Edition #12-Monday December 19th 2022
Quiz Question of the Week
Answer at the bottom
This Week in History 📰
19th December 1843- ‘A Christmas Carol’ First Published
21st December- First Day of Winter… and Summer
21st December 2012- First YouTube Video to One Billion Views
Major Events This Week 🔬
What to Expect in the Markets Next Week
Monday
Tuesday
Wednesday
CB Consumer Confidence (Dec)
Thursday
U.S. GDP Growth Rate - Final Reading (Q3)
Friday
PCE Price Index (Nov)
Summary 📝
Three straight negative sessions saw last week ending down 2%, as a promising beat in November’s CPI on Tuesday saw the Fed take a slightly more hawkish tone in their 2023 economic expectations.
I’d argue that the key event was the continued decline in inflation though, and even if the Fed is expecting a slightly longer period of volatility in 2023, we can take some positives from the improving inflation reports at least. Friday’s PCE will be an important part to this, as well as inflation readings in January. but with the Fed now not meeting until March, we hopefully don’t have any negative catalysts in the market until we get to earnings season in Q1.
I’m looking 5-10 years ahead, and putting my money to work. Even if 2023 is another rocky year, we want to be owning as many quality companies as we can, for the best prices we can get.
If you think there is further downside, then by all means keep some cash ready, but don’t be under the expectation that one day a bell will ring, and the bull market will begin!
These transitions take time, and never happen all at once for the sectors and companies that make up the market.
My 2023 watchlist is going to be made up of companies with the following:
Strong cash reserves
Beaten down sectors in 2022
Household names with strong name recognition
A range of products which can cater to wide demographics
Fair valuations (P/E)
ZERO or manageable debt levels
Pricing power to move in line with inflation
Resilient supply chains
If you can find companies which meet all the above, and you have the stomach to ride out the rest of the bear market, then you might just look back at 2022/23 as the time when it all began for you, and financial independence got a whole lot closer!
Market Recap 📈
Provided by Unusual Whales Futures
Post of the Week 💌
❗️Anatomy of an Investor 🧠
✅ What does it take to be a really successful investor? 🤔
✅ Obviously we want to be able to make as much profit as we can in the market, but we need to be able to balance this within our time, our interests, and with the constantly changing environment. 🤯
✅ In order to be successful, you need to know how to survive and thrive in good times and bad. This will require having a clear view of your holdings, the ability to juggle risk, and find new opportunities when they come. 👀
✅ There will be numerous challenges, but if you have a strong stomach, the strength to stay true to your strategy, and the ability to stay clear of the noise, you’ll be in a really good position to see success over the long term. 📈
What do you think? What do you consider to be your most valuable quality as an investor? 🤔
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Investing World Cup- Final Update
The Investing World Cup is finally at an end, with hundreds of votes, and some of the biggest companies of the world going head to head, Alphabet has been crowned the winner!
Also a huge congratulations to Argentina for winning the ‘other’ world cup!
What’s Moving Markets?
Incoming Earnings Reports this week- provided by Earnings Whispers.
CNBC- Elon Musk polled Twitter on whether he should step down as CEO. Most voters said yes
Twitter’s new owner Elon Musk posted an informal poll Sunday asking users of the social media platform if he should step down as CEO.
Musk claimed he will abide by the results of the poll, but it is unclear whether or not he will actually do so.
The poll closed Monday morning with a majority of respondents calling for the billionaire to leave his post.
The collapse of FTX, once a $32 billion crypto exchange, has shattered investor confidence in cryptocurrencies.
Louise Abbott, a partner at law firm Keystone Law, told CNBC the exchange’s demise is “devastating for investors.”
The disaster has set back adoption of crypto assets by “one or two years,” according to Evgeny Gaevoy, CEO of crypto market maker Wintermute.
CNBC- Treasury yields rise as investors assess monetary policy, economic outlook
Treasury yields rose on Monday as investors continued to assess the outlook for the economy and monetary policy, after last week’s hawkish comments from the U.S. Federal Reserve.
Events today- provided by Unusual Whales.
Analyst Upgrades and Downgrades- provided by MarketWatch
Highest Short Interest Companies- provided by MarketWatch
Chart of the Day 📈
2022 has been quite the rollercoaster year, but as investors, the big question is always going to be on what is next!
We’re almost certain to see a recession next year, with likely declines in growth, high interest rates, falling employment data, and rampant, albeit declining, inflation.
The chart we see below brings in the expectations of CEOs in the next 6 months. You’ll notice it’s not been this low since the financial crisis, and the dotcom crash.
However, both of these major recessions came with fairly limited warning to most people. Unless you were really paying attention to the valuations of tech companies, or understood the complexities of the mortgage approvals process, you likely didn’t see it coming until the markets collapsed.
This time, we’ve had so much foreshadowing to the inevitable recession due to the amount of stimulus and funding of the economy during the pandemic, as well as the subsequent tightening of policy, that nobody would be too surprised to see a recession in 2023.
With markets usually pricing in 6 months of future events, I hope to see that a lot of this recession risk has been absorbed into the prices we seen in today’s market.
Admittedly, we are likely to see reductions in consumer spending, and profit margins for companies, but if you are looking to buy into quality companies who have pricing power, large cash reserves, and a sustainable financial structure, then this might be just the sort of opportunity you want to see.
Investor’s Toolkit ⚒️
Happy holidays during the festive season, and have a very Merry Christmas!
All investor’s toolkit will be on sale at some point, so keep an eye on the newsletter in coming issues for deals galore!
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Disclosure
✅
This newsletter provides general information only. Before making any financial or investment decisions, please consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.
Quiz Question of the Week- Answer
Answer- B Microsoft
In April 2019 Microsoft was the first company to ever reach that figure, with Apple being the second.
These companies are valued at £909 billion and £893 billion, respectively.