crash
8 Facts You Must Know About Bear Markets
There are few things scarier than a bear market, but steep and sustained drawdowns in stocks are an absolute fact of investing life. Markets go through cycles; always have, always will.Â
It’s also true that despite being inevitable and unpleasant, bear markets are not entirely all bad. An irony of bear markets is that they’re one of the exceedingly rare times when long-term retail investors can actually have an advantage over the pros.
Traders and tacticians are under constant pressure to do something, even as a receding tide lowers all boats. Contrast that with retail investors, who are luxuriously free from clients yelling at them all day. Normies can just sit back and dollar-cost average into stocks at increasingly cheaper prices.
Most importantly, a patient long-term investor who is diversified in accordance with his or her age, stage in life and risk tolerance can not only wait out a bear market, but profit from it. Remember: The market can be miserable at times, but its long-term trend is always to the up and right.
A familiarity with the basics of bear markets should help investors better cope with the next one. To that end, we’ve compiled the following eight facts you must know about bear markets.
- SEE MORE 5 Stocks to Sell or Avoid Now
Why You Might Not Want to Get Too Excited (or Nervous) About a Housing Crash
As mortgage rates continue their ascent toward 6%, more and more folks are talking housing market crash. But high interest rates arenât really a catalyst for a crash, especially if the high rates arenât really high. Emphasis on âreal,â as in inflation-adjusted. Everything has gone up in price, and wages should also be rising. This… Read More »Why You Might Not Want to Get Too Excited (or Nervous) About a Housing Crash
The post Why You Might Not Want to Get Too Excited (or Nervous) About a Housing Crash appeared first on The Truth About Mortgage.
Stock Market Today: Stocks, Bonds, Crypto and More Take a Dive
The S&P 500 fell to its lowest point in more than a year Monday as last week’s selloff retained all of its momentum and bled into just about anything that trades.
Interest-rate fears continued be the selloff’s primary driver. The 10-year Treasury briefly touched 3.2% today and, even after pulling back to 3.06%, sits around levels last seen in 2018.
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“Interest rates are a hammer, not a scalpel â they are blunt tools designed to move slowly and with great force, rather than precisely,” says Andy Kapyrin, co-chief investment officer at registered investment advisory firm RegentAtlantic. “The Fed is swinging the interest rate hammer, and the financial markets are responding to the aftershocks.”
Technology (-3.9%) and consumer discretionary (-4.3%) were among the usual suspects in a trading day that saw each of the 11 S&P 500 stock sectors finish in the red. But this was a wide selloff that went well beyond just stocks and bonds.
U.S. crude oil futures, for instance, cratered by 6.1% to $103.09 per barrel, amid ongoing worries that China’s strict COVID-19 lockdowns will cramp oil prices. Indeed, energy (-8.3%) was Monday’s worst-performing sector, with even blue chips such as Exxon Mobil (XOM, -7.9%) and Chevron (CVX, -6.7%) taking it on the chin.
Gold futures? A bad day, too, off 1.3% to $1,858.60 per ounce as investors piled into the U.S. dollar.Â
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Cryptocurrencies haven’t provided safety, either. Bitcoin, which fell as low as $30,375 and finished off 13.4% to $31,153, has now fallen by more than 50% from its November 2021 peak. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
Edward Moya, senior market strategist at currency data provider OANDA, notes that institutional buyers are starting to pay close attention to Bitcoin, given that many who got in during 2021 are now losing money on their investment. “If the $30,000 level breaks, that could trigger a flash crash environment if several whales unload,” he says.
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The Nasdaq Composite (-4.3% to 11,623) has re-entered bear-market territory, off nearly 28% from its January highs. The S&P 500 (-3.2% to 3,991 â its lowest close since March 31, 2021) needs to lose another 4% or so before entering a bear market, while the Dow Jones Industrial Average (-2.0% to 32,245) would have to retreat another 9%.
YCharts
Other news in the stock market today:
- The small-cap Russell 2000Â sank by 4.2% to 1,762.
- Palantir Technologies (PLTR) stock surrendered 21.3% after the data analytics company reported lower-than-expected first-quarter earnings per share (2 cents actual vs. 4 cents estimated). The company also gave current-quarter guidance below Wall Street’s estimates, adding that there is “a wide range of potential upside to our guidance, including those driven by our role in responding to developing geopolitical events.” One high note of PLTR’s financial results was its Q1 revenue of $446.4 million, up 31% year-over-year and above the average estimate.
