SPECIAL EDITION: The Latest News & Stock Deep Dive

1. Genevieve’s Corner

SPECIAL EDITION: SMALL CAP STOCK DEEP DIVE

Hi everyone! 👋 What an incredible week, with the S&P hitting a new 52-week high.

Now only 4% away from a record high! 📈

Let’s recap the week. 👇

• U.S. employers beat expectations and added 199,000 jobs in Nov. The unemployment rate fell to 3.7% from 3.9%

• SEC met Fidelity to discuss its spot Bitcoin ETF (now listed on the DTCC under ticker $ FBTC). Remember: SEC spot Bitcoin approval window is set for Jan 5-10th!)

• Gold hits new record high of +$2,100/ounce

• Bitcoin is up +11% this week, hitting +$44k

• JPM CEO Jamie Dimon says, “The only true use case for it is criminals, drug traffickers … money laundering, tax avoidance” (Note: Less than 1% of the trillions transacted annually in crypto are illicit. The UN estimates that annually, 2-5% of global GDP is used for illicit activities and money laundering through the traditional banking system and cash)

• Moody’s cut China's credit outlook to negative from stable. Just last month, Moody’s downgraded the U.S. to negative from stable. The two largest economies in the world are now rated NEGATIVE because of rising debt

• Google launches Gemini, the AI model it hopes will take down GPT-4

• Bloomberg Commodity Index drops to 2-year low 

• DOE wants to buy up to 3MM barrels of crude oil for the Strategic Petroleum Reserve for delivery in March 2024

• Apple’s Head of iPhone and Watch Design to depart in shake-up

• A new bill introduced in the U.S. House and Senate that bans hedge funds from buying single-family homes in America

• Pending home sales drop to a record low, even worse than during the financial crisis

• Hunter Biden was indicted by a federal grand jury on nine counts, including multiple felonies 

• US Senator Elizabeth Warren says, "There's a new threat out there; it's crypto" and "We can't allow that to continue"

• Elon Musk’s SpaceX has initiated discussions about selling insider shares at a price that values the company at +$175 billion

• GameStop CEO Ryan Cohen is now free to invest the company’s +$900MM cash in stocks, Warren Buffett-style

• U.S. consumer credit rose less than expected to $5.1B vs $8.5B in Oct.

• The P/E ratio on the S&P 500 is currently 21.3x, a multiple expansion of 9% in 2023

• Bank of Canada holds interest rates at 5% (Canada’s GDP dropped 1.1% in Q3)

• U.S. job openings hit a two-year low (well below expectations). Job openings dropped from a peak of 12MM last year to 8.7MM in Oct.

• U.S. firms scaled back hiring in Nov., adding only 103k private payrolls compared to 130k expected

• 40% of Russell 2000 companies now have negative earnings. This is up more than 2x since 2006

• Chinese stocks have fallen to their lowest prices in 5 years

• Up to one-third of office real estate could be wiped out due to emptying downtowns

• 543 startups shut their doors due to bankruptcy or dissolution in 2023. Q3 saw the highest number (212 shutdowns) since the firm began tracking the data

• Mark Zuckerberg sells first Meta shares ($185MM) in 2 years after +172% surge

• NVIDIA executives and directors last month sold or filed paperwork showing they intend to sell roughly 370,000 shares ($180MM). If all of them were sold, it would be the biggest monthly disposal by dollar value in at least six years

• Bloomberg says this is the start of a fresh crypto supercycle that will push Bitcoin above $500,000

🎯 GENEVIEVE’S TAKE: This week, premium GRIT subscribers are in for an exclusive treat – a deep dive into a small cap that has surged +22% since it was featured in our Alpha newsletter for premium subscribers on November 30th. ⚡️ Seize this opportunity to explore the caliber of small-cap analyses regularly delivered in our Alpha newsletter!

Upgrade to GRIT VIP to access this small-cap stock deep dive in the VIP Member Hub! 🚀

Hope you had a great weekend!

Genevieve Roch-Decter

2. Matt Allen’s Corner

WARREN BUFFET’S CHECKLIST

Warren Buffett is the greatest long-term investor ever.

At the age of 11, he bought his first three company shares for a total of $114. Fast-forward 80 years, and at the age of 93, he has a net worth of $117 billion.

Here is a simple checklist of picking stocks like Buffett:

Remember that Warren Buffett is a very advanced investor who uses things like discounted cash flow models, among other things. This list is a simple, broad checklist.

1. “If the business does well, the stock usually follows.”

When you invest in a stock, you own the company. He looks for businesses that have favorable long-term prospects. This is why I believe in investing in stocks you know and understand for the long term. He might go all in if the stock trades lower than he values the business worth. For example, if you love the business at $40 a share, and the stock is trading at $20, you should buy the stock. Buffett is an accounting genius. He taught himself accounting and used the discounted cash flow method to value companies.

2. Ask yourself these questions when determining the long-term prospect of the business:

Does the company have a consistent operating history? Is it the dominant business in its sector? Is the business generating high and sustainable profit margins?

Let’s use Apple as an example. The company has a consistent operating history since 1976. Apple is dominating the cell phone and computer space.

3. “Our favorite holding period is forever."

Warren Buffett says, “If you do not feel comfortable holding a stock for 10 years, you shouldn’t hold it for 10 minutes.”

Emotions are the hardest part of investing. Fear can cause you to sell at the bottom. At the same time, greed can cause you to buy at the top.

🎯 GRIT TAKE:

From Warren Buffett's strategies, investors can… Upgrade to GRIT VIP to read the full GRIT TAKE! 🚀

Cheers,

Matt Allen

3. Comin’ Up

EARNINGS AND ECONOMIC DATA

💰 Earnings:

Monday: Oracle

Tuesday: BHP Group Limited

Wednesday: Adobe

Thursday: Costco, Lennar

Friday: Darden

📈 Major Economic Events:

Monday: N/A

Tuesday: CPI

Wednesday: PPI, FOMC interest-rate decision

Thursday: Initial jobless claims

Friday: Industrial production

The author of this newsletter owns ETF’s (exchange traded funds) that may hold ownership interests in the companies discussed in this newsletter as of the published date of this newsletter. An insider to GRIT Capital Corporation currently holds an ownership interest in Apple Inc (AAPL) and Alphabet Inc Class C (GOOG) as of the published date of this newsletter. The insider to GRIT Capital Corporation does not guarantee that they will maintain their ownership interest in Apple Inc (AAPL) and Alphabet Inc Class C (GOOG) and may increase or sell such interest at any time.

^Sources:

(1) Three takeaways from Fed Chair Powell following July hike decision (Elisabeth Buchwald- July 26 2023): https://www.cnn.com/2023/07/26/business/fed-powell-takeaways/index.html 

(2) Microsoft Investor Relations (July 27, 2023): https://www.microsoft.com/en-us/Investor/default.aspx

(3) Mostly Borrowed Idea’s Twitter Account (July 25, 2023): https://twitter.com/borrowed_ideas/status/1684007357787918342

(4) Microsoft Investor Relations (July 27, 2023): https://www.microsoft.com/en-us/Investor/default.aspx 

(5) Meta Investors Relations (July 27, 2023): https://investor.fb.com/financials/default.aspx 

(6) Alphabet Investor Relations (July 27, 2023): https://abc.xyz/investor/ 

(7) Siblis Research (July 27, 2023): https://siblisresearch.com/data/us-stock-market-value 

(8) Wall Street Breakfast: Cancel the Recession (Seeking Alpha - July 27 2023): https://seekingalpha.com/article/4620376-wall-street-breakfast-cancel-recession