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The Best of What They Said and I Read Week Ending 7/29/18

Short excerpts from articles I found interesting.

I may not agree with the author and the following material is not intended as investment advice.

Barron’s  – July 27, 2018 – Look Beyond the FANGS – by Randall W. Forsyth

“Poof! David Copperfield, meet Mark Zuckerberg. Instead of making a jetliner disappear on a Las Vegas stage, the chief executive of Facebook made $119 billion evaporate from the social-media giant’s stock-market value on Thursday after uttering some less-than-encouraging words about future growth and expenses.  Our colleagues at Dow Jones Data Strategy observed that not only was this the biggest drop in market cap ever, but it was larger than the market values of 457 of the S&P 500 companies…And Facebook’s drop only brought the shares back to where they were last May, and still above the levels they reached in early Spring after the Cambridge Analytica revelations.”

 “By Friday the damage seemed more widespread, especially in the Nasdaq. The tech-heavy index slumped 1.5%, leaving it down 1.1% for the week. The S&P 500 did manage to end the week in the plus column by 0.6% while the Dow Jones Industrial Average benefited from its lack of new tech to add 1.6% for the week…”

 U.S Global Investors – July 27, 2018 – by Frank Holmes

“…The price of bitcoin surged above $8,000 on Tuesday for the first time since May after the Group of 20 (G20) meeting in Argentina concluded last weekend with little urgency to take regulatory action on cryptocurrencies. In a communiqué, finance ministers and central bank governors expressed confidence that the technology underlying alt-coins “can deliver significant benefits to the financial system and the broader economy.”

“From its low of $5,850 in late May, bitcoin was up nearly 44 percent on June 24 before pulling back on the Securities and Exchange Commission’s (SEC) decision not to approve a bitcoin ETF filed by Cameron and Tyler Winklevoss. (Today it was back above $8,000.)…Volatility is still roughly six times as high as large-cap stocks and gold in a single trading session, and 11 times as high in the 10-day period.”

“…U.S. consumer sentiment fell to a six-month low in July amid concern over trade tensions, according to the University of Michigan report released on Friday. While sentiment remains high by historical standards, uncertainty surrounding trade has strained confidence as Americans fear economic fallout from the tariffs and potential inflation.”

Bloomberg Businessweek – July 23, 2018 - Looking for a Trade War Defense – by Sarah Ponczek

“During months of heated rhetoric surrounding trade and tariffs, Wall Street strategists and advisers largely assumed it was all just brinkmanship.  But suddenly more of them are advising investors to go defensive.  Easier said than done in 2018, when every global market is intertwined.  S&P 500 companies got 43 percent of their sales from overseas in 2016, according to a report from S&P Global Inc.  “There is a lot of debate on what is a defensive sector,” says Emily Roland, head of capital markets research at John Hancock Investment.”

 “Some say you should shift assets to smaller companies.  They’re domestically oriented and should provide insulation from a trade war, the thinking goes.  Others hail consumer staples.  If the economy slows, people will still need toothbrushes and diapers, right? 

 “…It turns out none of this is clear-cut…If all this is giving you the idea that maybe the simplest move is to stay diversified, well, that’s one reason the index fund business is booming.  And if ever there was a time to embrace the idea that stocks move unpredictable, in what economists call a “random walk,” maybe it’s at a moment when it seems the world can turn on a single random tweet.”

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