Weekend Update #464 - January 8th, 2022
Stocks covered: Block (formerly Square, NYSE:SQ)
Dear Friends of Purple Chips,
I'm looking forward to 2022, it should be an exciting year filled with opportunity. At Thursday, the Dow was at 36,200, not very different from 2 weeks ago. In this video, we look at the following:
The impact of demographic trends on labor markets;
Thoughts on Block (formerly Square);
a quote by the black belt of the investing world.
Please click on the icon below to view the video:
Transcript for Update 464:
On Thursday, the Dow Jones was a little over 36,200, little changed from a week ago. The news that was moving markets was that the Fed has indicated that they will probably be raising interest rates starting in March. The other thing moving markets was that the sell-off in tech stocks that gathered speed. As an indicator, the Ark Innovation fund which was a star in 2020 was off by 30% by the end of 2021.
It’s a polarized market out there with a lot of stocks that are at 52-week lows and just as many at 52-week highs.
Slide 3 – Valuations
On Thursday, the low valuations were:
Veeva Systems, Tencent and Adobe.
On the TSX there was Stella Jones, TC Energy, Saputo, Fiera Capital and Enghouse Systems.
Slide 4 – Spotlight – Chart
In the Spotlight this week, the Scotia analysts look at the shrinking labor supply in the US. This chart shows a trend of a slower growing workforce. This could have a significant effect on the economy in the way of rising inflation. Another aspect which isn’t discussed in the following commentary is the effect that this trend could have on house prices. As this change takes hold, residential real estate could change course and turn from a seller’s market into a buyers-market as aging boomers cash in on their biggest asset – their houses.
Slide 5 – Spotlight – Text
Here’s the Scotia commentary on this trend. Pause your video to read this.
Slide 6 – Satellite Holdings
We added a 3% position in Block on Wednesday at $152.84
A lot of tech stocks have come off in the last week and I cant help but think that when these stocks were going up, most investors were falling over themselves to buy them and then when they go down, nobody wants them… It just proves that most investors don’t buy low and sell high because they do what’s most comfortable which is to buy with the crowd when a stock is rising and sell low when everyone gets scared.
Slide 7 – Core US
n/c
Slide 8 – Core CAD
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Slide 9 – Quote
This is a short video this weekend, so we’ll finish with this quote by Warren Buffett
“ Be fearful when others are greedy. Be greedy when others are fearful.”
This quote is appropriate for the current market because the market is so polarized and there are so many extremes and if you know a stock is a good deal, you just have to buy it and put aside your emotions and fears.
END –
That’s all for this week, I’m john Schwinghamer, the author of Purple Chips.