The Long Term Investor

We have been seeing companies LOSE on very good earnings for years now. The FAD of making forward looking statements that has taken hold over the past 2-3-5-8 years is the cause. It used to be that what investors looked at was the financials. NOW they ignore the financials and read CRAP into some vague forward looking statement that is couched in VAGUE language, downplaying expectations, to avoid getting sued later.

The good thing is......this sort of price drop usually ONLY lasts a few days at best before the stock starts to react to the actual financials.

Nvidia........yes......I thought about this company when I posted that list in my prior post. I tried this company as a potential holding a while back. It was a little too erratic for my taste so I sold the shares and did not make it a permanent member of the portfolio model. another stock back than that did NOT stick was Constellation Brands. Just too erratic for me.

 

I like this little article. I am a student of HUMAN BEHAVIOR and this is..........pure........human behavior.

Young investors have a huge stomach for risk right now, data suggests

https://finance.yahoo.com/news/youn...r-risk-right-now-data-suggests-194739891.html

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


"Millennial and Gen Z investors are willing to stomach far more risk than they have in the past, according to fresh data from E*Trade. The company's quarterly investors survey found that over half of these younger investors indicated that their risk tolerance has increased since coronavirus, far higher than other groups.

Retail investors — regular people with portfolios, rather than pros — have streamed into the market since the S&P 500 index plunged 30% in late March off its February peak. And as the S&P 500 (^GSPC) climbed back to a new all-time high this week, powered largely by tech stocks, these aggressive investors have made a lot of money as big winners of the rally.

E*Trade’s survey, which polled 873 investors, found that 51% of young investors have increased risk tolerance — 23 percentage points higher than the total population. Furthermore, this cohort is getting out of cash, trading more, and full of optimism where the market is concerned. Around 34% of investors under age 34 have moved out of cash and into the market, which is 15 percentage points higher than the total population.

They're also trading more frequently, with 51% of investors under 34 trading equities more since the pandemic began, and 46% saying they're trading derivatives more frequently. Based on the survey, only 30% of the total client base is trading more, and even fewer (22%) are trading more derivatives, making the outsized gains particular to young people.

And while E*Trade said that just 9% of young investors surveyed said their portfolios had fully recovered, half expected a full recovery in six months, compared to just a third of the total. However, it’s important to note the date of the survey: between July 1 and July 9. Since then, the S&P 500 has flown back up to a record high, surpassing the pre-Covid peak in late February.

For young investors, this may seem like a reward for staying in or getting into the market and taking on risk as so much economic data has been weak.

This has been the best 100 days for the stock market of all time, and one of the shortest bear markets, having recovered astoundingly quickly, even though no vaccine has vanquished the risks and fears of the coronavirus.

Many people have pointed out that younger investors may have come of age during the financial crisis and Great Recession in 2008, events that shaped their thinking (and that would explain trends like favoring debit cards and avoiding debt). At the same time, they’ve also lived through an incredibly long bull market that had been in place most, if not all, of their careers — potentially long enough to forget that stocks can go down, too.

It’s important to put E*Trade’s numbers showing appetites for risk into context in two ways. First, financial advisers and target-date fund managers say younger people should have fairly high exposure to stocks in long-term portfolios. (Though of course some investors don’t hold the S&P 500 index, and might not be seeing the same gains in their portfolios.)

But more importantly, this data also came in the first week of July when the market was far lower — this is not optimism from the current climate of an all-time high.

That means that the millennials and Gen Z investors (5 to 24 years old) who have been involved in this market have had their moves vindicated and reinforced. Whether it was the right move based on the data is up for debate. If they were long-term investing moves, sure, but the frequency suggests it was more than that, something that might worry market watchers, though perhaps less than trading Hertz stock.

E*Trade appears to be thinking about that.

“When it comes to Millennials and Gen Z investors, time is on their side, but that doesn’t mean they can be complacent or act emotionally,” Chris Larkin, Managing Director of Trading and Investment Product at E*TRADE Financial wrote in a note about the survey. “Access to the market has never been easier, so investors just embarking on trading should walk before they run. A thoughtful and disciplined approach is key—do your research, set up watch lists, and align your trading strategy with your goals and risk tolerance.”

Larkin offered a list of tips: don’t get caught up in fads or impulse buying, use analysis, learn how to use options in ways other than speculation — like protecting trades, lowering risk, and producing income — and test trading strategies with a paper portfolio before using real money."


