Ticker Reports for August 26th
Why the Buy-and-Hold Strategy May Be Best for Most Investors
The buy-and-hold strategy is a time-honored approach favored by seasoned investors, hedge funds, and institutions. It offers a compelling path to investing in the stock market and achieving long-term financial goals. With the strategy's simplicity, reduced risk profile, and long-term growth potential, the buy-and-hold strategy may be the best trading strategy for most investors.
The Essence of Buy-and-Hold
Buy-and-hold is a long-term investment strategy centered on acquiring shares of fundamentally strong companies in fundamentally strong sectors like consumer staples, healthcare, utilities, and finance. Investors who employ this approach hold onto their investments for extended periods, often years or even decades. This strategy starkly contrasts short-term trading strategies that attempt to capitalize on market volatility.
While short-term traders focus on timing the market, buy-and-hold investors embrace a patient and disciplined approach. They acknowledge that markets are inherently unpredictable in the short term, but quality companies tend to weather economic storms and deliver sustained value over time.
Unlocking Exponential Growth
One of the most compelling arguments favoring the buy-and-hold strategy lies in its ability to harness the power of compounding, described by Albert Einstein as the eighth wonder of the world. Compounding allows your returns to generate further returns, building wealth exponentially over time.
As you reinvest dividends paid by the companies you invest in, and as those investments appreciate, your investment base grows exponentially. The longer you hold your investments, the more pronounced the impact of compounding becomes. Over decades, a modest initial investment can grow into a significant sum, demonstrating the remarkable power of time in the market.
Exploring the Multifaceted Benefits
Beyond the potential of compounding, the buy-and-hold strategy provides many other advantages, making it an appealing approach for investors of all skill levels. From those seeking a straightforward path to seasoned veterans looking for long-term wealth accumulation, buy-and-hold offers these compelling benefits:
- Tax Efficiency: Long-term investments typically enjoy lower capital gains tax rates than short-term trades, allowing you to keep more profits.
- Reduced Transaction Costs: Frequent trading incurs fees that chip away at your returns. The buy-and-hold strategy minimizes these costs by emphasizing long-term ownership.
- Emotional Discipline: Buy-and-hold encourages a patient, long-term perspective, helping you avoid impulsive decision-making driven by short-term market fluctuations.
- Simplicity and Accessibility: The strategy's straightforward nature suits investors of all skill levels. Buy-and-hold is also a low-maintenance strategy requiring minimal active management.
- Diversification Opportunities: Over time, the buy-and-hold strategy allows for a diversified portfolio across various asset classes, reducing risk and enhancing potential returns.
- Alignment with Long-Term Goals: By prioritizing steady growth over quick gains, buy-and-hold complements long-term financial objectives like retirement planning.
Buy-and-Hold vs. Active Trading
To fully appreciate the merits of buy-and-hold, let's compare it with a range of alternative strategies that fall under the umbrella of active trading.
- Day Trading: Day trading is the buying and selling of securities within the same trading day to profit from intraday price movements
- Swing Trading: Swing trading is when an investor holds a position for a few days or weeks to capture short-term price swings.
- Momentum Trading: Momentum trading is buying stocks experiencing strong upward trends and selling when momentum fades.
- Scalping: Scalping is the process of making very short-term trades, often within minutes or seconds, to profit from small price changes.
- Technical Analysis-Based Trading: Technical analysis involves using charts and technical indicators to predict future price movements and using that chart data to make trading decisions.
While potentially lucrative, these active strategies come with inherent challenges and risks. They demand substantial time, effort, and expertise. Investors must continuously monitor the market, analyze data, and execute trades effectively. This intensive approach often leads to higher transaction costs, which can eat into profits, even for successful trades. Moreover, the constant need to make rapid decisions in response to fluctuating market data can be emotionally taxing and often trigger impulsive choices driven by fear or greed.
Studies have shown that a majority of active traders struggle to outperform the market consistently, and many incur significant losses due to frequent trading and the associated tax implications.
In contrast, the buy-and-hold strategy offers a more straightforward, passive, and often more successful approach, particularly for individual investors. It begins with thorough research and careful selection of investments, followed by a long-term commitment to your chosen companies. By focusing on the long-term growth potential of fundamentally strong companies and harnessing the power of compounding, buy-and-hold investors can build wealth steadily over time, minimizing the risks and emotional turmoil associated with active trading. While the strategy is not entirely hands-off, buy-and-hold allows you to reclaim your time and mental energy, offering a more sustainable path to financial success.
Navigating Market Volatility and Missed Opportunities
Despite its numerous advantages, the buy-and-hold strategy is not without its critics. Some argue that this strategy risks losing potential profits by ignoring short-term market swings. Others express concerns about holding onto investments during market downturns. While these concerns are valid, they often result from misunderstanding the strategy's core principles.
