The Long Term Investor

A mild loss for me today. I had only two stocks in the green....NVDA and AAPL. At least NVDA being my largest holding, double any other, is a good one to be positive. I also got beat by the SP500 today by 0.33%.

ON....to the final two market days of 2023.

 

I am calling this the story of the day......since....nothing really happened today in the markets or business news due to the Christmas/New Years gap week.

Treasury yields fall as investors weigh the 2024 outlook for interest rates

https://www.cnbc.com/2023/12/27/us-treasury-yields-investors-weigh-2024-interest-rate-outlook.html

"U.S. Treasury yields fell Wednesday, as investors considered the outlook for monetary policy and financial markets for the coming year.

The yield on the 10-year Treasury dropped nearly 10 basis points to 3.789%."

 

The......"other"....news of the day.

The S&P 500 hovered less than 1% below its record closing high of 4,796.56 reached on Jan. 3, 2022. We are now at 4781.58 on the SP500 at the close today.

 

I hate to even mention the FED....but I like this little article.

Quick Hit: The Fed’s Target Draws Near
The Fed’s targeted inflation rate is very near their stated aim.

https://www.fisherinvestments.com/e...mmentary/quick-hit-the-feds-target-draws-near

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

"For much of the last six months, a common narrative has held that, although inflation was slowing towards the Fed’s 2% y/y target, the last mile—getting it down from a lower-but-above-target rate to the bullseye—would prove the toughest task yet. This narrative always lacked evidence, in our view. And now the Bureau of Economic Analysis’s (BEA’s) November Personal Consumption Price Index (PCE Price Index) has proven it. Let us show you in today’s quick hit.

First, a reminder: PCE is the nation’s broadest dataset on consumer spending, including both retail sales and spending on services, which the Census Bureau’s Retail Sales report largely lacks. PCE is what feeds GDP. It is the bellwether of consumer incomes, spending and—wait for it—prices. The headline PCE Price Index, which it uses to inflation-adjust (real) spending, is the Fed’s targeted inflation measure. (Editors’ Note to financial reporters: Not the core rate!Stop conflating the two!) And, for that matter, the BEA uses the same index to derive real GDP.

In November, we got a clear positive report across the board, even if spending growth rates weren’t boom-ish. Real consumer spending rose 0.3% m/m in November. And, before you presume this was all about Americans going deeper into hock, note that real after-tax personal income rose more—0.4%.[ii] But most attention, as one may expect, was on the inflation measures.

The headline PCE Price Index fell -0.1% m/m—the first actual monthly decline in prices since April 2020.[iii] On a year-over-year basis, it hit 2.6%—just 0.6 percentage point above the target.[iv] Core PCE prices (which exclude food and energy) rose 0.1% m/m and 3.2% y/y.[v]

But perhaps more interesting is this: The last six months have shown a vast slowing in the Fed’s targeted rate. Over this span, headline PCE rose an annualized 2.003%.[vi] On target!

Exhibit 1: Headline PCE Price Index, Rolling Six-Month Annualized Rate


Source: Federal Reserve Bank of St. Louis, as of 12/22/2023.

Now, of course, the Fed aims at year-over-year inflation rates, not annualized over shorter periods. But as an indication of the trend, you can clearly see going that last mile doesn’t look as tough as many pundits previously presumed. And, with supply chain snarls largely vanquished as money supply gently declines, we doubt it is going to get harder from here.

Of course, many use data like this to try and surmise what the Fed may do. Don’t. The cabal of people who set US monetary policy aren’t predictable, often defying past “guidance” based on bias and unknowable interpretations of the incoming data. Investors don’t need to, either, considering stocks have climbed since October 2022—during rate hikes, since the Fed “paused” and since cut speculation started. The influence is limited at best."

MY COMMENT

YEP....the FED is basically done. Now the only remaining question will be when they lose all power to move the markets. One thing is sure....they are not going to shut up. their ego's will not allow that. they are too used to being minor media celebrities.

 

How is the real estate market up there...oldmanram? Especially housing not commercial?

 

OK.....if you dont like NEGATIVE dont read this post. SORRY....in advance to put a small damper on the great year we have had by talking about the future.

The topic.....China and Taiwan.

I believe that as an investor it is important to realize that it is......"PROBABLE".....that China will invade and take Taiwan some time over the next 1-3 years. When this happens it will dwarf the impact of Covid on the USA and world economy. Taiwan controls and produces over 90% of the worlds chips. The factories are there, the technology is there, the designs are there....for the taking.

China will do this for many reasons including:

* They are obsessed with Taiwan and have continuously.....including very recently......announced that they will "reunite" with Taiwan.

* The opportunity to take over and control the worlds chip manufacturing and supply and capture all the latest chip designs and technology, will be way too big for them to ignore.

* They will be able to strike a huge blow against the USA in security, and world standing.

