To The Moon

My Investing Muse (22Jul24)

Layoffs & Closure news

• Salesforce, a cloud-based software company, has reduced its workforce by around 300 employees, reports Bloomberg, citing sources. - Yahoo Finance

Layoff & closure news continued into the week.

Crowdstrike Saga

News about the Crowdstrike

Crowdstrike lost the falcon and it cost us billions ... and more. Spain said billions of dollars of productivity and commerce would have been lost across the world due to this outage. - NZ HeraldTelevision channels, airports and banks around the world have been knocked offline in a massive IT outage causing Windows computers to suddenly shut down. - Telegraph UKPlanes are grounded due to IT outage. - Sky News

What other stocks should we look at after Crowdstrike tumbles? Keep away from Microsoft for now.

Is this a time to short Crowdstrike? How about Microsoft?

Following the global outage, the likes of AWS, Alibaba Cloud, Tencent Cloud, Oracle Cloud, Google Cloud and more should note the companies affected and prepare their pitch. The same should be done for CrowdStrike competitors.

Where are our business continuity plans when we need them? Do not ignore the training and the drills. It is no longer about just in time (JIT) but let us also look at just in case (JIC). What can AI do in this case? Let's consider and plan.

S&P493 & The Mag7

I came across a blog post dated 17 July 2024 about S&P493. In this article, we learnt about the Magnificent 7 (let’s call them Mag7 for short). The Mag7 has demonstrated strong growth in 2023 as per the Yahoo Finance chart below:

Infographic: The Year of the 'Magnificent Seven' | Statista

Here are some of the highlights of the S&P493:

You’ve heard of the “Magnificent Seven” stocks: seven names that have carried U.S. markets to one new all-time high after another.But what if you were told that just three of these stocks were responsible for almost half of the S&P 500’s overall gain in 2024?These seven companies–Apple (AAPL), Amazon (AMZN), Alphabet (GOOG, GOOGL), Meta Platforms (META), Microsoft (MSFT), NVIDIA (NVDA), and Tesla (TSLA)–are up a collective 31% in the first six months of 2024, compared to 7.4% for the rest of the index (the “S&P 493”). The overall S&P 500 has risen 14.5%.However, NVIDIA, Alphabet, and Microsoft collectively posted a 49.3% gain between January and June 2024, adding around $2.85 trillion in market cap. The S&P 500 overall gained $5.8 trillion of market cap in the first six months of the year, meaning these three companies drove 49% of the index’s total gains. (All seven “Magnificent Seven” stocks as a collective accounted for 64.3% of S&P 500 market cap growth for the first half of the year.)

The magnificent 7 collectively account for 64.3% of the market capital growth for the first half of 2024. This implies that these seven companies could drive the market in any direction. They can lead the rally in one day, and they can plunge the market in another.

If the Mag7 are the main players behind the S&P500 growth, the performance of the 493 companies could be hidden behind a singular chart.  The S&P 500 represents more of the magnificent 7 than the rest of the 493 companies. Treating the S&P 500 as a representation of the economy could be skewed because of such weightage.

Let us look at the 493 businesses separately. Their struggles may not be reflected in the S&P 500 chart. Looking at the average in such cases may not give us a better sense of the general market or economy.

My final thoughts

Following the failed assassination attempt on presidential candidate Trump, the country is in an upheaval. America is one inch away from having a civil war should the assassination be successful. This is not the way democracy should work. We should have the freedom to express our opinions and yet big enough to respect any differing opinions. We need the coming election to be done well as America plays a big part in the global economy.

The Federal Reserve needs to look at the macro data closely before deciding on the interest rate decision in the coming months. The earnings season is an important reference as many investors will look at the outlook closely. The outlook can affect the stock price much more than the revenue and earnings from the previous quarter.

The Democrats are having cold feet towards President Biden. There is much room for volatility in the coming weeks. Let this consider hedging as part of our current portfolio.

@TigerStars

$S&P 500(.SPX)$

$CrowdStrike Holdings, Inc.(CRWD)$

$Microsoft(MSFT)$

$ProShares Ultra VIX Short-Term Futures ETF(UVXY)$