The Long Term Investor

Well I had to take advantage of the NVDA share sale today. I considered the odds and decided to sell some SMCI and put those funds into NVDA. I consider NVDA at this price level simply too attractive to not do something. So I sold off about 2/3 of my SMCI holding and immediately bought NVDA with the proceeds.

I still like SMCI.....as a AI/tech hardware play.....that is why I did not sell the whole position. BUT....I just had to get into NVDA shares at the price today. SMCI was my best source of cash for more NVDA.

I will have a short term loss on those SMCI shares that I sold...I guess that will help a bit on taxes next April.

As a bonus I had enough left over after I bought more NVDA to buy....TWO....yes...TWO....shares of PLTR.

 

Ignoring the markets till the close. BUT...I agree.

Why the Fed Should Declare Victory and Cut Interest Rates.
Small business owners are being punished by the central bank's data obsession. We need to focus less on CPI numbers and more on boosting the economy.

https://www.inc.com/bill-saporito/the-fed-should-cut-interest-rates-now.html

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

"For much of the year, Wall Street analysts and economists have been volleying their theories about when the Federal Reserve will lower interest rates, as well as how many rate cuts should we expect this year. One in July? Three by September?

Or how about none, as some of the Fed's rate hawks were recently discussing. With the recent CPI news--headline inflation up 3.5 percent in March--the betting odds for a rate cut got longer. "The recent data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence," Fed Chair Jerome Powell said during a Q&A event this week.

You don't need confidence Chairman Powell, just some bold leadership.

Here's a suggestion: lower the damn Federal Funds rate. Like, today. The Fed has two roles: maximize jobs and minimize the harm caused by inflation. On the labor front, wages have been growing faster than prices, but there's no evidence that pay gains are driving the dreaded wage-price spiral. The labor market may be tight, with relatively low unemployment, but big tech continues to tamp down demand with massive layoffs. Tesla, for instance, just week lopped off 10,000 workers in the middle of the night-- the latest victim of falling demand (and a flailing CEO). Declare victory and lower our interest rates.

Despite reasonably good labor news, though, the Fed continues to fix its daze on inflation. And the March inflation data threw another sacrificial squirrel into the hawks' nest. They'll gorge on it and miss the point. Inflation continues to make a wobbly descent from pandemic highs--down 60 percent from its peak according to the White House--yet the Fed won't take its eye off the 2 percent inflation target.

There are other indicators the Fed might consider. In a recent report, the economics consultancy Pantheon Macroeconomics noted that the combination of moderating unit labor costs, a normalized supply chain and a shrinking money supply--all of which currently applies--serves as a brake on inflation even if there is a short-term blip. "We recognize that a central bank fixated on the latest inflation numbers--even though they are backward-looking and tell us nothing about the future--is less likely to cut rates after disappointing data," wrote chief economist and founder Ian Shepherdson. This is a polite restatement of the definition of an economist as someone with their head in the past and their ass in the future.

And that posture is hurting a lot of businesses. Please don't show me any more CPI data about the price of used cars or "owners' equivalent rent."This kind of data, says UBS chief economist Paul Donovan, a frequent Powell critic, is statistical bupkis, a word he actually didn't use. What he does say is that the Fed measures things that don't matter since most people aren't buying cars this year and nobody pays OER, whatever that is.

Donovan also points out that inflation is regional: not everyone is experiencing the same rate. And not all goods are rising. Prices of hard goods have been falling for years, which is one reason that the logistics industry is a mess, because the prices for hauling those goods have been falling too. So has the cost of diesel.

One of the consequences of high interest rates is that they themselves are inflationary: consumers have now racked up some $1.3 trillion in credit card debt and delinquencies are rising. At 24.66 percent annually--the current national average according to Lending Tree, the highest it has recorded. On $1.3 trillion, you get to more than $320 billion in interest payments, money you can't use for other things, such as savings, or investing in your business.

High interest rates are crushing small business owners, who are much more likely to use their credit cards to finance operations. The Fortune 500 doesn't have this problem--those companies can issue their own debt. But if you are running a machine shop or bakery and trying to finance a big order, your local bank is less interested now--especially if it's already neck deep in commercial real estate liabilities. And even if you get financing, the interest rate is no bargain. The Kansas City Federal Reserve reports that median rates for term loans for small businesses rose in the fourth quarter of 2023, with urban banks charging 8.9 percent. So while small businesses are justifiably concerned about inflation, they'd be less concerned if they had more affordable money.

