Posts Tagged ‘market view’
Since August, the market view appears to have turned quite bullish. The negativity in investor sentiment that was evident during the decline in the market from spring until early summer seems to have evaporated. This is quite interesting, as the change in investor sentiment was primarily a result, I believe, of the rumor and eventual announcement by the Federal Reserve of additional quantitative easing in September.
This rise in investor sentiment was not built on a market view of substantially higher revenue and earnings for corporations, but on the rush of additional cash into the financial system. The problem with such a market view is that this is not a sustainable, long-term solution for either stocks or the economy.
Since the announcement in September, investor sentiment has once again started to become bearish. People are realizing that there are significant economic structural issues that cannot and will not be resolved by simply pumping more money into the financial system.
An interesting divergence in the market view between sectors has been that the high-end retailers are immune to the negativity purveying the general economy. However, this might not be the case in reality.
Tiffany & Co. (NYSE/TIF) just released its earnings guidance for the full fiscal year, coming in at $3.20–$3.40 per share. This is a dramatically reduced amount of corporate earnings from its earlier guidance of $3.55–$3.75. (Source: “Tiffany Reports Its Third Quarter Financial Results,” Tiffany & Co., November 29, 2012.)
For the 2012 third quarter, which ended October 31, the company reported corporate earnings of $63.0 million; a decrease of 30.0% from the same quarter last year. Two areas … Read More
When it comes to technology stocks, one must develop an investment strategy that has long-term implications. Technology stocks can be quite volatile, so it helps to have a long-term horizon and an understanding of what the companies are trying to do over the next few years.
Of the older technology stocks, Yahoo! Inc. (NASDAQ/YHOO) is still a player in the Internet sector, albeit quite diminished in stature. Yahoo!’s share price has been in a well-defined trading range for an extended period of time. However, the recent appointment of Marissa Mayer as the new CEO has certainly re-energized the firm as well as the share price.
I made my readers aware of Yahoo! as a possible addition to one’s investment strategy when it was trading at $15.98; the recent run-up in stock price is a clear indication that investors believe that the firm can unlock significant value going forward.
Another stock that has had questions raised about whether it can unlock any future value is Facebook, Inc. (NASDAQ/FB). We all know Facebook is one of the leading social media technology stocks; however, questions have been raised about this company’s long-term investment strategy and whether it’s viable.
For both of these firms, the monetization of their user base has always been questionable. An interesting article in The Telegraph reports that sources involved with both Yahoo! and Facebook have been in discussions about forming an alliance. (Source: “Yahoo! plots alliance with Facebook in new search deal,” The Telegraph, November 17, 2012.)
These two large technology stocks would have several interesting ways to develop an investment strategy together. By combining Facebook’s members … Read More
The smartphone and tablet markets continue to be extremely competitive, and stock analysis indicates that this competition will heat up further.
Apple Inc. (NASDAQ/AAPL) dominates the tablet market with its “iPad,” but watch for new entries from Microsoft Corporation (NASDAQ/MSFT) with its “Surface” tablet, Google Inc. (NASDAQ/GOOG) with its “Nexus” tablet, and Samsung with its “Galaxy” series. And then there area also some believers surfacing as “BlackBerry”-maker Research In Motion Limited (NASDAQ/RIMM; TSX/RIM) gets set to launch new devices powered by its “BlackBerry 10” (BB10) operating system in the first quarter of 2013, though it has always delayed launches.
The question is: can Research In Motion (RIM) ever regain its former luster? My stock analysis tells me that the company has a long and tough road ahead of it, and while it’s unlikely it will catch Apple, the best-case scenario would be to take some market share away from Apple and the other players. The BB10 devices and operating system moved in the right direction after passing stringent security requirements from the U.S. government last week, which should help in the key advance sales.
On the Street, there appears to be some optimism, albeit it’s speculative that RIM can mount a comeback. Based on my stock analysis, I’m not convinced.
The market view appears to be more positive. When doing technical analysis of the chart, we can see that the stock has rallied 32% since trading down to a 52-week low of $6.22 on September 24, but is still below its 50- and 200-day moving averages (MAs). Strong pre-sales of its BB10 smartphone could drive RIM higher.
Chart courtesy of … Read More
In what will most likely be a landmark ruling, Australia’s federal court has ruled that one of the world’s leading credit ratings agencies Standard & Poor’s (S&P) misled investors by issuing a AAA rating, its safest rating, to securities that were extremely complex and risky, and that ultimately lost most of their value.
One of the biggest problems following the crash is that investor sentiment has soured on the financial industry. Many people have the market view that the game has been rigged against the retail investor. During the bubble prior to the crash, rating agencies like S&P continually slapped AAA on risky investments. The entire system was built on generating revenue and commissions by packaging products that could be sold to people who should not have been buying them in the first place. By creating a false market view, investors who normally wouldn’t buy risky assets were tricked into believing that they were safe. This blatant misrepresentation has led to a lack of positive investor sentiment across many facets of the financial system.
Investor sentiment can be extremely fragile. Rulings such as this finally capture the anger that many have felt over the past few years. While investors have lost untold amounts of money, the rating agencies that people and institutions have relied upon have gotten off without any liability. The market view was that rating agencies could do whatever they wanted without repercussions. This appears to be changing.
Justice Jayne Jagot of Australia’s federal court stated that S&P was “misleading and deceptive” when it came to rating structured debt instruments during 2006. The debt instruments themselves were grotesquely … Read More
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