Yesterday's action in the markets showed that while the proponents of the efficient market hypothesis claim that the markets are rational, reality is otherwise.
How else could you explain this? Intel (INTC) hit the trifecta for companies.
Their profits for the fourth quarter increased to $2.3 billion, or $0.40 a share from $234 million, or $0.04 a share in the fourth quarter of 2008. Revenues also climbed, from $8.2 billion in the fourth quarter of 2008 to $10.6 billion in the fourth quarter of 2009. And their gross margins surged to a record 65 percent.
That is very positive news for a company, and management's outlook added to the plus side of the ledger. For the upcoming year, Intel expects to see a gross margin of 61 percent. While that's off from the 65 percent that they saw in the just ended fourth quarter, that's a historically high number for the company.
These numbers blew away analyst expectations. Expectations for profits were for $0.30 a share and revenue was expected to come in at $10.2 billion. So Intel exceeded expectations on profits, revenues, and margins.
Naturally, Intel shares dropped on the news, falling by about three percent to $20,80. Efficient market my butt.
JP Morgan Chase (JPM) also reported earnings that exceeded analyst expectations. For the fourth quarter, the company reported earnings of $3.3 billion, or $0.74 a share, on revenue of $25.2 billion. In the fourth quarter of 2008, the company earned $702 million, or $0.06 a share.
Analysts had expected JPM to come in with earnings of $0.61 a share, which the company beat. However, revenue came in lower than expected, with analysts expecting revenues to total $26.8 billion.
On the news, shares of JPM sold off, dropping by 2.3 percent. With this stock, however, traders had a reason to sell off. The topline number was less than expected, and management cautioned that consumer defaults could continue to be a problem for its retail banking and credit card divisions. The results, said Sanford Bernstein, were "on revenues and the cautious tone around the credit outlook."
The news from JPM was a catalyst for a drop in all of the major indices. The Dow was off by 0.9 percent to 10,610. The S&P 500 fell by 1.1 percent to 1,136, and the Nasdaq dropped by 1.2 percent to 2,288.
For the week, the Dow lost 0.1 percent, the S&P 500 fell by 0.8 percent and the Nasdaq dropped by 1.3 percent.
Investors should take advantage of days when the market sells high quality companies like Intel that just beat earnings, revenue, and margin expectations. This selloff in Intel provides investors with a chance to get in at a lower price than they could have BEFORE earnings were announced. If it was worth three percent more before a blowout quarter, it's time to step in and buy the stock, not sell it.
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How else could you explain this? Intel (INTC) hit the trifecta for companies.
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That is very positive news for a company, and management's outlook added to the plus side of the ledger. For the upcoming year, Intel expects to see a gross margin of 61 percent. While that's off from the 65 percent that they saw in the just ended fourth quarter, that's a historically high number for the company.
These numbers blew away analyst expectations. Expectations for profits were for $0.30 a share and revenue was expected to come in at $10.2 billion. So Intel exceeded expectations on profits, revenues, and margins.
Naturally, Intel shares dropped on the news, falling by about three percent to $20,80. Efficient market my butt.
JP Morgan Chase (JPM) also reported earnings that exceeded analyst expectations. For the fourth quarter, the company reported earnings of $3.3 billion, or $0.74 a share, on revenue of $25.2 billion. In the fourth quarter of 2008, the company earned $702 million, or $0.06 a share.
Analysts had expected JPM to come in with earnings of $0.61 a share, which the company beat. However, revenue came in lower than expected, with analysts expecting revenues to total $26.8 billion.
On the news, shares of JPM sold off, dropping by 2.3 percent. With this stock, however, traders had a reason to sell off. The topline number was less than expected, and management cautioned that consumer defaults could continue to be a problem for its retail banking and credit card divisions. The results, said Sanford Bernstein, were "on revenues and the cautious tone around the credit outlook."
The news from JPM was a catalyst for a drop in all of the major indices. The Dow was off by 0.9 percent to 10,610. The S&P 500 fell by 1.1 percent to 1,136, and the Nasdaq dropped by 1.2 percent to 2,288.
For the week, the Dow lost 0.1 percent, the S&P 500 fell by 0.8 percent and the Nasdaq dropped by 1.3 percent.
Investors should take advantage of days when the market sells high quality companies like Intel that just beat earnings, revenue, and margin expectations. This selloff in Intel provides investors with a chance to get in at a lower price than they could have BEFORE earnings were announced. If it was worth three percent more before a blowout quarter, it's time to step in and buy the stock, not sell it.
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