The Amazon in Full Flow

Published 2020/07/08, 09:26
Updated 2023/07/09, 12:32
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Market Scorecard

Chinese shares have continued their weeklong surge higher. Of particular importance to us here in South Africa is that Tencent is up 5% this morning, pushing it further into record-high territory. A record-high Tencent means a record price for Naspers and Prosus. Most people are not aware of how much of their pension fund value is owed to Koos Bekker and Naspers' early investment into Tencent. For the last five years, the returns on the JSE have been very disappointing. Imagine how much worse things would have been without the biggest company tripling in value over the same period.

Yesterday the JSE All-share closed up 0.72%, the S&P 500 closed down 1.08%, and the Nasdaq closed down 0.86%.

Byron's Beats

On Monday Amazon hit $3 000 a share for the first time. The market cap of the company now sits at $1.5 trillion. Amazon has been a darling stock for many investors, but it hasn't always been plain sailing or easy - nothing ever is on the market.

Many people forget but Amazon first hit $2 000 a share in August 2018. From there it did nothing for nearly two years. Even before the market crash in March 2020 it was still hovering around $2 000. During the crash, it went below $1 700. From there it went to $3 000 in three months.

We have seen this movie a few time with stocks like Apple, Nike, Starbucks, Google and even Tesla (NASDAQ:TSLA). Even quality companies have periods of stagnant share prices. The trick is to accumulate during these periods if you feel the investment thesis has not changed. Ironically many investors feel they should sell when stocks go "no where" for a while.

Amazon hit $3 000 a share for the first time

One thing, from Paul

I was reading an article about what makes a good project manager and came upon this interesting paragraph. It struck me that these attributes would be universally useful in any knowledge-based industry, including investing.

So maybe what follows is something that I'd like my colleagues to read, but here it is for you too:

"Managers need to think for themselves, be curious, and have low ego. Why does this matter? When you are surrounded by smart, opinionated people the easy option is to either 100% accept what they're saying because it's eloquent and well-thought through or reject it outright because it sounds crazy or goes against your priors. Thinking for yourself allows you to avoid these traps. Managers need to be curious because building a complete picture of a discipline requires genuine curiosity to ask questions nobody else is asking. A large ego would lead to a manager imposing their will on every piece of the program, killing curiosity and the benefits of top down problems and bottom up solutions."

Here's the whole thing, which is about a US government research programme and what it looks for when recruiting new programme managers: Why does DARPA work?.

Michael's Musings

With all the attention that Elon Musk and Tesla are receiving at the moment, I wanted to find something that covered Musk's management style. Most pieces that I found spoke about Musk's relentless work ethic and his determination to change the world. Then I found this article, which also mentions Steve Jobs - Why Intelligent Minds Like Elon Musk and Steve Jobs Embrace the Rule of Awkward Silence.

The rule of the awkward silence is not to blurt out the first thing that comes into your mind when you are asked a difficult question. It requires you to be comfortable to take time to think about how you are going to answer. Part of this process is the silence that occurs while you are thinking. For people who are not used to silence, it can be rather awkward.

At the essence of this rule, it speaks to people being comfortable in themselves, and not spewing BS just because they don't want to seem weak. Think more, talk or tweet less. I wonder if Musk uses this rule when he tweets? Musk is now worth around $78 billion, making him the richest person with South African roots by some margin. At that level of wealth, it doesn't matter much what others think about his tweeting.

Bright's Banter

On the 6th of June I wrote about a CB Insights list titled "The Global Unicorn Club". We looked at all private businesses with valuations of $1 billion and above. We found that there were 472 unicorns in total with a street value of $1. 382 trillion.

We looked at the actual unicorns by valuation and we saw the likes of ByteDance, Didi Chuxing, and Kauaishou making the top ten. The US basically dominates the list with 226 startups or 47% of the total number of unicorns. Today's infographic compares the top 10 countries by number of unicorns which is a sign of innovation.

The Countries With the Most Unicorns

Signing off

There is a US oil inventory number this afternoon. It will give some guidance around demand and supply factors in the US at the moment. Even though many companies are in the red this morning, thanks to Naspers (JO:NPNJn) and Prosus (JO:PRXJn), the JSE All-share is higher today. European and US futures are red this morning, and the Dollar is a bit stronger. The Rand is currently at $/R 17.16.

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