Rite Aid Plummets on Forecasts; Pandora Continues a Remarkable Year
Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Alright, folks. The glorious, bullish days of 2013 are slowly winding to a close, and a new year -- full of joy, fear, surprises, and disappointment -- awaits us. Before the ball drops, however, I'd like to make one solemn vow of my own on this very public forum, in the hopes that other investors might take my resolution to heart. I resolve to tune out, as best I can, the insufferable amount of noise surrounding each and every meeting of the Federal Reserve. I highly doubt that the Fed's gradual tapering process will cause financial tremors that send markets back to the dark ages of 2008-2009, so let's just prepare for a soft landing, and not worry so much about the pilot's job, shall we? We'll be at the gate soon enough. It just may take a few years to determine whether we've arrived in Honolulu or Cleveland. The Dow Jones Industrial Average added 11 points, or 0.1%, to end at 16,179 on Thursday, another all-time closing record.
As a company that boasts what is arguably the most impressive and diversified entertainment portfolio in this small world, it's only fitting that Walt Disney stock should play a big role in today's Dow performance. Disney shares tacked on 1.1%, good enough for the second-largest gain in the index, despite lower-than-average volume. With just a handful of full trading days left in the year, time is running out for last-minute portfolio adjustments. Aside from some end-of-year tax-driven money shifting, and barring an unexpected systemic catalyst before the end of December, Wall Street's just looking to relax and enjoy the holidays like the rest of us.
Pandora Media , like Walt Disney shares, ended firmly higher on Thursday, although Pandora's gains far exceeded Disney's, surging 4.4% on the day. Frankly put, there was no compelling reason for Pandora shares to surge today. The stock's already tripled this year on the heels of high adoption rates and increasing listening hours. The problem -- which I see as a fundamental, unavoidable one as an investor -- is that the company doesn't make any money. There are plenty of good public companies out there already that turn profits -- healthy, sustainable profits -- to the point where taking a risk on a hot stock like Pandora in a young industry with competitors springing up all over the place just isn't worth it.
Lastly, and definitely least on a daily return basis, we find the drug store Rite Aid , which saw shares crater in trading on Thursday, falling 10.2%. Unless you're daytrading penny stocks or playing the bitcoin futures market (neither of which I endorse as sound short- or long-term investment methods), investors should be alarmed by such a shocking intraday swing in one of their holdings. Today's slump, which was caused by lackluster forecasts for the final quarter of fiscal 2014, does have one silver lining: the foreseen future weakness is largely explained by a "soft flu season." So, pardon me, Rite Aid, if I don't find myself cheering on influenza each winter while weighing my moneybags...
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Fool contributor John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.The Motley Fool recommends Pandora Media and Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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