Hello everyone,
Trust your weekend was relaxing or productive or whatever you wanted it to be.
John titles his Monday newsletter: Blunder 3.0
In other words, when the Fed keeps interest rates too low for too long, then raises them too much too quickly, it then lowers them again too much, which whipsaws, or creates a bi-polar mentality in the market, and then ignites all thrusters in the rocket and takes the market on a merry swing into the stratosphere.
Welcome to the roller coaster…
This one will be with us until at least the mid-terms have been done and dusted and the next CPI figure is released. There’s going to be a lot of talking, but in the end, it will all be about the numbers. You have a choice: you can turn off all social media and the TV and give yourself some peace and stillness for a time or you can continue to digest and ruminate about what’s said and not said in the media. There is a lot of misinformation, to be sure, you just need to be aware of it.
John’s Monday newsletter is focused on reminding you that you are buying now for what is going to happen 6-9 months down the road. So, on the big down days, we will have and have had in days past, remember to buy in small parcels. Close your eyes and pull the trigger, click that key, or get your offspring to do it for you. They have no fear built in yet.
John has been very nimble this year. As a result, he has returned a great one-year return of +78.54%.
Are you worried about the decline of Tesla lately? You shouldn’t be. It’s approaching a price-earnings multiple of 30X, as John points out in Monday’s letter. What soured the sentiment toward Tesla? You guessed it – Musk’s close relationship with Twitter. Musk sold a large amount of Tesla stock to fund his Twitter buy-in. The market sliced $333 billion or 34.6%, off the market capitalization of the company. Has Musk taken multi-tasking to the extreme and dabbled in too many ventures? Taking your eye off the ball at critical times can be a person’s or a company’s undoing. Time will tell if his step into the Twitter space is Musk’s undoing or is Twitter’s constructive renewal.
If you’re still not convinced. John’s wise wisdom here should pacify you. He reminds us that Tesla is the fastest-growing large company in the world. Profit margins are increasing, thanks to the recent collapse of commodity prices. Unit sales will rise by 40% this year. Every time Tesla opens a new factory at a cost of $7 billion, it generates $15 billion of profit per year, forever.
Has anyone ever been to the Middle East? When John was working for Morgan Stanley in the 1980s, he volunteered for a job that involved him flying to Kuwait and riding in a camel caravan – a great social event - with the Kuwaiti Royal Family into the Dibdibah Desert. The chiefs in Morgan Stanley had received the invitation – notoriously difficult to get on this list. MS needed someone who knew the Middle East well, could speak some Arabic, was comfortable in the desert, and was a good rider. It was a risky assignment as the U.S. had just launched air strikes against Libya, destroying the dictator, Muammar Gaddafi’s royal palace, in response to the bombing of a disco in West Berlin frequented by U.S. soldiers. John was the only one who put his hand up.
If you wish to read about all of John’s adventure in the Middle East, let me know.
Most pandemic consumer trends are now starting to wear off. The stationary bike, the new sofa to watch your favourite Netflix series, or truckloads of potting mix to get your herbs and veggies growing are all on the out. One sector, however, is still running strong: pet care.
Hands up who rushed off to the Animal Welfare League and picked up a fluffy bundle to keep your company in the wee hours? Pet ownership is booming in the U.S. Morgan Stanley research has found that there are about 5 million more pets in the U.S. than there were in 2019. That 4% increase in pet ownership has resulted in an 11% gain in pet spending. Pet ownership has become a global phenomenon. The English have a long-standing history of pet ownership – especially dogs. They are brought in handbags to the dinner table in restaurants and on trains. I’ve also seen them at cafes, the hairdresser, and at the gym. In Australia, our pets ride in the back of utes, ride the waves with their master and harass the postman. Cats, naturally aloof, are also popular and merit a mention. Animals have a calming effect on the human body, and it has been scientifically proven that they can lower stress levels and moderate blood pressure. A four-legged friend is definitely worth the effort and ultimately will be considered part of the family.
Have a great week.
Cheers,
Jacque
Don’t judge each day by the harvest you reap but by the seeds that you plant.
-- Robert Louis Stevenson