The Long Term Investor

As we wait for the FED......I like this little article.

Sailing and Trading/Investing

https://scheplick.com/2023/09/19/sailing-and-trading-investing/

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

"There are few sports more applicable to markets than sailing.

As I age, sailing becomes a sport I cherish more and more. It is a fascinating sport not only from its skill level and uniqueness, but also its ability to demonstrate one of the first great achievements of humankind, after fire and the wheel, we mastered the water.

A small sailing ship has immense power in the way it travels, harnesses the energy around it to move, and never expels an ounce of emissions, making it totally natural in the way it traverses the water. Quite literally, you are caught in the wind, moving at nature’s speed and emotion at any given point.

The more I sail, the more I realize how many things stand out to me in terms of relatability within my own life. One of those things being how it relates to markets, of which I’ve spent many years of my life doing whether it’s building communication apps for traders or next level tech for investors to perform better research.

Here are some similarities that I’ve come to realize:

– In sailing, you literally have to ride the trend (wind).

– You cannot fight the trend (wind), as you will not going anywhere.

– You must always be observing your surroundings for risks.

– You cannot ever predict the wind or water so all you can do is position yourself in the best place to succeed.

– When the facts (wind or water) change, you change your mind.

– It’s good to know the basics and not overcomplicate things. For example, you don’t need to know advanced weather stats or data like atmospheric pressure, but knowing which way north is helps and is totally applicable.

– Related to the above bullet point, in markets, the over complication of any strategy or style, too many tools and inputs, becomes far too noisy and it becomes harder and harder to be rational. Stick to the simple things.

– Overconfidence will get you tipped and down into the water you’ll go. One will never over power the wind or elements around you. Be humble around nature.

– Working your way upwind is 100x harder than the downwind ride you took to get there. So don’t ever fall for the too-good-to-be-true schemes! You’ll just find yourself in an even more difficult place than before.

– Related to the above, there’s a stat in financial markets whereby if you lose 10% on a trade, you need to make 11% to get back to even and so forth. The number needed to break even only increases. This kind of mindset is true for sailing as well. If you fly downwind in 30 seconds, you’ll only find yourself in place whereby you now need to work upwind for the next 20 minutes.

– 90% of sailing is preparation, planning and organization. For example, prepping a boat and getting it ready is truly time consuming and takes days of practice. This is similar to markets as well.

– Always wear a life vest! I’m a great swimming and don’t believe I need one, but for the rare chance the boat tips in an aggressive way or something happens that seriously hurts you, the vest will keep you afloat. These types of risks can’t be ignored. Similar to markets, one can lose everything very easily without proper precautions.

I’ll add more to this list when I get time! Thanks for reading and hope you enjoyed it.

I had a great day of sailing just the other day as the weather changes, fall comes in, and weather begins these moments need to be cherished!"

MY COMMENT

A well done article. As usual it is the simple little things that separate the......."few"......from the majority.

 

As to the FED.

Federal Reserve leaves interest rates unchanged at 22-year high, signals one more hike in '23

https://finance.yahoo.com/news/fede...gh-signals-one-more-hike-in-23-180117610.html

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

"The Federal Reserve held interest rates steady at a 22-year high on Wednesday while signaling another rate hike will be needed later this year to bring inflation back to its 2% target.

The central bank maintained the range for its benchmark interest rate at 5.25%-5.5%, but held projections for interest rates to finish the year in a range of 5.5%-5.75%, implying one more rate hike this year.

Twelve members of the FOMC saw one more rate hike needed this year while seven members wanted to keep rates at current levels through year-end.

Officials now see interest rates falling by 0.5% next year from the expected peak rate range of 5.5%-5.75%, implying holding rates at higher levels for longer than forecast earlier this year. In June, officials officials penciled in a full percentage point worth of rate cuts for 2024.

In its statement, the Fed said future rate hikes would be contingent on the impact of previous rate hikes on the economy, the lagged effects of policy, and economic developments.

"In determining the extent to which additional policy firming may be appropriate … the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments," the statement read.

Fed officials noted they still view inflation as "elevated," and that they remain "highly attentive" to inflation risks. Still, officials lowered their outlook for inflation, which they now see ending the year at 3.7% from 3.9% forecast in June. Officials see inflation falling even lower next year to 2.6%, in-line with forecasts from June.

The Fed acknowledged that job growth has slowed, and the central bank now sees unemployment clocking in lower this year at 3.8%, down from the 4.1% previously forecast, and holding at that level through 2025.

The outlook for GDP was revised higher for the year to 2.1%, up from 1% previously. Next year’s outlook was also raised to 1.5% from 1.1%.

Fed officials are proceeding cautiously as they mull future actions and take more time to digest cooling inflation data and weigh the risk that inflation will be too high against the risk of dampening the economy too much.

