The Long Term Investor

BIG TIME GREEN Friday. ALSO a nice BEAT of the SP500 by .85%.

Zukodany......you should be fine with goog over the long term. They DO SEEM to be lagging the other tech names lately.

 

Zukodany......you are a business owner. You have done the survey of your customers and you know where you get business from. You know exactly what drives customers to you. So YEAH.

Facebook......I agree that this business could be gone in as little as 5-10 years. They are in a very dangerous business niche. The NEXT big thing in social media could make them obsolete tomorrow. Personally........I dont like Facebook and have NEVER owned the company. OBVIOUSLY........I own the other BIG TECH names.......AMAZON, GOOGLE, MICROSOFT, APPLE. But Facebook.......NO......I dont like them as a long term business model. AND......just like this small bit of this thread.......I NEVER hear anyone saying anything positive about them.

 

This week, Wall Street will see quarterly earnings reports from 130 members of the S&P 500, including Walt Disney Co. DIS, +1.10%, Uber Technologies Inc. UBER, +0.06% and Beyond Meat Inc. BYND, +2.09%.

ANOTHER big week starts tomorrow. Reports this week from 26% of the SP500. We are in the HEART of earnings right now.......and.......so far so good.

SP500 year to date +1.25%
DOW year to date (-7.39%)

LAST WEEK........Monday through Friday........SP500 UP by 1.73%.
LAST MONTH...................................................SP500 UP by 4.51%.
LAST THREE MONTHS................................... SP500 UP by 15.56%.
LAST SIX MONTHS......................................... SP500 UP by 1.41%.

LOOKS LIKE.a trend to me. Lets keep it going this week and make some money.

 

AGREE....A55. If I dont like what a company does or their products.......I will not buy it. Beyond Meat......I dont like ONE HORSE product.......FAD based.......companies. I ALSO do NOT like to buy young IPO companies with no profit. I prefer to wait a few years and see how they do. MOST will not be successful......at least enough for me to ever buy them.

ON another topic:

Buy, sell, repeat! No room for 'hold' in whipsawing markets

https://www.reuters.com/article/us-...-for-hold-in-whipsawing-markets-idUSKBN24Z0XZ

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

"LONDON (Reuters) - Warren Buffett’s favourite holding period — forever — has few fans these days, with the average length of time shares spend in a portfolio hitting record lows this year as investors surf wild market swings for quick gains.

The length of time that investors hold shares has been shrinking for decades but the trend accelerated this year in volatile markets that have made people nervous about sitting on investments for too long.

There are different ways of slicing it, but Reuters calculations based on New York stock exchange data show the average holding period for U.S. shares was 5-1/2 months in June, versus 8-1/2 months at end-2019.

The previous record low of six months was hit just after the 2008 crisis. In 1999, for example, 14 months was the average.

Europe displays a similar trend, with holding periods shrinking to less than 5 months, from 7 months last December.


Rob Almeida, a portfolio manager at asset manager MFS, said for years mom-and-pop punters, commission-free investing and more machine-trading have contributed to the trend.

But 0% interest rates, trillions of dollars of central bank and government stimulus and high levels of uncertainty caused by the pandemic have added to the momentum.

“Capital doesn’t have a price thanks to all this stimulus,” Almeida said, “The COVID-19 crisis has accelerated the trend of short-termism in investing.”

Meanwhile there’s little clarity on companies’ future earnings, the economic outlook and the pandemic outcome.

“So what’s happening is this ability to act or trade or churn, whatever you want to call it, based on information that may not be material,” Almeida said.

Turnover ratios, the percentage of portfolio holdings that are replaced in a 12-month period, increased to 92% at end-June, from 85% a year ago for a group of global multi-asset funds tracked by Lipper.

The trend has ensured rich returns for nimble traders but also poses questions about market stability once stimulus fades.

‘BACK TO FRONT’
Market short-termism was highlighted as far back as 2010 by Bank of England chief economist Andrew Haldane who described it as “subconscious myopia.”

But buy-and-hold investors have had a rough year so far. Stocks fell 40% and bounced by the same margin in the space of three months. Around the 2008 crisis, moves of such magnitude occurred over three years.

Kevin Russell, CIO of UBS’ O’Connor hedge fund, with $6.1 billion in assets under management, said his lowest turnover strategies, unable to quickly adjust hedges and exposures, are now his worst performing.

Low-turnover strategies struggle in this environment as they are not as durable against the swift rotations happening across sectors and style factors, he said, referring to different investment styles.

And when short-term returns are so attractive, it makes little sense to hold assets for longer. Returns on 10-year Treasuries in the first 2020 quarter almost matched what would mathematically accrue after a decade, BCA Research strategist Dhaval Joshi noted.

“The same principle also applies to mainstream stock markets which are priced for feeble long-term returns – yet can rally by 20-30% in the space of a few weeks,” Joshi said.

“The incentive structure is back to front.”

On bonds too, whether high-grade government securities or “junk” debt, average daily turnover is running 10-20% above historical averages, trading platform Marketaxess said.

Asset manager BlueBay generally churns bond positions twice a year. But that horizon shrank in March-April to 2-3 months as volatility constantly threw up buying opportunities, said portfolio manager Kaspar Hense.

The issue has implications for spending on investment research, which is often used to set out strategies for longer-term investing, as well as for long-term pension and insurance investors. And BCA’s Joshi said short-term players buying and selling at the same time can extinguish market liquidity, increasing volatility.

