Even Disney's Magic Can't Stop the Dow's 326-Point Plunge

Education Management craters while StealthGas bucks the trend.

Feb 3, 2014 at 6:01PM

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.

Wall Street institutions, which had been supremely confident in a Denver Broncos Super Bowl victory last night, sold off stocks steeply on Monday to pay off their bookies. But investors can be thankful, since the infallible "Super Bowl Indicator" -- which tells us the market will rise any year an NFC team (i.e., the Seattle Seahawks) takes the Lombardi Trophy -- is in the bulls' favor.

I kid, of course; the real explanation for today's slump had nothing to do with sweaty 300-pound men and everything to do with the state of U.S. manufacturing. The state of U.S. manufacturing happens to be very disappointing. The ISM Manufacturing Index, which stood at 57 in December, dropped the most since May 2011 to a 51.3 January reading. Wall Street blamed weather for the slump, but investors weren't buying it, and the Dow Jones Industrial Average (DJINDICES:^DJI) plummeted 326 points, or 2.1%, to end at 15,371. 

The magic of Walt Disney (NYSE:DIS) is nearly limitless. Their theme parks can create timeless memories, their characters can bring children unparalleled joy, and the Disney-owned Star Wars franchise boasts Jedis with telekinetic powers. But even Walt Disney didn't have the power to prevent its stock from slumping 3.6% Monday. Twenty-nine out of 30 Dow stocks lost ground during today's broad-market sell-off, so Disney shareholders are by no means suffering in solitude. Plus, Super Bowl MVP and Seattle Seahawks linebacker Malcolm Smith promised he'd be going to Disney World last night, so its theme parks obviously still resonate with adults. Disney reports quarterly earnings on Wednesday, so stay tuned -- we may be seeing more volatility in a few days. 

The only thing Education Management (NASDAQOTH:EDMC) has in common with Disney is its next quarterly earnings date, which is also this Wednesday, Feb. 5. Education Management stock fell a whopping 7.4% Monday, as concerns continue to swirl around the for-profit education company's legal risk. Several law firms have encouraged shareholders to come forward and file suit against the company, which the firms say may have violated its fiduciary duty to shareholders. Student lending practices and graduate placement statistics were cited as areas of inquiry. Shares are down more than 25% in the past five days on the litigation concerns, and investors should be extremely careful investing in a company with so much heat.

Ignoring the fearful attitude of the day, shares of StealthGas (NASDAQ:GASS) added 2.9% by the ring of the closing bell on Monday. The Greek company primarily ships a variety of oil and gas products to customers around the world. With a market cap of about $316 million, StealthGas is a tiny company as far as Wall Street's concerned, which generally makes shares more subject to volatility. StealthGas' Monday press release announcing the acquisition of two more vessels as well as the arrival of a new CFO and CTO was cheered by investors who see today's changes as the beginning of a new chapter for the company.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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