- Rivian Automotive (RIVN) plummeted 20.9% after sources told CNBC that Ford Motor (F, -5.9%) will sell 8 million RIVN shares after the electric vehicle maker’s insider lockup period expired on Sunday. The news also dragged on Amazon.com (AMZN, -5.2%), which owns roughly 158.4 million RIVN shares, according to S&P Global Market Intelligence. “The news is not surprising to us, especially after the two companies terminated a partnership to jointly develop an EV last November and as Ford begins deliveries of the F-150 Lightning, a direct competitor to Rivian’s R1T pickup truck,” says CFRA Research analyst Garrett Nelson, who maintained a Hold rating on the EV stock.
The Strongest Parts of a Weak Market
Green ink was in shockingly short supply Monday â but relative success was found among the usual suspects.Â
- SEE MORE Should I Buy Bonds?
“This collapse should continue the rotation into defensive dividend stocks,” says Jay Hatfield, chief investment officer of ETF manager Infrastructure Capital Management.Â
Consumer staples, which was only marginally lower Monday, and utilities, second-best at a 0.8% decline, are among such beneficiaries, Hatfield says.
Among their greatest qualities right now is what’s sure to be a common refrain in near-term investment advice: pricing power. In short, as inflation continues to march unimpeded, those companies that are best able to push most of those prices on to consumers should fare best â and while your average American might go a few extra months without taking a vacation or buying a new pair of Nikes, they’re unable to pull back much on basic necessities such as food and electricity.Â
Read on as we examine a number of stocks with exceptional pricing power â as well as highlight several names that, while good companies in their own right, will have an uphill battle as long as inflation remains white-hot.
- SEE MORE Sell in May and Go Away? Here We Go Again …
Warren Buffett’s Inflation Plan: Buy, Buy, Buy
Rapidly rising prices are on the radar for virtually everyone in America â even the billionaire class. Indeed, Warren Buffett himself has his eyes on inflation.
Buffett finally whipped out Berkshire Hathaway’s (BRK.B, $318.99) checkbook in a big way earlier this year, spending tens of billions of dollars in a matter of weeks.Â
- SEE MORE 65 Best Dividend Stocks You Can Count On in 2022
All it took was a historically bad start to the year for stocks â or at least, that’s how things would appear at first glance.
But stumbling share prices, while certainly critical, aren’t the whole story here. Warren Buffett clearly has been monitoring America’s rampant inflation, which appears to be a key factor driving his renewed appetite for equities.Â
And make no mistake: Berkshire’s chairman and CEO is hungry.
Berkshire Buys Like There’s No Tomorrow
Buffett has embarked on a shopping spree the likes of which we haven’t seen since the Great Financial Crisis. During the first quarter â¦
- The Berkshire Hathaway equity portfolio scooped up $41.5 billion in net stock purchases in the first quarter. That’s the most cash Buffett has splurged on equities in a quarter since 2008
- The Oracle of Omaha spent another $3.2 billion buying back BRK.B shares.
- Berkshire also announced that it would spend $11.6 billion to acquire insurer Alleghany outright â a deal that should close during the fourth quarter.
True, the market’s terrible start to 2022 no doubt played a starring role in Buffett’s largesse. The S&P 500 tumbled as much as 13% from its all-time high at one point in Q1. Buffett, as patient as any investor when it comes to waiting for bargains, at long last pounced â and did so with surgical precision.
- SEE MORE Sell in May and Go Away? Here We Go Again …
Buffett put nearly 30% of Berkshire’s massive cash pile to work in equities last quarter. And according to Bespoke Investment Group, almost 80% of his purchases came during the weakest part of the quarter.
That’s remarkable timing.
Contrast that with 2021, when the S&P 500 generated a total return (price appreciation plus dividends) of nearly 29%, or its third best run since 1997. Berkshire, however, used the market’s outstanding performance as a chance to lighten up on stocks. Indeed, the holding company was a net seller of equities in all four quarters of 2021.Â
Suffice to say that Warren Buffett is pretty adept at the whole “buy low, sell high” thing. When investors are fearful, he more often than not gets greedy.Â
Warren Buffett Makes the Most of Inflation
But there’s a second (and perhaps more urgent) factor driving Buffett’s lavish spending on stocks right now: Inflation.Â
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Remember, Warren Buffett rather famously didn’t go shopping when the market lost a third of its value in the pandemic crash of 2020. So while he hasn’t been this active buying stocks in ages â it’s not just because stocks are in a slump.
It’s because of inflation.
When prices are rising at the fastest pace in four decades, cash is trash. That helps explain Buffett’s biggest Q1 binge, says David Kass, a professor of finance at the University of Maryland’s Robert H. Smith School of Business and noted Buffett expert.
