The Long Term Investor

Shockingly my SMCI that I purchased at the open for $1035....closed today at $1091. Time to SELL....and claim victory.....SELL, SELL, SELL.

NO......not selling....I am going to hopefully make this a long term hold....unless it disappoints me over the next year or two.

Other stocks that I had UP today.......NVDA, COST. I am not where I can check my account for results at the moment,

 

WELL....a medium level LOSS for me today. BUT....a good victory over the SP500 today by.....0.56%.

COST, NVDA, and shockingly SMCI were all nicely positive......did yeoman's work for me today helping to hold my loss well below the SP500.

I put $50,000 (each) into SMCI today in three different accounts....both of mine and my siblings. This is a NEW position.

I sold shares of NVDA in all three accounts to raise the funds for the trade. I guess I would call it profit taking...although it was an immediate LATERAL move into a stock that is intimately tied to NVDA.

When the trades were done I had left over funds that allowed me to add 9 shares of PLTR to my one account....which brings my share total of PLTR up to 113 shares. PLTR has such a low price relative to any of my other holdings....I decided that going forward when I have a few extra bucks left over from a trade....to just put it into PLTR. I added one share of APPLE to my siblings account with leftover funds.

It is always nice to end the day of a trade with a profit in the new position....although it is meaningless. The way the market was going this morning I expected to start this position off with a first day LOSS.

 

I am doing my part to help to boost APPLE.

With the announcement of the new MacBook AIR with the M3 chip yesterday, I was able to replace my wife's old 2017 MacBook laptop with a new MacBook Pro with a $400 discount at Best Buy. It has the M2 chip.....8GB RAM and 512GB storage....but more than enough capacity for what my wife uses her laptop for. A total price of $1100.

 

Regarding the SUPER MICRO COMPUTER (SMCI) stock recently discussed in here. It is due to be included in the SP500 on March 18.

It will start as about #133 in the SP500 by Market Cap. It has a Market Cap of about $60BILLION.

 

A totally DISJOINTED day for stocks today.

LETS GET BACK ON TRACK TOMORROW.....ONWARD AND UPWARD.

Although.....a couple of down days is no big deal. Certainly NOT a correction. Probably a simple pause for a few days or perhaps a week or two at most....I would guess.

 

A good open today....reminds me of another week that we just had with DISMAL days to open the week yet we closed out the week with a nice gain.

In reality these short term weeks are just about RANDOM. To get beyond the randomness and luck....you have to go out long term with great Indexes or companies.

 

This is certainly good news for stocks.

Rate cuts likely at 'some point' this year: Fed's Powell

https://finance.yahoo.com/news/rate-cuts-likely-at-some-point-this-year-feds-powell-133004964.ht

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

"Federal Reserve Chair Jerome Powell plans to tell House lawmakers Wednesday that interest rate cuts are likely "at some point" in 2024, but that the central bank will proceed cautiously as it evaluates whether inflation is cooling appropriately.

"If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year," Powell said in a copy of his prepared remarks to the House Financial Services Committee.

The group at the Fed that decides whether rates go up or down "does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably" toward the Fed’s goal of 2%, he added in his remarks.

Powell's testimony before House lawmakers at 10 a.m. ET comes two weeks ahead of the central bank’s next policy gathering, where officials are widely expected to hold rates steady for the fifth consecutive meeting.

Officials last raised rates in July 2023 to a range of 5.25%-5.5%, a 22-year high, as part of the most aggressive campaign to cool inflation since the 1980s.

Powell first signaled in December that the Fed would likely pivot to rate cuts in 2024, and his colleagues predicted a consensus of three cuts this year. That prompted many investors to predict the first cut would happen in March.

But in the first two months of 2024 Powell and some of his Fed colleagues have been cautioning the public about how soon monetary easing could begin, pushing out expectations for cuts to later in the year.

Some higher-than-expected readings on inflation and strong jobs numbers only reinforced this cautious approach.

First the Consumer Price Index (CPI) in January was hotter than economists expected, as was the Producer Price Index (PPI), which tracks the prices businesses pay to manufacture products and services.

Then last week the Fed’s preferred inflation measure — the core Personal Consumption Expenditures (PCE) index — rose 0.4% compared with the prior month, marking the biggest jump since January 2023.

