What we’re reading (8/28)
“S&P 500’s Stunning Summer Rally Points to Best August Since 1986” (CNBC). The market’s been up for five straight months—12.7 percent in April, 4.5 percent in May, 1.8 percent in June, 5.5 percent in July, and 6 percent in August to date. A big part of August’s gain is due to one stock—Apple—being up 18 percent.
“What Is A Stock Split And How Does It Affect Your Portfolio” (Wall Street Journal). Speaking of Apple, its stock is splitting 4-for-1. That is, for every share you own of Apple before the split, you will own four after the split. Theoretically, splits (like buybacks) shouldn’t really affect value: if you had one share of a company’s stock worth $100 and now you have four shares worth $25 each, that’s still $100 in total. But there may be inefficiencies in capital markets that make that not so. If, for example, a split renders a high-priced stock like Apple more accessible to investors who previously couldn’t afford a single share, there may be reason to think that the post-split illustrative value would be $25.25 ($101 for four shares in total, or a gain of 1 percent). But as fractional share ownership proliferates you might expect even these effects to dissipate.
“Why Does Walmart Want TikTok? Look At How Teens Shop In China” (CNN Business). “The Chinese version of TikTok, known as Douyin, is one of several apps in the country that have tapped into the rapidly growing number of Chinese shoppers who like to buy stuff on social media platforms. Users of Douyin and Tencent-owned (TCEHY) rival Kuaishou, for example, can buy goods after watching short videos about products. They tune into live streams of influencers peddling everything from makeup to furniture. Users can ask influencers about products and get responses in real time, or they can click on steep discounts that are offered only in the apps.”
“Moderna and Pfizer’s COVID-19 Vaccine Candidates Require Ultra-Low Temperatures, Raising Questions about Storage, Distribution” (MarketWatch). Moderna’s potential vaccine requires storage temperatures of -4 degrees F, while BioNTech’s and Pfizer’s vaccines require storage temperatures of -94 F. Seems like a pretty big logistical hurdle to me.
“Shinzo Abe To Step Down As Japan’s Prime Minister” (Financial Times). Japan’s longest-serving prime minister in history—the man who gave us “Abe-nomics”—is stepping down due to health complications.
