-quality, ingredients to get by. See’s Candy was so obsessed with quality that it refused to lower its standards. One holiday season it closed down and put signs in its store that read, “Sold out. Buy war bonds for Christmas.” America’s decision to invade Northern Africa in November 1942 was extremely unpopular, even among President Roosevelt’s closest advisors. By almost every account, the troops weren’t ready, the planning was rushed, and the missions too ambitious. The top generals saw no downside to waiting a few more months. Dwight Eisenhower, then a general, predicted that Roosevelt’s hasty order to invade would become “the blackest day in history.” The invasion worked. But looking back after the war, the president’s advisors wondered why he was in such a hurry. One explanation was that the American people were antsy for something – anything – to happen after Pearl Harbor and Germany’s declaration of war. Roosevelt’s own son wrote him a letter saying he and his fellow soldiers were sitting around and “not having any fun … just waiting our turn.” Scratching those itches may have superseded military strategy. George Marshall, then Army chief of staff, said after the war: “The leader in a democracy has to keep the people entertained. That may sound like the wrong word, but it conveys the thought.” Most decisions aren’t made on a spreadsheet, where you just add up the numbers and a rational answer pops out. There’s a human element that’s hard to quantify, hard to explain, and can seem detached from the original goal, yet carries the most influence." MY COMMENT We live in the computer spreadsheet era. No one under about age 40 has much ability to conceptualize and think outside the box. The "box"..........being a computer. I have spent my life outside the box. I would guess that in every aspect of my life from sports, to business ownership, to investing, to music, to success in various aspects of life......people around me are wondering......how did HE do that? Being a good investor means more than just being a bean-counter. It is not just some answer that pops out of a spreadsheet. There is still MUCH intuition and logic and common sense.....as well as the ability to see what is going on around you....that counts.
When this is done, I'm going to take on the flyer guy who shorted me an A&W coupon last week. That kid will be lucky to make it to his eleventh birthday without counselling.
Looks like it is starting to clarify that the Social Security cost of living raise this year will be about 3%. Sounds good to me. Over the years that I have been under Social Security this might end up being my third largest raise. Here are the most recent raises: 2015 0.0% 2016 0.3% 2017 2.0% 2018 2.8% 2019 1.6% 2020 1.3% 2021 5.9% 2022 8.7% 2023 3% anticipated Social Security's cost-of-living increase could be only 3%: Will that be enough? https://finance.yahoo.com/news/soci...-be-only-3-will-that-be-enough-183700266.html
I had a small gain today....in spite of the market weakness in the last 30 minutes and especially in the last ten minutes. I did have four stocks down today.....AAPL, HON, NVDA, and NKE. I also got beat by the SP500 today by 0.02%.
