All things STOCKS
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05_never_again
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05_never_again
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Next meeting is on 9/17. Markets have been pricing in a ~95% chance of a cut ever since Jerome's Jackson Hole speech and the jobs number today pretty much confirms that it'll happen.
It is interesting how the market is choosing to interpret this. The August number, and the numbers for the last few months, have not been great. Job growth is definitely decelerating. But instead of the market selling off on fears of a slowing economy there's an assumption that a rate cut (or two, or three, depending on who you talk to) will keep the gravy train rolling. I'm always skeptical of "rate cuts will keep the markets happy" narratives, but there are instances where it has happened and there was no recession or bear market (throughout the mid 80s, 1995, 1998). You could make an argument that happened in 2019, but COVID came along and collapsed everything anyway so we'll never really know.
Of course another interpretation is that the market's gains for the last few years have been fueled by excitement around AI and all the cap ex that is going into it, and there's also an assumption that will continue even if job growth isn't good.
DinkinFlicka
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DinkinFlicka
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DinkinFlicka
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Thunder Good-Oil
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The Fed isn’t meeting in November this year. Typically they have 8 meetings per year.
September 16 and 17
October 28 and 29
December 9 and 10
OPEN needs to turn profitable. It wouldn’t hurt to buy back shares if they throw off a positive cash flow. Almost 750 million shares is a lot for a $4.4 billion market cap.
tbh
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05_never_again
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DinkinFlicka
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Ended up being a pretty good day for my growth holdings and my options wheel.
As far as my memestock double life, OPEN has a pattern of going red in a green pre-market after a short burst. I sold most of my shares at 7.10 and will wait to see where the bottom pivot is this week.
Hell, could be tomorrow before lunch. While it exhibits some technical pattern, it's wildly unpredictable after a price hike like it got last week.
DinkinFlicka
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I sold my AAPL position a good while back when I decided to take a more active route in my trading. It's up 12 points from when I sold off earlier this year.
It's the kind of stock I'd get into if I wanted to set and forget, but my mindset is options-heavy with lots of weekly expiry.
To give you an example, NVDA is probably my least volatile holding (that isn't a high yield dividend).
You'll see a lot more RUN, SOUN, RKT, SOFI and then a slew of penny-esque stocks like TLRY, WOLF (my 1.5 calls on it are screaming at me from the ether right this second) and other companies I don't esoterically care about. Couldn't tell you exactly what most of them do. That's better for me because it takes even more emotion out of it.
I'm a little over 3 months in and we have 3 red weeks and 10 green weeks. The worst red week was -5% and my green weeks average +6%. I have adaptable risk management protocols for bad macro events and and playbook for a looming correction (switch to mostly puts and VIX scalps) so I'm almost hoping for it to happen sooner than later.
Thunder Good-Oil
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I might take the opportunity to unload most of my RKT shares. I don’t like one person (Dan Gilbert) having so much control over a company that I own. Plus his wife divorced him last week and the April post mutual agreement isn’t public. She does take about 15% of Rocket Companies (he still votes her shares) and he still has over 50% of RKT shares.
I wish my shares weren’t in a taxable account.
Thunder Good-Oil
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Schwab dot com 11 S&P 500 sectors analysis:
Risks: The sector may underperform if economic growth slows. A persistent risk is the dominance of bigger members, which command a large share of the sector's market cap and thus determine much of its performance.
Risks: Concentration risk is high for the sector, with the two largest members accounting for nearly half of the total market cap The other half of the sector is also at risk of any further softening in consumer spending and/or a sluggish recovery in the housing sector, not to mention higher tariffs.
Risks: Companies can face shrinking profit margins in an inflationary environment without the pricing power to offset higher costs. Higher tariff costs may not be absorbed well by companies, and they might also face consumer pushback if prices are hiked.
Risks: Earnings growth might struggle if oil prices continue to fall on the heels of both relatively weak demand and a continued recovery in supply. While Energy tends to be cyclical and to do well when the Federal Reserve is cutting rates slowly, global commodity prices (particularly oil) fall under pressure if growth continues to slow.
Risks: If sweeping tariffs kick in and slow growth materially, Financials could struggle as consumers pull back on spending, businesses reduce investment, and lending slows. A continued slowdown in business confidence would likely bode poorly for the sector's earnings trajectory.
Risks: Several companies in the sector (particularly in the biotechnology industry) have weak fundamentals. Downward pressure on earnings estimates is helping lift multiples—that is, stock price relative to earnings—especially for risky industries like biotechnology, which is a risk as interest rates stay elevated.
Risks: Industrials may underperform if tariffs on key inputs (like steel and aluminum) stay on for a long period of time. Manufacturing activity remains sluggish and if it turns recessionary, Industrials' earnings are at risk.
Risks: Technology manufacturers rely on a stable flow of components and can face significant risk from supply chain disruptions. Keeping up with the increasing speed of technology innovation can be a challenge. Tech is close to the epicenter of the global trade war, given the escalations in tensions with China.
Risks: Weakness in global commodity prices—in conjunction with sluggish growth in countries outside of the United States—can weigh on performance. Materials relies heavily on foreign demand, and a stronger U.S. dollar tends to weaken sales abroad.
