Market Scorecard
US markets rallied strongly last night after Federal Reserve Chair Jerome Powell signalled a slowdown in the pace of interest rate changes. We're thrilled to see the Fed taking a more balanced stance, tackling inflation without killing the global economy. The S&P 500 and Nasdaq soared to end the month at their highest level since mid-September. Tech stocks were strong.
In company news, Salesforce co-CEO and heir apparent Bret Taylor is stepping down from his role after a year, leaving founder Marc Benioff as the business-software giant's sole chief. Despite releasing good results at the same time, the stock fell by 6.5% on that news. Elsewhere, Estee Lauder rose by 9.7% in a relief rally after suffering heavy losses in three straight trading sessions.
Look at these numbers 
. The JSE All-share was up 2.32%, the S&P 500 soared 3.09%, and the Nasdaq popped higher by 4.41%.
Our 10c Worth
One Thing, From Paul
CrowdStrike offers cybersecurity software and consulting services, and is a Vestact-recommended portfolio holding. It's probably our most future-focused and ambitious pick yet, because it's not profitable.
The company was only founded in 2011 when it rolled out the initial version of their CrowdStrike Falcon platform to detect threats and stop breaches. The software operates very flexibly, across cloud platforms and on multiple end-devices. They have over 21 000 corporate customers, who pay ongoing subscription fees.
CrowdStrike's third quarter results reported on Tuesday night were not well-received. The stock price was down heavily on Wednesday. Everyone who owns it in our client base is underwater.
Quarterly revenue grew 53% year-over-year to reach $581 million, but the projection for annual recurring revenue was disappointing. Management complained that "increased macroeconomic headwinds elongated sales cycles with smaller customers and caused some larger customers to pursue multi-phase subscription start dates".
The products that CrowdStrike sells are in demand, and the profits will come. We are going to have to grit our teeth and hold this one for the long-term.
Byron's Beats
Life is all about expectations. If you are Brazilian and you get knocked out the World Cup in the semi-finals you will be disappointed. But if Ghana makes the semis the players will be national heroes for life.
Markets are just the same. Stocks that are priced for 50% growth but only produce 30% growth will be punished by the market. Yet most companies would be ecstatic with 30%. CrowdStrike (see above) is a good case in point.
Over the long run, the same rules apply. The market has already factored in current expectations. It is the beyond (or below) expectation numbers that move share prices. We pick stocks that we believe will beat expectations over the long run. That is because they are world-class operators in sectors we expect to enjoy strong tailwinds. If we pick the right companies, any short-term disappointments won't change the long-term trajectory.
Michael's Musings
Warren Buffett is an impressive person. Even though he has given billions away, Bloomberg still lists him as the 6th richest individual alive, with a net worth of $110 billion. I really enjoyed this blog post about how Buffett approaches life - Lessons from a Young Warren Buffett.
One theme that stood out was his hunger for knowledge. He worked hard to educate himself on topics of interest. In an age before the internet, it wasn't as simple as watching a few Youtube videos. Buffett would get books from the library or find people who knew and then interview them.
Other lessons from his life include: hard and diligent work; surrounding yourself with interesting people; using writing to formulate and share ideas; harnessing the power of compounding. Add the blog post to your weekend reading list, it is worth the time.
Bright's Banter
Spotify just unveiled its 2022 Wrapped campaign where they show users their much anticipated year-end personalised recap, and announce the platform's top artists, songs, albums, and podcasts of the year.
Leading the pack once again was Bad Bunny, who for the third year in a row was the most-streamed artist globally on Spotify. The Puerto Rican rapper's tracks generated more than 18.5 billion streams so far this year on Spotify, and his album "Un Verano Sin Ti" was the number 1 most-streamed album across the globe.
Bad Bunny has been the top artist on the platform since 2020, when he came out with the albums "El Ultimo Tour del Mundo" and "YHLQMDLG". This year, his songs Me Porto Bonito and Titi Me Pregunto were among the top five most-streamed songs worldwide. I like recommending new music to you, enjoy!
Linkfest, Lap It Up
Local property fund Hyprop is the latest to list on A2x. The smaller exchange now has 93 companies onboard - Hyprop obtains second listing.
Balenciaga filed a lawsuit in New York State Supreme Court against North Six Inc. This is after a controversial ad campaign promoting its "objects" holiday drop - Balenciaga seeks damages from the company that made controversial ad.
Signing Off
Asian markets extended the gains we saw on Wall Street yesterday after China appeared to soften its Covid-zero policy. Vice Premier Sun Chunlan said the country's efforts to combat the virus are entering a new phase with the Omicron variant weakening and more Chinese getting vaccinated.
Benchmarks in Hong Kong, Japan, mainland China and South Korea all rose. The Japanese Yen rallied to a three-month high.
US equity futures are up a little more in early trade.
The Rand is trading at around R17.13 to the US Dollar. Perhaps it was affected by the news that President Ramaphosa is taking some heat for having cash Dollars stuffed in his couch, which is in contravention of exchange control and money laundering rules that the rest of us are supposed to observe? What will happen if he is forced to step aside? The rest of the ANC top-brass are even worse than Cyril.
That's it, have a good day.
Sent to you by Team Vestact.
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