The Dow Rockets Into Record Territory; Will Verizon and AT&T Miss the Ride?

The Dow Jones Industrials soared to start the week, but telecom stocks aren't enjoying big gains. Find out why.

May 12, 2014 at 11:00AM

On Monday, the Dow Jones Industrials (DJINDICES:^DJI) jumped out to an early gain, rising more than 88 points as of 11 a.m. EDT. More big news on the merger and acquisition front helped drive stocks higher, as investors increasingly believe that consolidation in several key industries could lead to a long-lived wave of greater buyout activity and produce attractive bids at substantial premiums to current share prices. Moreover, a rebound in the tech sector helped raise confidence in the overall market. Yet both AT&T (NYSE:T) and Verizon (NYSE:VZ)traded slightly lower after the first hour of trading this morning.

Source: Verizon.

The return of net neutrality?
Back in January, a federal appeals court ruled in favor of Verizon's argument that the Federal Communications Commission's net-neutrality rules unfairly required the company to avoid discriminating against particular websites. The ruling has led video-streaming services and other high-traffic websites to make agreements with Verizon and other Internet service providers in order to introduce speed-enhancing features.

But over the weekend, The Wall Street Journal reported that FCC Chairman Tom Wheeler would introduce new proposed rules to regulate the broadband Internet industry, specifically aiming at reinstating aspects of net neutrality that would prevent a two-tiered Internet service environment in which paying websites would enjoy faster service at the expense of those that chose not to enter into special agreements with Verizon, AT&T, and other ISPs. Specifically, the FCC would claim the right to consider and potentially reject those special agreements on a case-by-case basis if Verizon or AT&T effectively put those that didn't pay at a competitive disadvantage.

Even though the prospect of charging certain websites for faster access is appealing to AT&T and Verizon as a potential way to raise revenue, companies that rely on the Internet for their business models are understandably opposed to the demise of net neutrality. Going even further than Wheeler's planned proposals, most Internet companies want full net neutrality reinstated, with an outright ban on the types of agreements that AT&T and Verizon are looking to ramp up.

At this point, the rules haven't even been proposed yet, and even if they get through the FCC, Verizon and AT&T would have the right to challenge them in court and produce a potentially long and drawn out process before the regulations could take effect. Still, with the long-term threat out there, shareholders need to keep an eye on AT&T and Verizon until this highly contentious issue gets resolved once and for all.

Your cable company is scared, but you can get rich
You know 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.


Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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