04 November 2022
Last week was actually a pretty good week for markets. Both US and global stocks ended higher on hopes that the Fed might slow down its rate hikes. But tech heavyweights like Alphabet, Amazon, Meta, and Microsoft bucked the trend: their shares slumped, wiping out a collective $700 billion USD in market capitalisation in the span of just three days.
They reported worse-than-expected third-quarter results. Most of these tech giants were big winners during the pandemic, when lockdowns forced everyone to move their lives online. But now, the realities of a strong dollar, high inflation, and weaker demand have forced these companies to lower their revenue forecasts for the rest of the year.
👎Notably bad: Meta (formerly Facebook). One year after its big name change, Meta’s Q3 earnings report showed that it’s spent billions of dollars on its metaverse dream with little to show for it. The company’s stock slid 23% on the news, and it’s fallen out of the top 20 list of the US’ most valuable companies.
👍A bright spot: Apple. To investors’ relief, Apple reported decent results. It managed to grow its revenues in a challenging third quarter, although sales in its core iPhone business were a touch weaker than expected.
Our big takeaway?
You never want to let any single sector or stock have the power to make or break your finances. Despite the slump in big tech, the S&P 500 ended the week with a 4% gain – a good reminder of why it pays off to diversify your holdings!
If you’re feeling a little weary and battle-scarred from this year’s market volatility, just know that you’re not alone. We asked some members of our leadership team for their tips on how to weather a market downturn – and whether it’s your first bear market or your fifth, we think there are some valuable lessons in their successes and mistakes.
Earnings season comes round once every quarter. It’s the period of time when publicly-traded companies announce their earnings for the previous quarter or year.
Investors and media closely follow earnings seasons, because it gives them an indication of how companies are progressing on their goals, and managements’ plans for the future.
If a company reports earnings that are better than what market players expect, this report usually drives the company’s share price higher – and the opposite happens if its results miss expectations. But more importantly, markets look to managements’ forecasts of future earnings to get clues on how the broader economy might perform in the next quarter.
That’s why it’s common to see more stock price volatility during earnings seasons. But as a long-term investor, you shouldn’t be too shaken by any earnings season: if you’re investing for a goal that’s years or decades away, it doesn’t make sense to change your strategy based on a single quarterly earnings report.
Whether you want to tweak one of StashAway’s portfolios or create your own from scratch, Flexible Portfolios gives you that, well, flexibility.
By popular request, we’ve added 3 new ETFs to our Flexible Portfolio universe, so you can now get exposure to the Dow Jones index, international stock markets, or high dividend yielding companies.