WHY $SPDR DJIA ETF(DIA)$ FELL BY ALMOST 1%?As US bond yields inched higher, US stock market is reacting negatively with megacap stocks such as $Amazon.com(AMZN)$ & $Apple(AAPL)$ leading the losses.Investors are weighing in the likely further interest rate hike by Fed and typically with a rate hike, tech and growth stocks suffer the most. However, fellow Tiger community, don't be disheartened! If you are invested in great businesses, continue to DCA into the market. In such panic sell off, it might be a good time to scoop up somegreat value shares. All the best! Invest Safe!@TigerStars @Daily_Discussion @MillionaireTiger @CaptainTiger
The S&P 500 $S&P 500(.SPX)$ failed to maintain its winning streak of 4 consecutive weeksof gains, declining 1.21% this week after a strong four weeks. On the weekly chart, it reached the 50 period moving average and rejected off it.S&P 500 weekly chart with 50 & 100 MA200 daily MA RejectionOn the daily chart, the 200 period moving average was strong resistance as sellers stepped in to take profits. Key levels to watch for next week will be the 4180 level, which acted as resistance during late May into early June. That zone is around the 100 day moving average, and what was resistance last time might become support. If this fails, it will be interesting to see where the next support level comes in, likely either 3880 level or 50 day moving average. S&P 500 daily chart
A strong dollar index is bad for S&PThe dollar index has been gaining traction in the last week, and has reached the 108 level. Support for the DXY has been at the 50 day moving average, and is getting close to the high of 109.29 on July 14. The DXY is inversely related to the S&P 500.DXY vs S&P 500Jackson Hole Symposium The Federal Reserve's Jackson Hole Symposium starts on Thursday August 25, and traders will be looking for clues on the expected paceand size of rate hikes. Friday August 26, at 10 am, Fed chairman Jerome Powell will give a speech at the Jackson Hole forum and that willbe key for the markets.
The Dow Fell, Bed Bath & Beyond Slumped—and What Else Happened in the Stock Market Today
The stock market slumped Friday as investors contended with mixed signals from the Federal Reserve amid signs of a resilient U.S. economy.The $DJIA(.DJI)$ fell 292 points, or 0.9%, while the $S&P 500(.SPX)$ dropped 1.3%, and the $NASDAQ(.IXIC)$ slumped 2%. All three indexes finished the week lower, ending four consecutive weeks of gains for the S&P 500 and the Nasdaq.Stocks closed with modest gains Thursday after U.S. jobless claims unexpectedly fell during the week ended Aug. 13, the first decline since late July, suggesting the labor market remains strong. The Philadelphia Federal Reserve’s monthly manufacturing index also surprisingly accelerated in August.Strong economic data isn’t necessarily good news when the Federal Reserve is trying to figure out how much it needs to raise interest rates to tamp down inflation. Richmond Fed President Thomas Barkin said Friday the central would do what it would take to bring down inflation, even though doing so could lead to a recession.“We’re committed to returning inflation to our 2% target and we’ll do what it takes to get there,” Barkin said Friday during an event in Ocean City, Maryland.Barkin’s comments came after St. Louis Fed President James Bullard on Thursday said he favored a three-quarters point hike at the Fed’s next meeting in September, continuing the pace of the past two meetings. Bullard toldThe Wall Street Journalin an interview that the central bank “should continue to move expeditiously to a level of the policy rate that will put significant downward pressure on inflation.”Kansas City Fed President Esther George, however, said the “case for continuing to raise rates remains strong,” but added that the “question of how fast that has to happen is something my colleagues and I will continue to debate, but I think the direction is pretty clear.”George told a Kansas City economic group that the Fed has “done a lot, and I think we have to be very mindful that our policy decisions often operate on a lag. We have to watch carefully how that’s coming through.”Both Bullard and George are voting members of the Federal Open Market Committee, the central bank’s rate-setting committee.The comments from both Fed officials come before the Fed’s annual Jackson Hole conference in Wyoming next week at which Fed Chairman Jerome Powell will be speaking. His comments will be closely monitored by Wall Street.Investor focus remains on the Federal Reserve's pace of future interest-rate increases.“Investor focus will now shift to the upcoming Jackson Hole meeting, where central bankers will have another opportunity to address how it plans to adjust monetary policy over the coming months,” says William Huston, chief investment officer at Bay Street Capital Holdings in Palo Alto, Calif.Europe will have to adjust too. Germany’s producer price index for July, released on Friday, jumped 37% from the previous year, and it’s likely the European Central Bank will have to raise rates by at least half a point to start reining it back in.“We just do not have words to describe how disconnected the ECB is from reality with their benchmark rate at zero,” wrote NatAllinace Securities’ Andrew Brenner.With so much on its plate, the market is finally realizing that it might have come a little too far too fast. The S&P 500 has paused near its 200-day moving average, just about where technicians would expect it to. It’s the perfect place to take some profits, then enjoy the weekend and wait to see what the Fed has to say next week.These stocks are on the move Friday:$Bed Bath & Beyond(BBBY)$ declined 41% after RC Ventures, the firm run by activist investor Ryan Cohen,sold its entire stake in the home-goods retailer.$Applied Materials(AMAT)$ dropped 3.4% after the semiconductor-equipment maker said it expects fiscal fourth-quarter revenue of about $6.65 billion, higher than Wall Street estimates.$MSG Entertainment(MSGE)$ stock gained 3.4% after the company said it was exploring a spinoff of its traditional live entertainment and the MSG Networks businesses.$Bill.Com Holdings, Inc.(BILL)$ climbed 16% after the cloud software company posted fiscal fourth-quarter results that beat analysts’ forecasts and issued first-quarter revenue guidance also above estimates.$General Motors(GM)$ gained 2.5% after the company reinstated its dividend.$John Deere(DE)$ rose 0.5% aftermissing earnings expectations.$Foot Locker(FL)$ surged 20% after the companybeat earnings expectationsand named a new CEO.
Reuters Buffett's Berkshire Hathaway authorized to buy 50% Occidental stake -FERC order
A U.S. regulator has authorized Berkshire Hathaway Inc, the company controlled by billionaire Warren Buffett, to buy up to 50% of the common stock of oil company Occidental Petroleum Corp.In an order made public on Friday, the Federal Energy Regulatory Commission (FERC) said that authorization was "consistent with the public interest."Occidental shares were up 6.6% at $69.16 in afternoon trading.Neither Berkshire nor Occidental immediately responded to requests for comment.Occidental's share price has more than doubled this year, benefiting from rising oil prices following Russia's Feb. 24 invasion of Ukraine.Berkshire began buying Occidental shares around the time the invasion began, and by Aug. 8 had accumulated a 20.2% stake.It sought FERC authorization for a maximum 50% stake on July 11, saying it would not hurt competition, undermine regulators' authority, or cause consumers to pay more.Berkshire also owns $10 billion of Occidental preferred stock, which helped finance the 2019 purchase of Anadarko Petroleum Corp, and has warrants to buy another 83.9 million common shares for $5 billion.
$GoodRx Holdings, Inc.(GDRX)$ can't get much worse than this. Next week will be interesting to watch for how GDRX perform. MACD indicators seem to indicate a softening in negative sentiment, and the price is approaching its 52-week low even though it's recent earningresult was not all doom and gloom. A long punt, perhaps? [Lovely] [Victory]
$Alphabet(GOOGL)$ is a good company to own forever. So far no body can beat google and YouTube, any information we need, first choice. Cooking recipes/videoOnline / live entertainment Reserch on anything on earthThe information found in Google n youtube quite relevant, upto date. Everything you need, can find in there.Long term bullish 🤩Not investment advice, pls do yr own DD [Smile]
Bed Bath & Beyond stock is crashing after Ryan Cohen's exit
Meme stock influencer Ryan Cohen is sending $Bed Bath & Beyond(BBBY)$ stock plummeting.Shares of the badly struggling retailer cratered 45% in pre-market trading on Friday as itwas disclosed late Thursday Cohen's RC Ventures sold his entire position in Bed Bath & Beyond. Cohen, who is also the chairman of GameStop, had about an 11.8% stake in the company.Cohen's exit caps off an otherwise insane week of trading for a retailer not too far away from entering a grave alongside Sears, Kmart, Borders, and Circuit City.Bed Bath & Beyond stock skyrocketed by nearly 70% in intraday trading on Tuesday as a result of a massive short squeeze. BBBY stock finished that session up 29% in a volatile day. From Tuesday's close to prior to Cohen's disclosure after Thursday's session, shares had gained another 17%.Cohen initially disclosed a 9.8% stake in the company in March, and the recent resurgence of BBBY stock involved the meme community once again rallying together to counter institutional forces that hold opposing views on the stock and the underlying business.On Monday, Yahoo Finance reported on signs of financial stress at Bed Bath & Beyond locations in New York — and received colorful feedback from BBBY fans. On Tuesday, B Riley slashed its rating to Sell on Bed Bath & Beyond. Analysts at UBS and Wedbush also reiterated their sell ratings on the stock this week.But with Cohen now out of the picture, the market may turn back to focusing on Bed Bath & Beyond's bleak near-term outlook.And, as we've previously reported, it's brutal.After a failed push in 2021 and most of 2022 into stocking stores with private label goods no one had heard of while also closing stores and firing workers, Bed Bath & Beyond ended its most recent quarter with a little more than $100 million in cash, tanking sales, weak store traffic, and a badly damaged brand.There is currently an interim CEO running the business, which came about after the booting of former top Target exec Mark Tritton, and some observers are wondering whether vendors will continue to ship all of the merchandise that Bed Bath & Beyond needs for the holiday season amid the retailer's severely weakened financial state.A man takes a closer look at coffee makers while shopping inside of a Bed Bath & Beyond store in New York April 13, 2011. REUTERS/Lucas JacksonIn a filing on Wednesday, Bed Bath & Beyond said that it may have an announcement on a capital raise by the end of August."We think the fact that RC Ventures plans to liquidate its entire stake in the stock is a telling sign that there is less and less support of key fundamentally driven names in this gave," Wedbush analyst Seth Basham, who also has a sell rating on Bed Bath & Beyond stock, said on Yahoo Finance Live. "With that catalyst, we think the stock can reverse its course and start trading down."Other top Wall Street analysts also reiterated that investors should beware on BBBY."The road ahead will be long and filled with a lot of challenges," UBS analyst Michael Lasser said on Yahoo Finance Live. "If they do come out of this challenging situation, the business could look a lot different — probably would look smaller."On Thursday, Lasser reiterated a sell rating on Bed Bath & Beyond shares and slapped the stock with $3.50 price target, which assumed about 80% downside risk to the BBBY stock price at the time.
Bitcoin Sinks to Below $22,000. Crypto Stocks Coinbase and Marathon Digital Tumble.
Bitcoin sank to below $22,000 on Friday, following global stocks lower amid uncertainty over how aggressive the Federal Reserve would be in its effort to cool inflation with interest-rate hikes.Bitcoin, the world’s largest cryptocurrency, has declined 8.7% to $21,443 over the past 24 hours, according to CoinDesk. The selloff came afterBitcoin briefly crossed $25,000 over the weekendfor the first time since mid-June. The crypto had received a boost from a slowing of U.S. inflation. Traders felt that took some pressure off the Federal Reserve, which has been raising interest rates to tame rising prices.U.S. stocks were headed lower Fridayand shares in Asia and Europe fell as Federal Reserve officials offered slightly divergent views on the pace of future interest-rate hikes. St. Louis Fed President James Bullard on Thursday said he favored a three-quarters point hike at the Fed’s next meeting in September. Kansas City Fed President Esther George, however, said the “case for continuing to raise rates remains strong,” but added there was debate over “how fast that has to happen.”Bitcoin and its peers should, in theory, trade independently of mainstream finance, but they have proved to be largely correlated to other risk-sensitive assets like stocks.Craig Erlam, senior market analyst at Oanda, said that while the trigger for the Bitcoin selloff wasn’t clear, “the fact that it has barely recovered any of those losses suggests there is substance to the move.”Erlam added that the break below $22,500 “could be significant if it holds, with the next key test once more being $20,000.’ He added: “The crypto winter may not be over yet.”Ether,the second-largest token, has dropped 7.2% over the past 24 hours to $1,717. Smaller tokens such asSolana and Cardano also fell sharply.Crypto-related stocks such as $Coinbase Global, Inc.(COIN)$, $Marathon Digital Holdings Inc(MARA)$ and $Riot Blockchain, Inc.(RIOT)$ dropped 8.7%, 12.2% and 11.4%, respectively.