Consumers, who fuel about 70 percent of the economy, are getting hit hard, too. Living in a city where a pastrami sandwich now costs $25 can give you special insights into inflation. I love pastrami, but turkey is cheaper, (and better for me), a notion known as substitutability. This is happening elsewhere, too. People make tradeoffs and sellers adjust, the way that Applebee's alters its menu to be able to offer $10 deals. Or, consumers trade down to lower priced restaurant chains--one reason that prices for food away from home dropped, in the most recent report.

What the Fed ignores, though, is that you can't do this as easily with your credit card, mortgage or auto loan--which is taking an ever-larger chunk of our spending. There isn't a Bank of Applebee's to trade down to if JPMorgan Chase won't lower your mortgage rate. Not every entrepreneur or consumer pays that rate or runs up a balance--and of course, those are saving are looking pretty good right now. But for those who want to invest in growth, damage is being done. "People are struggling to make credit card payments," noted Richard Excell, a former portfolio manager at Wolverine Capital who now teaches at the University of Illinois' Gies College of Business, in a recent podcast. Not all people. Boomers are good. Younger Millennials are not. "It's an interesting dynamic," he said. "And not a healthy one."

If only some government agency could help us out with that.

Why is the Fed so afraid of lowering the cost of borrowing for businesses and consumers? Can it quantify the risk of overheating the economy by freeing up a few bucks for gas money each month?

This is obviously a question for highly-trained economists, and I am not encumbered by an economics degree. Then again, neither is the Fed Chair. So I asked my friend Bernie Baumohl, an economist, whether I'm out of bounds here. Bernie says no. As inflation has drifted down for nearly two years, real interest rates--that is, the nominal rate minus inflation--have gone in the opposite direction, a painful price increase. That's not helping the commercial real estate sector, which is already stressed by high vacancy rates. Banks are reaching the end of the extend-and-pretend phase on CRE loans and we face the risk that rising defaults will bleed into the banking sector. Another banking crisis anyone? At the other end of the economy, interest rate pain is especially severe for families earning less than $40,000, he notes. Rising auto loan and credit card delinquencies underline that point. Lowering rates for working-class people would have way more benefit than detriment.

Then again, the last time Bernie and I disagreed with the Fed there was trouble. We were both working for a newsweekly and summoned to Washington by then Fed Chair Alan Greenspan over a column Bernie wrote and I edited which criticized the way the Fed measured inflation. (Criticism that is ongoing.) Hauled into the principal's office of Econ High. After listening patiently to Greenspan for half an hour I realized two things: 1) he was as comprehensible in person as he was before Congress, which is to say, not really; and 2) the Fed chair has an awesome office; the Wizard of Oz would kill for the Wizard of Money's digs.

But Bernie and I are not alone on interest rates. "Consumers, unlike modern economists, consider the cost of money part of their cost of living," writes former Treasury Secretary Larry Summers, with colleagues Marijn A. Bolhuis, Judd N. L. Cramer and Karl Oskar Schulz in a recent paper for the National Bureau of Economic Research. That's why people have been feeling miserable about the economy, according to their research, which is a big issue for the Biden reelection campaign.

Indeed, why would people feel great about the economy when they see what they're forking over in credit card interest payments each month, or they're being shut out of the housing market, or they can't afford to expand their businesses. And why would you need to actually research this?

I'm betting that we non-economists could surely handle 2.5 percent to 3 percent inflation if it means the cost of money drops and makes other things affordable. I'm also betting, like Summers, that it won't be happening soon. Which is too bad. We need lower interest rates today, not six months after the data says it's okay."

MY COMMENT

Take the win.....move the inflation target to REALITY....2.5% to 3%. At this point the FED is just hurting the economy for...nothing.

 

OK...on to today. A true investor PANIC today. Good to see once in a while......and....a good buying opportunity.

I had a single stock UP today...HD. Of course I was solidly in the RED. I also lost out to the SP500 today by a BIG.....3.66%.

Sounds right considering what I own and the concentrated nature of my stocks and portfolio.

