Wall Street and many investors are in panic mode.
The NASDAQ is officially in a bear market (down 20% from its peak) and the S&P 500 is dangerously close to bear territory, too.
But I’m not worried.
I have earnings working in my favor.
Longtime followers know that earnings season is always my favorite time of year. This is when all publicly traded companies open up their books and show Wall Street if they’re still firing on all cylinders… or slamming on the brakes.
Typically, companies that report better-than-expected earnings results and positive future guidance are rewarded. Meanwhile, companies that post disappointing earnings results and/or weak future guidance get punished.
That’s held true this earnings season so far. Recall when Netflix (NASDAQ:NFLX) took it on the chin after reporting a dismal first quarter and guiding lower for the second quarter. On the other hand, Microsoft (NASDAQ:MSFT) surged after topping analysts’ estimates on the top and bottom lines and providing a positive outlook for its next quarter.
What happened to the price of Netflix and Microsoft after their earnings reports is a great example of money flow. Essentially, Netflix shares dropped as huge amounts of institutional money — think pension funds and investment banks — flowed out of the stock and Microsoft shares popped as big money flowed into the stock. It’s what makes earnings season so exciting!
And this earnings season has been full of surprises. We’re seeing money flow in and out of sectors and stocks as companies report. Just look at retail earnings from earlier this week…
Retail giants Target (NYSE:TGT) and Walmart (NYSE:WMT) reported yesterday and Tuesday, respectively. Walmart’s report was mediocre at best, with revenue of $141.57 billion for the first quarter of 2022, topping expectations for revenue of $138.94 billion. Moreover, earnings per share of $1.30 missed analysts’ estimates for earnings per share of $1.48 per share by 12.2%.
Target’s was an even bigger disappointment. While total revenue of $25.2 billion represents a 4% increase compared to last year, “The bottom line missed expectations, dramatically,” according to Forbes’ report.
As a result, Target’s shares dropped 25% on Wednesday, the stock’s largest single-day drop since 1987. As you well know, the market as a whole followed it down…
The reality is the financial media used Target’s weak earnings results as an excuse to say that consumers aren’t spending, when the fact is that Target’s margins were squeezed because of high shipping costs.
But my point here is that 25% selloff in Target shares is just another example of money flowing out when a company underperforms.
As I said, this front-row seat to the best game in town is what makes earnings season my favorite time as an investor…
And there is one thing about this earnings season that is a complete surprise!
To find out what — and to sign up for my upcoming The Great American Wealth Shift event — click on the video below:
Bottom line: If you know how to “follow the money,” you stand to make a fortune… and I’ve found a way to track these huge flows.
I’m sharing all the details in an upcoming event next Tuesday, May 24, at 4 p.m. Eastern time.
I’m calling it The Great American Wealth Shift. During the event, I’ll explain to you how to follow money flow… and how to find the types of stocks that can see incredible gains as a result of those flows.
Also during the event, I’m going to give away one of the top stocks I see a lot of money about to flow into AND the No. 1 stock I see a lot of money flowing out of in the near future. I can guarantee this is a stock you know well… and it’s one you’ll want to avoid at all costs.
If you haven’t already, you can register for the event here.
Remember, the upcoming event, The Great American Wealth Shift, will be held next Tuesday, May 24.
We’ll be starting at 4 p.m. on the dot. To make sure you don’t miss out, I encourage you to mark down the date and time in your calendar now.
I look forward to speaking with you then.
P.S. Don’t forget to register for my event: The Great American Wealth Shift.
We go live on Tuesday, May 24, at 4 p.m. Eastern time.
During the event I will name one of the top stocks I see right now AND the No. 1 stock that you should avoid at all costs.
You won’t want to miss it.