What’s Your Objective? | The Investors Edge

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

Week in Review: Market Rockstar NVIDIA Fails to Impress

If you aren’t familiar with the AI-chipmaker at this point, you likely don’t follow financial markets very closely.

NVIDIA is the stock market’s equivalent of Taylor Swift, and much like the pop star’s concert tickets, shares of the popular tech stock aren’t cheap.

The company reported earnings for the most recent quarterly period earlier this week, and the anticipation was quite epic.  In fact, there were reports of numerous “watch parties” taking place around the country.

Needless to say, expectations for this stock and its earnings report were quite high.

Despite beating the consensus estimates on both the top and bottom line, and guiding revenue and earnings estimates higher for next quarter, the shares fell as much as 8% after hours and were trading about 4% lower last I checked.

This is an excellent example of when investors’ expectations simply go beyond the reality of a company’s ability to deliver results that can live up to the hyped up mania they have created. 

Featured Insight: What’s Your Objective?

Much like most things in life, when it comes to investing, it helps to know what your purpose is.

And also, much like life, just wanting to make money, regardless of how you get there, usually doesn’t lead to optimal results.

In both life and investing, making money is usually a by-product of understanding your purpose and sticking to some tried and true principles in both good times and bad.

For example, it determining your asset allocation, you’ve probably heard that you should become more conservative as you age, but at a certain point your objectives could shift toward providing for the next generation and toward charitable intents, lengthening your time horizon and therefore increasing the amount of equity exposure you should have in your portfolio.

Likewise, you may be young, but if you’re liquidity profile is limited, you may want to be careful with your portfolio risk level because of various cash needs that may arise quickly with certain life events including marriage, buying a home, and having a child – plowing too much money into the stock market, and then being forced to sell into a down market when cash needs arise could prove costly.

Looking Ahead: All Eyes on Employment

After watching inflation like hawks for the past couple of years, investors seem to have turned their attention to the employment market as the most important economic indicator.

A rising unemployment rate and increasing jobless claims were a big part of the stock market swoon in late July and early August, and better data on that front helped stocks recover as we moved through the latter part of the dog days of summer.

Markets didn’t seem to care that the government overestimated job growth by more than 800,000 jobs during the past year – likely because it was widely anticipated that was the case – but I expect that when we get the August jobs report next Friday investors will want clear signs the economy remains on a solid footing.

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