WE MOVE ON FROM HERE.

 

OK read'em and weep. WOW.....I never guessed that the death of Dickie Betts would have this much impact on the markets.

DOW year to date +0.72%
DOW five days (-0.23%)

SP500 year to date +4.73%
SP500 five days (-3.54%)

NASDAQ 100 year to date +3.00%
NASDAQ 100 five days (-6.21%7)

NASDAQ year to date +3.50%
NASDAQ five days (-6.11%)

RUSSELL year to date (-3.53%)
RUSSELL five days (-3.42%)

For me a losing week.....DUH....I am now year to date for my entire portfolio at +13.08%. Last week at this time I was at +21.71% year to date for my entire portfolio.

 

HAVE A GREAT WEEKEND EVERYONE.

 

THE DISMAL DAY TODAY AS INVESTORS HIT PANIC MODE.

Stock market today: Tech stocks smoked, Nvidia tumbles 10% to cap worst week of the year

https://finance.yahoo.com/news/stoc...-to-cap-worst-week-of-the-year-200313365.html

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

"Wall Street retreated on Friday as dimming hopes for a coming interest rate cut and geopolitical uncertainty intensified a sell off in Big Tech.

The S&P 500 (^GSPC) fell about 0.9%, notching its sixth consecutive losing day, and suffering its worst losing streak since October 2022. The benchmark index lost more than 3% for the week. The tech-heavy Nasdaq Composite (^IXIC) slid 2.1%, falling more than 5% for the week. The Dow Jones Industrial Average (^DJI) managed to rise about 0.6%.

Disappointing earnings from Netflix (NFLX) weighed on hopes that quarterly reports would help revive the equity rally. Shares of the streaming giant, the first of the megacap techs to update, slid 9%. Technology stocks as a whole flashed red with all of the biggest names shedding value.

Market darling Nvidia (NVDA) lost 10%, while Amazon (AMZN) saw a drop of more than 2%. Apple (AAPL) decreased 1%.

The market had come back from a deeper sell-off after Israel's retaliatory strike on Iran spooked traders overnight and spurred a rush to safe havens such as gold. But investors are still on high alert, though Iran has confirmed the drone attack and said it failed.

Stocks were already under pressure before the shock amid persistent uncertainty about Federal Reserve interest rate cuts. A growing number of Fed officials this week expressed a more hawkish stance because of hotter-than-anticipated inflation data in the first quarter.

Meanwhile, US government bonds pulled back almost fully from their biggest rally of the year. The yield on the safe-haven 10-year Treasury (^TNX) fell to trade around 4.6%.

In commodities, Brent crude futures (BZ=F) — the global oil benchmark — traded around 0.2% higher to around $87 a barrel. West Texas Intermediate crude futures (CL=F) were up 0.5% to roughly $83 a barrel. Gold (GC=F) increases cooled a bit after earlier earlier gains, trading up 0.2%."

MY COMMENT

A good old fashioned investor PANIC today in the BIG CAP TECH world. In the old days....it would be the BIG CAP MONSTER stocks that were considered a safe haven...not today.

In addition the FED.....needs to evaluate the damage they are doing to the economy with their constant barrage of commentary and speeches. BUT....they will not....as they continue to believe that talking down stocks is somehow related to talking down inflation. MORONS.

BASICALLY....I see today as another indication that we are moving into an ever GUTLESS world. Investors panic over nothing. The media goes crazy over the Iran attack which was so small as to b totally meaningless. and on, and on, and on.

BUT.....as investors....this is what we just have to put up with over the short term in order to get the long term goodies.

 

AND NO.....I dont believe these numbers in the slightest. I take all....government....economic data with a huge grain of salt.

Something strange has been happening with jobless claims numbers lately

https://www.cnbc.com/2024/04/19/som...ening-with-jobless-claims-numbers-lately.html

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

"Key Points

• Most of the past several weeks have shown that first-time claims for unemployment benefits haven’t fluctuated at all — as in zero.
• A string of weekly reports showing exactly 212,000 initial claims has raised a few eyebrows on Wall Street.
• A Labor Department spokesperson noted that while the string of 212,000 prints on the jobless claims data is “uncommon,” it can be attributed to a consistent jobs picture reflected in seasonal adjustments to the data.

