The Long Term Investor

Here is the markets today.....at least for the open. Read it if you wish....no need to post this....it would simply be repetitious.

Stocks open lower amid Fed fallout, shutdown worries: Stock market news today

https://finance.yahoo.com/news/stoc...orries-stock-market-news-today-111709899.html

 

Today is COSTCO day. They report 4th quarter earnings....their financial year ends in August. The earnings release will come out after the close.

This company has been a long time holding for me. I "discovered" this company a long time ago....when they just had a handful of stores in Washington state. We were monthly shoppers at the Kirkland store in the early days. It was amazing how hard it was to find a parking space.

This holding is always in the top couple of holdings in my portfolio. Even though it is not a tech company....it always manages to sit right there as one of my top holdings.

This company has always had superb management and superb employee policies. They have total focus on their business model and do what they do over and over and over.....with extreme success.

A classic example of a superbly dominant company. They are not sexy.....or....in the news all the time.....but they produce, especially over the long term. Their membership fee business model is genius.

 

Can you tell I am ignoring the markets today? Nothing going on and nothing to celebrate........at this moment. Perhaps later.

 

YEP....a good day to buy something Smokie.

Speaking of buying things.....now to the end of the year will be a great time to lock in safe money. With the Ten Year Treasury at just over 4.5%....CD, Treasury, and other safe investments are paying.....real money. If you have money that is intended for use over the next few years but is too short term to take stock market risk....now.....is the perfect time to lock in some very good safe yields.

I used to do that with my "living money". After I retired at a young age......and had to fund my own living expenses from personal assets...... I usually kept three years of "living money" out of the stock markets. I would often ladder CD's so that money could earn something while it sat there.

When I first retired I was keeping five years of money out of the markets....for loving expenses. Over time I came to realize that it was ok to reduce that to three years of safe money.

 

I was looking at my home estimate on Zillow the other night. The estimated value has certainly not come down. I know that this is true based on a couple of recent sales in my immediate neighborhood.

We bought our current house about 4.4 years ago. At that time we downsized from the "big house"....about 5000 sqft, five bed, six bath....to the 3600 sqft, single story, for our "old age". We found the perfect house in our prime neighborhood.....when a "COMING SOON" sign suddenly appeared on the house. We had been driving that neighborhood daily for about a year waiting for one of the rare one story homes to come up for sale.

We were three days from leaving on a cruise when that coming soon sign popped up on the house. I called the realtor and found out the house was going to come active while we were going to be out of town and that the price was going to be $800,000. We arranged to see the house that day and made an offer even though it was...."coming soon". My offer based on many....very accurate...... market comps was $725,000. It was rejected immediately.

We thought about it for a day and I decided to simply bite the bullet and offer the full price $800,000 even though the house was not officially on the market yet. We were afraid it would sell while we were out of town. That offer was accepted and I spent a lot of time on the cruise doing paperwork for the purchase by docu-sign.

I figured worst case it would appreciate up to our $800,000 price in about two years. We were AMAZED as the house jumped up to a market value of about $1.5MILLION over the next year or two.

We have owned ten homes over our lifetime......a couple we either lost money or broke even.....a few we made good money....some we just kind of broke even or made a slight profit. When I look back at those prior homes....now....four of them are valued at over $1MILLION....with the lowest of the four being about $1.2MIL and the highest of the four being $3MIL.

NONE....of the past 9 homes we owned was over $1MIL when we owned them and sold them. In hindsight I believe we would have been better off to not sell and buy as much as we did......but.....we did get the opportunity to live in some amazing homes......a classic Victorian....a low bank waterfront farm house with acerage...... a Street of Dreams house.....a 20 acre horse farm.....etc, etc.

We started out in a little, zero down, HUD foreclosure, on the wrong side of the tracks for $16,000 with a payment of $160 per month back in the early 1970's. We were on food stamps at the time.

Anyway:

Home prices set record in July

https://finance.yahoo.com/news/home-prices-set-record-in-july-140213592.html

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

"Home prices climbed for the sixth consecutive month to new high in July as inventory shortages drive up competition.

The S&P Case-Shiller US National Home Price Index in July increased 0.6% month over month and 1% over the last 12 months, on a seasonally adjusted basis. July’s movement reached a new high for the nationwide home index, surpassing the record set in June 2022.

“U.S. home prices continued to rally in July 2023,” Craig J. Lazzara, managing director at S&P DJI, said in a statement. “The increase in prices that began in January has now erased the earlier [H2 2022] decline, so that July represents a new all-time high for the National Composite.”

The 20-city index — measuring existing home prices in the 20 largest US cities — rose 0.9% monthly in July after seasonal adjustment, exceeding Bloomberg’s survey of economists’ expectations of 0.7%.

“This recovery in home prices is broadly based," Lazzara said. “As was the case last month,10 of the 20 cities in our sample have reached all-time high levels. In July, prices rose in all 20 cities after seasonal adjustment (and in 19 of them before adjustment).”