Attempting to time the market is notoriously tricky, even for seasoned professionals. It requires an almost impossible level of precision and often leads to more losses than gains, especially for less experienced investors. On the other hand, the buy-and-hold strategy recognizes that market timing is essentially a game of chance and instead focuses on identifying companies with solid long-term prospects.
Steps to Implement a Buy-and-Hold Strategy
While the buy-and-hold strategy may seem straightforward, its successful execution requires investors to take a thoughtful and disciplined approach. Some of the key steps to implement this strategy include:
- Define Your Financial Goals and Risk Tolerance: Before starting your investment portfolio, you must establish clear financial goals and understand your risk appetite. Are you saving for retirement, a child's education, or a significant purchase? How much volatility can you comfortably withstand in your portfolio? These factors will guide your investment choices and time horizon.
- Conduct Thorough Research: Buy-and-hold is not about randomly picking stocks. It involves carefully selecting fundamentally strong companies with sustainable competitive advantages, solid financials, and long-term growth potential. Investors must analyze industry trends, management quality, and other factors that impact the company's future.
- Build a Diversified Portfolio: Diversification is critical to mitigating risk. Spread your investments across various asset classes (stocks, bonds, real estate investment trusts (REITs), exchange-traded funds (ETFs), etc.) and multiple sectors to avoid overexposure to any single investment or industry.
- Invest Consistently: Make investing a regular habit. Contribute a portion of your income to your portfolio consistently, regardless of market conditions. This dollar-cost averaging approach helps you buy more shares when prices are low and fewer when prices are high, smoothing out your average purchase price over time.
- Reinvest Dividends: Reinvesting dividends allows you to purchase more company shares, accelerating the compounding process automatically. This can significantly boost your long-term returns.
- Monitor Your Portfolio Periodically: While buy-and-hold is a long-term strategy, it's not entirely passive. Review your investments often to ensure they align with your goals and risk tolerance. Adjust as needed, such as selling underperforming assets or rebalancing your portfolio.
- Stay Patient and Disciplined: The market will inevitably experience ups and downs. Avoid reacting emotionally to short-term fluctuations. Remember that the buy-and-hold strategy is a marathon, not a sprint, and staying the course is crucial for success.
- Manage Your Emotions: Investing can be an emotional rollercoaster. Avoid making impulsive decisions driven by fear or greed. Stick to your plan, trust your research, and focus on the long-term horizon.
Patience Pays Off
While quick profits and get-rich-quick strategies and schemes might seem tempting, the buy-and-hold strategy remains a solid approach for those seeking long-term success in the stock market. By embracing patience, conducting thorough research, and constructing a well-diversified portfolio, you can harness the power of compounding, weather market storms, and potentially achieve your financial aspirations. Remember, investing is a marathon, not a sprint, and buy-and-hold provides a proven roadmap for navigating the long and rewarding road to achieving your financial goals.
Empower Your Long-Term Investment Strategy With MarketBeat
Ready to embrace the power of buy-and-hold investing? MarketBeat provides the tools you need to build a successful portfolio for long-term growth. Subscribe to MarketBeat's premium research reports and access in-depth analysis, expert insights, and comprehensive financial data on a wide range of companies and sectors. Make informed investment decisions and confidently navigate the market using MarketBeat as your trusted resource.
Wall Street Legend on Economy: "If you knew what I know, you'd be terrified too"
Wall Street Legend on Economy: "If you knew what I know, you'd be terrified too."
Something huge is headed to America's shores – and it scares the hell out of Wall St. legend Louis Navellier. When it makes landfall, its impact will be more violent and more severe than any financial crisis we've ever seen… "No matter how prepared you think you are, you aren't prepared enough," he warns.
Eli Lilly's Path to the Next Trillion Market Capitalization
Eli Lilly and Co. (NYSE: LLY) is a pharmaceutical giant that's made headlines for its GLP-1/GIP weight loss drug Tirzepatide, known as Mounjaro for type 2 diabetes, and Zepbound for obesity. Its stock is trading back near its all-time high at $972.52. Its market capitalization hovers around the $857 billion mark. The company has many growth drivers that will send its market cap through 1 trillion and more. Despite a 63% year-to-date (YTD) gain, the future holds much more upside, especially as Tirzepatide continues to find new indications for usage, thereby expanding the label and growing its user base.
Eli Lilly operates in the medical sector, competing with big pharma giants Novo Nordisk AS (NYSE: NVO), Pfizer Inc. (NYSE: PFE), and Amgen Inc. (NASDAQ: AMGN).
