The Long Term Investor

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Tesla stock drops on Q4 earnings miss, EV maker warns production growth rate will be 'notably lower' than 2023
CEO Elon Musk did say that the company's next-gen vehicle will be coming in the second half of 2025.

https://finance.yahoo.com/news/tesl...ill-be-notably-lower-than-2023-143454423.html

 

I mentioned GOVERNMENT earlier today....as.....one of the greatest dangers to the bull market rally. This is a perfect....idiotic....example of what I mean. A fishing expedition with.......the obvious goal of.......ultimately......attacking the most successful companies in America and the world.

FTC launches AI inquiry into Amazon, Alphabet, Microsoft, looking at ‘investments and partnerships'

https://www.nbcdfw.com/news/nationa...king-at-investments-and-partnerships/3444342/

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


"FTC Chair Lina Khan said on Thursday that her agency is looking into AI deals among the biggest players developing and using the technology.

• Khan described it as a "market inquiry into the investments and partnerships being formed between AI developers and major cloud service providers."
• Companies named include Amazon, Alphabet, Microsoft, Anthropic and OpenAI.

The Federal Trade Commission said Thursday it will conduct an extensive study on the artificial intelligence field's biggest heavyweights, including Amazon, Alphabet, Microsoft, Anthropic and OpenAI.

FTC Chair Lina Khan announced the inquiry during the agency's tech summit on AI, describing it as a "market inquiry into the investments and partnerships being formed between AI developers and major cloud service providers."

By invoking its authority to conduct a so-called 6(b) study — named for Section 6(b) of the FTC Act — the regulator can look into the AI companies separately from its law enforcement arm and make civil investigative demands. For example, the agency can order companies to file specific reports and answer questions in writing about their businesses.

"At the FTC, the rapid development and deployment of AI is informing our work across the agency," Khan said. "There's no AI exemption from the laws on the books, and we're looking closely at the ways companies may be using their power to thwart competition or trick the public."

In 2022, the FTC launched a similar inquiry into the prescription drug middleman industry, "requiring the six largest pharmacy benefit managers to provide information and records regarding their business practices." Two yeas earlier, it launched the same type of study into past acquisitions by Alphabet, Amazon, Apple, Microsoft and Facebook (now Meta), "requiring them to provide information about prior acquisitions not reported to the antitrust agencies."

"What AI liability regimes will ultimately look like is still an open question," Khan said on Thursday. "Our enforcement experience in other domains will directly inform how the FTC approaches this work."

MY COMMENT

WELL.....this is simply an "inquiry"....so nothing to worry about. Yeah right......when you start with the premise that the BIG TECH companies are ......"using their power to thwart competition or trick the public.".....we all know where this is headed.

This is what happens when you have........regulators and bureaucrats......drunk with power, pushing their own personal and out of touch with reality agenda.

Imagine....how our world class businesses would do if they were not constantly under attack from......their own country. CLASSIC.

 

A nice little gain for me today. Five of seven stocks UP. BUT...I did get beat by the SP500 by 0.13% today. My two that were down today....COST and AAPL.

ONWARD.

 

The very nice little market today.

S&P 500 closes higher for a sixth day, powered by strong GDP data: Live updates

https://www.cnbc.com/2024/01/24/stock-market-today-live-updates.html

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

"The S&P 500 rose for a sixth straight day, overcoming a slump in Tesla as data indicated continued economic growth.

The broad index rose 0.53% to 4,894.16, clinching another all-time closing record. The Dow Jones Industrial Average added 242.74 points, or 0.64%, to 38,049.13. The Nasdaq Composite increased by just 0.18% to 15,510.50, weighed down by a post-earnings tumble in Tesla shares.

Despite Thursday’s muted gains, the technology-heavy Nasdaq has outperformed this week, tracking to finish up 1.3%. The S&P 500 has advanced 1.1%, while the blue-chip Dow is 0.5% higher on the week.

Both the S&P 500 and Nasdaq have finished higher for the past six trading days. The benchmark S&P 500 has closed at a record high for five sessions in a row, the longest streak since November 2021.

Gross domestic product data showed the U.S. economy grew at a rate of 3.3% in the fourth quarter. That’s much higher than the 2% expectation from economists polled by Dow Jones, underscoring continued economic resiliency despite interest rate hikes from the Federal Reserve.

