General Mills ( GIS/NYSE ) issued a more upbeat earnings call as the food conglomerate posted earnings per share exceed 1.11 US dollars (vs. $0.99 projected). With the stock up nearly 6% on the day and 11% year-to-date, pundits who have been advocating a fearless play with consumer products are looking pretty smart on this one.
Despite Costco (COST/NASDAQ) income and income to beat, shares fell about 3% in after-hours trading. It just seems to be the result of a very bearish sentiment when it comes to retailers at the moment. Earnings per share are US$4.20 (vs. $4.17 forecast), and total revenue increased 15% year-over-year to US$72.10 billion (vs. US$72.04 forecast). Costco clearly benefits from people wanting to shop in bulk as they struggle with inflationary costs. raises However, the bottom line was that the giant kept 26% more stock than in previous years.
Markets may not be as panicked as the headlines suggest
This week our favorite tweeter Liz Ann Saunders is back at it again with an interesting take on investor behavior.
Comparing the value of the S&P 500 to the amount of investments that people are selling (aka “drawdowns”) gives you an idea of how long past stock market panics have lasted and how steep the recent decline has been in a historical sense.
I find this chart interesting in that I would have expected the recent drawdown to be much higher given all the dire headlines out there at the moment, like the “ugly recession” and comparing 2022 to 2008. Investor sentiment is down, with “recession” and “stagflation” being the dominant phrases we hear from TV talking heads. You might think – given all the pessimism as well as the new appeal GIC rates– that more investors will sell off their stock portfolios to get ahead of the worst-case scenario.
I suspect that more and more investors are beginning to understand just how irrational market timing is for the average investor. Vanguard and Data fidelity will support my hypothesis. Growth in passive investing through robo-advisorsalso how all-in-one index ETF. (more ETFs here)very likely to reward buyers who automatically maintain a target asset allocation during these volatile times.
It was said by those who are much smarter than me: “It’s not the time in the market that matters, it’s the time in the market.” And it’s not for nothing.
Kyle Prevost is a financial educator, author and speaker. When he’s not on the basketball court or in the boxing ring trying to recapture his youth, you can find him helping Canadians with their finances at MillionDollarJourney.com and Canadian Finance Summit.