Market Scorecard
US markets went sideways again yesterday, after digesting a heavy diet of corporate earnings. Fair enough, we all know that feeling. So far, 9% of companies in the S&P 500 have reported first-quarter numbers and 84% of them beat the consensus analyst forecast.
The Fed's monthly Beige Book survey was released yesterday, and showed that the US economy "stalled" with a pause in access to credit. Inflation is slowing but it's still too high for Fed officials, so another rate hike is expected next month. Locally, our inflation rate is also too high, rising slightly to 7.1%.
In company news, Tesla is down 6% pre-market after the EV-maker missed profit expectations 
. IBM and Morgan Stanley beat forecasts. Elsewhere, Western Alliance Bancorp was up 24% after the lender said it added $2 billion in deposits from 31 March to 14 April.
Yesterday, the JSE All-share closed down 0.63%, the S&P 500 barely moved 0.01%, and the Nasdaq squeezed out a tiny 0.03%.
Our 10c Worth
Bright's Banter
Netflix reported first-quarter results on Tuesday, with revenue in line with expectations but lower than expected subscriber growth. Sales came in at $8.16 billion with only 1.75 million new paid subscribers, which was 20% below what analysts had predicted.
They're spending a lot on content, around $17 billion a year, and are still figuring out how to balance profits and subscriber numbers. They're trying to boost revenue by cracking down on password sharing. They estimate that over 100 million people use accounts they do not pay for. They've rolled out measures in a few countries already and it seems to be working, although they acknowledge that near-term engagement might shrink modestly.
The streaming giant is also trying out a cheaper, ad-supported plan to appeal to more viewers. They've been pleased with its performance so far and might offer multiple ad-supported tiers in the future.
According to Nielsen, Netflix is still the most popular TV network in the US, accounting for over 7% of all TV viewing each month. The Asia-Pacific region remains Netflix's biggest source of new customers, with the service adding 1.46 million customers there in the first quarter of 2023.
Finally, Netflix recently said goodbye to its DVD mailing business and apologized for a glitch that left viewers unable to watch a live airing of "Love is Blind." Overall, we still like Netflix and we're happy to see them test out new pricing models to stay ahead of the game.
One Thing, From Paul
There are four ways to get rich. They are: (1) inherit a fortune, (2) marry someone wealthy, (3) earn a lot of money from your job and (4) start a successful company.
Options 1 and 2 take luck and good looks, or a winning personality. You have to be in the right place at the right time!
Options 3 and 4 require brains and hard work. There is an elite group of professionals, celebrities and athletes who have turned their talents into huge salaries, but the majority of rich people are entrepreneurs who have built up a profitable business over many years. Consider the picture of Adrian Gore of Discovery below. What a man!
There are no shortcuts. "Get-rich-fast" offers are mostly frauds or Ponzi schemes. No one wins the lottery.
Getting rich is one thing, but how do you stay rich? By consistently saving more than you consume, and by not making investment blunders.
If you are retired or preserving generational wealth from your family, invest conservatively in high-quality assets, aligned with your time horizon. Keep things simple.
Byron's Beats
Inflation in the US has been a hot topic over the last 18 months because it impacts everyone in the economy, especially the poor. Has this fast rise in consumer prices left devastation in its wake?
According to Josh Brown (pictured below), things have not actually been that bad. He said the following in an Instagram post:
"We've had a cumulative 17% rise in prices since 2020. But this has been accompanied by a 20% cumulative rise in average wages during the same time frame. Wages were up by a TOTAL of 27% during the entire 2010's decade, for context. So while your bills are higher, so is your comp. Not evenly and not for everyone. But that's life.
Also on the bright side: People with the lowest incomes have seen the greatest percentage increase in their income while women's employment rates just hit a new record high".
Michael's Musings
Here's a good question posted by Ben Carlson on his blog, A Wealth of Common Sense: Would you rather outperform during bull markets or bear markets? What's your answer?
Of his readers, 63% said they prefer to outperform while markets fall. I was surprised that the margin between the two options was so big at almost 2 to 1. Given that humans roughly feel the pain from a financial loss at twice the intensity of the joy felt from gains, it makes some sense.
Personally, I would much rather outperform during a bull market. The stock market is up 3 out of every 4 years on average. Bull markets last longer than bear markets. In other words, I would rather outperform 3 out of every 4 years, because that will result in the largest portfolio value at the end.
Vestact portfolios are built with the long term in mind, meaning that we favour growth stocks that are volatile in nature. During the good times, we have tended to beat the market but during market pullbacks, we underperform. A key part of our job is to hold your hand through the tough years, making sure that you hold the line.
Linkfest, Lap It Up
Relationships improve your health and help you live longer. You have to put in the work - Invest in your friendships, not just your family.
Americans spend about $20 billion a year on chocolate. Surprisingly, they outlaid 50% more on weed - Americans consume $30 billion worth of legal marijuana products.
Asian markets are looking ok this morning. Mainland China and South Korea traded slightly lower, while Hong Kong and Japan are in the green. Banks in China kept prime lending rates unchanged after the People's Bank of China stayed put earlier in the week.
These companies have results out today: Taiwan Semiconductor Manufacturing Co., Blackstone, Philip Morris, AT&T and American Express.
US equity futures are in the red once again this morning, but it's early days, let's see where they are in 6 hours' time The Rand is still trading around the R18.15 level against the US Dollar.
SpaceX will try to launch their Starship again today in Texas. That will be fun to watch, it's their biggest rocket yet.
All the best!
Sent to you by Team Vestact.
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