Wall Street is wrong again. But then, it usually is.
Wall Street is a casino. If no one trades, there’s no action. It’s in the Street’s interest to keep the action going. The way to do that is to convince investors that they’re wrong and the grass is greener somewhere else.
The latest myth to be smashed is in the direction of the economy. Wall Street placed big bets on slowing growth, on money costing money and on tech’s cash flows being discounted.
Wrong again. Fourth quarter GDP was again very strong. There are already indications the inflation storm is abating. The reason is technology, which continues to cut costs from manufacturing to the final sale.
I’ve now spent a decade covering markets, after three decades covering tech. My tech stories focused on the lessons of business, and my business stories focus on lessons from tech. I’m not trying to sell you anything. I’m a reporter. I’m telling stories, most of which happen to be true because I’ve been at this a long, long time.
Today’s Wall Street bet is that hardware matters more than software. It’s true that in the cloud software scales automatically. When you buy ServiceNow software to manage projects, there’s little incremental cost for ServiceNow. Software profits are huge. The goal of every business today is to automate everything, to reduce staff by turning what people do into cloud-based software.
But that doesn’t mean hardware is a bad business. Clouds need chips and now so does everything else. Intel brought nearly $1 in every $4 of revenue to its net income line last quarter, and just announced a $20 billion investment in Ohio to bring in more. Despite this, and a dividend yielding almost 2.75%, which Wall Street said last week it liked, the stock is down. Buy some Intel.
The fact is that it’s easy to make money in the stock market. Buy stock in companies that know what they’re doing and turn off the TV. Let time be your ally. I don’t care that my own retirement account is down 10% from where it was. That’s a buying opportunity. Even the 2008 crash was a buying opportunity. That’s because we know how to beat deflation, with helicopter money, and we know how to beat inflation, with technology. America’s economy is the greatest in the world, and the lead should grow this year, even while Wall Street complains, and the media convinces the heartland that everything is going to hell.
Relax. Focus on growth, letting the fastest growers invest ahead of it. Pick up some bargains while everyone is panicking. Let time do its magic. Don’t trade too much. Moore’s Law, and all the technologies made possible by it, will win in the end.
