Transcript:
Tom Vaughan:
Hello, everybody. Hello, everybody, welcome to Thursday, the S&P 500 was down 1.4% today, and actually the NASDAQ was down two and a half percent today. So one of the things that’s happening right now is that when the Federal Reserve Vice Chairman nominee was speaking in front of Congress today, talking a lot about raising rates and fighting inflation, what have you. And when rates come up, and the yields on bonds come up, you often see tech stocks coming down in that environment, just because they’re selling at higher multiples. And when you discount back at a higher interest rate, you end up with a lower current price. And so oftentimes, you see adjustments to that. The weird thing for me and watching that over the years is that a lot of these companies have really, really good earnings and really good products and what have you, there’s a reason that there’s some of the largest companies in the world. And so you’ll often see, you know, as interest rates are kind of coming up, you see the prices wobble and what have you, and then they have their earnings reports. And they come out to be better than expected, oftentimes, and, you know, shows to kind of the power of how much cash flow these guys can generate, and you’ll start to see them move forward.
Now, those smaller tech stocks often don’t have that same thing going for him, you know, because they were selling at even higher multiples. And they often don’t have really the size to kind of, you know, have the better numbers that come out. In these big companies –the Microsoft’s the Apples, the Googles– those types of things, you know, they have a lot of cash flow, and they have like cash, so the debt level isn’t a big deal to them, either. As far as that goes, they’re able to operate quite well without that. So anyway, I think this is an interesting timeframe. I wouldn’t be too concerned about what’s happening right now in terms of the volatility of the market, because this is not uncommon, right before the earnings season. Really kind of kicks off tomorrow with the big banks reporting, we got 35 of the S&P 500 companies reporting next week. So I think, you know, I would just be relaxing here and watching and see what happens with these earnings reports. See how the market reacts to it. See what type of forward guidance we get as far as that goes. So, look forward to kind of talking about this tomorrow. I do a summary on my show. Talk Money with Tom, you can feel free to join me from 12:15 to 1 Pacific Time and I look forward to seeing you tomorrow. Thank you very much.