Transcript:
Tom Vaughan:
Hello, everybody, welcome to Tuesday. The S&P 500 was down about a half percent today. Most of the indexes were down today. One of the things to keep in mind about a week like this, we have some of the biggest companies really in the world reporting earnings. We had Apple and Tesla, Google, Facebook’s tomorrow, Microsoft today. So lots of different earnings reports coming out, several of them are after hours and what have you. But when you have these big companies reporting earnings, a lot of times people will sell before the earnings come out, that way they can avoid some surprises. But nonetheless, you see volatility that happens around this.
And a lot of the volatility actually has to do with the guidance that comes out from these companies, and so we’ll see how that plays out here as far as that goes, because there’s a lot of concerns right now as to what’s really happening. I just looked at the Apple situation and their earnings report, that was pretty phenomenal: A year ago, in the second quarter, they made about $60 billion in revenue, which is a big number, it’s crazy. Well, they’re actually hit $81 billion in revenue for this year. So a year later, $21 billion more in revenue, that’s a big, big jump. So, if you look at their earnings, they were 65 cents a share last year, same time, that’s now $1.30 share, so they actually doubled their earnings in a 12 month period.
So this is what we’re seeing with Tesla. With all of these, we’re seeing really big numbers. And it doesn’t always result in a big jump in the price because again, the stock markets looking forward. Even if there’s some expectation that it might make a little bit less, then it makes more on that day. Sometimes you’ll see a jump, but usually it’s the guidance, and sometimes the CEOs are… If I’m a CEO, and I think for sure I can get to 100, I might say I want to get to 70, that way it can beat my numbers. But if the rest of the world thinks I’m going to get to 90, all of a sudden, they’re having to readjust back down to that 70 number. So, that’s kind of the weird little games that happened during earnings season, that’s why we see a bit more volatility. Even today, the S&P was down a half percent, but the actual market was down quite a bit more than that earlier, in the morning, then it kind of bounced back up.
So just kind of hang in there. Higher earnings like that, like what we saw with Apple are really amazing, and they ultimately lead to higher stock market returns over the long term. Those two are fairly well correlated: Earnings and Actual Price. Not on a day to day basis, but definitely over a longer period. So, those are great things. We have things going on here that are spectacular. So anyway, I look forward to seeing what’s going to happen tomorrow, and I will talk to you then. Thank you very much.