What we’re reading (8/21)

• “New York City Is Dead Forever” (New York Post). A controversial recent article by former hedge fund manager James Altucher. Central to the apparent thesis: execs/managers are realizing their employees are actually more productive working from home, so why lease the real estate? (As we wrote about here)

• “Airbnb Picked A Terrible Time To File For An IPO” (Barron’s). Airbnb formally filed registration statements with the S.E.C., kicking off a process that will eventually lead to its long-awaited initial stock offering. But, at least on the surface, this would’t exactly seem like a great time for a travel/lodging/leisure IPO. Perhaps they’re betting trends turn around and quickly.

• “Biden Finally Has His Big Moment” (Politico). The former vice president gave a rousing speech on the final night of the Democratic National Convention. All eyes on the GOP as its convention gets underway next week.

• “Struggling Retailers Rush To File For Bankruptcy As Fears Of A Second Wave Of Coronavirus Linger” (CNBC). “Over a two-week span in early July, seven retailers, including The Paper Store, Brooks Brothers and Lucky Brand, filed for bankruptcy protection. J.Crew, Neiman Marcus and J.C. Penney and four other retailers had already filed in May. Lord & Taylor and the off-price shop Stein Mart led another wave that hit earlier this month. Some would say it has been a flood, but what’s coming could be a tsunami.” 

• “Hedge Fund Marble Ridge To Shut Down” (Wall Street Journal). A relatively large distressed debt fund is shutting down after a DOJ bankruptcy watchdog report revealed a managing partner at the firm tried to suppress an auction for a piece of Neiman Marcus’s e-commerce business, MyTheresa, during Neiman’s chapter 11 proceedings (reportedly, he wanted to buy the shares himself at a big discount).

What we’re reading (8/19)

• “Student Call For Colleges To Cut Tuition Costs As School Year Begins Online” (CNN). Watch for litigation in this area in the near future. Per NYU marketing prof. Scott Galloway: “Universities have backed themselves into a corner…[w]e have raised tuition on average 2 1/2-fold over the last 20 years. I think Covid-19 was just the straw that broke the camel's back, where families across America are saying, ‘Enough already. We're not going to pay $58,000 for Zoom classes.’”

• “A TikTok Ban Is Overdue” (New York Times). Columbia prof. Tim Wu—one of the sharpest minds on the antitrust issues that may well dominate the political-economic discourse in the U.S. in the next decade and the author of the best op-ed I’ve read all year—is back with another thought-provoking piece in the Times: “In China, the foreign equivalents of TikTok and WeChat — video and messaging apps such as YouTube and WhatsApp — have been banned for years. The country’s extensive blocking, censorship and surveillance violate just about every principle of internet openness and decency. China keeps a closed and censorial internet economy at home while its products enjoy full access to open markets abroad.”

• “How Can Wall Street Be So Healthy When Main Street Isn’t?” (Associated Press). Of the numerous recent hot takes speculating about why the stock market seems to be so out of sync with from economic reality lately, this one comes closest to the mark in my opinion. The main point as I see it (and reading between the lines a bit): the adverse economic effects of covid are concentrated in the non-publicly traded part of the corporate economy. Large-cap equities’ stocks are doing just fine because their underlying businesses really are actually doing just fine.

• “‘Semiconductors And Software Are Really The Future Of Cars,’ Analog Devices CEO Says” (CNBC). The automotive industry is continuing its long march toward an inevitable future when cars are just computers on wheels, for better or worse.

• “EU Not Just Going To Take U.K.’s, Hedge Funds’ Word On Things” (Dealbreaker). “As it turns out, without interference from the Anglo-Saxons, the Germano-Gallic impulse to regulate alternative investments can proceed unmolested—and can be imposed on those Anglo-Saxons, anyway, if they’d like to maintain any clients across the Channel.”