The Fed's preferred inflation measure — the Personal Consumption Expenditures (PCE) Index that excludes the cost of food and energy, or so-called "core" PCE — rose 4.2% over the prior year in July, up from 4.1% in June but down from the range of 4.5%-4.6% for the first half of the year.

Another gauge of inflation — the Consumer Price Index on a "core" basis — rose 4.3% in August, slowing from 4.7% in July, its slowest pace since October 2021.

The Fed's decision on Wednesday was unanimous."

MY COMMENT

The markets HATE surprises......and....no surprise here.

As to one more hike this year.....perhaps.....as usual it will all depend on the economic data.

Looks like this had ZERO impact on the markets today. Now....lets see how the markets hold up as the FED begins to BLAB.

 

A moderate loss for me at this moment as I only have two stocks UP so far today. Those are....COST and HON. The tech monsters have been mostly down all day.....so my result is obvious.

I am very thankful that so far this month I am still nicely above +30% year to date in my entire account. With the languishing performance of the big tech stocks and the 13% to 14% correction for NVDA the past month.....I am very happy to still be nicely over +30% year to date.

I sit and wait for the next leg up in the bull market. This is how things usually go in the markets.....they tend to linger and than go up in spurts. The next catalyst for a burst upward will be earnings which will start in 3-4 weeks. I do have one stock that will report next week.......COST. They will report on September 26.

 

A NASTY loss for the markets today. I dont see any reason except for the FED. Even the FED is hardly a reason......since what they did today.....nothing....was totally expected.

I had every stock in the RED today at the close. Not a single stock up for me today. I also got beat by the SP500 by 1.00% today.

A typical recent FED day ending.

 

As to my largest holding....NVDA.....another losing day with the stock down by $12.81 or 2.94%. I am seeing lots of reports of big investors selling the stock lately....including my favorite Cathie Wood. Lots of profit taking going on by the big traders.

At this point from the intraday high of $502.66....which I believe was on August 31......as of the close today the stock is down by 15.97%. Somewhat of a falling knife at this point.

I would think at this point the stock would be an attractive buy.....for long term investors.....but you know what they say about falling knives.

Amazingly......I see little to no comment or articles about this correction in the price of NVDA in the media.

 

Here is a little summary of.....some.....of the Powell comments today.....not that any of this is really meaningful.

Full recap: Fed chief Powell’s market-moving comments on interest rates, soft landing chances

https://www.cnbc.com/2023/09/20/live-updates-fed-decision-september-2023.html

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

"Powell says the worst thing the Fed can do is not restore price stability

Fed Chair Jerome Powell said restoring price stability is the top priority of the central bank and failing to do that has serious consequences for the economy.

“The worst thing we can do is to fail to restore price stability, because the record is clear on that,” Powell said. “If you don’t restore price stability, inflation comes back and ... you can have a long period where the economy is just very uncertain, and it’ll affect growth. It ... can be a miserable period to have inflation come constantly coming back and the Fed coming in and having to tighten again and again.”

A soft landing is possible but not a baseline scenario, Powell says

Fed chair Jerome Powell threw cold water on the notion that a soft landing is a baseline scenario while taking questions from reporters on Wednesday.

When asked if a soft landing was a “baseline expectation,” Powell immediately responded no before explaining that a the scenario was indeed possible.

“No, no, I would not do that. I’ve always thought that the soft landing was a plausible outcome, that there was a path to a soft landing,” he said. “It’s also possible that the path has narrowed and widened.”

“Ultimately this may be decided by factors outside of our control at the end of the day, but I do think it’s possible,” Powell said. “I also think this is why we are in a position to move carefully, again. We will restore price stability, and we know we have to do that and we know that the public depends on us doing that.”

Stronger economic activity drove projection for fewer rate cuts in 2024, Powell says

The change to fewer projected rate cuts in 2024 has more to do with Fed officials’ optimism about economic growth than a growing concern about stubborn inflation, Powell told reporters.

“Broadly, stronger activity means we have to do more with rates, and that’s what that meeting is telling you,” Powell said.

Fed still ‘need to see more progress’ on inflation, Powell says

The Fed is not yet fully convinced that inflation is on the right path, according to Chair Jerome Powell.

“We want to see convincing evidence really that we have reached the appropriate level, and we’re seeing progress and we welcome that. But, you know, we need to see more progress before we’ll be willing to reach that conclusion,” Powell said.

Inflation is still well above 2% target with ‘a long way to go,’ Powell says

Federal Reserve chair Jerome Powell said Wednesday that while price pressures have shown some encouraging signs of easing, getting inflation back down to a 2% target is far from over.

“Inflation has moderated somewhat since the middle of last year, and longer-term inflation expectations appear to remain well anchored as reflected in a broad range of surveys of households, businesses and forecasters as well as measures from financial markets,” Powell said.

