The Long Term Investor

WOW....what a beautiful day in the markets today. A nice FAT GAIN for me with five stocks UP and two down. The down were HD and AAPL. I got in a monster beat on the SP500 today by.....1.65%.

The star of the day......NVIDIA. The stock has been on a....stealth.....run lately. With all the attention on the FED and the big cap tech earnings....there has not been much mention of NVIDIA being ON FIRE. IT closed at $661 today and was up by $31.

 

BIG gains in most of the big averages this week. I hit a new.....FAT....all time high today as did many others I am sure. Here is where we are at weeks end.

DOW year to date +2.56%
DOW five days +1.43%

SP500 year to date +3.96%
SP500 five days +1.32%

NASDAQ 100 year to date +4.79%
NASDAQ 100 five days +1.26%

NASDAQ year to date +4.11%
NASDAQ five days +1.12%

RUSSELL year to date (-3.17%)
RUSSELL five days (-0.67%)

What an amazing start to the year for the averages and for me personally. Last week I was at +8.06% year to date for my entire portfolio. This week.....a BIG GAIN.....I am now up to +11.21% for my entire portfolio, year to date. I dont know how long this SMOKING MARKET can keep up....but I am along for the long term ride.

 

HAVE A GREAT WEEKEND EVERYONE. LETS DO IT AGAIN NEXT WEEK.

 

Not hearing much about this....are you?


Fourth-quarter earnings are shaping up to be the best of 2023, but there’s a catch

https://www.cnbc.com/2024/02/02/fourth-quarter-earnings-shaping-up-to-be-the-best-of-2023.html

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

"Key Points

• Almost halfway into earnings season, profits are clearly coming in far better than anybody expected.
• Helping companies’ bottom lines this round are easing input costs, more emphasis on cost controls and efficiencies and significantly reduced expectations.
• But the strong figures come after earnings expectations tumbled going into the reporting season, and there’s no positive momentum looking forward.

Here’s how big of a surprise corporate profits have been this earnings season: The fourth quarter is now shaping up to be the best of 2023.

Despite ongoing macroeconomic concerns that have hampered demand and weighed on consumer sentiment, almost halfway into earnings season, profits are clearly coming in far better than anybody expected.

Helping companies’ bottom lines this round: easing input costs, more emphasis on cost controls and efficiencies and significantly reduced expectations.

A plethora of significant earnings beats among some very important S&P 500
companies such as Amazon, Meta, Apple, Chevron, ExxonMobil, Merck and Bristol Myers Squibb
have moved the Q4 growth rate notably higher late this week.

LSEG, formerly Refinitiv, is now seeing a nearly 8% rise in earnings growth this season. That’s far better than the 4.7% expected just three weeks ago, right before the big banks reported results.

Stronger-than-expected results from three sectors are particularly notable:

• Energy – 90% of the companies have beat earnings estimates, with profits coming in almost 14% above expectations.
• Health care – 85% have beat on the bottom line, with earnings coming in nearly 11% above expectations.
• Tech – 84% have posted earnings beats, with earnings more than 5% above expectations.

As for the S&P 500 as a whole, Q4′s current earnings per share growth rate of 7.8% exceeds the 7.5% growth seen in all of Q3 — and is now tops for the year.

Currently, 80% of S&P 500 earnings results have beat estimates, slightly higher than normal trends, and earnings have come in more than 6% above expectations — not quite the 7% to 8% upside seen in the previous two quarters, but still a very strong number.

One very important caveat: These strong figures come after earnings expectations tumbled going into the reporting season. Back on Oct. 1, S&P 500 fourth-quarter earnings were expected to grow 11% year over year, according to LSEG.

Although the earnings picture has significantly improved since the start of 2024, results are still far below what Wall Street had hoped for a mere four months ago.

As good as fourth-quarter results have been, there’s still no positive momentum looking forward. Both first-quarter and full-year 2024 earnings estimates have come down since Jan. 1 as many companies have issued cautious guidance this earnings season."

MY COMMENT

All the morons that established the earnings expectations are looking like IDIOTS once again. Low expectations? Well DUH....it is the experts that did that.

Earnings are coming in BIG this time around. BUT....you are not seeing this in the media. There is a near black-out on positive news regarding earnings.