What we’re reading (8/18)

• “No Applause, No Crowds: Democrats Begin A Most Unusual Convention” (New York Times). The Democratic Party’s convention is off and running. Night one featured Bernie Sanders and Michelle Obama, among others.

• “Boeing Offers Second Voluntary Layoff Package to Employees” (CNBC). Boeing employees in the company’s commercial airplanes division, services division, and corporate offices are reportedly getting offered voluntary layoff packages, with pay and benefits, as the company continues suffering the covid crisis’s overall effects on air travel and demand.

• “Hedge Fund Finds Two Ways To Lose Money On Tesla” (Dealbreaker). A weird lawsuit involving some weird ties between an SF-based hedge fund and a former Tesla technician who has been publishing reams confidential Tesla documents on the web since leaving the company.

• “5G Smartphones Could Crush Your Home Wi-Fi. So Where’s The 5G?” (Wall Street Journal). 5G is coming and is going to enable “blazing fast” mobile network access speeds.

• “John Boehner Would ‘Rather Set Himself On Fire’ Than Get Involved In the 2020 Election” (The Week). “Boehner retired from Congress in 2015 and has since exuded a ‘boy, am I glad I'm not a part of this anymore’ energy in interviews, sometimes enjoying a cocktail while doing so.”

What we’re reading (8/17)

• “What’s Happening In Belarus?” (BBC). “Belarus has been shaken for days by widespread mass protests, triggered by an election which was widely thought to be rigged massively in favour of the incumbent, longtime leader Alexander Lukashenko.”

• “Uber And Lyft Could Shut Down In California This Week. It May Not Help Their Cause” (CNN). A court in California recently ordered Uber and Lyft to reclassify drivers as employees (and not benefitless “independent contractors”). In response, Uber and Lyft are threatening to shut down their services.

• “Interior Secretary Approves Oil Drilling In Alaska’s Arctic Refuge” (Wall Street Journal). The Trump administration approved an oil leasing program for the Arctic National Wildlife Refuge—an area the size of South Carolina located in northern Alaska. It’s not at all clear we need more oil now, in the midst of worldwide oil glut.

• “UNC Abrubtly Halts In-Person Classes After Coronavirus Outbreak On Campus” (CNBC). UNC is transitioning entirely to remote learning after a covid cluster broke out in the first two weeks of on-campus classes.

• “At Homeland Security, I Saw Firsthand How Dangerous Trump Is For America” (Washington Post). A spirited op-ed from Miles Taylor, who served at the Department of Homeland Security in the Trump Administration from 2017-2019, including as chief of staff. “Like many Americans, I had hoped that Donald Trump, once in office, would soberly accept the burdens of the presidency — foremost among them the duty to keep America safe. But he did not rise to the challenge. Instead, the president has governed by whim, political calculation and self-interest."

What we’re reading (8/16)

• “‘The Devastation Is Widespread.’ Iowans Continue to Struggle Following Deadly Derecho” (NPR). The great state of Iowa (and its second-largest city, Cedar Rapids—the city that birthed the name of this website—in particular) was rocked by Category 2 hurricane-force winds in a rare inland meteorological event known as a derecho last Monday. Many are still out of power and national media coverage in the interim has been exceedingly thin. Here are some ways to help.

• “The Arrest Of Jimmy Lai” (Wall Street Journal). Jimmy Lai—the Hong Kongese businessmen and billionaire pro-democracy activist—was arrested six days ago on the heels of the June 30 enactment of the Hong Kong “national security law” by China’s parliament.

• “Bill And Melinda Gates-Backed Coronavirus Vaccine Maker Soars In Wall Street Debut” (CNN). Germany’s CureVac more than tripled in its first day of trading, foreshadowing the windfall that awaits owners of covid vaccines that ultimately prove effective. Others in the running: Moderna, Novavax, BioNTech, and Pfizer.

