Dow Plunges 231 Points on Russian Threat

Home Depot and Las Vegas Sands both slump; Krispy Kreme Donuts orders more of its own shares in a buyback.

Mar 13, 2014 at 6:33PM

After edging slightly lower three days in a row, the Dow Jones Industrial Average (DJINDICES:^DJI) edged no further, opting instead to plunge into negative territory as Russia launched military training operations near the Ukrainian border. The decision speaks to Russia's lack of concern regarding international consequences, a dangerous and provocative mind-set that makes diplomacy increasingly difficult. Only a week ago, tensions between the two countries had eased so much that mainstream U.S. media started to insinuate that Russian President Vladimir Putin had backed down, running from the idea of military action. Even if today's increased military presence is a "bluff," the aggressive move is making Western powers uneasy, and Wall Street downright scared. The Dow plummeted 231 points, or 1.4%, to end at 16,108 today. 

Not a single blue chip stock ended higher Thursday, so Home Depot's (NYSE:HD) 2.2% decline shouldn't be overly scrutinized. While Wall Street might be focused on the unusually harsh winter we've had and the impact that may have on the company's first-quarter results, I'd be more concerned about the company's long-term viability. That said, Home Depot's long-term viability looks promising to me; the biggest direct threat is from Lowe's, and Home Depot still has same-store sales growth that Lowe's would kill for -- despite the fact that Lowe's is half Home Depot's size. 

Shares of casino operator Las Vegas Sands (NYSE:LVS) tend to fluctuate a bit more wildly than the leading name in home improvement retail, and for good reason. Las Vegas Sands is slightly more leveraged than Home Depot, and far more sensitive to economic trends in Asia. In this way, Las Vegas Sands stock is a levered investment in the growth of the Asian economy, and the popularity of the new gaming mecca, Macau. A sudden and altogether unexpected drop in Chinese exports, announced on Monday, should give investors pause; there's a very real potential that Asian hype has sent the stock into overbought territory.

Finally, Krispy Kreme Donuts (NYSE:KKD), which opened the day trading nearly 7% higher, finished with 1.2% gains as geopolitical pessimism sent shares lower. In all honesty, the notion that Krispy Kreme's business became 6% less valuable in a matter of hours -- because of some active military personnel halfway across the globe -- makes about as much sense as a cyanide donut. Krispy Kreme investors actually have plenty to cheer after the company increased earnings projections, and boosted the share buyback from $50 million to $80 million, both of which could add some extra zeros to investor portfolios.

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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 Home Depot. 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.

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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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