The Long Term Investor

Discussion in 'Investing' started by WXYZ, Oct 2, 2018.

  1. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    To cap off the above posting....I just looked at my accounts today. ALL stocks in the green....so far....emphasis on "so far".

    I hate to JINX myself....but in two accounts....gains are in ....six figures. I dont see this sort of gain very often......not that I am complaining.

    I am happy to see that TSLA is once again in the green today. I dont own the stock and have no plans to buy it....but I do believe that the success of ELON MUSK is critical to our country.......and......that his current critics are mostly spouting negativity due to politics (theirs).

    Our country and the world would be in sad shape without what he has done to provide internet and digital services to the world, his nearly single handed creation of the mas EV market, him being basically the US SPACE program, the technological advances he has driven and will drive in the future, etc, etc, etc.
     
    #19721 WXYZ, Apr 26, 2024
    Last edited: Apr 26, 2024
    Lori Myers likes this.
  2. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    How we doing today people? Making some money today? I hope so.
     
    roadtonowhere08 likes this.
  3. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    OK.....a KILLER week and day today. I was BIG GREEN today. Although I did have a single stock in the RED.....poor APPLE.

    As to the SP500......I beat it today by 2.91%. Might be a record beat.
     
  4. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    BOOM.....the markets EXPLODED today. Here is how we ended for the week.

    DOW year to date +1.39%
    DOW five days +0.32%

    SP500 year to date +7.53%
    SP500 five days +2.26%

    NASDAQ100 year to date +7.06%
    NASDAQ100 five days +3.28%

    NASDAQ year to date +7.87%
    NASDAQ five days +3.45%

    RUSSELL year to date (-0.52%)
    RUSSELL five days +2.50%

    Well I got back a lot of money this week. As of the close today my entire portfolio is now at +20.35% year to date. That is a GREAT end to the month of April and the first four months of the year. Last week at the Friday close my entire account was at +13.08% year to date. That is one KILLER week gain.
     
    #19724 WXYZ, Apr 26, 2024
    Last edited: Apr 27, 2024
    Smokie likes this.
  5. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    HAVE A GREAT WEEKEND EVERYONE.
     
  6. roadtonowhere08

    roadtonowhere08 Well-Known Member

    Joined:
    Apr 13, 2020
    Messages:
    734
    Likes Received:
    633
    NVDA digging out of the hole, so I am happy :banana:
     
    Smokie and WXYZ like this.
  7. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    Earnings so far after this week.

    EARNINGS INSIGHT

    https://advantage.factset.com/hubfs/Website/Resources Section/Research Desk/Earnings Insight/EarningsInsight_042624A.pdf

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

    (this is a very long and very through article, please click the link for total coverage and analysis)


    "Key Metrics

    Earnings Scorecard: For Q1 2024 (with 46% of S&P 500 companies reporting actual results), 77% of S&P 500 companies have reported a positive EPS surprise and 60% of S&P 500 companies have reported a positive revenue
    surprise.


    Earnings Growth: For Q1 2024, the blended (year-over-year) earnings growth rate for the S&P 500 is 3.5%. If 3.5% is the actual growth rate for the quarter, it will mark the third-straight quarter of year-over-year earnings growth
    for the index.

    ..............

    Earnings Guidance: For Q2 2024, 19 S&P 500 companies have issued negative EPS guidance and 20 S&P 500 companies have issued positive EPS guidance."

    MY COMMENT

    YES....earnings are going very nicely. I am looking forward to the rest of the BIG CAP tech earnings as well as the remainder of the companies that I own.

    I am especially curious to see how my....."junior holdings".....PLTR and SMCI do this time around and how they move after earnings.
     
  8. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    Long term investing success is so simple.

    How your money can grow like gangbusters if you stick to the plan
    Most million-dollar-plus portfolios start growing slowly — and then wild things happen.

    https://www.usatoday.com/story/mone...busters-if-you-stick-to-the-plan/73409031007/

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

    "I want to blow your mind with this article. But if I can just inspire you to commit to building a fat nest egg for retirement — while believing you can actually do it — that will be just fine, too.