* They will be able to disrupt our economy, stock markets, and economy SIGNIFICANTLY for at least 2-3 years in a way that will make Covid look like nothing.

* They know we will simply bluster but in the end will not be able to do anything.

* And the final reason they will do it......they are the worlds most brutal, power hungry, communist dictatorship and this single event will......for a period of years....totally disrupt the economy of their world enemy......the USA.

Why do I think about this. Because I believe it WILL HAPPEN....it is just a question of when. As an investor I want to be aware of future market perils and this is the....BIG ONE. Forewarned is forearmed.....mentally. The hit to the stock markets......"when"....this happens will be HUGE. Especially the big cap and other tech companies.

I like to think that in this event I will simply have the guts to do what I always do......hold for the long term. At least that is my plan....till I take the first hit to the face.

The event when it happens will be an immediate BIG shock....but the real issue for investors will be the 1-2 years of BRUTAL bear market after it happens. My view of the markets following such an event........a BRUTAL 1-2 year bear market. Losses in all the big averages of 30% to 60%....minimum.....and probably my low end estimate is low.

Am I doing anything to prepare.....NO. Simply mentally preparing myself for the fact that in my opinion it is likely to happen.

OK...enough....now back to celebrating a great investing year.

 

OK....back to HAPPY TALK.

A good open today. Reminds me of yesterday. We need to build on the open and not let it linger and flail around like yesterday.

Stock market news today: Stocks pop as Nasdaq closes in on best year since 2003

https://finance.yahoo.com/news/stoc...ses-in-on-best-year-since-2003-143506410.html

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

"Stocks opened higher on Thursday as a high-flying 2023 neared an end on Wall Street.

The S&P 500 (^GSPC) hovered near an all-time closing high of 4,796.56 for the second straight day. The major average popped about 0.2% at the open, whilethe Dow Jones Industrial Average (^DJI) rose more than 0.1%. The tech-heavy Nasdaq Composite (^IXIC) paced gains, adding just more than 0.2%.

The Nasdaq has now gained more than 44% this year. If that holds, it would be the major average's best year since 2003.

Stocks entered Thursday looking to amass a ninth straight week of gains. If the S&P 500 does notch another positive week, it would be the longest weekly winning streak for the benchmark average since 2004.

Fresh economic data showed that unemployment claims ticked slightly higher in the week ending Dec. 23. Americans filed 218,000 jobless claims, up from 205,000 the week prior and above the 210,000 economists had projected.

Broadly, economists have been closely tracking the labor market for any signs of weakness that could indicate the US economy is headed for a broader slowdown in 2024, but Thursday's data did little to increase any concerns.

"Businesses have been extremely reticent to let go of workers that they struggled to find over the last 3 years," Jefferies US economist Thomas Simons wrote in a note to clients on Thursday. "We doubt that they will be able to hold on to everyone indefinitely, but they're going to try. ... The chances of a soft landing in the labor market have increased, but a landing of some sort is coming for sure."

Also in economic data, the latest release of the index for pending home sales stayed at 71.6 in November, the National Association of Realtors (NAR) said on Thursday. The index reading was the lowest since the index’s founding in 2001, and came in below the 0.9% increase economists had expected."

MY COMMENT

Another...."nothing" day.....for the markets. A good thing with the current bull market intact and the bias of the markets being UP.

 

I asked about housing in the Pacific NW in a post to oldmanram. Here is the national picture.

US pending home sales stuck at 22-year low despite dip in rates

https://finance.yahoo.com/news/us-p...-year-low-despite-dip-in-rates-151817940.html

MY COMMENT

The usual going on in the housing markets. Mortgage rates are an issue for buyers but rates are now lower and if we see some FED cuts they will go lower in 2024. We remain in a very distorted markets with EXTREME INVENTORY ISSUES.

Year 2024 should be a very interesting time for home owners and house hunters.

 

I like this little article.

Can sizzling Magnificent Seven trade keep powering US stocks in 2024?

https://finance.yahoo.com/news/sizzling-magnificent-seven-trade-keep-060820263.html

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

"NEW YORK (Reuters) - As a strong year in U.S. stocks winds down, fund managers face a potentially consequential choice in 2024: stick with the few massive growth and technology names that have powered equity indexes higher, or take a shot on the rest of the market.

Shares of the so-called Magnificent Seven – Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla – have individually soared between around 50% and 240% in 2023, making them among the market's most rewarding bets.

Because of their heavy weightings in the S&P 500, the seven were responsible for nearly two-thirds of the benchmark index's 24% gain this year. Not surprisingly, fund managers in BofA Global Research's most recent survey said owning the stocks was the market's "most crowded" trade.

But expectations that the Federal Reserve will cut interest rates next year while the economy avoids recession have awoken other parts of the market in recent weeks. Meanwhile, some investors say the huge rallies in the seven may have left them overvalued or vulnerable to profit-taking.

