Here are 3 reasons we are not going to buy stocks in Friday's nosediving market
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Miami Herald
an hour ago
- Miami Herald
Starbucks' problems may be too big to fix
In its early days, Starbucks' approach was unique. Unlike rivals like Dunkin', Tim Hortons, and breakfast diners, its mission wasn't to provide one coffee for everyone as fast as possible. Instead, it treated making coffee like a craftsman makes fine furniture, focusing on the highest quality product regardless of how long it takes. That approach helped Starbucks grow from a single store in Seattle, Washington, to a coffee powerhouse with 32,000 stores located in just about every nook and cranny of the globe, including: Over 18,000 stores in North 2,800 stores in than 6,500 stores in 1,300 stores in the Middle East and North Africa. 1,800 locations in Latin America, including more than 70 in Colombia, putting Starbucks about as close to the coffee's origins as possible. With that kind of growth, and plenty of shareholders eager for ever-increasing profits, it's pretty unsurprising that Starbucks has dealt with growing pains. The company has faced controversies over worker pay (and what they wear), and customer complaints over inconsistent drink tastes, food freshness, and, more generally, the rise of a less-relaxed cafe vibe, too focused on boosting transactions and profit margin. The situation has left many scratching their heads, wondering if Starbucks' new CEO, Brian Niccol, can get things back on track. Long-time hedge fund manager Doug Kass is among the doubters. He recently sent a particularly harsh message about Starbucks, suggesting Niccol's strategy to get Starbucks back to its roots is unlikely to pan out. Image source: Goodney/Bloomberg via Getty Images Starbucks' (SBUX) stock price financed a good chunk of the company's global expansion. Investors eagerly bought shares early in the company's growth phase to profit from the opportunity for its customer-first approach to dislodge market share from rivals like Tim Hortons and Dunkin'. Long-time shareholders have been handsomely rewarded, given that Starbucks shares have surged since its IPO in 1992. A $10,000 investment then would be worth over $3 million today. Related: Starbucks abandons key strategy to embrace its past However, many investors' love affair with Starbucks has faded since the company has mostly saturated major US markets like New York and California, reducing chances for sales growth. Its share price is up just 15% over the past five years, while the S&P 500 has climbed 89%. In 2025, Starbucks' stock price has fallen nearly 5%. With Starbucks stores seemingly everywhere, long-time hedge fund manager Doug Kass suggests the company's strategy nowadays is less about reimaging coffee houses and more about milking as much money out of existing locations as possible. Such an approach can boost earnings in the short term, but it poses a significant long-term risk to Starbucks' brand. "[Starbucks] morphed into overpriced purveyors of food/coffee - while the quality of their product offering has deteriorated and the selling cost of the product has risen," wrote Doug Kass in a post to investors on TheStreet Pro. It's not just the coffee, either. While many may think Starbucks bakes its treats on site, many are previously frozen. "I couldn't create a danish as unappealing," said Kass, who has managed money professionally for about 50 years. Some Starbucks employees agree that the company's mission has lost its way. It was once highly recognized as a pioneer in employee pay, offering solid wages and a "partner" approach to its workers. Employees, however, have increasingly explored unionization in recent years, saying the faster-paced environment is taking a heavy toll on its once-lauded baristas, and pay hasn't kept pace. Starbucks' response to unionization has drawn fire from worker advocates who suggest management has engaged in union-busting decisions. For example, the National Labor Relations Board (NLRB) has accused the company of firing or disciplining workers, including the high-profile case involving the "Memphis 7," seven workers terminated after advocating unionization. That case went to the Supreme Court, where an earlier court decision to grant an injunction supporting the workers was reversed in Starbucks' favor, and the case was sent back to the lower courts. The first corporate Starbucks location to unionize was in Buffalo in 2021, led by Starbucks Workers United. As of August 2025, workers at over 600 Starbucks stores across the US have voted to unionize, according to Workers United. The company's frayed relationship with some employees isn't the only problem CEO Brian Niccol is trying to fix. Niccol joined Starbucks as CEO in 2024 after over six years at the helm of Chipotle. Shortly after Niccol took over as Starbucks' CEO, he acknowledged, "a shared sense that we have drifted from our core" and announced his "Back To Starbucks' plan to get the company back on track, focusing on a "welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas." However, those comments and Niccol's plans sound hollow to Kass. "When he got to Starbucks, Niccol started off by using fancy jargon to distract from the fact that Starbucks is losing to both value and premium brands/operators," wrote Kass. "Starbucks now faces a very expensive overhaul in its physical locations and product offerings." Starbucks' competitive advantage hasn't been lost on rivals. Big rivals like Dunkin' and McDonald's have expanded menus, including popular refreshers, while local mom-and-pop cafes have leaned hard into the artisanal coffee house vibe. Related: McDonald's to test five crazy new drinks Winning back market share from those players won't be easy. As a result, Niccol's overhaul could pressure Starbucks' profits while ultimately doing little to restore Starbucks's culture, disappointing investors. "The brand is now very weak competitively - they aren't premium (artisans, local brands, etc.) and the previous also-rans are coming in hot with smaller footprints," said Kass. "From a product standpoint, they sell more chemicals, sugar and ice - it's not coffee." Undeniably, many remain loyal Starbucks fans, but there are more choices, and with less connection to the employees, the moat of loyalty isn't nearly as strong as it was in the past. "It is the Regal Cinemas concession stand without the movies. The notion that the baristas want to hang with the customers has been lost," said Kass. "I suspect the turnaround in both companies will take a lot longer than the consensus expects." To be sure, Starbucks' challenges aren't unique. Indeed, most companies experiencing the kind of success it has experienced deal with similar issues. Still, the hyper-competitive coffee market and the challenges facing Niccol leave Kass thinking that there are better alternatives for investors. "I would not bottom fish despite the material share-price weakness," concluded Kass. Related: Why did stocks tumble this week? The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
3 hours ago
- Yahoo
The S&P 500 Has Reached an All-Time High: Should You Invest Now or Wait for a Correction?