Even this little article was released on Friday late in the day.

I am sure many........ if not most.......people are thinking that earnings are NOT doing well this time around. That is the tone of the articles that you see every day.

I WELCOME the lowering of expectations that is happening for 2024.....a guarantee of more earnings BEATS to come.

 

Something is wrong with this picture:

Wall Street heads into the week ahead worrying the rally to record highs is running out of steam (3PM today)

https://www.cnbc.com/2024/02/02/wal...-worry-the-rally-is-running-out-of-steam.html

VERSUS

S&P 500 closes at a record, rises for a fourth-straight week on strong tech earnings: Live updates (4:23PM today)

https://www.cnbc.com/2024/02/01/stock-market-today-live-updates.html

MY COMMENT

ALL I can say is.......MORONS.

 

Once again:

I am once again posting my PORTFOLIO MODEL. My initial criteria to start the process to consider a business are.......BIG CAP, AMERICAN, DIVIDEND PAYING, GREAT MANAGEMENT, ICONIC PRODUCT, WORLD WIDE LEADER IN THEIR FIELD, LONG TERM HORIZON, etc, etc, etc.

PORTFOLIO MODEL

"Here is my "PORTFOLIO MODEL" for all accounts managed which is the basis for MUCH of my discussion in this thread. I am re-posting this since I often talk in this thread about my portfolio model. My custom in the past on this sort of thread was to re-post my portfolio model every once in a while since I will tend to talk about it once in a while. I "manage" six portfolios for various family including a trust. ALL are set up in this fashion. If I was starting this portfolio today, lets say with $200,000. I would put half the money into the stock side of the portfolio, with an equal amount going into each stock. The other half of the money would go into the fund side of the portfolio, with an equal amount going into each fund. As is my long time custom, I would than let the portfolio run as it wished with NO re-balancing, in other words, I would let the winners run. Over the LONG TERM of investing in this style (at least in my actual portfolios), the stock side seems to reach and settle in at about 60% of the total portfolio and the fund side at about 40% of the total portfolio over time. That is a GOOD THING since it tells me that my stock picks are generally beating the funds over the longer term. AND....since the funds in the account generally meet or beat the SP500, that is a VERY good thing.

As mentioned in a post in this thread, I include the funds in the portfolio as a counter-balance to my investing BIAS and stock picking BIAS and to add a top active management fund that often beats the SP500 (Fidelity Contra Fund) and a SP500 Index Fund to get broad exposure to the best 500 companies in AMERICAN business and economy. The funds also give me broad diversification as a counter-balance to my very concentrated 10 stock portfolio.At the same time the funds double and triple up on my individual stock holdings............that I consider the BEST individual businesses in the WORLD.

STOCKS:

Alphabet Inc
Amazon
Apple
Costco
Home Depot
Microsoft
Nvidia

MUTUAL FUNDS:

SP500 Index Fund
Fidelity Contra Fund

CAUTION: This is a moderate aggressive to aggressive portfolio on the stock side with the small concentration of stocks and the mix of stocks that I hold and with the concentration of big name tech stocks. Especially for my age group. (74). So for anyone considering this sort of portfolio, be careful and consider your risk tolerance and where you are in your life and financial needs. I am able to do this sort of portfolio since my stock market account is NOT needed for my retirement income AND I have a fairly HIGH RISK TOLERANCE. In addition I am a fully invested, all the time, LONG TERM investor. (LONG TERM meaning many years, 5, 10, 20, years or more)"

MY COMMENT

This portfolio is HIGHLY CONCENTRATED on the big cap side of things. OBVIOUSLY between the funds and my ten stock holdings there is MUCH doubling and tripling up on the stocks. THAT is INTENTIONAL. I strongly subscribe to the view of Buffett and some others that TOO MUCH diversification kills returns. I do NOT believe in the current diversification FAD that most people seem to now follow.......or think they are following. I DO NOT do bonds and think the current level of bonds held by younger investors.....those under age 50.....is extremely foolish.I DO NOT do market timing or Technical Analysis."

 

OH NO......is this good or bad......omen or superstition.....sign of the beast or self discovery and spiritual essence?

