The Long Term Investor

I do have an interest in this info. I find the current real property markets interesting. The standoff between buyers and owners continues with extremely low inventory and high prices.....a 'BIG BUMMER for those looking to buy a house.

US existing home sales drop in March; median price increases

https://finance.yahoo.com/news/us-existing-home-sales-drop-140824753.html

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

"WASHINGTON (Reuters) - U.S. existing home sales fell in March as higher interest rates and house prices sidelined buyers from the market.

Home sales dropped 4.3% last month to a seasonally adjusted annual rate of 4.19 million units, the National Association of Realtors said on Thursday. Economists polled by Reuters had forecast home resales slipping to a rate of 4.20 million units.

Sales fell in the densely populated South, the Midwest, which is considered the most affordable region, and the West. They rose in the Northeast for the first time since November. Home resales, which account for a large portion of U.S. housing sales, declined 3.7% on a year-on-year basis in March.

"Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves," said Lawrence Yun, the NAR's chief economist.

The average rate on the popular 30-year fixed-rate mortgage has drifted up towards 7%, data from mortgage finance agency Freddie Mac showed, as strong reports on the labor market and inflation suggested the Federal Reserve could delay an anticipated rate cut this year. A few economists doubt that the U.S. central bank will lower borrowing costs in 2024.

Fed Chair Jerome Powell said on Tuesday the U.S. central bank might need to keep rates higher for longer than previously thought as inflation remains elevated.

The Fed has kept its policy rate in the 5.25%-5.50% range since July. It has raised the benchmark overnight interest rate by 525 basis points since March of 2022.

Housing inventory jumped 4.7% to 1.11 million units last month. Though supply vaulted 14.4% from one year ago, it remains below the nearly 2 million units before the COVID-19 pandemic. The government reported on Tuesday that single-family housing starts tumbled in March and permits for future construction dropped to a five-month low.

At March's sales pace, it would take 3.2 months to exhaust the current inventory of existing homes, up from 2.7 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand.

Despite the improvement in supply, the median existing home price increased 4.8% from a year earlier to $393,500 in March. That was a record high for the month of March. Home prices increased in all four regions.

Data from mortgage finance agency Fannie Mae on Wednesday showed house prices increased 7.4% year-on-year in the first quarter compared to a 6.6% rise in the fourth quarter.

The NAR said properties typically stayed on the market for 33 days in March, up from 29 days a year ago. First-time buyers accounted for 32% of sales, compared to 28% a year ago. That share is well below the 40% that economists and realtors say is needed for a robust housing market.

All-cash sales made up 28% of transactions, up from 27% a year ago. Distressed sales, including foreclosures, represented only 2% of transactions, virtually unchanged from last year.

MY COMMENT

The nightmare continues for people trying to buy....or wanting to buy....a home. Between all cash buyers and the low inventory and rising prices and mortgage rates at or over 7%......it is a horror show for buyers.

For those of us that already own a home.........a good dream....other than the skyrocketing taxes and homeowners insurance.

I dont see anything changing till the FED does some rate cuts......and.....that appears to be something that will NOT happen till the fall at the earliest. As I have said many times....the market is going to explode when mortgage rates get down to 6% or below. BUT....along with that exploding market will come BIG price jumps.

We have bought and sold in some horrible conditions a few times. We have never waited....we simply powered forward and got it done. If I was a non-homeowner trying to get into my first house......I would simply bite the bullet and do what I needed to do to buy now. But....that is me.

 

I am glad to see this action by GOOGLE.

My comment has NOTHING to do with the underlying issue or politics....even if I agreed with the protestors. This is a private business. They have every right to fire workers that do not respect their property or business and disrupt normal work. These tech companies in the past went way overboard in company perks for workers and created a very entitled work force. It is NOT a "right" to work at one of the big tech companies......you are simply an employee....you can be fired for disrupting the business.

There is nothing wrong with exercising your speech rights and protesting.....just dont do it on the job against your employer......and.....do it legally.

Google terminates 28 employees after multicity protests: Read the full memo

https://www.cnbc.com/2024/04/18/goo...s-after-series-of-protests-read-the-memo.html

"Key Points

• Google terminated 28 employees Wednesday, according to an internal memo viewed by CNBC, after a series of protests against labor conditions and the company’s contract to provide the Israeli government and military with cloud computing and artificial intelligence services.
• The news comes one day after nine Google workers were arrested on trespassing charges Tuesday night after staging a sit-in at the company’s offices in New York and Sunnyvale, California, including a protest in Google Cloud CEO Thomas Kurian’s office.
• On Wednesday evening, a memo sent by Chris Rackow, Google’s vice president of global security, told Googlers that “following investigation, today we terminated the employment of twenty-eight employees found to be involved. We will continue to investigate and take action as needed.”"

