China's Slowdown Hits Stocks; Sears Holdings Jumps 6%

DryShips slumps, Home Depot falls as unexpected trade deficit worries investors

Mar 10, 2014 at 6:17PM

Today's stock market, it seems, refuses to let troubling news get in the way of its steady ascent -- an ascent that's began exactly five years ago. The troubling news of the day was from China, where the world's second-largest economy unexpectedly swung to a trade deficit, as exports fell a whopping 18.1% last month. Not only does this imply soft global demand for Chinese goods and services, but it threatens the strength of China's economy itself; should Asia's growth engine suddenly break down, U.S. markets would take a severe hit too, due to the interconnected nature of the financial world. Wall Street isn't overly worried about this outcome, though, and the Dow Jones Industrial Average (DJINDICES:^DJI) lost just 34 points, or 0.2%, to end at 16,418.

Home Depot (NYSE:HD), which lost 0.5% today, could prove to be a resilient investment option in the case of a China-induced market slump. After all, as my colleague Dan Caplinger points out, Home Depot stock has been the top-performing stock in the Dow since the 2007 market peak. I found that a little surprising, given the nature of the financial crisis sprang from an overheated real estate market, and if Home Depot's strength in the last seven years doesn't prove its resiliency, then I don't know what does.

When I think about resilient stocks, the name Sears Holdings (NASDAQ:SHLD) doesn't exactly come to mind, and I suggest you don't let its 6% gains today earn your confidence, either. The department store actually had to warn investors before its fourth quarter results even came out that the financials were going to be abysmal. And abysmal they were; CEO Eddie Lampert himself even said the quarter was "tough to terrible," as Sears lost more than $350 million over the holiday season. Consider the fact that the company's spinning off its most promising segment, Lands' End, to raise cash, and shareholders better also invest in some migraine tablets. 

Finally, shares of dry bulk shipper DryShips (NASDAQ:DRYS) slumped 4.3% in trade on Monday. It's a perplexing drop, because the stock usually rises and falls with the Baltic Dry Index, a gauge of bulk shipping rates across the world. The last time that index traded (on Friday) it closed with 4.3% gains. One counterintuitive threat to DryShips in the coming year is a game theory-esque dilemma: increasing demand is expected to send shipping rates soaring soon, but if DryShips and competitors all expect this, they'll rush to increase the supply of new ships, thereby driving rates lower in the process.

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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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