ThesisReflecting on the June quarter earnings season, few companies disappointed to a similar degree as online entertainment platform operator $Roblox Corporation(RBLX)$ The company missed analyst estimates both with regards to bookings and revenues, and the stocksold off more than 17% after the announcement (aftermarket reference). Following the June quarter results, I turn much more cautious on RBLX stock.Since Iinitiated coverageon Roblox with a Buy rating and $50.3/share target price, the stock is up about 8%. While I still believe the long-term narrative of a secular growth story is attractive and remains intact, the near- to mid-term outlook looks much more challenging than what the market is pricing - and honestly more challenging than what I have expected. Accordingly, I downgrade my recommendation to Hold and adjust my target price to $45/share to reflect lower EPS outlook.For reference, Roblox stock is down -60% versus a loss of about -15% for the S&P 500.Roblox's June QuarterRoblox reported Q2 resultson August 9th. During the period from April to end of June, the company reported revenues of $591 million (3% above consensus), which is an increase year over year of about 30%. Roblox's net booking, however, which adjusts sales for deferred revenues and is a much more relevant metric for the company, declined by about 4% year over year to $640 million. Notably, this is the second consecutive quarter of a declining net booking metric and this does not read well for a growth stock trading at almost x10 price to sales. Roblox's net loss was worse than expected: $176 million versus a loss of $157 million expected by analysts. Chief Business Officer Craig Donatocommented on CNBC:We're very much in investment mode, and that's going to put a little bit of drag on earnings, but these are investments that are the right investments for us to make that will pay off in the three-to-five-year timeframeRoblox Q2 Results 2022Roblox's bad financials materialized despite strong engagement: The company reported a 21% year-over-year increase in daily active users, now being 52.2 million. Similarly, hours of engagement during the June quarter were 11.3 billion, which is a 16% increase as compared to the same period one year prior, but below consensus at 11.7 billion. That said, Roblox's problem is connected to platform monetization, as the average net bookings per daily active user plunged by 21% to about $12.5/user.Roblox Q2 Results 2022GuidanceRoblox also provided some insights into the third quarter, specifically the company's business performance during July. According to the company, daily active users achieved an absolute record of 58.5 million, which implies a 26% year-over-year growth. Bookings are estimated between $243 million and $247 million, which represents an increase of about 10% as compared to July 2021.Roblox Investor Presentation Q2 2022ImplicationsRoblox is tradingat about x10 EV/Sales and x13 Price/Book. While I acknowledge Roblox's secular growth potential connected to the metaverse narrative, I also acknowledge that the company's valuation is incredibly stretched, leaving no room for a margin of safety. In other words, the Roblox is priced to perfection. And as the June quarter highlighted, perfection is easy to miss.Following a very bad earnings miss, I believe investors are well advised, if they turn more cautious on the name. As we have seen, Roblox's business performance is not immune to macroeconomic challenges and the company is clearly having trouble to ramp-up monetization, or at least grow monetization in line with engagement. Accordingly, as long as these challenges persist, I am reluctant to pay the market's incredible valuation premium for the company's growth potential.RecommendationRoblox significantly underperformed both against Q1 2021 and against analyst consensus estimates. Accordingly, I believe a more cautious investing approach is justified - one that doesn't demand paying a x10 EV/Sales multiple.As long as Roblox is having trouble monetizing the company's platform in line with engagement growth, I sustain a Hold recommendation for the stock. And as compared to my previous rating, I downgrade the 12-month target price to $45/share to reflect a weaker EPS outlook.My initiation article on Roblox:Roblox: Buy This Secular Growth Opportunity
Musk target ad tech firms in Twitter suit ovr takeover deal
Billionaire entrepreneur Elon Musk, who is attempting to walk away from his deal to acquire $Twitter(TWTR)$ is seeking documents from advertising technology firms as part of his quest to gain more information on bot and spam accounts on Twitter, according to filings in a Delaware court on Thursday.Twitter has sued the $Tesla Motors(TSLA)$ chief executive, who has accused Twitter of hiding information about how it calculates the percentage of bots on the service, for attempting to walk away from the $44 billion agreement. A trial is scheduled for Oct. 17.Musk's lawyers have subpoenaed both Integral Ad Science (IAS) and DoubleVerify for any documents or communications on their involvement in reviewing accounts or participation in any audit of Twitter's user base.IAS and DoubleVerify, which are both based in New York, use technology to independently verify that digital ads are viewed by real people. Advertisers use the services to ensure the ads they pay for are seen by potential customers and not automated bots.Twitter, IAS and DoubleVerify did not immediately respond to requests for comment.In response to a tweet by a user who questioned how Twitter audits its service and also linked to a Reuters story on Musk targeting the ad firms, Musk tweeted: "Those are the questions that Twitter is doing everything possible to avoid answering …"In a countersuit earlier this month, Musk claimed that Twitter's monetizable daily active users are 65 million lower than what the company has touted. Twitter has said it stands by its disclosures.The metric measures users who log onto Twitter through the website or apps that are able to serve ads or used paid products like subscriptions, according to Twitter filings.@TigerStars
Wood Add $NVTA: Up 276% & Drop 45%, What’s Behind The Roller Coaster?
Is Cathie Wood still trustworthy? Cathie Wood acquired 28.7 Million $Invitae(NVTA)$ shares worth $122 Million. That's 0.68% of their equity portfolio (31st largest holding). The investor owns 11.48% of the outstanding Invitae stock. The first Invitae trade was made in Q4 2016. Since then Cathie Wood bought shares fifteen more times and sold shares on five occasions. The investor's estimated purchase price is $514 Million, resulting in a loss of 76%. $ARK Innovation ETF(ARKK)$$Invitae(NVTA)$ Invitae Corporation, a medical genetics company, integrates genetic information into mainstream medicine to improve healthcare of people in the United States, Canada, and internationally. The company offers genetic tests in various clinical areas, digital health solutions, and health data services. It serves patients, healthcare providers, biopharma companies, and other partners. Genetic testing platform Invitae ripped 277% higher on August 10. It was truly epic. However, this stock was down by 45% in the following week by a severe sell-off.It appears the nearly 300% run-up on Wednesday was not about earnings but instead only due to a short squeeze.Roughly 217 million shares traded hands. For comparison, the average daily trading volume was just 13.7 million shares over the previous three months. Furthermore, the business entered August with only about 235 million shares outstanding total.It was also truly bizarre. Invitaeannounced a strategic pivot and provided financial guidance on July 18. That included unflattering growth projections, replacing the CEO, laying off one-third of its workforce, and promising to keep cash burn to "only" $825 million in 2022 and 2023. Nothing changed when it reported second-quarter 2022 operating results on August 9.EarningsGenerated revenue of$136.6 million in the quarter, a 17.5% increase compared to$116.3 million in the second quarter of 2021.GAAP gross profit was$26.3 million, and non-GAAP gross profit was$54.7 million in the second quarter of this year.GAAP gross margin was 19.2%. Non-GAAP gross margin was 40.1% as compared with 36.6% in the first quarter of 2022 and 35.4% in the second quarter of 2021.Cash, cash equivalents, restricted cash and marketable securities were$737 million as of June 30, 2022. Cash burn was$147 million, achieving a $22 million reduction from the first quarter of 2022.Invitae was among the worst positioned. It spent money a little carelessly, prioritized revenue growth over every other metric, and wasn't delivering any financial benefits from achieving larger scale. From 2018 to 2021, the business grew revenue 212%, but only grew gross profit 63%. That's a problem when operating expenses grow 302%. The result was unsurprising: Operating cash outflows swelled 507% in that span.
Hilton - An American Multinational Hospitality Company
Hey, this is Stocks_Pedia.I would like to introduce some unfamiliar companies that may be of some help to your investments.The company I’m going to introduce is $Hilton(HLT)$ .It went public on 12th December 2013.[Company Profile]Hilton Worldwide Holdings Inc. is a hospitality company. The Company is engaged in managing, franchising, owning and leasing hotels and resorts, and licensing its brands and intellectual property. The Company manages, franchises, owns or leases approximately 6,837 properties comprising approximately 1,074,791 rooms in over122 countries and territories. Its brands include Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts and Conrad Hotels & Resorts, Canopy by Hilton, others. It operates through two segments: management and franchise, and ownership. The management and franchise segment include all the hotels, which the Company manages for third-party owners, as well as all franchised hotels operated or managed by someone other than the Company. The management and franchise segment include approximately 745 managed hotels and over 5,978 franchised hotels consisting of approximately 1,047,262 rooms. The ownership segment includes approximately 54 properties totaling over 18,151 rooms.[History & Events]1919: Conrad Hilton purchased his first hotel, the 40-room Mobley Hotel.1925: The Dallas Hilton became the first hotel to use the Hilton name.1943: Hilton purchased the Roosevelt Hotel and the Plaza Hotel.1946: The company incorporated in 1946 as the Hilton Hotels Corporation, and subsequently began public trading of shares.1949: Hilton International was founded a few years later, in 1949, with the opening of the Caribe Hilton Hotel in Puerto Rico.1987: Hilton Honors (formerly Hilton HHonors), the company's guest loyalty program, was initiated in 1987.2007: Hilton Hotels Corp. agreed to an all-cash buyout from the Blackstone Group LP in a $26 billion (including debt) deal that would make Blackstone the world's largest hotel owner.2013: Hilton returned to being a public company. The Blackstone Group retained a 45.8% stake in the company.2020: As of June 30, 2020, about 98% of the rooms branded under Hilton were managed or franchised to independent operators and companies.[Main Business Segments][Net Income & Total Revenue][Competitors]Jumeirah Group$SHANGRI-LA ASIA(00069)$$Shangri-La Asia Ltd.(SHALF)$ Four Seasons Hotels and ResortsThe Ritz-Carlton
What Are They Thinking?EditorialThere was much surprise this week when Marc Andreessen announced his firm’s $350m investment into Flow, Adam Neumann’s newest venture. The details of the business model have not been fully revealed but it seems to be another real-estate-based idea, except this time it focuses not on offices but on residential property.Neuman’s infamy, after taking WeWork from startup to multi-billion dollars in value, only to see it shrink again, is of course huge. Most reactions are questioning the sanity of any venture fund, never mind one with as good a reputation as A16Z, to back him again.In explaining the decision Andreessen says:“We understand how difficult it is to build something like this and we love seeing repeat-founders build on past successes by growing from lessons learned,”So this week I want to take a step back and ask whether the investment is mad or bad (in the Michael Jackson meaning of the word).The answer depends a lot on understanding how venture capital works. Many of the readers here understand that so I won’t belabor the point. Suffice it to say that venture investors need to make large multiples on large investments in order to deliver the returns that their investors are looking for. Unless an investment could theoretically return 100x or more a venture fund really has no business thinking about putting money to work in it. 100x on $350m is $35 billion. And A16Zs share is probably between 15% and 30%. So for the plan to work the company must become worth between $120 billion and $230 billion.Is this possible?Well to answer that you have to look at the market being addressed, the cost of execution, and the likely upside. You also have to think about timing.Residential real estate is a very large market. It is dominated by mortgage-backed lending and rental income. The market is clearly large enough to imagine revenues in the billions of dollars, and possibly a lot larger.The rate of growth of Flow and its ultimate size over time will be part of the equation. But, on the back of an envelope, if it can get to $10 billion in revenue in 10 years then it is not impossible that it can achieve growth-driven multiples of 10–20x. That would certainly achieve the goals of A16z.So let’s start by saying this investment could make sense.But there is more. In this sector, the numbers are astoundingly high. If Flow can disrupt rents and mortgages then trillions of dollars are available. And if it can move debt-based financing to a new model of ownership, then it can be hundreds of trillions.These are scary numbers to most startup founders. But not to Neumann. He thinks big and has shown a prior ability to deliver. In this world, A16Z gets to 1000x or maybe more.So what is the lesson here? There is no shortage of ideas. But there is a shortage of big ideas delivered by big thinkers who can be trusted to really try to execute them. Whatever you may think about Neumann’s past. He qualifies. And as in baseball, hitting and missing is all part of the sport. You only have to hit once to deliver a home run.A16z is betting big on Adam Neumann’s new real estate startup Andreessen Horowitz is betting big on Adam Neumann’s return to the real estate startup game.A16z co-founder Marc Andreessen wrote in a Monday blog post that the firm would partner with Neumann on a new startup called Flow, which is focused on the residential real estate market. Neumann was famously pushed out as leader of WeWork in 2019 after the firm pulled its IPO plans, and his personal and professional antics — padding around barefoot, investing in a wave-pool startup — have provided fodder for books and an Apple TV+series.