Risks: Most REITs borrow heavily, making them vulnerable to high interest rates. The longer-term outlook for real estate is in question given uncertainty about a full post-COVID return to offices and major metro areas.
Risks: The sector is getting into expensive territory (relative to history) when it comes to valuation. Any rise in Treasury yields has the potential to lessen the attractiveness of higher dividend payers like Utilities.
Communication Services sector (rating: Marketperform)
Positives: Communication Services relies heavily on advertising and subscription-type revenue, which tends to rise when the economy is expanding.Risks: The sector may underperform if economic growth slows. A persistent risk is the dominance of bigger members, which command a large share of the sector's market cap and thus determine much of its performance.
Consumer Discretionary sector (rating: Marketperform)
Positives: Companies tend to be sensitive to economic activity, as consumers buy discretionary items more readily when job growth is strong and interest rates are low.Risks: Concentration risk is high for the sector, with the two largest members accounting for nearly half of the total market cap The other half of the sector is also at risk of any further softening in consumer spending and/or a sluggish recovery in the housing sector, not to mention higher tariffs.
Consumer Staples sector (rating: Marketperform)
Positives: Consumer Staples companies tend to be relatively insensitive to economic activity, as consumers buy staples regardless of economic conditions.Risks: Companies can face shrinking profit margins in an inflationary environment without the pricing power to offset higher costs. Higher tariff costs may not be absorbed well by companies, and they might also face consumer pushback if prices are hiked.
Energy sector (rating: Marketperform)
Positives: Energy stocks are generally supported by relatively high oil prices, which can firm when global economic growth accelerates. Supply shocks can potentially put downward pressure on oil supply, which can put upward pressure on prices.Risks: Earnings growth might struggle if oil prices continue to fall on the heels of both relatively weak demand and a continued recovery in supply. While Energy tends to be cyclical and to do well when the Federal Reserve is cutting rates slowly, global commodity prices (particularly oil) fall under pressure if growth continues to slow.
Financials sector (rating: Marketperform)
Positives: Some segments benefited from rising interest rates, which allow banks to lend at higher rates and insurance companies to increase returns on collected policyholder premiums. The economy has proven to be relatively resilient in the face of one of the most aggressive tightening cycles in history.Risks: If sweeping tariffs kick in and slow growth materially, Financials could struggle as consumers pull back on spending, businesses reduce investment, and lending slows. A continued slowdown in business confidence would likely bode poorly for the sector's earnings trajectory.
Health Care sector (rating: Marketperform)
Positives: Health Care tends to do well even when economic growth slows, as most people will find a way to pay for necessary health care treatment even during tough economic times (although elective procedures often decline). It also can get a boost when heightened market volatility drives investors toward stabler choices.Risks: Several companies in the sector (particularly in the biotechnology industry) have weak fundamentals. Downward pressure on earnings estimates is helping lift multiples—that is, stock price relative to earnings—especially for risky industries like biotechnology, which is a risk as interest rates stay elevated.
Industrials sector (rating: Marketperform)
Positives: Industrials often benefit when economic growth raises business confidence, resulting in new building projects, machinery purchases, increased airline travel and shipments.Risks: Industrials may underperform if tariffs on key inputs (like steel and aluminum) stay on for a long period of time. Manufacturing activity remains sluggish and if it turns recessionary, Industrials' earnings are at risk.
Information Technology sector (rating: Marketperform)
Positives: Information Technology tends to do well when strong economic growth encourages companies to invest in technology upgrades and consumers to buy new devices. Some of the larger members are not in the "long-duration" camp—companies expected to produce their highest cash flows in the future—given they have current earnings growth and strong cash positions.Risks: Technology manufacturers rely on a stable flow of components and can face significant risk from supply chain disruptions. Keeping up with the increasing speed of technology innovation can be a challenge. Tech is close to the epicenter of the global trade war, given the escalations in tensions with China.
Materials sector (rating: Marketperform)
Positives: The Materials sector historically is sensitive to fluctuations in the global economy, the U.S. dollar, and inflationary pressures. In a less-severe recession, the sector's profitability might not take as large of a hit.Risks: Weakness in global commodity prices—in conjunction with sluggish growth in countries outside of the United States—can weigh on performance. Materials relies heavily on foreign demand, and a stronger U.S. dollar tends to weaken sales abroad.
Real Estate sector (rating: Marketperform)
Positives: Real Estate, which consists primarily of commercial real estate investment trusts (REITs), tends to benefit from economic growth, which supports rent collections and property prices.Risks: Most REITs borrow heavily, making them vulnerable to high interest rates. The longer-term outlook for real estate is in question given uncertainty about a full post-COVID return to offices and major metro areas.
Utilities sector (rating: Marketperform)
Positives: The Utilities sector has tended to perform relatively better when economic growth slows, as consumers usually cut spending on other items before they stop paying utility bills. Expectations of more power generation due to artificial intelligence (AI) demand might continue to build.Risks: The sector is getting into expensive territory (relative to history) when it comes to valuation. Any rise in Treasury yields has the potential to lessen the attractiveness of higher dividend payers like Utilities.
Thunder Good-Oil
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