Nvidia stock hits record high as tech earnings reinforce AI bullishness

https://finance.yahoo.com/news/nvidia-stock-hits-record-high-041321023.html

"Shares of Nvidia hit an intraday record of $666 per share on Friday as artificial intelligence bullishness grows after tech earnings this week reiterated companies' big plans for the nascent technology."

NO.....I am not superstitious. Although the company is a.....BEAST. I prefer to take the "other" view on the number and NVIDIA:

"The Significance of Angel Number 666

• Balance and Harmony: The number 6 is associated with balance, harmony, and nurturing. When you encounter angel number 666, it often serves as a reminder to maintain harmony in all aspects of your life, including your thoughts, emotions, and actions.
• Family and Home: Guardian angels might be using this number to remind you of the importance of your family connections and the need to find stability and happiness within your domestic life.
• Material and Financial Aspects: This number can also be related to material and financial matters. It may suggest the need to find a balance between your spiritual pursuits and practical responsibilities, such as managing finances and securing your material well-being.
• Letting Go of Fear: Seeing angel number 666 could be an indication that you need to release fears and negative thoughts that are holding you back. Hence, trust the instincts of your guardian angel to help you overcome any challenges.
• Manifestation and Abundance: Angel number 666 holds positive energy related to manifestation and attracting abundance into your life. It reminds you that your thoughts and intentions have the power to create your reality."

https://www.hindustantimes.com/astr...defines-its-significance-101690876966743.html

NONE....of the above is intended as any sort of religious commentary.....just social observation.

 

That ETF has some really good returns for 3 year, 5 year, and 10 year.......rg. Looks like a good one for you to use.

 

Next week:

Earnings to test market rally: What to know this week

https://finance.yahoo.com/news/earnings-to-test-market-rally-what-to-know-this-week-145930556.html

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

"Stocks are back near record highs with the S&P 500 finishing Friday at 4,959, its highest close ever. All three major indexes logged gains for the week, surviving a tumultuous week of trading.

Stocks initially slid following lackluster tech results from Microsoft (MSFT) and Alphabet (GOOG, GOOGL), and sold off further on Wednesday when Fed Chair Jerome Powell said an interest rate cut in March is not the "base case."

But blowout earnings from Meta (META) and Amazon (AMZN), combined with a stronger-than-expected January jobs report, sent stocks into rally mode.

For the week, the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) rose more than 1% while the Nasdaq Composite (^IXIC) gained just under 1%.

A slew of corporate earnings including reports from Eli Lily (LLY), Disney (DIS), Spotify (SPOT), McDonald's (MCD), Chipotle (CMG), and Pepsi (PEP) will greet investors in the week ahead amid a light economic schedule.

The rate cut debate rolls on:

Federal Reserve Chair Jerome Powell poured cold water on investor hopes for a March interest rate cut during his press conference following the January Fed meeting. Powell said the central bank needs "greater confidence" in inflation's path lower before cutting rates.

Economists believe the January jobs report, which showed the US economy added 353,000 jobs in the month, bolsters the Fed's case it can wait to cut interest rates without pushing the economy into recession. But the report also brought forth concerns about inflation reaccelerating, as wages increased 4.6% in the month, the highest pace of growth since July 2023.

"After the FOMC meeting on Wednesday, we maintained confidence in our expectation of a March rate cut," Jefferies US economist Thomas Simons wrote in a note to clients on Friday. "After today's data, however, it is hard to see how that is going to happen. Barring a significant turnaround in the February data, or very weak inflation data between now and mid-March, it is much more likely that the FOMC will hold policy rates steady in March."

Investors are now placing a roughly 20% chance on an interest rate cut at the March meeting, per the CME FedWatch Tool. On Thursday, there had been a nearly 40% chance and a month ago nearly an 80% chance.

Earnings check-in

Corporate earnings appeared to round a corner to end last week. After S&P 500 earnings had been posting a more than 1% decline for the quarter, a swath of earnings in the past week flipped the narrative headline with earnings beats from tech stalwarts Apple, Meta, Alphabet, Amazon, and Microsoft, per FactSet.

The latest data from FactSet shows earnings are expected to grow 1.6% in the fourth quarter. And notably, estimates for the first quarter have been kept in check too. In the past month analysts have trimmed first quarter earnings estimates by 1.4%, less than the five-year average of a 2.1% cut.

