This is BAD for STOCKS

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Hello howdy there folks and welcome into today’s video so today are some bad news to share with you guys in regards to stocks in regards to the stock market we’re gonna go through some of this that i think needs to be set okay now first off all right we’re gonna get into some some bad stuff here but i think the the most important thing whenever you pay attention

To bad news and you look at some of this stuff is to not necessarily trade off of that information especially if you’re a long-term investor what happens is a lot of times in the stock market people start to make uh decisions investment decisions based upon something that could be going wrong in the stock market in the short term and so i’m going to share a bunch

Of stuff with you and i think these things are good to look at good to pay attention to but in terms of trying to make uh short-term decisions out of long-term investments that’s usually always a bad thing that’s going to get you into some trouble and also do keep this in mind not a lot of people will say this but this is how it is okay the stock market is a place

That sometimes can get bad news and go up and can get good news and go down and the reason being is the stock market is driven a lot of times by sentiment on what’s going to transpire over the next three to six months okay between the algorithms and a lot of wall street traders are always trading in and out of stocks they’re really focused in the next three to

Six months so you could be getting bad news today and the stock market could be going up because you’re gonna actually get good news likely three months six months from now that’s becomes a consensus belief you could be getting great earnings at a given time period and actually see the stock market going down during a period where you get great earnings and great

Everything else in the stock market because the sentiment is well it’s great now but in three to six months it’s going to get really bad okay so something very very important to uh you just share with you guys and i got a bunch of stuff we’re going to go through also if you want to check out the official crypto partner of me ftx us check out the first link in the

Description down there allows you to buy crypto with no fixed fee enter holy smokes as a referral code and uh basically when you trade your first ten dollars worth of crypto you get a free coin so pretty darn cool also check out my uh stock market investing mastery course that is also linked in the description down there that’s 100 free it’s a great beginner course

If you’re in your first year or two of investing okay all right guys so let’s jump into this first a thing i’m showing you here essentially this is out of uh somebody that charles schwab put this together so thank you for them for putting this together it shows s p 500 stocks and how many of those companies beat eps and beat revenue all right this past quarter now

This is the first troubling part and then i think the second part is even more troubling right so essentially 76 of companies be eps now companies should usually beat their numbers and the reason is usually companies go in with a little low ball figures uh to kind of give some some wiggle room so they have you know beats on the upside so that’s why you’re going

To see pretty consistently more than 50 percent of companies be eps it’d be a disaster if it was ever a last number right so 76 percent of companies be eps but here’s a troubling trend with that that’s the worst we’ve had since q1 of 2020 which was a disaster recorder because also in the worldwide economy was basically shut down almost overnight in the middle of

That quarter right and so you know that that’s definitely something to be concerned with the fact that companies and the reason being is everything just got so much more expensive transportation fuel cost everything shipping it doesn’t matter it you know everything we know about inflation and this is something that because there’s so much inflation it’s hurting

Companies earnings okay and it’s putting these companies in a position where they’re just not beating the way they work in the most trouble the most uh worrisome trend i guess you can say is you look at q1 2021 87 percent of companies bdps right in s p then it jumps down to 86 then 82 now 76 so we’re clearly trending in the wrong direction when it comes to eps

Beats it’s just getting worse and worse and worse less and less companies are beating their earnings per share which once again are kind of set up for them to beat it and so the fact that these companies are missing more and more often basically means that you know the pro these companies just aren’t able to be as profitable and like i said a lot of it’s because

They’re having to raise price on products and services that could that could taper off a little bit demand a lot could be because uh obviously workers are commanding higher pay higher salaries those sorts of things marketing expenses have gone up for countless companies out there and um on top of that they’re just all the costs that go into making their products

And services are obviously going up because of inflation and this is just creating a situation where the companies aren’t as profitable okay uh also on the revenue side you know about 69 percent of companies beat on a revenue compared to 83 and 72 in the past so revenue a little better but a little better story it’s still not great but it’s a little better story

But it’s really around companies profitability that’s being hit in a massive massive way all right and so if you’re thinking about you know uh eps trends and those sorts of things that’s definitely worth something and the worst part is a lot of companies did not guide they did not guide because they said it was such an uncertain time that they just can’t guide and