“We think it is natural,” Andreessen wrote, “that for his first venture since $WeWork(WE)$ , Adam returns to the theme of connecting people through transforming their physical spaces and building communities where people spend the most time: their homes. Residential real estate — the world’s largest asset class — is ready for exactly this change.”While the blog post did not disclose the size of the investment, The New York Times reported it at $350 million at a $1 billion valuation. That deal is the largest individual check a16z has written to a startup, according to the Times. Andreessen will also join Flow’s board.“We understand how difficult it is to build something like this and we love seeing repeat-founders build on past successes by growing from lessons learned,” Andreessen wrote.A Case Study On The Venture ProcessI want to throw out an important level setting: Do I believe that Adam Neumann can build a multi-modal real estate empire that revolutionizes the way we live? No. Would I have invested $350M with the guy who lit $20B on fire? No. Do I believe the investment case I’m about to lay out? No. So why write about this? I think the story and the numbers represent a fascinating opportunity to illustrate “the venture process.” There are people who write off venture as largely a “greater fool’s” game of passing the bag. There are other people who ask the honest question, “how does something like this happen?” I want to try and help answer that question.I’m not going to address every aspect and controversy surrounding Adam Neumann, WeWork, and Flow. And I’m certainly not a bull on this investment. I’ve never found myself typing “Say what you will about…” so many times. I found myself using it over and over again.“Say what you will about Adam Neumann, but he loves those amenities.”“Say what you will about Adam Neumann, but the man knows how to drive splashy marketing.”Instead I want this to be a case study to walk through how a lot of VCs think. Is the thinking right? Are they making the right decisions? Are they weighing the right variables? Unclear. Time will tell. But this is likely the structure for how some of this process is being justified.Investing in Flow | Andreessen HorowitzMarc AndreessenOur nation has a housing crisis.The demographic trends driving America’s housing market are impossible to ignore: our country is creating households faster than we’re building houses. Structural shortages in available homes for sale push housing prices higher, while young people are staying single for longer and increasingly concentrating in highly desirable urban centers. These factors put enormous pressure on rents in the nation’s most dynamic cities, starkly revealing the troubling realities of both sides of the housing market’s two historical models.The first model is: you own a home you call your own, typically with a multi-decade mortgage, near your current employer. IF you can find a house, as these locations often aren’t building new housing. IF you can afford that house, as housing prices in many such places have skyrocketed. And even then, you’re now stuck — you can’t move, even if your economic opportunity or life path wants to take you somewhere else.The second model: you rent an apartment, but: it’s a soulless experience; do you even meet your neighbors, much less have any friends in your complex? Does it feel like home, or just a place to sleep? Are you proud to bring friends and family to visit, or hesitant? And you can pay rent for decades and still own zero equity — nothing. There’s a reason the federal government started subsidizing home mortgages: someone who is bought in to where he lives cares more about where he lives. Without this, apartments don’t generate any bond between person and place and without community, no bond between person to person.Now drop the impact of the post-COVID world into this. Many people will live in places far away from where they work and many more will shift to a hybrid environment. As a result, they will experience much less, if any, of the in-office social bonding and friendships that local workers enjoy. For many of these people, increased screentime and reduced in-person interaction will cause challenges that are not just limited to work, such as alienation and loneliness. This is not a good path for anyone and it needs to be addressed directly, right now.At the same time, in the last two years, we have seen a shift in life priorities. For hundreds of years, ambitious young people have had to move to immediate geographic colocation with employers to have access to the best jobs for their skills and talents. That is suddenly no longer true. This newfound flexibility has triggered the “Great Resignation”, where people prioritized other factors over professional considerations. Many people are voting with their feet and moving away from traditional economic hub cities to different cities, towns, or rural areas, with no diminishment of economic opportunity. My partner Katherine Boyle has written about this, and I think she’s right: Can Zoom Save the American Family?and Can Starlink Save the American Mother?The residential real estate world needs to address these changing dynamics. And yet virtually no aspect of the modern housing market is ready for these changes.$SPX FLOW Inc(FLOW)$$WeWork(WE)$$Zoom(ZM)$
$NIO Inc.(NIO)$A drought in central China is weighing on battery production.What happenedA drought in China's Sichuan province is straining local electric grids and threatening both electric vehicle (EV) charging stations and suppliers based in the region. Shares ofNio(NIO-0.85%)fell as much as 3% on Thursday on concerns about how the issue could ripple through the country's automotive industry.So whatNio is one of the Chinese electric vehicle market's top success stories, both in terms of selling automobiles in China and Europe and building a strong brand in its home country. But the company's operations reportedly could soon be under pressure due to the hot, dry Chinese summer.Low water flows through Sichuan in central China have cut into hydroelectric power production in the region, forcing the closure of some manufacturing operations. Among the factories impacted is a massive battery plant run byToyota Motorand Contemporary Amperex Technology (CATL), which supplies batteries to Nio and otherelectric vehicle manufacturers.Production at a key facility has been suspended through at least Aug. 20. Overall, CATL has about 100 gigawatts of existing and planned battery manufacturing capacity in the region.Though it is too soon to know for sure how the slowdowns will impact Nio sales, according to local Chinese media reports the power disruption has led Nio and other automakers to limit their charging services in the region.Now whatNio hosts its annual general meeting on Aug. 25, and the subject of vehicle production for the rest of the year is sure to come up then. For now, the power issues in China are if nothing else a reminder to investors about how fragile this nascent industry is as production capacity continues to ramp up. Investors might also be concerned that if charging stations become unreliable, Chinese consumer interest in electric vehicles could be impacted.Nio shares are off 37% year to date on investor concerns about growth stocks in a weakening economy, and news earlier in the week that Nio rivalLi Autois slowing productionis likely weighing on the stock as well. While the long-term trajectory for Nio remains positive, there are a lot of questions right now about the company's ability to meet near-term growth expectations.source：fool
What Is Going on With Neptune Wellness Stock Today?
$Neptune Technologies & Bioressources(NEPT)$Source: ORION PRODUCTION / Shutterstock.comShares of Neptune Wellness(NASDAQ:NEPT) are ripping higher on Thursday. NEPT stock is up more than 120% at the time of writing, with shares now up almost 100% for the week. Is speculation at play?We’ve seen some monster moves as of late in the stock market. At one point this week,Bed Bath & Beyond(NASDAQ:BBBY) was up 550% from its low on July 27. Other names have been on the run too.Some of this has been from stocks being short-squeezed, like BBBY. For others, it’s simply speculative price action. However, NEPT stock could have other drivers sending it higher.Two Catalysts Launching NEPT Stock HigherAside from pure speculation, there are other events surrounding Neptune Wellness.First,Mind Medicine(NASDAQ:MNMD) isexploding higheron the day, up 45% at the time of writing. Mind Medicine is currently in a Phase 2 study using psychedelics such as LSD to help with symptoms of anxiety, ADHD, cluster headaches and major depression.At one point during Thursday’s session, shares were up as much as 77.5%. That follows yesterday’s 10% gain. Keep in mind, the company has a 1-for-15 reverse stock split coming up on Aug. 29. So there could be a bit of a sympathy rally in NEPT underway.Second, Neptune Wellnessreported earningsearlier this week, on Monday. The company delivered a top- and bottom-line beat, while revenue grew more than 60% year-over-year. Despite the headline numbers though, shares fell after the report, falling 5.8% on Tuesday and 6.2% on Wednesday.There may be several catalysts driving Neptune higher, but that doesn’t mean it’s a slam dunk. If anything, it looks a bit more like a speculative buying frenzy coming off of deeply oversold levels.After all, coming into this week, NEPT stock was down about 99% from 2021. It’s down even more than that from its all-time high from mid-2019. Further, shares underwent a 1-for-35 reverse stock split in June and, as is often the case, reverse stock splits are almost never good news.On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.Bret Kenwell is the manager and author ofFuture Blue Chipsand is on Twitter@BretKenwell.source：investorplace
Australia to build own mRNA vaccine plant with Moderna
$Moderna, Inc.(MRNA)$ SYDNEY, Aug. 16 (Xinhua) -- Australia will soon have the first manufacturing plant in the Southern Hemisphere to produce mRNA vaccines for a wide range of diseases including COVID-19, influenza and other respiratory viruses.Pharmaceutical giant Moderna signed a 10-year agreement with Australia's federal government and the Victorian government to work with Monash University, one of the nation's leading biomedical research institutions, to create the facility, which is expected to produce up to 100 million vaccine doses annually.Moderna said it would give Australians ready access to the company's COVID-19 vaccine, Spikevax, and provide mRNA manufacturing capabilities in the case of a new pandemic, such as avian influenza or another novel pathogen.In announcing the deal on Monday, Australian Prime Minister Anthony Albanese said the pandemic had "shown us how important local manufacturing capability is to our security and to our health."Victorian Premier Daniel Andrews was also supportive of the project, predicting "it will save lives, create jobs and strengthen Victoria's position as a national leader in medical manufacturing."Monash University Vice-Chancellor Professor Margaret Gardner said the facility, due to open in 2024, would complement the university's own ribonucleic acid (RNA) ecosystem with "ground-breaking work that will lead to the rapid development of life-saving vaccines and therapeutic treatments for infectious diseases and cancers."The Moderna facility will be part of the Monash Technology Precinct, which already contributes about 9.4 billion Australian dollars (about 6.61 billion U.S. dollars) annually to the Victorian economy with a combined workforce of about 95,000 people spreading among 13,000 high-tech businesses, according to the university.source：english.news
GigaCloud (GCT) Stock Pops 40% on First Day of Trading
Another fintech firm has started trading on a U.S. index. This one is worth watching for investors.GigaCloud Technology (GCT) made its trading debut.The Hong Kong-based firm surged after markets opened.It may seem like a meme stock, but GCT has a clear advantage over its fintech peers.Source: Zapp2Photo/ShutterstockHong Kong-based GigaCloud Technology (NASDAQ: GCT) made its debut on the Nasdaq and it quickly skyrocketed. Wall Street had good reason to be watching GCT stock keenly. In recent months, fellow fintech companies AMTD Digital (NYSE: HKD) and Magic Empire Global (NASDAQ: MEGL) debuted and skyrocketed.As both HKD and MEGL surged, Markets Analyst Thomas Yeung traced their riseto meme stock frenzy. As he explained, a temporary meme-stock mania does not make either one a good buy. “The trick is understanding the difference between a high-potential stock and one that’s riding a wave of overoptimism,” he noted, indicating that meme stocks fell into the second category. However, that doesn’t mean that the next Hong Kong fintech IPO isn’t worth watching.Let’s take a look at GCT stock’s first trading day and what investors can expect in the days ahead.What’s Happening with GCT StockGCT stock began surging as soon as markets opened. By 11:30 a.m. Eastern, it had spiked more than 62% and Wall Street was taking notice. While the stock would start falling after that, it has since rallied and remains in the green for the afternoon. As of this writing, it is up more than 40% for the day.This doesn’t necessarily mean that GCT stock is the next Reddit favorite. But it has still made an impressive debut that shouldn’t go unrecognized. It operates in the global business-to-business e-commerce space, an industry that is predicted toreach 18.7 trillion by 2027.And as Astute Analytica reports, the Asia-Pacific region holds the largest market share. Relevantly, Chinese e-commerce giant JD.com (NASDAQ: JD) holds a 12% stake in GigaCloud. But Bloomberg reports that according to CFO David Lau, the company isn’t generating revenue from China.Lau also notes that “A US listing would help us achieve not just valuation but also the profile we need to grow into the next phrase.”What Comes NextAll told, it’s impossible to say for sure where GCT stock will go from here. However, its IPO should be counted as an overall success. While it didn’t see gains north of 1,000% like MEGL, it also didn’tplunge 20% like Innovative Eyewear (NASDAQ: LUCY).Additionally, GCT stock has one advantage over its meme stock peers. After HKD skyrocketed onto Wall Street’s radars, contributor David Moadel warned investors to proceed with caution. “It’s hard to pinpoint exactly what AMTD Digital does and what it’s been up to lately.”GigaCloud, on the other hand, has a clearly defined mission and objective. That should help investors bet on it even as meme stock mania inevitably cools down.Source: InvestorPlace$GigaCloud Technology Inc(GCT)$
Is GigaCloud the next AMTD? GigaCloud Technology $GigaCloud Technology Inc(GCT)$ traded for the first time opening at $19.20 after pricing 2.94 million Class A ordinary shares at IPO price of $12.25. The stock reached a high of $21.22, before sliding to alow of $12.51. The stock closed at $15.69 but has since gained about 16% in after hours, at $18.20.
Based in Hong Kong, GigaCloud provides e-commerce solutions for the discovery, payment and shipping of large merchandise such as furniture and appliances. The company connects manufacturers based primarily in Asia with online resellers in Asia, the US and Europe.Total outstanding shares is 30.43 million, compared to the 2.94 million available shares. Will this become the next AMTD $AMTD Digital Inc.(HKD)$ that managed to surge to $2,500 at one point before crashing back down to earth?
