Seeking Alpha by Adding Beta

About 2 years back coming out of COVID pandemic, I wrote blog titled " New Roarin' 20s.."  It covered what happened in 1920s and what are the factors now which would trigger new roaring 20s. Do check out the blog...almost all factors are valid even now. 2022 went sideways due to inflation pressures which triggered historical steep rate hikes by central banks which led to tech companies taking more measured approach and laying off 200,000 employees....all of that changed in Nov'22 when ChatGPT was launched...even though I had mentioned AI/ML as one of the factor in my previous blog, ChatGPT really captured the imagination of the world and changed the outlook of AI instantly similar to what Netscape did with the Internet and iPhone did with the mobile. The singular concept of "Language is the Interface" made AI accessible instantly to billions of normal people....And now without mentioning AI, no talk starts or ends in tech world..and despite onsite of most-aw...

Today morning I went for my usual walk to neighborhood Farmer's market - it was pleasant cool spring morning with fog/clouds on the Evergreen hills! After brisk walk rewarded by bagel and Cappuccino, started thinking of last week's flurry of earnings results by tech giants, potential seizure of First Republic by FDIC and general direction of economy...that's the premise of this blog! Last two weeks tech giants except Apple and Nvidia have reported. Here is quick report-card Tesla: OK but markets did not like constant price cuts to stimulate demand Alphabet: Earnings were good especially with GCP reporting profits first time. Google Cloud is about 11-12% of revenues and 25% of cost but growing at 20-30%. Clearly established itself as 3rd option. Markets would have preferred more clarity on cost cutting and plans to get into leadership position in Generative AI. So stock reaction was muted Microsoft: It delivered on all fronts with Azure still growing at 27%, buzz with OpenAI...

First quarter of 2023 is over and it was quite an interesting one with so many unexpected events...almost similar to first quarters of past few years...Markets don't like unpexcted events - so it was surprising that with so many expected events, markets did pretty well especially Nasdaq with double digit gains. What's in store for rest of 2023...for that let's look at some ABC...factors! A I: ChatGPT and followup GPT-4 captured the imagination of world in just few months and revived the excitement around AI similar to what Netscape did for Internet and iPhone did for mobile. Those two events marked the pivotal moments and changed the world and lives of billions of people forever. It's still too early for AI to decide if this is indeed such moment...we will know that in next decade or two. But for now there is definitely lots of excitement with every company jumping onto the bandwagon of AI to project that they are not left behind...Companies which would benefit from thi...

What a week of events - no one would have predicted that the 16th largest bank in USA (Silicon Valley Bank) would be no more in less than 48 hours....almost exactly 15 years after the events of Bear Sterns collapse...While one more (again California) bank failed (Silvergate) no one shed any tears due to its high-risk ties to Crypto world...But SVB was no small bank...in fact it was the "go to" bank for last 40 years for startups, VC and many Silicon Valley companies... but what started as typical course of action - upcoming rating downgrade due to loss on treasury holdings, attempt to raise funds to cover capital requirements turn into classic bank run as depicted in  all time classic 1946 movie "It's wonderful life"...Only this time it was not a small town bank..it was one of the premier bank in most innovative place on the Earth...maybe that's what caused its downfall...it was bank for VCs and startups and they exited in droves with slightest doubt and mov...

It's that Sunday of the year when all of America is in party mood no matter what's happening in the nation or around the world. Super Bowl is one event which had helped Americans forgot the gloomy news of 2001 dot-com bust, 2009 great recession and recently pandemic induced lockdowns. Over 100 million Americans would be tuned to TV with family and friends and enjoying the much deserved matchup - Colts vs Chiefs. This is also significant in terms of generational shift. It's first time when the baton of quarterbacks would be passed from likes of Tom Brady/Aaron Rodgers to young, energetic African-Americans - Jalen Hurts (Age 24) and Patrick Mahomes (Age: 27). Their styles, risk-taking attitudes and running should make this an exciting matchup.  And when it comes to economic impact of Super Bowl - here are some numbers: Boost to local economy of host city Phoenix is going to be around $600-700M 325 million gallons of beer would be consumed on Super Bowl day - that's almost...

