During today's conversation we talk about the weekend ahead of playoff football then move to Microsoft making a big purchase, airlines hating 5G, the problem with quarterly earnings reports, Netflix and Peloton both sliding and more!
During today's conversation we talk about the weekend ahead of playoff football then move to Microsoft making a big purchase, airlines hating 5G, the problem with quarterly earnings reports, Netflix and Peloton both sliding and more!
All right. What's up, everyone? Welcome to the life finance in between Podcast. I'm Eddie Thomas. And this is brought to you by wealth management services here in Hershey, PA. Hope everyone's having a good week. It is currently Thursday, January 20. I want to get this out by Friday, January 21. So quick turnaround time. But all I wanted to kind of go through today was just talk about, just catch up a little bit, talk about what's going on this week in the markets and everything else, and then also see and also see what's going on just life. See what's going on there. Likewise, the chiefs case he showed the playoffs, and they're paying the bills this weekend after just after beating the Steelers, and I'm a bit concerned, I'm not gonna lie, I'm a little concerned. They wanted to last two Super Bowls. But for some reason, this time around when the playoffs just feels like the bills are just a little bit better. At least as of right now, I could be proved wrong. I have been proved wrong in the past by the chiefs, thankfully. And I sincerely sincerely hope I am again today or not today, but Sunday night when they play. But you never know. And now it's one of those points as a fan where it's like super bowl or bust. And that's not fair at all, as a fan, because the first 25 years of me being 22 years of me being alive, the chiefs didn't do anything in the playoffs, and I was just happy they made it. And now they win once and they go a couple times. I'm like, wait a second, this is what we're supposed to do. So what the cheat is win. And so now if they don't go to the Super Bowl, it's like a busted season to waste of time. And that's not fair. And that's not fair. Sometimes you gotta get brought back down to reality. So that always sucks. But we'll see. I mean, maybe I'll be on here next week, and the chiefs will be in the AFC Championship game just humming along. Who knows? I'm hoping that'd be pretty sweet. If you're a Steelers fan, I'm sorry, I didn't mean to do that to you. But I'm not sorry, also at the same time. So outside of that, not much going on. Not much going on just kind of day by day, watching a bunch of football, and not too much else. watching the TV series called Nine perfect strangers now. And it's on Hulu, it's actually pretty good. I'm only like three, we're only two episodes in three episodes. And it's a really interesting idea for a show. Like, they like nine people get taken to resort kind of like meditative getaway. And I don't know what happened. I feel like it's gonna go bad at any moment. But for now, it's just kind of going through their day to day. And it's actually surprisingly good. For now, not to say it's gonna take a bad turn or anything but who knows. And so that's really it. I've been trying to read more as well. I've been trying to read more books and that and doesn't always go well. I'm trying to like set goals myself in 2022 to like, just be more productive as a person every day. And so one of those was easy, I drink more water. The other one was read before I go to bed. The other one was trying to work out when I wake up, which will never happen in my entire life. I think every year since I was like 16 years old. I've told myself, I'm going to wake up early, I'm going to be a morning person and I'm going to work out. And not one year since I was 16 years old have ever woken up barely been a morning person and worked out in the morning. It's just not who I am. I'm up till I'm up till later in the night. So does not lend itself well to being a morning person. And I surely don't have the energy when I do wake up to get through it until I got my coffee and I'm been awake for about five hours and right around then right around minutes primetime workout. But before that, no chance, no chance I try to change it. If anyone has any, like tips and tricks that they do. Shoot them over more than happy to try anything. I just don't think it's in the cards for me. And that's alright. It's not in the cards for everyone. That's just is what it is. But that's what I'm going to try to do this year. Again, I'm going to try to wake up earlier, I'm going to try to read more, which isn't hard to actually enjoy reading. It's just carving out the time to do it. I'm gonna try to drink more water. Those are the three things for right now that I'm going to try to do and then taking small steps. If I do those, well, next month, I'm going to set some new goals. And I'm going to keep going from there. I've also started I'm going about to sign up with one of my friend and we're going to do a Spartan Race and July to end of June. I think it's in July in where North Carolina, Asheville, North Carolina, so I've been trying to run more and work out one for last until I haven't ran