Distinguishing News from Noise in the Stock Market

A summary of insights:

✅ Glenn's test for "news" is whether this information affects the earnings AND the long term of the company? He has 60 (!!) tabs open on his screen every day to determine what trends and stories are really making a difference.

🗞 My news "routine" is the Wall Street Breakfast podcast at Seeking Alpha, "The Real Yield", presented by Katie Greifeld at Bloomberg and live earnings calls at listed companies.

🙄 Glenn says that sometimes earnings can contain noise if the focus is on how a company missed an expectation by 2c when the real story is the billions it generated in revenue. (I mention Skilsoft here where the stock fell by over 20% the week of its earnings release and is up 27% in the past month).

📲 In my opinion, earnings calls are where you get real business, financial and industry analysis insight. Naturally, management is going to paint a positive picture but the analyst Q&As really dig into the data.

👩‍💻 I asked Glenn which news story he initially perceived as noise, but realised it was real news. He said "AI" and how it seemed to "come out of nowhere". However, it's been there for years and #ChatGPT was the trigger. He is looking at the knock on effects on other industries including supercomputers, data analysis, software etc. He mentioned a range of stocks that he's watching.

😎 We talked about the #metaverse in the context of the above and I quoted Jennifer Vessels who says "the metaverse isn't dying. The hype about it is".

💲 Glenn likes to find stocks that makes money quarter over quarter, year over year. As VectorVest, Inc calls it, a stock with high "relative safety and relative value".

💹 I point out the importance of looking at other markets to get insights about stocks e.g. the bond market (i.e. the cost of borrowing for companies and governments).

📈 The stock market is more than a binary place where you make money if stocks go up and lose if stocks go down. Self-awareness is important. Glenn is happy to short stocks (borrow stocks, sell them and buy them back at a (potentially) lower price) whereas I don't. I prefer options where I can get paid to wait to buy the stocks I'm interested in.

🌍 We discussed the big conversation of the day, namely interest rates! The European Central Bank has raised rates 7 consecutive times now. The Federal Reserve Board has increased rates 10 consecutive times and at the fastest pace in 40 years with optionality built into the last press release. The Bank of England has pushed rates up 12 consecutive times at this point. The Debt Ceiling conversation seems to be coming to an end (until 2025 anyway) in the US while inflation is higher than central bankers want in many parts of the world.