“Nevertheless, the process of getting inflation sustainably down to 2% has a long way to go,” he said.""

MY COMMENT

The usual and typical jaw-boning by Powell. None of this is significant....but.....the markets hate this sort of talk.

Is the FED in control of inflation or the economy....no....of course not. BUT....the economy and the markets and investors are at their mercy.....at least until more investors, especially the short term traders, tune Powell out and move on.

Someday....we will be done with this market trashing talk....but for now.....the beat goes on.

 

Yes we do sail on....Smokie.

We are seeing a FED hangover day today. There is simply no enthusiasm short term for the markets right now. The greatest drag on the markets.....a Ten Year Treasury yield pushing toward 4.5%.

Is this RATIONAL.....probably not. Nothing has changed.....nothing is actually going on.......earnings have been good and they will be good when they start back up in a month or so.

We are simply in one of those time periods where the extremely skittish short term investors as well as the erratic big money managers and companies are taking profits and following the short term lemmings.

We are nowhere near a general correction in the markets.....since the High of 4588 for the SP500 on July 31, 2023......we are now down by 4.92%. Some individual stocks like NVDA are in correction territory.....this particular stock being down by over 16% since the intraday high of $502.

At this point in time the general markets are captive to the daily news and the IRRATIONAL. The largest and greatest companies are being punished......for nothing. BUT....that is how the markets work....the short term is irrational, insane, and driven by the day to day traders and speculators. The rest of us....all we can do is wait out the short term insanity and hold on for the long term.

As I have said many times the big danger for the markets is if we some day reach the point where the total focus on the short term and the inability of people to have any longer term focus engulfs the markets and alters the many decade positive, long term, direction of the markets. I dont discount this happening. The impact of technology and the impact of "daily life on screens" on the human brain and human behavior......could.....significantly alter the stocks markets....even long term. Nothing is guaranteed or set in stone for the future.

 

So....moving on to what is and hopefully will continue to be reality....at least for my lifetime.

Pessimism and the Fed’s ‘Hawkish’ or ‘Careful’ Pause

https://www.fisherinvestments.com/e...ssimism-and-the-feds-hawkish-or-careful-pause

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

Future returns don’t hinge on rate cuts.

"What do you call it when the Fed pauses its rate hikes (again), projects fewer rate cuts over the next two years and its head vows about 10,000 times to “proceed carefully” when weighing the next move? Apparently it is a “hawkish pause,” according to some observers, who blame “higher for longer” fed-funds rate projections for markets’ post-meeting slide. As always, we don’t recommend reading into one day’s market movement, especially where Fed meetings are concerned—there is just too much short-term trading action, most of it based on technical indicators and human bias. The longer term is what matters, and stocks have already shown they are over rate hikes.

Reading through the Fed’s materials, we are hard pressed to see much reason for gloom. The policy statement described economic growth as “solid” and said future interest rate decisions will depend on incoming data, which all seems benign. The “dot plot” of Fed members’ economic projections showed a median assumption of one more rate hike this year followed by two 2024 cuts and five in 2025 (presuming the Fed would move in 0.25 percentage point increments). This is less than the June dot plot’s projection of four 2024 rate cuts and five in 2025, hence the higher-for-longer characterization.[ii] But the reasoning for this is pretty positive: Inflation projections are roughly the same as in June, but economic growth expectations are up. The Fed now sees GDP growing 2.1% this year and 1.5% in 2024, which is much better than June’s projections for 1.0% GDP growth in 2023 and 1.1% next year.[iii] Fed people anticipate rates staying higher not because inflation will remain a pest, but because stronger growth won’t necessitate big rate cuts. Seems a-ok to us.

Not that the dot plot is an actual policy signal. As Fed head Jerome Powell took great pains to remind everyone, it is a summary of individual Fed people’s forecasts, not a blueprint. Upcoming decisions will remain dependent on the data, and the Fed doesn’t have a plan. Among the 19 Fed folk who contribute to the dot plot, 7 anticipated holding pat the rest of the year and 12 anticipated one more hike. Powell cited this fact as evidence that “what people are saying is let’s see how the data come in,” stressing the Fed is “actually in a position to be able to proceed carefully as we assess the incoming data.”[iv]

But as is often the case where the Fed is concerned, the masses seemed set on finding the cloud in the silver lining and presuming the dot plot does indeed chart a pre-set course. Absent more Fed cuts, many argued, tighter credit would choke the economy, bringing tough times for earnings and stocks. They dismiss the recent improvement in GDP and other indicators as temporary, warning monetary policy’s innate lags mean the real impact of higher rates simply hasn’t set in. And when it does, look out.