In terms of real-world impact, it is a poor incentive for long-term corporate planning, Fabio Di Giansante, Amundi’s head of large cap equities, said.

“Because what ultimately drives share price performance is earnings and you need to hold on to good investments for a while to see (companies) execute their business decisions,” he said"

MY COMMENT

One BIG......very BIG.......problem with the above article is a FOOLISH assumption that all the short term trading that is going on is making money. I suspect that if looked at over a 6-12 month time period the MAJORITY of short term traders will either be NEGATIVE or FLAT when taxes and other costs are considered. There is NO DATA to verify that the average trader can actually make money.

I ALSO BELIEVE that this trading trend will ESCALATE.......nothing to do with the virus or anything else. It is simply the PUSH by brokerage businesses to HYPE trading as the way to go. You RARELY see anyone use the terms......INVESTOR......INVESTING.....of similar terms anymore. The terms you see being used are......TRADE....TRADING.....TRADER. ADD in the internet and the video culture generation as well as the total lack of long term knowledge on the part of younger people.......ON EVERY ISSUE......and you have a recipe for disaster.

MANY people are going to learn some......VERY BIG.....investing lessons the hard way. BUT....that is fine with me.....I STRONGLY PREFER.....to NOT be investing in the mainstream style of the moment. I KNOW what works for me and has for decades and I stick with it. It is INTERESTING to watch all the traders FLAILING around and CHURNING their own holdings......BUT.......I PREFER......to actually make and compound REAL MONEY.

 

SPEAKING about......TRADING. I have to run right now.....but.....will discuss later a TRADE that I am doing........NOW. I purchased 150 shares of APPLE at the open. I put the order in yesterday so it executed at the open automatically. I got the shares at $433 per share. Looking at the chart, I see that the price at the open was the absolute low of the day.....so far. Twenty minutes into the session it was back above $440.

Have to run.....will discuss later. YES shocking stuff........I am doing a RARE TRADE.

 

WELL.....looks like Emmett Kelly and I are in this together. I wanted to get that trade on here for full disclosure and because I always try to put up any moves as they happen. My entry price was $433 and a few cents for 150 shares right at the open today.

I had been thinking about doing a short term.......3-4 week.......trade on APPLE when the GREAT earnings and the split came out. I personally call this a MOMENTUM TRADE or an OPPORTUNITY TRADE. After giving this some thought over the weekend, I decided to put in the order for today. My reasoning:

The Robinhood environment is going have a strong BIAS toward buying this stock rather than selling over the next 3-4 weeks.

1. The GREAT earnings and stock split announcement will create an environment of escalating MEDIA HYPE as we near the split date.

2. APPLE is.....at the moment......the focus of MUCH positive media attention during a GENERALLY rising market.

3. The stimulus package WILL be agreed to and pass SOON....during my 3-4 week time period.

4. It is likely there will be POSITIVE virus vaccine news during the next 3-4 weeks.

5. I DO NOT see anything that is going to TANK APPLE over the next 3-4 weeks.

6. Continued media attention and speculation about APPLE. APPLE is hitting on all cylinders right now, their business is booming during the pandemic. I anticipate even GREATER financial numbers as we move forward........if they could put up the numbers they just put up for the second quarter......I believe the third quarter whisper numbers and analyst evaluations will be very positive ESPECIALLY over the next 3-4 weeks.

When I do a trade like this.......an OPPORTUNITY TRADE.......I do not use options or any other sort of leverage. I simply buy the shares. I have such HUGE margin capacity in my account......being a short term trade........I will just use margin. By owning the shares outright I have the option.........if I wish.........to hang onto them and more flexibility to decide when or IF to sell.

The DANGERS:

The GREATEST DANGER is a black swan event some time during the 3-4 week time period that tanks the markets. Probability of this is 5-12% in my opinion........trying to be very conservative and figure on the high side.

I consider that the POSITIVE side of the PROBABILITIES is so strong that there is only about a 85% to 90% chance to LOSE money. In other words ........just break even. These odds are as high as they are because I will have TOTAL LEEWAY to decide when or if to sell.

I consider the PROBABILITY to actually MAKE MONEY to be 70% to 80%. Based on the positive reason listed above.

I consider the DOWNSIDE RISK to be the potential to lose $9700. or about 15% worst case.

I am WILLING and ABLE to take and absorb the loss if the worst case situation happens......and.......understand that everything in this post is................FAMOUS LAST WORDS.......and.......could end up as.................WELL THAT DIDNT WORK OUT TOO WELL.

I have done these sorts of trades in the past. I do not do them often but when I have it is usually during a time period of CRAZY DAY TRADING MANIA and when there are LOTS of new people buying stocks and funds. I see the current environment from now going forward over the next 3-4 weeks to be a HIGH PROBABILITY opportunity and I will take the ODDS. My ASPIRATIONAL goal is to make $100 per share. I will PROBABLY SELL before the split date. From my life experience MOST splits run up leading to the split date and than drop back or stagnate for a short time after the split. I do not want to drag this trade out longer than 3-4 weeks.

I am taking this opportunity to try to add some money to my ART BUDGET for the year. YES........GREED......but very CALCULATED greed.

PLEASE.....I am not recommending that anyone else do this.......if any new investors are reading this. There is RISK and my personal circumstance is a big factor in being willing to take that risk.

 

I.......DO......wish you luck on a long and profitable journey to retirement. With BRKB and MSFT.......you can not go wrong. Those are BIG TIME core investments.