vestact posted: " Market Scorecard Yesterday, US markets were mixed. The tech-heavy Nasdaq started the month with a new record, building on its August gains, while the S&P500 was flat for the day. The good news is that the S&P500 hasn't suffered a 5% pullba"
Yesterday, US markets were mixed. The tech-heavy Nasdaq started the month with a new record, building on its August gains, while the S&P500 was flat for the day. The good news is that the S&P500 hasn't suffered a 5% pullback since October 2020. These days, big equities holders really seem to like "buying the dip".
In company news, ChargePoint, the maker of charging systems for electric vehicles saw its shares surge over 13.2% in early trade, after reporting a strong earnings beat. Elsewhere, Apple will now let US citizens add their drivers licenses to their Apple Wallet in some states.
At the end of the day, the JSE All-share was down 0.67%, the S&P 500 was up a fraction, by 0.03%, and the Nasdaq was up 0.33%.
Our 10c Worth
Bright's Banter
On Tuesday after the market close, CrowdStrike released a good set of quarterly numbers that beat analysts' expectations. The Sunnyvale, California-based cybersecurity company grew its earnings per share by 266% to 11 cents, while revenues jumped 70% to $337.7 million year-on-year thanks to 1 660 new corporate subscribers, bringing the total to 13 080.
The company also raised its revenue guidance for the year to between $1.39 billion and $1.4 billion. Analysts are debating whether its annual recurring revenue growth has slowed. We think not, the company has proven itself in taking market share and providing superior services.
In my latest comments on cybersecurity, I pointed out that ransomware attacks show no signs of slowing down, being up 337% from 2019. There have been high profile attacks on the JBS meat company and the Colonial Pipeline. Of course, these hackers target certain IT management tools with vulnerabilities, but it provides an opportunity for businesses like CrowdStrike.
CrowdStrike uses machine learning to detect any irregularities in corporate IT systems and maintains a specialised database to find malware on laptops, cellphones, and other devices that access dedicated corporate networks. We're very bullish on CrowdStrike as a company that protects classified information from criminals. We have recommended this one to Vestact clients, and you should consider adding some to your portfolio.
One Thing, From Paul
According to Bloomberg news, the privately-owned, cloud-based email software management company Mailchimp may be sold for more than $10 billion.
I have a soft spot for Mailchimp, as I've been a customer of theirs for many years. I use their email database system to manage a running club in Parkview called the Tyrone Harriers. We have 963 current subscribers who each receive a message about their running options for the next morning, every day of the week. You can find out more and join up here.
For that service, I currently pay just over $24 per month. That's a steal. How else would I be able to keep track of everyone, and easily send out the daily message after tweaking the words and adding a new photo?
Mailchimp is based in Atlanta, and was founded in 2001 by Ben Chestnut and Dan Kurzius. They still own the whole thing, so a big payday is coming their way!
The buyer is said to be Intuit which is the maker of TurboTax and QuickBooks software. They've been listed for many years and have a market cap of $154 billion.
Byron's Beats
Yesterday Bright spoke about the sustainable apparel business Allbirds. It got me thinking about the pioneer in sustainable clothing, Patagonia and what that business might be worth. I remember listening to a "How I built This" podcast episode with the founder Yvon Chouinard a few years ago. It's a very intriguing story.
Yvon was a good rock climber and sold climbing gear for most of his adult life. He opened his first store in 1973 under the name Chouinard Equipment. The name changed to Patagonia in 1981.
What was so interesting about the interview was Yvon's genuine desire to make quality sustainable clothing, rather than chase profits. He was not interested in money at all. That is why all Patagonia clothing can be sent back to the company to be repaired for free, or they will buy it from you.
Patagonia encourages their customers to buy as little clothing as possible. Rather buy quality and wear it a lot.
Ironically this commendable ethos made the business go mainstream. Wall Street bankers, the ultimate advocates of materialism, fell in love with the brand and like to order up corporate-branded items.
At least 1% of all Patagonia sales go to environmental groups. If this company lists one day, I would be keen to get some shares.
Michael's Musings
Every now and then a client asks us if they should use their spare money to pay off their bond or invest in the stock market. The answer is: "well, it depends". Your risk tolerance is the main thing to consider. For those who like risk, put extra money into the stock market instead of your bond.
If you pay your bond off early, you are saving the interest that would have been due. This is your return on investment. For most local property owners their interest rate is around 7%, the current prime rate. So, any extra money that you put into your bond is getting an annual return of 7%. Slightly more than inflation but not amazing.
If you put your extra money into the stock market, you won't have the guaranteed 7%, but you should be getting a good return over the long run. If you can stomach the volatility in the stock market, it is probably better to pay your house off slowly.
Once your house is paid off, do you really want a large part of your wealth sitting in a slow growing and illiquid asset? Over the long run, the stock market gives better returns.
Personally, I like the idea of owning my property. It is an emotive decision, not an investment decision. If my income dries up for some reason, I want to know that I can stay in my house. As a result, I plan to pay off my house in 10 years, instead of the 20 calculated by the bank.
Don't lose sleep over this debate though, there is no correct answer. All that matters is that you have extra money at the beginning of each month to invest and save.
Ben Carlson goes through his own thought process in this blog piece. He's American, but most of the principles remain the same - Why I Might Never Pay Off My Mortgage.
Linkfest, Lap It Up
Pakistani e-commerce company Bazaar Technologies raised $30 million. The one-year old company operates business-to-business market places for grocery stores - Bazaar Technologies puts Pakistan on the map.
Here's a great graph showing the top 50 highest paid athletes. It breaks their earnings down between on-field and off-field activities - Visualizing the Highest-Paid Athletes in 2021.
Signing Off
Asian markets are mixed this morning. Hong Kong and mainland China are up, while South Korea is down. The risk of regulatory crackdown still lingers in China as ride-hailing companies are the latest victims of criticism from Beijing.
The Rand is trading at around R14.42 to the US Dollar. US futures are steady as we await US factory orders, durable goods, trade balance, and initial jobless claims, which will all be reported later today. Enjoy the day!
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