A Slow Start
By Tue, May 12, 2020
Hey Scoopers,
As the quarterly earnings reports are slowing down, investors are eyeing the upcoming macro figures to gauge the state of the economy. â More on that in the “Overall Market” section.
Beyond the overall market, one oldie but goodie stock had more than 400% gain in the last 12 months, while a high-flyer stock lost more than 90% of its value. â More on that in the “What’s Up?” and “What’s Down?” sections.
Oh, by the way, we’ve got a reading suggestion for you. â More on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
Market Recap
- U.S. markets: Stock market indices didn’t agree on the direction but didn’t move too much either. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: Bitcoin halving happened on Monday, and the amount of Bitcoins to be awarded to the miners for their service is now half of what it was. However, Bitcoin’s price is still hovering near the $9,000 level.
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Waiting For Macro Figures
The Healthcare and the Technology sectors finished Monday in the green zone. Those gains were enough to help the Nasdaq and S&P 500 indices to end the first day of the week in the green.
As quarterly earnings reports are slowing down, all eyes are now on the macro figures, such as the Consumer Price Index (CPI) report, that is coming out this week. Until then, the market took it slow on Monday.
An Oldie But Goodie
So, what happened?
Shares of Stamps.com (Ticker:Â STMP) were up more than 6% on Monday. Of course, a 6% jump is not a bad performance. However, the company’s one-year 434% return is the astonishing part.
We’ve talked about this stock a few times in the past editions of the Daily Scoop. Do you remember, when one year-ago in April and May, the company voluntarily terminated its contract with the United States Postal Service, and the stock crashed 50% not once, but twice?
We talked about how Stamps.com is a well-managed company back then, and we say it again today. Well-managed companies who have cash at hand and benefit from good management end up winning and growing, even if they suffer from severe market pessimism.
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A Spooky Reverse Split
So, what happened?
Shares of Aurora Cannabis (Ticker: ACB) were down more than 92% on Monday. Once known as one of the best marijuana stocks, the company has recently lost its share price qualification to stay listed on NYSE. To maintain its status, it had to go through a reverse split and gave its shareholders one new share for every 12 they used to own. While the reverse split is a mathematical price change, it is most certainly an indicator that a company is in trouble. For an unprofitable company, a reverse split is a sign of trouble that worries investors to their core.
What Are We Reading Today?
So what happened here?
Folks, if you’ve been with us for a while, you’d know this editorial team is a fan of Howard Marks, the founder of Oaktree. Since the start of the COVID-19, Howard has published a more frequent series of memos to discuss the curious case of the stock market recovery despite the economic downturn.
He just published his latest memo, and it has a fantastic and insightful review of what we know and what we don’t know about the state of the economy, the virus’s progress, the Fed’s response, and, of course, the stock market. Add it to your read list.
Tomorrow, we will share with you our own learnings from his latest memo. Happy reading!
If you end reading the memo, let us know your takeaway by emailing us at members@tradestocks.com.
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