"When you have seven companies that are huge in the index all going up, that is good for the market," said Jonathan Cofsky, portfolio manager for the Global Technology and Innovation team at Janus Henderson Investors. "But I think there are probably more opportunities in the rest of the market, depending on rates and the economy."

Data from the Apollo Group showed 72% of the S&P 500's stocks underperformed the index this year, a record.

However, there are signs the rally is broadening. The equal-weight S&P 500 — a proxy for the average stock — has climbed 6.8% in December against a 4.5% rise for the standard index, after lagging most of the year.

Meanwhile, the previously sluggish small-cap Russell 2000 has soared about 14% in December, on track for its biggest monthly gain in three years.

With the weighting of the Magnificent Seven in the S&P 500 swelling, a bad year for the group could spell trouble for the broader market if other stocks don't take up the slack.

Other important factors for the market next year include whether inflation continues to ebb, allowing the Fed to cut rates at the pace markets expect, as well as the continued resilience of the U.S. economy. The run-up to the U.S. presidential elections in November also could increase market volatility.

Of course, other areas of the market might struggle to replicate features that attracted investors to the seven in the first place. Their size and competitive advantages made them a refuge for investors worried about economic fallout from aggressive monetary policy tightening the Fed embarked on to calm surging inflation.

Excitement over the business potential from emerging artificial intelligence technology also helped propel some of the megacaps in 2023, including Nvidia and Microsoft, which have climbed 238% and 56%, respectively.

Another factor is profitability: the Magnificent Seven are expected to post a 39.5% aggregate earnings increase in 2023, against a 2.6% decline for the rest of the S&P 500, according to LSEG data. Their earnings growth is expected to outperform again in 2024, albeit by a lesser extent.

But the Magnificent Seven stocks are trading at more expensive valuations overall after their gains. According to LSEG Datastream, their average forward price-to-earnings ratio is 33.6 times, while the S&P 500 trades at 19.8 times.

"They don't get the low-hanging fruit of coming into this year weak as ... a starting point," said Matt Benkendorf, chief investment officer of the Vontobel Quality Growth Boutique.

Vontobel Quality Growth holds Microsoft, Amazon and Alphabet in its portfolios, but not the other four companies where Benkendorf sees more operating challenges.

Cofsky, meanwhile, said his funds own at least some of the Magnificent Seven but he sees potential rotation into small or mid-cap tech stocks in 2024 if rates continue to moderate.

BMO Capital Markets strategist Brian Belski recommended investors own "a little bit of everything" in the coming year, given his "expectation for individual stock participation to broaden significantly," following narrow breadth relative to history in 2023.

Others believe the Magnificent Seven will continue drawing investors hoping for a repeat of their performance this year.

The Magnificent Seven's dominance of the S&P 500 means they are widely owned by mutual funds and ETFs and may benefit as money comes off the sidelines into stocks, said Francisco Bido, senior portfolio manager at F/m Investments.

He counts all of the seven as long-term holdings in his portfolios, except for Tesla.

"It's a little bit of a feedback loop," Bido said. "They get bigger, people want even more.""

MY COMMENT

My portfolio is obviously very heavy in these few companies. BUT....why not? They represent the most successful companies in the world. As an investor I want to own the BEST of the best. that will continue for me in 2024....I have no plans to sell anything or make any changes to my portfolio or investing style.

 

I am having a good start to the day today....five stocks UP and only two DOWN. The down stocks are non-tech....HD and COST.

But......it is still a very slow and shallow day. Nothing is BOOMING....the gains are mild......so the day is definately not set in stone.

It is the sort of day when the AI TRADING PLATFORMS have a good shot at...pushing the markets.

 

As we knock off the final two days of the market year 2023......I say....HAPPY NEW YEAR TO ALL.

It has been a KILLER year for investors. I am looking forward to my final year end data on Friday. I will of course post my gain for the year in my stocks and two funds. I currently sit at....basically....an all time high.

i dont know if anyone can beat Zukodany with his 60% gain.....but....all are welcome to post their year end results. Remember it is NOT a competition. We all are different ages and different stages in life and have various investing goals. The main thing will be to evaluate your performance against what your personal goals are and against whatever is the best guideline for your personal investing style. For me.....my personal guideline is the SP500. There is no doubt that I will SIGNIFICANTLY beat the SP500 this year. There is no doubt that I will also.....exceed my primary investing goal .....to achieve a total return of 10% or more....for the long term.

THANK YOU....to everyone on here for your knowledge and participation in the discussion. Those that only LURK.....join us in posting next year......your participation is certainly welcome.

 

Correction made Zukodany......LOL......EXCUSSSSSSE MEEEEEE (a 1970's reference). The only one that might give you a run for your money this year is TireSmoke.....with his extreme chip portfolio.