To The Moon

My Investing Muse (02Sep24)

Layoffs & Closure news

• Goldman Sachs is planning to cut a few hundred jobs as part of an annual review process - Yahoo Finance

• Shell is planning to cut a fifth of its workforce in two oil and gas exploration divisions, as a cost-cutting drive by chief executive Wael Sawan reaches its core upstream business. - FT

• Big Lots is reportedly considering filing for Chapter 11 bankruptcy. Stock is down 27% in the pre-market. X user Triple Net Investor

• Shake Shack to shut 6 California locations, including 5 in LA, after state’s $20 minimum wage hike, per NYP.

• Layoffs at Cisco securities - Times of India

• Chinese employees at US computing giant IBM have expressed dismay over a terse conference call with the company’s American executives on Monday, as the firm cuts hundreds of jobs at two local research labs - SCMP

Layoff & closure news continued into the week.

US inflation (CPI Calculator)

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Inflation in America has risen 21.93% since Jan 2020. Have we seen this in our income? How do we feel compared to this data? Is the inflation much lower or higher? Source: BLS

Top 10 stocks in S&P500

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US stock market concentration is getting worse: The top 10 stocks now reflect ~38% of the S&P 500 market cap, near the all-time high of 39% seen in June. Over the last decade, this share has more than DOUBLED. To put this into perspective, in 2020, the top 10 companies accounted for just ~25% of the S&P 500. Now, this percentage even exceeds the 2000 Dot-Com bubble levels by ~12 percentage points. A few key stocks *are* the stock market. - X user The Kobeissi Letter

This is why the indices are “skewed”. This may also hide the strengths and weaknesses that we do not see from the other companies in the indices and market.

My final thoughts

The market looks forward to a coming Fed pivot - where the Federal Reserve drops the interest rates after accounting for inflation and unemployment data.

There seem to be some inflationary pressures coming from insurance, housing and other sectors. One of the key events would be the coming presidential candidates’ debate. Let there be more debate on policies instead of personal attacks. This would help many who are still undecided.

The extreme weather in the USA, Japan and other parts of the world would add to the cost of living.

One area of concern is Artificial Intelligence (AI). The elevated interest rates are putting pressure on “results” following AI investments. There would be expectations for more returns - more revenue, productivity and profits. One of the leading lights in AI, OpenAI may lose $5B in 2024. There were also concerns about cash flow running out by the end of the year.

AI will be part of the future but not every AI company can reap its benefits. More companies should fall away compared to those who are successful. The Fed pivot may ease some of the tensions but will this be too little, too late?

Let us do our due diligence to identify great companies. When the time comes, let us invest boldly.

@TigerStars

$S&P 500(.SPX)$