MY COMMENT

Of course......this little survey comes from E*Trade and ONLY involves just over 800 investors. BUT, I dont doubt that the younger people are being pushed into trading more and more by media, boredom, excitement, greed, fear of being left out, etc, etc, etc. In general.......I think people are pretty smart and most will NOT take outsize risk. The examples you see in the media every day are the EXTREME.

 

Thanks for the KIND WORDS TomB16. No one knows what the markets will do short term. BUT......there are times when you can see the PROBABILITY lined up. Even with........pretty good insight.......I RARELY trade, since I am a long term investor.

As long as you ask........my June 23 shares are working out real well. I am within $3 of DOUBLING my money. I have 12 shares.

TODAY........another GREAT day. Plenty of GREEN and a BIG BEAT of the SP500 by .97%. I was TOTALLY out of touch today. the first time I got a chance to check the markets on my phone was about 7:00PM. I was very.......PLEASANTLY SURPRISED to see the price of TESLA and APPLE.

 

The recent.......ACTION......in TESLA reminds me of the early days in Microsoft. MSFT would split and than within a few months be pushing back toward the pre-split price. This went on for a run of about 12 years..........from 1990 to about 2002. One BIG difference..........MSFT had a license to mint money as the ONLY provider of an operating system to the vast majority of the computers being sold in the world. AND.......at the same time.........during that era the INTERNET came into use EVERYWHERE. TESLA is a much more TENUOUS situation..........with more RISK. BUT.........still looking pretty nice.

I just put in a SELL ORDER.......to sell ALL shares of 3M in all accounts. This stock has been my absolute WORST performer over the past 5 years........achieving a total return of about 35% over that time. Recent mention of NVIDIA got me thinking..........so........I will be replacing ALL 3M shares with NVIDIA shares.......at the open tomorrow.

As I mentioned.........I did a deep research dive on NVIDIA in the past and ended up trying it out as a position. I ended up NOT adding it as a long term holding. I am going to give this company another TRIAL. So........for now.........in my portfolio model it is REPLACING 3M. I am thinking there is a good probability that in they will be the DOMINANT NAME in artificial intelligence and machine learning, powering of self-driving cars, cloud gaming and data centers. In fact I think they already are........but NOT fully. I like their science and research and management. THE BIG ISSUE with chips that I have seen in the past is that they tend to become simply commodities.........and they are subject to cyclical downturns. THAT.......is what caused me to sell last time I tried this stock. In fact this is what caused me to sell out of INTEL in the distant past when they were a long term holding for a good length of time.

I DO like the performance.........so far.......of their Mellanox acquisition.........it doubles down on data centers AND gives positioning for leadership in AI and deep learning. I find it very impressive that this acquisition contributed 14% of Nvidias overall revenue and just over 30% of data center revenue in the recent earnings.

So.........lets see how this goes.........the SECOND TIME AROUND. If it STICKS.......good. If not.......well I can always add these funds to the SP500 Index fund if I dont have something else as a long term candidate.

 

Hey Road

Am I reading right......you are in the Apple trade along with me and Emmett Kelly?

YES.......I am STILL holding to my original plan. I anticipate that the stock will follow the same trend that I have seen many many times in the past with many many companies........I anticipate that there is a distinct........PROBABILITY.........that the stock will be down or linger following the split.

REMEMBER..........I am holding shares that were bought on margin. I prefer to NOT hold them beyond the short term. I am NOT looking for more shares. I prefer to make a nice profit and sell. BUT......others.....may be doing this trade AND willing to just hold the shares. That is fine. I think that is VERY reasonable......especially if someone wanted to add some shares anyway.

I am keeping in mind the ONE BIG THING going forward that has the potential to disrupt EVERYTHING......the election. I see the Dem's putting ALL the pieces into place to dispute the election in EVERY WAY possible if they lose......they will challenge the count, the mail votes, the legality.......EVERYTHING. I see the potential for the election results to be TOTALLY TIED UP for months after the election.....perhaps even beyond the end of the year. A complete disaster. How they REFUSED to accept the results of the last election is just a MINOR warm up to the nuclear devastation and scorched earth they will bring down on the country if they lose this time. As usual.......what they claim the REPUB's will do to disrupt and challenge the election is exactly what THEY will do............TIMES 1000.

The above is NOT political............it is what I SEE as the chaos that could start the first week of November and wreak havoc on the markets. So at that time......I want to be simply holding my long term portfolio........for the long term........nothing more nothing less. Sorry to be negative......but that is what I expect........and the good news......this is simply one persons opinion so I hope I am very very wrong.

 

I DO LIKE this little article on Nvidia. I am going to bed so here it is.....no time to discuss tonight.

