Earnings, Economy, Volatility and more Stock News

The Prudent Speculator Weekly Commentary is expertly curated every week as a valuable resource for stock market news, investing tips, business insights, and economic trends as it relates to value stock investing. In this week’s Market Commentary, we discuss Earnings, Economy, Volatility and more Stock News. We also include a short preview of our specific stock picks for the week, the entire list is available only to our community of loyal subscribers.

Executive Summary

Newsletter Trades – 2 Sells & 8 Buys

Week – Growth Stocks Wobble

Media – Don’t Believe Everything You Read

Volatility – Stocks Go Up and Down, but Long-Term Trend Is Up

Earnings – Solid Growth Still the Forecast

Economy – Mixed Numbers; Univ. of Michigan Contrarian Buy Signal

Valuations – Reasonable Metrics for our Portfolios

Wall of Worry – Lots of Cash on the Sidelines; Sentiment Far from Euphoric

Stock News – Updates on PHG, ADM, ETN, PFE, AMGN, BHE, MOS, ZBH, QCOM, ALB, APD, TPR, CMI, CE & WEN

Week – Growth Stocks Wobble

While we realize the overall ink generally was red, albeit only to a modest degree, it was a very good first week of November for the Value benchmarks…on a relative basis. After all, the Russell 3000 Value Index pulled back 0.1% over the last five trading sessions, while its Growth counterpart skidded 2.9% as the A.I. trade took a breather.

Not surprisingly, as happens whenever certain stocks or the markets head south, the media was quick to find a supposed expert who told us so. This time around, it was options wagers made against a couple of retail-investor A.I. favorites, Nvidia and Palantir, by Michael Burry of The Big Short fame, that were cited as example of prescient trades.

Of course, anyone who looked at Mr. Burry’s regulatory filings would realize that the massive put-option trades he put on those two stocks were initiated prior to the end of Q3. As such, they are likely still in a loss position, despite last week’s action, given that when options are purchased, one must be right about the stock price moving lower and the speed at which the downturn occurs. Since option premiums evaporate over time and the stock prices look to be generally higher today than they were when the positions were likely initiated, Mr. Burry likely has a long way to go just to get back to breakeven.

Media – Don’t Believe Everything You Read

That doesn’t mean that A.I. stocks won’t continue to cool off, and readers know that we have taken quite a bit of money off the table on our A.I.-related names in the past couple of months. Still, we always encourage those who share our long-term time horizon to focus on facts and not fall victim to fear, especially as the pundits receiving press have little ability to see the future.

Yes, those of us who live in glass houses shouldn’t throw stones, but we readily concede that our crystal ball always has been cloudy. However, we do have the ability to study market history, so we don’t lost any sleep when we hear comments like what David Solomon said last week: “Of course, it is likely there’ll be, you know, a 10% to 20% drawdown in equity markets sometime in the next 12 to 24 months.” For good measure, the Goldman Sachs (GS – $786.34) CEO added, “And I’d say there are very few people in this room that don’t think that’s a possibility.”

Volatility – Stocks Go Up and Down, but Long-Term Trend Is Up

We suppose that sounds ominous until one remembers that 10% corrections (and 10% rallies) happen with great frequency,

with 15% drops (and even-more-lucrative 15% advances) occurring every 2 years on average,

and official Bear Markets (and Bull Markets) hitting ever 3.4 years, on average,

with an unofficial one taking place earlier this year.

Volatility is the price long-term-oriented investors must pay for lucrative long-term returns, but it is reassuring to look at how stocks in the fullness of time have overcome every disconcerting headline,

including those related to tariffs,

and government shutdowns.

Time, as they say, heals all wounds,

and the long-term trend in stocks has been higher.

Earnings – Solid Growth Still the Forecast

True, past performance is no guarantee of future performance, and we readily concede that it is different this time…but it is different every time and the long-term evidence shows that equity prices generally have followed earnings over time with sizable selloffs occurring in concert with a recession in corporate profits.

Anything can happen going forward, but a profit recession is not presently the consensus forecast. Indeed, with Q3 results continuing to come in very favorably, Standard & Poor’s just hiked its outlook for even better 2026 growth in EPS, as the economic environment remains supportive,

as the Atlanta Fed remains optimistic in its projection for real (inflation-adjusted) Q3 U.S. GDP growth,

Economy – Mixed Numbers; Univ. of Michigan Contrarian Buy Signal

and the important Non-Manufacturing Index (NMI) for October from the Institute for Supply Management (ISM) rebounded to a better-than expected reading of 52.4, which the keeper of the gauge states:

A Services PMI® above 48.6 percent, over time, generally indicates an expansion of the overall economy. Therefore, the October Services PMI® indicates the overall economy is expanding for the 65th straight month. The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for October (52.4 percent) corresponds to a 1.2-percentage point increase in real gross domestic product (GDP) on an annualized basis.

Yes, the ISM Manufacturing Index (PMI) for October trailed estimates, but the ISM folks state, “The past relationship between the Manufacturing PMI® and the overall economy indicates that the October reading (48.7 percent) corresponds to a change of plus 1.8 percent in real gross domestic product (GDP) on an annualized basis.”

We also note that the other “disappointing” economic statistic out last week, the Univ. of Michigan’s preliminary measure of consumer confidence for November, fell to a nadir that historically has signaled very favorable subsequent equity market returns.

Certainly, there is no assurance that the economy will remain healthy, but the same Univ. of Michigan survey saw a decline in longer-term inflation expectations,

which helps to keep the Federal Reserve on track for additional interest rate cuts,

another positive harbinger, on average, for stocks.

So, while we wouldn’t be surprised to see some of the more richly priced stocks continue to pull back and we are always braced for market-wide moves south,

Valuations – Reasonable Metrics for our Portfolios

we continue to be enthused about the long-term prospects of our broadly diversified portfolios of what we believe are undervalued stocks,

as we do not think gains on the Value indexes have been excessive over the last two decades,

we are now in the seasonally favorable six months of the year,

Wall of Worry – Lots of Cash on the Sidelines; Sentiment Far from Euphoric

there is a mountain of cash parked in money market funds,

and investor sentiment on Main Street,

is a long way from levels that might suggest we should expect lower-than-usual returns over the next six months.

Stock News – Updates on sixteen stocks across nine different sectors

Keeping in mind that all stocks are rated as a “Buy” until such time as they are a “Sell,” a listing of all current recommendations is available for download via the following link: https://theprudentspeculator.com/dashboard/. We also offer the reminder that any sales we make for our newsletter strategies are announced via our Sales Alerts. Jason Clark, Chris Quigley and Zack Tart take a look at earnings reports and other market-moving news of note out last week for more than a few of our recommendations.