I want to congratulate you, Mr. Market. For six days, you held it together and reacted positively. You are making your constituents, the investors, happy and restoring some of the lost faith in public markets. Next time I see you out, drinks are on me. The only thing is, I want you to try to not overreact, in any direction, to macroeconomic news and various earnings reports. I know that's a lot to ask, because you are certifiably insane, but if you can be stable this week, you will give hope to thousands.
This week's buzz
First up, you're a little nervous about the growth of Japan's economy. Let me remind you, Mr. M, that the Japanese economy has been in or around stagnation for the past 20 years. On the Surprise Scale, 1 being "Bernie Madoff is still in jail" and 10 being "Apple goes bankrupt," this is maybe a 1.5.
Yes, the exports from the island nation fell a little bit, and the economy didn't quite grow as we all wanted it to, but this isn't your fault -- so don't punish yourself and everyone else. In this world of global market insanity, it's every market for himself. Let the Nikkei (INDEX: ^N225) do its thing, and if you want to drop some U.S.-listed Japanese companies based on fundamentals, be my guest -- that's what you're here for. But I implore you, don't drop 200 points tomorrow because of something that doesn't really concern you.
Economic data blah blah blah
On Wednesday, my friend, we'll hear about the latest CPI numbers from July. I'm not saying the CPI doesn't matter. It does. It's a great way of determining how quickly our salaries are becoming less salary-y because of inflation. But let me remind you again: You should be measuring the individual performance of companies -- not a vague basket of goods that sounds like a Harry and David "thank you" present.
The market is expecting a 0.2% uptick, but it could be different depending on food and energy prices. If it's not 0.2%, don't get upset.
There's plenty to be happy about, like the uptick in deal flow, acquisitions, spinoffs, and more. Just this week, Google (Nasdaq: GOOG) bought Frommer's! Compatible horizontal integration at work! When you're backpacking through Nepal and don't know where to find a restaurant with a nice bathroom, you can just Google your location, and Frommer's will even tell you where the toilet paper is. Good things are happening, Mr. Market. Don't let random economic data throw you off.
One company to bring them all down
Another thing you like to do, Mr. Market, is bring down the entire market when one or two companies have a hiccup. Why? That's not helping anybody.
This week, we have two companies that are going to have bad news -- we already know this. For one, Facebook (Nasdaq: FB), as if it hasn't been kicked in the face enough, is about to get leveled again. On Thursday, the lockup period ends, and then insiders, including Goldman Sachs (NYSE: GS), can begin to unload their billions of shares. Goldman is not going to dump them all, nor can it legally, but it may choose to unload a bit of the shares onto the market. This is, undoubtedly, going to hurt the stock in a material way.
Don't freak out! This has nothing to do with you or the rest of the market. For those who are unlucky enough to hold the stock, it's just going to be another day of "What was I thinking?" But, Mr. Market, don't take a 100-point dive because you think Facebook's stock plunge is tantamount to having an asteroid hit the Earth.
Another company that will probably have a tough week, or life, is Groupon (Nasdaq: GRPN). Though Groupon has been doing well in the past few trading sessions, its earnings release is slated for this Thursday. What should you expect? Well, local businesses have started to realize Groupon helps them about as much as that guy who dances with a sign on the side of the road.
And they can pay that guy a lot less than they pay Groupon.
The company is also becoming notorious for funky accounting methods. Last quarter, Groupon's accounting team, who may have gotten their CPAs from Charles Ponzi's School of Accounting and Other Fun Things, booked revenue without subtracting for sales shared with merchants.
So if Groupon doesn't fare so well on Thursday, don't sweat it. Let Groupon go to zero; I don't mind that. But for all the great and thriving companies out there -- a widespread market loss is unneeded and perilous to the hyper-cautious minds of investors around the world.
What I am trying to say overall is that isolated events, whether they are company reports or an economic figure about tree planting, are just that -- isolated. There's no need to swing triple digits in any direction based on one or two numbers. Let's restore some stability to the market and let the system work the way it's supposed to.
More to come
For Facebook, this week won't be pretty, but there's more to the story. Our analysts here at the Fool have forecasted the social network over the next year, including its hurdles and opportunities. Read the premium report on Facebook.