First of all, Happy New Year...Due to holiday travels my new year blog got delayed..it's about time to write first blog of the new year...and last two weeks of action in markets, inflation and general economy definitely deserve a look and make some predictions for what's ahead in 2023. What a change on the calendar makes a difference in sentiment...technically year change should not matter ..it's abstract boundary created by humans to manage their life...animals don't have any calendar year..they have only seasons..but humans also invest in markets and somehow change of year makes change in psych of investors..as if all the worries of 2022 are over and it's new start. Well if it helps change the sentiment, I am all for it every now and then! Let's look at some of the trends and make some predictions. Inflation trend is definitely downwards and it can reach near desired fed target of 2% - at least when it comes to core CPI. I won't be surprised that by end of...

First Avatar movie got released in 2009 in midst of market turmoil due to housing crisis. 13 years later,  "Avatar - The way of Water" got released this week - again in the midst of post-pandemic, inflation driven market turmoil. James Cameron took 13 years to make second Avatar movie and I am sure it would be another blockbuster like first one (needs to make $2B box-office collection just to break even). But "Fed" up sequel seems to have repeated in just 4 years. Last time I wrote with exact same topic was in Oct 2018.  Most of the content in that blog could be repeated here. Markets are frustrated that Fed is again behind the curve by continuing to raise rates till it reaches 5.1% even though everyone fears that economy is heading into recession. As reaction to Fed meeting and Powell's Q&A session, markets crashed to send a message - enough! But Powell's fed wants to make sure that inflation is really coming down and willing to take the risk of "t...

Last week was one of the most eventful week - elections, crypto crash, soft inflation triggered massive rally in stock markets, layoffs at Meta and many other tech peers, slow counting of votes and of course the chaos at Twitter.....each of these can be a blog topic. But let's focus on how FTX "House of Cards" came crashing due to "Game of Thrones" in Crypto Universe! I have written about Cryptos in my previous blogs  " Coinbase IPO : Netscape or Webvan moment for Crypto",  " Crypto-currencies : Fad, Fraud or Frontier",  " Tulips, Eyeballs and Dogecoin " Many of those hypothesis and predictions came to forefront this week which led to collapse of FTX - once valued at $32 Billion and its young founder Sam Bankman-Fried became from hero to villain.  FTX was saving crypto world during summer meltdown by buying or supporting other smaller "houses of cards" built on fraud coins, over-leverage, no regulations...no one had any id...

Many of you know the famous Gordon Gekko (played by Michael Douglas) dialogue from the 1987 movie Wall Street - "Greed is Good". Well - on the eve of mid-term elections, let me tweak that dialogue into a political context and say "Gridlock is Good". Over the last two years, we've had a one-sided government within all branches of government (President, House and Senate controlled by Democrats). We got some meaningful policy actions done by Biden and Congress. But some of those actions also created the inflation mess that the economy is dealing with (another reason is slow action by Fed in raising interest rates) as well as gyrations in stock markets. Most of the predictions suggest that Democrats are going to lose House by a few seats and there is small possibility that they may lose control of Senate (my prediction is that the Senate will remain 50:50). Either way, with the House gone to GOP, there would be "gridlock" in Washington. Here are my reason...

I have a written few blog posts about Tesla while it was still a small company with a market cap of less than $10B (unfortunately, I did not follow my own advice of owning the stock instead of or in addition to the car; as the saying goes, hindsight is 20/20). Now that Tesla is a much bigger company (with a market cap equal to or greater than all the other car companies in the world combined), it's time to take another look at the company and the stock. So here it goes. $TSLA reached a 52 week low this week despite very optimistic "pedal to the metal" projections from Elon Musk. After touching a $1 trillion valuation, it has been sliding down (call it the trillion dollar curse, similar to what Meta also experienced – but that's another blog topic) and lost over 40% in 2022. What's impacting Tesla and its stock? There are 4 "C"s which will decide what's next for the company. Competition: It used to be EV + Autonomous Driving + Cool Factor = Tesla just...

