Hello reader, welcome to the latest issue of HX Weekly!

Each week we bring you a new edition of HX Weekly that includes three distinct sections.

In the first section, Thoughts on the Market, we'll offer insights into current economic and market news.

In the second section, HX Daily Redux, we'll revisit investing concepts, tactics, and more from past issues of HX Daily.

And in the third section, Market Wizard’s Wisdom, we’ll share thoughts, quotes, and theories from the greatest investing minds of all time.

Now, let's dive in!

Thoughts on the Market

Déjà Vu: The Meta Setup

We saw this movie with Google… and we think we know how it ends

In August of 2024, we wrote about the U.S. Department of Justice lawsuit against Google after readers flooded our inbox asking if the company was about to be broken up.

At the time, the stock was under heavy pressure, headlines were everywhere, and many market commentators were convinced this was the beginning of the end.

We told you the opposite.

Our view then was simple.

The legal noise would take years to play out, the core business would remain intact, and the stock, despite all the fear, was presenting a huge opportunity.

Not long after that piece ran, Google bottomed out at around $152 per share.

However, as recently as this February, just before the broader market pulled back, the stock had surged to nearly $345.

We’ll let you do the math, but if you’d followed our suggestion back then, you would have made a lot of money.

Today, we find ourselves in a very similar situation. Only this time, the spotlight has shifted to Meta Platforms, another one of our favorite stocks.

Meta: A Sudden Wave of Legal Pressure

Over the past week, Meta has faced a series of legal setbacks that have quickly captured media and investor attention.

In one closely watched case in California, a jury found the company liable for contributing to a young user’s mental health issues, with damages totaling several million dollars.

Around the same time, a separate case tied to child safety concerns produced an even larger headline number, with potential penalties reaching into the hundreds of millions.

Taken together, these rulings have created a sense that something bigger is unfolding. Commentators are already speculating that this could open the door to a wave of additional lawsuits, with thousands of similar cases already in the pipeline.

The narrative forming around the story is that Meta, and social media more broadly, is facing its “Big Tobacco moment.”

That framing is powerful. It’s also familiar.

The Market Is Reacting Exactly as You’d Expect

Unsurprisingly, Meta’s stock has come under pressure.

After trading above $738 per share in late January, the stock has pulled back sharply and is now sitting below $546.

The decline has been particularly steep in recent days, with shares falling nearly 10% in just the past week and roughly 17% over the past month.

Of course, not all of this is about the legal headlines.

The broader market has been under pressure due to geopolitical tensions tied to the Iran conflict, and ongoing concerns about AI-driven disruption have weighed on parts of the tech sector.

Still, there’s little question that these court rulings have added another layer of fear at precisely the wrong time.

And that combination, negative headlines layered on top of an already weak market, is often where the best opportunities emerge.

This Isn’t About Arguing the Case

Before going any further, it’s important to clarify what we are, and are not, saying.

We are not here to argue that Meta did nothing wrong. We are not dismissing concerns about social media use, particularly among younger users. And we are certainly not suggesting that some changes or safeguards aren't warranted.

Those are real issues that deserve serious consideration.

But from an investor’s perspective, the legal debate itself is not what determines where this stock goes next.

What matters is how situations like this tend to unfold over time, and how markets typically react to them.

What History Tells Us

If you step back, there is a very clear pattern in cases like this.

Initial rulings generate massive headlines and create the perception of existential risk. The media amplifies the story, analysts weigh in with worst-case scenarios, and investors begin to price in outcomes that may never actually materialize.

Then the legal process continues.

Appeals are filed. Decisions are challenged. Remedies are negotiated. And over time, the narrative shifts from “this changes everything” to “this will take years to resolve.”

We saw it with Google just last year.

We saw it with Johnson & Johnson and its long-running talc litigation, which began nearly a decade ago and continues today.

But look at how JNJ's stock has performed since then….

Does this look like a company that went out of business?

And we saw it in perhaps the most famous example of all, the lawsuits against Big Tobacco companies like Philip Morris, now known as Altria.