Berkshire raised its stake in Chevron (CVX, $162.49) to $26 billion, up from a modest $4.5 billion at the beginning of the year. That’s a big deal. The integrated energy major and Dow Jones Industrial Average stock is now Berkshire’s fourth-largest holding.
- SEE MORE The 15 Best Value Stocks to Buy Right Now
And it’s not like Buffett scooped up those CVX shares when they were on sale. The stock traded at all-time highs in Q1.
In addition to a number of other attractive attributes, Warren Buffett also sees an inflation hedge in Chevron, Kass says. And even if oil prices level off or reverse trend, a stake in CVX is better than sitting in cash and equivalents.
“Chevron has a large stock buyback program and pays a cash dividend of 3.5%,” Kass says. “That makes it a relatively safe cash alternative. Instead of earning essentially zero on Treasury bills, why not earn a dividend yield and a buyback yield that combined probably come in somewhere in the high single digits?”
The same calculus of falling stock prices plus rising inflation can be seen in a number of Buffett’s recent buys.Â
Earlier this year, Berkshire disclosed a series of purchases in Occidental Petroleum (OXY, $59.24). Buffett’s conglomerate is now the integrated oil and gas firm’s largest investor, with 14.6% of its shares outstanding.Â
“Chevron and Occidental, to me, they make a whole lot of sense,” Kass says. “Oil, I believe, is a good hedge against inflation.”
This stocks-down-inflation-up dynamic helps explain the sudden and stark reversal in Berkshire’s balance sheet.Â
When inflation is all but dormant, as it was for more than a decade until last year, Warren Buffett was content to accumulate cash. From 2016 to 2021 â a period in which Buffett bemoaned the fact that relentlessly rising asset prices made it nigh impossible to find whale-sized acquisitions â Berkshire’s cash hoard essentially doubled, from $75 billion to about $147 billion.
Watching the cash pile up, however, was preferable to destroying capital by overpaying for assets in an aging bull market.
- SEE MORE The 22 Best Stocks to Buy for 2022
But now, with share prices falling and consumer prices rising, putting cash to work in more attractively priced companies that pay dividends and buy back their own stock is almost irresistible.Â
For example, Buffett bought $600 million additional shares in Apple (AAPL, $159.48) following a three-session decline in the stock in Q1. The iPhone maker recently authorized a $90 billion share repurchase program and disburses more than $14 billion in dividends annually.Â
Or take the case of HP (HPQ, $37.9). Hefty buybacks and dividends â not to mention a cheap valuation â no doubt factored into Buffett’s purchase of a major stake in the computer and printer maker in April, Kass notes.
Topping off Buffett’s buying was an $11.6 billion outlay to outright acquire insurer Alleghany. This Warren Buffett move wasn’t tied to inflation â it just seemed a fruitful way to put more of that cash to work. Kunal Sawhney, CEO of independent equity research firm Kalkine, says Alleghany makes a perfect strategic fit with Berkshire’s extant insurance businesses.Â
Even after Buffett’s Q1 buying extravaganza, Berkshire retains $106 billion in its arsenal of financial firepower. If stocks keep struggling amid intense inflationary pressures, expect Buffett to make even more bold bets and splashy buys.Â
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What Is an Online Financial Advisor & What Can They Do for You?
Even though consumers have been using online banking and mobile applications for years, the concept of online financial planners like Mint is still new. In comparison to a traditional face-to-face financial planning relationship, how do online financial advisors work? Online financial advisors allow users to manage their investments, track their spending, create budgets, and leverage
The post What Is an Online Financial Advisor & What Can They Do for You? appeared first on MintLife Blog.
Hereâs Exactly What to Do if You Canât Pay Rent
In this era of rapidly increasing housing costs, many renters know the familiar dread when the first of the month is coming and they know they canât cover the rent. But nowâs not the time to bury your head in the sand. By exercising your negotiation muscle, you may be able to strike a deal [â¦]
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Can You Get Life Insurance if You Have Depression?
Stock Market Today: Netflix’s Epic Crash Clips Nasdaq
The earnings calendar was front and center Wednesday as a mixed day for the broader indexes was easily overshadowed by a plunge in of Wall Street’s most notable mega-caps.
Netflix (NFLX) suffered its worst single-day decline in 18 years â a 35.1% nosedive eroding roughly $55 billion in market value â triggered by the company’s first quarterly subscriber loss since 2011.
- SEE MORE The 15 Best Value Stocks to Buy for 2022
The streaming giant, which expected to add 2.5 million net subscribers during the first quarter, announced it had lost 200,000, triggering a flurry of analyst downgrades despite an easy earnings beat. The shortfall was in part caused by Netflix’s decision to pull out of Russia, which cost it 700,000 subscribers, but inflation is also causing customers worldwide to make tougher spending choices.