    I've been investing in stocks for almost 30 years now, and I've made plenty of mistakes. Costly ones. But despite that, I'm not super worried about retirement, because I've amassed a considerable sum. Yes, I needed to invest new sums regularly, and yes, I needed to invest effectively (i.e., in stocks, not savings bonds or savings accounts), but another critical thing I needed was to simply stay the course.

    How money grows: the early years

    When you decide to invest in stocks for the long term, the early years are not very exciting. That's a problem, because it's easy to lose interest — especially if you start just before the market takes a breather or, worse, pulls back. (Stock market corrections happen all the time — every year or three, on average. Despite occasional pullbacks, the market has always recovered and gone on to new highs.)

    Let's start crunching some numbers to see how your money might grow. We'll assume that you're going to start with $0, invest $12,000 per year, and that your money will grow, on average, by 8% annually. Off we go!

    See? It's nice, but it's not exciting. But it's starting to get interesting. See — by year five, you've invested $60,000 and you've earned $16,000, for a total near $76,000. Not bad.

    By the way — your money will definitely not grow exactly like in the table above, because you won't earn an average return evenly every year. There will be up and down years, sometimes in the single digits, sometimes double. The stock market is simply volatile. On average, over many decades, the stock market has averaged annual gains of close to 10% — so I'm using 8% to be a bit conservative. (These returns ignore inflation, though, which does shrink your purchasing power over time.)

    The table below shows how the S&P 500 index of 500 of America's biggest and best companies has grown, year, by year, over many years. This is more like how your own portfolio might grow.

    (see chart in article)

    How money grows: the middle years

    Let's return to our unfolding example of how money grows. You're still investing $12,000 annually, and time has gone by. Eventually, you'll get to the middle years of your investing marathon. Your results might look something like this:

    (see chart in article)


    Now it's much more interesting, right? By the 20-year mark, you've plowed nearly a quarter of a million dollars into your account, and you have much more than half a million dollars in it. Your investments have earned a hefty $353,000 for you!

    If you started around age 30, you'll be around 50 now, with a very solid nest egg growing.

    Think back to your early years for a moment. When your portfolio was only worth, say, $50,000, a 1% increase in it would bump it up by... $500. Eh.

    Now, though, if your portfolio is worth $593,000, a 1% bump means an increase of $5,930 — much better
    . Between year 20 and year 21, your portfolio will grow from $593,076 to $653,481 — an increase of $60,405 for that one year, even though you only added your usual $12,000. Divide that by 365, and your portfolio grew by an average of $165.50 per day!

    How money grows: the crazy years

    Now we're starting to get to the crazy years. Check out the rest of the table, below:

    There's a good chance you weren't lucky or savvy enough to start investing in your 20s, so you may not be able to save and invest for 50 years. (Your kids may be able to, though — so try to spark their interest in stocks!)

    Even if you only have 30 or 40 years in which to grow your money, you can still work wonders. Check out year 30 above: You would have invested $360,000 by that time, and your portfolio would be worth $1.1 million more than that! Between year 30 and year 31, your portfolio would grow from $1,468,150 to $1,598,562 — increasing by $130,412. (That may well exceed your salary at that point!) Divide it by 365, and you'd be making, on average, $357 per day.

    Your portfolio will grow by $281,550 to 3,638,922 from year 40 to year 41. That's very likely going to exceed your salary, and it will be an average increase of $771 per day!

    These are some crazy numbers, and they're all coming from some fairly conservative estimates. You may well average more than 8% annual growth, for example, and you may well be able to sock away more than $12,000 annually. Yes, that's an aggressive sum for a young person, but as you age and, ideally, earn more, you can probably sock away more and more over time.

    Between year 49 and year 50, your money will grow by $562,819 — an incredible $1,542 per day, on average.

    How to start building your massive portfolio

    These numbers get really wild after many years, and you might just tune them out as being unrealistic or too far away. Yes, they take a long time to achieve, but they are realistic. For best results in your life, believe the math and commit to amassing as much as you'll need for retirement. It can be hard to think about retirement when you're young, but most of us will retire in the future, and we'll need significant retirement income — much more than Social Security will provide.

