FAAMG Stocks: Facebook $FB, Amazon $AMZN, Apple $AAPL, Microsoft $MSFT, Alphabet’s Google $GOOGL $GOOG. These five companies, collectively known as FAAMG (FAANG minus Netflix plus Microsoft), have a total of $5.3 trillion in market cap as of Jan 17, 2020, 18% of the S&P 500, with "index concentration" the highest in 20 years.
Calendars: Earnings; Economic here & here; Hearings US House and Senate; BLS & BEA.
Note: the major US stock exchanges (NYSE, NASDAQ) will be closed Friday, July 3, 2020, in observance of the July 4th Independence Day holiday.
2020 Jul 02: S&P 500 +0.45% DJIA +0.35% NASDAQ COMP +0.52% hits All-Time Record Close for Second Straight Day:
2020 Jun 30: S&P 500 +1.54%, DJIA +0.85%, NASDAQ Comp +1.87%. S&P 500 has its best quarter since Q4 1998. For the month of June, the S&P 500 UP +1.8%, the DJIA gained +1.7%, and the NASDAQ Comp up +6%. For the second-quarter: S&P 500 UP +18%, the DJIA UP +15.6%, NASDAQ Composite UP +29.4%.
Video replay of Federal Reserve Chair Jay Powell and Treasury Secretary Steven Mnuchin testifying June 30, 12:30 pm EDT before the US House Financial Services Committee about their respective agency’s COVID-19 pandemic response. Committee memorandum (pdf). Secretary Mnuchin's statement (pdf); Fed Chair Powell's statement (pdf).
Jun 26 video: ARK Invest's Cathie Wood gives an update on the V-Shaped Recovery.
Jun 22-24: Bloomberg Invest Global Virtual Event. Speakers include Stephen A. Schwarzman, Chairman, CEO and Co-Founder, Blackstone; Jim Chanos, President and Founder, Kynikos Associates; Manny Roman, CEO, PIMCO; Bill Ackman, Founder & CEO, Pershing Square Management; Steven Mnuchin, US Treasury Secretary; Bob Prince, Co-Chief Investment Officer, Bridgewater Associates; Jon Stein, CEO & Founder, Betterment.
For the month of May: S&P 500 +4.5%, DJIA +4.3%, NASDAQ Composite +6.8%. At the Berkshire Hathaway Annual Meeting May 2, 2020, Warren Buffett announced he dumped Berkshire's airline stocks, adding, "the world has changed" but "never, ever bet against America." See also Wall of Worry update: China & Hong Kong, The Tragedy of HSBC; and COVID-19 archive.
2020 Jul 02: S&P 500 +0.45% DJIA +0.35% NASDAQ COMP +0.52% hits All-Time Record Close for Second Straight Day:
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| NASDAQ Composite (INDEXNASDAQ: .IXIC) |
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| S&P 500 Index (INDEXSP: .INX) |
Jun 26 video: ARK Invest's Cathie Wood gives an update on the V-Shaped Recovery.
Jun 22-24: Bloomberg Invest Global Virtual Event. Speakers include Stephen A. Schwarzman, Chairman, CEO and Co-Founder, Blackstone; Jim Chanos, President and Founder, Kynikos Associates; Manny Roman, CEO, PIMCO; Bill Ackman, Founder & CEO, Pershing Square Management; Steven Mnuchin, US Treasury Secretary; Bob Prince, Co-Chief Investment Officer, Bridgewater Associates; Jon Stein, CEO & Founder, Betterment.
A V-Shaped Recovery: Cathie Wood, ARK Invest video (May 29, 2020) at 9:04: "I've been through a lot of recessions and by definition a v-shaped recovery is caused because inventories are liquidating and not keeping up with consumption. We think that's what's going to be happening during the next few months." CBO forecasts Q3 GDP growth UP +21.5% (annual rate). CBO forecast graphic:
Election 2020 Preview: Joe Biden is ‘completely unelectable,’ says ‘Bond King’ Jeffrey Gundlach (video Mar 5, 2020) after assessing that Biden will likely be the Democratic Party's nominee for President, following the results of Super Tuesday. On the 2020 presidential election, Gundlach has said his base case is that President Donald Trump will get re-elected. Trump's popularity rose during the House Democrats' impeachment proceedings, and impeachment galvanized support for Trump:
Trump Effect: Deranged Dems' Impeachment Proceedings #FAIL With Voters
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| Democratic Congressman Adam Schiff "gets away with distorting the truth for political purposes ... because he has a willing echo chamber in the Washington press corps ..."--Wall Street Journal; "... the pathologically dishonest Rep. Adam Schiff ..."--Glenn Greenwald in The Intercept |
Jan 21, 2020: Adam Schiff Caught "Mischaracterizing" Evidence Day One Of Senate Impeachment Trial. How is it Donald Trump knows it’s all about the voters and everybody inside the Beltway thinks it’s all about them?--Bob Lefsetz. Impeachment isn't the way forward (video). See also: How Dems screwed themselves on impeachment (Aaron Maté video), and Andrew Yang's warning.