Thursday’s report also included encouraging data on the inflation front. The personal consumption expenditures price index posted a quarterly gain of 2% when excluding food and energy, a core gauge that the Fed prefers when assessing inflation. Headline inflation increased just 1.7%.

“That was a really healthy mix of data,” said Kevin Gordon, senior investment strategist at Charles Schwab. “That’s pretty much as close to nirvana as you can get for the Fed in looking for non-inflationary growth.”

But a sell-off in Tesla, a retail investor favorite, weighed on the market. Shares plunged more than 12% after the electric vehicle maker posted disappointing fourth-quarter results and warned of lower vehicle volume growth for 2024.

On the other hand, IBM jumped more than 9% after the technology company posted adjusted earnings and revenue that beat analysts’ predictions.

More than one-fifth of S&P 500 companies have reported financials this earnings season, according to FactSet. Nearly 74% of those have surpassed Wall Street expectations, the firm’s data shows."

MY COMMENT

In spite of some of the negative commentary I have seen....EARNINGS are doing just fine. They are at 74% BEATS. that is with about 20% of reports done....and...that 20% includes a huge number of banks....as usual....so not particularly representative on the UP side.

Starting next week we will hit the GITS of earning over the next 3-4 weeks. No doubt.....earnings will be GOOD as usual.

 

EXPECTATIONS....in the form of stock price.....are SKY HIGH for the big cap TECH monsters. Perhaps too high. I would not be surprised to see the market fall back some next week.....not that I have any sort of advance information.

Alphabet, Microsoft and Meta close at all-time highs ahead of earnings next week

https://www.cnbc.com/2024/01/25/alphabet-shares-close-at-a-record-joining-microsoft-and-meta.html

 

The story of the day......for the financial media.

Fed’s favorite inflation gauge rose 0.2% in December and was up 2.9% from a year ago

https://www.cnbc.com/2024/01/26/pce-inflation-december-2023-.html

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

"Key Points

• The core personal consumption expenditures price index for December, an important gauge for the Federal Reserve, increased 0.2% on the month and was up 2.9% on a yearly basis.
• Including volatile food and energy costs, headline inflation also rose 0.2% for the month and held steady at 2.6% annually.
• Consumer spending increased 0.7%, stronger than the 0.5% estimate. Personal income growth edged lower to 0.3%, in line with the forecast.

Fed’s favorite inflation gauge rose 0.2% in December and was up 2.9% from a year ago

An important inflation gauge released Friday showed that the rate of price increases cooled as 2023 came to a close.

The Commerce Department’s personal consumption expenditures price index for December, an important gauge for the Federal Reserve, increased 0.2% on the month and was up 2.9% on a yearly basis, excluding food and energy. Economists surveyed by Dow Jones had been looking for respective increases of 0.2% and 3%.

On a monthly basis, core inflation increased from 0.1% in November. However, the annual rate declined from 3.2%. The 12-month rate is the lowest since March 2021.

Including volatile food and energy costs, headline inflation also rose 0.2% for the month and held steady at 2.6% annually.

The release adds to evidence that inflation, while still elevated, is continuing to make progress lower, possibly giving the Fed a green light to start cutting interest rates later this year. The central bank targets 2% as a healthy annual inflation rate.

Markets took little notice of the data, with stock futures indicating only a slight change at the open and Treasury yields mostly lower.

“Inflation dynamics inside the metric that the Fed uses to formulate policy strongly imply that the central bank will hit its inflation target in the near term,” said Joseph Brusuelas, chief economist at RSM. “This will create the conditions in which it makes [its] policy pivot and begins a multiyear campaign in which it reduces the policy rate towards a range between 2.5% and 3%.”

The Fed’s benchmark overnight interest rate is currently targeted between 5.25%-5.5%.

As inflation drifted closer to the Fed’s target, consumer spending increased 0.7%, stronger than the 0.5% estimate. Personal income growth edged lower to 0.3%, in line with the forecast.

The data indicated that consumers are dipping into savings to pay for their expenditures. The personal savings rate fell to 3.7% for the month, down from 4.1% in November.

Within the inflation numbers, prices for goods declined by 0.2% while services prices rose by 0.3%, reversing a trend when inflation began to spike. As the pandemic forced people to stay home more, demand for goods spiked, adding to supply chain problems and exacerbating price increases.

Food prices increased 0.1% on the month while energy goods and services rose 0.3%. Prices for longer-lasting durable goods such as appliances, computers and vehicles decreased 0.4%.