Apple $Apple(AAPL)$ became the world's first$3 trillion company for a brief time during intraday trading on Jan 3 this year. Due to the bear market in 2022, Apple has fallen to a 52-week low of $129.04 but has recovered most ofits losses in the last 2 months, and now is valued at $2.77 trillion market cap. That's just another 8.3% to the $3 trillion market cap. It is now 6.3% away from its 52-week and all time high of $182.94.AAPL YTD -5.44%Recent news have been quite bullish for Apple, as it is just about a month away from iPhoneseason, where it is rumoured that Apple askedits suppliers to increase production for its next iPhone, and the iPhone 14 is expected to seeas much as 15% increase in prices. Some analysts have also said that Apple may get into the digital advertising business as its next big thing to boost sales.Charts say it has limited upsideFrom a charting perspective, there might be some indicators that Apple is due for a short term correction.Apple Daily Chart (2 gaps to be filled)Apple Weekly Chart with 50 period MAThe daily chart shows that Apple left 2 gaps when it gapped up Aug 10 and Jul 29. Gaps are created when the opening price differs greatlyfrom the previous days close, and it causes inefficiencies in the stock, and the price action will typically attempt to fill the gaps it left behind, although it is not a must to fill those gaps.Currently those gaps are between $164.92 to $167.68 and $157.35 to $161.24.The weekly chart shows an interesting trend that when ever the price action moves too far away from the 50 period moving average, it tends to pull back toward that 50 MA and find support, although that support failed in the firsthalf of 2022. The stochastic indicators also show that it is getting into the over bought range and could remain there for sometime beforemaking a correction.Apple 3 year Price to Earning (trailing twelve months)Apple's current Price to Earnings ratio sits around 28.5x earnings, which is still quite far from its record high 40.7x in Sep 2020.Apple 3 year Price to Cash Flow (TTM)Current price to cash flow is at 23.4 times cash flow, which is getting close to its record 28.6x in Sep 2020.Apple 3 year price to sales (TTM)Apple's current price to sales comes in at 7.25, and getting close to highs of 8.6 in Sep 2020. An interesting trend in the price to sales shows that whenever Apple crossed the 8.0x price to sales, it to pull back towards 7.0x and managed to find support. To buy or not to buy?From the analysis, it shows that the current price is not a buy. Apple will be good to hold if you bought it at a cheaper price earlier this year.
As this is a mid term election year, data has shown that the S&P 500 and the market tends to not perform well from late August to mid October. It would be highly recommended to wait for pull backs during this period to attempt to accumulate Apple shares if you love the fruitcompany.S&P 500 performance in mid term years vs all other years$S&P 500(.SPX)$
$FedEx(FDX)$T released the earnings of fourth quarter fiscal year 2022 as of the end of March. With the excellent guidance of the new fiscal year, the stock gained a3% in post-hour trading.For Q4 results,Revenue was US $24.39 billion, an increase of 8% year-on-year, slightly missed market consensus of $24.57 billion;Among them, income from express delivery business was 11.94 billion, which was basically the same as the market expectation of 11.95 billion US dollars; freight revenue was US $2.76 billion, better than the market consensus of US $2.51 billion;Non-GAAP's operating profit was US $2.23 billion, a year-on-year increase of 13.6%, and it is expected to be US $2.28 billion;EBITDA is 2.47 billion US dollars, expected to be 3.30 billion US dollars, and net profit is 1.80 billion US dollars, up 32% year-on-year, expected to be 1.81 billion US dollars, which is basically flat;Non-GAAP EPS is $6.87, expected to be $6.88While the diluted EPS was US $6.87, which was flat than expected.Capital expenditure reached $2.38 billion, up 41.7% year-on-year.FedEx's business this quarter has several characteristics:Yield for parcels rise because of rising cost in supply chain and transportation.The revenue of a single package in the United States was 22.08 US dollars, up 20% year-on-year, and also exceeded the expected 20.56 US dollars; After exchange rate adjustment, the individual income of international parcels was US $59.8, up 17% year-on-year, exceeding the expected US $55.6. The impact of the price increase will continue, and at the same time, it will bring higher income to the company.oThe volume dropped significantly.The average daily parcels of express delivery were 5.82 million, a year-on-year decrease of 11% and less than the expected 6.16 million. Among them, the average daily parcels in the United States were 2.99 million, down 8.4% year-on-year, lower than the expected 3.17 million; The daily average number of international parcels was 2.82 million, down 13% year-on-year, lower than the expected 2.98 million. Judging from this value, the domestic performance recovery in the United States is better than that in the world. As the income brought by the increase in freight can cover the decline in package volume, the overall performance is still rising.The freight recovered rapidly, Freight revenue was the biggest part of the overall exceeding expectations, with revenue per Hundredweight of US $35.6, up 30% year-on-year, setting the highest growth rate in recent years and higher than the expected US $31.8. Operating profit margin of freight business increased by 570 basis points to 21.8% due to the increased marginal effect brought by price increase.Among the expenditure items, the cost of shelf insurance, employee wages and purchasing and transportation rates all increased to a large extent, which brought about an impact of 130 million US dollars to the company. The company introduced a new 401 (k) plan for new employees in January 2022, replacing the original pension plan. In addition, capital expenditure on automation has also increased. At the same time,Capital expenditure is expected to reach $6.8 billion in the coming year.As for the performance guidance for the next fiscal year 2023, the company also made some interesting statements.Because FedEx has to make a certain "mark-to-market" (MTM) adjustment in accounting calculation methods, such as employee pension, investment business adjustment, etc. At the same time, the company can't confirm the effective tax rate, so it can't give guidance.However, it also provides certain profit guidance, which is before MTM adjustment. It is expected that the diluted EPS in fiscal year 2023 will be between 22.45 and 24.45 US dollars, and the profit margin will expand after adjustment, which is also a relatively large range.However, the whole figure was also higher than the previous market expectation of $22.6.The reason why there is so much room for adjustment and relatively "rich" conditions are set is to leave some room for the uncertainty of performance changes.After all, the current inflation cycle makes the whole logistics industry full of great uncertainty. Industrial activity has been stable in May, but according to the PMI data of the United States in June, the initial value has dropped sharply, and inventory replenishment is slowing down, which will restrain freight demand to some extent.The change of pension plan may bring more costs to the company in the short term, but in the long run, the new pension plan will reduce the long-term debt of the company and benefit the long-term profit margin.For shareholders, the best news is to continue to overweight repurchase. The company bought back $2.2 billion in fiscal year 2022, while it plans to buy back $1.5 billion in the next six months.
Warren Buffett's annual shareholder meeting will be held on April 30, 2022. Finally the offline meeting is going to be held again.
Fortunately, the $Berkshire Hathaway(BRK.A)$‘s performance of last year till now has been very good.
In 2021 which rose by 29%, outperforming $DJIA(.DJI)$ and $S&P 500(.SPX)$ properly.
In the first quarter of 2022, it rose 17% against the market, and Buffet once becoming The Only One Assets Grows Among Top 10 Richest Men in 2022
While in 2019 when the big carnival for technology stocks , and the pandemic shock in 2020, $Berkshire Hathaway(BRK.A)$ has been underperformed the broader market for two consecutive years.
Buffett's company once held a disproportionately large percentage of cash, but since 2021, they have been buying some stocks.
The latest big move is Berkshire purchased a total of 11 million shares of $HP Inc(HPQ)$ 4 times according to the disclosure from SEC on April 4th to 6th.
Together with the initial holding of 109 million shares, Berkshire held a total of 11 million shares. HP's 120 million shares made it the second-largest technology stock after $Apple(AAPL)$ . The shares were worth about $4.2 billion at Wednesday's closing price.
After the news came out, HP surged 14.75% on Thursday, and Buffett earned $650 million overnight.
As we all know, Buffett does not favor technology stocks much. The $IBM(IBM)$ that opened a position in 2011, but was trapped for five years.
Until he made hundreds of billions of dollars in Apple that the former shame of the "blind spot of technology stocks" was finanly wiped out.
Why this time adding HP? The market gives the following reasons:
In terms of performance in the past five years, the company's revenue has exceeded market expectations for eight consecutive quarters. .
According to its first-quarter earnings report, HP said sales of commercial computers and printers rose 26 % and 9% y-o-y, respectively, and the profits were also higher than analysts’ estimates.
Some analysts believe that HP's forward price-earnings ratio is 8.5, while the forward price-earnings ratio of the Standard 500 index is 18.2, and from Wednesday's close, HP's gains in the past year have lagged the S&P 500 index.
Analysts said HP was trading below its intrinsic value and gave a fair market price of $51.39 per share.
3. Continual Share Repurchase
As a company that focuses on shareholder returns, HP has been repurchasing its own stock. In fiscal 2021, which ended in October last year, HP repurchased a total of $6.2 billion in stock, an increase of 100% from $3.1 billion the previous year. . During the quarter, HP repurchased another $1.8 billion in stock.
According to statistics, HP's dividend yield in the past 12 months has exceeded 2%, the repurchase yield has reached 19.3%, and the comprehensive shareholder yield has been as high as 21.9%.
So I would like to ask you a small question:
Have you followed Buffett in the past year? How are the benefits?
What do you think of Buffett's position in HP?
Do you think now is a good time to buy HP?
Share your opinion and you will earn tiger coins!
$Berkshire Hathaway(BRK.B)$$Berkshire Hathaway(BRK.A)$
Key Highlights: Home Depot, Cisco, Walmart, Lowe's, Target
Fed minutes from the prior month indicated that the Fed would continue interest rates hikes until inflation comes down substantially. While there was no guidance, market is expecting a 50bps increase in the upcoming September FOMC meeting. Moreover, advanced estimates for US retail and food sales for July were almost flat sequentially. This resulted in overnight correction of major US indices with $S&P 500(.SPX)$ down -0.7% and $NASDAQ(.IXIC)$ falling -1.3%.United Kingdom’s inflation saw a surge with CPI up 10.1% in July to a 40 year high with food prices and energy prices a key contributor to the rising prices. Europe has been the epicenter of an energy crisis given the ongoing geopolitical tensions that saw a reduction in natural gas flows through the Nord Stream 1 pipelines. European equities also saw weakness with $DEKA E STOXX50(0MPR.UK)$ 50 falling by -1.3%.Below are $Home Depot(HD)$ ,$Lowe's(LOW)$ ,$Wal-Mart(WMT)$ ,$Cisco(CSCO)$ ,$Target(TGT)$ 's 6 months performances.$Home Depot(HD)$ recorded its strongest quarterly sales in 2Q.Growth was better than expected on resilient repair and remodeling demand, bucking the slowdown in housing turnover amid rising mortgage rates. Same store sales growth impressed, growing 5.8% due to rising prices while margins also impressed despite rising cost pressures. Despite the inflationary issues and slower macroeconomic environment, no down trading has been observed from the latest quarter, as both professional and DIY segment sales still saw growth. $Lowe's(LOW)$, a home improvement retailer that is relatively more focused on the DIY segment, also alleviated fears of homeowners sharply delaying their improvement plans.$Cisco(CSCO)$ supply challenges have finally eased with less advanced chip capacity for enterprise networking easing. Revenue guidance is back to low single digit range of 2%-4% for 1Q and 4%-6% for FY2023. This also signals that the demand for chips have started to falter for the chip sector, especially seen in the consumer-focused products such as personal computer and graphic processing units. Backlog for Cisco continue to remain at record highs mainly due to the previous supply issues, which provide visibility in the fiscal year ahead.$Wal-Mart(WMT)$ ’s Q2 results showed a pivoting of consumer spending away from discretionary products to more of groceries and necessities, as inflationary pressures continue to hit households. It saw weakness in apparel and electronics product sales as inventory levels surged. $Target(TGT)$ , another big-box retailer, missed same store sales guidance, and saw profits falling by 90% in 2Q22 given its focus on discretionary products. Despite price reductions, Target continued to face inventory issues from consumers curtailing discretionary items.
$53 bln Losses In 2Q - Buy Berkshire's Dip Or Not?
