Two US service members killed in Jordan as Iran steps up attacks
Market Scorecard
Yesterday was a very mixed day for stocks. On the local front, the JSE Top 40 saw 21 stocks in the green and 19 stocks in the red. Looking at the US, the Nasdaq opened at a record intra-day high but then slipped as the day progressed to finish the trading session lower. The S&P 500, however, managed to close in the green and is now flat for 2020. What a ride considering that the market returns for the year says that nothing significant happened. It is a reminder that looking at annual returns or year to date figures is rather arbitrary.
Yesterday the JSE All-share closed up 0.28%, the S&P 500 closed up 0.17%, and the Nasdaq closed down 0.81%.
One Thing, From Paul
The internet is fabulous, because every few days something fresh and funny comes to one's attention. Considerthese interesting insights into the challenge of selling stuff to people.
This list is by someone called Goatherder (real name Colin) and was put up on the noticeboard called Hacker News on Y-Combinator. Say what?
1. Sales is a lot like golf. You can make it so complicated as to be impossible or you can simply walk up and hit the ball. I've been leading and building sales organisations for almost twenty years and my advice is to walk up and hit the ball.
2. Sales is about people and it's about problem solving. It is not about solutions or technology or chemicals or lines of code or artichokes. It's about people and it's about solving problems.
3. People buy four things and four things only. Ever. Those four things are time, money, s_x, and approval/peace of mind. If you try selling something other than those four things you will fail.
4. People buy aspirin always. They buy vitamins only occasionally and at unpredictable times, sell aspirin.
5. I say in every talk I give: "all things being equal people buy from their friends. So make everything else equal then go make a lot of friends."
6. Being valuable and useful is all you ever need to do to sell things. Help people out. Send interesting posts. Write birthday cards. Record videos sharing your ideas for growing their business. Introduce people who would benefit from knowing each other then get out of the way, expecting nothing in return. Do this consistently and authentically and people will find ways to give you money. I promise.
7. No one cares about your quota, your payroll, your op-ex, your burn rate, etc. No one. They care about the problem you are solving for them.
Michael's Musings
Recently I read a book by a relatively unknown serial entrepreneur. One of the things that he speaks about in the book is ROE. I know we are talking about finance, but in this case, ROE does not mean Return On Equity. In this context it means Return On Effort.
At the end of the day, time is the one resource that is truly not renewable. We need to place more value on where we expend time and energy. In the business context, some business deals give a decent return on equity but are just not worth the effort.
For me property falls into that category. I own a rather generic 2 bed, 2 bath apartment, where the tenant has paid rent on time each month for over two years now. Even with having a good tenant, owning property is time consuming, not to mention expensive when things need repairing. Imagine how much worse it would be if I had a bad tenant!
After thinking about return on effort further, I have decided to sell my apartment. I would much rather have that money sitting in Apple and Visa shares (in USD), where professional managers do all the hard work. All I have to do is receive dividends four times a year. Who knows, maybe South African property will outperform US equities. Even if it does, the value derived from not having to worry about looking after a tenant and a property will be worth it.
Bright's Banter
Social media company Snap Inc. (NYSE:SNAP) released its second-quarter numbers after market close. Revenues topped analysts expectations notwithstanding a slowing spend in digital advertising. The numbers also showed a slowdown in growth in daily active users. Snap earnings tend to be the benchmark of what we can expect from other social media companies.
Revenues are up 17% to $454 million, its slowest growth since its IPO in 2017 leading to a net loss that widened by 28% to $326 million. The company said that the coronavirus pandemic had impacted digital advertising. However, the company saw increased ad spending from industries like gaming and e-commerce.
Daily active users grew by 4% to 238 million; the pandemic engagement numbers dissipated faster than expected. The market didn't like this and initially the share price was down as much as 14%. At the time of writing, it is only down 6%. The company had a goal to reach profitability, but the pandemic slowed its revenue growth, delaying this goal to sometime post-pandemic.
Snap CEO Evan Spiegel said on an earnings call "This has been an extremely challenging time, while our revenue growth rate continues to be impacted by ongoing market disruptions, the fundamentals of our business remain strong." Snap didn't give any earnings guidance as expected.
Signing Off
Earnings season shifts gears with both Microsoft (NASDAQ:MSFT) and Tesla (NASDAQ:TSLA) reporting after the US market closes tonight. Expect the Tesla share price to be wild following the numbers - it could go either way! Talking of Tesla, Musk is due for a $2b bonus thanks to the Tesla market cap averaging over $150b for six months, the current market cap is $300b. There is South African retail sales data being released at 13:00 for April, which is when we were in a hard lockdown. Thanks to a weaker Dollar the Rand is looking healthy at $/R16.39 this morning.