Eli Lilly's Tirzepatide Continues To Win the Battle of the Bulge
Lilly’s blockbuster Tirzepatide continues to edge out Novo Nordisk’s Semaglutide drugs Ozempic and Wegovy when measuring weight loss potential. Tirzepatide has proven to be more effective since it mimics 2 hormones: GLP-1, which provides the feeling of being full, and glucose-dependent insulinotropic polypeptide (GIP), which lowers blood sugar by releasing more insulin into the bloodstream.
In an 84-week study, patients taking Tirzepatide lost an average of 26.6% of their body weight. Tirzepatide has repeatedly been proven to be more effective than Semaglutide, indicating patients were twice as likely to lose 10% and 3X more likely to lose 15% of their body weight than Semaglutide.
Tirzepatide Has More Benefits
In addition to weight loss, Tirzepatide has been shown to be effective in lowering cholesterol and blood pressure levels. It has also been shown to improve cardiovascular risk factors because of its effects on weight loss and blood pressure. Lilly is trying to expand the indications for Tirzepatide to include more medical conditions like sleep apnea, non-alcoholic steatohepatitis (NASH), aka fatty liver, and metabolic dysfunction-associated steatohepatitis (MASH). Additional indications that trigger due to obesity include hypertension, stroke, and kidney disease. It's also being considered in treating Alzheimer's and Parkinson's disease.
A 176-week SURMOUNT-1 Phase 3 study of pre-diabetic adults indicated that Mounjaro reduced the risk of developing type 2 diabetes by 94%. It also sustained weight loss over the 3-year treatment period. Obesity is a chronic disease that can enable multiple complications to form.
Lilly Has a Bunker Buster Weight Loss Drug in the Pipeline
While Tirzepatide is proving to be a blockbuster, Lilly is already developing its next-gen weight loss drug that will target 3 hormones: GLP-1, GIP and glucagon (GCG). Retatrutide is a triple agonist that has already completed Phase 2 trials with unprecedented success. Patients saw a mean weight reduction of 24.2% after 48 weeks, the most of any drug to date. Ozempic patients had an average of just 15% after 48 weeks. Lilly’s own Zepbound produced an average weight loss of 20.9% after 48 weeks. Phase 3 trials will continue until the end of 2025 on a much larger sample size.
LLY Stock forms V-Bottom
The daily candlestick chart for LLY formed a classic V-bottom pattern. LLY sold off from all-time highs at $966.10 (lip line) on July 15, 2024, to a low of $747.55 on Aug. 5, 2024. LLY surged higher followings its spectacular Q2 2024 earnings release, initially surging 9.5% the following day, rising $73.17 to $845.31. LLY proceeded to claw higher until it retested the lip line on Aug. 20, 2024, and reached a new all-time high at $972.53 on Aug. 22, 2024. The daily relative strength index (RSI) rallied to the 65-band and has gone flat. Pullback support levels are at $902.64, $878.50, $825.24 and $786.58.
Eli Lilly: Knocking the Ball Straight Out of the Ballpark
Eli Lilly posted Q2 2024 EPS of $3.92, crushing consensus analyst expectations by $1.19. Revenues surged 36% YoY to a whopping $11.3 billion, crushing consensus estimates for $9.96 billion by $1.34 billion. Revenues were driven by a 27% increase in volume and a 10% increase in realized prices, partially offset by a 1% decrease from FX. Volume increases were driven by Mounjaro and Zepbound (diabetes and obesity drugs), Verzenio for metastatic breast cancer, Taltz for plaque psoriasis, and Jardiance for type 2 diabetes and chronic kidney disease. Trulicity sales fell 31% YoY.
Raising the Bar and Guidance Higher: Eli Lilly's Success
Eli Lilly raised its full-year 2024 EPS to $16.10 to $16.60, up from previous guidance of $13.50 to $14.00 versus $13.68 consensus analyst estimates. Full-year 2024 revenues are expected to be between $45.4 billion and $46.6 billion, up from $42.4 billion to $43.6 billion in previous guidance, versus $42.93 billion consensus estimates.
Eli Lilly CEO David Ricks commented, "Mounjaro, Zepbound and Verzenio led our strong financial performance in the second quarter as we advanced our manufacturing expansion agenda, and it is equally exciting to see the growth around the world of our medicines for cancer, neurological disorders and autoimmune diseases."
Ricks concluded, “We also recently received approval of Kisunla to help people with Alzheimer's disease, a moment that was decades in the making. Lilly's performance and progress in Alzheimer's, metabolic disorders and many other serious diseases highlight the tenacity, focus and capability of our scientists, clinicians, engineers, customer teams and collaborators."
Eli Lilly analyst ratings and price targets are at MarketBeat. There are 18 Wall Street analyst ratings on LLY stock, comprised of 16 Buys and 2 Holds. Consensus analyst price targets point to $956.88.
Who are Nvidia's New Silent Partners?
Nvidia recently became just the third $2 trillion company.
But Nvidia can't do everything by itself.