Calling the state of the U.S. jobs market these days stable seems like an understatement considering the latest data coming out of the Labor Department.

That’s because most of the past several weeks have shown that first-time claims for unemployment benefits haven’t fluctuated at all — as in zero.

For five of the past six weeks, the level of initial jobless filings totaled exactly 212,000. Given a labor force that is 168 million strong, achieving such stasis seems at least unusual if not uncanny, yet that is what the figures released each Thursday morning since mid-March have shown.

The consistency has raised a few eyebrows on Wall Street. The only week that varied was March 30, with 222,000.

“How is this statistically possible? Five of the last six weeks, the exact same number,” market veteran Jim Bianco, head of Bianco Research, posted Thursday on X.

“Initial claims for unemployment insurance are state programs, with 50 state rules, hundreds of offices, and 50 websites to file. Weather, seasonality, holidays, and economic vibrations drive the number of people filing claims from week to week,” he added. “Yet this measure is so stable that it does not vary by even 1,000 applications a week.”

Others chimed in as well.

“Numbers made up,” one participant on the thread opined, while another said, “Someone’s cooking the books.”

However, others offered more analytical thoughts, attributing the uniformity in data to seasonal adjustments. Tracey Ryniec, a strategist at Zacks Investment Research, suggested: “You can go look at each state Jim. Those vary greatly.”

Indeed, a Labor Department spokesperson noted that while the string of 212,000 prints on the jobless claims data is “uncommon,” it would not be considered anomalous.

The streak “can be reasonably interpreted as an indication that there has been very little volatility in initial claims over this period relative to historical patterns, and that the seasonal adjustment factors are effectively removing seasonality from the aggregate figures reported by states,” the official said.

Moreover, claims not adjusted seasonally have shown substantial fluctuation during the five-week period, registering readings of 202,722; 191,772; 193,921; 197,349; 215,265 and 208,509.

Federal Reserve officials watch the weekly claims numbers as part of their broader assessment of the labor market, which has shown surprising resilience as the central bank has tightened monetary policy.

The Labor Department official also pointed out that new seasonal factors to the claims data were announced a month ago.

“Using the new seasonal adjustment factors, initial claims have been at a fairly consistent level since around mid-September 2023 and even more so since the start of February 2024,” the spokesperson said."

MY COMMENT

So these crazy numbers have been happening since the "new seasonal adjustments" came on board. Well yeah....this is how the numbers are being cooked. The constant adjustments cooked into the various economic data makes it impossible to knwo what is real and what is fantasy. It also makes it impossible to compare numbers over time.

I simply dont trust ANY of the government economic data.

 

Moving on from the past....this week. From here on it is the rest of the year and earnings next week that count....now.

 

I like this little article.

Welcome to 'peak boomer' era: A wave of retirees is about to blow through their savings and cling to Social Security to stay afloat

https://www.businessinsider.com/how...s-could-affect-economy-social-security-2024-4

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

"The youngest baby boomers are about to enter retirement — and most of them aren't financially prepared for this next stage of their life.

Beginning this year, over 30 million boomers born between 1959 to 1964 will start to turn 65, marking the "largest and final cohort" of that generation entering retirement, according to a new report from the Alliance for Lifetime Income's Retirement Income Institute.

Many in this cohort, known as "peak boomers," are facing significant economic headwinds, the report said. It's what some have called the boomer retirement bomb — and it might be costly for the rest of the workers in the economy.

Through an analysis of data from the Federal Reserve and the University of Michigan Health and Retirement Study, the report found that 52.5% of peak boomers have $250,000 or less in assets, meaning that they'll likely deplete their savings and rely primarily on income from Social Security in retirement. Another 14.6% of that cohort have $500,000 or less in assets, meaning "nearly two-thirds will strain to meet their needs in retirement," the report said.

"America has never seen so many people reaching retirement age over a short period, and well over half of them will find it challenging to meet their needs through their retirements, let alone maintain their current standard of living," Robert Shapiro, an author of the report and the former Under Secretary of Commerce for Economic Affairs, said in a statement. "They lack the protected income that many older Boomers have from solid pensions or higher savings."

The peak boomers' retirement wave could also impact the overall US economy. The report projects that employers will have to replace as many as 14.8 million peak boomers — primarily in the manufacturing, healthcare, and education industries — which could decrease economic productivity.