After long hiatus due to personal reasons, it's time to get back to blogging. And what better day to start than on first day after historically worst month for markets. This year was no different. Sept kept to its reputation as worst month with markets ending at lowest point for 2022 (S&P down by 25% and Nasdaq by 32%). This week saw the leaders (like Apple etc) taking the hit...that may be an indication that markets may be getting closer to bottom...now that we are in Oct which had the reputation of having worst crashes, we may get one or two big crashes...that would be clear sign of market bottom. As they say "Don't fight the Fed" - that holds true in both directions. Fed is determined to get back it's credibility and will not (and should not) pause interest rate hikes till inflation indicators show clear downward trend....It's possible that Fed may do more than needed and damage the economy at least for short run...Economists, companies and policy maker...

Mayday  is an emergency  procedure word  used internationally as a  distress signal  in  voice-procedure  radio communications. May 4, or, "May the 4th Be With You,"  marks a celebration of all things Star Wars  attributed to famous phrase "May the Force be with You" used by Jedi Masters! After dreadful month of Apr and worst start of year for Nasdaq ever, high-tech growth stocks are sending "Mayday" signal and hoping that some kind of Force would save them from daily pounding. It feels like dot.com bust all over again. Covid pandemic pulled forward growth of many high-flying stocks. Now that pandemic is over as worldwide issue despite spurts in Chinese cities and even in New York, investors are worried about lack of growth for once high-flying growth companies. Even "FANG" group is not spared. Many stocks are back to where they were before pandemic. For few of them, 5 years of gains got wiped out in last 5 months.  So obvious quest...

It's that time of the season when NCAA Basketball have their March Madness tournament in which college basketball teams play to win National Championship and millions of brackets are published. At one time, Buffet announced  $1 Billion prize money to anyone with 100% accurate bracket - no one won it. It's just impossible probability ( one in 9.2 quintillion ). But it's fun - This year my ranking is close to half-million in CBS Sports Men's Bracket Challenge even with 30 correct predictions till now. March also brings another interesting aspect about markets - in last 15 years, markets have reached bottom 2 times during March. March 9, 2009 during housing bubble crash and March 23, 2020 during pandemic induced crash. So we may be in for repeat of this pattern when S&P reached short-term bottom on Mar 7 2022  (at 4170).  Based on how most of the indexes recovered since then, it feels that way. Even Chinese stocks seem to have reached bottom on Mar 15, 2022 and roar...

Similar to The Four Ps of marketing mix (Product, Price, Place and Promotion), I was thinking of The Four Ps of (current state) of Stock Markets. Let's look at "The Four Ps of Markets" Post P andemic Growth: Pandemic pulled forward growth of many companies such as Zoom, Roku, Netflix streaming numbers, enterprise spending, cloud growth etc. 2 years later Pandemic seems to be on its way out and world is returning to normalcy. Post earnings calls. Markets started worrying about what would post pandemic growth look like for high-growth companies. Stock prices of most of these companies reached peak 12-15 months back and are now 50-80% down from those peaks (Zoom stock reached peak in Oct 2020 when it was valued more than IBM). High double digit (in some cases triple digit) growth is over and these companies must be valued based on growth going forward. Even achieving 30-50% growth on bigger numbers is going to be difficult. And we all know what happens when growth music stop...

Exactly two years back first COVID case was detected in US. Two years, Two Presidents from two parties with very different approaches to dealing with COVID and USA is still having highest daily cases, highest hospitalizations and unfortunately deaths due to COVID. Unfortunate state of affairs despite having three effective vaccines and majority of people vaccinated. After two years,  people are frustated and have moved on and treating COVID like endemic which is going to stay with us for many years to come. That's going to be normal world in 2022. All of us should continue to wear masks and take eligible vaccine boosters when available. While world is adjusting to Covid as endemic, markets are trying to adjust to post-pandemic economic world. Let's look at few macro attributes and their effects on stock markets in 2022 Inflation running very hot and is at 40 year high reminding people of Volcker Fed days Supply and labor shortages - I experienced it first hand 30 min to pick co...