 

The market today.

S&P 500 rises as it tries to recover from a 4-day losing streak

https://www.cnbc.com/2024/04/17/stock-market-today-live-updates.html

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

"The S&P 500 advanced on Thursday as Wall Street attempted to recover its footing amid a losing streak for the benchmark index. Investors also continued parsing the latest corporate earnings reports.

The broad index added 0.4%, while the Nasdaq Composite rose 0.3%. The Dow Jones Industrial Average jumped 239 points, or 0.7%, boosted by a rally of more than 4% in UnitedHealth.

The S&P 500 has slid more than 1% so far in the week, while the Dow sat near its flatline for the same period.

The Nasdaq has tumbled almost 3% this week as technology shares struggled. That puts the index on pace for its fourth straight down week, which would mark the longest negative streak since December 2022.

Credit bureau Equifax declined more than 9% in Thursday’s session on disappointing second-quarter guidance. Homebuilder D.R. Horton advanced more than 4% after quarter financials topped expectations.

More than 12% of S&P 500-listed companies have now reported earnings in what’s shaping up to be a positive season. Of those that have already posted results, 73% have surpassed Wall Street expectations for their individual performances, according to FactSet.

The S&P 500 and Nasdaq flirted with their fifth straight down session, briefly trading lower on the day. That would mark the longest losing streaks for each since October and January, respectively.

The moves come during what has been a difficult second quarter on Wall Street. That’s been driven by growing concerns around the path of inflation and monetary policy from the Federal Reserve.

All three major indexes are lower so far in April, in stark contrast to the stronger-than-expected market performance seen in the first quarter.

“This has been one of the most widely advertised pullbacks that we’ve had,” said Quincy Krosby, chief global strategist at LPL Financial. Now, “what we’re paying attention to ... is whether or not we are going to see lower lows.”

MY COMMENT

HERE is the real news....that I have yet to see anywhere in the daily news:

"More than 12% of S&P 500-listed companies have now reported earnings in what’s shaping up to be a positive season. Of those that have already posted results, 73% have surpassed Wall Street expectations for their individual performances, according to FactSet."

Kind of reminds me of......if a tree falls in the woods and no one hears it, did it make a sound?

We continue to live in a BIZARRO world where EARNINGS continue to be disrespected....underestimated....under-reported....and nit-picked to death. And amazingly....at the same time....EARNINGS are the GREATEST factor by far that determin and show business success and progress. The single most important factor that impacts stock performance.

 

The above is pretty much it for what is going on today.....NOTHING. It should be a wide open field for stocks to run.....but....we are back to a little mini-obsession with the FED combined with relentless fear mongering for clicks.

Investors simply need to .....IGNORE IT ALL.

 

At least we are seeing disinflation in one part of the economy. Looks like there are some real bargains in rent available in downtown office towers in many cities. Commercial real estate in many big and medium cities.....definately a falling knife.

Commercial real estate foreclosures jumped 117% in March as trouble looms
Commercial property foreclosures spike in March

https://www.foxbusiness.com/economy/commercial-real-estate-foreclosures-jumped-march-trouble-looms

 

I dont have much awareness of the real property markets in the EU....other than what I see on the TV show "House Hunters International".

Any tips on buying residential property in the EU Stratmore? I assume it is generally like here.....location, location, location....from what I see on TV.

 

LOL....today is the same as yesterday. Except for a small gain in NVDA today. SO....right now I have two stocks UP...GOOGL and NVDA.

 

I am eating into my ......cushion.....of year to date gains now. That is what it is for.

I had a moderate loss today........a much nicer close than yesterday....so progress. I was in the RED.....but today...had three stocks UP...NVDA, HD, and GOOGL.

I did lose out to the SP500 today....but also by a small amount.....0.11%

 

WELL, WELL....who would have ever guessed.

Why Simpler Has Been Better for Portfolio Diversification
Broader asset class exposure doesn’t always pay off.

https://www.morningstar.com/portfolios/why-simpler-has-been-better-portfolio-diversification

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

"In our recently published 2024 Diversification Landscape report, Christine Benz, Karen Zaya, and I took a deep dive into how different asset classes performed in the past couple of years, how correlations have evolved, and what those changes mean for investors and financial advisors trying to build well-diversified portfolios. One key finding: Portfolio diversification didn’t boost returns in 2023’s generally bullish market environment.

