Nike (NKE) Stock: Why it Pays to Avoid Herd Mentality

02:55 09/11/2018

You have to ignore the herd if you want to make money.

As we noted on September 4, 2018, traders were so caught up in Nike Inc. NKE  controversy, they ignored opportunity.

All after the company named Colin Kaepernick as the 30th anniversary face of its “Just Do It” campaign. “No doubt, [Nike’s] decision to feature Kaepernick prominently in its latest marking effort will spur significant debate among those in athletic circles and more broadly,” noted Oppenheimer analysts as we noted on September 4, 2018.

Then came calls for a Nike boycott, which sent the stock down temporarily.

But it was nothing more than market noise. Hated or not, a football player face isn’t going to crush Nike for long.

In fact, it didn’t last long at all. The stock has since recovered after 31% Labor Day weekend sales and another upgrade.

Canaccord Genuity upgraded NKE to a buy and raised its target to $95.

"We believe Nike's new 'Just Do It' ad campaign with Colin Kaepernick was a stroke of genius," Canaccord Genuity said, as quoted by CNBC.

"This premeditated move was another subtle but significant sign of Nike's strength and confidence in its position in the marketplace, one that likely does more good than harm. "It was courageous in that Nike took a stand in support of a social issue where few (if any) companies have of late. It spoke to Nike's core consumers in a very Nike-esque provocative way that shows it understands them and the issues that matter to them."

Technically, the stock found solid support at its 50-day moving average and turned higher. It’s done the same thing since April 2018.

Again, if you want to make money in this market, ignore the herd.

They get it wrong far more often than they get it right.

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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