• “The Showmanship” (Gizmodo). It’s worth appreciating the finer aesthetic points of how Epic Games went about serving its antitrust suit on Apple. “Epic Games set Apple up to piss off millions of Fortnite players and then immediately directed all that wrath at Apple, and tacked on a #FreeFortnite hashtag too. And just in case you weren’t sure what Epic’s plan was, the company timed the video with the drop of a lawsuit filed against Apple, and then released an FAQ that continued to lay the blame at Apple’s feet…I cannot recall any company—especially one the size of Epic Games—setting up a lawsuit so perfectly.”

• “‘All These Rich People Can’t Stop Themselves’: The Luxe Quarantine Lives Of Silicon Valley’s Elite” (Vanity Fair). “[Uber founder] Travis Kalanick is throwing (outdoor) parties, private-jet owners are hopping from safe zone to safe zone, and dinner party hosts are administering 15-minute COVID-19 rapid tests—all business as usual. ‘Coronavirus is a poor person’s virus,’ says one source.” Yikes.

What we’re reading (8/14)

• “Here’s How Robinhood Is Raking In Record Cash On Customer Trades — Despite Making It Free” (CNBC). Robinhood doesn’t charge customers commissions to trade (and almost no one else in the industry does anymore either as a result), but they do get paid by market makers for the right to execute customers’ trades, a practice known as “payment for order flow.” When retail trading surged this year, Robinhood started making a ton of dough.

• “Justice Goes To Yale” (Wall Street Journal). “In his letter to Yale, Assistant Attorney General Eric Dreiband puts it this way: ‘Asian American and White applicants have only one-tenth to one-fourth of the likelihood of admission as African American applicants with comparable academic credentials’…he added: ‘There is no such thing as a nice form of race discrimination.’”

• “The Times That Try Stock-Pickers’ Souls” (Albert Bridge Capital). A nice reminder to focus on “value.” But the basic “value” premise—that “value” is buying stocks trading below intrinsic value—is still incomplete. The real golden goose is identifying stocks most likely to outperform even if all stocks are currently trading at exactly their intrinsic value (conditional on the current information available and without insider trading, of course).

• “Goldman Takes New Lack Of Standards, Pride Out For A Ride” (Dealbreaker). Historically, GS has turned up its nose at consumer finance. But that’s all changed under newish CEO DJ D-Sol. The latest news is that Goldman is trying to acquire GM’s credit card business.

• “Michigan Plans To Redesign A Stretch Of Road For Self-Driving Cars” (CNN Business). When Motor City and its minders in Lansing are carving off huge chunks of highway space to retrofit for self-driving vehicles, that’s when you know it’s time to get on board.

What we’re reading (8/13)

• “Silver Vs. Gold: How The Two Metals Compare As Investments” (Wall Street Journal). Liquidity (gold more liquid), volatility (silver more volatile), diversification (gold less correlated with other asset classes because silver actually has industrial uses and therefore follows the business cycle, to an extent), storage costs (gold storage less expensive, because gold priced much higher per troy ounce).

• “Reading The Dollar Doldrums” (Project Syndicate). More from ex-IMF/ex-PIMCO/current Allianz economic chief Mohamed El-Erian. “As for the dollar’s role as a reserve currency, I am reminded of a simple principle I learned at university: it is hard to replace something with nothing. At this time, there simply is no other currency that can or will fill the dollar’s shoes. Instead, we will continue to see small pipes being built around the dollar. And, because none of these will be large enough to replace it, the eventual result will be a more fragmented international monetary system.”

• “Apple And Tesla Just Announced Stock Splits. Here’s What That Means For Your Investments” (CNN Business). Some banker out in the Valley is having an absolute field day recommending splits—which, in theory, should have little to no impact on the actual fair value of a share—to some of the world’s biggest companies that, for whatever reason, are actually paying for this asinine advice (it’s particularly surprising in a world where platforms offering fractional share purchases are increasingly ubiquitous, so you don’t need a low price/share to get retail investors biting on the stock).