Mobileye Global: CEO Makes $10 Million Bet on Future Strength
Mobileye Global Inc. (NASDAQ: MBLY) is a leading developer of advanced driver assistance systems (ADAS) solutions. The company's chips are used in modern automobiles and electronic vehicles (EVs) worldwide. The company makes its revenues from selling its propriety ADAS chips, licensing its software algorithms, and potentially deriving per-mile fees with autonomous vehicles.
Mobileye is a dominant player in the ADAS segment, controlling nearly 70% of the market share. Its systems are in over 150 million vehicles from manufacturers, including Ford Motor Co. (NYSE: F), General Motors Co. (NYSE: GM), Honda, Nissan, BMW, Audi, and Volkswagen AG (OTCMKTS: VWAGY). Mobileye is still majority-owned by chip giant Intel Co. (NASDAQ: INTC).
Mobileye operates in the auto/tires/trucks sector, competing with Aptiv PLC (NYSE: APTV), NVIDIA Co. (NASDAQ: NVDA), and Magna International Inc. (NYSE: MGA).
EyeQ System-on-a-chip (SoC) Technology
Mobileye’s main product is its EyeQ system-on-a-chip (SoC). Its ADAS solutions are complete systems built around the EyeQ chip, including sensors, cameras, and software algorithms. Mobileye offers various levels of ADAS systems that provide basic safety features like collision avoidance, lane departure warnings, adaptive cruise control, traffic sign recognition, and pedestrian and cyclist recognition and detection. Most of its revenue is derived from selling EyeQ chips to auto suppliers and manufacturers.
Mobileye SuperVision
Mobile SuperVision is dubbed the bridge to consumer autonomous vehicles (AVs). SuperVision systems can provide hands-free driving. They combine the capabilities of autonomous driving to enable drivers to take their hands off the wheel but still require them to pay attention to the road. They incorporate functions like autonomous lane changes, parking visualization for autonomous parking, and accelerating and decelerating to avoid collisions and being cut off.
SuperVision is the production version of its autonomous driving solution using cameras and sensors. It uses 11 cameras, Lidar and driver monitoring, and its EyeQ 6 SoC. These next-gen ADAS systems are being deployed in some EVs manufactured by ZEEKR Intelligent Technology Holding Ltd. (NYSE: ZK).
MBLY Stock Forms a Descending Triangle
The daily candlestick chart for MBLY shows a descending triangle pattern. The stock collapsed 22.5% following its latest earnings results. The gap fill at $18.45 was the starting point of the upper descending trendline resistance, meeting the flat-bottom lower trendline support at $13.93. The daily relative strength index (RSI) fell back under the oversold 30-band. Pullback support levels are at $13.83, $12.56, $11.57, and $10.52.
Mobileye's Underwhelming Results
Mobileye reported Q2 2024 EPS of 9 cents, beating consensus estimates by a penny. Revenues fell 3.3% YoY to $439 million, beating $424.34 million consensus estimates. The number of systems shipped rose 110% YoY, significantly improving operating loss and adjusted operating profit.
Inventory supply glut issues have been clearing up since Q1 2024. Excess inventory was a result of supply chain concerns in previous years that led to customer overstocking. The company believes EyeQ inventory at its Tier 1 customers has fully normalized as of the end of the second quarter 2024.
Mobileye Issues Downside Guidance on China Slowdown
Economic conditions in China were the primary driver undergoing a reshuffling process that led to Mobileye slashing its full-year 2024 guidance. The company reduced second-half volume and revenue expectations due to China-related macro factors.
Mobileye expects full-year 2024 revenues of $1.60 billion to $1.68 billion versus $1.88 billion consensus estimates. This was down from prior guidance of $1.83 billion to $1.96 billion. The company lowered its adjusted operating income from $152 million to $201 million, down from $270 million to $360 million.
Mobileye CEO Amnon Shashua commented, “We are glad to report that the excess inventory at Tier 1 customers that meaningfully impacted our business in the first half of 2024 appears to be almost fully behind us.”
Shashua continued, “But a more significant than anticipated softening of business conditions in China (affecting the industry as a whole) is expected to lead to challenges in the second half. While the conditions in China are highly volatile at the moment, we continue to invest in China for the mid and long-term as we see the potential of a lucrative market over time, particularly in light of new initiatives that we believe will strengthen our positioning,"
On Aug. 6, 2024, it was reported that CEO Shashua bought 631,963 shares of MBLY common stock between $15.50 and $17.00 for around $10.4 million.
Mobileye analyst ratings and price targets are at MarketBeat. There are 24 Wall Street analyst ratings on MBLY stock, comprised of one Strong Buy, 14 Buys, eight Holds, and one Sell. Consensus average analyst price targets point to a 118.2% upside to $31.42 per share. Mobile has a 16.12% short interest.
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