in a while, and it's not good. It is not good. I mean, burned out a mile in, and I used to play soccer in college, so I was actually a pretty decent running shape. And we are a ways away from that I get reminded every day, every day chatter on, I get reminded that that is no longer my reality. But we're still trying, I'm still putting in at least a mile or two a day, hoping to build from there. I got six, seven months. I'll update you guys on the journey is how we're going. But right now we're crushing like seven minute 32nd miles. If I'm if I'm burning, which is far, far off what I was in college, but I can't live in the past. My reality is this. That is where I'm at miles wise. But now that I'm seeing it on here, I feel like it's going to give me another I guess, motivation. Because I'm going to feel like I'm obligated to try to keep up and get better. So right now it's where we're at 730 mile. As of what the guy said January 2020 21. Check back in six months, I'm going to be at seven minutes need. Now we'll see. But let's get into the market and business news and what has been going on there and some really cool things. So not really cool things the market has been getting, like pummeled all week off of fears from inflation and rate hikes from the Fed. Also, people just not buying tech companies at the same P E ratio as they were, that's price earnings ratio. They're just they are not comfortable buying them at a higher ratio as they once were in the past. And I think a lot of the growth in value for tech stocks got potentially priced in over the past year and a half to two years. And now we're seeing the NASDAQ pull back, right around 10% for just this year alone, only 20 days into it. Because of that. This is something that most people expected to happen. It's something that was bound to happen, I don't think it's a bad thing. I think it's something where it's healthy, for five to 10% corrections to come up. And they give a buying opportunity. I think a lot of individual investors will get scared out of the markets because when you see read it is a bit alarming. But it's one of those things where this is just cat, this is what the market does in the past two years. It's not what it did. Ever since COVID, we had one bad month during COVID. And then it's been nothing but up since then. I think we're kind of due for a little bit of volatility and a little bit of down within the markets. And that's okay. And that's, that's really healthy. I think what we can see is inflation come down. Hopefully, I think people are feeling that at the pump, especially use cars prices, as I'm trying to buy a used car, it is no fun at all to see what the prices are now, I think those will come back down over time. As supply chain gets back up and rolling and cars can be manufactured and produced at the same rate they were beforehand. And I also think people see it right now in the grocery store, which I'm hoping gets dialed back soon here as well. Soon being six months to a year of that kind of being a bit higher inflation and the dialing back after that, as we kind of slowly hopefully go into the next stage of what life is with COVID. And I think we've been kind of stuck in this rut of fear unknown, another strain comes up everyone to worry the market reacts, things are more expensive. The one thing I stay true is that we're still spending as consumers so much money. So that is the positive but there's still money to go around, people are still spending it. So that's a positive sign. We just need some prices for some goods to come back down as well. I think when we see gas prices come down, we're gonna see a inflation come down as a whole as well. I think I think a lot of this is is driven by higher energy prices. But we'll see. Like I said, it might take a couple of months for that to really play out in the grand scheme of things that's short term. It's not gonna feel like short term at the pump or the grocery store. But it is it is short term. And so yeah, we've seen the market up and down over the past week. It's okay. It's okay. It's gonna do these things, like I said, but it hasn't all been bad. There's a really in my in my life in my world, a really cool acquisition and all that what that acquisition was was Microsoft bought Activision for I think$68 billion, or something like that. All cash Insane numbers. Activision makes Call of Duty, the video game and some other games. And I think that was, so I'm a gamer. I enjoy playing video games with some my spare time and only play Call of Duty, FIFA, NHL, Madden and some other shooter fortnight when I was big, I was playing fortnight, those kind of games. And so when I saw Microsoft, I play Xbox, I'm not a PlayStation guy and an Xbox guy. When I saw Microsoft, by Activision one, it caught me off guard, I had no idea they were in talks to do so. So that was pretty cool. And secondly, it was something where once they did I was thinking, what does this mean for Xbox? And what does this mean for Call of Duty as a franchise? The market loved it. Activision shares rose. At I think it was like 20, between 20 to 30%. That day, at one time, Activision was in some trouble, legally with how their company was being