A couple of weeks ago, my family and I were waiting to be seated at a big chain restaurant when I overheard a conversation among three young men who looked to be about 19- to 20- years- old.
Young man in sweater: Yes... my dad still short it.
Young man in flannel shirt: No way!!!!
Young man in sweater: Yes...and he just binged watching "Breaking Bad!"
Young man in football jersey: (facial expression of bewilderment): What???
These young men got what their parents can't grasp: the absurdity of hating a stock (in this case, Netflix), or even the stock market in general when they happen to be the very consumers, that add validity to the corporate earnings story. People find lots of reasons to hate things, but shorting a stock that represents a place you spend your money is ludicrous, and is not unusual these days. Sure, one could argue about valuation, but even then, it would be easier to have disdain for a product that doesn't command your money or time (so much time).
A predisposition to disliking stocks and the market is always disastrous; assuaged every few years, but the broad misery of market crashes mitigates the ability to gloat—unless you're selling another book.
Earnings Season...A Second Look
The stock market is more than numbers and stock symbols, and corporate earnings are more than numbers and consensus. The stock market reflects people around the world, in all aspects of human life, while earnings are a check-up on those people and their economic backdrop. It's a shame this isn't covered better in the media, because it can help policy decisions, and can be cathartic; or underscore the need for action.
The reaction to earnings is often less important than what we can gleam from both a macro and a micro perspective.
Don't get me wrong, we always want stocks we own (and even those we don't) to react positively to good news or even the would-be silver linings. But it's important to take from companies that operate in the real world, what the government and industry surveys could never tell us: the real deal.
Singing in the Pain
Slowly the cars began to move. Slowly they climbed the steep hill. As they climbed, each little steam engine began to sing:
"I-think-I-can! I-think-I-can! I-think-I-can! I-think-I-can! I-think-I-can! I-think-I-can! I think I can - I think I can - I think I can I think I can--"
-The Little Engine that Could
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for July 24th, 2014 | John Ransom