It's Wise To Decentralise

vestact

Nov 1

Market Scorecard

Yesterday, US markets slipped into the red but still capped off a surprisingly good month. Energy shares had whipsawed on the news that President Joe Biden would call on Congress to consider once-off taxes for producers making record profits. Despite all the noise, major indices managed to lock in gains for October, with both the S&P 500 and the tech-heavy Nasdaq notching single-digit monthly increases.

In company news, Stryker is down 4% in aftermarket trade as the medical devices giant reported earnings that came slightly below expectations. Elsewhere, Apple closed down 1.5% after Foxconn, an important supplier to Apple's iPhone production, struggled with a Covid-19 outbreak at a factory in China.

In summary, the JSE All-share closed up 0.43%, the S&P 500 fell 0.75%, and the Nasdaq was 1.03% softer.

Our 10c Worth

Bright's Banter

Apple closed up 7% on Friday, a day after reporting surprisingly good numbers for the September quarter. This has been especially impressive since it came off a very high base which was fuelled by pandemic spending when people were stuck at home buying luxury items instead of experiences.

Overall revenue was up 8% to $90.1 billion, a record for the September quarter. Sales from the iPhone came ahead of expectations, showing no signs of slowing down. iPhone sales are up 9.7% year-on-year to $42.6 billion, almost half of all revenues. Net income was at a record $20.7 billion.

"Our record September quarter results continue to demonstrate our ability to execute effectively in spite of a challenging and volatile macroeconomic backdrop," said Luca Maestri, Apple's CFO.

The strength of Apple's ecosystem, unmatched customer loyalty, and record sales spurred their active installed base of devices to a new all-time high.

Worldwide smartphone and PC shipments, of all brands, declined 9% and 19.5%, respectively, during the third quarter. This tells me that Apple is a lot more stable than its peers amid a host of headwinds. Mac revenues were up 25% year-on-year, grossly outpacing the downtrend, while Services were only up 5% in the same period but coming off a really high base.

In short, Apple's business is strong and demand for its products remains high across the globe, even in emerging markets. This is a theme we've only really seen in the luxury goods space. The Cupertino, Cali giant is still the same recession-resilient business we've learnt to love over the years. Apple has played its role in being the safe port in the storm.

[image]

One Thing, From Paul

I'm in London currently, enjoying a few days here while visiting my adult children. This is a great city, full of delightful neighbourhoods. It's safe, vibrant and full of great shops and restaurants. The underground train system works well, despite being a little grubby.

This blog post by Alfred Twu, an artist and architect based in California, describes what the city of the future ought to look like. As he says, this has to be something we evolve toward. Each of us needs to engage with community efforts in our local area. The best we can do is to change our cities gradually, to be more liveable for everyone. Byron's piece below is a good place to start.

Byron's Beats

A lot of the hype around web 3 and crypto is the idea of a decentralised system that is no longer controlled by a powerful few. It might work, or it might not. What we do not realise here in South Africa is that we are witnessing a large-scale decentralisation of our utilities. Putting a solar and battery system on your house gives you power independence and takes away your reliance on a failed centralised system.

Hopefully, in time, this modular system will help take the strain off Eskom, households will have access to cheap renewable power and the world is spared from tons of carbon.

According to Sandra Laurence from BizNews South Africa needs 166 million solar panels by 2032 to fill the gap. She is talking about large-scale centralised production here.

But do not underestimate the solar revolution that is just getting started amongst households. There are around 18 million households in South Africa. Let's assume 4 million homes can install 10 panels in the next decade. That is 25% of the required capacity covered, and it excludes small businesses that will be doing the same.

How do we spearhead such a movement? You need 2 things, incentives and affordability<.b>. Loadshedding covers the incentive part quite easily. And affordability is finally a reality. There are plenty of solar installers out there where you can buy all the equipment upfront. But subscription models have also recently entered the market.

GoSolr and Versofy Solar are two that come to mind. If you can afford your electricity bill, you can afford to pay these guys a subscription fee. Now there is no excuse. If you want to help this country crawl out of its power crisis, get Solar, it is your duty.

Michael's Musings

One of the good things to come out of the 2020 lockdowns was people's willingness to educate themselves about trading and investing. The stock market is one of the best places to create wealth, no other asset class can match it in terms of effort to return. The volatility of owning stocks isn't for everyone though.

So far this year, the Nasdaq is down 30.6%. In 10 months, you have watched a third of your invested wealth disappear. Ouch! That's not meant to happen. It also doesn't make for great braai-side chat. According to the Wall Street Journal, the number of day traders has dropped significantly over the last year. I suppose logging into your share portfolio on a daily basis isn't as fun when losses are mounting.

As long-term investors, we know that these periods are normal, unpleasant, but normal. Hang in there, this phase of negativity will pass.

Linkfest, Lap It Up

There's a sinister side of behavioural science in product design. People use familiar ways to deceive, steer, or manipulate users into behaviour that is profitable for their entity - Recognise the dark tricks in financial products.

There are many different types of plastic. Some are recyclable and others aren't. Sorting through it is difficult and expensive - Less than 5% of US plastic was actually recycled last year.

Signing Off

Asian markets are up this morning. Tech shares rallied more than 5% and led a rebound in Hong Kong equities, with the likes of Alibaba and Tencent up 6% and 7.3%, respectively. Other markets in Japan and South Korea also climbed.

US equity futures are trading higher in early trade. The Rand is trading at around R18.30 to the US Dollar.

Press on, the year is almost over!

Sent to you by Team Vestact.

Comment