104 S&P 500 companies are slated to report earnings this week, per FactSet.

Mainly quiet on the economic fron:

After an onslaught of economic data that's showed the US economy is off to a hot start to the first quarter, investors will have few data points to dissect in the week ahead. Weekly initial jobless claims will continue to be closely tracked as companies announce layoffs while an update on activity in the services sector on Monday will catch investor attention.

MY COMMENT

We will see a very NORMAL week this week. There is really little to nothing going on with the FED, the economy, or the markets. it should be a good week to judge the basic market direction.....with no outside influences or distractions.

However.....with many stocks and averages near or at all time highs.....there is potential for profit taking or re-balancing.

 

LOL.....you have to love the traders. They constantly float all this rate cut BS....which the media constantly parrots. They trade this stuff up and down making money both ways. The AI trading platforms....are actually just trading short term news headlines and interest rates.....so...... not much AI involved.

Today is the perfect example. Powell speaks and the trading kicks in. Powell speaks and the Ten Year Yield jumps and the trading kicks in. These people and their speculative short term trading....do not really care about Powell.....they just use it to push their trades.

The reality is that the actual stock markets.....is the long term retail investor. AND....none of those people are selling and causing the drop today. It is all short term speculation.

Of course the big boys of trading....acting in concert.....have the power to move the markets in favor of their trades. They do it up and down constantly. It is not considered market manipulation....but it should be. Because of their power you will never see an investigation into the many trading AI PROGRAMS and how and why they act in concert......and....how they move the markets.

The opposite example is the old GAME STOP short squeeze. When that happened.......it did not take long to hold congressional hearings, market stops, etc, etc, etc. My opinion.....the short term speculative trading process......is obviously corrupt. If you play in that pool as a little minnow.....well......you will get what usually happens to a small fish in a tank full of sharks.

Not surprisingly......when the experts and big boys play in our pool......the long term.....hardly any of them can even beat the simple un-managed averages. How can that be when they make huge profits in the short term speculation......which is much more difficult to pull off.....well....the result speaks for itself.

Dow drops nearly 400 points as traders worry about the potential for fewer rate cuts than expected

https://www.cnbc.com/2024/02/04/stock-market-live-updates.html

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

"Stocks fell Monday after comments from U.S. Federal Reserve Chair Jerome Powell dashed investor hopes for interest rate cuts in the near term and yields pushed higher.

The Dow Jones Industrial Average dropped 384 points, or 1%. The S&P 500 slid 0.7% along with the Nasdaq Composite.

In an interview with “60 Minutes” that aired Sunday, Powell reiterated comments made after last week’s January policy meeting. After the Fed kept interest rates unchanged, Powell suggested that a rate cut in March was unlikely.

“We want to see more evidence that inflation is moving sustainably down to 2%,” he said. “Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.”

Those comments lifted Treasury yields and dampened expectations for rate cuts in the near term. The yield on the 10-year Treasury note was last up more than 12 basis points to 4.158%.

Investors also assessed a fresh batch of strong economic data as suggested rates may stay elevated for longer than anticipated. The ISM nonmanufacturing index for January came in at 53.4, higher than a Dow Jones forecast of 52.

Earnings season stretched on, with McDonald’s shares slipping 3% after posting mixed quarterly results. Caterpillar shares popped more than 2% after posting strong profits. Meanwhile, Boeing slumped 2% on news that it will have to rework 50 undelivered 737 Max airplanes.

Monday’s moves come after the three major averages rose for the 13th week out of 14, powered by a stronger-than-expected January jobs report and solid earnings reports from Microsoft and Meta Platforms.

“The fundamental narrative survived a robust stress test this week and it’s hard to poke a hole in either the earnings power of US tech or the broader growth/inflation tradeoff ... the tactical setup, however, looks demanding and I’m a bit doubtful the next few months will sustain the same degree of upside torque that we witnessed in the past few months,” Tony Pasquariello, global head of hedge fund coverage at Goldman Sachs, said in a note to clients on Saturday.

Traders will also be keeping an eye on the Middle East, where the U.S. began airstrikes in Iraq and Syria on Friday."

MY COMMENT

In a perfect world the media would be catering to all the tens of millions of long term investors. We represent the GUTS of the markets compared to the minor numbers of short term traders. BUT...it is all about power and money.

