Thursday’s release of the US’s October inflation figure was a genuinely positive surprise. Even though the headline number only came in two pips below the 7.9% expected, Mr Market assumed manic mode. Strong buying of tech stocks drove the Nasdaq 100 index a staggering 7.5% higher – something that’s happened only five times in the past 20 years.
Among the biggest winners was one of my favourite stocks, internet security multinational Cloudflare, which rose 24% having a drop into the $30s for the first time since depths of the lockdown in 2020. As the graph above shows, Cloudflare has been on the slide all of this year reflecting the market’s indiscriminate selloff of exponentially growing businesses.
___STEADY_PAYWALL___Revenues at the world’s leader in online security solutions expanded at 47% year-on-year for the three months to end September. Even though that beat analysts’ expectations, such is the depressive mood of Mr Market that he knocked 18% off Cloudflare’s post-results. Growth was deemed “disappointing” compared with a 50%-plus average since 2016.
Apart from confirming that US inflation’s worst point has past, Thursday also showed how much savvy investors can profit by taking a long view on companies like Cloudflare with long-term high growth potential. In the wake of 2022’s market wipeout, it’s time for homework, ignoring the noise, building positions and then sitting back. For this too shall pass.
More for you to read today:
- DA leader John Steenhuisen on devolution; “coalition school”; Mbeki; ANC Conference; and why 2024 is SA’s Last Chance Saloon.
- Corion’s ‘best ideas’ money managers beating market, Vintcent adds Kaap Agri to outperforming portfolio
- How just can the Just Energy Transition in SA be?
- Breakdown: Who is contributing what to South Africa’s clean energy shift
- FTX collapse spreads to other crypto companies
- Financial Times perspective: Joe Biden is still Donald Trump’s worst nightmare
London-based founding director of OMBA, Mark Perchtold, shares his insights into how those investing offshore can avoid getting palpitations each time they see whipsaws in investment markets. His specialist asset manager defrays risk through only investing client money into low cost Exchange Traded Funds – and by diversifying across numerous geographies. While the strategy cannot completely avoid the impact of sharp daily market moves, it is the best wealth creation strategy for those taking a longer view.