Nvidia will surge 24% and become the first $500 billion semiconductor company as processor dominance widens, Bank of America says

https://markets.businessinsider.com...ssor-data-center-dominance-2020-8-1029522333#

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

• "Nvidia will become the first $500 billion semiconductor stock as its data center business ramps up and gaming sales surge, Bank of America analysts said Thursday.
• Analysts led by Vivek Arya boosted their price target for Nvidia shares to $600 from $520, implying a 24% rally from Wednesday's close.
• "All growth roads" lead to the company reaching the valuation threshold and capitalizing on healthy tech trends, the team said.
• Nvidia holds an "unassailable hardware/software/developer lead in some of the largest and fastest growing markets," they added.
• Watch Nvidia trade live here.

Blockbuster second-quarter earnings set the stage for the Nvidia to become the first-ever $500 billion chipmaker, Bank of America analysts said Wednesday.

The team led by Vivek Arya lifted their price target for the semiconductor company's shares to $600 from $520 in a note, implying 24% upside from Wednesday's close. Bank of America also reiterated its "buy" rating on the stock and praised the company's robust financials.

Nvidia reported better-than-expected sales and earnings on Wednesday afternoon, and its data center unit outperformed its gaming arm for the first time. The company also guided for a strong second half of the year on gaming sales growth and continued data-center strength.

"All growth roads" lead to Nvidia reaching a half-trillion-dollar valuation, the analysts said. The company's free cash flow generation of 38% is "best-in-class" for all of tech, and its upcoming Ampere gaming chips set it up for strong momentum, they added. The team raised its 2020, 2021, and 2022 Nvidia profit forecasts by 10%, 14%, and 11%, respectively.

"Bigger picture, we believe NVDA has an unassailable hardware/software/developer lead in some of the largest and fastest growing markets in semis/tech," they wrote.

Nvidia only gained as much as 2% in Thursday trading after posting early losses amid a wave of profit-taking. Shares have more than doubled in 2020 as investors pile into tech bets.

Still, the processor company needs to overcome a handful of obstacles on its climb to a $500 billion valuation. The data center sector is a "lumpy" one where volatile inventory build and digestion can quickly decelerate growth, the analysts said. US-China trade tensions could strike at the company's international sales. Disruptive merger and acquisition activity could also freeze the company's winning streak, they said."

MY COMMENT

Who knows........I am looking for another DOMINANT, ICONIC.......long term holding. I tried them once before.......hopefully they will stick this time. If not.........I keep looking. At the worst......I think they will perform better than continuing to hold 3M.......at about 35% total return in five years.

 

Hi again ROAD

Am I reading your post correctly? Except for Apple.....are you ALL cash and missed out on the entirety of the rally since March 23?

I do NOT fault that......if I am reading your post correctly.......you probably missed a lot of the pain and losses if you went to cash early. What I am curious about is.......do you plan to get back into the markets? I am also curious as to how you will get back in and when. I see TWO EVENTS that will impact someone like you getting back into investments........the election........and...... a virus vaccine.

I think we will see multiple vaccines being approved in September/October........a good event that might KICK the markets into high gear........and......the election.....with the potential for 2-4 months of total turmoil. So, someone that is all cash.......MIGHT.......see prices kick up in a short term RALLY in Sept/Oct and than a correction, 10-20%, following November.

WHATEVER happens......good or bad.....all this stuff of the past 6 months and going forward for another possible 4 months or more is putting a BIG STRESS on people and the economy. We seem to be weathering it so far......but at some point there might be a tipping point.

I want to make clear........I DO intend and WILL simply hold through all this STUFF that will happen between now and the end of the year. I will remain fully invested as usual for the long term.

 

I put in my sell order for 3M and my buy order for Nvidia last night......to be executed at the open. WORKED OUT WELL.......at least so far......the Nvidia shares are showing a gain......so far of 2% ABOVE my purchase price per share. Nice to have a very small cushion going forward. I REALLY .......hope......this stock sticks as a long term holding. I think this company is on the cusp of becoming a BIG CAP, ICONIC PRODUCT, DOMINANT, WORLD WIDE MARKETING, GREAT MANAGEMENT, DIVIDEND PAYING, company. In other words exactly the sort of company i like to hold for the long term.

The thing that killed it for me in the past and still might this time is the habit of chip companies to be EXTREMELY cyclical. I like my companies to be a little less erratic in their growth. I was an INTEL investor for many years in the 1990's and did well with them in the computer GOLDEN ERA. BUT....ultimately the erratic medium term behavior caused me to bail.......and......I have not owned the company since than.