• “On McDonald’s And Morality” (Dealbook). More on this McDonald’s saga, which was on our reading list a few days ago. “In its complaint, McDonald’s goes out of its way to justify its original investigation and the decision to fire Mr. Easterbrook without cause. Directors took the former C.E.O. at his word, and their investigation concluded that his conduct did not clear the ‘high bar’ set out in its definition of cause. At the time, it was best for the company to terminate him ‘with as little disruption as possible,’ it said.” SPC’s view: indeed, maybe it’s time to stop paying CEO’s—who are largely replaceable—gargantuan sums of shareholder money and then just taking their word when they run off with said sums of money that the actual facts underlying their departure are all on the up and up.

• “How To Fix The USPS Financial Crisis” (The Onion). A few fun suggestions for shoring up USPS’s finances. Our favorites: “Ask God for permission to start delivering on Sundays”; “Stop being such candy-asses about mailing hazardous reptiles”; “Consider appointing a postmaster general without millions in FedEx stock”; “Rename post offices after Confederate generals to interest Republicans in protecting them.”

What we’re reading (8/12)

• “The Definitive Guide To The All-Weather Portfolio” (Of Dollars and Data). A nice primer on Bridgewater Associate’s “all-weather” portfolio, so named to reflect the fund’s ambition to perform pretty well in a wide variety of market environments.There’s one nugget in here that is very relevant to our core investment thesis here at SPC: “Since asset prices are determined by market participants’ collective expectations about the future, the only thing that can cause a major shift in assets prices is something unexpected (i.e. a surprise).” The difference between SPC and Bwater is apparently that we actually want a portfolio heavily exposed to surprises, not one that is “indifferent” to them.

• “Hertz Selling More New Shares That It Is Renting Cars” (Dealbreaker). “Don’t worry, day traders: Even though you’re already underwater on those new shares—which went for an average of $2 apiece—we’re sure that ‘significant and rapid and currently unanticipated improvement in business conditions’ will come around and save you, once Vladimir Putin’s untested and possibly fictitious coronavirus vaccine saves the world.”

• “Uber CEO Says Its Service Will Probably Shut Down Temporarily In California If It’s Forced To Classify Drivers As Employees” (CNBC). Corporate blackmailing of the body politic, or a credible and objective run-down of the basic math for obtuse lawmakers? You be the judge. Uber CEO Dara Khosrowshahi says Uber may have to shut down for at least a bit in CA if a court doesn’t overturn a recent ruling requiring Uber to classify drivers as “employees.”

• “A Look At Robinhood Traders’ Favorite Stocks” (Axios). A lot of stocks that our model says are absolute garbage on this list (looking at you, AAL and UAL). But there’s nothing silly about young traders (Robinhood’s cornered market) trading heavily in speculative names—”risk-on” strategies are arguably exactly what traders in their 20s/30s should be doing. There’s a lot of ballgame left before retirement.

• “Morgan Stanely Boss Is Frequent Caller To SEC Chairman” (Financial Times). “When [S.E.C. chair] Jay Clayton takes calls from America’s top bankers, more often than not James Gorman of Morgan Stanley is on the line. The chairman of the Securities and Exchange Commission has had more private contacts with Mr Gorman, the Morgan Stanley chief executive, than the head of any other big Wall Street bank, according to the regulator’s public calendar.”

What we’re reading (8/11)

• “Sen. Kamala D. Harris Named As Joe Biden’s Running Mate” (Washington Post). “Biden’s announcement, made in a text and tweet, aligns him with a former presidential rival whose most electric campaign performance came when she criticized his record on school integration during a debate.”

• “S&P 500 Closes Lower For The First Time In Eight Days As Tech Shares Drop” (CNBC). All three of the major indices were down, but the Nasdaq was down a full 1.7 percent.

• “Airbnb Plans To File For IPO In August” (Wall Street Journal). Airbnb will purportedly file its registration statements with the S.E.C. this month. Morgan Stanley is apparently “lead left” on a potential initial stock offering this year, with Goldman “also playing a lead role,” whatever that means.