Looked at in conjunction with a separate report Thursday showing that gross domestic product grew at a much faster-than-expected 3.3% pace in the fourth quarter, the most recent round of data shows an expanding economy and inflation at least moving back to the Fed’s 2% annual target.

While the public more closely follows the Labor Department’s consumer price index, Fed policymakers prefer the PCE because it adjusts for shifts in what consumers actually buy, while the CPI measures prices in the marketplace.

Inflation has been a nettlesome problem since the early days of the Covid pandemic, when price increases surged to their highest levels since the early 1980s. The Fed initially expected the acceleration to be temporary, then responded with a series of interest rate hikes that took its benchmark rate to its highest in more than 22 years.

Now, with the inflation rate cooling markets largely expect the Fed to start unwinding its policy tightening. As of Friday morning, futures traders were assigning about a 53% chance the Fed will enact its first rate cut this cycle in March, according to CME Group data. Pricing points to six quarter-percentage point decreases this year."

MY COMMENT

Both of the economic reports this week came in GREAT. The economy is humming along....like a well oiled top. Inflation is right there in the sweet spot. Now if the FED can just sit down......STFU.....and.....let the economy sit right now we would be all set.

The mania about rate cuts continues with the short term traders......they are the people that will be able to trade and benefit from this "stuff" short term.

BUT......in spite of it all what really counts is.....EARNINGS. After all.....I own specific companies NOT the general economy.

 

I thought there might be some weakness at the open today. Especially with the big cap growth stocks. We have seen such a big run up lately....we are ripe for a little pause. i expect that earnings will have a hard time next week when a majority of the magnificent seven report. Even if the earnings are good it will be all about the GUIDANCE......same as usual.

The expectations on these companies and AI are so high....I dont know if the actual data can meet them.

 

I dont jnow why....but I was thinking about April investing in years past.

Back in the old days when much fewer people had a 401K....the primary retirement and investing vehicle for most people....outside their pension..... was the IRA. April would often see a good jump up in the markets as people made their IRA contribution before the April 15 deadline and invested the money.

It was an artificial...government created.....market timing event. I would usually try to get my IRA money invested early to take advantage of the April BUMP UP. Now......we no longer see this sort of market action or expectation in April. The dominance of the 401K has wiped it out.

 

I like this little commentary.

Should You Buy Stocks at All-Time Highs?

https://investorplace.com/2024/01/should-you-buy-stocks-at-all-time-highs/

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

"Do you put money into this market here at all-time highs?

I used to be nervous about buying a stock when it was setting a record (or a new 52-week high). My fear was: “We’re in thin air up here. It feels like heightened risk for a big pullback.”

But a study of market history tells us such a fear usually isn’t warranted.

Our hypergrowth expert Luke Lango offered some statistics about investing at new all-time highs on Monday.

From Luke’s Daily Notes in Innovation Investor:

Technically, a bull market starts when stocks rally 20% off their lows. However, most investors wait for the stock market to rally more than 20% off its lows and make a new all-time high before calling it a new bull market.

That finally happened for the stock market last Friday. Therefore, by this more common definition of a bull market, stocks have finally entered a new bull market for the first time since 2021.

That’s bullish news for investors because bull markets tend to last a long time.

Since World War II, there have been 13 previous bull markets. On average, they have lasted more than 1,700 days with average stock gains of about 150%.

The current bull market is less than 470 days old with gains of less than 35%.

Judging by historical standards, this new bull market has a lot more runway ahead of it, both in terms of time and gains.

And yesterday, Luke began a buying spree, once again speaking to the reality of purchasing stocks at a new all-time high:

History says this is a breakout worth buying.

When stocks reach new all-time highs, it usually happens in clusters. In other words, once stocks hit an all-time high for the first time in a while, they usually keep making new highs.

Moreover, when the stock market hits an all-time high for the first time in a market cycle, it usually marks the start of a multi-year bull market.

That’s why we view the market’s recent record close as confirmation of our bull thesis that stocks are entering the second year of an AI-powered bull market that lasts into 2030.

William O’Neil, who founded Investor’s Business Daily and created the very popular swing-trading system known as CANSLIM, had a quote about this:

It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.

My friend Meb Faber, the CEO of Cambria Investments, is a widely respected quant analyst. Here’s his take:

Is buying stocks at an all-time high a good idea?

No, it’s not a good idea, which should surprise no one.

The fact that it is a GREAT idea, well, that should surprise everyone.