    So consider saving aggressively and investing effectively — perhaps simply in a low-fee index fund such as the S&P 500 ETF ."

    MY COMMENT

    See the article for the charts that show all the investing results and amounts.

    People may not believe these numbers....but....they are true. AND.....these numbers ONLY assume a return of 8% per year average.

    And even more amazing......the 8%......if you are in an investment like a SP500 ETF....includes nearly 2% in dividends that are simply paid regardless of how stocks perform.

    The only things difficult are having the discipline to invest and save EACH year.......and....having the discipline to stick to a plan for your life without bailing out of the markets or the plan.
     
    TireSmoke and Smokie like this.
  9. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    We....."did good"....this week.

    S&P 500 posts best week since November, Nasdaq surges 2% Friday as Alphabet soars

    https://www.cnbc.com/2024/04/25/stock-market-today-live-update.html

    MY COMMENT

    I am sure for many if not most people, this week was a perfect example of the difference between...."FEELINGS".....and....."REALITY".

    After the DISMAL day last Friday..... and the very erratic week we had this week with all the ups and downs and INSANITY this week with the day after META earnings market drop........I am sure it felt like a pretty tough week to most investors. Yet at the end of the week....it was a HUGE success........for those with the guts to sit in the markets and ENDURE.

    A good lesson for investors regarding the potential for EMOTION to impact your investing.

    To steal a phrase......"If investing was easy, it would be called football".

    Actually investing is very easy.....simply put your money into an SP500 ETF each month for life and sit back and never do anything. Sounds so easy....but get feelings involved....and it becomes supremely difficult.
     
  10. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    I like articles that illustrate business management decision making. This has got to be one of the stupidest management decisions I have seen. It ranks right up there with the BUD Light disaster.

    Hertz says it lost another $195M from EV bet
    Hertz bet big on EVs in 2021, announcing it would invest in acquiring 100,000 Teslas to help build its EV fleet

    https://www.foxbusiness.com/markets/hertz-lost-another-195-million-ev-bet

    "Hertz bet big on EVs in 2021, announcing it would invest in acquiring 100,000 Teslas to help build its EV fleet. But the rental car firm reversed course early this year due to low customer demand, saying it would unload tens of thousands of EVs and return to gas-powered vehicles.

    The company said Friday it plans to sell 10,000 more EVs, taking its total planned sales to 30,000 this year. Higher repair costs also weighed on the company's overall fleet maintenance expenses."


    My COMMENT

    CRAZY. All of your business operations are set up to handle and maintain a gas vehicle fleet...so....why in the world would you suddenly bring in a huge number of EV vehicles.

    AND....there is absolutely NO WAY your customers want to drive an EV vehicle and mess with charging and low mile range. In addition, most of your customers have never driven an EV and dont know how to drive a car that only has a screen. Without any data or anything else....I would say at least 90% of your customers DO NOT want to be given an EV as a rental car.

    This insane management move.....irritated the many customers that were forced to accept an EV when they did not want one. This is one of those company decisions where I cant believe that no one stepped up and said....."wait a minute, is this really a good idea"...."do our customers really want this"?

    Simple COMMON SENSE....tells you this is not a good move....even if you have ZERO business management experience or experience in the rental car business.

    This is a perfect example of...."in the bubble"...thinking in a company. As I have said a few times in this long thread......as a business person and manager....the most important thing I can do regarding any decision or plan is ask......"why"...."why"...."why"?

    OR.....once in a while, it might be a good idea to get out of the executive offices and work directly....at the lowest level of your business..... with your actual customers and employees.....what you think you know is often simply WRONG.
     
    #19730 WXYZ, Apr 27, 2024
    Last edited: Apr 27, 2024
  11. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    Earnings will continue for me next week. I have AMZN and SMCI reporting after the bell on Tuesday. I also have AAPL reporting on Thursday.

    I am looking for more beats to add to my collection.
     
  12. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    A little weekend....real property....article. SORRY.....it is not good news.