ran behind the scenes with a lot of seemingly ill intentioned executives having the helm and power which they shouldn't have. And I think that was a big reason as to why they sold on Microsoft, the writing was kind of on the wall that some big changes had to be made, and there's no bigger change and being bought by another company. Microsoft is obviously one of the best companies in the country in the world. And I think it's a really good purchase by them for the long term growth of titles like Call of Duty and eSports. In general, I think those industries have a huge, huge runway, I think we're in the very beginning stages of eSports. And gaming in general. And it doesn't feel that way, because gaming has been around for so long, right. But it also, as far as eSports is concerned, and that's out of it. It's so young. And I think if we look back in 20 years, this will be a purchase that was made by a company that saw a vision that maybe others didn't see at the moment. And I'm really excited to see what Microsoft can do with that. And I'm also just a play, I'm an Xbox guy. So like, when Sony was down the next day, the makers of PlayStation was down the next day on that news. It was Score one for Xbox, and those and Microsoft users. That's super, I understand how it comes across. I hope Sony I'm pretty sure Sony bounce back. But it was just funny to see like the Xbox PlayStation rivalry play out on Wall Street and how those companies were kind of commingling with each other in the stock market because of actions they were taking. So that was funny. So Score one for the Xbox users. Let's go. Second thing that happened this week, and this was an absolute head scratcher. This actually makes no sense at all to me and if someone can. Now granted I didn't do that much. I'd haven't done that much research as to why this is happening. And if someone can enlighten me, maybe I'm just just haven't done the research. It maybe it makes more sense than what I'm what I'm about to kind of spiel on about with it. But the rollout of 5g Internet, apparently is supposed to ground like airplanes are supposed to not fly. Like airlines are saying we're gonna ground all our flights. That 5g is gonna mess with all of our technology. It's not going to be safe for the air, the pilots, the people on the planes, what is not going to fly? My question is one How does that happen? How does 5g affect airline insurance? But the big question that I have in my head is how is it only coming out now? How do we wait? Until Verizon says okay, we're rolling out 5g 5g Excuse me? This is something we've worked on for years. The research has been in we've been waiting for this ramp up phones are running off 5g Now everyone's waiting for this the next stage of internet let's get it going. Verizon is taking that steps. And then and then at that point, airlines go Wait, wait, wait, wait, wait, that's gonna that's gonna mess us up. How do we get to that point? How did how was it not like sometime within the first I don't know five years of research to get to 5g are is like the Federal Aviation Administration, FAA or some airline come across and say hey, wait, this might not be good for us. We got to kind of change or we have to find another solution or something along those lines. How is it that we wait until internet it's about to roll out full stop 100% It's coming out now. Then do we bring this up? If you're the airline's how do we not take the stuff beforehand in the research of saying we need to change something? And I'm pretty sure varizen was just like cool. We're gonna do it anyway. I'm not sure what airlines are going to do with they're actually gonna ground flights or not? I don't think they have I don't think they're going to potentially this was just a whole lot of something made out of nothing. And there really isn't that much interference that 5g provides. But my question still remains the same and like, how is that possible? We wait this long to say this is going to cause an issue when 5g for the home internet came out on October 2018. I get it's only four years. But think of how much has happened in that four years? I'm sure the research was started way before that. But we'll just take these for years. How do we not bring this up one time, at least at a public eye? That this is something we need to be concerned about? I don't know I, what I hope that whatever has to come out of it, I hope comes of it. I hope they take care of what they need. They care if they change something within either the airline instruments or maybe we delay the rollout of 5g. I don't think we're going to do that. But I just don't I don't know how awaits this long. I do not know any sense. At least to me. I don't know. So we'll see. The next. So the other thing that's surprising this weekend in the market. And so I'm going to kind of jump into two things here. I don't understand quarterly reporting for earnings. And the impact that has and the company I'm specifically talking about here is Netflix. Now a week ago, Netflix said it was going to increase its price for users for a month, I think it's only going to be $1. But when you have 200 million plus households in the US alone, that's a lot of revenue