Summer is the best time to develop a garden.
The pleasantness of the weather makes semi-amateur horticulture feel like therapy.
It is therapy.
I’ve a flock of recycled disused water butts, sawn in half and hole-punctured underneath using my most trusted tool – a bright orange Black and Decker cordless drill.
Filled with peat-free compost and seeds of various types, the containers will look more like show homes for plants rather than the discarded shells they are now.
At least that’s what I’m aiming for.
Kale, carrots, onions, fennel, and lavender. But no flowers yet.
That’s next week’s happy gardening task.
The extremely warm summer has meant superhero speeds of growth assisted by daily watering; a lazy but joyful task that’s easy to do in this carbon-induced sunburn.
The seeds I’m worried about most are lavender. They are precious little savages, perpetually refusing to cooperate when it comes to germination.
No amount of due care and attention pleases them.
Like the recession deniers, with a little telling off, I’m hoping they come to their senses.
Stock market memo
We seem to have entered an economic downturn that will have a broad impact on the digital advertising businessMark Zuckerberg
21% of the S&P 500 reported earnings this week and the results were mixed and a lot stronger than I’d expected.
Microsoft – lowest earnings growth in two years but with guidance for increased revenue – 12% – and income moving forward. Ukraine, China supply chain woes, and softer digital ad spend blamed for revenue declines.
Google – slowest revenue growth in two years yet still grew by 12% to $56 billion. Search grew 14% to $40 billion, net income was down 14%, slower down in hiring, and advertisers pulled ad spend.
Meta – first ever reported sales decrease down 1% to £28.8 billion, increase in users, decreased ad demand down by 14%, click-to message ads see double-digit growth
Apple – profits down 11% to $19.4 billion, revenue rose 1.87% to $83 billion, iPhone sales rose 2.8% to $40.67 billion
Amazon – slowing revenue (7.2% v 7.3% for the first quarter) and a $2 billion loss for the quarter, revenue driven by strength in cloud computing business, inflation continues to drive up costs
We are seeing some pockets of softness here and there… but in the aggregate, we expect revenue to accelerate in the September quarter as compared to the June year over year performanceTim Cook
Let’s be honest. These companies are still printing money because they produce goods and services that are in demand across the globe, quite apart from the fact that they have built huge moats around their existing businesses.
In the aggregate, they have performed extremely well given the high inflationary/supply-chain chaos the global economy is in the midst of.
Along with energy, tech is doing well.
The only question mark is around Meta and Mark Zuckerberg’s ‘all-in’ stance on the metaverse, still in its infancy and feels a lot like a college dorm project on steroids.
Kinda like the beginnings of Facebook.
Is it, or is it not inflation
We got the news that inflation for June rose by 6.8%, up from 6.3% for the previous month, in particular, energy increased by 43.5% from last year and food by 11.2%.
For the overwhelming majority of Americans, it’s inflation.
Biden, Yellen, Powell, and the White House PR machine have a job to do which is to prevent panic in the markets so that the economy doesn’t go into complete freefall.
That’s their job.
But I don’t blame them for acting the way they do and saying the things they say.
As investors, we know not to take the word of anyone seriously when it comes to their interpretation of the economy and individual stocks.
Yep, that means my word as well.
From a value perspective, we assess risk by estimating value, assessing risk, and holding onto things for long periods.
So whether you jump on the ‘it’s not a recession because it’s not broad-based’ bandwagon or not is irrelevant.
- Did you buy in at a margin of safety?
- Does your written-out investment strategy have a section on how to deal with uncertainty?
- Is it likely that stocks will be worth more than 10 years from now?
Just because it is or is not a recession doesn’t mean you need to make it the focus of how you position your portfolio.
What else happened this week
- The S&P 500 finished July up 9.1%, the NASDAQ was up 12%.
- Friday saw Exxon and Chevron banked record profits at $17.9 billion and $11.6 billion respectively.
- Walmarts second-quarter net profit fell 40% which sent stocks tumbling on Tuesday.
- Russia further reduced the flow of gas through its Nord Stream pipeline to Germany from 40% of capacity to just 20%, driving up energy costs and hampering Europe’s economic recovery.
- German cities have already begun shutting off lights and enforcing cold showers in their publicly run buildings to save energy.
Thanks for reading the first blog from Wealth Accumulated.
See you next week.
D J Thomas