On August 6, Warren Buffett's company - Berkshire Hathaway- announced its latest earnings:Q2 revenue of $76.18 billion, compared to $69.11 billion last year.Net earnings (loss) attributable to Berkshire Hathaway shareholders: -$43.755 billion, compared with earnings of $28.094 billion last year.The loss was mainly due to investment and derivatives losses of $53.038 billion.2Q Berkshire Investment Huge Losses: $53 billionIn the 2Q, US stocks fell into a bear market. The $S&P 500(.SPX)$ fell 16% in the second quarter, the largest quarterly decline since March 2020, the $DJIA(.DJI)$ fell 11% and the $NASDAQ(.IXIC)$ fell more than 22%.Berkshire's five largest positions- $ Apple (AAPL)$, $ Bank of America (BAC)$, $ American Express (AXP)$, $ Chevron (CVX)$ in the 2Q have fallen sharply, which might account for Berkshire's losses.Don't Worry About Floating Losses?According to US GAAP, long-term holdings will be accounted in the book value; for short-term investments that might be sold, the market price is accounted, and the difference is included in earnings.In other words, the floating gain or loss of the stock is included in the net income. So, the $53bln losses are just floating losses.In its report,Berkshire cautions investors not to pay much attention to fluctuations in investment income.Investment gains and losses in any single quarter are meaningless. The net earnings per share may be misleading to investors who have little or no knowledge of accounting rules.But after June 17, $Apple(AAPL)$ began to rise sharply in a row, and several other positions, Bank of America, Chevron, and American Express also continued to rise. It meant the floating losses of Berkshire may decrease in the next quarter.Buy the Dip or not? It’s a question.Compared to the $51.1 billion investment in the 1Q, Buffett sold $2.3 billion of shares and spent only $6.2 billion on stock purchases (most of which was used to increase his holdings in $Occidental(OXY)$ ) in 2Q.Some analysts expect $Occidental(OXY)$ to report net earnings of $10.7 billion this year.Under Equity accounting principles, if Berkshire holds at least 20% of its common stock, it may bring $2 billion to Berkshire profits.However, at the same time, Berkshire's share price has retraced more than the broader market in the last 3 months.$Berkshire Hathaway(BRK.B)$ closed at $292 on Friday amid a recent 2-week rally in the US stock market. It is still at the recent 1-year low.Berkshire reported weak earnings on Aug. 6, which means its shares will continue to fall recently.Would you buy Berkshire lately (and at what price)?Do you think Berkshire can outperform the broader market this year?Follow me and comment here to win tiger coins~
Tech Giant Apple, Tesla See 8 Consecutive Gains! Will It Continues?
THE US stock market opened higher onThursday, the three major indexes closed higher, the Dow rose 1.02%, the NASDAQ rose 1.93%, the S&P 500 rose 1.43%.
$NVIDIA Corp(NVDA)$ up nearly 10%, to "single-hand", led the semiconductor and technology stocks rose, $Apple(AAPL)$ and $Tesla Motors(TSLA)$ welcomed their eight consecutive gains!
Based on market news, Musk officially opened Tesla's first manufacturing plant in Europe on Tuesday (March 22), which is seen as a milestone in Musk's push into the European automotive heartland.
Currently, Wall Street expects Tesla to deliver about 322,000 vehicles, up from 306,000 in the fourth quarter of 2022. The figures are expected to be officially released around April 2.
Musk also showed off his impressive dance moves at the event~
Could Tesla and Apple's back-to-back gains signal renewed investor optimism about tech industries growth prospects?
Looking at the numbers, tech funds have seen inflows worth $2.55 billion since March 16 and outflows worth $6.86 billion in the first two months of the year, according to Refinitiv.
Analysts say the tech sector still has strong fundamentals and high cash levels.
Emily Roland, co-chief investment strategist at John Hancock Investments, said the gains in these stocks are a sign that the tech sector's resilient fundamentals are starting to emerge amid concerns about macroeconomic factors.
Amanda Agati, chief investment officer at PNC Asset Management Group, said: "The fundamentals of tech haven't changed, so we see this rebound as cautious investors re-entering the market after the Fed's rate hike. "Looking ahead, the first-quarter earnings season is just a few weeks away, and one of the sectors expected to outperform will be technology, which has been a major contributor to earnings during the pandemic."
Finally, what do you think?
Have you made any money with this rally in Apple and Tesla?
What do you think of the rally? Will it continues?
What are your thoughts on tech stocks? Where do you see tech stocks going?
Small talk for everyone prepared 888 tiger coins, please "Buffett" to speak!
The War and the Oil Surge vs. A New World Monetary Order
On March 4, BZ topped 115 as Russian forces gradually encircled southern cities of Ukraine. Crude oil traders rushed to cancel their short orders. A large number of short sellers have gathered in this price range. The withdrawal of these short orders and upcoming long orders are likely to lead to a further spike in oil prices.
The U.S. announced 60 million barrels of crude oil will be released. But it only equals to 3-4 days of US consumption, and wartime is likely to consume more oil. With crude oil inventory data well below market forecasts, crude oil futures logically present a super-backwardation structure. It means that traders have no confidence in the short-term market supply balance.
In fact, not only crude oil futures, but also other major commodity futures are starting to exhibit a similar structure. The proportion of commodity futures with super-backwardation structure is at one of the highest levels on record. Since last November, I have repeatedly highlighted the continued strength of crude oil and commodities. If anyone has any illusions about the current strength of crude oil and commodities -- it must be Fed officials.
In 1973, Egypt, seeking to reclaim the Golan Heights and Sinai Peninsula lost in the Six Day War, raid Israel on the Yom Kippur holiday. After the holiday, the Israeli army asked US for help and defeated Egypt in an overwhelming battle. Nixon applied to Congress for financial assistance to Israel. However, Nixon deliberately delayed the application by a week, who aimed to buy time for Egypt. This, of course, was another move by the US to interfere with the geopolitical landscape: superficially, the US treated both countries fairy; but it laid the foundation for more conflicts later.
Sure enough, Arab countries didn't buy it. The oil embargo resulted in oil prices soaring four times from $2-plus to more than $12, opening up a period of Great stagflation in the United States. By 1979, after the Iranian revolution, oil prices even doubled again, until Volcker took the responsibility and saved the economy.
Currently, the dollar is appreciating, US Treasury yields are falling, and safe-haven asset prices are rising. All of this seems at odds with crude oil and commodity trends. Some Fed officials also argue on this basis that inflationary pressures will not persist. After all, no one buys bonds when there's inflation. If the bond market don’t worry about the inflation, let alone Fed.
However, there is another perspective.
After announcing sanctions against the Russian payment system, the US deliberately excluded energy from the sanctions, despite constantly stating that "Russian crude oil will not be an exception in the end". The bigger killer was the freezing of the Russian central bank's dollar reserve assets abroad and the ban on the Russian central bank providing liquidity to bail out sanctioned Russian banks. Yesterday, shares of SBER Bank, one of Russia's major banks, plunged to just a penny in London. Such dollar hegemonic sanctions have indeed hit the Russian financial system hard in the short term, but not without a backlash.
The exclusion of Russia from the dollar payment system and the freezing of the Russian central bank's dollar assets are practical ways to show that dollar assets are not so-called "safe assets". Your assets are only safe if the US recognizes them. In the short term, such sanctions do force dollar-dependent countries, especially emerging countries, to seek for more dollar assets under this background. However, after recognizing this hegemonic rule of the dollar system, these countries may remain vigilant and start developing a payment system independent of the dollar. The continuous strengthening of the RMB is just like a mirror that shows the weakness of the dollar system.
Historically, every oil crisis or oil price spike has invariably been followed by a recession in the US economy. Currently, this kind of surge in oil price is very rare. The last time we saw oil prices soar to such heights in such a short time was the 1973 oil crisis.
The Bretton Woods system crashed down in the face of the oil crisis; a new global monetary system emerged. At one time, oil was priced in gold. After the Bretton Woods system went bust, Kissinger brought the world the petrodollar system that established the hegemony of the dollar. At that time, oil would be priced at over $400 a barrel if it were denominated in gold. Without the anchor of gold, the global monetary system is like a kite with a broken string, which can fly very high in a flash, but can also fall down in an instant.
As oil soars epically, other assets are not immune. For the third time in more than three decades, German Treasuries fell by more than 20 points in a single day as Germany announced a massive increase in military spending. At the same time, the single-day implied volatility of Treasuries changed by a factor of five variance - or a probability of one in three and a half million, a theoretical one in 20,000 years. Readers who follow my research should know that the appearance of these epic price swings is no accident and hints that a new monetary system will shape. In fact, it is not impossible for countries that have been kicked out of the dollar system to return to gold. If Russia's currency were priced in gold instead of dollars, then the Russian ruble would probably be 20-30 instead of 120.
One of the relatively certain outcomes we can expect from this war is that the turmoil in the crude oil market will continue in the short term. As it remains uncertain whether the scope of sanctions will include energy, financial institutions will be indecisive to open letters of credit to refining companies. This situation is bound to further contract oil supply in the short term. Some oil traders are already seeing $200 for oil prices.
Currently, US Treasury real yields have plunged to the lowest. This scenario also happened in the oil crises of 1975 and 1980. Both of them led to US stagflation, recession, and double-dip in stock and bond markets. Many market analysts have never seen such a scene in their life.
That said, every oil crisis or oil price spike has been accompanied by a reshaping of the monetary system: 1973, 1980 and 2008. This time should be no different. At one time, Arthur Burns, the Fed chairman before Volcker, argued exhaustively why monetary policy could not solve inflation caused by structural problems such as war, and deliberately excluded oil and food prices from the calculation of inflation.
Ultimately, this economic sophistry, which was defiant in the face of a devastating economic cycle, made Fed miss a good opportunity to tighten monetary policy, which led directly to the subsequent Great Stagflation. But, it helped establish a dollar-centered monetary system. After all, Volcker showed how a central bank can double its benchmark interest rate to 20 percent during fierce inflation after credit money has abandoned gold. Volcker's move undoubtedly laid the groundwork for the subsequent credit and hegemony of the dollar, but the credit created by the pioneers has almost been lost by those who came after.
The "Modern Monetary Theory" that was so popular last year argued that no matter how the Fed prints money, inflation is difficult to get up. The core of this theory is the continuation of the credit and the hegemony of dollar is alive and well. However, if the inflation is calculated according to the original inflation calculation method before the 1970s, the CPI in the U.S. is now 15%, not 7.5%. When considering the balance of both ends of the national balance sheet, and that the Fed's liabilities are the appreciation of Americans' assets, the "Modern Monetary Theory" fails to take into account that without credit, asset prices are only inflated. Printing money only adds another “zero” to the price of assets, but the value of cash flows generated by assets does not change.
Macro changes are always silent and difficult to see, but eventually they come as a shock - like the melting of a glacier and the final avalanche. At this turning point, which currency will rule the world in the near future?
$Apple(AAPL)$ Apple's Q2 2022 Earnings Conference call is to be released on April 28! As the world's most valuable publicly-traded company, its earnings update is important for investors to check.IOS devices are boosted on the return to work and reopening of the U.S. economy. While we are now moving to a post-Covid-19 pandemic recovery era, the supply chain constraint could be a vital factor to consider. Generally, analysts continue to see Apple as a long-term winner, believing there is more room for revenue growth in advertising-related areas, AR/VR opportunities, and Apple services like TV and Music. Bank of American keeps an objective price at $215, reiterates BUY. Moreover, it is expected for Apple to announce a $70 billion+ buyback authorization during the earnings call.Therefore, the upcoming earnings result can explain a lot of situations while also creating trading opportunities![Cool] [Cool] [Cool]
WHY $SPDR DJIA ETF(DIA)$ FELL BY ALMOST 1%?As US bond yields inched higher, US stock market is reacting negatively with megacap stocks such as $Amazon.com(AMZN)$ & $Apple(AAPL)$ leading the losses.Investors are weighing in the likely further interest rate hike by Fed and typically with a rate hike, tech and growth stocks suffer the most. However, fellow Tiger community, don't be disheartened! If you are invested in great businesses, continue to DCA into the market. In such panic sell off, it might be a good time to scoop up somegreat value shares. All the best! Invest Safe!@TigerStars @Daily_Discussion @MillionaireTiger @CaptainTiger
Berlin plant starts, Tesla's stock is about to have a big run？
Elon Musk dances as Tesla opens $5.5 billion German factory
Elon Musk celebrated the $5.5 billion manufacturing plant’s opening
If the establishment of the Shanghai Gigafactory in China has given $Tesla Motors(TSLA)$ a firm foothold in the world's largest new energy car market, then the launch of the Berlin plant is more like Tesla's success in putting the revolutionary banner of new energy vehicles into the world's auto industry the hinterland.
With the delivery of the first batch of 30 "European version" Model Ys to users, Tesla's factory in Berlin, Brandenburg, Germany officially opened.
The Berlin factory is Tesla's second overseas super factory and Tesla's fourth global factory.
On Tuesday's trade, Tesla rose 7.91% closed at $993.98.
Some fundamentals of the Berlin factory
Tesla's Berlin factory covers an area of 300 hectares, with a planned investment of 4 billion euros, with an annual assembly capacity of 500,000 vehicles, and an annual capacity of 50GkWh for the supporting 4680 battery factory. Together, the two factories are expected to be able to solve local problems. 12,000 jobs.
The Berlin factory will only produce and deliver the Model Y Performance in black and white, with other colors being added gradually as production ramps up.
In the first six months, Tesla plans to have a production capacity of 30,000 vehicles, and the current pace is 100 vehicles per day, which is expected to increase to 1,000 vehicles per week by the end of April. As for when to start production of other versions of Model Y, Tesla has not given an accurate time yet.
Target 1.5 million units delivered in 2022 !
In 2021, Tesla sold 936,000 cars worldwide, making it the world's best-selling new energy vehicle. According to Musk's vision in February in 2022, Tesla's deliveries will increase by more than 50% this year, which means that Tesla's global sales are expected to reach 1.4 million units this year, or even exceed 1.5 million units.
