This week the Super Bowl rolls into the Bay Area. And yes, it still stings that the Niners aren’t playing. But take a step back and the bigger picture is obvious. Hotels are full, restaurants are packed, rideshares are surging and money is flowing into the local economy anyway. The benefits show up even if your team didn’t make the big game.
Markets work the same way. You don’t need every headline to break your way for progress to happen underneath the surface.
January started the year on solid footing for both stocks and bonds despite a steady drumbeat of unsettling headlines. Geopolitical flare-ups, Fed speculation and the S&P 500’s worst single-day drop since October all drove short-term volatility, but each wobble faded quickly and markets pushed to new highs within days. We saw the same pattern play out elsewhere as gold and silver rallied on global economic and geopolitical uncertainty before reversing once clarity emerged, a reminder that while these assets can play a supporting role they remain volatile and very sentiment-driven.
So what was the driver behind the positive results? Was it:
a) Earnings growth is strong and getting stronger
b) Profit margins are near multi-decade highs
c) More companies are making money
d) All of the above
If you chose d) All of the above, congratulations! Regular readers of The Broadcast know that earnings are the engine that drives the stock market in the long term.
This is why I keep coming back to earnings. Financial plans aren’t built on headlines, predictions or whatever the market is arguing about this week. They’re built on companies figuring out how to sell more stuff, control costs and grow profits over time. When earnings are doing that, portfolios can have remarkable momentum even if the ride feels bumpy.
The moral of the story is to stay invested, ignore the noise and let earnings do the heavy lifting, because that’s how plans move from spreadsheets to real life.
And yes, if The Broadcast sometimes feels like it was written by the Department of Redundancy Department with a seemingly unending supply of sports analogies paired with the same old song and dance about earnings, patience and tuning out “the noise,” that’s intentional. Because repetition isn’t a lack of imagination, it’s how the fundamentals get reinforced and how real investing success actually happens.
As for the sports analogies, I promise I will change it up as often as I can. Recently my family has been watching the reality show Traitors, so next month might have a little twist...stay tuned!
Until next time, take good care.
