vestact posted: " Market Scorecard US markets on Friday concluded their toughest week since 2020. All three major indexes finished the week with sharp losses. The broader S&P 500 fell 5.8% for the week, its largest decline since the Covid pandemic roiled market" Vestact - Money with a dash of funny
US markets on Friday concluded their toughest week since 2020. All three major indexes finished the week with sharp losses. The broader S&P 500 fell 5.8% for the week, its largest decline since the Covid pandemic roiled markets in March 2020.
All eleven sectors within the S&P 500 have fallen at least 15% from their recent highs, with seven in bear market territory. The old-school Dow Jones fell 3.8% for the week, its biggest drop since October 2020, and the tech-heavy Nasdaq was down 4.7% for the week.
In company news, EBay announced that they are launching eBay Live, a dedicated shopping platform that gives users a way to purchase products in a live and interactive environment. The new experience is rolling out in beta format this month, kicking off with a curated selection of rare trading cards and other collectables.
On Friday, the JSE All-share closed down 3.13%, the S&P 500 gained 0.22%, and the Nasdaq was up a healthy 1.43%.
Our 10c Worth
One Thing, From Paul
I spent some time last week reviewing a giant Goldman Sachs report about internet stocks. It must have taken a team of people there weeks to compile. What interested me most was this line:
"Since October 2021, this group of stocks is down sharply compared to the S&P 500 because of reduced investor appetite for revenue multiple-based valuations and much lower investor tolerance of long-term investments given the uncertain macro environment including inflation, Ukraine conflict, tight labor markets, softening consumer demand and rising interest rates."
That's the point that I've been making repeatedly in recent weeks: the stock sell-off is not due to economic weakness or poor company prospects. It's a result of grumpy investors losing their taste for high-growth companies.
The good news is that a state of mind can easily change. In fact, I expect that to happen soon. Once the noise about inflation dies down, markets will start creeping up again and the "smart money" will come rushing back in.
For the record, Goldman's top buys in the sector are Amazon (strong growth in e-commerce and cloud computing), Uber (strong revenue growth expected), Meta (better landscape for growth and margin stabilisation), and Google (search, cloud, and a recovery from YouTube).
Byron's Beats
In South Africa, we have seen the private sector offer many services that the government has failed to provide. Healthcare, education, security, postal delivery, and transport all come to mind. The private sector is even fixing potholes these days.
Advances in renewable energy technology are finally letting South Africans privatise their own electricity too. Hallelujah. If you can, it makes sense to do this at scale. That is exactly what Val de Vie residential estate are doing. According to this article, the estate will build its own solar plant that will generate 1 megawatt of electricity.
There are many large housing estates in South Africa and we are blessed with a lot of glorious sunshine. I expect this won't be the last time we hear of such projects.
Michael's Musings
Netflix is rumoured to be in the running to buy the US F1 broadcasting rights. Currently Disney, through ESPN, owns the rights which they pay $5 million per season for. That is very cheap as far as sporting content goes! Due to the growing popularity of F1, thanks partly to Netflix's Drive to Survive, the new fee is expected to be between $75-$100 million per season.
The assumption has been that streaming companies would stay out of live sport because of the cost involved in buying the rights. If Netflix did decide to experiment with live sport, F1 is probably its best bet. The company already has a hit F1 show, plus all the data on who watches the show, and the broadcasting rights are relatively cheap.
Adding to the speculation was an announcement last week from Netflix that they are creating an F1 movie, with Brad Pitt as the lead and Top Gun: Maverick's Joe Kosinski set to direct. The movie is budgeted to cost $225 million. If I had to guess, paying $100 million for a season of live sport will do more for retaining subscribers than a 2-hour movie at double the cost.
Bright's Banter
Warren Buffett ran his last annual charity auction to bidders who want to dine with him. This time around the winning bidder for the billionaire investors' lunch coughed up just a little over $19 million. The auction raises funds for a San Francisco-based charity called Glide.
The bidding opened last Sunday with a starting price of $25 000. The competition took an interesting turn on Friday, the final day, when an $11 million bid raised eyebrows and started a costly tug-of-war until a last-minute bid lifted the price to $19.0001 million, beating the guy who sat at $19 million.
This was easily the highest bid ever for the old man's lunch, the previous record was set by crypto bro Justin Sun, who paid $4.57 million in 2019. Now that Warren Buffett is retiring from his charity lunch, it's time for me to stand up and pick up where he left off! The good news is that lunch with me is cheap.
Linkfest, Lap It Up
Rich people have options. This map shows which countries are losing the most wealthy people and where they are going. There aren't too many surprises - Mapping the Migration of the World's Millionaires.
Chenin is the most wildly planted grape in South Africa. In 2021, we exported just over 53 million litres of them in the form of wine. The Chenin Blanc Association has introduced a universal indicator for you to learn more about the fruit - This new indicator will accelerate your knowledge and have you buying more wine.
Signing Off
Most Asian markets are down this morning. The MSCI Asia-Pacific index has dropped for an eighth day, the longest such stretch since February 2020. Mainland China has managed to buck the trend, continuing a recent spell of outperformance amid global weakness in equities.
US markets will be closed today for the historic Juneteenth holiday. The Rand is trading at around R15.98 to the greenback.
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