In each case, the initial reaction was dramatic.

In each case, the companies faced real consequences.

And in each case, the businesses survived, adapted, and ultimately continued to generate substantial value for shareholders.

There is very little in today’s Meta situation that suggests it will follow a fundamentally different path.

Meta’s Business Isn’t Going Anywhere

What often gets lost in moments like this is just how durable Meta’s underlying business really is.

This is not a company dependent on a single product or a narrow user base. Across Facebook, Instagram, WhatsApp, and Messenger, Meta reported approximately 3.58 billion daily active users as of late 2025.

That's nearly half the planet engaging with their platforms daily!

That level of scale is extraordinarily difficult to disrupt.

Even in the face of regulatory scrutiny, legal challenges, and shifting public sentiment, user behavior tends to be remarkably sticky.

People don’t simply walk away from platforms that are deeply embedded in their daily routines, social lives, and communication networks.

And as long as users remain engaged, Meta can continue to monetize that attention.

And guess what, the market knows this. Look at the chart below, and you'll see that, despite the share price decline, Meta's earnings estimates have not decreased at all.

The Same Pattern Is Playing Out Again

When you connect all the dots, the setup looks strikingly similar to what we saw with Google in 2024.

A major legal development triggers a wave of negative headlines. The narrative quickly escalates into something far more dramatic, with predictions of structural change or long-term decline. The stock sells off as investors rush to adjust to the perceived risk.

But beneath the surface, the core business continues to operate largely unchanged.

That disconnect, between perception and reality, is where opportunity is created.

The Bottom Line

In the case of Meta, we believe this is one of those moments.

Not because the legal issues are trivial. They aren’t.

But because the market’s reaction appears to be pricing in a level of long-term damage that history suggests is unlikely to materialize in the way many fear.

At HX Research, we’ve seen this dynamic play out repeatedly over the past three decades.

The headlines are loud, the uncertainty feels overwhelming, and the temptation is to step aside until things “clear up.”

But by the time they do, the opportunity is usually gone.

We think Meta today looks a lot like Google did in August of 2024. A great business caught in the middle of a legal storm, with a stock price reflecting fear more than fundamentals.

And if that pattern holds…

There's a good chance we'll be writing about this META moment again in the near future.

That article will detail this time as the point when investors who kept their focus on the bigger picture stepped in, bought Meta, and were handsomely rewarded for it.

Here is the original Google piece we referenced above. Enjoy.

HX Daily Redux

The DOJ Google Antitrust Suit

Here is a question submitted to us by several readers this week…

Earlier this week, a federal judge ruled in favor of the US Department of Justice (DOJ)’s claim that Google had acted improperly and in a monopolistic fashion.

“After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly,” US District Judge Amit Mehta wrote in Monday’s opinion. “It has violated Section 2 of the Sherman Act.”

Almost a half dozen readers asked us what this means. This surprised us, and we don’t often answer questions about individual stocks. Given the interest, however, we decided it made sense to address this situation.

What does this really mean for Google? And Apple? And you?

First, let’s describe what exactly is going on here in an easy-to-understand fashion.

Google has negotiated contracts worth billions of dollars with key companies in the mobile telephone business. Mostly Apple and Samsung. These contracts position them as the “default” search provider on those phones.

This means that when you go use your phone to do an internet search – unless you actively go in and change the settings – you will automatically use Google for the search.

How many of you have ever gone in and changed the default search engine?

We are guessing that the answer is not many of you. We know that we haven’t.

Part of that is because we think Google is great. We are happy with the product.

The way to think about this deal is that the mobile handset companies own a piece of real estate. Think of it as a neighborhood with many houses (applications) and there is a street going into the neighborhood.

Google pays them a bunch of money so that their house will be at the front of the street, and everyone can see it.

Could another search engine (like Microsoft’s Bing) pay Apple and Samsung to have their house at the front of the street?

Absolutely. We are sure the handset companies will sell that spot to whoever is willing to pay the most money.

