It was quite an after-hours session yesterday once headlines of the AT&T/Time Warner deal came across the wires. Lots of chatter for more M&A quickly spread and several deals that are already in place saw prices move up as expectations for government approval grew. Meanwhile, the Federal Reserve is expected to announce a quarter-point interest rate hike when it wraps up its June meeting later this afternoon. The thing I’m watching is if the Fed raises its economic and inflation forecasts. That could make for an interesting market reaction. I’ll be watching the S&P 500 (SPY) for the reaction. Anyone who watches the markets knows we will see volatility in the last couple of hours of the session.
Notes From Tuesday’s Action
Relative strength standouts – RH Inc. (RH) – earnings pop, FedEx (FDX), XPO Logistics (XPO), Domino’s Pizza (DPZ), Palo Alto Networks (PANW), Proto Labs (PRLB), Proofpoint (PFPT), Twitter (TWTR) – positive analyst commentary, Varonis Systems (VRNS), Alibaba (BABA), GrubHub (GRUB), Baozun Inc. (BZUN), Shopify (SHOP), Illumina (ILMN), CoStar Group (CSGP), Boston Beer Company (SAM), ICU Medical (ICUI), Abiomed (ABMD), Align Technology (ALGN), Humana (HUM), Intuitive Surgical (ISRG), Ferrari N.V. (RACE), Stamps.com (STMP), Google (GOOGL) (GOOG), Amazon.com (AMZN), Zebra Technologies (ZBRA), Nutanix (NTNX), Tiffany & Co. (TIF), Estee Lauder (EL), Automatic Data Processing (ADP), Akamai (AKAM), Vail Resorts (MTN), Weight Watchers (WTW) – positive analyst commentary, Medifast (MED).
Other notable names rallying nicely – NVR Inc. (NVR), Tesla Inc. (TSLA) – momentum follow-through, but did close off highs on news of job cuts, Diamondback Energy (FANG), Concho Resources (CXO), Dave & Buster’s Entertainment (PLAY) – earnings pop, Sage Therapeutics (SAGE) – Positive FDA update on company’s depression drug trial, Charter Communications (CHTR), Royal Caribbean (RCL).
Notable names lagging during the session – LendingTree (TREE), SolarEdge Technologies (SEDG), Stryker (SYK) – Wall Street/investors worried about a Boston Scientific bid of some sort, Raytheon (RTN)/Northrop Grumman (NOC)/Lockheed Martin (LMT) – tough day for defense as threat of peace overhangs the group, HollyFrontier Corporation (HFC), Enanta Pharmaceuticals (ENTA).
If History is Any Guide at All
We like to give historic data a bit too much credibility at times when it comes to dictating future opportunities. While most media outlets love to dig up talking points and “take the other side of the argument” as they tend to put it, we are living in an area of extreme advancement on many counts – tech, science, travel, entertainment, etc. The problem sometimes with media and the arguments being made is a result of prior relationships and what financial impact there would be for the media channel in question. Getting on the business networks was never an easy task, but if one become an advertiser, then suddenly there was a conversation to be had. Fortunately, the internet evolved and investors have been able to access more and more useful information without as many conflicts. That would often be why we would get a steady dose of particular opinions. Respect history by all means, but investing is an always evolving process in which context is better suited wherever conflict of interest is minimized.
Chasing the Next Hot Thing in Careers and Investing Tends to Never Add Up
For the few who have a knack for being early enough in industry shifts to capitalize on it from a strategic career standpoint, there are some good years to be had. But that tends to leave the job of finding the next big thing. At a younger age, you can afford to take more shots and throw caution to the wind. However, when you start to reach your mid-30’s and look to start a family, there does need to be some sense of stability and an idea of where you want to be for the next couple of decades. In investing, one can move around to try and ride the hottest stocks of the day, but getting in and out of stocks constantly will lead to underperformance over time. You definitely won’t capture compound returns of a solid dividend winner at the very least. It takes a commitment of time and more than the usual risk profile to pull off this in-and-out of the markets approach. If you find something good career or business-wise, stay the course. Same for investing, no matter the asset of your liking.
Thanks for reading!