Volatility, You're Back! Home Depot, Netflix, and Vringo, Inc. Slide

The Dow also loses ground as a dose of chaos returns to the stock market today.

May 6, 2014 at 6:14PM

The stock market is -- with the exception of quantum particle interactions and makeshift chemistry labs -- one of the most notoriously volatile things in the known universe. In the last week, however, major market indices have been humming along smoothly, logging a small loss here, a modest gain there. In fact, the first third of 2014 has taken investors on a rather dull, calm ride -- and it isn't just the stock market. Stocks, bonds, and currencies, through the end of April, are each experiencing a dearth of volatility not seen in the prior five years. But such a smooth journey can't go on forever, and stocks showed their penchant for big swings once again on Tuesday as the Dow Jones Industrial Average (DJINDICES:^DJI) tumbled 129 points, or 0.8%, to end at 16,401. 

Home Depot (NYSE:HD) helped propel the Dow lower -- Tuesday was its first triple-digit move in more than a week -- as shares shed 1.6% in trading. Today's stumble was hastened by new data, which reveal that home prices aren't rising as rapidly as investors had hoped, a softness in the real estate market that could dent Home Depot's business if the trend continues. CoreLogic's Home Price Index advanced at an 11.1% year-over-year pace in March, more than 1% shy of February's 12.2% annual gains. Considering how harsh this winter was, it's especially disappointing that prices didn't jump a little higher when March rolled around.

Vringo (NASDAQ:VRNG) shareholders can identify with being "especially disappointed" today, as the stock tumbled 9.2% in trading. Vringo is an unusual stock because the underlying company doesn't rely on that old-fashioned business model of providing goods and services to earn its keep. Put simply, Vringo is what some people might term a "patent troll." Vringo "is engaged in the innovation, development and monetization of intellectual property and mobile technologies," a strategy that boils down to acquiring intellectual property and then either licensing it out or suing the pants off anyone that infringes upon it. A 2012 ruling against Google for $30.5 million is now being challenged by the search giant, in a move that puts a serious damper on Vringo's prospects. Vringo has less than $3 million in revenue in its last five fiscal years combined. 


"Orange is the New Black" returns on June 6. Source: Netflix

Lastly, shares of Netflix (NASDAQ:NFLX) tumbled 5.3% on Tuesday, as a number of high-growth stocks fizzled out. While fans of Netflix's hit original series "Orange is the New Black," can rejoice upon hearing that the show's already been greenlit for a third season, major concerns still loom surrounding the company's business model. Netflix shelled out an undisclosed sum to Internet service provider Comcast earlier this year to ensure that its video content would reach subscribers without a hitch. The agreement was a blow to the ideal of net neutrality -- in which all Internet traffic is treated equally by broadband providers -- and could set a costly precedent for Netflix down the line.

Your cable company is scared, but you can get rich
You know cable's going away. Cable knows cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple


John Divine owns shares of Apple and Google (C shares). You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends Apple, Google (A and C shares), Home Depot, and Netflix and owns shares of Apple, Google (A and C shares), and Netflix. Try any of our Foolish newsletter services free for 30 days. 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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