The 20-city index increased by 0.1% over the last 12 months. For the third straight month, Chicago, Cleveland, and New York reported the highest year-over-year gains among the largest US metropolitans in July, at 4.4%,4%, and 3.8%, respectively.

July’s median home price jumps

July’s US median home price for existing homes rose to 1.9% to $406,700, according to the National Realtors Association (NAR). The robust housing market suggests that while some buyers pulled back due to high borrowing costs, demand continues to outweigh supply.

(Median prices are often used as a cost measurement as they are not influenced by outliers, such as very expensive or very cheap units, unlike average home prices.)

“This month’s index data tracks May, June, and July, a period when mortgage rates neared 7% in mid-July, creating the second knock of a one-two blow to housing affordability.” Danielle Hale, Realtor.com’s chief economist, said. “Existing home sales, limited by low inventory as high costs cause many existing homeowners to stay put, have borne the brunt of the impact and continued to slip in July.”

Home prices have been lifted by the diminishing housing supply on the market, caused by a combination of already low inventory and sellers not listing homes in order to stay with their low mortgage rates. July’s inventory of unsold listings declined 14.6% to 1,110,000 units from 1,300,000 units last July.

“If [homeowners] have mortgages that are 2,3, or 4%, they are less inclined to sell their house or their apartment,” Danny Sassoon, senior loan officer and assistant vice president of Citizen bank, said.

Higher mortgage rates have also impacted demand. In July, the average four-week rate on a 30-year loan was 6.84%. Buyers’ purchasing power has been slowly stripped away as result of both high home prices and mortgage rates,

“Higher mortgage rates have radically altered homebuyer purchasing power and have been a key factor in existing home sales dropping from a more than 6.5 million unit pace in early 2022 to the roughly 4 million unit pace in recent months,” Danielle Hale, Realtor.com’s chief economist, said.

2024 forecast

One property research firm projected that prices will continue to rise in 2024, but at a much more moderate pace given elevated mortgage rates. US home prices could see a gain of 3.5% year over year by July 2024, according to CoreLogic:

“The projection of prolonged higher mortgage rates has dampened price forecasts over the next year, particularly in less-affordable markets,” Selma Hepp, chief economist for CoreLogic, said. “But as there is still an extreme inventory shortage in the Western US, home prices in some of those markets should see relatively more upward pressure.”

For the financing buyers, things might get even tougher as the Federal Reserve suggested last week that it will keep rates ‘higher for longer.’ One housing expert later predicted where rates could go.

"In the short run, it's possible that mortgage rates may go up to 8%," Lawrence Yun, the chief economist of the National Association of Realtors, said on Thursday after the group released its existing home sales data for August.

“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 added."

MY COMMENT

The housing markets have been crazy for the past four years. What else is new? Poor buyers....you just have to just deal with the conditions being imposed on you and adjust your priorities.

I feel your pain buyers......we bought some of our nine houses during times of extreme interest rates and had to get creative. The highest interest rate we had over the years was in the 10% range......which was owner financed (early 1980's). The mortgage companies at the time were wanting 12%. We had a couple of times that it took us 3 years to sell our house. So....I understand buying and selling in extreme times.

 

I continue to IGNORE the markets today......therefore....some old "war stories" like the above post.

 

HEY.....the markets are improving. YIPPIEE KI YAY Now we are now ONLY down by one percent today.

Unfortunately for me.....I suspect that I am down by much more with my tech heavy and very concentrated portfolio.

BUMMER.

BUT......I continue to be fully invested for the long term as usual.

 

I am having a perfect day today....not a single stock up. Eight for eight.

Of course I dont do anything to try to be up or down....I simply sit, wait, and get blown around by the short term market wind.

 

One of my kids just put $6000 into their brokerage account today.....so.....I took advantage of the down day today to buy:

3 shares AAPL
2 shares MSFT
2 shares HD

The balance $4258 will go into the SP500 Index fund at the close today.

This account is a mini version of my Model portfolio.....with about 85% of the money in the SP500. The stocks are NVDA, HD, COST, MSFT, AAPL, and GOOGL.

 

I had another clean sweep day today. BUT......this time to the red....every stock down today. The best I can say today is that I did not get beat by the SP500 by very much.....0.18%.

A pretty pathetic day when the best you can say is that......"I did not lose out to the SP500 by very much today"....on a day when the SP500 was down by 1.47%.

 

So glad the government is always willing to help out business in this country. Where would we be without their help?

FTC files antitrust suit against Amazon, alleges retail site is illegal monopoly

https://finance.yahoo.com/news/ftc-...etail-site-is-illegal-monopoly-162915537.html

 

While I am waiting for the COST earnings report. This is a pretty good little article for any newer investor. They list the various books and than go on to describe each one in a little blurb.....the books deal with investing and your financial life..

