Hang in there.
To quote one of the most inspirational people around (and possible future president), Dwayne "The Rock" Johnson: "Just bring it" on Friday. You may be mentally beaten to a pulp after riding a wild week in the markets and studying Facebook's (FB - Get Report) 10-K for 175 hours. But now is not the time to take your eye off the ball as the market has the feeling of a massive downdraft that takes us well below the Feb. 8 lows. How you react during moments like these will mean explosive profits that make your Christmas shopping season or painful losses that cause you to sell your new Lamborghini (watch what Lamorghini's CEO just told TheStreet). With that inspirational talk out of the way, the reality -- when it comes to the market right now -- is that it will continue to fall until it prices in enough risk from a U.S. vs. China trade war. Nobody knows where things will end up and markets hate uncertainty. So in the meantime, we are back in a headline-driven market where the CEO of a company in the Dow Jones Industrial Average could go on TV (or web video with TheStreet), complain about trade wars, and the market takes an @ss beating. It's that simple. As for the true cost of a trade war, again, nobody knows. All investors see is the potential for things getting so bad that the Chinese government restricts the growth of former growth company Starbucks (SBUX - Get Report) . Happy Friday.
Facebook, the Bottom Still Hasn't Been Hit
CEO Mark Zuckerberg goes on TV Wednesday night, the stock drops on Thursday. Chief Operating Officer Sheryl Sandberg (who I reached out to for an interview; no reply yet, which is unfortunate because TheStreet is the preeminent lifeline to Facebook's increasingly worried institutional investor base) goes on TV Thursday afternoon, the stock continues to sell off. What is the market saying following these interviews? Three things. Both executives have now opened the door to a regulated Facebook, a move they may regret. You don't invite the government into your home. You never know what it will find and how much the government will take out. A regulated Action Alerts Plus holding Facebook is simply not worth as much to investors as an unregulated, profit-at-all-cost Facebook. The stock could easily start getting dumped by growth managers. Secondarily, you are left with the sense from both interviews that Facebook doesn't know how deep its data problem goes. And finally, the company has gotten so big that it can no longer be properly managed without situations like Cambridge Analytica popping up frequently. Terrible week for Facebook ... what's even worse is that it's hard to estimate when things will get better. The stock is down 13% over the last five sessions, noted TheStreet's Martin Baccardax. Remember where you first heard the stock could fall 50%.
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Friday Talking Points
(1) Shout out to TheStreet's Scott Gamm for this insightful new interview with billionaire investor Ken Fisher of Fisher Investments. Said Fisher about the return of volatility: "This process is good, you should look past the short-term because short-term traders get whacked -- you should look toward the longer-term." Makes sense. (2) Dropbox (DBX had a strong first day of trading, and you must watch our interview with the company's top executive; (3) In uncertain periods of the market, it's always good to reconnect with one's investing roots. I suggest you read "25 Rules for Investing" from TheStreet's founder and Action Alerts Plus portfolio manager Jim Cramer. Read it. Print it out. Discuss with your family. Plaster it on your whiteboard.