Where does Tesla's confidence come from?
The Berlin factory is naturally an important weight in Musk's heart. In 2021, the registration of pure electric vehicles in Europe was 1,205,387 units, and the Tesla family contributed 167,549 units, accounting for 13% of the market.
In addition, the Austin factory in Texas, USA is also about to be ready, and this new factory with an annual production capacity of 500,000 units is also full of vitality.
In China, in 2021, the Shanghai plant will hand over 450,000 new cars. According to Reuters, with the expansion of the factory this year, the production capacity of the Shanghai factory can be pulled to 1.1 million units this year, which is an astonishing figure.
So under this production expecatation, Do you think, Tesla's stock is about to have a big run？
Munger is a well-known China bull. It became even more evident when he bought a substantial position (19% of the portfolio) in Alibaba via Daily Journal Corp in the first quarter of 2021.He doubled the position in Alibaba $Alibaba(BABA)$ $Alibaba(09988)$ at the start of 2022. Many investors look upon Munger as an influential investor and take heed in the things he say and do. Despite the tumbling share price, Alibaba investors found comfort in the wise man's 'endorsement'.But it all changed when Daily Journal's position in Alibaba was reportedly halved. It is optically damaging because it raises questions (did Munger think that it was a mistake) and dents confidence at the same time. It is likely that some investors will dump Alibaba shares just because of this.The thing is, Munger has never explained why he buys or sells certain securities. It is all for investors to make their own interpretations. There could be reasons that we may not really know. Munger stepped down as the chairman of Daily Journal just two weeks ago and it is quite certain that he was the one who made the selling decision because he remains as a director and is still in charge of the securities portfolio.Investors can see this incident as 'the glass is half empty or half full'. The 'half empty' reasoning is the obvious one and that Alibaba is bad because Munger is selling.The 'half full' version is that he is halving the stake, not selling an entire stake. The position is still quite large. Would he sell the remaining half? Possible and only time will tell. Daily Corp's investment in Alibaba is just one of the many Chinese stocks Munger owns indirectly. He has been investing in China for more than 15 years via Himalaya Capital which is managed by Li Lu. There are no reports about the stake he has in China equities though because it is private wealth.I would suggest a third way of looking at it - don't look too much into it. Investing is personal because competencies, beliefs and circumstances are different. It is highly likely that our portfolios are different from Munger or even Buffett, even if we look upon them as great investors. In fact it is very rare for any two portfolios to be the same.For example, Buffett bought into HP Inc which left a lot of investors bewildered with that choice and unlikely investors will just follow to buy the stock. Basically it is the confirmation bias acting up. It begins with our preferred stock and then we look around for validation of our choice. For example investors may like Apple or Snowflake and then Berkshire had stakes in them - wow these are good stocks as confirmed by Buffett. But most didn't like HPQ in the first place, so no one really cares if Buffett bought or sold it (or Alleghany or Occidental or the airline stocks he dumped during Covid). Alibaba is popular among many investors and some have relied upon Munger's investment in it as a validation. The problem with investing this way is that investors will forever be swayed by the acts of others, never their own. The successful investors I know develop their own confidence and not by borrowing confidence from the others.
3 Blue-Chip Stocks to Buy for April 2022$Visa(V)$ $Apple(AAPL)$ $NVIDIA Corp(NVDA)$ 1. Visa (V)
Outside of the tech space, these next two companies have been some of the best performers over the last decade. Visa (NYSE:V) and MasterCard (NYSE:MA) run what I like to call a “toll booth” on transactions.There’s a secular trend that’s been underway for years, as consumers transition from cash and check to credit and debit. Additionally, the rise of online and digital sales has only fueled this move, as consumers obviously find it easy to shop.Specifically, with these two businesses, investors have been quick to critique the valuation by pointing out that Visa stock trades at more than 17 times its trailing 12-month revenue. In the past, this valuation has also been an issue. Even during generous market periods, that’s a rich valuation for many growth stocks. However, in those instances, investors aren’t taking profits into account for the growth stocks, because many don’t have any. And in the case of Visa, it’s incredibly profitable.Overall, the company sports gross profit margins of almost 80% and net profit margins of 51.6%. These metrics aren’t back to the pre-pandemic highs just yet, but they are inching in that direction now. Therefore, it makes a great option among the top blue-chip stocks to buy.2. Apple (AAPL)I refer to Apple (NASDAQ:AAPL) as having one of the best business models in the world. It runs the razor/razor blade model, but at an incredible premium.The razor/razor blade model is premised on the idea of getting the razor into customer’s hands — even if that means giving it away at cost (or less) — so that they will continue to buy razors from you, which is the real money maker.Rather than give away its razors though — in this case, that’s iPhones, iPads, Macs, etc. — Apple charges a hefty premium. They mark these devices up in price to the point where they alone generate an enormous business for Apple.So, what then is the razor blade portion of the business? Services.Last quarter, overall revenue grew 11%, while Services revenue grew almost 24% YOY. Not only is it outpacing the company’s Products revenue in terms of growth, and overall revenue growth, but Apple’s Services unit is more than twice as profitable as its Products business. And that is the main catalyst that people need to understand.3. Nvidia (NVDA)As one of the greatest companies in the market as well, Nvidia (NASDAQ:NVDA) caters to multiple end-markets that are enjoying long-term secular growth. Some of those end markets include:Datacenter, cloud computing, supercomputing, artificial intelligence and machine learning, graphics, gaming, autonomous driving and automotive, drones, robotics, the metaverse and more.Moreover, when you look at those markets, it’s pretty clear to see the trends. Do customers want faster computers, better graphics, and more responsive gaming and control (for drones, robotics, autonomous driving)? Do they want faster cloud-based applications and are they generating more data?The answers to these questions all point to more demand for Nvidia’s products In turn, it’s the main reason I believe this firm will eventually command a $1 trillion market cap.
Growth Stocks Outperform Value Stocks? Data & Analyst Tell You Why
This article gonna explain why the well-recognized indices and analysts believe the growth stocks will outperform the value stocks.According to MSCI indices, Quality & Growth investing will continue to outperform Value. Let's look at the three types MSCI indices.Before we start, we need to know what MSCI World Index is: The MSCI World Index captures large and mid-cap representation across 23 Developed Markets (DM) countries. With 1,540 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.1. The MSCI World Growth Index It captures large and mid cap securities exhibiting overall growth style characteristics across 23 Developed Markets (DM) countries. Five variables are considered: long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate and long-term historical EPS growth trend and long-term historical sales per share growth trend. From this chart, we can tell that the growth companies outperform the broader market.2. The MSCI World Quality IndexThe index aims to capture the performance of quality growth stocks by identifying stocks with high quality scores based on three main fundamental variables: high return on equity (ROE), stable year-over-year earnings growth and low financial leverage.The quality stocks perform way better than the broader market in the past decade.3. The MSCI World Value Index It captures large and mid cap securities exhibiting overall value style characteristics across 23 Developed Markets (DM) countries.The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price and dividend yield.Among the three indices, only the value stocks underperform the MSCI world index.From this trend, we can detect the growth and quality stocks will continue to outperform the broader market in the future.Analysts are also positive on the growth stocks for 2 reasons1. fundamentalsCompared to value stocks, growth stocks have a weaker correlation with short-term fundamentals. Long-term fundamentals have a greater impact on growth stocks, such as industry trends, industry growth, and the competitive landscape of companies. After the pandemic, the slope of economic recovery is the core concern of the market. Growth stocks have a lower requirement for the slope of recovery, and as long as the pandemic and market sentiment recover, growth stocks will likely rise. However, the rebound of value stocks has higher requirements on the slope of economic recovery, policy implementation and effect.2. liquidityGrowth stocks are more sensitive to the liquidity environment. Overseas liquidity uncertainty is being removed. The implied rate hike expectations for the year in FFR futures has fallen back since May, and US Treasuries have fallen from a high of 3.2%. We think the Fed may slow down the pace of rate hikes in Q3 and stop raising rates in Q4. If we look at the six-month dimension, both rate hike and U.S. Treasury rates are falling back.A major reversal in growth stocks may be startingBoth fundamentals and improved liquidity are more favorable to growth stocks, so the certainty of growth stocks rising is higher. Once market sentiment improves, a rally in growth stocks could open up a major trend reversal.However, there are more influencing factors that restrict the rise of value stocks. In the short and medium term, it may continue the oscillating pattern, and may still need to wait for the opportunity of reversal.ConclusionMaybe it is counter-intuitive, growth stocks are still good choice in this market. But we shouldn't put all eggs in the growth basket. Rather, we can focus more on growth and quality stocks, and also buy some value stocks to hedge risks. $S&P 500(.SPX)$$NASDAQ(.IXIC)$$Coca-Cola(KO)$
“When all the dreams drain, same are loss and gain.” – The Romance of Three KingdomsKey Points- Hong Kong’s selloff and reversal last week were epic, but onshore less so.- Short sellers onshore are wrongfully blamed, as they have been cutting positions. Net long on margin peaked with the onshore market around mid 2021, and had since entered a deleveraging phase. It will still weigh on indices.- An onshore leverage cycle is typically ~3 years, consistent with the wavelength of 3 to 4 years in our theory of China’s economic cycle.- On October 20, 2018, there was a meeting at the Committee of Financial stability and Development. The onshore market eventually bottomed out in early January 2019. It will take more than a meeting and a phone call to end this bear. A second low is likely. But such likelihood is less perceptible now, as the market gets swayed by the near-term momentum.- Our trading range forecast of the Shanghai Composite continues to holdbetween slightly below 3,200 and slightly below 3,800, with the worst scenario being just below 3,000. We will continue to adjust our risk appetite according to the composite’s position within this range.One of the Most Oversold MarketsLast week was epic. The change of index points in the past twenty days ranked among the second steepest in more than four decades, together with October 28, 1997, during the Asian Crisis, and March 20, 2020, during the pandemic. The worst twenty-day selloff occurred two weeks preceding October 27, 2008, at the depth of the global financial crisis (Figure 1).The selloff and its dramatic reversal came at such speed that it stunned many young traders and analysts in the market. For those of us, who started covering markets since the Asian Crisis twenty five years ago, the epic volatility had spurred an innate crisis reflex attained after decades of market watching. In our report titled “The Ides of March”on Monday, March 14, we warned of the impending plunge. Then in our pre-market report titled “Another Technical Reprieve: Who Is Still Sellling?” on Wednesday, March 16, we presaged the epic short squeeze. After emerging from the vortex of trading fury, we must pause to ask why, and where to from here.The Russian-Ukraine conflict is still raging on. And the stance of a US-led alliance is toughening. Russia is confronted by significant resources constraints and reported flagging morale. As the U.S. keeps warning of the possibility of World War III should the war drag on, all eyes are on China, an important balancing piece in this War.Within China, opinions are split, and the debates are intense. But one can probably draw wisdom from one of China’s ancient classics “the Romance of Three Kingdoms” to understand the strategic dynamics between the US, Russia, and China. In the novel, the second and third most powerful kingdoms (the Kingdom of “Su” and “Wu”) at times joined forces to resist the dominant kingdom. At times, Su and Wu bickered with each other to maintain boundaries and balance of power, while separately growing their own military power to prepare to challenge the dominant kingdom to unite China.It is a fascinating classic full of strategies, games, and wisdoms. I could go on if this were not a market strategy piece. For Chinese well versed in this novel, the current delicate balance in the battlefield can be appreciated.Figure 1: All major China indices are oversold, close to their historical extremesSource: Bloomberg, BOCOM Int’lAs Russian central bank’s forex reserve overseas was sanctioned by the US soon after the war broke out, all US rivalries must have started to ponder the safety of their USD assets. If the USD system can be weaponized, a small and open economy such as Hong Kong that is also an important financing channel for many Chinese companies must have apprehensions about being cut off. No wonder, the short-selling interest and the put volume ratio in the Hong Kong market had been at their records (please refer to “Another Technical Reprieve: Who is Still Selling?” on 2022-03-16). After the sanctions on Russia, Hong Kong appears even more strategically important for China in the overall grand schema.The Important Meetingon 16 MarchThe onshore market had also sustained substantial volatility this week, albeit to a much lesser extent when compared with the Hong Kong market. While the Shanghai Composite plunged over 4% in one day during last Tuesday’s trading, the point loss over the past twenty days was not uncommon in the past twenty years.After lunch break on Wednesday, Xinhua announced that vice premier Liu He chaired a work meeting at the Committee of Financial Stability and Development. During the meeting, vice premier Liu