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On the Turning Away…
…from the pale and downtrodden … and the words that they say which we don’t understand.
Wall Street almost — almost — became aware of the U.S. economy this morning.
Continuing the epic U.S. employment saga, the Labor Department put another brick in the unemployment wall this morning. Some 3.8 million Americans filed for first-time unemployment benefits last week.
The six-week total now stands at 30.3 million unemployed. CNBC called it “the worst employment crisis in U.S. history.”
The market opened down nearly 2% on the news, and, for a brief moment, you could see the sweat on Wall Street’s brow. A hint that somewhere in that sea of frothing bullishness, someone almost had an epiphany. A realization that economic demand might suffer considerably due to 30 million unemployed American consumers.
And then, while contemplating how waning demand might impact a U.S. economic recovery and corporate bottom lines, that someone stumbled over a pile of Fed money (It’s a gas!) and completely forgot the whole deal…
The Takeaway:
Hey you!
Are you still learning to fly in this crazy market? Or are you sitting back comfortably numb and enjoying the quarantine?
Yes, the economic data makes you want to run like hell, but you don’t have to say “goodbye blue sky” to investing in this market. Just breathe, be patient and take your time. Otherwise, your portfolio will play that great gig in the sky.
When it comes to investing, it’s hard to remove yourself from the “us and them” mentality, especially during these trying times. But giving in to emotions will eventually bankrupt you one of these days.
Yes, by all economic accounts, the market is more irrational than Roger Waters on a nicotine and whiskey bender. But you can be right and still lose money.
Now, Great Stuff has been pretty down on the market’s prospects since this whole pandemic thing started. We recommended putting most of your investment capital in gold, bonds and cash … you know, the standard safe havens. (By the way, which one’s Pink?)
But there’s one sector in which we have high hopes: tech.
No, we don’t have brain damage. We’re just reading the writing on the wall. Today, Great Stuff takes a look at three Big Tech companies post earnings, and we weigh their potential in the current market.
It’s our way of helping you shine on, you crazy diamond!
So, what’s … uh, the deal? Where can I grab that cash with both hands and make a stash?
Why, be careful with that ax, Eugene! If you’re wanting more, then it’s time to turn your tech investing into interstellar overdrive. See, nobody stays as fearless in the tech game as Paul Mampilly. And Paul just found one tech stock that’s set to transform the way we use and create energy.
Paul even said: “This technology can single-handedly power a major American city … virtually free of charge.” So, let there be more light! And as the market’s seesaw continues, and the Fed’s jugband blues carries on, find out more about the one tech stock that Paul recommends you buy now.
Click here to learn more!
Good: Freedooooom!
Did you miss crazy Elon Musk? I did.
The Tesla Inc. (Nasdaq: TSLA) CEO proffered up his best Rage Against the Machine impression yesterday, crying out “Freedom!” and calling the COVID-19 response in the U.S. “fascist.”
The outburst came during Tesla’s earnings call with investors … earnings, yeah right!
Speaking of earnings, Tesla posted a surprise profit. Doesn’t that make it three in a row?
Why yes … yes, it does. And that’s a good thing for Tesla investors in the wake of Musk coming a bit unhinged. The company posted a first-quarter profit of $1.24 per share, shocking analysts who expected a loss. Revenue also topped expectations, coming in at $6.2 billion.
While Tesla remained cautious in its outlook due to the pandemic, investors seized on the unexpected profit and better margins — a notable feat given Tesla’s lower production volume.
Our take at Great Stuff is that Tesla is a solid long-term investment. However, given our reservations about the overall market and the U.S. economy, now may not be the best time to chase TSLA shares. If you’re looking to invest, be patient. Wait for a pullback, and time your entry accordingly.
Better: Sign, Sign, Everywhere a Sign
Do this. Don’t do that. Can’t you read the signs?
Facebook Inc. (Nasdaq: FB) is in rally mode today. The company has seen the sign, and it’s opened up investors’ eyes. (A Tesla cover into and Ace of Base reference? Are you trying to give us whiplash?)
What sign? Why the most important sign of all for Facebook: stability in ad trends.
Forget that Facebook blew past Wall Street’s first-quarter earnings expectations, or that revenue of $17.74 billion rose 17% to beat the consensus target of $17.53 billion. It’s all about guidance in this market.
“After the initial steep decrease in advertising revenue in March, we have seen signs of stability reflected in the first three weeks of April,” Facebook said in its conference call with investors.
That’s all the sign that FB bulls needed to send the stock skipping more than 5% higher.
So, what’s our take on Facebook? Well, setting aside our distaste for the company’s mishandling of user data and its unwillingness to fully address misleading posts … FB is the best social media stock on the market.
It’s a dual-edged sword. FB is a solid investment choice if you can set aside your emotions on the company.
Best: Good Ol’ Softy
Microsoft Corp. (Nasdaq: MSFT) is probably one of our favorite tech stocks here at Great Stuff. While we haven’t made it an official pick for the Great Stuff free portfolio, you should probably pick up a few shares if you can.
Why? Because of statements like this: “COVID-19 had minimal net impact on the total company revenue.”