To test the value of portfolio diversification, we created a portfolio made up of 11 different asset classes. We allocated 20% of the portfolio to larger-cap domestic stocks; 10% each to developed- and emerging-markets stocks, Treasuries, US core bonds, global bonds, and high-yield bonds; and 5% each to small-cap stocks, commodities, gold, and REITs. We then tested how this “diversified” portfolio fared versus a plain-vanilla version of a 60/40 portfolio (made up of US stocks and US investment-grade bonds).

As US stocks bounced back from their losses in 2023, most other asset classes fell behind. In contrast to 2022, when diversification was a net positive, every “diversified” asset class fell behind the Morningstar US Market Index in 2023. As a result, the most basic version of a 60/40 portfolio gained about 18% for the year, but a more diversified version fell roughly 4 percentage points behind.

Thanks to slightly lower correlations for many of the “diversified” asset classes, the diversified portfolio would have done a better job reducing risk, but not enough to result in higher risk-adjusted returns.

How Portfolio Diversification Fared in 2023

Source: Morningstar Direct. Data as of Dec. 31, 2023. The 60/40 portfolio consists of a 60% weighting in the Morningstar US Market Index and 40% in the Morningstar US Core Bond Index. The diversified portfolio includes a 20% weighting in larger-cap domestic stocks; 10% each in developed- and emerging-markets stocks, Treasuries, core bonds, global bonds, and high-yield bonds; and 5% each in small-cap stocks, commodities, gold, and REITs.
More-diversified portfolio strategies have also struggled over the past two decades. The diversified portfolio reduced risk compared with a plain-vanilla mix of domestic stocks and bonds over most trailing periods but not enough to result in better risk-adjusted returns, as measured by the Sharpe ratio.

How Portfolio Diversification Fared Over Longer Periods

Source: Morningstar Direct. Data as of Dec. 31, 2023.
To test the value of diversification over longer periods, we used the IA SBBI US Large Stock and IA SBBI US Intermediate Term Government indexes (which both have longer performance histories) as a baseline for a basic 60/40 portfolio. We used the same asset classes I mentioned above to test the performance of a more diversified portfolio over rolling 10-year periods starting in 1976.

Risk-Adjusted Returns (Sharpe Ratio)

Source: Morningstar Direct. Data as of Dec. 31, 2023. The rolling 10-year Sharpe ratios are for stocks only, a 60/40 portfolio, and a fully diversified portfolio. Both portfolios assume annual rebalancing.
Although a broadly diversified portfolio improved risk-adjusted returns (as measured by the Sharpe ratio) versus an all-stock portfolio during most rolling 10-year periods between May 1993 and December 2016, our test portfolio posted weaker risk-adjusted returns over most periods since then. The basic 60/40 portfolio, on the other hand, fared better than the stocks-only benchmark about 87% of the time going back to 1976 and came out ahead of the more broadly diversified version in every rolling 10-year period since the period starting in late 2004.

Net Effect on Risk-Adjusted Returns

Source: Morningstar Direct. Data as of Dec. 31, 2023. The chart shows the difference in rolling 10-year Sharpe ratios for a 60/40 portfolio and a fully diversified portfolio versus a stocks-only benchmark. Both portfolios assume annual rebalancing.
Diversification’s recent struggles mainly reflect the confluence of strong returns for US stocks and core US bonds and weaker results for international stocks and more specialized assets during most of the period from 2000 through 2023. In addition, market correlations often converge during periods of market crisis, which happened across most major asset classes (with Treasuries and cash the notable exceptions) when the market tumbled in 2022 and early 2020.

Correlations have also trended up over longer periods for some major asset classes, which reduces the value of diversification. Correlations between US and non-US stocks, for example, have significantly increased over the past 10 years. Even areas often touted for their diversification benefits—including REITs and high-yield bonds—have moved in tandem with the broad US equity market more often than investors might expect. In aggregate, the correlation coefficient for the diversified portfolio versus the Morningstar US Market Index rose to 0.94 for the most recent three-year period, compared with 0.87 for the three-year period ended in December 2004.

Net Effect on Risk-Adjusted Returns

Source: Morningstar Direct. Data as of Dec. 31, 2023. The chart shows the difference in rolling 10-year Sharpe ratios for a 60/40 portfolio and a fully diversified portfolio versus a stocks-only benchmark. Both portfolios assume annual rebalancing.
The key question now is: Will a plain-vanilla stock and bond blend continue to dominate, or can a more diversified approach add value? The answer depends to a large extent on the macro environment, which went through a significant shift starting in late 2021. In contrast to the low inflation and generally declining interest rates that defined most of the previous three decades, both inflation and interest rates have reversed course. As a result, correlations between stocks and bonds have remained positive since 2021, reducing the benefit of basic portfolio diversification.