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So if a company can’t guide them more likely means they’re not feeling very confident at all about their earnings the other worrisome thing we saw is as the earnings period went longer and longer because some companies reported in about mid-february some companies in late february some companies in early march and some companies at the end of march it seemed like

As earnings season transpired and went on it seemed like companies were less and less confident as the quarter transpired it seemed like the companies that reported earnings uh kind of in let’s call it the beginning to middle of february we’re kind of the most confident and then things started to erode more and more as you went throughout february and obviously

A lot of that was the wall of war stuff inflation gas prices going up russia ukraine all these different you know factors started making companies a lot less confident in kind of you know not having as positive things to say and so that’s something to kind of keep in mind there okay now if we go ahead i want to pull up some different sectors and talk about these

And some potential pitfalls here in uh some of these okay so first thing i got pulled up here is housing stocks right now housing stock earnings a lot of those companies will report at the end of april beginning of may okay this is when you’ll see almost all these companies report will be kind of toward the to toward the end of april beginning of may so it let’s

Call it in about a month from now and the worrisome thing when it comes to housing stocks is this is a sector that’s already seen as being at their peak okay that’s why all these stocks are trading around the 52 we close right now all these stocks are trading around 52 week lows because people are looking at housing stocks and they say i think we’re you know

Around peak housing right now and so if you’re around peak housing right now this is this is obviously horrible news for anything in relation then rh said in february their demand dropped by if i recall it was 10 to 12 points 12 10 to 12 percentage points in february that was definitely a worrisome thing and rh was one of the last big companies to report their

Earnings in this earnings season okay and so that was kind of like a little wake-up call where i was like oh boy okay that’s not good and remember rh their target market is not the middle class their target market is at the lowest end the upper middle class but really the top five percent of income earners in the united states of america that is rh’s that’s

That’s who’s buying rh furniture and so if you’re thinking about a company that even even on the the upper end is is kind of got some worries some things to say around demand and then also they’ve been kind of getting killed with uh transportation costs as well they were talking about container shipping costs and i’ve heard that from the container shipping cost

Issue is massive like i’ve heard it just from almost every company from the corsair gamings to an rh i’ve heard it from everybody container cost is ridiculous right now if you’re shipping products overseas you are paying silly prices right now and we don’t know when that trend is going to reverse it’s going to reverse at some point but it’s not right now it could

Be still a quarter away two quarters away three quarters away so that hurts short-term profitability in a massive massive way but when it comes to these companies here’s the deal if these companies have this upcoming earnings period say you know what we’re kind of seeing um you know the numbers just not coming in as far as demand for housing starts because keep

In mind a lot of these companies are still fulfilling houses right and we got a lot more to get into in this video by the way but a lot of these home companies that sell homes keep in mind it’s usually a six to 18 month build process so if you know that obviously a ton of people were still buying homes in early 2021 into mid-2021 even in the back half of 2021 so

Those orders are all getting filled right now right and as somebody that lives in a new community i see it firsthand for myself like a lot of these people ordered homes at the end of 2020 beginning of 2021 those homes are finally starting to get to those folks now all right but what everybody looks at for housing is know what you’re doing now in the homes you’re

Fulfilling now they’re looking at orders coming in where you know what are what are your numbers going to look like in six months from now what are your numbers going to look like in 12 months from now that’s what obviously investors care about right in traders as well and i like to play these names for momentum if all of a sudden you hear toll brothers say you

Know demand’s starting to slip we’re not quite selling the homes we once were we’re getting pushed back on pricing we’re not getting as many people coming through the model homes and if you hear that from kb homes and you hear that from polti and things like that that’s definitely be a worrisome thing now we might not get that yet and that would be good news the

Issue is even if you don’t get that and even if let’s say in this earnings period toll brothers polti kb lenore all these guys in the housing sector all say no this thing still look great we’re still being able to raise price things like that wall street’s just going to look at them there and say yeah that’s fine uh in three months from now that’s when it’s going

To start to hit as that’s the problem with these housing stocks right now they can’t get out of their own way right now and the reason being is even if even if they were to come out this quarter and say you know what things are things are still looking really really strong people are still going to say yeah well just next quarter next quarter is when it’s going to

