Survive And Thrive

Market Scorecard

Yesterday, US stocks rose briefly in the morning but fell away in the course of the afternoon. The S&P 500 closed at its lowest level in two months. We're still hopeful that fewer supply chain strains and falling commodity prices will allow central bankers to tone down inflation-taming efforts in the coming months. We are resolute stock holders.

In corporate news, Adobe (NASDAQ:ADBE) shares fell 17% after the company announced plans to buy collaboration-software company Figma for an eyebrow-raising $20 billion. Elsewhere, health insurer Humana (NYSE:HUM) rose 8.4%, after boosting its guidance for the year.

At the end of the day, the JSE All-share was off 0.58%, the S&P 500 slipped 1.13%, and the Nasdaq drifted away by 1.43%.

One Thing, From Paul

Science writer James Gleick reports that physicists regard space and time as a single thing, a four-dimensional block in which the past and the future are just like spatial dimensions. Einstein was a leading developer of this unified theory.

Jonny Thomson, who writes the weekly newsletter called The Well, has a more useful approach, describing time as "the thing that frames every moment of our life. We're irrevocably forced to occupy a time we call now, and to understand things as occurring before or after some other event."

We don't travel at the speed of light, we are just down here on the ground. Human brains have multiple neural centres that record the passage of time. It's a fundamental part of our consciousness. What is more, our bodies don't last forever. We are born, grow old and then die.

So, my advice today is that your time on this Earth is finite, so don't waste it. Seek out fun people to be with, and fun things to do. Live in the present, but keep planning ahead. Have a good weekend.

Byron's Beats

We are living through a period of high inflation at the moment, and we have to deal with it as best we can. As investors, we need to look at our holdings and be sure that our companies will survive or even thrive. At Vestact, we only invest in large, established businesses so I'm very confident that our portfolios will get through these tough times easily.

Which stocks could benefit from inflation? Let's look at an example - an "old school" manufacturing business that has come through three generations. It's well established and profitable and has a hard-working CEO who is very good at what he does. But he gets his secretary to print out and write his emails. The business has not yet digitised.

In an inflationary environment that kind of business is under pressure. Their input costs are rising and their workers are demanding higher wages. Their customers won't accept higher prices. The CEO decides to digitise the business to cut costs. Companies like Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) and CrowdStrike (NASDAQ:CRWD) all have offerings targeting businesses undergoing such transformations.

I've also been looking closely at Salesforce (NYSE:CRM), a global leader in Customer Relationship Management (CRM) software. They are really benefiting from the rapid digitisation of a variety of customer-facing businesses.

Michael's Musings

Amazon just spent $1 billion creating the new Lord of the Rings series. This year Netflix (NASDAQ:NFLX) will spend around $18 billion on content creation, and Disney (NYSE:DIS) takes things to another level with a planned spend of $33 billion! All the content is created to keep customers on their respective platforms.

Mind-blowingly, none of these entertainment services comes close to the volume of content creation on YouTube. Every three hours, YouTube adds as much content as Netflix and Amazon's entire catalogs combined, or twenty times Disney's.

Granted, most of the stuff on YouTube won't be watched by more than a few people, but there is something for everybody on the platform. This massive library, which is created for free, allows YouTube's owner, Google, to generate $7 billion per quarter in revenue. Amazing.

Bright's Banter

New York-listed Tencent (HK:0700) Music is reportedly planning to go public in Hong Kong as early as next week. It's the latest in a spate of Chinese firms seeking a second listing in Asia's financial capital to mitigate the risk of Chinese ADRs being booted off US markets.

The IPO in Asia will be by way of introduction, meaning there will be no issuing of new shares to raise additional capital. The tech company raised about $1.07 billion in the US IPO back in 2018. So far, Tencent Music shares have tumbled 31% this year giving it a market cap of $8.02 billion.

The Hong Kong Exchange plans to lower revenue requirements to make it easier for deep-tech firms to go public there. This is an interesting move as it could attract more listings in the near future. Let's see how all of this goes.

Signing Off

Asian markets are down this morning, and heading for a fifth week of declines. Shares fell in Hong Kong, Japan, and South Korea. Mainland China was not spared the rod, and equities there also slumped. Industrial production and retail sales data that beat expectations had no positive impact.

US equity futures are also lower, suggesting more market weakness ahead. The Rand is also looking wobbly, trading at around R17.65 to the US Dollar.

Over and out. We will see you here on Monday.

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