Perhaps. But the thing is, markets are forward-looking, and we don’t think it is accurate to say they see trouble in higher rates in the US or, for that matter, other big developed markets. Exhibits 1 – 3 show the S&P 500, MSCI UK Investible Market Index and MSCI EMU Index, all in local currencies, with Fed, Bank of England and ECB rate hikes highlighted. In all cases, after the initial 2022 dive amid a plethora of fears last year, stocks rose through a flurry of rate hikes. This, despite knowing full well what everyone was saying and that monetary policy changes take several months or more to fully hit the economy. If higher rates haven’t yet deterred markets, we have a hard time seeing why strong returns from here would suddenly hinge on massive rate cuts.

Exhibit 1: The Fed and US Stocks


Source: FactSet, as of 9/20/2023. S&P 500 Total Return Index, 12/31/2021 – 9/19/2023.

Exhibit 2: The BoE and UK Stocks


Source: FactSet, as of 9/20/2023. MSCI UK IMI returns with net dividends in GBP, 12/31/2021 – 9/19/2023.

Exhibit 3: The ECB and Eurozone Stocks


Source: FactSet, as of 9/20/2023. MSCI EMU returns with net dividends in EUR, 12/31/2021 – 9/19/2023.

So we suggest tuning down Fed chatter—and for that matter, all rate hike chatter on both sides of the Atlantic. This stuff has been discussed so widely for so long that it seems unlikely any material surprise power remains. All possible outcomes have been hashed and rehashed for months on end, giving markets ample time to weigh and price them. Stocks seem to have done you a favor and scrutinized all this stuff so that you can go on with life. Might as well take them up on it."

MY COMMENT

Lets put it this way.....for the average person.,..the average family....Is there any other alternative to investing in stocks and funds long term to create and grow net worth? Does any of this constant 24/7 DRAMATIC HAND WRINGING over the the daily issues really reflect what the average person is thinking or cares about?

The answer to both is......NO.

 

The greatest single danger and drag on the markets right now.....government. They are suing and harassing the largest companies.....that are the basis of our economy...... constantly. The increase in insane regulation continues. The FED is constantly trying to trash and tank the markets. (yes they are part of government) They are stimulating when they should not be and refusing to stimulate when they should. The free markets, the stock markets and the basis of our historic success....free market capitalism.....are constantly under attack.......from government.

 

Here is the market drag today and recently.

10-year Treasury yield hits its highest level since 2007 as jobless claims decline

https://www.cnbc.com/2023/09/21/us-treasurys-investors-digest-fed-rate-decision.html

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

"U.S. Treasury yields continued their march higher Thursday, reaching multiyear highs, as investors digested the Federal Reserve’s interest rate decision and forward guidance along with new unemployment data.

The yield on the 10-year Treasury was up by around 13 basis points at 4.482%, hitting a fresh 2007 high in the session. The 2-year Treasury was more than 8 basis points higher to 5.197%, hovering around levels last reached in 2006.

Yields on the 5-year note and 30-year bond also touched their highest levels since 2007 and 2011, respectively.

Yields and prices have an inverted relationship, and one basis point equals 0.01%.

Treasury yields reached their highs of the day after the release of new U.S. unemployment data. Initial jobless claims came in at 201,000, well below a Dow Jones forecast of 225,000. It was also their lowest level since January. It was the lowest volume of new unemployment claims since January.

Traders seemed to interpret the data as a sign the Fed may need to tighten policy further to tame inflation.

The Fed announced its decision to keep rates unchanged as its September meeting concluded on Wednesday, in keeping with investor expectations.

However, policymakers also suggested that they are expecting one more rate hike to come this year and rates to stay higher for longer, with just two rate cuts forecast for 2024. In June, the Fed said it was anticipating four rate cuts next year.

In a press conference after the announcement, Fed Chair Jerome Powell said the central bank was in a position where it could “proceed carefully” with its monetary policy. Policymakers would, however, like to see more progress in the fight against inflation, even though pressures have somewhat eased, Powell indicated.

The Fed also released its projections for several key economic indicators on Wednesday, saying it expects the gross domestic product to increase by 2.1% this year, which is far higher than previous forecast.

Meanwhile, the core personal consumption expenditures price index, which is used to track the inflation rate, is now expected to come in at 3.7%, lower than predicted in June."

MY COMMENT

This obsessive focus on economic data and statistics is simply CRAZY. None of these numbers are reliable at all....they are constantly revised up and down like a yo-yo.

BUT.......the people that control the daily narrative LOVE to focus on this sort of "stuff".

 

I will say.....I am STILL positive as to the future of investing and returns for the long term. I try to post what is happening day to day and talk about day to day "stuff". Often that content is inherently negative. Just because I might talk about it or post about it does not mean that I am negative.

When it comes to my own money......I continue to be fully invested for the long term as usual. I continue to look at my money and mentally project....using the rule of 72's.....that I will continue to double my money every seven years...or less.