U.S. Department of Justice Inspector General's (an Obama appointee) Report On FBI Conduct (pdf), found "Clear Abuse" of FISA Process by the FBI during Obama's Presidency. The report "now makes clear that the FBI launched an intrusive investigation of a U.S. presidential campaign on the thinnest of suspicions that, in my view, were insufficient to justify the steps taken"--Attorney General William Barr.
Read of the Year: The Inspector General’s Report on 2016 FBI Spying Reveals a Scandal of Historic Magnitude: Not Only for the FBI but Also the U.S. Media by Glenn Greenwald:
What the Hillary Clinton campaign, its Democratic Party 'partners' and their 'partners' in the Obama Administration, including at the FBI and CIA, as well as in mainstream media, e.g., at CNN, Washington Post, New York Times, MSNBC, NBC, CBS, ABC, et al, were counting on, was this:
"If it does not bother you to learn that the FBI repeatedly and deliberately deceived the FISA court into granting it permission to spy on a U.S. citizen in the middle of a presidential campaign, then it is virtually certain that you are either someone with no principles, someone who cares only about partisan advantage and nothing about basic civil liberties and the rule of law, or both. There is simply no way for anyone of good faith to read this IG Report and reach any conclusion other than that this is yet another instance of the FBI abusing its power in severe ways to subvert and undermine U.S. democracy. If you don’t care about that, what do you care about?"Why Was The Steele Dossier Not Dismissed As A Fake from the beginning in 2016? A cursory examination of the Steele Dossier should have convinced the CIA or the FBI that it was fake news. Any residual doubt would have vanished after learning that its author, Christopher Steele, was an opposition researcher paid by the Democrats to dig up dirt on Trump. That our most sophisticated government officials acted as if the Dossier were legitimate leads to only one conclusion. They were a knowing and willing part of the Democratic and media smear of a presidential contender, and then president, that paralyzed U.S. politics for three years. We now know that the Steele Dossier is bogus. Inspector General Michael Horowitz drove the final stake through its heart. He found that the Dossier was compiled from hearsay and third-hand gossip from two low-level sources and that they denied the testimony attributed to them.--Paul Gregory, research fellow at the Hoover Institution.
What the Hillary Clinton campaign, its Democratic Party 'partners' and their 'partners' in the Obama Administration, including at the FBI and CIA, as well as in mainstream media, e.g., at CNN, Washington Post, New York Times, MSNBC, NBC, CBS, ABC, et al, were counting on, was this:
“If a lie is only printed often enough, it becomes a quasi-truth, and if such a truth is repeated often enough, it becomes an article of belief, a dogma ..."--Isa Blagden
“One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken.”--Carl SaganEditor's note: The sad truth is that too many people became 'invested' in the Hillary Clinton campaign's disinformation, and remain 'convinced' that the Steele Dossier is true and Trump is a 'Russian agent' no matter how much evidence you lay before them of how false their belief is. Democracy Dies in Ignorance & Disinformation.
See also Joe Biden Dec 16, 2019: "Section 230 should be revoked, immediately should be revoked, number one. For Zuckerberg and other platforms." Section 230 of the Communications Decency Act is one of the core protections of the internet, a key legal shield that allows internet platforms to host user-generated content with less liability, and one of the most valuable tools for protecting freedom of expression and innovation on the Internet, and Joe Biden wants to revoke it! Big Tech Employees & the 2020 Primaries, who was their favorite candidate? All (except Netflix employees) preferred Bernie Sanders (I-VT) by a wide margin of around 30%, while senile Joe Biden got early primary donations ranging from 0% at Netflix to only 2.6% at Microsoft. 😲 More here and here on Biden's cognitive decline.
Feb 20-28: COVID-19 Coronavirus Spooks Stocks. CDC Risk Assessment & WHO Updates, S&P 500 Index DOWN 13%:
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| S&P 500 Index DOWN 13% Feb 20-28 |
2020 Feb 28: Federal Reserve Chair says coronavirus is an "evolving risk to economic activity" and Fed ready to take action if necessary.