Key Points Market indexes have been reaching new heights, and right now is an incredibly expensive time to buy. Some investors are worried a correction or recession may be looming, making it smarter to wait. However, history suggests that there's never necessarily a bad time to invest. 10 stocks we like better than S&P 500 Index › The S&P 500 (SNPINDEX: ^GSPC) has been breaking records over the last few weeks, officially reaching a new all-time high in July. As of this writing on Aug. 1, it's up by about 25% from its low point in April. However, not everyone is optimistic about the market right now. In fact, one-third of U.S. investors say they are feeling "bearish" about where stocks will be in the next six months, according to the most recent weekly survey from the American Association of Individual Investors. With stock prices near record-breaking highs, some investors may be tempted to wait until the next downturn to buy at a discount. Here's what history says about whether you should buy now or hold off. Is it safe to invest now? Nobody can predict where stocks will be a few months or a year from now, and new policies out of Washington could change things on a dime. However, several scenarios are possible. For one, stock prices could continue soaring like they have over the past few months. If that happens, right now would be a fantastic time to buy to see immediate gains. Scenario two is that the market takes a sharp turn for the worse, like it did earlier this year amid tariff uncertainty. Between February and April, the S&P 500 fell by close to 20%, leaving many investors panicked and eager to sell. But those who stayed the course and held their investments reaped the rewards when the market quickly rebounded. A similar situation played out in March 2020, when the S&P 500 experienced one of the fastest crashes in history at the start of the pandemic. The short term was rough, but the S&P 500 has since earned total returns of nearly 112%. The third scenario may be the one that concerns investors the most: a prolonged recession. But even if that is on the horizon, investing at record-high prices doesn't necessarily mean you'll lose money. A market downturn may result in your portfolio losing value. But if you hold your investments until the rebound without selling, you likely won't experience any actual losses. Say, for example, you invested in an S&P 500 index fund in December 2007. The market was reaching record highs at the time, but it was about to slip into the Great Recession, which would last until 2009. In that time, your investment would have plunged by more than 50%. Selling at any point during that recession could have locked in significant losses, since you would have likely been selling your investments for far less than what you paid for them. However, if you simply stayed in the market, you would have earned total returns of around 75% after 10 years and 312% by today -- more than quadrupling your money. In other words, even if you had invested at the seemingly worst possible moment -- at record-high prices immediately before one of the most severe recessions in U.S. history -- you would still have made a significant amount of money over time. Now, could you have earned more if you had waited until the market was at its lowest point to buy? Definitely. But hindsight is 20/20, and nobody knows when the next correction or bear market will begin. Timing the market accurately is next to impossible, and if your timing is even slightly off, you could potentially lose a lot of money. Rather than waiting for a chance to "buy the dip," it's often wiser to invest consistently. You can always increase the amount you invest during the next slump, when stocks are at a discount. But in the meantime, continuing to buy can ensure you're not missing out on immediate gains if stock prices stay on the rise. One major caveat to remember The key to ensuring your portfolio survives a downturn is to only invest in long-term quality stocks. Sometimes weak companies can thrive in the short term, earning exponential growth in a matter of months. But those investments are far less likely to pull through tough economic times. Healthy companies with strong business foundations have a much better chance of seeing long-term growth despite short-term hiccups. When a company has a solid competitive advantage, a competent leadership team, robust financials, and a long-term plan for the future, it's much more likely to survive even the worst recessions or bear markets. The most important thing you can do right now, then, is double-check that every stock in your portfolio deserves to be there. Once you're certain that all of your investments have healthy fundamentals, you can rest easier knowing that you're well prepared for whatever may lie ahead. Should you buy stock in S&P 500 Index right now? Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,820!* Now, it's worth noting Stock Advisor's total average return is 1,019% — a market-crushing outperformance compared to 178% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The S&P 500 Has Reached an All-Time High: Should You Invest Now or Wait for a Correction? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 hours ago