The monthly increase marked a stark shift in the inflation data. On a six-month annualized basis, core-PCE now sits at 2.5%, up from the 1.9% level it occupied in the previous two reporting periods.

Several Fed officials have warned recently that the path down to the Fed’s 2% target will be "bumpy," and they suggested cuts could now come in the summer or "later this year." That places the Fed on a collision course with the presidential election in November.

Powell highlighted the Fed's dilemma in his prepared remarks Wednesday. Lowering rates too soon, he said, could halt undue progress made in getting inflation down so far. But the Fed also doesn’t want to hold rates high for too long so as to weaken the economy, he added.

Investors appear to be listening to the Fed's cautious commentary. They now expect the first rate cut in June instead of March. They also expect three for the year, after starting the year estimating a total of six.

But that timeline could slip further if progress on inflation stalls or the job market and wages continue to beat expectations. One prominent economist has already predicted that the Fed won't raise rates at all this year.

"The economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured," Powell said in his prepare remarks Wednesday."

MY COMMENT

This should help the markets....although it will mostly be psychological. I would be very happy to see three rate cuts. If this happens it is a good indicator that the bull market will continue for at least another year and perhaps much longer.

 

Here is the jobs data.....not that anyone cares.

Private payrolls rose by 140,000 in February, less than expected, ADP reports

https://www.cnbc.com/2024/03/06/adp-jobs-report-february-2024.html

"Key Points

• Private companies added 140,000 positions for the month, an increase from the upwardly revised 111,000 in January but a bit below the Dow Jones estimate for 150,000, ADP reported.
• Leisure and hospitality led with 41,000 new jobs, construction added 28,000 and trade, transportation and utilities contributed 24,000.
• ADP’s report precedes the Labor Department’s more closely watched nonfarm payrolls release, which happens Friday."

MY COMMENT

The key phrase is......."less than expected". This should help with the FED going forward....although this is not a critical indicator being just a single month and subject to the usual revisions.

 

It is a good day so far....but....the usual big tech suspects are in the red at this moment. It is nice that the 10 year Treasury yield is pushing back down toward the 3% range.

At some point....probably sooner rather than later....the obsessive focus on APPLE and GOOGLE will end. The media and others will move on to new fear mongering topics.

 

This post is for......"ME". I am NOT encouraging anyone to buy this aggressive young company.

Super Micro Computer Is Joining the S&P 500. Is the Artificial Intelligence (AI) Stock Juggernaut a Buy?

https://finance.yahoo.com/news/super-micro-computer-joining-p-121500958.html

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

"Super Micro Computer's (NASDAQ: SMCI) incredible year just got even better. Last Friday, after the markets closed, S&P Global announced that the maker of servers and storage equipment often used for AI applications will join the benchmark S&P 500, along with several other stocks.

Shares of Supermicro (as it's commonly known) have jumped over 25% since the news broke and a whopping 297% year to date, fueled by a December quarter earnings report that was much better than its guidance -- and by the same tailwinds that have fueled other AI stocks as the enormity of demand for these companies' products becomes clearer.

What the S&P 500 means for Supermicro

Admission to the S&P 500 also marks a significant milestone for Supermicro. Just a couple of months ago, entering the closely watched benchmark index would have been a fantasy, but the stock's monster gains this year and massive revenue growth, at 103% in its most recent update, seem to have persuaded the S&P 500's gatekeepers to make it a member.

There is no strict formula for companies to be added to the S&P 500, but they must be based in the U.S. and have a profit based on generally accepted accounting principles (GAAP) over the past four quarters. From there, it's mostly a question of market capitalization and diversification, and Supermicro closed the regular Friday session with a market value of $50.6 billion, well ahead of the other three latest entrants into the S&P 500: Whirlpool at $5.8 billion, Zions Bancorporation at $5.7 billion, and Deckers Outsdoor at $23.1 billion.

Selection for the S&P 500 acts as an important stamp of approval for Supermicro as it shows that S&P Global believes its recent gains won't be easily undone even though some analysts have talked of an AI bubble. The news also gave the stock a double-digit boost because ETFs that track the S&P 500 will now have to buy shares of Supermicro to stay current with the updated index, increasing demand for the stock and restricting supply.