Year 2019's 13 Worst #FAILs in Tech: 13. Samsung Galaxy Fold;12. Facebook privacy & Libra; 11. Apple FaceTime bug & butterfly keyboard; 10. Amazon Ring & local police; 9. Huawei in US; 8. Uber IPO; 7. Amazon HQ2;6. Airbnb bedbugs; 5. Vaping; 4. Jeff Bezos, Amazon CEO & Washington Post owner's mid-life crisis: divorce tweet, dick pics, sexts to skanky girlfriend(s); 3. ICANN, Internet Society & Ethos Capital re: .ORG; 2. WeWork, need we say more? #1. The Worst of the Worst: Boeing 737 MAX. Congrats to Google, Microsoft, and Elon Musk, for missing this year's list of "13 Worst #FAILs in Tech." See also Boeing CEO Finally Fired.
2019 Best Year for US Stocks Since 2013, S&P 500 UP 28.9%, Dow (DJIA) UP 22.3%, NASDAQ UP 35.2%. The S&P 500 Index tends to produce an annual return of 11.2% after a year in which it climbs at least 20%. Why the S&P 500 Has Beaten Other Indices over the Past Decade:
Three 'experts' who got the 2019 Stock Market Totally Wrong.3/3 ...The lesson: innovative disruption at scale in conjunction with profitability drives equity returns. The S&P 500 has beaten the Russell, EAFE & EM equities handily over the last decade because it houses more global disruptors than those other indices. $SPY $XLK $EEM $EFA— DataTrek Research (@DataTrekMB) December 30, 2019
Predictions for 2020: Oil and gas prices will remain range-bound in 2020. See also 5 Biggest Threats To Oil & Gas In 2020 and IEA: An Oil Glut Is Inevitable In 2020.Remember how everyone was worried about an inverted yield curve forecasting a global economic contraction over the summer? Fun fact: the US has NEVER seen a recession (back to 1970) w/out oil prices 1st rising by +90% over a year. Full analysis here: https://t.co/V2MKAhpB8b $SPY— DataTrek Research (@DataTrekMB) December 23, 2019
US 2020: ‘Bond King’ Jeffrey Gundlach says a recession is ‘very unlikely’ in 2020.
Brexit 2020: This Time is Different, Global Elite Show No Signs Of Wanting To Stop Brexit.
EU 2020: 'The Bottom Is Not In' For Europe's Struggling Economy says El-Erian.
Inverted Yield Curve T10yr/2yr: Aug 14, 2019: Former Federal Reserve Chair Janet Yellen said the markets may be wrong this time in trusting the yield curve inversion as a recession indicator. "Historically, it has been a pretty good signal of recession, and I think that's why markets pay attention to it, but I would really urge that on this occasion it may be a less good signal," Yellen said, adding, "The reason for that is there are a number of factors other than market expectations about the future path of interest rates that are pushing down long-term yields." Aug 15: Mohamed El-Erian agreed with Yellen (CNBC video). See also Goldman Sachs Oct 7, 2019: 'US Is Not Close To Recession' - Economic Run 'Not Over.'
Economic & Earnings Links:
Markets | cnbc.com | Stock Exchange Trading Hours (24 hour format / local time):
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Twitter: @ReutersTech @techreview @fastFT @technology @markets @business @WSJ @NAR
How to Read Financial News Redux: Process Determines Priorities & Understanding Consensus & Separate the Narrative from the Noise.
Other stock & investor links:
Profits explained | Finance Decoded FT.com video: Jonathan Guthrie explains how companies calculate their profit, what investors should be wary of and the different measures used to gauge how a company is really performing (video published Feb 17, 2016).
Peter Lynch on investing:
Common Terms: Infographic: Here's 40 Stock Market Terms That Every Beginner Should Know | visualcapitalist.com
Operating Profits
Revenue is the income (before deducting expenses) that a business has from its normal business activities, usually from the sale of goods and services to customers. Revenue is also referred to as sales or turnover. Profits or net income generally imply total revenue minus total expenses in a given period. Source: Wikipedia
Risk Assets generally refer to assets that have a significant degree of price volatility, such as equities, commodities, high-yield bonds, real estate and currencies.
Market liquidity | Wikipedia.org: "In business, economics or investment, market liquidity is a market's ability to purchase or sell an asset without causing drastic change in the asset's price. Equivalently, an asset's market liquidity (or simply "an asset's liquidity") describes the asset's ability to sell quickly without having to reduce its price to a significant degree. Liquidity is about how big the trade-off is between the speed of the sale and the price it can be sold for. In a liquid market, the trade-off is mild: selling quickly will not reduce the price much. In a relatively illiquid market, selling it quickly will require cutting its price by some amount. Money, or cash, is the most liquid asset, because it can be "sold" for goods and services instantly with no loss of value. There is no wait for a suitable buyer of the cash. There is no trade-off between speed and value. It can be used immediately to perform economic actions like buying, selling, or paying debt, meeting immediate wants and needs."