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Fall off yeah this past quarter you might have been okay but next quarter and so they’re kind of in like they’re in a no-win situation that’s the best way i could describe it for the housing stocks they’re in a no-win situation they say their numbers are good and they’re going to continue to be good for the next quarter or two everybody’s going to say it’s it’s a

Wall yeah it’s great now but it’s about to get bad so that’s the problem and that’s why i can’t pick up some of these companies i love a toll brothers i would love to own toll brothers but i can’t pick up that stock right now and i just can’t i love rh and it’s a company i’m doing a lot of research in right now i can’t pick up that stock right now um rocket rocket

Has me very very intrigued i can’t pick up that stock right now with mortgage rates just getting more and more expensive i don’t see that trend slowing anytime soon outside of a massive recession but even in that scenario almost everybody that wanted to refinance is already refinanced and there are so many benefits in a massive massive way then if you if you tack

On the possibility of a slowing housing market in the back half of this year which i think is very much a possibility that’s another thing that’s not good for a rocket okay and so if i think about this this is also another stock that i’m like i can’t touch it right now um maybe when we kind of get into peak fear maybe in the back half of the year when it comes

To a lot of these housing stocks maybe that’s a whole different scenario and i can step in there but right now it’s a really really tough pick okay and housing’s a you know pretty big sector and that’s what a lot of people look at and they say if these stocks are slipping more and more then there’s going to be a overall worry about about at the end of the day

There’s going to be an overall worry about the economy because if you talk about real estate prices starting to shrink people’s wealth starting to go down real estate wise that could always be obviously be something that people say well maybe i gotta pull back chinese dogs got some good news recently so china’s opening up basically more and more audit firms to

To like us ones to audit properly these companies i think that’s our step in the right direction a massive massive weight for chinese stocks so um i think chinese stocks could get more intriguing china needs to build back trust in a massive massive way and so if they’re doing that that’s in my opinion that’s huge no big tech let’s be honest what drives the stock

Market everybody answer it with me big tech thank you okay this is what drives the entire stock market because these companies have huge weight and the s p on the nasdaq 100 these sorts of companies are seeing in front of your face now last earnings season a lot of these stocks look at them okay horrible horrible horrible you know it’s i need to add another stock

On here i know it’s kind of a smaller big tech but i still want to add it onto this particular list and that is uh shopify okay shopify needs to be added to this list even though it’s a smaller company but i mean if you look at these stocks netflix destroyed last earnings season paypal destroyed adobe destroyed a lot of these companies just didn’t have the numbers

That wall street thought they had right uh meta destroyed i mean it’s just awful amd’s been in a pretty big fall as well i wouldn’t call it destroyed but dang that’s that’s rough okay apple’s been holding strong what if what if apple doesn’t have the best numbers this upcoming quarter okay if you’re thinking about a risk to the market apple’s been holding this

Whole show together if it was finally to actually fall that’s definitely a risk okay nvidia’s has started to really you know slide mr softy’s been holding up pretty strong not quite as strong as apple but mr softy’s been holding them strong probably continues to google from what i heard google’s search ad rates have gone insane so that’s good for them but at the

Same time the the internet like as many people using the internet has gone down dramatically as the world’s opened up more and more which is not good for google so it’s got like google’s got one side good one side not good they kind of got a hedge business a little bit so that’s good intuit has come down massively tesla’s been holding pretty strong amazon’s been

Holding pretty decent but the stock still hasn’t gone anywhere since about june of 2020 keep that in mind you know shopify has obviously been a destroyed stock over this time so when it comes to big tech in this upcoming earnings season the way i kind of think about this is there the good news it’s good and bad okay the bad news is i think apple’s a big risk if

They can keep putting up these stellar numbers okay great i think the stocking but i know no one i don’t have any insight on how those apple numbers are trending i know they were cutting a little bit of supply for some products that maybe just weren’t selling quite as well as apple and anticipated including the the smaller iphone 13 from what i heard and so uh

That’s not good obviously and so we’ll see what happens without apple i think apple’s a big risk for this earnings season it’s the biggest weight it’s the biggest big dog right and if apple pulls down it can pull down everything else the good news is a lot of these stocks are beaten down paypal is very beating down netflix very beating down adobe is meta is shopify

