Interesting, but not in a way you'd expect.
Clips of the week.
Last night's (Thursday, 7/30 ) earnings from 4 out of 5 of the biggest companies in the S&P 500 was like an earnings crescendo. Facebook, Amazon, Apple, and Alphabet all reported, all beat expectations; some by a very wide margin. These quarterly reports were all anyone could talk about since June 30th, the end of the second quarter.
Investors needed the justification for crowding into these stocks; the handful of mega-cap companies holding up the stock market in the face of the worst economic news since the Great Depression. It's no secret that everyone, from mom and pop investors to institutional money managers, is relying on a very short list of names - Facebook, Amazon, Apple, Netflix, Google (Alphabet), and Microsoft. These 6 names account for nearly 30% of the S&P 500.
You're hearing a lot about how stock market leadership has never been so narrow. How it echoes late 1999, just before the tech wreck that started in March of 2000. You're also hearing that this time period's market leaders are in much better financial shape; cash rich balance sheets, earnings and revenue growth even during the pandemic, which created the perfect climate for these stay at home/work from home companies. But you also hear that their valuations more than factor in their future growth, which is super valuable in a negative growth economy. Holders of these stocks have benefited handsomely from indecision about taking profits, with each new leg higher adding validation to the narrow leadership.
But after the crescendo, comes the fatigue. The tired news cycle about the end of the $600.00 weekly Government unemployment assistance, the nonstop chatter about narrow tech stock leadership, states slowing or halting their reopening, and even reported Covid cases, seems to be leaving the populace in a state of information overload. Today's trading day definitely has a sluggish feel to it, despite the big earnings beats last night from the four aforementioned companies.
The decision to do nothing is, nevertheless, a decision. Don't sell and take on the risk of giving back massive gains. Don't buy and risk missing out on the only source of capital growth. As someone who doesn't particularly care for all-or-nothing investing decisions, there's nothing wrong with taking a little off the table, cashing in a few chips, and raising some cash for rebalancing and future opportunities. It's the prudent compromise for prudent investors.
Let's pivot to the Clips of the week. This was a great week for Be the Boss of Your Money. That's my live stream that I broadcast to LinkedIn, Facebook, and YouTube, every Monday through Thursday, at 4:30 PM ET. And then in replay mode afterward.
Every episode starts with a stock market update jammed with perspective and transitions to a value-add about personal finance, investing, or business. Sometimes I even have guests join me. If you're into watching/listening to podcasts, this is the show for you. I love answering your questions in the comments about the topics we discuss, so go ahead and ask away.
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Below are few brief clips from this week's live streams.
Thanks!
Mitch
