Weekend Investor: The Week That Was

I hope you had a wonderful week!

Earnings season is winding down and we’re moving to a seasonally slow time on the market. But there’s still a lot to cover.

In case you missed it

Here’s some of the content I put out this week. Enjoy!

• Winner Take All Markets: I have said here that I’m looking for companies in winner take all markets, but what does that mean? This article dug into the topic, including 2-sided markets, network effects, and aggregation.

• Sony Spotlight: #1 in video content production, #1 in gaming, and #2 in music. A company like that is worth a closer look.

• AI Bubbles, Moats, and NVIDIA’s Earnings: There’s a lot to cover in AI and these are my opinions as I see the AI world today.

• Photoshop Gets AI: This was one of the most impressive AI launches I’ve seen yet. Watch this video to see a demo that could be the beginning of a massive shift in how art is made.

• Uber + Waymo: I predicted that Uber would partner with Waymo and it happened this week. This could impact Asymmetric Investing Universe stock General Motors (owner of Cruise), but I don’t think it will. Uber will have to disrupt its existing drivers (suppliers) to launch autonomous ride-sharing at scale. And will it undercut its human-driven pricing structure with autonomous vehicles? If this is a success, why wouldn’t Waymo license its technology to every ride-sharing or delivery company?

  • Cruise is a focused company with a clear business model and no legacy baggage. I still think that gives Cruise a leg up over Uber in autonomous driving, but we’ll see.

The debt ceiling

The debt ceiling negotiations were a hot topic for investors this week. I highly recommend you don’t spend a moment of your time thinking about the debt ceiling this weekend or next week. Here’s why:

• A decade from now, no one will remember the brinksmanship that goes into these negotiations.

• The debt ceiling doesn’t impact any company’s operations at all (outside of maybe asset volatility for financial institutions).

• The only action I would take is being prepared for a dip in the market that’s a short-term buying opportunity. Be greedy if the market gets fearful.

The financial recession and economic boom

Over the last 3.5 years, reality has been different depending on where you sit in the economy. If your job is related to financial markets, it was a boom time from 2020 to 2022 and the last 12 months have seemed like a recession. But if you’re a service worker 2020 to 2022 were terrible and the boom times have just begun.

It’s looking more and more likely that late 2021 to spring 2023 were the “financial recession” as the economy recovered. But is there a real economic recession coming, as talking heads have been predicting for months?

Rising wages don’t look like a sign of a recession.

Neither does incredibly low unemployment.

Credit card debt is rising, but is now at its historical trend line, and remember the rise in wages?

The big change is interest rates, but that doesn’t seem to have changed consumer habits much at all.

These charts present a few key unknowns:

• We know housing is slowing after the jump in interest rates, but does a slowing housing market have a noticeable downstream impact on the economy starting in 3-12 months?

• Will auto sales slow as rates stay persistently high and inventory returns to dealerships?

• Are layoffs going to snowball from Silicon Valley to the rest of the economy as profits come back into focus?

• What’s the downstream impact of likely commercial real estate defaults that will be driven by higher rates and falling occupancy?

• Is the banking crisis over?

If you squint, all of these questions could be answered with a very bearish view of the future. But there’s always SOMETHING to worry about, isn’t there?

It looks more to me like the core economy is strong and commercial real estate defaults and regional banking failures will be a continuation of the financial market recession without dragging down the broader economy.

Maybe I’m right. Maybe I’m wrong. But the experts were sure a recession was coming this year and instead, the economy looks great and the S&P 500 is up 10%. This is why I stay invested. No one can accurately predict the future.

Speaking of staying invested, I’ll be posting the third spotlight of the month next week and will reveal the $500 allocation to the Asymmetric Investing Portfolio before I buy the stocks. Both of those emails will only go to premium members, so if you aren’t already a premium member, sign up here to find out what I’m buying.

Disclaimer: Asymmetric Investing provides analysis and research but DOES NOT provide individual financial advice. Travis Hoium may have a position in some of the stocks mentioned. All content is for informational purposes only. Asymmetric Investing is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any asset involves risk and could result in significant capital losses. Please, do your own research before acquiring stocks.

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