    High mortgage rates hang around, reaching 7.17%
    Homebuyer demand took a hit this week as mortgage rates stuck above 7% for the second week in a row.

    https://finance.yahoo.com/news/high-mortgage-rates-hang-around-reaching-717-164439632.html

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

    "Mortgage rates continued their climb past the 7% threshold this week, sidelining price-sensitive buyers in their wake.

    The rate on the 30-year fixed rate mortgage rose to 7.17% on Thursday, up from 7.1% the week prior, according to Freddie Mac. Rates surged past 7% last week for the first time this year following a government report showing inflation remained hotter than expected.

    A separate measure, which tracks rate changes daily, revealed even bigger swings. The daily rate on the popular 30-year fixed loan was 7.52% on Thursday, the highest reading since November 2023, according to Mortgage News Daily.

    The uptick in rates was a sour note for would-be buyers hoping to get into the spring market, forcing some first-time and repeat buyers back on the sidelines.

    Any hope of seeing rates stabilize will be contingent on inflation, said Jiayu Xu, an economist at Realtor.com.

    Unfortunately, the rising mortgage rates occurred during what is typically a busy time in the housing market, potentially giving pause to prospective homebuyers as they weigh their purchasing decisions,” Xu said. “Despite the increased mortgage rates leading to higher costs, it could also suggest a less competitive market where opportunities may exist for some homebuyers.”

    Buyers backpedal as rates soar

    Demand for mortgages slowed last week as mortgage rates hit their highest levels since late 2023.

    The volume of applications to purchase a home fell 1% during the week ending April 19, according to the Mortgage Bankers Association (MBA) weekly survey of applications. Overall, applications were down 15% compared to one year ago.

    Those purchasing turned to government-backed loans or adjustable-rate mortgages (ARMs), which offer slightly lower interest rates.

    The ARM share of applications increased nearly 8%, the MBA noted, which was consistent with the uptick in rates as buyers searched for any measure of relief. The FHA share of applications also registered a modest uptick, rising roughly 13% for the week ending April 19.

    But homebuyers weren’t the only ones halted by the uptick in mortgage rates. Refinance applications fell 6% last week, the MBA found, as homeowners lost hope of snagging a lower rate.

    While mortgage rates are partially to blame for the lull in demand, the limited supply of homes on the market is a big factor. There’s still more demand than there is supply, keeping home prices from edging down.

    It’s also fed the lock-in effect.

    “The jump in mortgage rates has taken the wind out of the sails of the mortgage market,” said Bob Broeksmit, CEO and MBA president. “Along with weaker affordability conditions, the lock-in effect continues to suppress existing inventory levels as many homeowners remain unwilling to sell their home to buy a new one at a higher price and mortgage rate."

    A silver lining in new construction

    While inventory of previously owned homes continues to hover near 30-year lows, sales of newly built homes in March surpassed expectations, seeing the largest increase since December 2022.

    Sales of newly built, single-family homes in March rose nearly 9% to 693,000 on a seasonally adjusted annual rate, according to data released this week by the US Census Bureau and US Department of Housing and Urban Development.

    The pace of new home sales last month was up just over 8% from a year earlier, though experts predict it may moderate.

    Still, new homes represent a cushion for buyers facing low inventory on the existing home side.


    New single-family home inventory in March sat at 477,000, up nearly 3% from February. That represents about 8 months of supply at the current building pace. As for existing single-family homes, data from NAR shows there were just over 3 months of supply in March — at least 5 to 6 months represent a balanced market.

    Overall, the inventory of newly built homes in March was up just over 10% annually.

    According to Sam Khater, Freddie Mac’s chief economist, buyers are coming to terms with higher rates, as evidenced by the recent uptick in sales for new homes.

    Despite rate increases more than half a percent since the first week of the year, purchase demand remains steady,” said Khater. “With rates staying higher for longer, many homebuyers are adjusting.”

    MY COMMENT

    Not a happy picture for those that are trying to buy their first home.

    There are a couple of options......ARM mortgages.....are one possible option. Just make sure you have enough years before the adjustments happen and that worst case scenario you can live with the adjustments if you have to. Of course when doing an ARM most people are hoping to be able to re-finance at much better terms.....in the future.