There is no way the jump in the Ten Year Treasury is justified today. So....I simply dont care. I look at it and simply....LAUGH.

It is so transparently ridiculous.

 

In general I agree with this little article.

Strong Jobs Report Confirms the 2024 Bull Thesis for Stocks
Buckle up, folks: the jobs report confirms this bull market is about to heat up

https://investorplace.com/hypergrow...ort-confirms-the-2024-bull-thesis-for-stocks/

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

• "This does not look like an economy on the brink of collapse. Instead, it shows remarkable resilience, with a bullish catalyst in potential interest rate cuts later this year.
• According to current estimates from the Cleveland Fed, inflation increased by less than 3% in January. This indicates that real wages grew by more than 1.5% in the same month. This growth represents one of the largest jumps in the past three years!
• With inflation expected to continue declining and wage growth remaining around 4%, it appears that real wage growth will stay positive for the near future. And stocks generally perform well when real wage growth is positive.

The U.S. economy shows no signs of plunging into a recession. My advice? Take that theory and toss it in the nearest trash bin.

The January Nonfarm Payrolls Report revealed that the U.S. economy added an impressive 353,000 jobs last month, with increases in hiring across every sector except one.

This does not look like an economy on the brink of collapse. Instead, it shows remarkable resilience, with a bullish catalyst in potential interest rate cuts later this year.

The likely outcome is robust and accelerating economic growth for the remainder of the year, accompanied by rising stock prices.

Why the Jobs Report Paints a Positive Economic Picture

The big thing for us isn’t the strong job growth number, per se. That’s awesome to see. But the real positive in the jobs report? Wage growth.

Average hourly earnings increased by 4.5% year-over-year in January, a significant rise. More importantly, according to current estimates from the Cleveland Fed, inflation increased by less than 3% in January. This indicates that real wages grew by more than 1.5% in the same month.

This growth represents one of the largest jumps in the past three years!

Moreover, this trend continues a multi-month streak where wage growth has outpaced inflation. Throughout most of 2021 and 2022, inflation exceeded wage growth. This pattern shifted in May 2023 when wage growth surpassed inflation. Since that time, wage growth has consistently outpaced inflation.

This trend is a very positive sign for the economy.

Consumers drive approximately 70% of the U.S. economy. The economy thrives when they spend, particularly when their purchasing power increases or when wage growth exceeds inflation.

As the chart below illustrates, stocks generally perform well when real wage growth is positive. Real wage growth has been positive since May of the previous year. With inflation expected to continue declining and wage growth remaining around 4%, it appears that real wage growth will stay positive for the near future.

The Final Word

We’ve been saying this for a while now. The U.S. stock market is in the early innings of a multi-year bull market powered by AI. We’re now entering Year 2 of this bull market. We think it lasts into 2030, and that by the end, this tech bull run will go down as the biggest in history – bigger than even the Dot Com Boom of the 1990s that made so many investors filthy rich.

Today’s jobs data seems to corroborate that thesis.

Buckle up, folks, because this bull market is about to heat up."

MY COMMENT

Sounds good to me. AND....I agree that the bull markets has a goo ways to go....as we continue to climb a big wall of worry.

Although......much of the info above could be argued to be a set up for more inflation and perhaps even another FED HIKE later in the year.

As a long term investor.....i really dont care either way. I will take what the markets want to give me for as long as possible and than I will simply sit and wait to do it all over again.

 

The above article about POWELL was a LEAD ARTICLE. At the same time I notice this little secondary article on the same site.

Why Wall Street is still bullish on stocks even with March rate cut hopes dashed

https://finance.yahoo.com/news/why-...th-march-rate-cut-hopes-dashed-113017736.html

 

I have not looked but with NVDA UP big once again.....I suspect that I am positive so far today. The stock is currently UP by over 3% and over $20 per share.

I also know that at this moment I am in the green on COST, GOOGL, and AAPL. So I have a pretty good clue where I am right now without looking.

 

The real question today should be....WTF....is the head of the FED doing blabbing on a TV show....."60 Minutes"?

Is this really what we want the head of the FED doing? A perfect example of the IDIOCY of where we are right now in society, culture and finance.