Samsung Electronics reported preliminary second-quarter profits that broke company records. Shareholders responded by selling the stock like it admitted to running a Ponzi scheme. This makes perfect sense if you've ever met an investor.
The company printed money at unprecedented levels. The stock tanked. Capital expenditure concerns and demand worries apparently matter more than actual profits, which is the financial equivalent of dumping your girlfriend because you're worried she might get ugly in ten years. She's hot now. Enjoy it.
Retail traders spent the morning Googling "what is capex" while panic-selling their Samsung positions. They bought at the top because some guy on Reddit said semiconductors were the future. They're selling at a loss because a different guy on Reddit said capex is bad. Neither guy owns Samsung stock. Both guys work at Chipotle.
Technical analysts examined the charts and determined Samsung's moving averages formed a bearish death cross, which is astrology for people who think they're too smart for astrology. The stock could go up. It could go down. It could trade sideways for six months while everyone pretends to understand Korean semiconductor manufacturing capacity. None of this has anything to do with the actual business.
Samsung built chips. Sold chips. Made record profits selling chips. The market decided this was bad news because future chip demand might soften and the company might spend too much money building factories to make more chips. So investors sold a profitable chip company because it might make too many profitable chips later. This is why your retirement account looks like that.
The stock fell despite record earnings, which proves my central thesis: numbers don't matter, news doesn't matter, and everyone pretending to analyze this stuff is just killing time until lunch.
Photo by Gavin Phillips on Unsplash
Leave a Comment