    The other option is new construction. One of my kids is in the process of buying a new construction home right now. They will close in mid June. Of course they are doing their mortgage through.....a family source with very favorable terms. But....I know that the big builder that they are buying from....offers buyers $10,000 toward closing costs if you use their in-house financing and a nice $20,000 incentive toward upgrades. I also see them advertising a mortgage rate of 4.99% on signs on some of their new homes. I dont know what sort of mortgage these are.....but.....there are definitely builder incentives out there for buyers.

    Regarding the big builder above.....they are selling houses like crazy....in the large master planned, gated, community where my kid is buying.

    I am also seeing many big new construction builders with BIG price reductions on their new homes as an incentive to buyers.
     
    #19732 WXYZ, Apr 28, 2024
    Last edited: Apr 28, 2024
  13. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    Regarding the above.....one great aspect of financial freedom....is the ability as an individual.....or in our case as a family....to be free from the turmoil of the mortgage market.

    I manage most of the family investment accounts including the account of my sister. She has done very well over the past 30+ years that I have been investing her account in the same fashion as my PORTFOLIO MODEL. (before that my mom helped her with her investing)

    As pay back for what I have done for her.......she chooses to be the family mortgage banker. She also likes the retirement income from holding two family mortgages for my kids. (she has no kids of her own)

    It is a BIG HELP for my kids to basically pay cash when they buy a new home. For example my current kid that is closing in June:

    * They will pay all cash to the builder at closing.

    * I will prepare a deed of trust and note for my sister....on the new home..... which we will record ourselves after the closing with the builder on the new home.

    * My sister holds the mortgage on my kids.....existing home.....which they will put on the market to sell AFTER the new home closes.

    * My kid will move into the new home....but...we will leave some of their furnishings at the old house for staging till it sells.

    * My sister will defer payments on the new home till the old home sells.

    * My sister will give terms on the new mortgage......length of the mortgage and interest rate.....so my kid can have a payment that they can afford.

    Of course......this all has to be legal. My kids do legitimately pay their payments and my sister does legitimately pay taxes on the interest. We also make sure that the family loans are properly documented with a recorded deed of trust and note and we make sure that the loans....even though below market.....meet the requirements of the...."Applicable Federal Rates".

    I just did an hour consult with a CPA on the new purchase financing to make sure we are doing everything properly.....since some components of the loan will involve a gift tax situation.

    BOTTOM LINE......we pull together as a family to educate and support the new generation. LONG TERM INVESTING has given us the ability to do this.

    Obviously most people can not do what we do as a very small extended family. We have a very unusual family history of starting out in EXTREME POVERTY with my great, great, grandfather.......that continues to impact our family behavior all these years later.

    BUT....investing and long term accumulation of money.....gives YOU options. It will allow YOU to educate and help YOUR kids...if you wish. It will allow YOU financial freedom. YOU dont have to do things the way we do. YOU will create YOUR own family traditions and habits and values. AND....if YOU are the fist generation of investors in your family.....YOU....will be the person that has the potential to have a long term impact on YOUR family going forward. Who knows.....what YOU do may impact your family going forward for generations.....like my great, great, Grandfather.
     
    #19733 WXYZ, Apr 28, 2024
    Last edited: Apr 28, 2024
    Lori Myers likes this.
  14. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    OK......here is a question....why do I violate my own privacy....to a degree....like the above on here?

    Well I try to remain anonymous on here. I try to NOT cross the line with "stuff" that will identify me.

    BUT.....my goal is to try to set an example for others. To MOTIVATE...by example. To try to....simply....do a little good.

    This thread is a nice little community....I like that.
     
    #19734 WXYZ, Apr 28, 2024
    Last edited: Apr 28, 2024
    Lori Myers likes this.
  15. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    AND.... I will say....it DOES NOT take a village. It is ALL up to EACH of us as individuals.

    SO......NOTHING in this thread that I post is intended to be ANY sort of investing advice to ANYONE else. I know nothing about anyone's background or finances. YOU have to make your own decisions, choices, and investments. I AM NOT a financial advisor or consultant.

    The WORST MISTAKE anyone can make is to take any sort of internet content as investing advice......this content INCLUDED.

