Market Scorecard
Markets had a good day yesterday. European markets and the JSE All-share all had strong closes and that strength continued into the US open. The US market even gained strength as the trading day went on. Then, with 45 minutes left of the trading day, Trump took to twitter and the market fell like a stone. As you can see from the red figures below, the US market gave up all their gains and then went backwards for the day. Trump tweeted that he will hold a press conference on Friday to announce new measures against China due to mainland China’s imposition of a security law onto Hong Kong. The market is not sure what measures will be announced, so it is a case of sell first, then see what comes from the announcement.
Yesterday the JSE All-share closed up 1.77%, the S&P 500 closed down 0.21%, and the Nasdaq closed down 0.46%.
Our 10c Worth
One thing, from Paul
What’s going on with Vestact recommended stock Illumina? Bright did cover their first quarter numbers on the 6th of May, which were solid enough although the management team sounded anxious and withdrew earnings guidance for the rest of 2020. Since then the stock price is up a heart-warming 20%!
You will recall that Illumina makes genetic sequencing machines and the consumables that they use when performing analysis of human DNA and other genetic material. Their top customers are companies like 23andMe and Ancestry, which are consumer-facing services that allow one to send in saliva or another sample to get tested.
One reason for the stock price uptick could be that these companies are all collaborating on major Covid-19 genetic studies. Researchers are probing DNA in search of clues about why some Covid-19 patients get so much sicker than others.
23andMe is recruiting 10 000 people who were hospitalised with Covid-19 and then analysing their DNA closely. This is what is called a genome-wide association study, where the genetic data of lots of people is mined in an attempt to discover useful correlations. In the past, 23andMe has provided genetic data for studies on depression and bipolar disease, lupus, inflammatory bowel disease, and Parkinson’s disease.
Ancestry has its own study going on where it is surveying 250 000 existing customers to find those who later tested positive for Covid-19 and were hospitalised with the disease, then digging deeper into those customers’ data.
If this sounds interesting and you want to do some more reading on the topic, go here: COVID-19 host genetics initiative.
Byron’s Beats
My Colleague Michael has been speaking a lot about the pros and cons of working from home. Clearly, for many businesses it is very doable. But what about camaraderie and company culture? Maybe the solution is to rotate or have people working three days at the office per week? I suppose each company will find its own best formula by trial and error.
This WEF article covers Facebooks approach to the matter. Facebook staff have the option of working from home permanently. However there is a catch. If your living expenses come down because you relocate to a cheaper area, then so will your salary. I suppose that makes sense?
The movements of property prices are also going to be interesting. Areas further from CBD’s with lots of sun and space might see a spike in demand. Some US states have lower taxes than others. That will also be a decisive element.
And then there is the price of commercial property. With less people in the office, the demand for commercial offices will also drop. We will just have to watch the evolution with interest.
Michael’s Musings
In my first stats lecture, the professor made the point that you can torture stats to tell you anything you wanted. The easiest way to do this is through presenting data in different graphs. For most readers, they only look at the pictures created by the graph and sometimes don’t even look at the axis’s. Are the graphs below saying the same thing?
Yes they are. It is the same data just with different scales on their Y-axis. It is normal to show exponentially growing data on a logarithmic scale as it helps to put the change in perspective. In a logarithmic graph, the line drawn shows you the rate of change.
The problem is that many people don’t read the graph and make snap judgements about what the data is saying. When a group of 200 people were split into two sub-groups, the group that saw the linear graph were much more worried about the Covid-19 virus. However, those who saw the graph on the right were less worried.
So depending on the message you are trying to drive, you can present the same data but on a different graph, and then get a different response from the general public.
Here are more details of the test run buy the London School of Economics – The public do not understand logarithmic graphs used to portray COVID-19.
Bright’s Banter
This morning I was listening to another Knowledge Project podcast. In this podcast Shane Parrish chats with a gentleman who goes by the name of Dan Ariely.
Dan Ariely is the James B Duke Professor of Psychology and Behavioural Economics at Duke University. He has delivered six TED talks with over 20 million combined views. He is also an author with multiple New York Times best-selling titles including Predictably Irrational: The Hidden Forces That Shape Our Decisions.
Prof. Dan is passionate about researching why humans do some of the silliest, mind-boggling, and downright irrational things.
In the podcast, Prof. Dan covers a lot of topics from the three types of decisions that control our life and how understanding our biases can help us make better and smarter decisions. Tricks on how to not make ego-driven decisions, why people insist on flirting with the line between honesty and dishonesty. The people we surround ourselves with plays a big role in our decision-making.
Shane Parrish Interviews Prof. Dan Ariely On The Knowledge Project
Linkfest, Lap it up
If you live in a city, don’t have a car, don’t want to use public transport but still need to get to work, what do you do? Uber would be one option, another is to dust off your bicycle and cycle to work – Londoners Jump on Bikes in Record Numbers as Restrictions Ease.
Nir Kaissar and Barry Ritholtz debate about their views on how to achieve financial freedom, and to then create wealth –How to Get Rich? Make a Lot or Save a Lot?.
Signing off
This evening Jay Powell will be doing an online Q&A session, we are not likely to hear anything new from him though. Oil prices are down this morning and US futures are pointing to a weaker open later. The JSE All-share is in the red and the Rand is slightly weaker at $/R 17.47.
Sent to you by Team Vestact.
Follow Michael, Byron, Bright and Paul on Twitter
078 533 1063
Vestact - Money with a dash of funny 