In good times only 10% of listed companies (companies that can legally sell stock to retail, everyday investors) operated at a loss.
In bad times, that number would rise to around 40%.
Good times =10% profitless. Bad times = 40% profitless.
That makes sense, right?
In good times, companies make a profit. In bad times they take temporary loss. Makes sense, right?
If a company cannot do that, if a company loses money in good times and in bad times it’s worse than a kid running a lemonade stand and should not be allowed to swindle ma & pa investors into buying its stock, right?
Well that is not the case anymore.
Nowadays, (good times) a whopping 42% of publicly-listed companies are operating at a loss.
Wow, if that many are operating at a loss now, during economic good times, what will happen during the next (eventual) recession? We know what happens if the economy starts at profitless-companies = 10% and then slips into recession. But what the heck happens if 42% of companies are profitless to begin with?
It would be interesting to see when the last quarter these firms reported a profit occurred. Even better would be a scatter chart by quarter starting at the beginning of COVID. The assumption would be that COVID’s onset would be a neutral starting point and performance since then would be a gage of how the economy has actually performed, vs the spin.
It’s at the bottom, meaning that is the percent of companies that during good times.
Looking at that line we see:
It used to be, (pre-covid) during good times, only 10% failed to make a profit.
Then, also pre-covid, during good times, only 15% failed to make a profit.
Immediately pre-covid, during good times, only 30% failed to make a profit.
Now, post-covid, during good times, 42% are failing to make a profit.
Wait! 42% during good times? 42% is normally a number associated with the depths of a recession.
If 42% is the good times number, (not just a leading indicator) then the next recession, if ever and when ever it comes, might be pretty harsh for corporate America, don’t ya think?
I wasn’t implying that you are spinning. I find your observations very insightful. i came to finance after my time in the military. I brought formal training and experience in intelligence analysis to that job. It was a common point of view that a good investment advisor has to think and act like an intelligence analysts when looking at the economy.
Interesting, and yeah I can see the similarities. (Making a decision based on too-little data.)
For a brief time I managed a seafood counter in an upscale supermarket.
In some ways, it’s like day-trading. On Wed you have to predict the demand for fresh seafood that weekend, and the only data I had to “go on” was recent sales trends.
A few weeks ago, I made good money predicting “People will be buying the Mag 7 stocks for a few days.”
This week, I’m making money because I correctly read “No one is buying semi conductor stocks this week.”
I am not as good (consistent) at it as I sometimes think I am, but I will continue for now.
I observed that the human emotions of greed and fear are significant drivers in short term individual stock price movement. Bottom line fundamentals always drive the train in the end. I also learned from asset allocation theory, put into practice, that the only thing the markets accurately signal is the next big looser.
Warner Brothers has been pulling crap lately, including completing the movie Coyote vs Acme but not releasing it.
When you spend millions producing a movie and then don’t release it, it tends to deliberately distort your bottom line and this movie isn’t the only example.
Maybe if Warner Brothers actually releases the movies it produces, it might improve its bottom line.
That’s correct. In fact I always recommend buy and hold long term to people who ask.
That said, all across America, yesterday and today, thousands and thousands of seafood mangers and restaurateurs decided to buy more or buy less seafood for the upcoming weekend.
I guarantee you all those managers are looking at some combination of the information illustrated below (+/- recent sales trends in their own store.) You can easily imagine the similarities to buying stocks with the hope of selling them in a few days.
have a big game against those stinkin’ Giants on Sunday, so make trays, not filets.