- Yahoo
From Figma's IPO surge to SNAP cuts: 10 business stories that defined the week
From Wall Street to Main Street, this week was packed with major business moves. There were big market debuts, tough earnings reports, and updates that show how quickly some industries are shifting. Other countries are stepping up after Trump pulled the U.S. out of the climate fight Emotionally intelligent people use the 2-week rule to motivate themselves and reach their biggest goals Exclusive: Google is indexing ChatGPT conversations, potentially exposing sensitive user data New companies made a strong entrance, established players faced some hard numbers, and key sectors—everything from housing to transportation—saw important changes. Taken together, this week's news offered a picture of how businesses are adapting to a quickly changing economy and what that looks like right now on the ground. Here are the week's biggest stories. Figma IPO Surges Past Expectations The collaborative design software company priced its IPO at $33 per share, well above expectations, and surged to $109 in its first hours of trading. Its $44 billion market cap makes it one of the year's biggest tech debuts. Figma's IPO didn't just light up the stock market—it also minted a new class of billionaires. Cofounder and CEO Dylan Field now has an estimated net worth of $1.8 billion from his holdings, with the potential for another $1.3 billion in stock if FIG hits $130 per share. Zillow's housing market report reveals hot and cold spots Zillow economists see a cooling housing market ahead. In its latest 12-month forecast released this week, the company projects U.S. home prices will fall 1% between June 2025 and June 2026, with a steeper 2% drop expected for the full calendar year. Rochester, New York, ranks as the nation's hottest seller's market, while Jackson, Tennessee, tops the list of buyer-friendly areas. The U.S. market overall sits in neutral, with a national score of 52. Nissan reports $782 million loss Japanese automaker Nissan sank into a $782 million loss for April through June, but promised Wednesday it would return to profitability later this year. The automaker's sales slipped 10% over the last quarter. CEO Ivan Espinosa outlined aggressive cost-cutting measures, including closing a flagship plant and slashing 20,000 jobs. SNAP cuts threaten thousands of grocery stores Reductions to SNAP benefits in the 'One Big Beautiful Bill Act' could devastate small grocers in low-income areas, where up to 70% of sales depend on the program. According to the National Grocers Association (NGA), which represents independent community grocers across the United States, as well as their wholesalers, roughly 12% of grocery store payments currently come from SNAP. Citi Strata Elite Targets High-End Cardholders Citi reentered the premium card space this week with a $595-a-year offering featuring travel credits, lounge passes, and up to 12 times the rewards on bookings. The new card is designed to directly compete with Chase's Sapphire Reserve card and the Platinum Card from American Express—both of which have recently announced new features, fees, and revamps. Spain rescues Thirty Meter telescope Spain pledged $470 million and a new site in La Palma to revive the stalled Thirty Meter Telescope project after U.S. budget cuts pulled support. 'Faced with the risk of this major international scientific project being halted, the Government of Spain has decided to act with renewed commitment to science and major scientific infrastructures for the benefit of global knowledge,' Diana Morant, Spain's minister of science, innovation, and universities said about the potential acquisition. Union Pacific Pursues $85 Billion Merger A proposed acquisition of Norfolk Southern by Union Pacific would create a coast-to-coast freight rail network for the first time, connecting 43 states and 100 ports. The Surface Transportation Board (STB) will review the agreement after the companies file their application to merge—something they say they plan to do within the next six months. Cinemark expands panoramic ScreenX theaters Cinemark is trying to lure audiences back into movie theaters. The company is rolling out 18 new ScreenX venues by 2026, featuring a 270-degree panoramic viewing experience. The deal expands Cinemark's existing partnership with South Korea-based CJ 4DPlex to a total of 26 Cinemark theaters. Rite Aid to close most pharmacies by mid-August As part of its bankruptcy process, Rite Aid will shut down nearly all remaining pharmacies by the end of next month, transferring prescriptions to other local providers. MLB prepares for record-breaking game The Braves and Reds will face off this weekend at Bristol Motor Speedway in front of more than 85,000 fans, the largest crowd in Major League Baseball history. The event, dubbed the MLB Speedway Classic, will mark the first MLB game ever played in the state. This post originally appeared at to get the Fast Company newsletter: Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