When is the last time you saw an article pointing out that the SP500 is currently UP by over 14% year to date......above the long term average return. AND.....this is simply the percentage increase...it does not include the dividends in the Index.

Bottom line.....the future is POSITIVE. Ignore the daily GARBAGE. Live life and let time cure the short term ills of the markets.

 

At least this little article is accurate in it's short term view.

Dow Jones Slides 225 Points After Surprise Drop In Jobless Claims; Nvidia, Tesla Sell Off

https://www.investors.com/market-tr...less-claims-nvidia-tesla-sell-off/?src=A00220

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

"The Dow Jones Industrial Average briefly dropped 225 points Thursday, as global markets backed off broadly after Wednesday's shift in tone from the Federal Reserve. The Labor Department's initial unemployment claims unexpectedly dropped. Meanwhile, tech titans Nvidia and Tesla sold off in the stock market today.

First-time claims for unemployment assistance surprisingly dropped to 201,000. They were expected to rise to 225,000 vs. 220,000 claims in the previous week.

Meanwhile, the Philadelphia Fed manufacturing index fell to -13.5 in September. It was expected to drop to 0.5, down from August's 12.0 reading. Later in the morning, existing home sales from the National Association of Realtors is expected to rise to 4.10 million in August, up from July's 4.07 million.

Key earnings movers Thursday include Darden Restaurants (DRI), KB Home (KBH) and FedEx (FDX).

Darden shares rose 0.4%, while KBH stock slid 5.6% in early action. Finally, FedEx shares jumped almost 6% in morning trade.

Stock Market Today

Broadcom (AVGO) dived nearly 4% on reports that Google-parent Alphabet (GOOGL) is looking to drop the company as a supplier of AI chips as early as 2027. Competing Alphabet supplier Marvell Technology (MRVL) rallied 0.4% in early trade. Alphabet shares slipped 2.1% early Thursday.

Meanwhile, Cisco Systems (CSCO) tumbled 4% after agreeing to acquire Splunk (SPLK) for 157 a share, a 31% premium to Wednesday's closing price.

EV giant Tesla (TSLA) traded down 1.9% Thursday morning, while Nvidia (NVDA) lost 1.6%. Dow Jones tech icons Apple (AAPL) and Microsoft (MSFT) traded mixed, after today's stock market open.

Another stock market leader, Meta Platforms (META), moved down 0.8% in early action.

Airbnb (ABNB), Amazon (AMZN), Axon Enterprises (AXON) and IBD Leaderboard watch list stock DraftKings (DKNG) — as well as Dow Jones stocks Caterpillar (CAT) and Intel (INTC) — are among the best stocks to watch as the stock market outlook deteriorates.

DraftKings is an IBD Leaderboard watch list stock, while Airbnb featured in this Stocks Near A Buy Zone column. Airbnb was a recent IBD Stock of the Day.

Dow Jones Today: Oil Prices, Treasury Yields

After Thursday's opening bell, the Dow Jones Industrial Average declined 0.3%, while the S&P 500 was down 0.9%. The tech-heavy Nasdaq composite sold off 1.2% in morning trade.

Among U.S. exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) was down 1.2%, while the SPDR S&P 500 ETF (SPY) fell 0.9% early Thursday.

Early action Thursday also showed the 10-year U.S. Treasury yield at 4.47%, hitting a new high in the wake of Wednesday's Fed decision. The Federal Reserve policy committee took a big hawkish shift on Wednesday, dimming hopes for a quick shift to rate cuts in 2024.

Oil prices rebounded from Wednesday's losses, as West Texas Intermediate futures rose 1% in morning action. WTI futures traded right at $90.50 a barrel Thursday.
Stock Market Extends Losses

On Wednesday, the Dow Jones Industrial Average lost 0.2%, while the S&P 500 moved down 0.9%. The tech-heavy Nasdaq composite sold off 1.5%.

Wednesday's Big Picture column commented, "The sell-off appeared to be tied to a growing expectation that the U.S. central bank will keep the cost of money at a higher level longer than originally thought. Investors also apparently showed disappointment at the dimming possibility that the Fed will sharply cut rates next year — if the economy falls into recession."'

MY COMMENT

The article above continues with more content.....BUT....I am done with the short term today. It is not worth any more time or focus.

 

Today is pretty much done. It would take a world record rally to get positive by the close today.

So.....we just write off the day and perhaps the week.....and move forward. After this week, only one more week left in September.

 

I think 8% thirty year mortgage rates are a sure thing now.

Housing economist warns of 8% mortgage rates after home sales disappoint

https://finance.yahoo.com/news/hous...es-after-home-sales-disappoint-141850108.html

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

"Homebuyers made fewer deals in August as rough housing conditions persisted. That may get even worse, one housing expert said.

