Monday 19 October 2015

Top Tweets Today: 19/10/2015

Today marks the 28th anniversary of the 19th October 1987 stock market crash where the Dow Jones toppled over and ended the day down 22.6%. It is the single biggest daily loss ever recorded on the the index. But have stock indices stabilised since then to prevent a similar occurrence from happening?

I think to answer this question we firstly need to acknowledge the advancement in technology and how it has changed the speed with which we receive information and the less tiresome work in getting the information. However in saying this, more information isn't necessary good as the market clings to each possible economic data being released and tries to speculate the effects of these.

 We should also note that because of these advancements in computing technology, financial security exchanges around the world have implemented systems that prevent such movements from getting out of hand. We've seen how these systems have worked on 24th August 2015 when markets around the world shock as a result of bad news coming out of China. The pause in trading allowed participants to reassess their actions and think twice about what they are going to do.

I must say from the onset that I don't become bullish when I hear celebrities staking their fame and fortune on the stock market simply for the reasons why traders don't become actors & actresses or even singers for that matter. So when I heard Oprah Winfrey has bought a 10% stake in Weight Watchers, a health company that tries to help it's clients lose weight, I was skeptical.

Although news of Winfrey's ownership has shot shares through the roof the company is down over 70% for the year which doesn't show much optimism from shareholders lately. The resulted surge in price could be from the amount of shorts that had loaded up on the stock and were caught by the surprise announcement.

Given Oprah Winfrey's stardom, is it enough to save this company from being relegated to the ranks of a has been? I'm not sure but the fact that she was willing to put up a significant amount of capital in the company must say that she believes in management's plans and see's her popularity as a tool to attract new customers to the business. It'll be interesting to see how this one pans out.
We saw a few surprise with big name companies reporting downbeat numbers that didn't sit well with investors and this week will be no exception with many watching to see if the existing negative sentiment in corporate profits remains true.

IBM reports today followed by Verizon and Yahoo the big ones on Tuesday. Wednesday see's General Motors and then the big ones of Amazon and Google. I think the key focus will be on Amazon as after Walmart reported bad numbers last week, being one of the online retailers big competitors it'll be interesting to see if they can pull a rabbit from the hat come Thursday.
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