There are also no real arguments that Google is a bad search engine. In fact, the judge acknowledged that Google is recognized as the best search engine.

It is unclear how consumers are being harmed. We don’t pay for search engines.

So - what exactly is the problem?

Our view is that the “problem” is that politicians like to score points with the public by going against big technology. Whether there is harm to consumers or illegal activity is beside the point.

Why did the judge agree? At this point, much of our judiciary has become as politicized as the rest of our government.

Some argue that this judgment will be as monumental as past judgments that broke up monopolies like AT&T and Standard Oil.

We don’t think so.

What happens if Apple and Samsung make the default browser access non-exclusive? An open auction like sports rights.

It would be hard to argue then that other companies do not have access and are being disadvantaged.

We think that this will go into appeals for years, and eventually, sometime in two to five years, you will read about a settlement that is inconsequential to Google as a whole.

Remember that another administration may not pursue the same aggressive path as the current one.

Even if we are wrong about the eventual outcome, our legal process ensures that it will not happen quickly.

Do we think this judgment matters to Google?

In the next six to twelve months – we do not. We also do not think it will matter beyond that, but our view is that the focus with the stock should be on the earnings and that investors will forget about this quickly.

Market Wizard’s Wisdom

One of the Greatest Investors on Wall Street Ever

Martin Zweig is one of the "Market Wizards" most influential in our trading and investing.

Zweig was a famed investor who attended the Wharton School at the University of Pennsylvania. He's widely known as a contributor to Barron's. But he's considered one of the greatest investors on Wall Street ever.

As we all attempt to process the historic market moves of the past week, we recalled a powerful Zweig quote and wanted to share it with you today.

If you've been with us for long, you'll recognize this as one of the core philosophies behind our approach to trading and investing.

The first place to start when thinking about his quote is that to make real money, you need real moves in a stock price.

A stock that goes back and forth and trades in a narrow range can be a great trading vehicle, but it's hard to make outsized returns. However, significant trends can last longer and go further than anyone ever expects.

The second thing to consider is taking advantage of the opportunities the market is giving you, not the ones you want it to provide. In other words, to make money in stocks, you need to find stocks that are moving.

In STP Trader, we primarily focus on two groups of trends. One of those is outside the scope of Zweig's comment. That's what we call "operational" trends. That is, keeping an eye on a company's operations across revenues, earnings, or other relevant metrics that investors pay attention to.

We like to find companies with consistent track records of growing these metrics and exceeding investor expectations. In my experience, this combination – growth and beating expectations – produces superior stock performance.

Management teams with long track records of outperformance are also likely to continue to outperform.

We combine this focus on operational trends with a view toward a stock's trend.

As a rule, we avoid trading stocks in a confirmed downtrend. We don't necessarily need to know why the stock is in a downtrend, and to be honest, we don't care.

A downtrend indicates that, for whatever reason, the stock market, in the aggregate, is not seeing enthusiastic demand for the shares—the reason why is irrelevant.

With thousands of liquid, publicly traded stocks out there, you should always be able to find tons in a confirmed uptrend. The uptrend tells us that the stock market is interested in the company and its stock, and typically, that interest is likely to continue.

Here's one last concept to think about with Zweig's quote: On the face of it, it sounds like a trading strategy. The reality is that following the trend is the best way to invest.

For investing strategies, we focus on stocks that we think can go up a lot. We don't mean 50% or 100%, but rather 300%... 500%... even 1,000%. You need to find stocks in major long-term uptrends to get those kinds of returns.

Like with trading and longer-term investing, we focus on stocks in uptrends and operational momentum. The best way to find a stock about to go up 1,000% is to find one where earnings per share are about to go up 1,000%.

That doesn't happen in a day, a week, or a month. It takes years. That means it takes some significant trends into account.

For avid traders, We recommend learning from Market Wizards like Zweig and incorporating their lessons into your approach to trading and investing.

We hope that you’ve enjoyed this week’s issue of HX Weekly…

Do you have any thoughts, questions, or feedback? Tell us more in the comment section or at [email protected].