By Brandon M. Suffel Founder Breakfast at Midnight April 28, 2020
Starbucks and the earnings report that flipped the stock. The pharmacy stock I like. And, should we be focusing on stocks, and their losses, or the economy? That is, should we blame the stock market, or blame the economy for our misfortune?
Twitter: @SuffelStocks Stocktwits: @SuffelBMS
Starbucks!
What’s goin on with Starbucks? There seems to be an issue…
Since Starbucks almost three point loss on Apr. 3, it’s recovered slowly but surely, but evidently, the fearful quarter two earnings report was just around the corner.
Of course, a majority of Starbucks locations are closed, nationwide, and nearly worldwide, besides the “areas” least affected by the coronavirus pandemic. That still doesn’t justify the plausible consequences of a “closed” economy over the last month-or so.
I’m not interested in the earnings, I’m interested in the guidance.
And unfortunately, I’m distraught with the results. The guidance from Starbucks was sullen. To say at the least. Is it necessary to complain? The economy can barely sustain easing restrictions of social distancing. Even the movement opening salons, bars, and restaurants again is a challenge. Starbucks falls into this category as a mindful sacrifice. Sure, some Starbucks locations have opened their drive-thru for customers, but how does that attain to a normal day of consumer traffic? It doesn’t. If you believe in the 25% – 35% of loss in business in the Chinese state, my compassion, and empathy, goes to those who still stick with Starbucks. Remember, it’s not your fault, and it’s not the stocks fault either.
$SBUX in trading hours filled trades from bullish investors as the share price continued to patiently uptick. After a positive close at $78.69, shares suddenly fell in the after hours, when the earnings report and guidance unleashed. The share price would soon come tumbling down (-1.16%). $SBUX remains volatile in the after hours.
I still believe Starbucks is great for portfolios. $SBUX stock teaches new-and current-investors the importance of compounding interest, having faith, and how the market can function in good and bad times.
I like Rite Aid
I woke up Mar 16. early, with good intentions, and a hunger for market knowledge. Then I thought of an idea for trading: I’m going to invest in a safe play, one I know I’ll make my money back if my risky play backfires. And little did I know then, my risky play would make me richer than I was the day before, and so forth.
I chose Rite Aid. It wasn’t a radical choice. At the time, markets were swinging unbelievably negative, and it seemed the market couldn’t go any higher; but lower. So, Rite Aid at $10.10 a share – a steal – became a new hit like the other pharmacy crew ($WBA and $CVS). The big three would soon work with 45, and steal the market.
Since then, I still follow Rite Aid, CVS, and Walgreens, but today, Rite Aid just made sense.
$RAD shares made a sharp gain of $0.74/share (+4.90%). And in the after hours, shares continued the momentum.
Is it the Stock market? Is it the Economy?
Should we blame the Stock market or the economy for our misfortune today? An awfully probing question, if you ask me. I recently fell upon an article that may address those concerns… and here’s how I interpreted it:
Joshua M. Brown, the author of “You can’t invest in GDP,” immediately brings up an important point: Although stocks have recovered from their losses since Mar. 23 low; businesses have not.
Soon, we come across a letter, from a colleague of Josh’s, Ben Carlson, who makes fair judgment: When GDP declined 5% during the 2007-2009 financial crisis, stocks accordingly fell 50%. The financial crisis was a financial crisis. Whereas today, we’re in the midst of a natural disaster. In that case, the economy tends to do more damage on the lives of civilians compared to your stocks, Roth IRA’s, and 401k: A driven point investors and ordinary market analysts fathom.
Who are the winners, or those constantly bailed out in all of this? Josh addresses this eerie question with honesty. I interpreted it as the big corporations today continuously experience less regulations, and receive substantial aid like extravagant subsidies from the government; compared to small businesses who struggle to stay open. Small businesses aren’t financially capable to withstand a “closed-off” economy much longer.
I find it intriguing stock prices are merely opinions. They are generated numbers. Physically, stocks don’t exist–unless otherwise on written documents.
Joshua M. Brown captures this topic brilliantly, and analyzing this read taught me the value in stocks today, compared to yesterday’s prices, and tomorrow’s.
Brandonsuffel.com 