I have a special penchant for cryptocurrencies. In my view, the blockchain represents the future of business and financial transactions. In comparison, AT&T Inc. (NYSE:T) is anachronistic. Despite its telecommunication edge, T stock has a reputation for being a “legacy investment.”
Although I’m increasingly shifting my attention away from the traditional markets and towards cryptocurrencies, I consider T a relevant investment. Whether or not T stock works for you is entirely dependent on your personal needs and expectations.
As my InvestorPlace colleague Dana Blankenhorn correctly stated, if you’re young and need a portfolio boost, look elsewhere. But as a steady income generating machine, T represents the mythical cash cow.
Even if you’re young, that doesn’t mean you have to jump blindly into Facebook Inc (NASDAQ:FB) or Netflix, Inc. (NASDAQ:NFLX). These are great companies, and I’ve written positively about both of them. But sometimes, stability is its own reward.
I learned this lesson not too long ago. After the proposed SegWit2x Bitcoin hardfork failed, the offshoot cryptocurrency Bitcoin Cash jumped higher, taking down the original. In literally hours, I lost an ungodly amount of money. Fortunately, the digital markets stabilized, restoring my account balance.
Usually, though, volatile events don’t end up with a happy ending. Humans are humans, and we panic. Thankfully, the T stock price is largely predictable. It moves higher modestly, but it’s not prone to dramatic losses.
Of course, this year happens to be the time when the T stock price doesn’t fall in line with statistics. Year-to-date, T shares are down 20.5%. Is it time to cut your losses, or can something be salvaged?
I have to admit that I’m in an awkward situation. A few months back, investment performance-aggregator TipRanks called me a “top blogger.” As luck would have it, they focused on my bullish sentiment towards the T stock price.
At the time, I issued a caveat. AT&T is a buy, but its nearer-term technical action is ugly. However, I also said that it could be primed for a big leg up, based on both the technicals and the fundamentals.
Unfortunately, the T stock price didn’t hold the $35 support line that I was banking on. Instead, after multiple bear attacks, shares crumbled late last month.
In the ensuing days, T stock meandered between $33 and $34.50. Currently, shares are attempting to close the gap to get back above $35, to disappointing results.
How you approach T stock at this juncture will again depend upon your particular strategy. If you’re an income investor, I wouldn’t want to risk overreacting. Losing double-digits is no joke.
On the other hand, AT&T is hardly a fly-by-night operation. It’s weathered multiple storms in the past, and this one is likely no different.
If you’re a capital-minded investor, you may want to steady yourself for possibly a further drop. I really hate the fact that the T stock price gapped down the way that it did in October.
Stuck in a technical no-man’s-land, the next logical support line is somewhere around $30 to $31. For my worst-case scenario, that would imply another 11% drop.
The only positive spin I can put on this technical volatility is that if you were looking for a discounted opportunity on T stock, this might be it.
Still, I’m confident that once we get through this mess, the value proposition for AT&T will shine bright. First, the somewhat long-in-the-tooth deal with Time Warner Inc (NYSE:TWX) will likely happen.
As our feature writer James Brumley states, both companies traversed a long road. It would be anticlimactic, to say the least, if the proposed buyout fell apart.
Second, the next-generation 5G network is a game-changer, and AT&T leads this critical arena. In September, I wrote the following:
“For AT&T Inc, the 5G network isn’t just about faster broadband connections. If that were the case, T wouldn’t be any different than every other mobile business. Rather, AT&T is taking a page out of Alphabet Inc‘s (NASDAQ:GOOG,NASDAQ:GOOGL) or Amazon.com, Inc.’s (NASDAQ:AMZN) playbook and delivering what Brumley calls ‘consumer-oriented 5G to the masses.'”
Finally, this is AT&T that we’re talking about. It’s been around the block more than a few times. Irrespective of the ebb-and-flow of the T stock price, the telecom giant will right the ship. When it does, this dry moment will just be considered a mere blip on the radar.
Josh Enomoto is long Bitcoin and Bitcoin Cash.