My investing muse (23 Jan 2023) - BigTech layoffs, underperforming stocks & debt ceiling

My investing Muse

BigTech Layoffs

BigTech has started the year with a series of layoffs. Unfortunately, this could be closer to the start instead of the end. The coming earnings season will provide some insight into the outlook of the market. Beyond the revenue and EPS, the market outlook will also affect the price following the earnings. Let us monitor the outlook.

With the layoffs, it would lead to reduced spending. However, we can also see more starting their own businesses - choosing to be entrepreneurs than salaried staff. Hopefully, we can see more innovations and advances in the coming months.

Underperforming stocks

If we have any underperforming stocks, it would be good to take profits or stop losses for these positions. Let us divert the funds to other assets with much better fundamentals. At the same time, we need to look out for businesses with weakening balance sheets. There were some businesses which surged during Covid without profits and more debts. In order for these companies to generate cash flow, they need to take on loans (at higher interest rates) or sell more shares in the market. Both are not good for the business and outlook. Should they accumulate more debt, these are red flags which will push these stocks into the “stop loss” pile. Personally, I may follow the technical indicators and cut my losses (or take profits) for such stocks.

Debt Ceiling

Summary of the US Debt Ceiling

Warnings have been sounded about the debt ceiling. While most have resigned to an eventual increase in the debt ceiling, the negotiations to get to this agreement can be tedious and painful. The US is expected to avoid a default on their payments but there is nothing guaranteed. This could cause much volatility in the market.

Global Economy by GDP - source by IMF, graphics by visualcapitalist

The US has an annual GDP of about USD$25 trillion. Thus, the payment of $1.2 trillion in interest (by 2024) can set the economy back significantly from various meaningful upgrades & revamp of policies. The practice of borrowing money from the future needs to stop. The government needs to spend within their means.

In lieu of these, I prefer to be monitoring the market this season. Not buying can also be a good trade. The coming GDP figure will be interesting and the earnings reveal much more about how the market is performing. Let us research before investing.

@TigerStars

$S&P 500(.SPX)$  

# Macro Trend

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  • BettyT
    ·01-22
    TOP
    Wise planning with monitoring .
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    • KYHBKO
      thank you.  monitoring helps to ride out this nervy time. 
      01-23
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  • jeffry09
    ·01-24
    TOP
    The TECH stocks like MSFT is still undervalued.
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    • KYHBKO
      what is a fair intrinsic value of Microsoft for you?  thanks for sharing
      01-24
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  • RK0948
    ·01-24
    TOP
    Thanks for sharing
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    • KYHBKO
      you're welcome
      01-24
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  • PandoraHaggai
    ·01-25
    TOP
    When do you think tech companies will stop laying people off?
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    • KYHBKO
      this is a vicious cycle.  it should get worse before it gets better.  the market will need to hit the bottom first and we could still be a distance away.
      01-26
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  • BellaFaraday
    ·01-25
    TOP
    Will default really happen? That's what worries me
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    • KYHBKO
      it has started with some developing countries. US has a few months to fix this fast before they get into default, losing their place as world's reserve currency.
      01-26
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  • MortimerDodd
    ·01-25
    TOP
    The debt problem is certainly worthy of our attention right now
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    • KYHBKO
      one man's debt is another man's asset. it could get really ugly. 
      01-26
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  • EvanHolt
    ·01-25
    TOP
    Investing in stocks with good fundamentals is the only thing we can do
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    • KYHBKO
      yes.  personally,  I am not really buying now. just researching and shortlisting companies
      01-26
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  • DonnaMay
    ·01-25
    TOP
    To be honest, the layoffs have made me lose faith in the stock market
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    • KYHBKO
      it is tough for all and it should get worse. good time to put up a more defensive portfolio.
      01-26
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  • AricLo
    ·01-24
    TOP
    thanks for sharing
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    • KYHBKO
      you're welcome
      01-24
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  • RXU
    ·01-23
    TOP
    monitor. eye on
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    • CHUMOI
      Ok
      01-23
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  • Lsiang
    ·01-22
    Thanksss
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  • Mrzorro
    ·01-24
    HAPPYCNY
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  • henghm
    ·01-28
    like
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  • NPC69
    ·01-24
    K
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  • Kimi_Loke
    ·01-24
    [财迷]
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  • ekwee75
    ·01-24
    [Happy]
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  • Paul981124
    ·01-24
    👌
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  • BenWong78
    ·01-24
    😀
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  • benchang
    ·01-24
    [呆住]
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  • Win 88
    ·01-24
    [开心]
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