to come in for Netflix with that price increase. That was interesting in itself because it it shows that as long as the price increase month a month is only $1 per user, it doesn't, you don't really think about it. Like I don't think $1 I don't think your Netflix went from $14 to $15, or whatever you pay. I don't think you turned around like, well, that's that I'm not using Netflix anymore and cancelled it. I don't think that happened, or at least not on a mass scale at all. I think it's one of those things where people are like, Okay, well, it's $1 More than Netflix per month, is what it is. But for Netflix, that dollar means a whole lot more in the revenue. And so going into this earnings, they released earnings today after the market closed. And going into it, people knew that they're now going to increase their cash flow by the dollar that they're increasing. So at least 200 million plus. And with that, Netflix released earnings today, and I'm looking it up right now. And so they're down 20%, as of seven o'clock at night on the 20 20% 20. That's so much. And the reason they're down is because their their earnings were fine, they hit earnings. But they said their guidance going forward was that their user growth is going to slow down slightly. And they're not going to get as many different. More people coming into the platform and using Netflix. So their their subscriber excuse me, subscriber growth was going to swell. Writing was on the wall that that had to happen at some point, you're just not going to get everyone every year signing on your service. And I'd argue if you don't have Netflix, now, by this point, you're probably not going to get it. Or it's going to take something crazy for you to get it because it's been around for so long. But so they came out and they said this, they said, Hey, listen, our subscriber growth is going to slow for a little bit. They're gonna, I'm sure they have a plan in place that they counter that either way it's make more content for themselves, hire better at the best actors, the best writers, and make it so Netflix is the place to go. You go for viewing television. But even on that even they're saying that, you know, we see competitors are here. They're kind of cutting into the services and the amount of people we can reach. And because of that we were not 100% sure what the future is going to hold. After saying they're still going to they're going to increase revenue because the households they do have they're going to increase the price for they're still down 19% 19.69% right now. And this is why I don't like quarterly earning reports. And it makes no sense to me. Why? So I get them and I don't get them. It makes no sense that they'd be done. 20% Their company be cut by a fifth? Because they're not 100% sure what the next three months looks like? That makes no sense. Could you imagine if you as a person had like a progress report every three months. And if in that progress report, you didn't do as well as you thought, or you didn't do as well as you thought, and you weren't sure what the next three months were going to look like. So you just got crushed, like everyone just crushed you. It makes no sense. It makes no sense that we hold companies to these quarterly reports, and they come out, and they get pummeled on somewhat bad news. And what it lends itself to, especially when you're in these companies is why would you take any chances? Why at that point, when you hear when you know that in three months time if we don't have all of our ducks in a row. And if we don't have the perfect guidance for going forward, we're going to get crushed in the stock market. It doesn't lend itself well to innovation and taking risks for companies and changing and just trying to be better in different ways. When you No, no, you have a three month window to do it. And if you don't do within that three month window, you're going to get punished for it. And Netflix hasn't even said anything really that bad that all they said was their stock subscriber growth was going to slow and this is after having it just gain and gain and gain for the past. One, when was Netflix, Netflix streaming? Beginning 2007, they started streaming. So it's been 15 years of Netflix growing. And now they're saying, Hey, we don't know how fast we're gonna grow, and people are now cutting them by 20%. Because of that, I just don't I don't understand why react so strongly on three months worth of reporting. When, as an investor, you're invested for 10 plus years, three 510 plus years, whatever your timeline is, I don't understand why you do that. And yes, I get there's more competition. And that can continue to be a trend where competition is cutting in the Netflix's kind of footprint there. But that's not news either. These two other streaming platforms have been around for forever. Netflix completely competes with everybody. They compete with everyone new and old. That's not news. So I don't understand these dramatic cut offs. And what's what from what I've seen, and this is for the most part, what happens is you get crushed on the companies get crushed on the bad news way, way more than they get uplifted when they have good news. And I'm