Market Scorecard
US markets finished in the red yesterday, after hawkish comments from two Fed governors. Atlanta Fed's Raphael Bostic called for continued rate hikes to above 5% to make sure inflation doesn't pick up again. Minneapolis Fed President Neil Kashkari said he's concerned that there isn't much of an indication that rate hikes are slowing down the services sector. Sigh. The S&P 500 battled to its weakest close in the last six weeks.
In company news, Rivian plunged 18% after the EV-maker said it would recall 13 000 cars to fix a faulty sensor in the front passenger seat. Elsewhere, vaccine maker Novavax tanked 26% after it issued a statement saying that "substantial doubt exists regarding our ability to operate as a going concern" through the next year. It wasn't all doom and gloom though, First Solar rose 15.7%, after giving full-year guidance above expectations.
In summary, the JSE All-share closed up 1.15%, the S&P 500 fell 0.47%, and the Nasdaq was 0.66% lower.
Our 10c Worth
One Thing, From Paul
Here's a great blog post for you to read. It's by Doug Boneparth, and it's called Generational Wealth Needs A Rebrand.
His central message is that you can inherit more than just money. What people ultimately want is for their children and their children's children to be better off than they were.
Here's Doug: "I do believe accumulating assets for the benefit of your heirs is admirable. It often takes a lot of hard work, tremendous discipline, and significant sacrifice to create better outcomes for those on the receiving end of your wealth. But for most people, the real wealth being transferred is never a portfolio of stocks or a piece of property."
"Consider expanding your definition of generational wealth. The experiences, lessons, tools, passions, and even the cautionary tales that are passed down to us matter. In many ways, they matter more. This kind of wealth provides future generations the ability to do more than spend. It provides them with the ability to change."
Byron's Beats
Morgan Housel's book The Psychology of Money is an absolute must-read, even if you aren't that interested in investing. There are so many good life lessons in there.
I really liked this passage: "The historical odds of making money in US markets are 50/50 over one-day periods, 68% in one-year periods, 88% in 10-year periods, and (so far) 100% in 20-year periods."
Those are pretty good odds if you ask me and only get better the more patient you are.
Michael's Musings
In March each year I share a snapshot of my personal portfolio. You can see my 2022 portfolio here. I think it is good for clients to see that we eat our own cooking. When things go badly, we share the pain. Last year hurt. For example, Crowdstrike went from good gains (up 24%) to a significant loss.
My goal is to add regularly, thus removing timing luck from my returns. Unfortunately, last year I renovated my house, so the portfolio shrank instead of growing. From a financial perspective, it isn't great putting USD into the South African property market.
I started this investment in 2014 and I still hold most of the positions I bought at the beginning. Over that time, I've been through some rough patches, including the end of quantitative easing, Brexit, the Chinese growth crisis, Covid, and now the spike in interest rates. As Byron points out above, you must buy companies you are happy to hold for over 10 years.
Bright's Banter
Salesforce reported a strong set of results last night, thanks to good revenue growth and forecasted increased profitability. Its shares rose 15% in after-hours trading. They predicted that revenue for the current quarter would come in between $8.16 billion and $8.18 billion, up roughly 10% year-on-year.
The company said its revenue grew 14% to $8.38 billion in the three months through January. Losses, however, widened to $98 million from $28 million in the year-earlier quarter. This is all due to delayed orders and slowing demand for its services.
Billings, a measure that reflects business transacted during the quarter and serves as a leading indicator of revenue trends, rose 13% to $14.68 billion in the fourth quarter. Analysts had only pencilled in billings of $13.74 billion.
The company's CEO, Marc Benioff, has stated that improving profitability is their highest priority, and that they are reducing headcount, paring real estate costs, and increasing scrutiny of spending. The company is also disbanding its M&A committee to reflect the new focus on efficiency.
Salesforce is facing pressure from activist shareholders, including Elliott Management Corp. and Starboard Value LP, to improve shareholder returns. Elliott added that it wasn't totally satisfied, saying that they needed "a sustainable leadership plan and a board that demonstrates it can provide accountability through proper oversight."
Linkfest, Lap It Up
Breakthrough ideas emerge from small discoveries. Try tinkering and making modest improvements - Little bets, trial and error.
The Alps have received less than half of their normal snowfall this winter. That's bad for skiing and also reduces meltwater further away - Venetian waterways running dry.
Signing Off
Asian markets are lower this morning, with declines in Hong Kong and Japan where technology shares cooled off. The offshore Yuan weakened after being one of the most notable gainers against the US Dollar yesterday, when it rallied more than 1% in its largest advance since November.
Pakistan's consumer price index jumped 31.5% in February year-on-year, the highest annual rate in nearly 50 years. Shame, that's rough.
US equity futures are in the red this morning. Oil steadied, but remained set for a third day of gains thanks to optimism over a revival in Chinese demand. The Rand is trading at around R18.18 to the US Dollar, like the vodka.
Stay away from vodka, it's only Thursday.
Sent to you by Team Vestact.
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