Man, I hope you have not been paying attention to your investment portfolios. Cause if you have, you probably had a moment or two of panic.
Seeing the market just continue to dive deeper and DEEPER into the RED. Within the Nasdaq, more than half of the stocks are down 40% from and more than 70% are down more than 20%. Meaning the Nasdaq is crashing and is in a bear market.
But then on Thursday, the market threw everyone for a loop. It made us think, neigh made us BELIEVE we had a chance at a recovery but like Kyrie with the handles.
If you reach, he will be teaching.
We all learned a lesson that we already know but maybe we needed to relearn. You CANNOT time the market. Your best bet is to play the long game. Continue Dollar Cost Averaging and ignore the daily volatility.
Market Returns for the Week:
Tale of the Tape
ECONOMY
Pretty boring week for economic news; however, the Federal Reserve decided to rile the entire Crypto community and the Economic community up on Thursday. By finally releasing their stance on the creation of a Digital Dollar in the near future.
Or at least that was our expectation when the Federal Reserve released their research on CBDC (Central Bank Digital Currencies). They basically said we pick no sides, we are open to the idea of it but we want public feedback on the direction they think we should go. You can submit your thoughts and feedback on why or why not the fed should be in favor of a Digital Dollar right here.
You may be wondering, why is it important whether or not the fed chooses to advocate (I say advocate because the Fed does not have the power to actually issue the currency. That will be left for our Oh So Great and Efficient Legislative Branch of Government that gets SO much done to pass a law that would make CBDC legal tender) for the adoption of CBDCs? Well, there are two reasons, according to Axios:
EARNINGS UPDATE
Netflix reported earnings and 😳😬😰😱. Investors were not pleased in the slightest. The stock fell 20% on Thursday after the Earnings Call. The making reason for the major shift in investor sentiment is Netflix’s slowing subscriber growth.
They finished 2021 by adding "only" 8.28 million subs vs an expected 8.19 subs. Which is not that bad…….
However, they are projecting to add only 2.5-3.4 million subs in the first quarter of 2022. Analysts were expected another 7 million subs.
The irony of the massive sell-off is Netflix actually crushed actual revenue and profit metrics.
Earnings per share (a good way to think about profit per individual shareholder) came in at $1.33 per share versus an estimated 82 cents
Also, revenue grew by over 20% in 2021 and they are projecting similar growth for 2022
The massive panic from investors makes no sense to me other than investors are looking for reasons to take profits or everyone just realized how capital intensive it is for Netflix to keep making shows that people want to watch.
However, Netflix is also raising prices which might cause customers to cancel or could increase revenues substantially.
These are the types of questions you have to ask when making an investment and deciding if a risk is worthwhile. In this situation, some investors say the risk to reward was no longer worth it.
Peleton is just a mess and it did not even have earnings this week. Things just seem to be going from bad to worse for the business. The stock is down 84% from its all-time high.
The pandemic was great for the stock but it is just finding it difficult to come back into society. It fell another 20% this week because it announced it would be reducing the production of its bikes and treadmills. Because apparently no matter how expensive or fancy an exercise bike or treadmill is. It will still go the way of every exercise equipment once people are not locked up in their house. It will become the newest coat rack. Because business is no longer BOOMING, Peleton hired McKensie (a very big consulting firm) to help determine if a 40% reduction in workforce is their only route to survival.
The last thing I expected this week was for Amazon to announce that they will be expanding their physical retail footprint. Amazon announced that they will be opening a clothing store in Glendale, California later this year called Amazon Style. However, unlike typical retail stores like Kohl’s, Macy’s, Ross, or JCPenny. Amazon Style will be futureized by:
Customers can send items to a fitting room via the Amazon Shopping app.
QR codes on items can be scanned to see additional sizes, colors, and ratings.
Fitting rooms will offer new recommendations based on what customers want to try on.
So why is Amazon leaving going deeper into regular brink and mortar retail?
Well as I have learned from my sisters and the ladies in my life. Finding the right size is HARD! Unlike us dudes who can basically just buy the same pair of pants or shirt from anywhere and it generally fits. For women that is not the case. Every type of dress has a different fit plus women have to manage between their tops and their bottoms. As I have seen when shopping with my sisters that can be a very hard task. So dudes the next time you wonder, WHY THE HELL DOES IT TAKE SO LONG TO SHOP? Bro, just listen to what the women in your life are saying. It ain’t easy for them AT ALL especially when they black and curvy.
So yeah, people still prefer to go in stores and try the clothes on first before buying. So they can make sure it will fit rather than ordering and having to send stuff back. Plus there is a rush when you go shopping and people like that rush.
Looking Ahead
The Federal Reserve will be hosting its first FOMC (Federal Open Market Committee) meeting of 2022 on Tuesday with a press conference on Wednesday. What to listen and watch for:
Level of Interest Rate increase. With inflation at a 40 year high, the Fed is under pressure to get things back under control.
How quickly do they plan to stop Quantitative Easing and stop injecting money into the economy?
How they feel about the economy generally. With low unemployment and supply chain issues.
However, that will not be the highlight of the week. Next week will be all about EARNINGS! And as Netflix has shown us, this earnings season will be a very bumpy ride. This week we have all the big dogs coming out to report earnings. As they make up a substantial part of the S&P 500, as they go so goes the market.
So expect a lot of crazy headlines throughout the week. For daily updates as these companies report, check out my TikTok and Instagram. Apple and Microsoft are projected to top analysts' estimates because that is what they do. They print MONEY!
Totally Unnecessary Man U Update
I cannot believe it but Man U actually won a game this weekend. We (notice how when Man U wins I use “we” and when Man U loses I use “them”) beat West Ham which has been a difficult team to break down. Took a last-minute effort but I am just glad we finally won a game.
Unfortunately, Nigeria got bounced out of AFCON (African Cup of Nations). 😭
Thank you for reading
I hope you all have A WONDERFUL WEEK. I will see you back here on Wednesday for another post. In the meantime, Go subscribe to Rambling Mind Podcast for mid-week stock market updates. You can also catch me on TikTok, Instagram, and YouTube every day.
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God bless Each and Everyone of y’all
✌🏾