To The Moon

Fear has once again instilled a sense of apprehension within the financial markets due to recent macroeconomic developments, thereby reigniting concerns of an impending economic downturn. The $S&P 500(.SPX)$ has experienced a decline of more than 10% from its peak in July, thereby entering into a correction phase. This decline in equity values has coincided with a notable upsurge in treasury yields, marking their highest levels since the 2007 Global Financial Crisis. As a proponent of the wisdom of remaining invested over time, I posit that the recent sell-off in U.S. equities may represent an opportune moment to amass shares in companies of exceptional quality. In this discourse, I shall delineate two equities that, in my assessment, hold the potential to deliver attractive returns on capital over the long term. Microsoft: Growth Firing On All Cylinders In the midst of persistent geopolitical uncertainties and a challenging macroeconomic landscape, $Microsoft(MSFT)$ has continually demonstrated its prowess as one of the most impeccably managed enterprises globally. The technology behemoth has consistently reported stellar quarterly financial results, recording a remarkable growth of over 27% in net income and 25% in EBIT. Microsoft's strategic thrust in the integration of artificial intelligence across its spectrum of offerings, spanning from cloud computing to personal computing and gaming, has consistently yielded impressive results. Notably, Microsoft Cloud has achieved a quarterly revenue exceeding $31.8 billion, reflecting a formidable 24% YoY growth. Furthermore, Microsoft recently finalized its acquisition of the renowned video game manufacturer, Activision Blizzard, marking a monumental move that could potentially position Microsoft as a dominant force in the gaming industry. The company's high-quality character is discernible through its share price, which commands relatively elevated valuation multiples when juxtaposed with prevailing market standards. Presently, Microsoft is traded with a P/E ratio of 31.74, in contrast to the S&P 500's P/E ratio of 24.59. Therefore, should Microsoft's stock price continue to experience downward pressure amid a broader market sell-off, I am of the opinion that this presents a compelling opportunity to procure shares in a high-caliber company, propelled by its innovative solutions and steadfast growth trajectory. OCBC: A Pillar of Financial Fortitude $OVERSEA-CHINESE BANKING CORP(O39.SI)$ is bestowed with the distinction of being one of the three largest banks in Singapore, underpinned by a highly diversified business framework. The institution also enjoys the tailwinds of favorable macroeconomic conditions, as evidenced by its achievement of over 38% net income growth in the first half of 2023. This commendable performance is underpinned by record net interest income, augmented trading, and investment income, and an upswing in insurance profits. Notably, as inflation persists in a manner more tenacious than initially anticipated, central banks worldwide have reiterated their commitment to maintaining higher interest rates for an extended period. This commitment inherently benefits institutions such as OCBC, as it safeguards their net interest income. Beyond its impressive financial performance, OCBC has chosen to bolster its 2023 interim dividends to 40 cents, marking a remarkable 43% increase, equivalent to 12 cents, in comparison to the previous year. This decision elevates OCBC's dividend yield to 5.4%, outstripping competitors such as DBS (4.8%) and UOB (4.8%). The significance of dividends in times characterized by elevated inflation cannot be understated, as they offer a means of providing investors with income and mitigating some of the impacts of rising living costs. Additionally, OCBC presents an enticing valuation proposition with a P/B ratio of 1.06, particularly when measured against the metrics of DBS (1.45) and UOB (1.11). Consequently, OCBC's multifaceted business model, robust dividend yield, and attractive valuation render it an appealing prospect for investors navigating a high-interest rate environment. Conclusion In conclusion, I contend that attempting to accurately time the market is an exceedingly challenging and, in many respects, a near-impossible endeavor. Rather than expending energy analyzing the market's potential trajectory, a more prudent approach is to engage in scrutiny and investment in high-quality enterprises, such as those discussed in this article. As the venerable Albert Einstein once articulated, "compound interest is the eighth wonder of the world." Patient investors capable of weathering short-term volatility are destined to reap enduring rewards. @TigerStars @CaptainTiger @TigerEvents