To all my readers, wish you belated happy new year. After travel back from India I kept on postponing my new year blog for no reason...In a way it was good thing since I would not have expected so much market action in first three days of new year. Before we get into what could be in store for 2022, let's look at how some of the predictions/recommendations did for 2021. Macro Predictions: GDP growth, interest rates and unemployment rates were on target as per predictions. S&P did much better than predicted (20% better) Schools did open in Fall'21 COVID predictions were completely off the mark partially due to emergence of Delta and Omicron variants - who would have thought that we would be having million cases (daily) in US in 2022? Stock recommendations: Winners: SPG (94%), MAC (75%) and WFC (75%), XOM (59%), OKE (51%) Losers: CLVS (46%), BABA (44%), SQ (36%), NIO (33%) Overall portfolio of recommendations did no better than S&P's return of 27% (when it comes to my...

Next week starts the biggest shopping season of the year in US with Black Friday. Millions of people would be heading to malls to spend on holiday gifts. And given that people were stuck at home for last year with only option of online shopping, this year they want to go in malls in person and enjoy the shopping. That brings me to my blog topic - is this the Retail Renaissance? ( The Renaissance was a fervent period  of European cultural, artistic, political and economic “rebirth”  following the Middle Ages) During depths of COVID pandemic, most of the in-person retail (except for essentials) was closed for multiple weeks. Holiday shopping of 2020 was mostly online. Since people were scared to go out.  Online giants like Amazon did a wonderful job in delivering everything from essentials to holiday gifts. No wonder stocks of traditional retail companies were trading as if they are going out of business. Retail was facing double whammy - short term pain of Pandemic and lon...

Kids are known to blame their dogs for eating their homework! Looking at one of the photo forwarded by a friend, I can blame supply chain for "Who ate my Donut?" The Supply Chain issues are seen everywhere - from corporate earnings to weird economics of used cars selling more than they were bought for. Supply chain issues are mentioned in every earning call multiple times - even by companies which are supposed to be all digital. The ports are backlogged with ships lined up for miles to get unloaded. What happened in the world priding itself "just-in-time" and efficient, all connected flat world. Pandemic threw a wrench in this supposedly well-oiled supply chain engine.  When Pandemic hit in early 2020 across the world, after initial spurt of demand in consumables (remember toilet paper shortage?) demand for travel, autos etc vanished overnight including labor.  No wonder crude price went negative briefly. Governments pumped up trillions of $$ to keep their economies...

Exactly 18 months back in depths of COVID induced panic, Crude oil fell to -37 US $ per barrel....yes you read it right. It was minus..means someone was ready to pay $37 to take one barrel of oil off their hands...weird but it did happened albeit for very short time....That was then..and now same barrel of oil has reached $80 - highest since 2014. Oil price is just one of the very widely tracked indicators which reflect multiple factors. Let's look at some other trends Oil at 7 years high Natural gas at multi year highs crossing $6 per BTU Power cuts in China due to coal shortage. Even in most progressive country priding itself to transition to green power Germany also having potential power cuts due to coal shortage UK citizens are living in their 70s with long lines at gas stations to refill their cars.  Avg time to ship holiday goods from Asia to America has gone to 80 days - twice of pre-pandemic days and prices have gone up multi-fold Labor shortages all across - UK is having ...

One would think that leader of capitalism USA and only large communist nation (which matters) China would have very different problems. However if you pay closer attention to what's happening in Washington and Beijing and reasons behind it, you would wonder if both systems have created similar societies and trying to address the problem with only slight variations in their approach, Last 3 decades saw explosive growth in economies and corresponding wealth creation. After financial crisis of 2008-09 it has increased the wealth gap significantly. By some accounts, top 1% of population has 15 times more wealth than bottom 50% . Unicorns (startups valued at more than billion $) are being created every day. Even in China wealth at top has been very concentrated. President Xi is determined to address this with force of regulations as well as policies. In US, progressives are putting pressure on President Biden to enact $3.5 trillion "social contract" bill (and they are willing ...