Spain Is In the Final, IBM Falls 25% & AI Shifts the Market

Good morning and welcome to the One of a Kind Financial Show Daily. I'm Mike Milligan, Certified Financial Planning Professional, founder of One Oak Financial, and host of the Ideas by Mike podcast. It's Wednesday, July 15th. Yesterday, one of the most iconic American companies of the last century lost a quarter of its market value in a single day while the rest of the market went up. Today, we're going to unpack what happened at IBM, walk through 5 other days like it, And get ourselves ready for the 2nd World Cup semifinal that will send the party either to London or Buenos Aires tonight. Educate, coach, plan. My motto: never miss a moment.

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Yesterday, Tuesday, July 14th, international business machines IBM, The company nicknamed Big Blue, a name in American business since 1911, pre-announced that its 2nd quarter numbers were going to fall short of Wall Street expectations. They guided the revenue to $17.2 billion versus the $17.86 billion the Street was looking for. Adjusted earnings per share guided to $2.93 versus $3.02. the Street expected. Not a small miss. The stock reaction was much larger than the miss. IBM shares fell 26% in early trading yesterday. To put that in context, the reporting called this an even steeper single-day decline than what IBM went through during the 1987 Black Monday crash. The reason CFO gave in his letter to investors is worth reading carefully. He wrote, quote, in the last few weeks of June, we saw clients shift their quarterly CapEx spend towards servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. End quote. The translation here is corporate customers pulled dollars out of software and put them into AI hardware— chips, memory, data center gear— because they were worried about supply and price. The CEO also said the company did not anticipate the magnitude of the shift and that large— that numerous large deals failed to close as expected. This is educational only and it's not a recommendation on IBM one way or the other. 2 facts hold in your mind though. One, this happened on a day the broader markets rallied. 2, the software sector ETF that tracks IBM's neighborhood, the iShares Expanded Tech Software ETF, fell more than 4% on the news. So the shock rippled beyond IBM.

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Let me walk you through 5 other days like yesterday when the market was flat to up and one big American company had its own private earthquake. The date: February 3rd, 2022. The company: Meta Platforms. Facebook's parent company reported its first-ever quarterly decline in daily active users. The stock fell roughly 26% in one day. Market cap wiped out $230 billion. At the time, that was the single largest day-dollar loss of any U.S. company in history. The year again, 2022, but on April 20th. The company Netflix. Netflix reported it had lost 200,000 subscribers in the first quarter, its first decline in more than a decade. The stock fell 35%, roughly $54 billion of market cap gone. It was Netflix's worst single day in about 18 years. Again, the third instance of big drops. also happened in 2022. It was May 24th. Snap Inc. Snap issued a profit warning in the middle of the quarter. The stock closed down 43%. It was the largest single-day drop in Snap's history, and it dragged Meta and Alphabet down with it. A couple of others on big drops like what happened to IBM. November 28th, 2001, Enron. Enron shares collapsed after its rescue merger with, uh, Dynegy fell apart. The stock dropped from a little over $4 to 61 cents. That's roughly 85% in a single day. Within weeks, Enron filed the largest bankruptcy in U.S. history to that point. Another company, and this one is on This list again. October 15th, 2004, Netflix. The shares fell 41% in one day after guiding subscriber growth much lower because of new competition from— get this— Blockbuster and Amazon. The company survived, but investors who owned it that morning did not know that yet. There was a lot of scare. scared investors at that time. Now put IBM yesterday next to those 5. Different eras, different industries, same lesson. When you own an individual company, you are not just exposed to how well the company runs, you are also exposed to one 24-hour window when the market changes its mind about the story. Here's the planning point: inside a one-of-a-kind financial plan, we do not need to predict which company had its bad day next, or one next year. We build the plan so that no one company can knock you off your goals. That is the entire reason diversification exists as a discipline, not because it's exciting, but because it's durable.

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The party in Madrid and Barcelona may still be going on, This morning. In the World Cup yesterday afternoon in Dallas, Spain beat France 2-0 in the first semifinal. The first goal was scored off a penalty shot in the first half, and then, and then another one occurred in the second half. France, the top-ranked side in the world, is out. Spain, the last European nation to win a World Cup back in 2010, is going to the final. And if you're on social media this morning, you can see it now. The plazas in Madrid are still full. The Ramblas in Barcelona was a river of red and yellow. The celebration has not stopped since the final whistle. This is what happens when the plan works. The party runs long. Tonight, 3 o'clock Eastern in Atlanta, is the other semifinal, England versus Argentina. The defending champs, Messi and his crew, chasing back-to-back World Cups. And the 3 lines of England England chasing their first World Cup since— final since 1966. When we come back tomorrow, the party will either be in London or Buenos Aires. And Sunday, July 19th, at New York's New Jersey Stadium, Spain plays the winner for the trophy. Bringing this all together today, IBM yesterday reminds us that owning a single stock is owning a single story, and stories change fast. It was Meta in 2022, Netflix twice, Snap in 2022, Enron in 2001. 5 other days, a giant lost 25% or more in a single session while the broader market moved on with its day. This is not a reason to fear the market. It's a reason to build a plan that does not depend on any one company's Tuesday morning. Spain last night and tonight's semifinal reminds us that preparation is louder than excitement. Spain waited 16 years to get back to the World Cup final. 16 years of youth systems, coaching changes, tactical rebuilds. That is the version of patience most Americans need inside their retirement plan, not the version that flips through the CNBC ticker every 20 minutes. We're not chasing returns. We are building a one-of-a-kind financial plan. For a one-of-a-kind life.

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If you'd like to sit down with our team and see what a plan looks like for you, call One Oak Financial at 757-909-7151. Grab a copy of The One of a Kind Financial Plan on Amazon or at oneoakfinancial.com, and go catch the first 3 episodes of our all-new limited series, Reckless Abandonment. On the One Dot Oak Radio YouTube channel, episode three is going to walk straight into the AI infrastructure shift that just clipped Big Blue. Estoy aprendiendo. So are you? Educate, coach, plan. Never missable. This program is for educational purposes only. It is not investment advice and not a recommendation to buy or sell any specific security or product. Past performance is not indicative of future results. Consult your licensed financial professional before making any investment decisions. Mike Milligan is a Certified Financial Planning Professional and the founder of OneUp Financial. I am also an investment advisory representative with Advisory Alpha LLC. Ideas by Mike, doing business as OneUp Financial and Advisory Alpha LLC, are unaffiliated entities.

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