The situation in 2022 is very different from that of previous years. Stocks are not going to have the same anabolics that they had, injected by the Federal Reserve to alleviate the Coronavirus.
In this new context, inflation in the United States accelerated to 7% year-on-year, marking a record since 1982. The world of low rates begins its end.
Those effects have already begun to be seen in countless stocks that have suffered spectacular declines from their highs. One might think that such corrections only happen in small and unknown companies, but that is completely wrong.
In fact, we have the cases of Facebook, Spotify and Paypal, which presented their quarterly results this week. Let’s see their numbers:
The balance sheets of these companies were normal in terms of total sales and earnings. But what is really relevant is what will happen to them in the future: therein lies the problem.
There is a common denominator in all 3 companies: slow growth and negative expectations. These factors are decisive, since investors always anticipate.
The impossibility of maintaining the vertiginous growth rate that they had is of vital importance and that is why such falls are explained.
Some daredevil will believe that it is a good opportunity to buy Facebook, Spotify or Paypal, given the fall they have had. And clearly it can work out for you. But, without a doubt, it is a bad idea. Rule 1 of any investor: “don’t try to catch falling knives”.
On the other hand, indices live a very different reality than most stocks. The S&P 500 fell just 6% from its highs and the Nasdaq 11%. Why so little punishment when the vast majority of stocks have performed so poorly? It is explained by the great concentration of the main companies that have a high weighting in the indices.
They are Apple, Google and Microsoft, which are the 3 largest companies in the market and are close to the historical maximum zone. Don’t let this one start to fall Top 3because in that case, the night will come…
As we always say, this year is going to be very particular. For this reason, I want to invite you to download for free a report that I prepared so that you can, in this context, how to beat the market. I think it will be very useful to you. You can do it in the following link.
Source: Ambito