Positive stock/bond correlations would probably persist during an extended period of rising interest rates and/or rising inflation. Even during periods when stock and bond correlations are positive, however, Treasuries and other high-quality bonds can still improve risk-adjusted returns when added to an equity-only portfolio. The upshot: Investors looking to build diversified portfolios don’t necessarily need to venture too far beyond the basic mix of larger-cap stocks and high-quality bonds."

MY COMMENT

SURPRISE......simple is better....more often than not.

AND I say....WHO......in the world emphasizes a BIG CAP portfolio? Well.....only little old me.....and the SP500 of course. I STILL say the greatest portfolio in the world for most people is simply 100% in an SP500 ETF.

This is the IDIOT or SIMPLETON portfolio. Of course....in the world of economics and investing it is the....IDIOTS (as defined by the ELITES and experts)....that are usually right.

Unfortunately way too many investors diversify themselves to death. I agree completely with those that believe that limited diversification is a good thing.

 

A very sad day........RIP......Dickie Betts.

https://www.msn.com/en-us/music/new...d65d3803144faaacb2bd012ba3c0e&ei=135#image=10

To this day the live double album....."At Filmore East".....is one of the greatest of all time. Hauntingly good.

 

WELL stock futures getting hammered (NASDAQ down by over 300 points) due to reports over the last hour or two of Israel attacking Iran. From what I see if this is true....the attack appears to have been very limited....assuming that it is over.

Israel launches missile strikes into Iran in response to Tehran's attack Sunday

https://www.npr.org/2024/04/18/1245763498/israel-iran-missile-strikes

I dont have a lot of concern over this. Seems like a very limited response to me and basically meaningless.

BUT.....I do marvel at how skittish the current markets are. The level of nervousness in the markets right now is INSANE.....as is the over-reaction that we see from this sort of news item. Hopefully things will settle down by the open.....but I doubt it.

 

MOVE ON....nothing to see here. Israel did a little "show" strike last night.....simply a mild warning.

As to gas and oil.....it would be nice if we were still the worlds largest producer and were still self sufficient.....but....we are seeing more impact now from the switch over to summer formulation than anything else.

 

We are probably in for another.....meaningless....market day today. the big event of the day will be that.......amazingly....we get done with the week. SO far I see....NOTHING.....I see nothing.....at all going on today that is meaningful.

S&P 500 futures recover from overnight losses and are little changed following Israel strikes on Iran

https://www.cnbc.com/2024/04/18/stock-market-today-live-updates.html

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

"Stocks were able to regain ground Friday after equity futures tumbled overnight as investors bet Israel retaliatory strikes against Iran would not escalate to a bigger conflict. Oil prices traded into the red after briefly spiking earlier.

Futures on the Dow Jones Industrial Average added just 5 points, trading near flat despite at one point falling more than 500 points following news of the Israel strikes. S&P 500 futures were about unchanged. Nasdaq 100 futures lost 0.3% following a post-earnings decline in Netflix.

A person familiar with the matter told NBC News that Israel conducted a limited strike against Iran. Earlier, Iran’s Fars news agency reported explosions were heard near the airport at the country’s central Isfahan city, but the reason was unknown.

Dow Jones futures, 1-day Oil prices briefly spiked more than 3% in Asia morning trading, with global benchmark Brent crude futures topping $90 a barrel. Crude futures have since given up those gains, with both the international benchmark and West Texas Intermediate futures down slightly.

Nasdaq 100 futures were weighed down by a post-earnings slide in Netflix. The streamer fell more than 4% even after quarterly earnings beat on the top and bottom line. Netflix’s subscribers jumped 16% from the previous year, but it said it would no longer report paid memberships starting in 2025.

A tough week

Still, the S&P 500 is heading for its worst week in almost six months as fears around the path of inflation and monetary policy grow.

The broad index has fallen for five sessions in a row — a first since October — in a retreat that has brought its week-to-date losses to 2.2%. It would be the large-cap benchmark’s third straight negative week and its worst weekly performance since Oct. 27, 2023.

The S&P 500 is now 4.8% off its 52-week high, part of a market pullback that has been largely driven by tempered expectations for a rate cut soon. Economists and strategists now see the Fed waiting until at least September to lower rates and are increasingly entertaining the possibility of no reductions at all this year.

Minneapolis Fed President Neel Kashkari, who’s not voting on rate decisions this year, told Fox News Thursday that the central bank needs to be patient as long as it takes before cutting rates and the first move may not take place until 2025.