CEO Reed Hastings also said NFLX was planning to launch an advertising-supported version.
“The initial allure of Netflix was that it didn’t have any ads; it’s unclear if Netflix fans will be amenable to advertisements,” says David Trainer, CEO of investment research firm New Constructs. “Rivals like Disney can monetize content through a variety of other channels, like merchandise and theme park revenue. Netflix doesn’t have the infrastructure for those kinds of revenue streams.”
Ripples were felt throughout the streaming industry. Rivals including Disney (DIS, -5.6%), Amazon.com (AMZN, -2.6%), Warner Bros. Discovery (WBD, -6.0%), Paramount Global (PARA, -8.6%), Roku (ROKU, -6.2%) and even Chinese streamer iQiyi (IQ, -6.7%) all finished well in the red.
These losses weighed heaviest on the Nasdaq Composite, which declined 1.2% to 13,453. Faring relatively better were the S&P 500 (down marginally to 4,459) and Dow Jones Industrial Average (+0.7% to 35,160), which were buoyed by more positive earnings news.
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International Business Machines (IBM, +7.1%) was the Dow’s top component after it reported a 24% pop in profits and beat top- and bottom-line expectations.
“Stringing together consecutive quarters of outperformance illustrates that there is a clearer path to accelerating growth in 2022,” says Morgan Stanley analyst Erik Woodring (Overweight, equivalent of Buy).
- SEE MORE Kiplinger’s Weekly Earnings Calendar (April 18-22)
Meanwhile, price hikes helped Procter & Gamble (PG, +2.7%) offset inflation-pressured margins and deliver better-than-expected sales and profits.
Tesla (TSLA), off 5.0% during Wednesday’s session, was up by roughly the same percentage following a Street-beating Q1 report. Earnings of $3.22 per share easily cleared estimates of $2.26, while revenues of $18.76 billion topped the consensus mark of $17.80 billion.
YCharts
Other news in the stock market today:
- The small-cap Russell 2000Â managed a 0.4% improvement to 2,038.
- U.S. crude futures edged up 0.1% to settle at $102.19 per barrel.
- Gold futures slipped 0.2% to finish at $1,955.40 an ounce.
- Bitcoin was relatively calm, sliding 0.3% to $41,243.10. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.
- Rite Aid (RAD) stock was up more than 38% at its intraday peak before paring its gain to 10.8%. Sparking the surge was a report in the New York Post that suggested the pharmacy chain rejected a late-March buyout bid from Spear Point Capital Management. According to the article, the private-equity firm offered to buy Rite Aid for $815 million, or $14.60 per RAD share â a 56% premium to its March 30 close at $9.36.
- Omnicom Group (OMC) jumped 4.5% after the advertising firm reported earnings. Despite suspending operations in Russia during the first quarter, OMC reported earnings $1.39 per share and revenue of $3.41 billion â more than the $1.30 per share and $3.29 billion analysts were expecting. CFRA Research analyst Janice Quek maintained a Buy rating on OMC stock, citing the company’s “good cost control” and an upward revision to its organic growth forecast.
The Time to Buy Emerging Markets?
Inflation is hardly just an American problem.
- SEE MORE 10 Best Inflation-Fighting ETFs for Higher Costs
Yesterday, the International Monetary Fund said inflation was a “clear and present danger” as it lowered its 2022 global GDP forecast by 0.8 percentage points, to 3.6%. And emerging markets are expected to struggle even more than developed economies as higher prices weigh heavy on commodity importers.
That in turn has meant even worse year-to-date returns for many emerging market (EM) stocks compared to their still struggling U.S. counterparts.Â
But this dip might prove an ideal buying opportunity for those wishing to brave the high potential (and high volatility) of EMs, especially given expectations for emerging market growth to recover in 2023.
If you want to take the plunge, you can spread out your risk across dozens or even hundreds of stocks from numerous countries through exchange-traded funds (ETFs). Or you can narrow your bet to a single region â for instance, these five stocks and funds allow you to harness the growth of Africa.
If you’re looking for some of the most potent individual picks across the globe, however, look no farther than this cluster of 11 emerging-market stocks. We explore the opportunity each presents, and what about them stands out to stock-research experts.
- SEE MORE The 22 Best ETFs to Buy for a Prosperous 2022
What Is The FDIC and How Does It Work?
You work hard for your money. You want to make sure itâs safe. Thatâs where the FDIC comes in. The Federal Deposit Insurance Corporation (FDIC) makes sure your money is protected when you deposit funds at a participating bank. Itâs rare, but banks can fail. A bank failure occurs when a financial institution canât meet [â¦]
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.