Quite the week in stocks. Everything in technology is up it seems, from Amazon to Microsoft, to Intel, even Nvidia. Everything, except AMD that is.
This past week AMD posted good profit and revenue numbers…but killed their own momentum by announcing that they’d see a revenue slow down. The stock then dropped 17% over the next 2 days.
I sat there touting Intel [up 10%+ this week] as the better stock to buy. It has a solid track record of solid execution. AMD is a bit more inconsistent.
And yet, posting anything negative about AMD stock brought about a torrent of trolls spouting insults and profanity my way, because I’m uninformed. They say.
Let me say this. No amount of CAPS LOCK PROFANITY tweets can save a stock. No amount of touting a new product or singing of praises will bring a stock back up. Worst of all, virtue signaling that you invest in a ‘good’ company like AMD and not an ‘evil’ company like Intel is a sure fire way to lose money. Now, of course everybody is free to steer steer clear of the Exxons and Monsantos of the world because of their ‘evil’ past. What you cannot do is buy a declining stock with deteriorating revenues and profits just because you like it, and then go and be bitter about it when it goes sour.
If there is a more direct way to waste money, please tell me.
THEN, I got a series of people telling me I don’t know finance, to ‘go read the numbers because they’re good.’ I sat there for 20 minutes adding up their revenues over the past year, combed their forecast, and believe me…there was little to say about the near term future of this company.
Stocks don’t move on ‘cool products’ or ‘virtue’ – they move on expectations of the future. They move on the EXPECTED sales of a cool new product. The mere existence does nothing, in the same way talent with no drive gets you nowhere. You buy a stock because you think their profits will go up the same way you stock up on gasoline TODAY because you think the price will go up tomorrow.
Heh, except stocks get zero miles per gallon. Just look at Tesla.
Back to focusing. AMD reported good numbers for the quarter that JUST ENDED. But then they slit their own throat by saying their revenue in the FUTURE quarter would slide 15 to 18 percent due to seasonality.
I had dozens of people telling me THEY read the opposite. From the same earnings report document. I was incredulous. To read the same document as I did and draw the exact opposite conclusion is baffling to me. For context, AMD does sell a lot of chips for driverless cars, Artificial Intelligence, cryptocurrencies…all the ‘en vogue’ things the kids love!
But here’s the problem. Intel sells more. Nvidia sells more. You can’t hang on to a stock because you bought a computer with their chips in it and you like it.
I’m all for ‘virtuous investing.’ If there is such a thing. But what I am not for is volunteering to lose money because the people at the company are ‘good.’ If there ever was such a broad, subjective concept.
You know what’s good? Profits. Intel profited from AMD’s loss this week. To this day I cannot tell you what exactly makes Intel ‘evil.’
What I can say is that I owned a computer with an AMD chip in college because somebody else told me AMD is awesome! And I never saw the appeal. That computer is long gone. My Intel one is still cranking.
I’ve never been a man of faith, I have no problem with anybody who is. But I do have a problem with looking at a deteriorating company and buying it ‘for the greater good’ on ‘faith’ that it’ll get better. The company itself announced it would see a slowdown.
What’s more is…90% of stock markets trading is executed by computers. Computers are neither good nor evil. They’re programs on a screen made of glass or silicon or plastic.
Computers scanned the earnings report milliseconds after it came out and deemed AMD’s bad news t be just that. Bad news. The computers are programmed to sell on bad news. Not on virtue. On profit and numbers. Not on faith.
And yet people still think that there are people like Jim Cramer manipulating the stock market like The Godfather with the string puppets. There is nobody out there who will force you to buy a stock. Unless my old stock brokerage comes back from the dead.
The biggest problem I saw was people blaming others for their own mistakes. People doubling down as a painful financial loss ate into them. I’ve been there. I have been trading stocks for 11 years and I have lost a LOT of money to ‘stock market tuition’ – you pay up for the learning experience.
What I saw was a lot of people unable to come to terms with a difficult decision. As the tired old saying goes, sometimes the hard thing and the right thing are the same thing. Sometimes you just need to take the loss and move on.
Mark my words, once you cross the line into investing, there is nobody to save you. You have to be able to shed the victim mentality of ‘damn that guy on TV messed up my stock. Get em!’ Because guess what: for every person lighting a prayer candle for one outcome, there is certainly somebody else lighting a prayer candle for the opposite.
The stock market is no place for spirituality.