Fungibility | Wikipedia.org: "Fungibility is different from liquidity. A good is liquid if it can be easily exchanged for money or another different good. A good is fungible if one unit of the good is substantially equivalent to another unit of the same good of the same quality at the same time and place."
How to Read Financial News Redux: Process Determines Priorities & Understanding Consensus & Separate the Narrative from the Noise.
Other stock & investor links:
- 40 Stock Market Terms That Every Beginner Should Know--visualcapitalist.com.
- Bloomberg TV US LIVE / Asia LIVE / Europe LIVE; Bloomberg Radio.
- SHCOMP - Shanghai Composite Index (Bloomberg) / SHANGHAI Composite (Google)
- SZSE Component Index (Google)
- NYSE: BRK.B Berkshire Hathaway Inc. Class B
SEC.gov | Company Search Page; see also Full Text Search (advanced)
SEC.gov | How Investigations Work - The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud. Crucial to the SEC's effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them. One of the major sources of information on which the SEC relies to bring enforcement action is investors themselves — another reason that educated and careful investors are so critical to the functioning of efficient markets. To help support investor education, the SEC offers the public a wealth of educational information on this Internet website, which also includes the EDGAR database of disclosure documents that public companies are required to file with the Commission.
SEC.gov | How Investigations Work - The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud. Crucial to the SEC's effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them. One of the major sources of information on which the SEC relies to bring enforcement action is investors themselves — another reason that educated and careful investors are so critical to the functioning of efficient markets. To help support investor education, the SEC offers the public a wealth of educational information on this Internet website, which also includes the EDGAR database of disclosure documents that public companies are required to file with the Commission.
Profits explained | Finance Decoded FT.com video: Jonathan Guthrie explains how companies calculate their profit, what investors should be wary of and the different measures used to gauge how a company is really performing (video published Feb 17, 2016).
Peter Lynch on investing:
Still following the market at age 71--(he has no plans to abandon the stock market for other leisure pursuits, “It’s a fun exercise, beats the hell out of golf" ... Lynch spends time calling companies, listening to earnings calls and reading transcripts)--investor Peter Lynch explains his philosophy this way: Use your specialized knowledge to home in on stocks you can analyze, study them and then decide if they’re worth owning. The best way to invest is to look at companies competing in the field where you work ... "If you’re in the steel industry and it ever turns around, you’ll see it before I do.” The popular-wisdom version of his ideology is mistakenly often cited as “invest in what you know,” which leaves out the role of serious fundamental stock research. “People buy a stock and they know nothing about it,” he says. “That’s gambling and it’s not good.” Lynch’s advice for small investors: Picking individual stocks is hard even for the professionals--"if you can’t understand the balance sheet, you probably shouldn’t own it.” Source: Peter Lynch, 25 Years Later: It’s Not Just ‘Invest in What You Know’ - WSJ Dec. 6, 2015
Where Markets Fail: Visible Hands | CFA Institute Enterprising Investor
Memos from Howard Marks
Shortcuts to Factor Investing 101 | blogs.cfainstitute.org: "Smart beta and factor investing are just fashionable marketing labels for a wide range of risk-based approaches that sit somewhere beyond active and passive investment management but possess attributes of both. In essence, smart beta and factor investing combine the disciplined rules-based approach of market-cap weighted passive funds with the discretionary selection of whichever chosen factors or index series those who use them hope to replicate."
See also on Domain Mondo: Investing, Jack Bogle, Warren Buffett, S&P 500 Index, US, China
Where Markets Fail: Visible Hands | CFA Institute Enterprising Investor
Memos from Howard Marks
Shortcuts to Factor Investing 101 | blogs.cfainstitute.org: "Smart beta and factor investing are just fashionable marketing labels for a wide range of risk-based approaches that sit somewhere beyond active and passive investment management but possess attributes of both. In essence, smart beta and factor investing combine the disciplined rules-based approach of market-cap weighted passive funds with the discretionary selection of whichever chosen factors or index series those who use them hope to replicate."
