vestact posted: " Market Scorecard US markets closed in the red yesterday, capping a disappointing first quarter of 2022 for global markets. The S&P 500 declined by 3.8% in the past three months and the Nasdaq finished the quarter down 8.5%. Note that things co"
US markets closed in the red yesterday, capping a disappointing first quarter of 2022 for global markets. The S&P 500 declined by 3.8% in the past three months and the Nasdaq finished the quarter down 8.5%. Note that things could've been worse if it wasn't for the recent rally in tech stocks.
In company news, GameStop surged 18% after-hours after the meme stock announced that it would seek a stock split. Elsewhere, Apple noted that its technicians will now decline to repair iPhones that have been listed as missing on its global GSMA database, because they may have been stolen.
At the end of the trading day, the JSE All-share closed up 0.10%, the S&P 500 lost 1.57%, and the Nasdaq fell 1.54%.
Our 10c Worth
One Thing, From Paul
Friday advice time, here goes. Do you have older children and want to give them money or other assets? Here are some tips on how to go about that.
Be transparent. Let your children know your objectives for making these donations, but be flexible. If you'd prefer them to keep the assets or invest the money, say so. However, once you've made the transfer, let go. It's theirs, and they are adults. Don't be a bully.
Be predictable. Let them know how much you have in total, and how much they can expect in the future. Is this an advance on their inheritance one day? How often will these gifts be made? Once only, or every year? How about every quarter, or every month? If it's to be a regular transfer, pick an amount that you can afford indefinitely, because they'll get used to it. Whatever you decide, play open cards.
Give equal amounts to each child, regardless of their age, gender, marital status, place of residence, spending tendencies and/or how much they earn. Trust me, if you don't want drama, equality is the best policy.
Start slowly. Don't give away more than you can afford. Don't underestimate your own financial needs over time. You certainly don't want to be asking for money back later.
Byron's Beats
We have a client who works in the medical devices industry and he sent me an update from Stryker, who are struggling with chip shortages. Stryker has to bid for these chips through a broker, and that's crimping margins. They expect this to continue throughout the year.
Our client says his business is also suffering from the same problem. This is an ongoing issue for many industries that rely on semiconductor supply. My response was that challenges are normal. Stryker will weather the storm, margins may decline for a while but things will normalise next year. This is certainly not a reason to sell Stryker shares.
I was pleased that he agreed and said Stryker was a great bet in the industry. It is very rarely plain-sailing out there for big corporates. But it's their job to navigate around these obstacles.
Michael's Musings
Earlier this week, the Wall Street Journal reported that Walmart has decided to stop selling cigarettes in some of its stores. According to the article, the company has been wrestling with the moral and economic factors of selling cigarettes for a while. Walmart represents about 5% of tobacco sales in the US, so you can understand why executives have been reluctant to give up that ongoing business.
It seems that the tipping point has arrived, where the economics of selling smokes is outweighed by the moral objections. Walmart notes that increased regulation that comes with selling tobacco products pushes up costs, so other products could be sold on that floor space at better margins. It's also a product range with high levels of theft throughout the supply chain.
This is another example of how the world won't change for the better unless the economics makes sense. The same applies to the globe moving towards renewable energy sources. Society won't change because it is the correct thing to do, it will happen because it makes more economic sense.
Bright's Banter
We're seeing an increase in high-profile cyber hacks, with the losses getting larger and larger. The decentralised finance (DeFi) industry is no exception to this. I recently wrote about the Ronin hack where crypto assets worth $540 million were stolen.
The infographic below shows the largest known crypto heists by estimated losses. The one that stands out is the Poly Network hack, which happened in August last year to the tune of $610 million, but the attackers returned most of the funds after claiming to have only wanted to expose security risks on the platform.
According to crypto risk assessment specialists Crystal Blockchain, hackers made off with over $4.3 billion in 2021 alone. Most crypto hacks happen on a smaller scale but are more lucrative. We've all seen those fake SMS's claiming your wallet or crypto exchange has been hacked and you need to click on this link to change your password.
All of these vulnerabilities in software, websites, wallets and even human judgement make a strong business case for cybersecurity companies for the long term. The increase in hacks means that the addressable market for cybersecurity increases, this is going to be a perpetual expense line item on every business' books.
We recommend that you own cybersecurity leader CrowdStrike.
According to Trung Phan, Netflix should join the app store revolution. The streaming giant can use its infrastructure and user data to build a valuable app ecosystem - Netflix's future lies with apps not ads.
Signing Off
Asian markets are mixed this morning. The main bourses in mainland China and India are in the green, but Japan, Hong Kong and South Korea have lost some ground.
Monthly US payrolls figures are expected out later today; let's see if they reinforce the case for the Fed to tighten or not. US equity futures have pushed higher in early trade.
The Rand has weakened slightly to around R14.63 to the US Dollar.
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