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The Best of What They Said and I Read Week Ending 2/16/2020

Short excerpts from articles I found interesting.  I may not agree with the author and the following material is not intended as investment advice


 Bloomberg – February 15, 2020 – All the Ways Stock Market Bulls Have Gone Off the Rails. Again.  – Sarah Ponczek and Elena Popina

  • “…When it’s 11 years into a massive rally and share values soar by $1 trillion in two weeks, skeptics come out of the woodwork. Records keep falling -- the S&P 500 is setting one every 2 1/2 days -- while valuations fatten. It’s enough to make the staunchest bull wonder about a reckoning…A global health panic, flat-lining economies in Europe, inverting bond yields -- none has restrained the S&P 500, which is up eight of the last 10 days and 15 of 19 weeks. Forty days into 2020 and a third of the Nasdaq 100 is already up 10%...”
  •  "…Theory No. 1.  The stock market has ceased to be a report card on the broad health of American commerce and is instead being hijacked by four or five monopoly-like companies that basically can’t keep rising…Microsoft Corp., Apple Inc., Amazon.com Inc., Alphabet Inc., and Facebook Inc. now make up 18% of the S&P 500, a record. Combined, they account for half of the S&P 500’s gain this year, and one-fifth of its 400% rise since March 2009…When they break, so will everything else.”
  •  “…The counterargument is that concentration is always present. In 2020, it’s Apple, Microsoft and Amazon. In 1990, the top three S&P constituents -- Exxon Mobil Corp., IBM Corp. and General Electric Co. -- accounted for 8% of the S&P. In 1980, IBM, Exxon and AT&T Inc. made up 12%, data compiled by S&P Dow Jones Indices show…By the way, as big as the Fang stocks are, the S&P 500’s weighting methodology is not the reason for its success over the years. Since bottoming in 2009, an equal-weighted version of the benchmark has returned 605% including dividends. That’s 80 points more than the classic market-cap weighted index.”

 U.S. Global Investors - Investor Alert – February 14, 2020 – Frank Holmes 

  • “…The major market indices finished up this week. The Dow Jones Industrial Average gained 1.02 percent. The S&P 500 Stock Index rose 1.55 percent, while the Nasdaq Composite climbed 2.21 percent. The Russell 2000 small capitalization index gained 1.87 percent this week.”
  •  “…The share of Americans in the labor force is the highest in nearly seven years -- and the trend is led by younger women. Prime-age women 25 to 54 in the workforce is near a two-decade high, with the fastest increases among millennials and younger Gen Xers. Furthermore, 2.7 million women who weren’t in the labor force before January entered and found a job, compared with almost 2.2 million men who followed the same path, underscoring sustained demand for workers.”

 Barron’s – February 14, 2020 – Facebook and Google Face Real Regulatory Risk.  The Pain Is Just Starting – Eric J. Savitz

  • “Apple, Amazon.com, Microsoft, and Alphabet all have current market valuations above $1 trillion. Next on the list is Facebook , at about $600 billion…the Federal Trade Commission issued an extraordinary demand to the five big tech companies: It wants details on every deal they completed over the past 10 years that weren’t previously subject to FTC review…the five companies closed a combined 495 deals over that decade, transactions that represent billions of dollars and thousands of jobs. The commission said the probe “will help the FTC deepen its understanding of large technology firms’ acquisition activity...and whether large tech companies are making potentially anticompetitive acquisitions of nascent or potential competitors.”
  •  “…Commissioners Christine Wilson and Rohit Chopra proposed that the FTC also look closely at “consumer protection issues arising from the privacy and data security practices of technology companies, including social media platforms.” They think the FTC should study “how the monetization of data impacts the creation and refinement of algorithms that drive content curation and targeted advertising practices.”
  •  “…While still massive, rich, and powerful, the tech companies are under assault from both sides of the aisle. The latest investigation comes from President Trump’s FTC, but it isn’t hard to imagine the same approach from a Sanders or Warren Administration. And recent hearings on Capitol Hill suggest Democratic and Republican lawmakers are equally interested in going after big tech.”

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