On top of that, the generation's retirement is likely to have an impact on consumer spending. Using data from the Consumer Expenditure Survey, the report found that peak boomers will spend $204 billion less in 2032 than they did in 2022, with the transportation sector taking the biggest hit.

Still, as the report noted, younger employees are likely to fill some of the jobs that peak boomers will leave, and productivity will rise as technology advances.

The crisis is partially due to changes in how Americans save for retirement

Peak boomers entered the workforce just as retirement plans shifted away from defined benefit plans like pensions — which generally guarantee stable income and are employer-subsidized — to contribution plans like 401(k)s, which rely on workers to pay into them.

Of the different types of retirement-savings plans the report looked at, defined benefit pensions have the least disparities along racial, gender, and ethnicity lines (although there are significant disparities in annual payments) — but only 24% of peak boomers hold them, and even those plans are coming up against potential underfunding.

Already, many retirement-aged Americans are living on paltry incomes. A little over half of Americans over 65 live on incomes of $30,000 or less a year, per the Census Bureau's Current Population Survey, with the largest share living on $10,000 to $19,000. And, per Business Insider's calculations of CPS ASEC data, 79.2% of retirees receive some type of Social Security income.

Retirement-aged Americans, many of whom fall in that peak boomer category, previously told Business Insider that they might just have to continue working until they die or become infirm to stay afloat.

"Only the very wealthy are going to have any dignity in their old age," Pam, who is nearly 58, said. "And the rest of us are just going to pray that they can die while they still have a job because nobody wants to die on the street.""

MY COMMENT

Like every generation many will simply have to live on what they have. This is nothing new. Many generations have had to simply live frugally in retirement and primarily depend on Social Security.

The primary purpose of this article is as a WARNING for younger people. Do nothing to secure your future and you will end up like this. It is.....the "Grasshopper and the Ant".......and....is serious stuff.

 

Where is EMMETT when we need him?

 

The KEY words here being......"TRADERS" and "WALL-STREET".

Traders Are Cashing Out of Markets En Masse

https://finance.yahoo.com/news/bloated-wall-street-bulls-cashing-201513343.html

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

"(Bloomberg) -- The great market rally of 2024 looks dangerously close to unraveling as Wall Street’s once-invincible bull brigade begins to withdraw its winnings.

With Treasury yields breaking out, Federal Reserve hawks ascendant and Middle East strife flaring, money has just been pulled out of equities and junk bonds at the fastest rate in more than a year. Dip-buyers have been muzzled. The S&P 500 fell every day this week as the top seven tech behemoths closed nearly 8% lower, with equity volatility climbing.

Fueling the reversal is an uptick in tensions that bulls may be less inclined to brush off after ringing up trillions of dollars in trading profits since late October. First among them is evidence that inflation has supplanted recession as the chief nemesis of central bankers. With commodities surging and economic data stubbornly hot, speakers led by Chair Jerome Powell have poured water on hopes for a long-awaited pivot in monetary policy.

It adds up to a backdrop warranting defense, says Kathryn Rooney Vera, chief market strategist at StoneX Group.

“In a world of high geopolitical risk, upside risk to commodity prices, upside risk to inflation, I think we have to be more conservative in our allocation,” Rooney Vera said by phone. “I would rotate from high-flying equities at this point, and I would put that into really high-yielding short-term paper.”

The view suggests oft-ignored valuation imbalances across assets are starting to matter again. With government bonds selling off, the 10-year Treasury rate pushed back above 4.6%, about 40 basis points above the so-called earnings yield of the S&P 500. That gap, the rough basis for a valuation tool known as the Fed model, can be framed as the least favorable for equities since 2002, relatively speaking.

Down six days starting last Friday, the S&P 500 tallied its worst losing streak since 2022, extending its April loss to more than 5%. Two-year Treasuries saw their yield briefly push above 5% on Tuesday, part of a fixed-income rout that has erased gains in high yield- and investment-grade bonds for the month.

Traders this week sensed a deliberate effort by central bankers to restrain bets on imminent easing ahead. Powell said Tuesday that it will probably take “longer than expected” to gain the confidence needed to lower rates. A day later, Fed Governor Michelle Bowman warned progress on inflation may have stalled. On Thursday, asked if it would be appropriate to hold rates steady all year, Minneapolis Fed President Neel Kashkari answered: “potentially.”