not saying for sure, but I would not be surprised if Netflix came out today and said, Hey, listen, we did really well, these past three quarters, and we're expecting to keep that course going forward. I could see him up 5% 6% Surely not 20% on that. But the here they are down 20 Because they just had one, not even about three months. They just had bad guidance. And so we just we got to figure some things out. We're not sure what growth looks like. That's all right. If I'm Netflix, if I'm an investor in Netflix, I want them to take chances. I want them to take risks. I want them to try to keep trying to change the world and change our company for the better to gain more subscribers over time. I don't care if they don't know what the next three months doesn't. They don't know what that looks like. I don't care. That's fine. That's fine. I'm here for 10 years. I'm not here for three months. If you're there as a trader Sure, I mean, maybe react on this news. If you're there as an investor. It doesn't make sense to react on news like this, with this kind of emphasis on the downswing. If they go on three months, and they say everything went really well we know exactly where it's going. They better be up 20% Otherwise, I don't understand why people react strongly to bad news and not as not as well to great to good news. And that's just human nature. But these companies get pummeled pummeled if they don't reach their goals or if they don't have good guidance just let it just let companies innovate and be just be cool companies to put in like a very simple term just let them be cool companies and give them a long runway another company that's getting crushed and this one actually kind of deserves in my opinion get crushed. Is peloton. peloton has gone from let me see here. Let me pull up their stock this isn't Oh yeah. Okay. You Yeah peloton also has been cut in I mean, half and then half that again they've been getting crushed the reason being they want some training for at 160 623. So yeah it's not has not been good for peloton in the past couple months. And I think the reason being is because we're no longer in like a COVID lockdown situation. peloton was one of those companies that ran up so high when COVID was in full force and everyone was at home having to workout at home. They had so many customers at that point that they couldn't keep up with the supply. So they're cut, they're lagging behind a bit. But they're also being rewarded as far as investors were concerned. And their company, their stock price was just soaring and their company valuation was soaring. Now they're getting brought back down to reality and they even said today that they're just going to stop. They're just going to stop producing manufacturing bikes and treadmills at the moment because of waning demand. And so all that means to me is people aren't as interested in working out at home. I'm still looking at the company's value here. So even this was written. This article was written November 8 2021. And they were worth 15 point 4 billion. We sit here June 20 A net worth 7.9 billion they are cut in half since November alone which is just crazy. But yeah, I just I think the trend of people working from home 24/7 working out at home 24/7 and working from home for that matter but working out a home 24/7 stopped and I think it was really cool to get pellet a peloton for about four months during the like lockdown situation. And now that people are going back to gyms they can get back on their normal monthly membership membership. And there's no need for a peloton that's gonna close turn into a clothes rack. I think they're they're starting to see that and I don't really know. Yeah, see they started 2020 at 45 billion they were worth 45 billion at the beginning of I'm sorry, of 2021 Yeah, they started 2021 at 45 billion they're now worth as of today 7 billion nearly crazy crazy and this is not because of quarterly earnings that they're down this big it's just there I think the market and customers are now seeing this model of buying a home workout equipment and paying a subscription to keep using that equipment doesn't work that well yet maybe in the future it will and it definitely in a lockdown situation it will but when we're when the when people are up and running and outside and back in their gyms peloton gets hurt by that and also to say that there's a ton of competitors that can just also make a bike with an iPad on it like an order track and any other company that wanted to do so. So yeah peloton is getting absolutely crushed this year and last year and I'm not sure when that turns around from them. They need to make some in my opinion some serious changes to their company structure. They need to find a way to have also gym locations that aren't going to be super expensive that they can build up a brick and mortar presence because while everything is going online I still think the consumer likes the low cost low commitment high engagement with other people structure and incentives that the traditional brick and mortar gym gives them and peloton doesn't give them that because it's a strictly at home workout where you're online working with people but I just don't think