• Skip to main content
  • Skip to primary sidebar
  • Skip to secondary sidebar
  • Skip to footer
Wealth Accumulated

Wealth Accumulated

By D J Thomas, a large-cap stock market value investor and financial writer

  • Newsletter
  • Reports
  • Substack
  • About

walmart

Warren Buffett is holding a boatload of cash

February 21, 2023 by D J Thomas

Warren Buffett

Berkshire Hathaway’s cash increased to $128.65 billion in the fourth quarter of 2022 up from nearly $109 billion in the third quarter according to the latest Berkshire Hathaway annual letter. Even more astonishing is Apple represents nearly 40% of Berkshire’s portfolio, a stock that he purchased more of in Q4. My favourite quote from the annual letter: “When you are told that all (stock) repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive)”. Read the full letter here.

US inflation in January rises higher than expected

The Fed’s preferred measure of inflation – the core personal consumption expenditures price index increased 4.7% from a year ago adding to the expectation that the Fed will have to keep rates higher for longer. Inflation as we all know and love it including food and energy rose 5.4%.

HSBC profits from higher interest rates

Quarterly pretax earnings came in at $5.2 billion versus $2.7b billion for the same period last year. Full-year profits at $17.5 billion were lower than last year’s $18.9 billion due to the costs of selling a French bank. Rising credit losses were blamed on higher inflation.

Walmart and Home Depot: the consumer is under pressure

Walmart CFO John David Rainey: “The consumer is still very pressured… and if you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to previous periods. And so that’s why we take a pretty cautious outlook on the rest of the year.”. Home Depot Chief Financial Officer Richard McPhail: “We’ve seen an increasing degree of price sensitivity as the year’s gone on, which is actually sort of what we predicted in the face of persistent inflation.”

Tesco, ASDA and Morrisons don’t want you to eat real food

The rising costs of production such as energy have curtailed the supply of fresh fruit and vegetables to UK supermarket shelves. As a result, they’ve limited what consumers can purchase. ASDA has introduced ‘MAX3’ – “We have introduced a temporary limit of three of each product on a very small number of fruit and vegetable lines, so customers can pick up the products they are looking for.”

Intel cuts dividend by 65%

There is now open talk of NVIDIA replacing Intel in the DOW after its stock plunged from $68 a share in April 2021 to $25 this week. On top of cost cuts, CEO Pat Gelsinger intends to grow the dividend over time after a drastic cut – “The board and I continue to view the dividend as a critical component to the overall attractiveness of Intel”. A declining PC market and demand for its own products – its customers simply have too many chips and need to work through their own inventories. “While we know this dynamic will reverse, predicting when is difficult”. 

Fed minutes: the inflation fight continues

There are signs that inflation is falling, but labor markets “remained very tight, contributing to continuing upward pressures on wages and prices“. Members believe that ongoing rate hikes will be necessary because more evidence of progress across a broader range of prices would is required. A few members of the FOMC members wanted a half-point or 50 basis-point rather than the recently announced quarter-point rise a few weeks ago.

St. Louis Fed President James Bullard wants rates north of 5%

“We have a good shot at beating inflation in 2023”. Bullard wants rates to go higher now so that in his opinion, the FOMC has a better chance of beating inflation in 2023. “Our risk now is inflation doesn’t come down and reaccelerates, and then what do you do? We are going to have to react, and if inflation doesn’t start to come down, you know, you risk this replay of the 1970s … and you don’t want to get into that. Let’s be sharp now, let’s get inflation under control in 2023.”

Like you’ve always known, the US is in a recession

July 20, 2022 by D J Thomas

Like you've always known, the US is in a recession

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.

Picture of a small kale plant in a container

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 busi­ness

Mark 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 performance

Tim 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

Primary Sidebar

Become a smarter investor

Investing in billion dollar businesses

  • Facebook
  • LinkedIn
  • Twitter

Secondary Sidebar

Recent Posts

  • Warren Buffett is holding a boatload of cash
  • The FTSE 100 hits 8000
  • Why Adidas is a relatively unpopular large company
  • How earnings from oil smash records whilst tech disappoints
  • Diageo: the world’s greatest boozer

Footer

Recent Posts

  • Warren Buffett is holding a boatload of cash
  • The FTSE 100 hits 8000
  • Why Adidas is a relatively unpopular large company
  • How earnings from oil smash records whilst tech disappoints
  • Diageo: the world’s greatest boozer

More about Wealth Accumulated

  • Facebook
  • Twitter
  • Pilane Capital
  • Substack

Follow Wealth Accumulated

  • Facebook
  • LinkedIn
  • Twitter

Search this site

Copyright © 2023 · Wealth Accumulated · Log in

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.OkPrivacy policy