Monster Deal

Market Scorecard

The S&P 500 and the Nasdaq both hit intra-day highs yesterday following the announcement that President Biden has reappointed Jay Powell as Fed Chair. Powell is a known-entity and markets like certainty. Later in the day markets started to soften because he is also seen as someone who will raise interest rates quickly if needs be. Having said that, he’s been extremely accommodative to date.

Higher interest rates are bad for stock prices in the short term, but very good for the US Dollar. At the closing bell, US markets were in the red and the Dollar was looking very strong.

In company news, Monster Energy and Constellation Brands (a beer, wine and spirits company with over 100 brands) are said to be considering a merger. Elsewhere, Mondelez might want to buy JSE-listed AVI, the maker of Five Roses Tea and Bakers Biscuits, among other products. When the story broke on Friday, the AVI stock price jumped 6% and was up another 1.6% yesterday. Although foreign investment is a good thing, a delisting of AVI would be another loss for the JSE. Too many companies are leaving the exchange and hardly any are joining it.

Yesterday the JSE All-share closed up 0.70%, the S&P 500 closed down 0.32%, and the Nasdaq closed down 1.26%.

Our 10c Worth

One Thing, From Paul

I’ve taken modest personal positions in the two mRNA pharma companies that make the spike-protein Covid vaccines. Everyone’s a pandemic expert these days, so I’m sure that you know the ones I’m talking about: Moderna and BioNTech (the latter works with Pfizer).

My theory is that we will all be getting regular Covid booster shots, for many years to come. Also, mRNA technology will probably be used to make similar shots to attack cancer, malaria and other worrisome cells.

mRNA vaccines are preferable to traditional vaccines because they are easier to design, quick and cheap to produce, and less likely to cause adverse reactions in the patient.

I was thinking about all of this today when reading this interview with one of the Moderna co-founders, Robert Langer. He owns about a 3% stake, worth $2.6 billion. The MIT professor, who still regularly goes into the lab, has also founded more than 40 other companies. He holds around 1 400 patents and is one of the most published and cited scholars of all time.

What a valuable human being! Plus, he seems like a nice guy. Read the interview here: The Modest Moderna Co-founder And Multibillionaire Robert Langer Shares His Secrets To Success.

Byron’s Beats

Gaming is already huge around the world. What do you do if you manufacture goods in the real world and want to hawk products to gamers? Create a virtual world, of course. That’s exactly what Nike has done on the Roblox gaming platform.

Nikeland is a virtual, immersive 3D space where Nike fans can connect, create and compete. The virtual experience is designed to keep consumers active. Your avatar gets to kit out in all sorts of cool Nike products. Best of all, Nikeland is free for anyone to visit, breaking down what Nike believes is the biggest barrier to sport – access.

Nike has an amazing brand and this type of innovation will keep the brand relevant and in touch with younger generations that enjoy virtual experiences. You can read more about Nikeland here on the Nike website.

Michael’s Musings

Here at Vestact, we are long term investors. That means we don’t jump in and out of the market, and we don’t buy companies with poor prospects simply because their stock looks cheap. We are not market timers, which is more about luck than skill. We don’t know what will happen in the short term. Picking the correct sector and company for long-term growth is much easier and has higher chances of success.

In the early stages of Covid, we had a client call us to sell out their entire portfolio because they felt the pandemic would be much worse than people expected. They were correct and managed to get out before the market crashed by 30%. Unfortunately, the market bottom coincided with the height of fear and confusion about the future. That makes sense (in hindsight) because if the market wasn’t worried, stocks would not be down.

Anyway, that client watched the market bottom, then start to rise, and finally go past their original selling prices. To that client’s credit, they got back into the market. Unfortunately, they bought back shares at higher levels than where they sold. Not to mention the massive CGT bill from SARS because selling locked in earlier gains. Plus, there were brokerage (trading) costs on the buying and selling.

This story serves to highlight why we don’t try to time the market. Not only do you have to get the selling correct, but the buying back too. Trying to time the market does not work. Just accumulate shares in companies with strong growth potential and good fundamentals, and then hold them through the cycles. Keep your eyes on the horizon.

In a similar vein, Ben Carlson talks about how buying a stock just because it has gone down a lot recently is a bad idea because even beat up stocks can fall further – Buying Low Is the Easy Part.

Linkfest, Lap It Up

Nuclear power is a controversial topic. Nuke stations using current designs are expensive to build and risky, but modern prototypes could be much cheaper, more versatile and significantly less risky – A New Generation of Nuclear Reactors Could Hold the Key to a Green Future.

Getting into space is hellishly expensive. How about spinning an object at very high speeds and then slinging it into space? That could work, but the object would have to withstand immense g-forces for a prolonged period – This Company Wants to Launch Satellites Into Orbit Using a Giant Spinning Centrifugal Slingshot.

Signing Off

Asian markets are mostly in the toilet this morning, and US equity futures are slightly lower.

As mentioned above, the US Dollar is looking very strong at the moment, so the Rand has been battered down to $/R15.85.

Today in history, back in 1963, President John F. Kennedy was assassinated. He was only 46 years old. Bummer! Whatever you do today, make sure to stay alive.

Sent to you by Team Vestact.

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