    If you are NOT COMFORTABLE or need help with your investing....go see a good FIDUCIARY FINANCIAL ADVISOR....so they can review your entire situation and goals. Dont rely on the internet.....PLEASE.
     
    #19735 WXYZ, Apr 28, 2024
    Last edited: Apr 28, 2024
  16. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    I will also say....TELL YOUR FAMILY, FRIENDS, CO-WORKERS,....EVERYONE...about this board and this thread.

    The more participation we can get the better for everyone on here. The more opinion, input, content, etc, etc, we can get the better this site will be for all of us.

    We are all constantly learning from everyone else that posts.
     
  17. Smokie

    Smokie Well-Known Member

    Joined:
    May 24, 2022
    Messages:
    1,449
    Likes Received:
    1,013
    Good little article posted above.

    We are impatient little creatures. We hate waiting for good things to come around. Whether it is at the drive-thru, the package in the mail, a leg-up in our career, or just about anything. We want it now and quickly more than ever. :)

    As has been the case for a long time. Time in the market is going to be beneficial to your long term success. Just keep at it. Stick to a plan that matches your goals and ignore a lot of the noise.
     
    WXYZ and TomB16 like this.
  18. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    ACTUALLY....I post for my own self interest....as much as anything

    I started posting on the old MSN Money Boards about 30 years ago....about 2004 to 2005. My topic has always been the same....LONG TERM INVESTING. Way back than I was doing my usual thing...BIG CAP GROWTH company investing. I called my portfolio my...."MODEL PORTFOLIO". Nothing has changed over the past 30 years in terms of what I do or what I advocate as an investing style...except for....the content of the portfolio. It tends to evolve slowly to keep up with the times....as needed.

    I probably get more from posting than anyone reading this "stuff". I believe the daily posting significantly helps me to focus my thinking and constantly evaluate what I am doing. It helps me to not get caught up in the moment and all the day to day stuff going on.

    I see it as a form of motivational visualization. It definately helps me to keep my eye on the ball. During the hard times and bear markets....it helps me to focus on the coming future good returns ...rather than...the dismal present. It is constant reinforcement of what I need to do and how too do it.

    So...I greatly appreciate this.....STOCKAHOLICS SITE...for allowing me to keep myself focused on what I am trying to do with my investing...through my constant daily repetition and reinforcement of my own behavior.
     
  19. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    14,951
    Likes Received:
    5,046
    MORE of the same next week.

    A Fed meeting, jobs report, and more Big Tech earnings: What to know this week

    https://finance.yahoo.com/news/a-fe...arnings-what-to-know-this-week-113643323.html

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

    "Stocks rebounded as tech earnings spawned a rally in markets despite growing concerns that the Fed will hold interest rates higher for longer.

    The Nasdaq Composite (^IXIC) rose more than 4% last week, while the S&P 500 (^GSPC) popped almost 3%. Meanwhile, the Dow Jones Industrial Average (^DJI) rose less than 1%.

    In the week ahead, a Fed meeting, the April jobs report, and earnings from Big Tech stalwarts Apple (AAPL) and Amazon (AMZN) will test the recent optimism in markets.

    Updates on job openings, activity in the services and manufacturing sectors, and consumer confidence are also on the calendar.

    Companies reporting earnings include AMD (AMD), Coca-Cola (KO), Eli Lilly (LLY), McDonald's (MCD), Novo Nordisk (NVO), Starbucks (SBUX), and Super Micro Computer (SMCI).

    An update from the Fed

    The latest decision on interest rate policy from the Federal Open Market Committee is expected on Wednesday, followed by a media press conference with Fed Chair Jerome Powell. Markets widely expect the central bank will hold rates steady.

    Investors will be closely listening for how the Fed is interpreting recent hotter-than-expected inflation data given that the market has scaled back its rate cut expectations.

    "Another round of elevated inflation data is likely to lead to a more hawkish-leaning message at the May FOMC meeting," Deutsche Bank chief US economist Matthew Luzzetti wrote in a research note on Friday. "While we expect the Committee will maintain an easing bias, we also anticipate the statement and press conference will echo Chair Powell’s view that firmer inflation prints suggest it will take longer to gain confidence about disinflation."

