Wednesday was another optimism-packed day at the stock market. Investors are waiting for the announcement of the day and the location of the meeting between President Trump and his Chinese counterpart to sign phase one of the trade deal. It may come any minute now.
Beyond the overall market, the best performing stock of 2019 was down by more than 13%. It looks like being the best-performing stock doesn’t mean you are immune to pessimism. At the same time, a long-forgotten WiFi provider on airplanes jumped more than 28%. It looks like that being forgotten doesn’t mean you are dead.
Oh, and by the way, the new income tax brackets and IRA contribution limits are out. Have you already made your 2019 contribution? More on that in the “Water Cooler” section.
Also, don’t forget to scroll down to the “Overall Market,” “What’s Up?” and “What’s Down?” sections to read more.
- U.S. markets: All three indices were up another day, and the stock market is hitting new record-highs. Scroll to the “Overall Market” section to learn more.
- Cryptocurrency: Bitcoin’s price continued to hover above the $9,000 mark. In the last few days, the price has been gyrating without any significant changes in the overall trends.
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What happened in the stock market?
Everybody is waiting for a date and a location for the upcoming meeting between President Trump and President Xi Jinping. And, all everybody wants from that meeting is a signed trade deal. Any minute now, there should be an announcement of the date and the location. And, the market is buying its way up the anticipation.
What does this mean?
The excitement is now getting a bit out of touch with reality. Signing phase one of a trade deal is no nirvana. Trade disagreements are not things that can be resolved in a few months. And, of course, the global economy is still dealing with the lack of growth. For example, trillions of dollars are getting negative interest rates all around the world. And, those are less trade-deal dependant than we hope. Let’s not forget that there is still a possibility that even phase one of the deal doesn’t go through.
The moral of the story is to stay vigilant, always.
So, what happened?
Shares of Boingo (Ticker: WIFI) were up more than 28% on Wednesday. Most of us associate Boingo’s logo with internet access when trying to connect to in-flight wifi. And, that’s why most people assume that the company is not worth investing. How big airline internet access market can be?
It turned out that Boingo is much more than just an airplane wifi provider. As the company describes, Boingo builds wireless networks such as distributed antenna systems (“DAS”) for venues such as railroad stations, shopping malls, and the likes of military compounds. Wednesday’s price jump is partially due to stronger than expected performance in the military division. And, it is partially due to achieving break-even in this quarter. While the stock hasn’t been a winner in 2019, this is a cash-generating stock with growing revenue that most people assume is dead.
Being the best-performing stock doesn’t mean you are immune to pessimism.
Shares of the Roku (Ticker: ROKU) were down more than 13%. In Q3 2019, Roku over-performed the analysts’ revenue expectations, and reduced costs even faster. The company ended the quarter with more than $300 million in cash. Due to the growing number of streaming services, more people around the world are looking at Roku for aggregating their streaming providers. Consequently, advertisers are turning to Roku as one of their target platforms for investing their ad dollars. Why is the stock down, then?The company adjusted down its forecasted earnings for Q4 and forecasted higher expenses due to the integration costs of its recent acquisition of dataxu. If you are a long-term investor similar to us, there is nothing about Roku’s operations to worry about. The stock is, of course, overvalued. But, Roku has earned the right to be overvalued.
The new income tax brackets and IRA contribution limits are out.
Almost no one gets excited about new income tax brackets and IRA contribution limits. But, being investment nerds, we are excited. If you are under 65, you can now contribute $500 more to your traditional or Roth IRAs. This means more money in your pocket.
Let’s take an example. An IRA account allows you to grow your investments, tax-free. For example, you have Roku share in your IRA account, and you sell to lock your 300% gain. You don’t have to pay capital gain tax. Sweet!
Have you already made your contribution to your IRA or Roth IRA account for 2019? If not, why? Don’t you like tax-free capital gain?