Meb detailed the results of a back-test he ran that had two rules: remain in stocks if they’re trading at all-time highs at the end of the month. If they’re not at all-time highs, then move into to government bonds.

Here’s the conclusion:

It turns out, it’s a pretty damn good strategy. Better returns than just stocks, lower volatility, and WAY lower drawdowns…

It’s an acknowledgement that all-time highs are nothing to be afraid of.

The right answer to “do you put money into the market at all-time highs” should consider your own risk tolerance, financial goals, and investment horizon.

Legendary boxer Mike Tyson famously said:

Everyone has a plan until they get punched in the mouth.

It’s easy to look at Luke’s data, Meb’s research, and O’Neil’s quote and make a bullish investment plan: “The historical data tell me stocks are headed higher! I’m in!”

But that punch to the mouth is coming.

I can’t tell you when, but it’s on the way, and it’s going to ring your bell. If you’re not emotionally prepared, you’re going to do what the average investor does best…

Become terrified… sell at the wrong time… and underperform.

The way to avoid this outcome boils down to two things:

• Understand exactly why you’re investing in every stock/asset you purchase.
• Know exactly what would cause you to sell that stock/asset ahead of time, and don’t sell unless that thing happens.

It’s this second point that trips up so many investors, so here’s a recommendation…

If you’re more of a short-term trader, or not able to ride through meaningful drawdowns, or not 100% committed to a stock for the long haul, the “why?” behind selling a stock should relate to a specific stop-loss amount. For example, perhaps 20% below whatever high point the stock reaches while you own it.

But if you’re a longer-term investor who’s buying quality assets, stop-losses can be counterproductive in the quest for multi-bagger returns. You’ll need a different approach."

(Article continues from here, click to see the rest)

MY COMMENT

I mention all the time on here that when I have the funds to invest....I NEVER wait for an entry point. The academic data supports going all in all at once when the funds are ready. I have followed this for decades.

Even for me....after over 55 years of investing....it takes a small mental push to do this. Your brain will always tell you to wait for a market drop to get a good buy-in price. BUT....I never give in to how my brain is trying to trick me....I go in.....all in all at once. AND....more often than not over the short term I am very happy that I did.

 

I see that the markets have now settled in to the positive.

BUMMER.....I am expecting to put some money into the market for my kids spouse......at the open on Monday. The money will be available and we will meet tonight and put in the orders. Perhaps we will get lucky and the markets will do a sudden drop at the open MONDAY.

The money will go into the same seven stocks that I own.....NVDA, MSFT, AAPL, GOOGL, COST, HD, and AMZN.

BUT.......up or down....we will make the buy at the open on Monday. No market timing even for a few days. There is simply no way to know what stocks will do....over a few days. BUT...I do know that over the longer term the markets will in general be Up about 70% of years. SO....even with many of these companies being at all time highs.....the money will go in. All in all at once.

This is long term money and the sooner it gets to work in the markets the better. Well actually...... the funds are coming from a SP500 Index Fund....so....a lateral move from stocks to more specific stocks. In fact about 25% of the money is already in those seven stocks as part of the SP500.

Basically I am moving about 20% of the entire account....which is all in the SP500 Index....to the seven stocks. The account is now large enough that it is justified to have some individual stocks. The account is too small to do 50/50 but 20% will be a good start for the long term.

 

I dont want to beat a dead horse so I will let you click on this article on your own. Some said the markets are priced for perfection.....well now we have perfection in just about all the recent economic data....especially the two reports this week.

The Fed got the inflation reading it wanted. When cuts begin is still a tossup.

https://finance.yahoo.com/news/the-...n-cuts-begin-is-still-a-tossup-151221930.html

 

Right now I am in the green on EVERY ONE of my stocks. But the gains are so light they could easily flip to the red. So I am not counting any chickens today....yet.

 

YET....another new all time high for me at this moment....by a small amount. This is in spite of the fact that NVDA and AAPL are in the red by a small amount right now.

The remainder of the day is RIPE with potential. BUT....at the same time being a Friday and preceding the big earnings week next week.....I would not be surprised to see a late day sell off.

Speaking of next week.....EARNINGS:

MSFT on Tuesday after the close.

AMZN, GOOGL, and AAPL after the bell on Wednesday.

Of course we also have the FED meeting and blabbering next week. Not that they really have any relevance anymore. they have lost their power to do much to the markets.