Written by Michael Forrester – Founder, President, and CIO of High Note Wealth
Happy Monday! August is closing up shop and this weekend we crossed into the range of 2020 being 67% complete. Whoa. That percentage doesn’t seem like enough. It’s easy to forget, but we learned in the Spring we are doing 2020 in “dog years”. Based on that math, at the end August the year will be 4.69 years long. That feels about right.
In true 2020 fashion, we really packed it all in again this week with a tragic shooting in Wisconsin, a false alarm resulting in riots/looting in Minneapolis, protests around the country, the pause of professional sports, the finish of “convention season”, virus news galore and a U.S. stock market up seven straight days and closing the week at all-time highs. That’s a lot.
What was missing from the news flow was a report out of D.C. that both sides of the isle came together to reach a deal on extending unemployment benefits or offering additional support to small business. Why? From this vantage point, it seems that the lawmakers need a nudge from Mrs. Market. Until the stock market rebels, we expect the filibustering to continue. The week in review is a bit much to consider for today, so we will keep this brief with a couple of things that have our attention.
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Yabba Dabbabbot Labs Approval
What do we need?! TESTING. When do we need it?! NOW. Great news on testing this week with Abbott Labs receiving FDA emergency use approval for their 15-minute COVID-19 test. A quick test with results delivered to a phone app could be a game-changer in terms of opening up the economy. The reported accuracy of the tests still has some room to improve, but they should be able to dial that in. A quicker test could be the missing link for getting live events and travel back open. It will take some time to scale a project this size, but it is good news no doubt. You can read the press release here.
SalesForce Is With Us
A month ago, we added technology company, Salesforce, to the portfolios in the $187-$188 per share range. If you read this communication from that week, you recall that the idea was that it had bounced back from March lows, but still hadn’t seen the expansion of other tech giants like Apple, Amazon, Microsoft, etc. This week that all changed when they printed a crazy number in earnings which drove the stock price up to $276.
We wish we could tell you we saw that coming a mile away, but it’s not the case. What we did see was a very solid company with a subscription-based model, outstanding free-cash flow, out-of-favor with investors and a price that made sense. Sometimes it’s better to be lucky than good. The takeaway is that even in a market making all-time highs, there are still individual names that are supremely undervalued (and plenty that are overvalued).
Kids These Days Have It Sooooooo Easy
NOT. Things are definitely different for younger generations in terms of what it’s like to grow up in the 2000s – having the internet at a young age, focus on education and sports at an early age, technology everywhere, astronomical college costs, etc. Another thing that is different is quite alarming is the inability to earn higher incomes than their parents. Check out this chart from the Visual Capitalist (@visualcap).
As Americans, we have this notion of climbing the economic ladder or of each generation doing more, but the facts show a different picture. In fact, each successive generation is showing a drop in the percentage of those that earn more than their parents. Hmmm. Seems like something a political party would add to their platform.
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