Sales of previously owned homes declined 0.7% in August from the month prior to an annualized rate of4.04 million, the National Association of Realtors said Thursday. That underperformed the 0.7% increase and 4.10 million annualized rate that economists polled by Bloomberg predicted.

The pace, which was down 15.3% from a year ago, is the third slowest of the current housing cycle, NAR chief economist Lawrence Yun said. Only the paces in January and December 2022 were slower.

The data underscores the muting effect higher mortgage rates is having on both buyers and sellers, a scenario that could get tougher soon.

"Mortgage rate changes will have a big impact over the short run, while job gains will have a steady, positive impact over the long run," Yun said in the a statement, before adding in the press call later that, "in the short run, it's possible that mortgage rates may go up to 8%."

Existing home sales in August reflect mortgage rates that were locked in during the months of June and July, when mortgage rates were just below 7%, said Realtor.com chief economist Danielle Hale.

"Since then, mortgage rates have climbed above 7% and since the Fed’s September projections keep another rate hike on the table, mortgage rates are not likely to drift lower in the absence of new data warranting a reconsideration of the outlook," Hale said in a statement. "This means that affordability headwinds that buyers face are likely to continue."

The average rate on the 30-year fixed mortgage has remained above 7% for five straight weeks, according to Freddie Mac. The latest data comes out at noon EDT Thursday.

While elevated rates make it more costly for buyers, it's also convincing many homeowners to stay put rather than sell.

According to Redfin, 91.8% of US homeowners with a mortgage have an interest rate below 6%; 82.4% have a rate under 5%; and 62% have a rate below 4%. That’s far below last week's rate of 7.18% and a good reason to avoid selling a home and lose a much more attractive rate.

That's evident in Thursday's data.

Only 1.1 millionunits were available for sale at the end of August, some 0.9% fewer than a month go and down 14.1% from one year ago, NAR reported. At the current sales pace, that represents 3.3 months of supply. At least 6 months are required to balance the market.

The shortage of supply has helped to prop up home prices, too — another obstacle for buyers.

The median price of a home for all housing types sold in August was $407,100, an increase of 3.9% from a year ago, the NAR found. That median price was the highest for the month of August and the fourth highest ever.

"I think that people are delaying buying a home and that lack of supply keeps prices high," Daryl Fairweather, chief economist at Redfin, recently told Yahoo Finance. "So it depends on how high or how long mortgage rates stay high whether we'll see a decline in prices or not."

Wednesday's Federal Reserve meeting offered some clues. It's likely that another quarter-point hike of the central bank's benchmark rate is in the offing this year. And the Fed's projections suggest that rates will stay higher for at least three more years.

While mortgage rates aren't tied directly to the movement in the fed funds rate, they do track the yield on the 10-year Treasury, which so far has been rising with the Fed hikes. That means more tough times could be ahead for homebuyers if mortgage rates increase.

"Just today's home sales are reflecting July's mortgage rate of under 7%. So if mortgage rates were to go up to 8%, naturally, we have not seen the bottoming for home sales," Yun said in the press call. "Home prices continue to mark higher, but for home sales, we [would] make it another leg down if mortgage rates were to go to 8%.""

MY COMMENT

Nothing anyone can do. If you are looking for a home to buy and you can afford it and plan to stay there for a while....you can always pull the trigger and refinance later if rates drop some.

(see post below)

 

We are inundated with news and events right now that seem pretty negative. If you are under age 35 you are probably of the mind set that you have it worse than any generation.......ever.

If this is your thinking....WAKE UP.......things are not that bad. I could make a strong case that nearly EVERY generation over the past 100 years......actually.....HAD IT WORSE than you do right now.

BUT....as humans....we are so ego-centered and focused on our own times....we tend to have ZERO concept of what happened to others before our time. The constant focus on cell screens and social media just tends to make this sort of thinking much worse.

The bottom line....every generation struggles with the conditions they are given. There is no reason to put your life or goals on hold....you just deal with and go out and do it. I see young people all around me that are doing that.

 

Here are some good lessons.

The frugal life of Warren Buffett: How the billionaire spends his fortune, from McDonald's breakfasts to a rare and 'indefensible' splurge

https://finance.yahoo.com/news/frugal-life-warren-buffett-billionaire-185335895.html

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

"Warren Buffett's had a good year — his fortune has ballooned by more than $16 billion so far.

With an estimated net worth of $124 billion, according to the Bloomberg Billionaires Index, the 93-year-old Berkshire Hathaway chairman and CEO is now the sixth-wealthiest person in the world. He's richer than Mark Zuckerberg, whose net worth is an estimated $111 billion, Google cofounder Sergey Brin, worth $116 billion, and former Microsoft CEO Steve Ballmer, worth $118 billion.

Looking at Buffett's frugal ways, though, you might not know it.