“The stock market’s biggest worry right now is inflation, which is re-accelerating and throwing cold water on the idea of any rate cuts in 2024, let alone one or two,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management.

The Nasdaq Composite has fallen 3.6% so far this week. The tech-heavy index is on pace for its fourth straight down week, its longest negative streak since December 2022. It would also mark the Nasdaq’s worst weekly performance since September.

The Dow has seen muted moves this week, slipping just around 0.6%.

Oil prices turn lower as traders realize Israeli strike on Iran was ‘carefully calibrated’

Crude oil futures are now trading lower, erasing gains of more than 3% from earlier in session as it becomes clear that Israel’s strike against Iran was limited.

U.S. West Texas Intermediate futures lost 28 cents, or 0.34%, at $82.45 per barrel. Global benchmark Brent crude futures fell 49 cents, or 0.56%, at $86.62 per barrel after topping $90 earlier in the session.

“The energy market has been through this before,” said John Kilduff, founding partner at Again Capital. “It’s hard to get your head around the fact anymore how high the bar really is in the Middle East these days for all out war to break out and for oil supplies to be impacted.”

That point is driven home by the price action. Despite the news, WTI is on pace to end the week about 4% lower.

The Israeli strike was “very muted and carefully calibrated” using small packages of explosions and drones rather than manned aircraft, said Admiral James Stavridis, the former Supreme Allied Commander of NATO.

“Both capitals, Jerusalem and Tehran, are downplaying the events — de-escalating,” Stavridis told CNBC’s “Squawk Box” on Friday.""

MY COMMENT

See anything going on in the above that is new? NOPE. Same old, same old today.

We will simply muddle our way through the day and end the week. At that point we are another week into the year and we move on.

Next week we get some of the BIG CAP GIANTS reporting earnings. It has been deal silence in the media. No one is mentioning earnings or saying much about them.

 

Speaking of the BIG CAP GROWTH earnings....next week we will hear from....META, MSFT, GOOGL, and AMZN.

Will anyone care? I dont know. Recently every time we have good earnings we have the FED or other...."supposedly"..... sensational events dominating the news. We also see the usual ignoring of the actual earnings to focus and nit-pick the guidance.

For some reason it never matters that the guidance always turns out just fine, the next time earnings are reported. The default approach to guidance is to totally emphasize the potential negatives....that somehow rarely happen.

 

It might actually be scary if government had any competence. The poor college students. A good learning experience for them...for when they get out of college and have to deal with the incompetence of the IRS as a worker.

Some students are still struggling to access college aid amid ongoing FAFSA ‘disaster’

https://www.cnbc.com/2024/04/19/fafsa-disaster-stops-some-students-from-getting-financial-aid.html


"Key Points

• Problems with the new Free Application for Federal Student Aid have resulted in fewer students applying for college financial aid.
• Given the current status of FAFSA submissions, the Department of Education is on track to see 2.6 million fewer FAFSAs submitted this year, a nearly 20% decline, according to higher education expert Mark Kantrowitz.
• Studies show students are more likely to enroll in college when they have the financial resources to help them pay for it."

MY COMMENT

I like the use of the word...."some"...in the headline. In other words.......2.6MILLION students and about 20% of those that normally file a FAFSA. Sounds like a pretty big amount of...."some"...to me.

As I said a good learning experience and life lesson for the students.

 

Amazing....China says jump.....and all APPLE can do is ask......how high.

Apple pulls WhatsApp, Threads from China app store after Beijing order

https://www.reuters.com/technology/...reads-china-app-store-wsj-reports-2024-04-19/

MY COMMENT

What choice do they have? They stupidly tied themselves to China as the....market of the future. The China market is a.....MYTH an ILLUSION. China is not going to be any sort of big market opportunity for any American company. They are simply USING them all. They are stringing them around while they steal their tech. Once China has their own capability in every one of these business areas the American company will be kicked to the curb. It is not hard for them to do this....they are not a free market. The government has total control of the population and can easily mandate what products can be sold or bought.

APPLE and every other American company that was operating under the DELUSION that China was their golden key to the future....needs to WAKE UP. APPLE and the rest need to be doing everything they can to get their manufacturing and future marketing hopes out of China. There are about SEVEN BILLION or more people in the world....outside of China. I think that is enough potential market for them to focus on compared to operating in and depending on China.

 

As to China and APPLE.

 

NORMAL market today....SP500 and NASDAQ in the red.

At least for those with money and guts.....this is looking like the buying opportunity that many have been waiting for. Perhaps some of that money siting on the sidelines will join the party now.