To The Moon

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The predominant company in the vital semiconductor sector, TSMC, has published its third quarter results. Its business performance would give us a clue to the state of the global economy. However, the results were lackluster. TSMC reported an 11% decrease in revenue and a 25% drop in profits (measured in $NT) compared to the previous year. News reports have even called this situation TSMC's most significant profit decline in half a decade, and marking two consecutive quarters of profit decline, a trend not observed in four years. Going beyond the headline figures, I aimed to delve further into the various segments to gain a more detailed understanding of which specific industries are underperforming. TSMC's primary source of revenue is divided into two key segments. As of 3Q23, High Perfor

For the past few weeks, the financial markets have been quite unsettling to observe, with growing discussions regarding a potential impending crash. The primary concern at present revolves around the rising long-term yields of US Government bonds. The bigger question is: What is causing this rise in yields? This analysis is crucial in determining whether we are witnessing a necessary market adjustment or the onset of a crash. There are a handful of factors: 1) Rates to stay higher, longer The Federal Reserve has signaled the possibility of raising interest rates once more before the year's end, and that higher rates will persist for a longer period. The market had to adapt to this altered expectation, resulting in an increase in longer-term bond yields, and the correction in the market com

The US Government is currently actively pursuing legal action against not just one, but two major players in the Big Tech industry. Following its lawsuit against Alphabet, the FTC, in collaboration with 17 states, has initiated legal proceedings against Amazon, citing anti-trust concerns. Here are some of the allegations leveled against Amazon: Undercutting the prices of other sellers with its own products. Penalizing sellers who offer lower prices by relegating their listings lower in search results. Compelling sellers to utilize its warehousing and delivery services. Deceiving numerous consumers into unintentionally subscribing to Amazon Prime. Amazon's share price saw a 4% decline after the lawsuit became publicly known. It's worth noting that the U.S. Government has not had a strong tr

Selling covered calls presents an enticing opportunity to enhance your income stream from your stock holdings. To illustrate, if you possess Apple shares and believe that a suitable selling price for them is $200, you may opt to sell call options with a strike price of $200. Should the stock price indeed surpass $200, the options may be exercised, resulting in the sale of your Apple shares and realizing your profits. However, if the price remains below $200, the options will expire without value, allowing you to retain the option premium. This strategy enables you to extract additional yields from your stock investments. So, should everyone sell covered calls since it sounds like free money? While it may increase the cash flow generated from your stock portfolio, it might not necessarily i

The Federal Reserve chose not to increase interest rates during the latest FOMC meeting, yet the stock market experienced a decline. Some investors might be wondering why, considering that this should be a piece of positive news. We must remember that the market is forward-looking and would price its expectations accordingly, often before the event happens. In this particular instance, the market was not reacting to the current FOMC decision but was instead preparing for future ones. The present pause in interest rates had already been anticipated and factored into the market's calculations. In fact, the futures market for the Fed's interest rates indicated an over 80% probability that rates would remain unchanged, and that prediction proved accurate. But what the market didn't expect was

The lingering apprehension about interest rate hikes never entirely go away. Recently the concerns of a rate hike have escalated, as indicated by the movements in financial markets. Firstly, long-term bond yields have continued their upward trajectory. The yield on the US 10-year bond has climbed from 4.267% to 4.289%, while the 2-year Treasury yield has surged past 5%, reaching 5.022%. This reflects an expectation that interest rates will remain elevated for an extended period. Thirdly, stocks have once again experienced a decline after a brief rebound last week. The declines were not substantial, with the S&P 500 falling by 0.7% and the Nasdaq Composite dropping by 1.1%. It doesn't help when oil prices have been trending up and both major oil exporting countries, Saudi Arabia and Rus

We often hear the stock investing advice of 'buy and hold' as though it is a panacea for all investing problems. Such advice also premised on the assumption that 'stocks go up in the long run'. This can lead investors to mistakenly believe that merely holding onto a stock for an extended period guarantees profitability. However, this is dangerous advice because there are stocks that don't go up in the long run and may caused losses and missed opportunities for an investor. I believe no one wants to take ten years to find out he has lost money. In a research titled 'Long-Term Shareholder Returns: Evidence from 64,000 Global Stocks,' led by Hendrik Bessembinder, an extensive analysis encompassing 64,000 global common stocks spanning from 1991 to 2020 revealed a striking revelation. It was ob

Two weeks ago I talked about the stock market was undergoing a correction. I said it's not a big crash, just a correction, and I expected it to keep going down for another month by about 10%. But now, in the last few days, markets have showed some strength and this has led me to wonder if the correction is done. The S&P 500 has rebounded by 2% in the past 5 days. Displaying Is The Stock Market Co... Likewise, the tech sector, represented by the QQQ, has gained 3%. Displaying Is The Stock Market Co... The fear gauge indicator known as VIX has dropped by 15% after reaching its highest point of around 17.89 on August 17, 2023. Displaying Is The Stock Market Co... And a concern that was bothering the market earlier – the rise in long-term interest rates – has now taken a bit of a turnaroun

Companies are expected to experience increased interest expenses as interest rates rise. However, this doesn't apply universally. There were companies who took on long-term debts when interest rates were low and currently don't require refinancing. Additionally, some of these companies held substantial cash reserves that benefitted from high interest rates, resulting in the generation of millions of dollars in interest income! Bloomberg ran a piece on this, highlighting a roster of companies that generated interest income exceeding $200 million during the most recent quarter: The Big Tech are rather impressive, with Apple and Alphabet earning nearly $1 billion in interest income. High interest rates didn't affect these companies due to their substantial cash holdings and continuous cash ge