    Since Powell said publicly on April 16 that inflation was taking "longer than expected" to fall to the Fed's 2% target, data on price increases has come in above expectations. Most recently, the core Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy and is closely watched by the Federal Reserve, rose 2.8% over the prior year in March, above estimates for 2.7% and unchanged from the annual increase seen in February.

    After the print, investors were pricing in just a 33% chance that the Fed cuts rates in July, down from an 83% chance a month ago, per the CME FedWatch tool.

    A look at the labor market

    With the Fed committed to holding rates higher until it feels confident inflation is coming down, there is a continued focus on the health of the labor market. Resilient data has economists hopeful inflation can fall to 2% without the economy slipping into recession despite a higher interest rate environment.

    The April jobs report is expected to show 250,000 nonfarm payroll jobs were added to the US economy, with unemployment holding steady at 3.8%, according to data from Bloomberg. In March, the US economy added 303,000 jobs while the unemployment rate slipped to 3.8%.

    And, largely, economists don't expect there to be any signs of cracks in the strong labor market story.

    "We don't expect the recent momentum in the labor market to slow," BofA US economist Michael Gapen wrote in a weekly note to clients on Friday.

    Big Tech earnings roll on

    The market's reaction to Big Tech earnings has been a mixed bag thus far. Meta's (META) plans to spend heavily on artificial intelligence, along with its softer-than-expected second quarter revenue guidance, gave investors pause. The social media giant's stock fell more than 10% following its earnings release.

    Alphabet (GOOG, GOOGL) proved to be the winner of the week: Its stock popped more than 10% after the company announced a cash dividend program of $0.20 per share, approval for a $70 billion share repurchase program, and earnings results that topped estimates. The company's market cap topped $2 trillion on Friday.

    Baird technology desk sector strategist Ted Mortonson reasoned that a large reason behind the divergent moves in the two Big Tech stocks was a "game of positioning." Meta stock had soared over the past year, while Alphabet didn't outperform by nearly as much.

    This narrative will be put to the test once again in the week ahead when Apple and Amazon are scheduled to report earnings. Apple enters its report with shares down more than 11% this year amid growing concerns over a slowdown in demand. Meanwhile, Amazon is up more than 18% this year and hovering near an all-time high.


    Earnings scorecard

    Beyond Big Tech, this week will wrap up the two busiest weeks of reporting for the S&P 500. With 46% of the index having already reported for the quarter, the index is tracking for earnings per share growth of 3.5%, slightly above the 3.2% expected prior to the start of earnings season, per FactSet.

    At large, companies that beat on earnings per share and revenue are seeing muted positivestock reactions, while companies that miss are seeing more negative stock performance than usual.

    Strategists have told Yahoo Finance it seems companies are struggling to impress investors and drive big stock reactions after a massive market rally to start the year.

    "You don't just need a beat [on earnings and revenue estimates] and hold [on guidance], you need a beat and raise and confidence in the very long-term trajectory of these companies," Citi strategist Drew Pettit told Yahoo Finance.

    Still, there has been a silver lining in earnings reports thus far: Profit margins are increasing. The S&P 500 is pacing for a net profit margin of 11.5% this quarter, above the 11.2% seen last quarter and in line with where margins were a year ago.

    As Truist co-CIO Keith Lerner noted in the Yahoo Finance Chartbook back in January, a key question for investors in 2024 has been whether or not corporates will be able to preserve margins amid sticky inflation and high interest rates. For now, the answer appears to be yes."

    MY COMMENT

    Sounds like a potentially good week. Of course...that depends on the FED not trashing the markets like they usually do.

    Lets hope they just.....STFU.....and go away.
     
  20. Smokie

    Smokie Well-Known Member

    Joined:
    May 24, 2022
    Messages:
    1,449
    Likes Received:
    1,013
    That would be nice for sure….but as we all know, they simply cannot miss an opportunity for attention. The media will continue to swoon and squeal about every little detail like teen”s on a first date.

    My take, way too much attention is given to them and the microscopic focus on every little report.
     

Share This Page