Amazon Pharmacy Threat – Forbes
Quarterly earnings reports came fast and furious last week. Results generally were terrific, with data provider Bloomberg calculating that an impressive 76.4% of the 229 members of the S&P 500 that have announced thus far have exceeded consensus analyst expectations. Of course, as is usually the case, forward guidance was critical in determining which direction stock prices would gyrate and many a company saw its shares move sharply up or down.
Indeed, the past five days witnessed some of the most interesting earnings reactions in memory, especially on Friday when four prominent technology stocks enjoyed huge gains that propelled the Nasdaq Composite Index to an impressive 2.20% one-day increase, even as the rest of the U.S. equity market posted very modest gains. Incredibly, Amazon.com, Alphabet, Microsoft and Intel all rallied handsomely, so much so that the foursome added a combined $146 billion in market value.
Not surprisingly, the giant advance in Tech-Land propelled Growth stocks to a big victory on Friday over Value (145 basis point gap in the Russell 3000 indexes), continuing the trend witnessed for most of 2017…
…and prompting more pundits to suggest that investments in companies that trade for rich valuation metrics will remain more lucrative. While there have been very few “Death of Value” proclamations, and it is tough to complain about the double-digit percentage gains in our portfolios this year, the financial press last week had a little fun with the latest quarterly missive from Value-oriented hedge-fund manager David Einhorn, who wrote, “Given the performance of certain stocks, we wonder if the market has adopted an alternative paradigm for calculating equity value.”
Many in the media saw Mr. Einhorn as throwing in the towel on Value, which prompted him to clarify later in the week that he was actually defending a style of investing that has delivered the best long-term returns…
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