Ironically, the announcement came Monday (Presidents’ day) afternoon, and, lo and behold (tongue in cheek), the stock gaped down roughly 4% (that’s nothin based on the news) at the open on Tuesday. However, by today’s (Wednesday’s) close it was back to within a buck of its pre-warning price. Amazing!!
Jones Tradings’ Chief Strategist Mike O’Rourke pretty much echoes what I’ve been preaching herein of late:
“The FOMC is pumping liquidity at the same pace it was during the heyday of QE1. Passive managers and index products have no choice but to buy, and active managers can’t afford to sell in this environment. In most investing environments a withdrawal of guidance on a holiday would have been a red flag met with massive selling pressure knocking a company’s shares more than 10%.
The liquidity and euphoria has people behaving in the one-mentality of the early 1970’s and the late 1990’s. It has prompted markets to largely ignore Boeing doing significant damage to its reputation and losing its key product in excess of a year. The type of thinking that has sent Tesla up 186% in 4 months. It is the type of thinking the fueled books titled, Dow 36,000, Dow 40,000 and Dow 100,000. The thinking that one can pay any price for a company because they plan to own it forever.
The bottom line is there is no respect for risk in the equity market and mania is not indefinitely sustainable, there is no permanently high plateau.”
Be sure to read my weekly message from earlier today, if you haven’t already. I believe you’ll find it timely, and instructive…