So much noise, so little news
It’s a 24/7 news cycle, and the media attached to that wheel can’t tell you that what’s happening right now is one data point out of many, not a meaningful, active element in itself .
Higher interest rates, for example, mean higher mortgage rates, which in turn could slow the housing market and lower prices (or at least slow their growth).
It is not a simple equation. Cheaper sales prices with higher mortgage rates may increase affordability for buyers, but they also slow wealth creation for sellers.
Both are interesting data points when you’re looking at many different stocks, but evaluating a company’s outlook is much more about how its management executes a plan while adjusting to economic conditions.
( and Netflix PTON) (for example, they have taken very different approaches to ending the pandemic boom. NFLX)
Netflix has always talked about how it was pulling growth forward, warning that at some point there will be quarters with small declines. The company explained how it would become more efficient with content spending and focus on new areas such as video games to drive growth.
You can believe the strategy will work — I’m positive about more focused content spending, and I think games turn the money on. But how the company executes on its clearly articulated strategy means far more to its future than a rate move or whether Disney
( has an Avengers movie in theaters right now. DIS)
Peloton, for its part, has never really articulated a plan to return to growth after the pandemic spurred its customer acquisition. Yes, the broader economy matters more to Peloton than to Netflix, but you should buy, sell or ignore the company’s stock based on whether you believe in its long-term business plan, not because the cost of financing a bike marginally more expensive.
The media likes to keep things simple. That’s why the weatherman tells you it’s going to snow, how much it might fall, and what the temperature will be, not the underlying science that makes these things happen.
It’s easy to confuse individual data points with movements in the stock market because when we get data, the market is moving, but those movements don’t really speak to long-term performance.
When considering investing in a company or selling a stock you own, consider as many data points as you can and don’t make blanket assumptions that higher interest rates or a weaker economy are bad (or good) for that company.
Remember that charts, numbers, expert opinions and everything else are tools to help you understand the bigger picture. None of this is the final word (which is why TheStreet has built tools like TheStreet Smarts, Action Alerts Plus, and Real Money to help investors understand not just individual data points, but how they all fit together ).