Macy’s (M)

Macy's department store in New York City
Mike Strand / Wikimedia Commons

Shares of department store giant Macy’s soared a whopping 18% on Thursday after the retailer posted better-than-expected quarterly results and offered an upbeat outlook.

The company's second-quarter net income increased to $345 million, on revenue of $5.65 billion. More importantly, Macy’s same-store sales for the quarter — a key metric in the retail space — spiked 62% over the year-ago period.

Management even reinstated Macy's dividend, and the board approved a $500 million share repurchase program.

Macy’s shares were walloped at the height of the pandemic, falling as low as $5 in March of 2020, but management’s turnaround strategy continues to gain traction.

Thanks to the chain's steadily growing popularity among younger customers and increasing e-commerce sales, the stock is up more than 300% from those pandemic lows.

The lesson?

Often, a good time to jump on a stock is when no one else is. It’s almost impossible to time a stock’s bottom, but if the worst-case scenario is already baked into the price, your chances of long-term success improve greatly.

As Buffett has famously said, "Be fearful when others are greedy. Be greedy when others are fearful."

Join Masterworks to invest in works by Banksy, Picasso, Kaws, and more. Use our special link to skip the waitlist and join an exclusive community of art investors.

Skip waitlist

Lowe’s (L)

Lowe's Home Improvement Warehouse
Miosotis Jade / Wikimedia Commons

Lowe’s shareholders had a nervous feeling heading into the chain's second-quarter earnings release. On Tuesday, main rival Home Depot saw its shares dip 5% after posting disappointing sales for the quarter, raising a cloud of uncertainty over the entire home improvement space.

But on Wednesday, Lowe’s bucked the odds, reported strong earnings and revenue, and saw its shares fly as much as 10%.

For the quarter, Lowe’s posted earnings per share of $4.25, versus the average analyst estimate of $4.01. Revenue of $27.57 billion also topped expectations of $26.9 billion.

Looking ahead, management now sees full-year 2021 revenue of $92 billion, up from an earlier view of $86 billion.

The takeaway?

Don’t let short-term noise impact your investment decisions. If you are a firm believer in Lowe's long-term prospects, panic selling because of one bad quarter from a close rival isn’t a very wise thing to do.

Like Buffett recommends, "Only buy something you’d be perfectly happy to hold if the market shut down for 10 years."

Robinhood Markets (HOOD)

LONDON, UK - January 2021: Robinhood financial investing app on a mobile device
Ink Drop / Shutterstock

Finally, we’ll take a look at stock-trading app Robinhood, whose shares are down about 14% since the companys disappointing Q2 results came out late Wednesday.

During the quarter, revenue more than doubled to $565 million, fueled by a huge spike in crypto-related trading. But investors fled the stock after management provided downbeat guidance due to a slowdown in trading activity.

Investors are also concerned that crypto trading is becoming an unsustainably large part of Robinhood’s growth.

Crypto transactions accounted for more than 50% of the company’s transaction-related revenue.

The stock is now at its lowest price since shortly after its initial public offering (IPO) in late July.

The lesson?

Leave IPOs to seasoned traders and less risk-averse investors. While IPO investing can be an exciting world, studies show IPOs tend to underperform over the long run.

"An IPO is like a negotiated transaction — the seller chooses when to come public — and it's unlikely to be a time that's favorable to you," Buffett once said. “So, by scanning 100 IPOs, you're way less likely to find anything interesting than scanning an average group of 100 stocks.”

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Brian Pacampara, CFA

Brian Pacampara, CFA

Investing Editor

Brian is an editor for MoneyWise. A long-time stock junkie, his work has appeared in The Motley Fool, Seeking Alpha, and Yahoo Finance. He believes in owning "Forever Stocks" — a rare group of businesses that have paid out dividends for decades. Brian holds the Chartered Financial Analyst (CFA) designation.

What to Read Next

Disclaimer

The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.