addressed many market’s concerns, most notably the US-listed Chinese companies versus the HFCAA, the support for the platform companies, and the reform of the property sector, as well as monetary and fiscal policies. He also mentioned that China had been working closely with the SEC and the HKEx regarding the US-listed Chinese companies, and had been making progress.The market immediately jolted into action. Interestingly, the Shanghai Composite initiated its rebound at 3,023, a touch below its secular trend line of 850-day moving average at 3,160 on Wednesday. From trough to peak, the Shanghai Composite recovered almost 8% in three days. And there were whispers about some hedge funds engaged in short selling had been targeted. A quick search of Soro’s books, the infamous manager who made a fortune during the financial crisis, returned no results from many of China’s online bookstores. It is odd, as Soros is worshipped by many Chinese traders as the “God of Trading”, same as the underground triads worship General Guan Yu, one of the main characters in the Romance of Three Kingdoms. Anecdotes such as this invoke the memories of the summer of 2015, when short sellers were rounded up to save the market.Yet our data analysis suggest that the short sellers have been in retreat – since mid 2021 indeed (Figure 2). Meanwhile, China’s USD junk bond continues to plunge, together with the short positions outstanding in the onshore market. That is, short selling is not the instigator of this selloff. While the market recovery since Wednesday has been impressive, it has a different cause from what is being understood by the market.Figure 2: On-shore short selling has been retreating since last year, together with USD junk bondsSource: Bloomberg, BOCOM Int’lPeaked Cycle andWaning ConfidenceWe believe leveraged traders are the smarter money in the onshore market. At least, they are confident and committed. By studying their trading behaviors, we will get a glimpse into market confidence, and gauge the future direction of the onshore market.Our data analysis shows that net buying activities in the Shenzhen Stock Exchange has peaked around mid 2021, and has been declining since. We note that the net buying activities peaked at the same level seen during the summer of 2015 – just before the stock market bubble burst. And the Shenzhen Composite has been falling in tandem (Figure 3, upper panel). We have found similar patterns in the Shanghai Stock Exchange (Figure 3, bottom panel).Figure 3: Shenzhen/Shanghai net long on margin has peaked for the current cycleSource: Bloomberg, BOCOM Int’lFurther, we have found a 3-year cycle in the margin trading activities in China, roughly consistent with the wavelength of our theory of China’s economic short cycle of between every three and four years. It seems that on a six-year cycle consisting of two sub-cycles of three years, the first three years are the period of substantial leveraging up then deleveraging down in margin trading, then followed by another three years of steadier margin accumulation – before the eventual violent deleveraging process, such as early 2016 and the entire 2018. Right now, it seems that the deleveraging process is continuing. If the most confidence and the smartest money is retreating, the onshore market will likely feel the pinch.The unwinding of leveraged positions is a sign of waning confidence. It is not atypical at the end of the cycle. Indeed, such deleveraging trades will magnify the volatility that tends to be concurrent with the cycle’s end. It is just a usual part of the market cycle, and it will come and go – like the turn of the seasons.In our 2022 outlook, we outlined our macro framework this year by examining China’s external-related macro accounts to gauge the change in dynamics between China and the rest of the world, most notably the US. We believe that exports and the current account surplus, as well as the forex deposits in China’s commercial banks have been an important source of liquidity to sustain the performance of the onshore market.As 2022 progresses, we find that the strength of Chinese exports is starting to wane (Figure 4). This should not have come as a surprise. As the western world gradually achieves crowd immunity, production capacity is recovering and the dependency on Chinese exports is lessened. Based on this macro framework, we have been a near lone cautious voice on the onshore market. Meanwhile, Hong Kong’s export growth continued its slide for a third quarter, and Chinese exports will slow in tandem (Figure 4).Figure 4: China mainland and HK’s exports will continue to slow; US cycle peakedSource: Bloomberg, BOCOM Int’lAt the end of the cycle, all growth assets tend to be affected. For instance, CATL, China’s biggest new energy play, finds itself closely correlated with the NDX, the biggest 100 tech companies in the US Nasdaq (Figure 5). It is not a coincidence. After this technical reprieve, investors will once again focus on decelerating fundamentals typically featured at the end of the cycle.Figure 5: CATL vs. NDX – both growth assets at the end of the cycleSource: Bloomberg, BOCOM Int’lConclusionLast week’s technical reprieve in offshore markets was epic, but onshore less so, as suggested by points loss over the preceding twenty days before the market rebound. Onshore, short sellers were wrongfully blamed for the selloff. Indeed, they have been retreating since mid 2021, in tandem with plunging USD Chinese junk bonds.While Wednesday’s important meeting has addressed many market’s concerns, China does not have much sway in the outcome of the negotiation with SEC. For the past ten firms named by the SEC under the HFCAA, all had handed over the audit drafts -- with China’s approval. While Hong Kong is a natural market for the return of Chinese ADRs, Hong Kong is much less liquid than New York. Upon returning, the ADRs will suffer a liquidity discount, and will likely be roiled by the change of investor base. The sheer volume of the ADRs’ return will likely overwhelm HKEx. Of course, a special gateway can be open in the HKEx for these best-of-breeds Chinese firms to return home.The net long on margin in the onshore market has peaked for the cycle in tandem with the onshore indices, and deleveraging appears to be in progress. The pressure on the onshore market cannot be easily dissipated by one meeting or a phone call, as important as these communications are. On October 20, 2018, during the depth of the trade war and as the US market plunging into its worst Christmas since the Great Depression, the Financial Stability and Development Committee had a similar meeting, too. But the onshore market eventually bottomed out in early January 2019. We continue to believe a second low is likely -- if history is a guide. But such likelihood will not be immediately apparent, as the market gets swayed by near-term momentum.In our 2022 outlook published last November, we forecasted the trading range for the Shanghai Composite to bebetween slightly below 3,200 and slightly below 3,800, and the worst scenario to be just below 3,000(“Outlook 2022: Shadow Fed Tightening”, 2021-11-15). Last week’s selloff almost got us to 3,000. Our forecast range continues to hold, and we continue to adjust our risk appetite according to the composite’s position within our forecasted trading range.
What's the Next Stock with the Biggest Earnings Misses?
Benefiting from global monetary easing and technological progress, U.S. stocks have experienced a super-long bull market over the past decade. Technology leader FAANG have performed particularly well, and have become the "engine" that drives the Nasdaq and even the entire US stock market to continue to rise.
However, this appears to be reversed in 2022.
$Meta Platforms, Inc.(FB)$: the year-on-year decline in earnings per share doubled compared to market expectations, and key user indicators were poor. After the earnings was released, the stock price plummeted 26.39% in a single day, suffering the largest one-day drop in the history of the US market.
$Netflix(NFLX)$: On April 19, the first quarterly of the streaming media giant Netflix once again "thundered". The company lost 200,000 net paying subscribers globally in the first quarter for the first time in 10 years, and expects to churn more customers in the coming months.
$Alphabet(GOOGL)$: On April 26, Alphabet, the parent company of Google, also announced its first-quarter results this year. According to the report, Alphabet’s first-quarter revenue growth rate was the lowest in two years, and its net profit fell by more than 8% year-on-year. The year-on-year growth rate of advertising revenue was significantly slower than the previous quarter, far less than analysts’ expectations.
$NASDAQ(.IXIC)$ tumbled 500 points in after-hours after Google's worse-than-expected earnings report, in a sign of increased market panic.
What's the next stock with the biggest earnings misses?
$Palantir Technologies Inc.(PLTR)$$SoFi Technologies Inc.(SOFI)$$Coinbase Global, Inc.(COIN)$$Unity Software Inc.(U)$$Roblox Corporation(RBLX)$$Rivian Automotive, Inc.(RIVN)$$Affirm Holdings, Inc.(AFRM)$
There is an opinion that these growth stocks are overvalued. Some of these companies aren't even profitable yet.
Are the best days for growing stocks really over?
Affected by factors such as high inflation, the conflict between Russia and Ukraine, and the Fed's tightening of currency, the large U.S. stock technology stocks that have recently announced their earnings reports have "died out." The growing stocks may face worse situations.
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Key Points- Selling in Hong Kong at one of its worst. Indiscriminate selling by institutional and individual investors. Pessimism will take time to dissipate, the Hang Seng will take time to bottom. Fleeting technical rebound will be difficult to trade.- Onshore market is no better. Foreign investors are reducing Chinese treasury. Onshore funds’ equity allocation uncomfortably high, and inconsistent with COVID resurgence, potential US sanctions and disappointing February credit growth. Be aware of contagion. The PBoC will act accordingly.- BUT forward points on the HKD suggest long-term confidence. Difficult case against HFCAA means accelerated return of US listed Chinese stocks. It will drain liquidity in Hong Kong near term, but China’s finest will eventually prove well worth it.February monetary stats onlyhalf of expectation.Last Friday’s trading was memorable. But it was not only because of the Shanghai Composite’s (SHCOMP) V-shaped reversal intraday, and continued bounce from its 850-day moving average. Just a few hours before China’s monetary statistics were due for release in the afternoon trading, the China treasury bond futures surged suddenly. This late-day surge in both bonds and stocks left many experienced traders scratching their heads.Later, at only half of the consensus expectation, China’s monetary stats for February proved to be very disappointing. Private long-term loan growth, a.k.a. mortgage, was negative for the first time in well over a decade. Of course, economists blamed the lunar new year as expected. But the market’s hope for aggressive easing must have been dashed, after cheering for the “historic” monetary stats in January.Such weak credit growth helped explain why the sudden surge in both bonds and stocks – bonds thought the economic slowdown will continue, yet stocks continued to bet on looming monetary easing. But neither could explain the mysterious surge BEFORE the release. And when it comes to predicting the future, bonds tend to be right more often than stocks.As mortgage growth decelerated dramatically, super-luxury apartments in Shanghai were flying off the shelves. A record RMB350,000 per square meter sales was reported, together with a flurry of apartment sales with total price tags from at least RMB30m to well over RMB50m or more. These are extra sour grapes, especially when the “Twin Sessions” didn’t mention “common prosperity”. These apartment sales did not need mortgage – they were all settled in cash.It is a wild menagerie.Confidence on Hong Konghas notwaned.At this juncture when the SHCOMP made its first attempt to bounce off its 850-day moving average, an important secular trend line, the bottom of the Hang Seng Index fell out. The Hang Seng failed to find support on its 17-year secular trend line, despite showing deep allocation value since Christmas and being the best-performing major index globally (Please refer to our reports titled “This Christmas, Hong Kong in Deep Value” on 2021-12-23 and “Hong Kong at Secular Inflection Point” on 2022-01-24 for more detailed discussions). We note that the secular trend line is neither support nor resistance level, but rather the underlying secular trend of an index. The addition to five more US-listed Chinese firms to the SEC watchlist according to the HFCAA did not help. The US-listed Chinese firms endured another bloody selloff on Friday in New York trading.And traders are wondering what next for these US-listed Chinese firms. Even though these firms have at most till 2024 to comply with the SEC rules and hand over their audit draft for SEC’s perusal, the accelerated HFCAA can dramatically reduce this grace period to two years or less. The HKEx has been preparing for their return to Hong Kong, the offshore Chinese market. But the HKEx has already been overwhelmed by hundreds of A1 filings. And too many IPOs will drain the liquidity in Hong Kong. 2021 is a good example.There will be no easy way out. As a leading China investment banker who had helped listing some of the biggest Chinese internet platform companies lamented during our chat, “the Chinese internet space had become uninvestable, everyone wants out”. Another fund manager who managed one of the largest China equity funds also jibed, “confidence is all but lost”.Confidence is hard to come by and difficult to quantify, but we will give it a try any way. We look at the change in forward points in the Hong Kong Dollar (HKD,Figure 1). Surprisingly, despite rife pessimism, the change in forward points in the HKD is more consistent with times with higher confidence about Hong Kong’s future, such as 2007 and 2017, not with the periods of 2005, early 2016 and early 2020 when confidence was low. Historically, the forwards points paid on the HKD are closely correlated with the return of the Hang Seng. Yet, right now, the Hang Seng has absolutely tanked, but confidence in Hong Kong’s future has not waned.Figure 1: Confidence in HK as suggested by HKD forward points has not waned, but diverged from the Hang SengSource: Bloomberg, BOCOM Int’lWho is buying? Foreigners reducingChinese Treasury.So who is still buying in depressing times like these? We look at cross-asset and cross-ownership holdings to gauge the penchant to buy or sell Chinese assets. Firstly, we examine the change in foreign holdings of the Chinese treasury. Our data show that foreign investors have been slowing their purchase of the Chinese treasury since early 2021, and this February they turned into outright outflow. Indeed, the outflow of US$35bn in February from the Chinese treasury is the largest single-month outflow we have since data history.It could be due to the Russian central bank selling some of its Chinese treasury holding to raise cash, as its foreign reserve is frozen by the US. But there must be some repatriation flows as well, as some leading international investment banks have