Still living in the house he bought in the 1950s and driving an equally modest car, the Oracle of Omaha prefers to keep and grow his money rather than take it out of the bank. He eats McDonald's for breakfast in the mornings and borrowed furniture when his children were born.

See how Buffett spends — or doesn't spend — his billions.

Buffett's hobbies include bridge, golf, and playing the ukulele.

Buffett loves playing bridge, sometimes playing for over 8 hours a week, the Washington Post reported. He also likes to hit the green for some golf, spends a great deal of his time reading, and loves to play the ukulele — he said in 2020 that he has a collection of 22 ukuleles. He's played the ukulele since he was young and used his skills to court his first wife Susan, their son Peter once told NPR.

Buffett once bought and donated 17 Hilo ukuleles to the North Omaha branch of the nonprofit Girls Inc, and showed up at the group's building to give a group lesson.

His fortune is largely tied to his investment company.

The vast majority of Buffett's net worth is tied to Berkshire Hathaway, his publicly traded holding and investment company. Buffett owns about 38% of the company's Class A shares and less than 0.001% of Class B shares, according to the Bloomberg Billionaires index.

Berkshire Hathaway itself owns over $1 trillion in assets, Insider previously reported.

Buffett began investing at a young age.

The CEO of Berkshire Hathaway began building his wealth by investing in the stock market at age 11, according to Forbes, and first filed his taxes at the age of 13. As a teenager, he was raking in about $175 a month by delivering The Washington Post — more than his teachers (and most adults). Berkshire Hathaway later owned nearly 30% of The Washington Post, about a $1.1 billion stake, for 40 years until the company shed the investment in 2014.

He also sold calendars, used golf balls, and stamps. He had amassed the equivalent of $53,000 by the time he was just 16.

Most of Buffet's fortune was built much later.

The vast majority of Buffett's wealth was earned after his 50th birthday. His salary at Berkshire Hathaway last year was just $100,000, the same as it's been the last 40 years, and he reimbursed the company $50,000 in part to cover his personal calls and postage. The company spent triple Buffett's yearly salary — $301,589 — on his personal and home security last year, according to the company's proxy statement.

Buffett's worst investment was a Sinclair gas station in 1951.

Buffett's greatest investment mistake is said to be a Sinclair gas station that he bought in 1951 at the age of 21 — he bought a stake in the station with a friend, and the business was consistently outsold by the larger Texaco station opposite it. He eventually lost the $2,000 he invested out of his total net wealth of $10,000 at the time, Yahoo Finance reported, referencing Glen Arnold's book "The Deals of Warren Buffett, Volume 1: The First $100M."

Buffett has been married twice and has three children.

Buffett married his first wife, Susan Buffett, in 1952. Together they had three children: Susie, Howard, and Peter. Though he and Susan remained married until Susan's death in 2004, they had lived apart since the 1970s. He married his second wife and longtime companion, Astrid Menks, in 2006.

When Susie was born, Buffett apparently turned a dresser drawer into a bassinet for her to sleep in, according to Roger Lowenstein's 2008 biography of the billionaire. For his second child, Howard, he borrowed a crib.

Buffett lives a modest lifestyle.

Despite his multibillionaire status, Buffett has long lived a relatively modest and frugal lifestyle. He previously told CNBC and Yahoo Finance's "Off the Cuff" that he's "never had any great desire to have multiple houses and all kinds of things and multiple cars."

Buffett lives in the same home he bought in the 1950s.

Buffett lives in a modest home in Omaha, Nebraska, which he once called the "third-best investment" he's ever made in a letter to Berkshire shareholders. He bought the home for $31,500 in 1958 — adjusted for inflation, that's about $276,700. The house is now worth an estimated $1.3 million, according to Zillow, and spans 6,280 square feet with five bedrooms and 2.5 bathrooms.

Buffett has made some security upgrades since buying it as he became famously wealthy. The home is now guarded by fences and security cameras.

Buffett used to own a vacation home in California.

In 1971, Buffett purchased a vacation home in Laguna Beach, California, for $150,000. Part of a gated community called Emerald Bay, the house has six bedrooms, is walking distance from the beach, and was renovated after Buffett's initial purchase.

He initially put it on the market in early 2017 for $11 million, then cut the price down to $3 million later that year. It sold in October 2018 for $7.5 million, after almost two years on the market.

Buffett's choice of vehicle has also long been modest.

Unlike many other ultra-wealthy individuals, Buffett has long driven a fairly modest set of wheels. He previously drove a 2001 Lincoln Town Car with a license plate that read "THRIFTY" for about a decade, before auctioning it off for charity and replacing it with a 2006 Cadillac DTS. In 2014, he replaced the DTS with a Cadillac XTS, according to Forbes.

"The truth is, I only drive about 3,500 miles a year so I will buy a new car very infrequently," Buffett once told Forbes.

Buffett has splurged on a private jet.