Common Terms: Infographic: Here's 40 Stock Market Terms That Every Beginner Should Know | visualcapitalist.com
Operating Profits
"The basis for all sustainable shareholder returns is operating profits, not, repeat NOT revenue. Profit is the source of all future dividends, it is the basis for increased book value via retained earnings. The art of investing involves buying future levels of profitability at a significantly low price to make the whole venture worthwhile. Thus, one of the first things we look at when considering an investment is the level of operating profits the firm manages to generate relative to the capital provided by owners and creditors ..."--Web.com And The Problem With Growth Investing | Seeking Alpha, Nov 8, 2015.
"Accounting games are also making the profits reported by companies much less trustworthy which, in turn, means P/E ratios are even more out of whack. Ciesielski, who writes The Analyst’s Accounting Observer ... [says] accounting manipulation has become very widespread and companies are using gimmicks to make profits look better. Company executives ...“all have a huge incentive to puff their numbers”... much of their compensation [is] tied to their stock’s performance. ... companies used to report profits according to Generally Accepted Accounting Principles — called GAAP for short. That meant all companies had to follow certain rules so that investors were able to compare apples to apples ... companies are now using creative accounting. GAAP has fallen between the cracks. The use of so-called “extraordinary items” and “non-cash charges” has made corporate earnings reports incomprehensible. “Non-GAAP earnings are more akin to anarchy,” says Ciesielski. ... How many companies are pulling these accounting tricks? Ciesielski says that, in 2009, 232 of the 500 companies in the S&P index were using tricks — thus straying from GAAP. Last year, 334 companies were doing so. Hundreds of billions in extra corporate profits were being reported simply by razzle-dazzle. It’s not that profits were actually higher — they were just made to look so." source: The secret stock market accounting trick | New York Post
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization - essentially net income with interest, taxes, depreciation, and amortization added. Often used to analyze and compare profitability between companies and industries, minimizing effects of financing and accounting decisions.
"Accounting games are also making the profits reported by companies much less trustworthy which, in turn, means P/E ratios are even more out of whack. Ciesielski, who writes The Analyst’s Accounting Observer ... [says] accounting manipulation has become very widespread and companies are using gimmicks to make profits look better. Company executives ...“all have a huge incentive to puff their numbers”... much of their compensation [is] tied to their stock’s performance. ... companies used to report profits according to Generally Accepted Accounting Principles — called GAAP for short. That meant all companies had to follow certain rules so that investors were able to compare apples to apples ... companies are now using creative accounting. GAAP has fallen between the cracks. The use of so-called “extraordinary items” and “non-cash charges” has made corporate earnings reports incomprehensible. “Non-GAAP earnings are more akin to anarchy,” says Ciesielski. ... How many companies are pulling these accounting tricks? Ciesielski says that, in 2009, 232 of the 500 companies in the S&P index were using tricks — thus straying from GAAP. Last year, 334 companies were doing so. Hundreds of billions in extra corporate profits were being reported simply by razzle-dazzle. It’s not that profits were actually higher — they were just made to look so." source: The secret stock market accounting trick | New York Post
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization - essentially net income with interest, taxes, depreciation, and amortization added. Often used to analyze and compare profitability between companies and industries, minimizing effects of financing and accounting decisions.
Revenue is the income (before deducting expenses) that a business has from its normal business activities, usually from the sale of goods and services to customers. Revenue is also referred to as sales or turnover. Profits or net income generally imply total revenue minus total expenses in a given period. Source: Wikipedia
Risk Assets generally refer to assets that have a significant degree of price volatility, such as equities, commodities, high-yield bonds, real estate and currencies.
Market liquidity | Wikipedia.org: "In business, economics or investment, market liquidity is a market's ability to purchase or sell an asset without causing drastic change in the asset's price. Equivalently, an asset's market liquidity (or simply "an asset's liquidity") describes the asset's ability to sell quickly without having to reduce its price to a significant degree. Liquidity is about how big the trade-off is between the speed of the sale and the price it can be sold for. In a liquid market, the trade-off is mild: selling quickly will not reduce the price much. In a relatively illiquid market, selling it quickly will require cutting its price by some amount. Money, or cash, is the most liquid asset, because it can be "sold" for goods and services instantly with no loss of value. There is no wait for a suitable buyer of the cash. There is no trade-off between speed and value. It can be used immediately to perform economic actions like buying, selling, or paying debt, meeting immediate wants and needs."
Fungibility | Wikipedia.org: "Fungibility is different from liquidity. A good is liquid if it can be easily exchanged for money or another different good. A good is fungible if one unit of the good is substantially equivalent to another unit of the same good of the same quality at the same time and place."
- Prior entries in archive: Markets & Stocks Archive (pdf).
