Dow Jumps 126 Points to Cap Off Best Week of 2014; Disney Stands Out Again

Education Management and Sears Holdings also end as big movers in the stock market today

Feb 14, 2014 at 6:29PM

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.

The bulls were out in full force in the stock market today, as the Dow Jones Industrial Average (DJINDICES:^DJI) headed into the three-day weekend on a strong note. Ignoring a soft jobs market and subpar retail sales, stocks have now posted gains in six out of the past seven trading days, and this week was the Dow's strongest of the year. The index tacked on 2.3% this week as the Federal Reserve vowed to stick with the monetary policies of outgoing Fed Chairman Ben Bernanke. Today alone, the Dow added 126 points, or 0.8%, to end at 16,154. 

Walt Disney (NYSE:DIS) stock ended as one of the standout blue chip performers Friday, gaining 1.7%. The mammoth Comcast-Time Warner Cable deal, confirmed on Wednesday afternoon, will have as-yet-unseen consequences for Disney, which owns the majority of sports leader ESPN. That said, Disney is very forward-looking nowadays, and has itself fueled the "cord-cutting" phenomenon by developing a close business relationship with streaming video leader Netflix. Disney's also embracing small business with its freshly announced start-up accelerator initiative, and I think the company's innovative mind-set will serve shareholders well in the years to come.

Shares of the for-profit college operator Education Management (NASDAQOTH:EDMC) also rallied today, though not because of the company's forward thinking. Education Management stock jumped 3.8% today, capping off a strong week that saw shares soar more than 12%. This recent bullishness, however, is misleading: The stock plummeted last week after quarterly profits fell by 96% and earnings forecasts missed estimates. I see this stock as a wildly volatile, speculative play that long-term investors should avoid, considering the company's poor fundamentals. 

Speaking of poor fundamentals and speculative, risky plays, shares of Sears Holdings (NASDAQ:SHLD) fell 4.6% Friday, reversing course after the stock rallied more than 20% in just three days. Here, again, we find a stock that posted an ephemeral, misleading rally for reasons unrelated to the business' fundamentals. Sears was one of yesterday's standout performers, as Wall Street cheered news that investment firm Force Capital Management has snapped up a 5.6% stake in the troubled retailer. Unfortunately, and as Credit Suisse noted today in reiterating its underperform rating, new owners don't change the company's immediate fiscal woes.

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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 Netflix and Walt Disney. The Motley Fool owns shares of Netflix and 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.

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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