To The Moon

The Swiss National Bank's US$54 billion loan to Credit Suisse apparently didn't restore the confidence in Credit Suisse. The next move is to change the owner for the bank. The Swiss authorities were busy over the weekend, brokering a merger between Credit Suisse and UBS. UBS has reached an agreement to acquire Credit Suisse for US$3.25 billion, or CHF0.76 per share. This price was less than half of the bank's market capitalization at the close of trading last Friday. In other words, a Credit Suisse shareholder saw the value of his shares decline 59% over the weekend while the market was close. This offer is particularly disappointing given that Credit Suisse's market capitalization was valued at US$27 billion at the start of 2022 and had peaked at US$79 billion in 2007. This deal can be se

Two US banks failed and were subsequently bailed out by the US government. The market reacted positively at first, but the good news was short-lived. Soon after, news broke of Credit Suisse running into trouble in Europe.Now, let's catch up with the situation at Credit Suisse.Why is Credit Suisse important?Credit Suisse is among the 30 global financial institutions designated as systematically important by the Financial Stability Board, indicating that they are deemed "too big to fail." The significance of this designation lies in the potential repercussions of such institutions collapsing.In contrast, Silicon Valley Bank and Signature Bank are relatively smaller than Credit Suisse. However, if Credit Suisse were to fail, the banking crisis could worsen and spread more widely due to the ma

No one has an idea what would break if the Fed raised the interest rate too fast. Seeing stocks being sold down in the past one year was not a concern because shareholders who have greater financial resources are better equipped to handle such volatility. But when innocent depositors get hurt, that's not acceptable. Despite the US government stepping in quick to make sure depositors of Silicon Valley Bank and Signature Bank are getting most of their money back, the fear of a banking crisis has not subsided. Bank stocks are still getting hammered. This is because people are expecting more banks to fail and the thought of this issue are spooking investors. To be clear, the depositors are getting their money back but not the shareholders or even the bondholders of the banks. Shareholders of S

Charlie Munger recently admitted that investing in Alibaba was a mistake because he underestimated the level of competition it faced as a retailer in the ecommerce space. This is true, as there are now several prominent ecommerce sites in China, including JD.com, Pinduoduo, Vipshop, Douyin, Kuaishou, and Xiaohongshu. The barrier to entry is not as high as some may believe, as new players continue to emerge and show promise. Let's talk about Pinduoduo in particular. Pinduoduo, launched just 8 years ago, has managed to carve a space for itself in the highly competitive ecommerce industry in China. Despite being a latecomer, it has now become the third-largest ecommerce player in China, after JD.com and Alibaba, both of which have been around for more than two decades. Pinduoduo found a n

The easiest way to answer the question is that a shareholder is a part owner of a business. But let's make it more insightful and answer it from the perspective of an Income Statement. The top line of an income statement is REVENUE. This is the amount of money the business took from its customers. You often hear 'the customer is always right' because the customers contribute REVENUE and help the business pay everyone else. The COST OF GOODS SOLD reflects the next most important group of people, the suppliers. In a chicken rice business, for example, the suppliers are crucial because there would be no business without rice and chicken. Hence suppliers must be paid promptly. OPERATING EXPENSES are expenses the business incurs to pay the landlord, staff, and other necessary expenses. If th

As we enter the third month of 2023, it's a perfect time to examine the current state of the market. In this evaluation, we'll utilize the S&P 500 index, a well-diversified collection of blue-chip stocks, as a benchmark for assessing the US stock market. Despite experiencing a correction over the last two weeks, the S&P 500 remains up by 2.9% from the beginning of the year until 1 March. When it comes to sector performance, Communication Services (XLC) and Consumer Discretionary (XLY) have outperformed the rest with a remarkable return of more than 10% in the past two months. On the other hand, Utilities (XLU) has been the weakest performer, declining by 9% over the same period. Here are the list of SPDR Sector performances (from the best to worst): Communication Services (XLC) +1

Over the weekend, Warren Buffett released his highly anticipated annual letter, which reflects his consistent investment philosophy year after year. For investors, this serves as a valuable reminder to revisit his timeless investment principles. I'll outline the key lessons from his letter. 1) Be business pickers, not stock pickers The stock quote is much easier to read than financial statements so many investors tend to focus on the share price movements and get too emotionally attached to the gains and losses in their investments, causing them to make poor buy and sell decisions as a result. Buffett provides an excellent example of the importance of focusing on fundamentals: "The company’s operating earnings – our term for income calculated using Generally Accepted Accounting Principles

SATS has finally released details on their rights issue, which they had been speaking of for months, to raise a significant amount of funds. First of all, the rights price is set at S$2.20. It means that you need to pay this amount to get each additional share. The allotment is 323 Rights Shares for every 1,000 shares you own. If you indeed have 1,000 shares, you would need to make a payment of S$710.60 (323 x S$2.20) to get your full entitlement. It's worth noting that subscribing to the full allotment of 323 Rights Shares may result in odd lots of 23 shares, which can be difficult to trade and may incur additional fees - lot size is in multiple of 100s. A possible solution is to subscribe to 300 Rights Shares, forfeiting the remaining 23 shares. This approach would result in a round lot

Tech companies are a copycat nowadays. They are feeling insecure whenever a competitor launches something and they felt they have to do it too. The most recent case being Meta, who is launching a paid verification service akin to Twitter Blue. The service is called Meta Verified. The 'blue tick' verified profile has been around for a while and it was only granted to personalities with big followings, for free. Now Meta wants to charge for that verified status for US$11.99 a month on the web and US$14.99 a month on iOS/Android (due to the fees on App/Play stores.) These prices are higher than Twitter Blue's US$8 a month and $11 a month on iOS/Android. This could be because Meta has a much larger platform than Twitter, with Facebook and Instagram under its umbrella. As a result, they have th

It surprised the investment world when Berkshire Hathaway announced a $4.1bn investment in TSMC in 2022. Buffett rarely ventures out of the US and even if he did, the stake isn't huge typically. So it seems unusual when TSMC was one of the top holdings in Berkshire's portfolio. That said, it is not difficult to guess why TSMC is a Buffett stock. TSMC is a clear leader in semiconductor manufacturing and currently cornered more than 50% market share in the world. The technology know-how to make the world's most advanced chips and the ability to produce at scale are the competitive advantages of TSMC. If so, why did Berkshire Hathaway sell majority of its TSMC stake in less than six months? He didn't explain and didn't need to, so we can only speculate why he did it. Berkshire bought TSMC sh