Big Week for Big Tech | The Investors Edge

By John Stewart, chief investment officer at Farmers Trust Co.

Week in Review: All-Time Highs

Most all major U.S. stock market indexes reached all-time highs this past week, and as someone I know once said – all-time is a long time.

There is obviously a sense of exuberance on Wall Street even if it is not shared on Main Street. And this is actually reflected when digging further into the market dynamics.

There are clearly some stocks that are doing phenomenally well, mostly the large technology companies, but the Russell 2000 index (not as popular as the S&P 500, or the Dow, or the NASDAQ), is made up of smaller publicly traded companies – and is down 3% so far this year, and is still down nearly 20% from its 2021 highs.

This seems to be reflective of the growing divergence between have and have nots in the economy as well.

The question becomes how long the economy can persist with such a dichotomy before things reach some critical mass that causes a change in the status quo – and who will be the winners in the next regime – things could look differently 6 months from now than they do today – best to prepare early.

Featured Insight: Keep a Long-Term Focus

One of the biggest mistakes investors make is to be too short-sighted in their approach.

This has become especially true in today’s world where everyone wants everything RIGHT NOW! And attention spans have dwindled down to an almost unimaginable level.

Being short-sighted when it comes to investments can work both ways – on the upside as well as on the downside.

When markets are down and account values are moving in the wrong direction, it can be tempting to throw in the towel to make the pain stop – that has ALWAYS been the wrong choice to make.

On the other hand, chasing the shiny hot stock because it keeps going up in value can be tempting as the fear of missing out on life changing gains can become irresistible.

It is this type of dynamic that currently controls the marketplace. Don’t let it lure you into making impulsive or imprudent investment decisions – keep your focus on the long-term by sticking to a disciplined investment plan.

Looking Ahead: Big Week for Big Tech

We’re in the heart of earnings season, and next week is the biggest week of earnings reports for the all-important technology sector.

Apple, Microsoft, Amazon, Google (which now calls itself Alphabet), and Facebook (which now calls itself Meta Platforms) are all set to report next week.

Given that the NASDAQ index which contains all these names is up roughly 25% in the past 90 days (that is, since the last time they all reported earnings) it’s safe to say that market expectations are quite high.

Historically, these companies have all done a pretty good job beating expectations. Nevertheless, the higher the bar, the harder it is to clear.

Any missteps for any of these bellwether companies, whether in the reports themselves, or in their outlooks going forward, could cause some turbulence in the markets.

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