Well we just had the first potential wrinkle to a fiscal cliff resolution, as House Speaker John Boehner’s “Plan B” never made it up for vote last evening. Talks are set to resume next week, so it may be tough sledding for traders looking for the Christmas week rally to continue.
Nike (NKE) did buck the overall selling, however, after the athletic footwear/apparel giant beat earnings expectations. Walgreen Co. (WAG) and Cintas Corp (CTAS) didn’t fare as well following their earnings numbers releases. Wall Street analyst downgrades did resonate in today’s downdraft, with stocks like Blackrock (BLK) and PNC Financial (PNC) seeing red following some cautious commentary.
Nipping at Your Heels
From countries to companies large and small, one important constant cannot be overlooked: competition.
Volatility is intense in today’s markets (and within companies themselves), but major shifts can sometimes take several years to take hold. Lower manufacturing costs were eventually what led Japan to become the manufacturing giant it was in the eighties, but eventually China took the lead from Japan in producing goods even more cheaply. Now countries like Vietnam and Brazil are stepping up to challenge China as the new manufacturing kings. Similar shifts happen in individual businesses as well, where competitors (and new technology) emerge and destroy once-mighty industry leaders.
When these events happen, the repercussions are enormous. Everyday families are particularly hard hit, as so many jobs are lost. Investors, too, can fall victim to these trends. It is our job to pay attention to important shifts and decipher their ramifications in the investing landscape. Some events will simply be out of our control, while others will be slow enough that we have plenty of time to take appropriate action. If you’re still of working age, pay close attention to your job situation, and make sure you are not heading for any unpleasant and unexpected surprises down the road. Competition should never be underestimated, especially in today’s fast-paced world.
Lazy Person’s Guide to Losing Money
The great thing about our society (and sometimes the biggest detriment) is the instant access to any and all information. Fact-finding has never been easier, but yet so many people still get scammed into buying terrible products, or making bad investments.
If you ask most of these folks why they were burned, it was because they didn’t do the leg work or due diligence to see if what their money was actually buying them. Instead, many times, they relied on a testimonial from an uniformed acquaintance or something of the sort. In a world where investment results are measured by the hour, the intriguing storylines are everywhere you look. But for much of the choices you have, very few people do little beyond the initial euphoric imagination of turning $5k into $50K in six months (or some other outrageous claim). The faster you want to make your money, the higher the risk you will lose everything you put at stake. Remember this fact and you will always remain ahead of the masses whose money will be destined to disappear!
Looking Toward Next Week
Looking ahead to the next week for stocks, we will have a Christmas Holiday shortened trading week with the markets closed on Tuesday. We would imagine the focus on a fiscal cliff resolution remains the key story as there will be little in the way of earnings to report.
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