Fact: MSFT was the only Dow stock to gain in the first quarter.
While practically every other company in the U.S. issues warnings and pulls forecasts, Microsoft is plowing ahead. The company just reported fiscal third-quarter results, beating even pre-virus estimates.
Driving that performance was an impressive 59% spike in Azure sales. Azure is Microsoft’s “Intelligent Cloud” business, and it’s eating Amazon Web Services’ lunch with JEDI-like prowess.
Finally, Microsoft actually provided fourth-quarter guidance — one of the very few companies to do so this earnings season. The company expects revenue of $35.85 billion to $36.8 billion, largely in-line with Wall Street’s targets.
The thing is, Microsoft has been an essential company for decades. It’s weathered dot-com busts, financial crises and government antitrust lawsuits. In fact, when I hear that “buy and hold” is dead, I always point to Microsoft.
You spoke to me, and now it’s time to breathe in the air.
Mr. Great Stuff, how long are you keeping this Pink Floyd thing going?
One of these days … one of these days I’ll stop speaking in song lyrics. But until then, you can count on Great Stuff to get countless eclectic earworms stuck in your head.
Meanwhile, if you’ve been hanging on in quiet desperation for this week’s Reader Feedback, wait no longer! It’s that time again, so let’s see what Great Stuff readers are thinking about this week.
Bye-Cycles
I feel like the stock market has three things going against that people don’t talk about but I’m not sure if they even really matter.
- “Sell in may and go away”
- We are at a serious technical resistance for SPY.
- We are at the end of the month and we tend to see people selling more at the end of the month as opposed to the beginning … right?
I have also read that we Tuesdays tend to be more bearish than other days of the week.
I am thinking that since we didn’t see much of a sell-off on Tuesday, no one is talking about ‘sell in May,’ and we aren’t really seeing a sell-off due to resistance or it being the end of the month … the fed is going to win and we are going to plow through resistance and the recovery will continue. Does what I’m thinking make any sense?
— Preston B.
My, my … someone’s been reading his Chad Shoop! (For anyone guessing: Chad focuses on investing around many of these market cycles — as well as some hidden market cycles too. Details here!)
Thank you for your thorough email, Preston. I wanted to touch on just a few of your questions today, but honestly, you already answered it yourself in the first line. Here’s the lowdown:
Yes, we often see a seasonal dip in May. Yes, the end of the month often brings a flurry of Big Money rebalancing and profit taking. Resistance … why, up until today’s market dive, it seemed like the S&P 500 Index had the rearview mirror torn off like it was in a Jo Dee Messina song.
All of these are true to their own extents. Yes. But somewhere along the line, Mr. Market declared that fundamentals and technical logic are dead, instead deciding to leap headfirst into the chasm of “fear of missing out” uncertainties.
Preston, your observations are most astute. In normal market climates, those trends are what we’d talk about this week instead. But today, as things are right this instant, I mostly agree with your statement at the top: “I’m not sure if they even really matter.”
Just Like Starting Over
Yo, Joe,
Well, I tried. That’s about all the slang I know. I am the newest of the newbies, have never placed an order. … How can I go find a broker when I have to stay inside? How can I get my monies out of banks into brokers’ hands? Is that all done electronically? Help!
— Janis W.
Yo, J.W.! What’s good, homie? You keeping things 100 during quarantine?
Let’s help you get that bread — err, a brokerage account to start with. Your hunch is right: Almost all brokerage action is done electronically these days, as is moving money into your account once it’s set up.
I know that many people are put off investing entirely because it’s mostly online. But once you get started with a broker you like and trust, I’m sure you’ll appreciate the convenience — and the possible addiction of checking on your stocks every second of the trading day (which, frankly, is a stage most new investors get through sooner or later).
Before we go any further, let me just say that Banyan Hill doesn’t have any personal or business relationship with any of these services. They’re just the top choices I see among many of our readers.
Check out some of these links below and see what broker is right for you. You’ll want a trading platform that’s easy to use and gives you the information you want without having to sift through a bajillion different web pages:
I also want to add that, just like starting any kind of account where money is concerned, there will be fine print. (There’s always fine print, right? It’s like the ever-returning pocket lint of the legal world.)
I wish you the best of luck, Janis!
I Am You, and What I See Is Me
Are you still ok with your advice to buy Starbucks put options?
— Philip H.
Philip, I … I don’t think that was my recommendation. By any chance, are you thinking of this Winning Investor Daily article by John Ross back on April 10? Hey now, us Joes and Johns aren’t interchangeable, you see…
So, while I can’t give you personalized investment advice here (legal beagles and whatnot), what I can say is that, when it comes to options … you definitely want to keep any losses short and take gains when you’ve got ‘em.
Options Land is a fast-moving (yet insanely profitable) place … and you might want to ask John Ross directly for your next move, Philip. For everyone else out there looking for a spot to jump into the options game (and trust me, there’s no better time to do so), you can get started with expert John Ross right here.
That’s a wrap for today, but if you still crave more Great Stuff, check us out on social media: Facebook and Twitter.
Until next time, be Great!
Regards,
Joseph Hargett
Editor, Great Stuff