One splurge Buffett has made is on a private jet. Buffett spent $850,000 on a used Falcon 20 jet in 1986, then sold the first jet and upgraded to a different used jet in 1989, spending $6.7 million. He and business partner Charlie Munger nicknamed the second jet "The Indefensible," Buffett revealed in a letter to shareholders.

Buffett used a flip phone for years.

Despite the fact that Berkshire Hathaway is a major Apple shareholder, Buffett didn't upgrade to a smart phone until 2020. Before that he preferred the Samsung SCH-U320, which can be bought on eBay for under $20. Though he did make the switch to an iPhone eventually, he told CNBC that he just uses it "as a phone."

Buffett's style includes suits from a Chinese designer and affordable haircuts.

Buffett has said he has about 20 suits, all made in China by designer Madame Li, according to CNBC. He has a longstanding friendship with Li, an entrepreneur who worked her way up in the business. He's gotten the same $18 hair cut for years from a barber shop in the same building as his office.

Buffett regularly eats at McDonald's and drinks a lot of Coke.

Buffett once told Fortune that he eats "like a six-year-old." He gets his breakfast at McDonald's almost every morning on the way to work. In 2017, he was spending no more than $3.17 on his order, paying with exact change, he said in the HBO documentary "Becoming Warren Buffet." He also drinks an alarming amount of Coca-Cola — he's said he drinks at least 5 servings every day.

Buffett is longtime friends with Bill Gates.

Buffett once went to McDonald's in Hong Kong with longtime friend Bill Gates and paid with coupons, Gates reminisced in his 2017 annual letter.

The letter reads: "Remember the laugh we had when we traveled together to Hong Kong and decided to get lunch at McDonald's? You offered to pay, dug into your pocket, and pulled out…coupons!"

Gates has described Buffett as a "thoughtful and kind" friend, and has said that every time he visits Omaha, Buffett drives to the airport to pick him up.

Buffett is one of the world's most generous philanthropists.

Warren Buffett is considered one of the world's most generous philanthropists. He pledged in 2006 to donate about 85% of his nearly 475,000 Berkshire Class A shares to five foundations: the Bill & Melinda Gates Foundation, the Susan Thompson Buffett Foundation (named for his late wife), and three foundations run by his three children.

He teamed up with Bill and Melinda Gates in 2010 to form The Giving Pledge, an initiative that asks the world's wealthiest people to dedicate the majority of their wealth to philanthropy. Buffett himself has pledged that 99% of his wealth will go to philanthropy during his lifetime or upon his death.

As of 2023, the shares he's already given away were worth about $50 billion based on their value at the time of donation, or about $130 billion given Berkshire Hathaway's current stock value. If Buffett had kept those shares rather than donating them, he'd likely be the world's wealthiest person with a net worth of around $250 billion, Insider previously reported.

Buffett plans on leaving his kids $2 billion each, the Washington Post reported in 2014. He once in a letter to shareholders that he recommends that super-wealthy families "leave the children enough so that they can do anything but not enough that they can do nothing."

Even for Buffett, there are things that money can't buy.

"There are things money can't buy," Buffett once said at a shareholder's meeting. "I don't think standard of living equates with cost of living beyond a certain point. My life couldn't be happier. In fact, it'd be worse if I had six or eight houses. So, I have everything I need to have, and I don't need any more because it doesn't make a difference after a point."

MY COMMENT

Not what everyone would do with his amount of money. BUT....he is probably just as happy as anyone.

BEWARE keeping up with or being jealous of the......JONES family. The outward trappings of many people are just a front hiding reality.

 

I think the main thing people need to do....especially younger people....is...dont put unrealistic shackles on yourself. There is no time limit on your goals. Keep focus and work toward them and you WILL achieve them. There is no time table for life....dont let your thinking and others impose one on YOU.

I watched my two kids as they go out of college. They are both Millennials. At that time the CONSTANT MEDIA LINE was that they wanted "experiences, they did not want to own a house or "things". We were told their generations was not getting married or buying homes or having kids like prior generations. We were told all sorts of BS about their attitudes toward jobs and work and life.

GUESS WHAT.....now as I look at them in their early 40's and late 30's.......they own a home, they have kids, they are married, they live in the suburbs, they have steady and stable jobs, etc, etc, etc. So do all their friends from college. In the end ALL the CRAP that we heard about their generation being so different turned out to be BALONEY. They have.....in hindsight....followed all the same steps as every generations before them.

My one kid.....all his friends moved into the hip downtown condos after college in the trendy part of town. Of course instead....my kid....choose to buy cheap a starter house....near, but not in.......the upscale suburbs instead. GUESS WHAT.....ALL of his friends from college that lived in the hip single area of his city......now live in the upscale suburb right along with him. Not a single one chooses to live in the hip downtown area of the city.