vestact posted: " Market Scorecard Markets have had a rough start to 2022. The S&P 500 posted its worst first five trading days of the year since 2016, down 2.5%. The Nasdaq has also had a shocker, its worst week since February 2021, down an eye-watering 5.7%. "
Markets have had a rough start to 2022. The S&P 500 posted its worst first five trading days of the year since 2016, down 2.5%. The Nasdaq has also had a shocker, its worst week since February 2021, down an eye-watering 5.7%. Of course, we are undeterred by such numbers. The tide will turn, so keep calm and carry on.
According to a crowd called Sundial Capital Research, almost 40% of the stocks in the Nasdaq are down 50% from their 52-week highs, while almost two-thirds are in a bear market (down 20%). A few names that are down a lot are Coupang, Didi, Lemonade, Nio, Rivian, Robinhood, Metromile, Palantir and Virgin Galactic. We don't own any of those in our model portfolio.
The December US jobs report out last Friday showed that employers added 199 000 jobs and the unemployment rate fell to 3.9%. The jobs number missed economists' expectations, however, the low unemployment rate is probably confirming the Fed's intention to stop with the stimulus it pumped into the economy during the pandemic.
In company news, French regulators have hit Facebook and Google with fines totalling $238 million over the misuse of cookies. The tech companies have three months to comply or face penalties of 100 000 Euros for each day of delay.
On Friday, the JSE All-share was down 0.3%, the S&P 500 lost 0.41%, and the Nasdaq sagged by another 0.96%.
Our 10c Worth
One Thing, From Paul
I'm back, and wishing you all a positive 2022. I enjoyed a good break with my family, mostly in the Western Cape.
The real benefit of family holidays is not the actual being away, it's the opportunity to mark the passage of time by making happy memories. I'm quite happy to spend money on travelling because it feels more like investing than consuming.
The global travel industry will rebound in years to come, and return to good health. Mind you, I'm not sure how long it will take, so we are not currently invested in the sector in our share portfolios. We sold out of Booking.com in May 2020. I have a chunky personal investment in Airbnb though.
Byron's Beats
The Rand is considered a risky asset, and so are equities. This means that when stocks around the globe drop, the Rand usually weakens too. That's not ideal if you want to send Rands to the US to buy the market dip because you will get fewer USDs when you make the exchange.
However, every now and then the opposite happens; markets drop and the Rand strengthens. That's exactly what happened last week. The Rand now sits at R15.55 to the USD, from R16, while the Nasdaq dropped 5%.
I am not saying that the market won't fall further or that the Rand won't get stronger. All I'm saying is that this doesn't happen often and if you are sitting on Rands, it could be a decent time to get them offshore and buy US stocks.
Michael's Musings
On Thursday Stryker announced that they are buying Vocera Communications for $3 billion. Here is a high-level description of the business: "Vocera caters to nearly 1 900 hospitals, allowing healthcare workers to communicate and collaborate with co-workers and engage with patients and their families". Looking at their website, they seem to be a hospital management system making it easy for staff members to interact with each other and have easy access to patient information.
Stryker has a powerful brand and an extensive sales network. Their business model is to buy bolt-on companies, allowing the acquisition to take advantage of the Stryker brand and sales team. The Vocera purchase will complement Stryker's Advanced Digital Healthcare division. With an increase in the digitisation of the medical industry, it makes sense for Stryker to bolster this part of its business.
Stryker paid a big premium for Vocera, but the acquisition is only 3% of their market cap. Vocera looks like a good fit and shows Stryker is adding some diversity away from their core medical devices business. We endorse this transaction.
Bright's Banter
I've got some bad news. The Tesla Cybertruck webpage no longer mentions 2022 as the year of production for the highly anticipated EV. What's worse is that Tesla gave no reason for the change. This means that sales of the futuristic-looking truck will be delayed further until an announcement is made about its production programme.
The good news is that Tesla did make some progress with the Cybertruck in 2021. Prototypes were spotted in Los Angeles and Texas during the year, and Tesla executives also noted that alpha prototypes were already built.
If you listen to the full-year 2021 earnings call, you'll hear that Elon Musk remains bullish on the Cybertruck, noting that a quad-motor version of the EV was delivered in December. Everything is still a work-in-progress. We hope Musk and his team can meet the demand for these trucks very soon.
Asian markets are trading cautiously this morning with smaller volumes than usual. Hong Kong and mainland China bourses rose as tech names rebounded, while South Korea slipped. Japan is shut for a public holiday.
US futures are little changed in early trade. The Rand is trading at around R15.59 to the US Dollar.
Welcome back to work team 10 January! Unfortunately, the "Happy New Year" statute of limitations has run its course, so you can't say that anymore. Carry on.
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