Posts by Jeff Macke
The menu at McDonald’s (MCD) is getting a makeover but investors are unimpressed. Shares are marginally lower today. Those chicken McNuggets you love will now come from chicks raised without antibiotics and the milk in your McCafé will come from cows that are not treated with artificial growth hormones. The company is also looking at ways to make its beef healthier, too. New CEO Steve Easterbrook is not wasting any time in changing up the fast food giant. Separately, the team at RBC Capital is confident U.S. store sales are already improving. It raised the stock to a buy today saying shares can hit $115, a 15% jump from current levels.
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Sic transit gloria mundi. Thus passes the glory of the world. It's half of all the Latin I know. Over the centuries it's been used in Papal coronations, snarky Valentines from Emily Dickinson and at least two Hollywood classics, Patton and Rushmore.
Today it applies to the Nasdaq (^IXIC) which may have officially spent Monday night over the haunted 5000 level but didn't trade in that rarefied air for even an instant yesterday, opening down ten and falling as much as a percent before recovering a bit into the close. After taking 15 sometimes excruciating years getting back to 5000 the forever dot-com-bubble-tainted index has spent less than one full trading hour at that lofty perch, at least so far.
That's it. The rest of this stuff is showbiz, noise and distraction. There's information buried in financial media but you gotta work to find it and I'm not always going to be here to help.
Ford (F) shares are in reverse today, off more than 2% after reporting a decline in February sales of 1.9% compared to the same period a year ago. Ford's lemons included the Fiesta and Taurus brands whose year-over-year sales fell more than 20% each. Even the F-Series Truck, which accounts for a big chunk of total company revenue, dropped 1.2%. Ford did try to highlight that sales of the F-Series so far this year are trending higher by 7% but Wall Street seems skeptical.
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So... This is awkward.
As I'm sure you heard the Nasdaq rallied just under 1% yesterday, closing a triumphant 8pts over 5000. I'd sort of been expecting this to happen in a couple of days, not now. My plan was for the Nasdaq to hit 5000 just as I wrapped my last segment tomorrow. I wanted to point to the scoreboard as we hit 5,000, drop my mic and commence roaming the earth getting into adventures like Cain in Kung Fu.
Alas, the animal spirits got ahead of themselves. That leaves us with two days to discuss everything else I've learned about finance in the 20 plus years since I left college. Today we'll do the basics to wealth managing and broad stock picking. Tomorrow we'll talk stock picks and disclose what I'm lugging with me as I head into the breach. Think of it as a 5 minute commencement speech cut into 2 parts.
Here are the four things I'd tell year 2000 Jeff Macke about building wealth (besides "buy Apple (AAPL) on margin and never, ever sell"):
If March comes in like a lion then where the hell is my roar? Futures are flattish after a weak close to February on Friday. Here's what you need to know as we head into March:
Stocks still closed higher for the week and had their best month since October 2011. For the record the S&P 500 (^GSPC) gained 5.5% and the Nasdaq (^IXIC) tacked on a glorious 7.1%. We're riding high and watching Naz 5000. Over the last 15 years March has been higher 10 times and down 5 with an average gain 1.8%.
And finally March features some anniversaries to keep in mind, especially in light of the annual Berkshire Hathaway (BRK-B) letter and it's traditional dismissal and embrace of market timing. March 10th is of course the 15th anniversary of the Nasdaq's all-time closing high of 5049. Before that though we have another important date in history: The worst mainstream media unintentionally ironic market bottom call EVER.
It's been a retail-heavy week of earnings, and if there's been a prevailing theme it's been the long overdue focus on merging the on- and offline shopping experiences. Obviously merchants have been talking about the move to so-called omni-channel sales for years but this was the quarter where shares really started moving based on how robust their non-brick and mortar efforts really are.
The turning point probably came at the end of last month when Amazon (AMZN) reported a surprise profit driven in large part by a surge in Prime customers. Don't underestimate the significance of that news, not just on Amazon's shares, which you can see ripping at the end of January, but in the mindset of other retailers. When the perception was that online sales meant nothing more than shipping headaches, the brick and mortar model still seemed ok. Once Wall Street and merchants a little slower on the uptake realized that Amazon was actually able to generate insanely high-margin revenues by improving incremental Prime offerings and charging more, lightbulbs started going off all over the place.
Weight Watchers International (WTW) shares are getting hit so hard that I'm resisting the urge to use a loss-related pun. Shares are off 30% after the weight loss club issued a stunning profit warning this morning. This is pretty bad, folks. Weight Watchers said meeting subscribers fell 13.3% for the quarter which was actually better than the 16.7% decline in online membership. For this year management says it will earn anywhere from 40 to 70 cents. Analysts were looking for $1.43. This is a mess. Lots of debt, no grip on the core business and looking very much like a typewriter ribbon manufacturer at this point.
Friends, our time together is coming to a close. I'm leaving Yahoo Finance next week. There isn't a mystery here. You won't find any hidden "car people" or conspiracies. This was my decision and it was made months ago. After four years, hundreds of segments and tens of millions of your clicks it's simply time for me to move along to other challenges.
I'm leaving you in good hands. In fact, as timing would have it, Warren Buffett, the unquestioned master of investing, both in practice and teaching others how to think about money, is releasing his annual letter to shareholders in the morning. I started teaching myself how to invest with Buffett's letters some 30 years ago. Tomorrow morning at 8am I'll be pouring a cup of joe and reading Buffett along with everyone else on Wall Street. If you have even a passing interest in finance I encourage you to do the same.
I'm watching a couple of CEO turnaround trades today.
I've touched on the idea briefly before, but I want to flesh it out ahead of a particular earnings report tonight. The idea isn't complicated but it's made me money pretty consistently over the years.
Obviously simple and profitable is the holy grail of trading.
I'm not talking about penny stocks in need of a superstar exec to save the day. This trade works best with blue chips where Wall Street, for whatever reason, has lost confidence in management. In those situations a change at the top can be a very bullish catalyst, sometimes even without a new executive waiting in the wings.
Microsoft (MSFT) is a great recent example. Here's a five year chart. I don't have to tell you much about Microsoft beyond the fact that it used to be a monopoly and now it's known mostly for so-so software and clunky tablets. But check this out.
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Taser (TASR) is getting tased by investors to the tune of 13% after 4Q profits missed by a penny coming in at 9 cents a share. However revenue of $47 million came in ahead of estimates. The 40% gain in the stock over the past year left little room for any negative news. On a more positive note, if you read the papers you know law enforcement is beefing up on taser like products including body cameras and so called smart weapons. Today CEO Rick Smith reminded investors the company has 13 major cities using its products and they are in active discussions or trials with an additional 28.