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The bigger the dip, the bigger the bounce

Oct 26, 2022

Good morning!

‍Looks like it’s gonna be a rug-pull Wednesday after what CNBC is calling Microsoft’s “foreboding” start to Big Tech earnings.

Really?

Reminder … if a single quarterly report bothers you and you’re prepared to hit the sell button based on a slew of clickbait, then maybe this whole investing thing isn’t your cuppa tea.

Just sayin’.

Here’s my playbook.

About Microsoft

Keep your head screwed on straight. Microsoft beat revenue and earnings - a “double.” The stock has returned 238.57% over the past 5 years, 938.48% over the past 10 and 1,414.10% over the past 20.

Keith’s Corner: The market rarely hands you a gift like this. Short-term MSFT volatility has exploded and that means the drop is a king-sized opportunity for those who recognize it. I’ll have a Trade with Keith recommendation out shortly (if not already out by the time you read this). Upgrade to Paid Trade with Keith

Visa: “youz gotta spend anyway”

Visa’s CEO put it super clearly and super succinctly: “The reality is we do know that there are some changes in consumer behavior going on, but they're still spending the same amount of money and they are still paying in the same way, which are critical to us.”

Translation: Youz guys gotta spend money anyway and as long as you pay us, we’re good.

Keith’s Corner: Yep. I talk constantly about the need to prioritize “must have” companies over “nice to have” companies and Visa’s a great example.

Buy this, not that

These days stocks you don’t own are just as important as stocks you do. I shared 4 companies with my friend, the fabulous Scott “the Cow Guy” Shellady on RFDTV yesterday. Two of the 4 are making hay while the other two are getting’ bailed … pun absolutely intended!

Don’t waste your chance (Watch)

Intel spins off Mobile Eye – call me unimpressed

Call me unimpressed. Intel is spinning off Mobileye, a key technology for autonomous driving for what is expected to be $15.9 billion in cash. Just a hair above the $15.3B in cash it spent to buy it in 2017. Intel’s advisers are kidding themselves if they think shares will price in the anticipated $18 - $20 range but what do I know??!!

What this says about the IPO market. Basically, that it stinks. According to Reuters, tech IPOs are at their lowest levels since 2008 and the tally is just $508 million YTD. That’s the lowest IPO amount raised since 2000 which ought to set off a few alarm bells.

Keith’s Corner: Intel is a strategically significant American chip maker on hard times. CEO Pat Gelsinger is on the right track, but the markets don’t seem to recognize that … yet. I hope I’m smart enough to buy more shares. You?

META: Are there any adults left in the building?

Meta reports after the bell today. The stock is down 60% for the year, more than double the Nasdaq’s fall. The advertising model upon which El Zucko built the company is cratering even though the company has padded advertising accounts by creating new ways to spin schtuuufff on Instagram and Messenger. Both of which are even more intrusive for users. Sigh. (Read)

I’m not holding my breath. GOOG posted numbers and that’s exactly what happened with mortgage and crypto-related search traffic in the proverbial toilet. Meta’s models may be in considerably worse shape.

My guess is that META cooks up another metric you’ve never heard of to distract and deflect. That’s Zuckerberg’s m.o. as of late and, now that Sandberg is gone (along with other high-profile execs), there may be no adult supervision left in the C-suite.

Keith’s Corner: I told you the stock was going sub $200 when it traded at $350+, then sub $100 when it broke that. So far, right on track. Putskies, bearish spreads … you know the drill. Volatility implies a 14%-15% move as I type.