Best Stocks to buy now
However, since reaching an all-time high of $588.84 per share in mid-October, Zoom has struggled as investors shift into stocks that benefit from an economic recovery and a stronger return to in-person activities.
Zoom shares closed Thursday at $346.50 per share, down more than 40% from their October high. The stock, which has gained nearly 3% so far in 2021, fell below $300 in May.
Brown, a CNBC contributor and CEO of Ritholtz Wealth Management, believes Zoom’s post-pandemic future has become overly pessimistic.
“I believe the stock is viable in the mid-$300s. “I don’t know if it will return to $600, but I’m happy to be a shareholder right now,” said Brown, who also writes the blog The Reformed Broker.
The investor stated that his perspective on Zoom is influenced in part by the role videoconferencing continues to play for his New York-based company.
“I don’t think these businesses that have signed up with Zoom are going to say, ‘Oh, there’s a vaccine?’ Let’s put an end to Zooming,'” Brown said. “I own a company. I employ 41 people. I don’t have people flying across the country right now, and I doubt I will in six months because of how effective Zoom communications have been for our clients, partners, and vendors.”
What the market most wanted was for the CPI to be higher. We got a hotter inflation figure than we were anticipating, which led to less of a re-pricing on the market, although the S&P 500 and bonds all rose on the day.
The best explanation is that it does nothing to disprove the notion that this is a “transitory” spike in inflation, driven in this case by a small number of categories with prices surging so far and fast that the gains aren’t sustainable (used cars, hotels, the heavily engineered rent statistic). The headline CPI is the highest it has been since summer 2008, and the core CPI is the highest it has been since the early 1990s – in both cases, it is early in the recovery and not the start of rampant inflation.
Of course, this does not disprove the “inflation will be stubbornly high” argument, but for the time being – because the Fed refuses to over-anticipate a new inflation trend – the market is content to assume this is not the case.
Even so, it’s a shaky/ambiguous breakout to a new high. Right now, the S&P 500 is just a few points above its intraday high of May 7, and nearly as many stocks are down as up. Still dealing with “past-peak” reopening urgency and upward earnings revision. The market has spent enough time at the same level to qualify as a beneficial digestion phase, but it is not always up-and-away at the first tick above the range.
Industrials, home builders, transportation, and banks are all down, so today is a good day to “buy growth when yields fall.” A lot of the work is being done by software, Amazon, and defensive groups. Market continues to “do what it takes” for the time being to maintain support through leadership rotations that seem to occur as frequently as shift changes in a hockey game.
Sentiment is certainly relaxed, not fearful, but also not wild-haired and greedy. The AAII retail bull-bear spread fell slightly, as did the II advisor poll, but the number of bears in both cases is near multi-year lows. NAAIM’s tactical professionals have increased their equity exposure from a few weeks ago, but not to previously aggressive levels.
The viral story stocks have dropped significantly over the last two days. Those involved are vocal and dedicated, but fewer players are spreading these memes (retail options volumes and overall WSB chatter levels have increased in recent weeks, but remain far below January’s feverish levels). And because there are very few genuine crowded shorts to exploit, these stocks become unstable after a few days, relying on further waves of price-insensitive buying. I doubt it’s over, but it’s more of a subplot: these crowds roving for the next score and pros pumping ripe names in the hopes that the machines will chase them down. If you’re into that sort of thing, it’s a lot of fun.
As previously stated, market breadth is mixed, albeit slightly to the upside at this point. The VIX is giving up some of its “event premium” post-CPI, and it is also likely to be leaking lower due to declines in meme-options buying. Don’t forget that a summer Friday awaits.
VIX futures are still on a good path (it is more “normal” and bullish when subsequent months are priced higher), but the gap between VIX products and the S&P’s “historical volatility” over the last ten days is quite large. All else being equal, one would expect VIX to decline slightly from here, despite the fact that it has been stubbornly falling for months.