11 of the Best Investing Books for Beginners
The best finance books for beginners break down important investing concepts in simple terms.

https://money.usnews.com/investing/articles/best-investing-books-for-beginners

Here is the list of books:


"Here are 11 of the best investing books for beginners:

• "The Intelligent Investor"
• "The Richest Man in Babylon"
• "The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns"
• "A Beginner's Guide to the Stock Market: Everything You Need to Start Making Money Today"
• "Investing QuickStart Guide: The Simplified Beginner's Guide to Successfully Navigating the Stock Market, Growing Your Wealth & Creating a Secure Financial Future"
• "Rich Dad Poor Dad"
• "How to Money: Your Ultimate Visual Guide to the Basics of Finance"
• "Get Good With Money: 10 Simple Steps to Becoming Financially Whole"
• "Broke Millennial Takes on Investing: A Beginner's Guide to Leveling Up Your Money"
• "The Total Money Makeover: A Proven Plan for Financial Fitness"
• "The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness"
• Bonus white paper: "Mastering Your Money Energy""

I recommend anyone that is looking for good educational material on investing....read this article and the little paragraph about each book. Pick one or two to start with and than try to work your way through the list.

 

HERE are the COSTCO earnings. Is this the first report of the upcoming earnings reports.....or....one of the last ones from the last earnings reports? I have no idea.

Costco Wholesale Corporation Reports Fourth Quarter and Fiscal Year 2023 Operating Results

https://investor.costco.com/news/ne...scal-Year-2023-Operating-Results/default.aspx

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


"ISSAQUAH, Wash., Sept. 26, 2023 (GLOBE NEWSWIRE) -- Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today announced its operating results for the 17-week fourth quarter and the 53-week fiscal year ended September 3, 2023.

Net sales for the 17-week fourth quarter were $77.43 billion, an increase of 9.4 percent from $70.76 billion in the 16-week fourth quarter last year. Net sales for the 53-week fiscal year were $237.71 billion, an increase of 6.7 percent from $222.73 billion in the 52-week fiscal year of 2022.

Net income for the 17-week fourth quarter was $2.160 billion, $4.86 per diluted share, compared to $1.868 billion, $4.20 per diluted share, in the 16-week fourth quarter last year.

Net income for the 53-week fiscal year was $6.292 billion, $14.16 per diluted share, compared to $5.844 billion, $13.14 per diluted share, in the 52-week prior year.

Costco currently operates 861 warehouses, including 591 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 33 in Japan, 29 in the United Kingdom, 18 in Korea, 15 in Australia, 14 in Taiwan, five in China, four in Spain, two in France, and one each in Iceland, New Zealand and Sweden. Costco also operates e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia."

MY COMMENT

This is raw data.....as reported by the company. The actual article contains Income Statement, Balance sheet, and Statement of Cash Flow.

Looks like some positive increases in every basic category. BUT....I have no idea what the expectations were. Regardless ....no doubt....the stock will be down tomorrow.

 

The media take.

Costco tops quarterly earnings expectations, even as sales remain soft

https://www.cnbc.com/2023/09/26/costco-cost-earnings-q4-2023.html

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


"Key Points

• Costco on Tuesday reported quarterly earnings that topped Wall Street’s expectations.
• Comparable sales for the company rose 1.1% year over year, but only 0.2% in the U.S.
• Costco is expected to share more details about the quarter during a conference call at 5 p.m. ET.

Costco on Tuesday reported quarterly earnings that topped Wall Street’s expectations, as shoppers turned to the membership club for cheaper gas, discounted prices of bulk items and more.

Here’s what the membership-based warehouse club reported for the three-month period that ended Sept. 3 compared with what analyst were expecting, according to consensus estimates from LSEG, formerly known as Refinitiv:

• Earnings per share: $4.86 vs. $4.79 expected
• Revenue: $78.9 billion vs. $77.9 billion expected

Costco’s net income for the fiscal fourth-quarter rose to $2.2 billion, or $4.86 per share, compared with $1.87 billion or $4.20 per share a year earlier.

Comparable sales for the company rose 1.1% year over year, but only 0.2% in the U.S. Excluding changes in gas prices, the metric rose 3.8% overall and 3.1% in the U.S.

E-commerce sales declined 0.8% compared with the year-ago period.

Costco is expected to share more details about the quarter during a conference call at 5 p.m. ET. Investors will listen for updates about inflation, consumer spending patterns and membership signups at the club.

Costco has gained momentum in the past three years, as membership-based warehouse clubs benefitted from dynamics such as more Americans cooking from home and more millennials moving into suburban homes with bigger pantries during the pandemic. Inflation has also driven some shoppers to sign up and renew their memberships to clubs, including Walmart-owned Sam’s Club and BJ’s Wholesale Club.

Yet in recent quarters, even Costco has spoken about consumers pulling back on some big-ticket and discretionary items such as jewelry, as grocery bills and housing costs remain elevated.

Shares of Costco have climbed about 21% so far this year, outperforming the 11% gains of the S&P 500. The company’s stock closed on Tuesday at $552.96, down about 1%"

MY COMMENT

Looks like a pretty significant BEAT compared to expectations. AND...the good news for those of us that own this company......there is still a membership fee increase due to happen soon. That will be a BIG boost in income.......that will carry forward every year.

 

Good open today and markets so far. I like it after yesterday.