Super Micro Computer will join the S&P 500 on March 18, which is when the ETFs will add the stock, leading to a spike in volume.

Is Super Micro Computer stock a buy?

Since the start of 2023, when the AI boom began to build momentum following the launch of ChatGPT, Supermicro's stock has gained a whopping 1,000%, easily beating even Nvidia during that period.

Unlike some so-called AI stocks, Supermicro's gains have been earned rather than just levitating on hype. The business is delivering phenomenal growth at the moment as its high-density servers excel at running intense AI applications and its products are in high demand. As noted, revenue doubled in its most recent quarter to $3.66 billion, and GAAP net income jumped 68% to $296 million.

Supermicro, which works closely with Nvidia, said that demand for its products is still outstripping supply, a sign that its growth still has room to accelerate. CEO Charles Liang also expressed optimism on the earnings call that the AI boom was here to stay:

Overall, I feel very confident that this AI boom will continue for another many quarters if not many years. And together with the related inferencing and other computing system requirements, demand can last for even many decades to come. We may call this an AI revolution.

Since Supermicro's report, more evidence has made it clear that AI demand is even stronger than believed. Arm shares skyrocketed on its earnings report as it felt the effects of the AI boom, and then Nvidia beat expectations as well. On Friday, Dell Technologies, which also makes AI servers, jumped more than 30% on its earnings report, as it said demand was outpacing supply for those servers. The broader AI sector rose on the news as well.

Supermicro shares also look reasonably priced for a company with its growth, as the stock is trading at a trailing price-to-earnings ratio of 70, but that valuation shrinks to just over 30 based on estimates for fiscal 2025, which ends next June.

With admission to the S&P 500 soon to come, a large backlog of orders, and more signs that the AI boom is still in its early stages, Super Micro Computer stock looks like an excellent buy even after skyrocketing this year."

MY COMMENT

I consider this stock as aggressive and somewhat speculative. If you already own NVDA this company is intimately tied to their success...now and going forward. I am NOT saying that anyone else should buy this stock.....based on my limited position.......$50,000 worth.

One thing that might be a concern to some is....IF MY MEMORY IS RIGHT....their margins are lower than NVDA and projected to lessen over the next year or two.

I will be interested to see how this company progresses over the next year or two.

 

Here is what I am talking about above.......but.....I am not able to access this article.

Super Micro: Deteriorating Growth And Margins Means It's Time To Trim (Downgrade)

https://public.com/posts/super-micr...and-margins-means-its-time-to-trim-1384289526

"Super Micro Computer has seen a 26% increase in stock price since September 2023, driven by strong price momentum and growth in the generative AI space. However, the company's top-line growth has slowed, margins are shrinking, and the stock has become more expensive. With potential gross margin saturation and slowing sales growth, it may be prudent to trim risk and hold off on buying SMCI at its current price."

MY COMMENT

Of course the future depends on earnings as they ACTUALLY come in....NOT...estimates.

 

WELCOME....Scott. Please feel free to continue to post your thoughts and investing opinions.....on any topic or style. If you are inclined let us know what you are invested in and your investing style. Anyone is welcome to post on this thread no matter your style....long term, value, day trader, speculator, etc, etc, etc. Any content is valuable for others to consider.

 

As an investor back in the 1990's and 2000's that rode an initial investment in CSCO from $25,000 up to $250,000......and...all the way back down to $25,000.....I like this little article.

Is Nvidia Doomed to be the Next Cisco? What Investors Should Know

https://finance.yahoo.com/news/nvidia-doomed-next-cisco-investors-153100385.html

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

"No company embodies the Artificial Intelligence (AI) age more than Nvidia (NASDAQ: NVDA), whose GPUs (graphic processing units) are being used in data centers to power AI applications.

Nvidia's growth has been extraordinary. The company grew its revenue an incredible 265% in Q4 to $22.1 billion, with Data Center revenue soaring 409% to $18.4 billion. And with Nvidia's growth, investors have benefited, with the stock more than tripling over the past year.

The AI revolution has led to comparisons between the Internet boom and bust. Not surprisingly, the company Nvidia is most compared to is Cisco (NASDAQ: CSCO), which was the backbone of the Internet.