Hawkish posturing fanned selling pressure that has been building across investor ranks. Redemptions from stock funds reached $21.1 billion in the two weeks through Wednesday, the most since December 2022, according to Bank of America citing data from EPFR Global. Investors pulled cash out of junk bonds at the fastest pace in 14 months, according to data from LSEG Lipper. Hedge funds ramped up short positions in US exchange-traded funds at the fastest pace since 2022, Goldman Sachs Group Inc.’s prime brokerage data show.

“There are weak hands selling, and will continue to sell, since they weren’t enthusiastic to buy in the first place,” said Peter Tchir, head of macro strategy at Academy Securities Inc. “People got sucked into chasing the rally, buying stocks at high valuations, now, a month or so later, the trades aren’t working.”

Market-implied expectations for monetary easing have collapsed in the past two weeks as traders price in less than two rate cuts this year. That’s down from as many as six earlier in 2024.

Tensions in the Middle East have reinforced the more cautious stance. Israel reportedly struck back at Iran on Friday morning and while the latest tensions were contained, worries remain about a wider war in a region already roiled by the Israel-Hamas conflict that could send oil prices above $100 a barrel.

Investors today face a pile of risks that they have shown themselves able to live with previously thanks to resilient corporate earnings and spirited economic growth. The S&P 500 is up 16% since Hamas attacked Israel, 17% since the 10-year Treasury yield’s 2023 peak, and about 20% since the Fed began raising rates two years ago.

Yet the sheer scale of market gains now threatens to work against risk assets, going forward.

Valuation worries are building within the equity ecosystem, particularly the Nasdaq 100, whose seven biggest members saw the worst weekly drop since November 2022. Cheaper-looking companies have been back to outperforming their often artificial-intelligence-enhanced growth counterparts. The Russell 1000 Value Index fell 0.7% on the week compared to a 5% drop in its growth counterpart.

“There has been a tremendous amount of faith-based investing into AI that pushed up valuations of many megacap tech firms,” said Max Gokhman, head of MosaiQ Investment Strategy at Franklin Templeton Investment Solutions. “A value overweight looks increasingly more attractive and it’s something we are actively discussing.”"

MY COMMENT

Here you have it......the traders, the WALL-STREET crowd, the AI trading platforms, the big banks......are all playing the current conditions. Who are these people......well.....they are the people that can not beat the SP500 over the longer term. They are the speculators and the LOCK STEP market drivers over the short term.

They are selling bonds, they are selling stocks, they are selling Bitcoin.....they will sell and trade anything....short term....that might make them some profit. they dont even consider the long term in the slightest.

They are joined by the nervous, skittish, investors that think they can market time and those that simply panic. At the same time all of this is TOTALLY AMPLIFIED by the AI news headline trading platforms that are in reality simply acting in concert to create the very conditions they are trading. In other words....legal market manipulation.

UNFORTUNATELY for all of them....they can not even beat the simple SP500 over the REAL long term.

This is all why there is only one way to handle this sort of short term volatility.....simply sit and hold on and do nothing. Or if you choose.....pick up additional shares at bargain prices.

This is why I choose to buy additional shares of NVDA on Friday. The price was just too crazy attractive. Will it go down more in the short term? Will it go up from here short term? I dont know and I dont care. I know these shares will be GOLDEN going forward over the longer term.

I found that NVDA price so attractive that I sold two thirds of my SMCI shares to get some cash to take adevantage of the NVDA price. I did not want to sell those shares....but....that was my only and best opportunity to raise some quick cash to take advantage of what I saw as a big opportunity.

I consider SMCI as a sort of derivative of NVDA. I was willing to take a short term loss in the shares I sold to get into the new NVDA shares at a price that I believe will provide a PROBABILITY of a greater return than the SMCI shares that I sold over the short and long term.

I did retain one third of my SMCI shares since I did not want to exit that position totally. I like the idea of owning a NVDA, chip industry, and AI based hardware company. I also believe that the drop in SMCI was WAY overblown and unjustified.

AND........I continue to be fully invested for the long term as usual.