consumers are there yet. I think we're seeing now peloton so I'll be curious to see what they do. I'd be curious to see if they move turn to a more brick and mortar type setup or they tried partnering with a couple gyms to get peloton inside the inside the walls there and have like at location instructors that coach through and have their own classes. They got to do something clearly they have to change something. I don't know what they what they'll change, but it's it's pretty clear that they have to or it's just gonna they're gonna end up just to keep losing value and you go from 45 billion to 7 billion in a month in a year. It's a you got to change something. You got to change something. So I don't know the future draft for the minor but Going into this weekend the futures are down. I'm hoping, hoping that Cheech one that's one thing football wise. I'm gonna watch it. I'm gonna watch football this weekend, I hope they win. So, that'll be fun to watch. I'll be curious. I mean, peloton is what it is. I'll be curious if Netflix bounces back. But I also like to do these things more often when I break down the week and kind of what's going on. During the week a little bit more. I have like a list. I'm trying to see if there's anything else I want to talk about. So you're kind of listening to me think out loud. But it made it this far, I guess you're here for the whole thing. So that's cool. We also saw Retail sales dropped in December. And like people said, That was a bad thing. I don't think it's that bad of a thing. I think it was kind of overblown. You had the entire year of companies saying and other people saying like, buy your Christmas, present early, they're not going to be here when the time comes, which wasn't true, everyone, everything was there. But you had everyone shopping for Christmas, I think significantly earlier than you traditionally do. And because of that, the year over year, for December sales dropped, I think retail sales for the year, were still don't quote me 13% or so. But for December, they dropped not a big deal in my mind. Not a big deal, I still think there's a ton of money getting spent and thrown around. And then I also saw a headline say that job claims are also not a big deal. I think that was also a fear piece. What we're seeing is now we're seeing seasonal workers no longer have those positions, that always happens. And I think and even like the jobless claims that did come out were lower this year than they were in prior years. So the unemployment still very, very low, somewhere between three to 4%. So people have jobs. It was just so seasonal workers and a bit of COVID back cause a little bit of an influx in jobless claims, but nothing to worry about as far as the economy is concerned. So those kinds of things were kind of nothing made headlines, but no real Norton's behind them. And then the last thing is McDonald's having like a make plant burger. Or they're like testing that out like a Beyond Meat burger. I thought this was done. I don't know. Maybe I'm just disconnected from that world. But I do love just your traditional hamburger. I just thought I thought the beyond meats of the world. I mean, I knew they weren't done. I just thought it wasn't clearly as popular as everyone had made it seem like it's so niche. There's so few people that actually I feel like eat those or prefer those to a real burger. And they're also from what I've heard, not that good for you. So on surprise someone like McDonald's I guess we're making stuff for the next stage. They're thinking this is gonna keep catching on, is having this MC plant burger rollout. I just don't think it's something long term that's gonna stick. But I could be wrong. That could just be me. Your average meat eater talking. And not someone who's in the know on alternative meats. Alternative needs, nobody would eat them. That's what they're called nobody. If that if they were called alternative meats. Oh my God, nobody beyond me. And I can't think of the other one. But those companies, they can't call that. Alright guys, that's kind of that's going oh I had for today. Just kind of wrapping up the week and seeing what's going on. Who knows what's gonna happen on on Friday. The futures are down right now. So I'm hoping I'm hoping either mark stays flat or even has a positive day and then you can kind of use one but if it doesn't, like I said earlier, not a big deal. We're kind of we're ready and we're ready to weather this kind of downturn for a small correction, which I think is healthy. But like I said, we're ready for that if it were to come so. Alright guys, stay happy, stay healthy. I hope everyone has a really good weekend and I'll be back on your next week. Until then I'll see ya. Securities offered through securities America Inc. Member FINRA slash SIPC. advisory services offered through securities America advisors Inc. Wealth Management Services and securities America are separate entities. The opinions and forecasts expressed are those of the author and may not actually come to pass. This information is subject to change at any time based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. 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