Cisco became the world's most valuable company in 2000, but its stock crashed soon afterwards and Cisco investors never fully recovered. The stock still trades well below its all-time high today.

So, can Nvidia and its investors avoid the same fate as Cisco investors?

There Are Similarities But Also Key Differences

In many ways, the rise of Nvidia is reminiscent of Cisco back in the late 1990s and early 2000s. During that period, Cisco was the leader in providing the infrastructure equipment used to power the Internet boom through its network routers, much like Nvidia is powering the AI revolution through its GPUs today.

And like Nvidia, Cisco in 2000 was primarily a hardware business. This is important because software revenue is more recurring and higher margin. As a result, investors typically assign higher multiples to software businesses. Neither Nvidia nor Cisco are primarily software businesses, and their multiples should reflect this.

While Nvidia and Cisco in 2000 share these similarities, there are key differences. One is that Nvidia's Cuda software platform has been a key differentiator for the company since it was introduced in 2006, even though Nvidia gives it away for free.

This software platform allows Nvidia GPUs to be programmed directly, saving customers time and money. By the time alternatives evolved, Nvidia GPUs had already become the industry standard. This created a wide moat for the company. Investors like wide moat businesses as these companies face less competition.

Cisco in 2000 was just starting to get more meaningfully into software with the introduction of its CiscoWorks2000 network management software when its stock peaked. Today, software is about a third of its revenue.

Nvidia and Cisco's customer bases are also quite different. Cisco was heavily selling into the cable and telecom industries, where companies typically carry meaningful leverage and have unpredictable capex cycles. Capex is the purchase of assets meant to be used over a long period. Nvidia is selling into the data center, where cash-flush companies like Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOGL) preside. This gives Nvidia a more stable customer base, which is another positive for investors.


CSCO Chart
CSCO data by YCharts

Nvidia also trades at a much lower valuation than Cisco did at its peak in March 2000. At its highs, Cisco had a nearly 200x P/E ratio. .

Nvidia, meanwhile, trades at around 60x P/E, and has been growing its revenue more quickly. In 2023, Nvidia's revenue surged 126%, while Cisco's revenue rose 55% in its fiscal year 2000. Investors generally assign larger multiples for high revenue growth, and there are few companies growing as quickly as Nvidia.

Potential Pitfalls

The biggest risk Nvidia faces is one that eventually hurt Cisco: demand suddenly drying up after the initial order surge. In 2001, Cisco took a large inventory write-off because in the race to meet insatiable demand, it acquired too much inventory and then demand suddenly dropped off. This was essentially Cisco saying the components it purchased to build its networking equipment were now basically worthless.

Currently, there seems no end in sight for GPU demand as companies build out their AI infrastructure. However, Cisco in 2000 believed there was no end in sight to the demand for networking routers. That outlook did not end well for Cisco investors.

Nvidia also has a bit more customer concentration than Cisco did in 2000, with one indirect customer representing 19% of sales in 2023. Customer concentration adds more risk, because if a large a customer pulls back on spending, it can lead to a negative earnings surprise, which tends to put pressure on stocks.

Still Early Innings

Nvidia is currently one of the best growth stories in the market. While there are similarities between it and Cisco 2000, they are also key differences. Nvidia is also much cheaper than where Cisco was when it peaked and it's been growing faster. Investors need to be aware of the risks, but AI still appears to be in the early innings. After all, AI wasn't a huge topic of conversation a few years ago, and now nearly every company is talking about it. Investors can continue to ride Nvidia's great growth, but just be aware it might not last forever.


MY COMMENT

NO...nothing lasts forever in business or life. Hopefully I will be able to avoid emotional and human brain based BIAS regarding this stock and all the others that I own.......and....over time will see clearly the direction of the company.

CSCO was a victim of the sudden collapse of the DOT COM stocks. If......or when.....NVDA starts to linger or slow in their business.....i doubt it will be as a result of a sudden collapse. I expect if they start to linger as a company there will be plenty of time to recognize it happening and sell or lessen exposure if necessary.

I did recently take some profit.....$50,000....in each account. BUT...that money went into SMCI which is very much intimately tied to NVDA and their success.

NVDA is STILL a HUGE position in my portfolio and I will continue to....RIDE THE WAVE.