End of Month Update January 2023
Happy belated New Year! From an investing stand-point, I hope it can’t get much worse than the last one…
A bit late to the party here, given that we’re one month into 2023, but predictions are fun so here goes:
- Rates peak at 5-6% as inflation starts to cool but the fed don’t cut for the rest of the year.
- Continuing AI product releases maintain the hype-cycle and we avoid a crypto-style burnout.
- Meta stock outperforms the rest of ‘Big Tech’ (and separately ‘Big Tech’ outperforms the indexes).
- Apple’s XR headset sells terribly and is generally considered a flop.
- I post something other than an end-of-month update (think the odds on this one are pretty good!)
I’ll review in December to see how I did…
Investing Morality
Layoffs at big tech companies are serious, but in context, they're still not especially large—all three major digital tech employment sectors are still at or near record highs. The bigger hit is to aggregate compensation, which has fallen alongside tech companies' stock prices. pic.twitter.com/fk5TKXIyct
— Joey Politano 🏳️🌈 (@JosephPolitano) January 30, 2023
Another month, another round of lay-offs in tech-land - this time: Alphabet. One of the results of Elon Musk’s culling of workers at Twitter (reportedly now down to 1,300 active employees from about 7,500 pre-Musk) is that he’s convinced activist investors of public-tech bloat. Their pressure has resulted in layoffs which have been cheered by some shareholders, who view the cutting of fat as financially prudent after a few years of massive headcount growth. Understandably, those losing their jobs haven’t been too pleased by this reaction, arguing that there are real lives behind the numbers.
It was with this uneasy investing-morality social media clash in mind that I came across a tweet along the lines of:
“Separate the investment from your personal life. Just because I invest in {cigarette-selling business} doesn’t mean I am advocating that people smoke cigarettes”
I wanted to briefly address what seems to me a flawed idea; Assuming that you’re not an activist investor trying to effect positive change by accumulating shares - in which case, fair enough - if we treat stock-ownership as ownership of a business (which it is, however minimal that ownership stake may be); if that companies’ prime means of generating profits is through the selling of cigarettes to consumers, how could holding shares not be advocating for people smoking? Whether you choose to separate the two because it’s morally convenient or not, your advocation is implicit in the investment.
This isn’t to say that one can only make investments in businesses that align with your values. For a start, it’s a completely personal decision whether or not that matters to you. It’s also probably tough to find a publicly-traded company that doesn’t have some form of dubious action in its history (but there are some businesses that are obviously worse than others from a public health perspective). If it does matter to you, however, taking an investment’s ethical implications into account is a more rational move than avoiding it.
(Also, publicly celebrating lay-offs is a weird look whatever the occasion but especially if you’re financially benefitting from it)
Choose Your Difficulty
That all felt a bit serious! Anyway here are some of the most valuable insights I spotted on FinTwit this month, both on the topic of the advantages that ‘retail’ investors have over institutions:
What I realized is that you can chose the difficulty level yourself (if you’re free of institutional constraints).
— Sheep of Wall Street (@Biohazard3737) January 16, 2023
A potential analogy to the market is a a large number of riddles. Your first task is to select a pool of riddles that you think you might be able to solve based… https://t.co/QaR7IcV86z
I love FinTwit for tweets like these - the rest of the thread is worth a read
Maybe I’ve been too swift in overlooking the majority of UK shares…
The below was an eye-opening comment on an interview advice thread: if a PM (portfolio manager) is so concerned with daily variance in the stock market that they may be distracted by a screen whilst interviewing a potential employee, they (and their institutions) are playing a very different game to the majority of private investors.
2/ mgmt and/or sell-side expectations. Important to get this info out asap as the PM you are meeting most likely will cut into questions right away and jump around/be distracted by the screen during market hours Getting a crisp mini-pitch out will anchor the convo well
— OpenPalestra (@OpenPalestra) January 25, 2023
Context: interview advice for an aspiring buyside analyst
YTD return vs benchmarks
(Index source: Koyfin)
| Portfolio | Nasdaq | S&P 500 | FTSE 100 |
|---|---|---|---|
| 18.60%* (IT’S GREEN, IT’S GREEN!!) | 10.68% | 6.16% | 2.88% |
*corrected after I found I was comparing versus 2022’s starting value…
Portfolio
| Holding | Ticker(s) | Weighting (%) |
|---|---|---|
| Nasdaq 100 | XNAQ | 44.8 |
| Twilio | TWLO | 11.2 |
| Snowflake | SNOW | 10.5 |
| Crowdstrike | CRWD | 7.0 |
| Datadog | DDOG | 6.1 |
| Cloudflare | NET | 6.3 |
| Amazon | AMZN | 5.1 |
| Cash | - | 9.2% |
No adjustments this month. The next could be busy though - 50% of the portfolio reports in February:
- Amazon - 2nd
- Cloudflare - 9th
- Datadog - 16th
Closing Remarks
Lotta quote tweets in this post. I’ve possibly spent too much time on Twitter…
Until next time!