Stock Market Commentary for 5/3/2021:
- +First trading day of the month: Despite Friday’s weakness, the S&P 500 notched its third straight month of gains in April. They added more than 5% to the index, as investors bet on a big economic and profit recovery from the pandemic.Earnings season continues: Carvana, Lowe’s, Paycom are among the stocks reporting today.
–Inflation fears and an overvalued market continue to weigh on stocks, even as companies pump out record earnings figures.
- Stock Talk:
|The Winner of the Day: Five9|
|Cloud contact center provider Five9 Inc. continues to roll. They comfortably beat Wall Street expectations on revenue and earnings in their first fiscal quarter, and raised guidance for next year.|
|What’s Moving Pre-Market: Vroom ↑ | Match ↓|
|The Loser of the Day: Twitter|
|Twitter slumped even after reporting strong Q1 earnings figures. Wall Street was disappointed by the company’s Q2 guidance, relative to social media peers such as Facebook.|
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Top Investment Story #1: The Wisdom Of Buffett & Munger
What is Happening?
1. Buffett says the world can change in drastic ways, so invest in index funds:
The “Oracle of Omaha” reminded the audience that none of the top 20 largest companies from 1989 were on today’s list.
2. Buffett remains bearish on airlines, but likes Chevron & Fossil Fuel companies:
Buffett made shockwaves when he unloaded roughly $4 billion of airline stock exposure last year. During the annual meeting, he reiterated his bearish stance on airlines and said: “he wished them well but wouldn’t want to invest in them.” On the other hand, Buffett remains optimistic about fossil fuels, arguing that the transition to renewables will be gradual.
3. Buffett’s Jim Cramer Moment: Apple? Buy… Buy… Buy…
Buffett admitted that trimming Apple in the portfolio was a mistake. He went on to say that Apple is a “huge bargain of a stock,” because its products are indispensable to people.
4. Munger warns that “Money printer going Brrrrr…” won’t end well:
Munger warned that economists are getting too comfortable with the current unsustainable economic environment. Munger fears that low-interest rates and money printing won’t end well.
5. Robinhood & Crypto are “no good”:
Buffett criticized Robinhood for “gamifying” stock trading. Munger noted that Robinhood isn’t free, because it sells customers’ orders to clearinghouses for a profit. While Buffett didn’t comment on Bitcoin, Munger called it “contrary to the interests of civilization.”
Buffett and Munger are some of the greatest investors to ever live. Their wisdom and worldview, while controversial with the mainstream at times, have proven true for 60+ years.
– By Raymond Kanyo
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Top Investment Story #2: Would You Tour Space?
What is Happening?
Competition has surfaced in the space sector of suborbital tourism. Jeff Bezos announced that his company Blue Origin, plans to offer tickets to ride their space tourism pod, “New Shepherd.”
Why Does This Matter?
Space seems to be today’s final frontier of tourism. Virgin Galactic has been the front runner in this realm, but with Bezos’ announcement, Virgin Galactic ($SPCE) dropped more than 3%.
To date, Virgin Galactic has sold tickets to about 600 passengers at a price between $200,000 and $250,000 each. The expectation is to increase the prices for the first commercial flights. In the past, Bezos has said Blue Origin will price New Shepard flights similarly to its competitors.
New Shepard is designed to carry as many as six people at a time on a ride past the edge of space, with the capsules on previous test flights reaching an altitude of more than 340,000 feet. The capsule is designed to give passengers as much as 10 minutes in zero gravity, and presumably a breathtaking view of the Earth, before returning to land.
Virgin Galactic anticipates a significant demand for space tourism in the coming decade, and believes there will be ample market share for both companies to succeed. It would be a good idea to keep an eye for updates from Bezos, and how Virgin Galactic shares react.
– By Austin Fockler