Is so a lot of these stocks are in a position where they should be able keyword should be able to uh you know have something inspiring for this quarter so some of those should be able to go up google i would call it i’m confused on google because of you know less people using the internet youtube everything like that google search but ad rates have been going

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Insane tesla tesla’s a wild card and the reason tesla’s a wild card is because obviously interest rates have been going up now recently which means if you’re taking out a car loan it’s more expensive so tesla uh we’ll see okay we’ll see what happens with tesla that’s another one i’m kind of a little confused about like like a google mcdougall okay but big tech

There’s certainly some some upsides but some risk now when it comes to a lot of the arc stocks a lot of these stocks have started to come back very very strong here recently when you pull up like a you know one month off those march 14th lows that’s kind of good as far as that goes but you know a lot of these stocks they’re beating down dog stocks let’s just be

Honest but uh the good news with those is it’s like can they really get like a teledoc for instance can tell the dog really get hit again this early season i don’t know man you know obviously a lot of folks have gone back to regular doctor visits in office and things like that but this whole trend of virtual health care is not is not going away let’s just call it

What it is okay if we think about some more of the like the stocks i’m watching you know a lot of these stocks have been just hit so dang hard but these aren’t really moving the market and mu is kind of important really important actually in my opinion mu the basically the biggest memory chip play thing about nand uh dram as i call it you know these are sorts of

Products that that mu is is a beast in and so this is obviously if you ever want to get context on how the overall electronic sector is doing look at a stock like mu they’re going to give you kind of a lot of a lot of insight when it comes to that ups is obviously always a very very important company to pay attention to when it comes and look at the stock since

Those march 14th lows it’s right back down where it was right and so this is one of those i look at and i’m like oh boy you know what’s going on here with ups do people know something here because you know a lot of stocks have flown off those march 14 flows and come back super strong a stock like ups just isn’t really doing it and so that that’s where i’m like

Yeah you know what’s going on there so now last i want to kind of share with you guys here is the travel stocks so travel i think um you know from a shorter term perspective i think it’s in a pretty darn good spot i think regardless of what’s going on in the economy i think travel is going to be extremely strong over the summer you know i was looking at some hotels

In a place i was looking to go potentially here soon and my gosh insanely expensive one but also sold out across the board you know strip’s been insanely busy especially on the weekends you know even like thursday friday saturday sunday the strip’s been nuts obviously you guys know i live in vegas um so i’m expecting travel to be red-hot for a while now some of

These companies like a win they have exposure to china which is bad unfortunately right now because china’s been doing some some lockdowns again in some major cities and things like that so that’s not good but a lot of these travel companies should put up some unbelievable numbers next few quarters you know like unbelievable like some of the best numbers you’ve

Honestly probably ever seen some of these travel companies put up you’ll see them put up over the course of the summer over the next few quarters so if you’re talking about one sector then i’m actually you know if i’m talking about like short-term bullish on it would be a lot of these sorts of companies because they’re going to have some some pretty bright spots

To say the bad news is with airlines and i know you know a lot of these companies can usually hedge fuel costs and things like that fuel cost is still an issue but on the flip side we do know that oil has been coming down very recently all right and so if you want some good news oil coming down is a good news for just about everybody i mean literally it’s good

News for all the companies out there it’s good news for travel stocks it’s good news for consumers it’s good news for literally everybody so um in the last kind of part of this is obviously jay pal the fed but we already know they’re likely going to raise so that’s going to be what that’s going to be other bad news is we still got you know this past quarter in

The upcoming quarter very very tough comps to comp against year over year on inflation number so inflation is still going to look pretty sky high i believe the rate of increase and i’ve said this a thousand times i believe the rate of increase is going to start to shrink over the course of summer which is good news but in the short term bad news okay because uh

Like i said like the comps are still very very tough here in the short term guys so anyway i just want to share all that with you guys i hope you enjoyed me just kind of shared my perspectives on the market and everything i see out there and things like that make sure you check out the pin comment for that ftx us the official crypto partner of me and uh once again

When you trade your first ten dollars worth of crypto you get a free coin hey never know maybe you get a free bitcoin or something like that that would be pretty cool much love and have a great day

Transcribed from video
This is BAD for STOCKS By Financial Education

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