cut their ratings of Chinese treasury and advised clients to reduce holdings.Importantly, bond investors are smart money. Historically, our data analysis shows that the change in foreign holding of Chinese treasury led foreign buying of onshore stocks and their return by up to about nine months (Figure 2). As such, when foreigners are reducing their Chinese treasury holdings, investors in onshore stocks must take note, as volatility will spill over from treasury to stocks.Further, we must be mindful of the consequent pressure on the RMB, as foreigners exit. The potential contagion effect could weaken the RMB suddenly, and induce capital flight. Right now, we are still seeing orderly depreciation of the RMB. The scenario of capital flight is a risk scenario in a market where cross-border capital flows are still monitored.Figure 2: Foreign buying of Chinese treasury bonds slowing, portending slowing offshore buying and dwindling return of A sharesSource: Bloomberg, BOCOM Int’lWho is buying? Selling in on/offshorestock markets.Taking the lead from the foreign investors in Chinese treasury bonds, both on- and off-shore stock markets saw intense selling.In Hong Kong, we are seeing the net buying activities in the market plunge to its lowest in history, and stuck there for months now (Figure 3). Meanwhile, our bottom-up aggregation suggests that, on the stock level, both institutional and individual investors have been dumping Hong Kong stocks (Figure 4). Even though the net-buying activities have been at the record low for months now, this tends to lead the eventual bottom in the Hang Seng by three months or more.Figure 3: Buying in Hong Kong and daily sentiment plunged to one of its worst in more than a decadeSource: Bloomberg, BOCOM Int’lAnd the indiscriminate selling by both institutions and individuals suggests that prevalent pessimism in Hong Kong. Such pessimism tends to ferment at some of the most difficult periods for Hong Kong, such as 2012, second half of 2015 to early 2016, as well as early 2020 (Figure 4). As such, even though the bottom has fallen out of the Hang Seng, it would still be rash to catch the falling knives in the near term. But we are sure long-term investors must have begun to appreciate the long-term value in Hong Kong, as suggested by the HKD forward points.Figure 4: Both institutional and private investors are dumping Hong Kong stocksSource: FactSet, BOCOM Int’lThe onshore market is a similar story. Net buying activity has precipitated into one of its lowest on record (Figure 5). However, we caution against using this measure as a market timing indicator for bottom fishing. Historically, it coincided with some of the lowest points in the SHCOMP, but not all. And its recent track record since 2016 has been blemished.Figure 5: Buying of onshore stocks collapsing, but not yet seen its worstSource: Bloomberg, BOCOM Int’lInstead, the equity allocation in the onshore aggressive allocation funds stays elevated at still above 80% (Figure 6). These funds raised their equity exposure in late 2021, and only reduced slightly their risk exposure despite the recent volatile market. In our 2022 outlook “The Shadow Fed Tightening” published on 2021-11-15, we highlighted that fund managers were inappropriately positioning for the end of the cycle and loaded their portfolios with risks. Such excess risky disposition will likely take some more time to unwind.Figure 6: Onshore investors’ stock allocation in their portfolio is still elevatedSource: Wind, BOCOM Int’lConclusionForeign investors are reducing their holdings of Chinese treasury at its fastest speed on record. Such treasury portfolio reduction tends to lead on/offshore stock buying activities and onshore stock return by around three quarters. Bonds are smart money.Selling in Hong Kong is intense, and is at one of its worst on record. Both institutional and individual investors are dumping Hong Kong stocks. Such pessimism tends to ferment during some of Hong Kong’s darkest hours, and stocks, while capitulating, will still need time to heal. It would be rash to bottom fish in Hong Kong, but long-term investors must have begun to appreciate the long-term value of Hong Kong stocks. The forward points in HKD suggest so.Net buying in the onshore market is at one of its worst on record as well. But its track record as a market timing indicator is patchy, especially in recent years. Meanwhile, onshore aggressive funds still have very high stock allocation of over 80% of their portfolios, and have only reduced slightly during recent market jolts. Such high equity exposure is not consistent with market capitulation. Our trading range forecast for the SHCOMP published last November was between just below 3,200 and just below 3,800, with the worst case being just below 3,000 should everything go south.Russian central bank’s reduction of the Chinese treasury can have contagion effects on assets such as the RMB, and induce capital flight if not managed carefully. Chinese companies with Russian business connection can be affected by the US sanctions, although the extent is still unclear. While the PBoC will likely step up its easing efforts, COVID is resurging, too.Be aware of the ides of March.
The EV industry is one of the fastest-growing, and Tesla is the poster-child. Led by an outspoken CEO, the company has smashed one record after another. However, should you be investing your money in Tesla? Keep reading to see what analysts recommend.With this article, I mark the opening of a new section on my blog, dedicated to investing in the Electric Vehicles.About TeslaTesla is undoubtedly the company that made electric vehicles mainstream, supporting its cars with a global network of fast DC public chargers known as Superchargers. It had a massive financial year in 2021, shipping more than 900,000 battery-electric vehicles (BEVs), by far more than its competitors.Revenue for the last quarter was $17.7 billion, beating expectations by more than half a billion dollars. It represented a 6 percent jump. Adjusted earnings came in at $2.54 per share, a massive increase of 218 percent over the same quarter in the previous year. It was the fourth straight quarter of gain for Tesla.Tesla, however, is not immune to the uncertainties of doing business. Thanks to increasing raw materials and logistics costs, the automaker has had to raise prices on its cars, and its cheapest electric vehicle now starts at $47,000, a jump of $2,000.Increased price notwithstanding, Tesla struggles to meet the demand for its cars, some of whom have months of waiting times. Next year, the company is expected to release the much-awaiting Cybertruck pickup truck and its Class 8 electric truck, the Tesla Semi, before that.Tesla also makes solar panels and battery energy storage systems like Powerwall and Megapack. It is in the process of commissioning two new EV and battery production facilities in Texas and Berlin.What are experts saying about Tesla stock?While bulls will tout the solid performance of Tesla in recent quarters, there are reasons to listen to the bears before investing your money in Tesla stock.For example, the automobile industry is a tough one to operate in. Competitors are coming strong, too, as they vie to unseat Tesla as the market leader in EVs. BYD moved 93,000 electric vehicles in the last month of 2021, which is too close to Tesla’s monthly average of 102,000 in the quarter. Stateside, competitors like GM and Ford are ramping up electric vehicle production and investments.Apart from that, many experts point out that Tesla’s stock trades at a significant premium, which the bulls claim is well deserved. However, Tesla stock could contract because even the bulls may change their mind as many of Tesla’s promises are still a work in progress.Moreover, Tesla may become a victim of its own stellar performance as it is expected to maintain that level of growth. Any stall or misstep could send the stock crashing.Is investing in Tesla stock a smart move?Unless you are a die-hard Tesla fan or have a huge appetite for risks, investing in Tesla stock is not the most prudent financial decision, especially at its current valuation. The P/E ratio is currently sitting at 184, which is very high.On the other hand, the current dip might represent a perfect entry opportunity:Hope this was useful for you! Please note that the above content is not an investment advise and shall be considered only for informative purpose.Feel free to share you comments below.
On Friday, February 12th, the price of gold rose by more than 1.3%, the biggest increase in the past four months.
This moving price signal is usually a good time for us to pay attention to an asset class. As one of the investment categories, gold is usually famous for its value storage means such as avoiding risks and resisting inflation. Under the background of tense regional political situation and high inflation in Europe and America, it is a good time for gold to come on stage. Personally, the following comment is a good analysis of some factors in the current gold price game:
Also on Friday, February 12th, the yield of 10-year US bonds rose above 2% for the first time in two and a half years, which put some pressure on the rise of "interest-free" gold. On the other hand, the price of crude oil is also rising, and the hidden worry of inflation is unabated.
Risk aversion and falling real yields should boost gold prices, but a stronger dollar may hinder further gains in gold prices. On the other hand, rising crude oil prices may aggravate investors' concerns about inflation and economic growth, which may further push up gold prices.
It is so changeable and complicated that it has never been a single factor rising in a straight line. And this article wants to analyze the ways of investing in gold for tiger friends. In addition to trading gold futures directly,$(GCmain)$, can also participate through industry ETFs and high-quality companies.
I. Gold-related ETF
The best gold ETFs are:
Here's a closer look at each of these top gold ETFs:
1.SPDR Gold Shares
The largest and mostliquidgold ETF is the SPDR Gold Shares. It's the gold standard for investors seeking direct exposure to the price of the yellow metal. The ETF's sole assets are gold bullion, which it stores in secured vaults.$:SPDR Gold Shares(GLD)$
Investors pay a premium for this particular gold ETF. It has a higher expense ratio compared to other ETFs that own physical gold bullion. However, it's still relatively cheaper than the cost of shipping, insuring, and storing gold bars and coins, especially when factoring in its liquidity. Its large size makes it a favorite of institutional investors such as pension funds that use it to hedge againstinflationand other risk factors.
2.iShares Gold Trust
The iShares Gold Trust is almost identical to the SPDR Gold Shares. That makes it another great way to invest directly in gold.It also boasts a lower expense ratio than its larger rival.$:iShares Gold Trust(IAU)$
Owning shares in this ETF is a great proxy for owning physical gold without the hassle and expense of storing or insuring bars and coins. The ETF handles these items, storing its bullion in the London branch of $:JPMorgan Chase(JPM)$ . Overall, this gold ETF has done an excellent job of tracking the price of gold, with only a minor underperformance due to its expense ratio.
3. VanEck Vectors Gold Miners ETF
The VanEck Vectors Gold Miners ETF is the largest ETF focused on holding shares of majorgold stocks. That makes it the best gold ETF for those who want to invest in mining companies as a way to play the gold market.$:VanEck Gold Miners ETF(GDX)$
Shares of mining companies can outperform the price of gold. That's because they can benefit from the dual catalysts of production growth and a rising gold price. However, owning mining stocks is riskier than investing directly in gold. That's because cost inflation and other factors can cause underperformance.
As of September 2021, this gold ETF held shares of more than 50 gold mining companies. Its top holdings included the largest gold mining companies in the world bymarket capitalization, led by the following five:
$:纽曼矿业(NEM)$$:巴里克黄金(GOLD)$$:Franco Nevada Corp(FNV)$$:Wheaton Precious Metals(WPM)$$:纽克雷斯特矿业有限公司(NCM.AU)$
These are some of the largest gold companies in the world. The market cap of the largest mining company on this list is $51 billion. Overall, these top five holdings make up more than 46% of this gold ETF's assets, led by Newmont at more than 15%. That gives investors greater exposure to the world's largest gold mining companies, making this ETF ideal for investors seeking quality over quantity.
II, The gold mine company
Although the GDX mentioned above can already track mining companies, you may want to invest directly in their stocks. This article briefly summarizes the stocks of two gold mining companies:
1. Barrick Gold Corporation
Barrick Gold is striving to be the most valuable goldmining companyin the world. The Canada-based company focuses on operating Tier One mining assets, which Barrick defines as:
Able to produce more than 500,000 ounces of gold per year.
Having at least 10 years of productive life remaining.
Featuring low-cost operations, as defined by total costs per ounce.
By focusing on operating large mines with significant remaining resources, Barrick can produce gold at a relatively steady pace for years. The company expects to produce an average of about 5 million ounces per year through 2030.$:Barrick Gold Corp(GOLD)$
Barrick also forecasts that its all-in sustaining costs will decline in the coming years from roughly $1,000 per ounce in 2020 to around $800 per ounce by 2025. Because of its focus on reducing costs, Barrick’s profits should continue to rise even if gold prices modestly decline.
Barrick complements its top-tier gold mining portfolio with a strong balance sheet. It has focused on paying down debt over the past several years throughfree cash flowand the sale of non-core assets. As a result, the company has reduced its interest costs. Its increasing financial flexibility and strength enables Barrick to pay a growingdividend.
2. Franco-Nevada Corporation
Franco-Nevada is a Canada-based streaming and royalty company. It has adiversified portfolio, with agreements tied to gold,silver, the platinum group metals (PGMs), iron ore, andoil and gas. In the second quarter of 2021, 56% of its revenue came from gold.$:Franco-Nevada(FNV)$
A major benefit of Franco-Nevada's focus on royalties and streaming is that it reduces risk. It doesn’t face the capital and operating cost overruns that have historically plagued mining companies. At the same time, Franco-Nevada’s agreements position it to profit as its mining partners complete exploration and expansion projects.
Franco-Nevada's streaming and royalty contracts provide it with the ability to generate lots of cash by selling the physical commodities it receives. That cash flow enables it to invest in new deals and pay a dividend, which the company has increased each year since itsinitial public offering(IPO) in 2008. The company also boasts a debt-free balance sheet -- a rarity in the mining industry -- giving it even more financial flexibility to invest in new royalty and streaming agreements.
Because Franco-Nevada can profit from gold mining without exposure to the risks of mine development, its stock has historically outperformed the price of gold and other gold mining stocks. All of these factors make it ideal as a gold mining stock.