• “I Am The CEO Of Uber. Gig Workers Deserve Better.” (New York Times). Shots fired in the NYT opinion pages (not only at the editorial board, but also a nice jab at Khosrowshahi’s predecessor): “Many of our critics, including The New York Times editorial board, believe that Uber and our gig economy peers have failed drivers by treating them as contractors, and that we will do anything to avoid the cost of employee benefits like health insurance. Given our company’s history, I can understand why they think that. But it’s not true, and it’s not what I believe.”

• “Will Richard Branson Ever Be Richard Branson Again?” (CNN Business). Virgin Group, which is heavily concentrated in travel—airlines, trains, hotels, cruises—is reportedly getting absolutely pummeled by covid. In the words of Branson himself, “If you want to be a Millionaire, start with a billion dollars and launch a new airline.”

What we’re reading (8/10)

• “McDonald’s Sues To Recover Severance From Fired CEO” (Wall Street Journal). This is, in the first place, an interesting case of a company attempting to claw back comp. from a CEO that (allegedly!) lied to the board about his extra-curricular relationships with subordinates. But this is also a story about the sheer magnitude of CEO pay. The as-of-yet-to-be-clawed-back compensation amounted to ~$42 million in pay, benefits, and stock. As we detailed here, it’s not obvious that shareholders of the largest and most important U.S. stocks get what they pay for when it comes to CEO comp.

• “Morgue Testing The US Economy” (Project Syndicate). According to Berkeley economics Professor J. Bradford DeLong, “[a] sound forecast for the US economy…must start by forecasting the future of the pandemic. Yet most of the charts, graphs, and tables concerning the virus and its impact are useless for forecasting purposes.”

• “El-Erian Says The Biggest Threat To Stock Market Rally Is Wave Of Corporate Bankruptcies” (CNBC). Allianz chief economic advisor Mohamed El-Erian (formerly of PIMCO/the IMF) sees a hypothetical flood of corporate bankruptcies as a potential catalyst to end the mini-rally. According to El-Erian, “Bankruptcies go from short-term liquidity problems to long-term solvency problems. If you get that, then unemployment becomes more problematic, and you get capital impairment…[b]elieve me, if there’s one thing Federal Reserve money cannot help markets through, it’s capital impairment events.”

• “Investors Cozy Up To Danish Stocks” (The New York Times). The Danish OMX Copenhagen 25 index is up more than 15 percent in Danish Krone, or more than 21 percent in dollar terms, blowing away the S&P 500, which is currently just barely positive YTD.

What we’re reading (8/7)

• “For Whom The Tok Ticks” (The Atlantic). “TikTok is going to be America’s problem in America, or America’s problem in China, or both.”

• “White House Seeks Crackdown On U.S.-Listed Chinese Firms (Wall Street Journal). More on the U.S.-China story. The Trump admin. is apparently threatening to exclude certain Chinese business from the U.S. markets unless they comply with certain audit requirements.

• “Uber Ride-Sharing Revenue Plummets, Food Delivery More Than Doubles” (CNBC). Uber’s Q2 revenue fell a whopping 29 percent relative to the same period last year.

• “Trump’s Train-Wreck Interview with Jonathan Swan on HBO…” (HBO). Chomping at the proverbial bit to dig into what happened here.

• “Cities Go Extreme With Coronavius Quarantine Crackdowns: Checkpoints, Power Shuts Sleep fines” (Fox).  “[C]ities across the country are taking increasingly severe measures to force the curve of the outbreak downward—including power shutoffs, fines and more.”

What we’re reading (8/6)

• “From Class Rooms To Class Zooms: Teaching During Covid Times!” (Musings on Markets). A new post from the “Dean of Wall Street,” NYU finance prof. Aswath Damodaran, that includes links to much (all?) of his teaching materials/class videos. Also, some good commentary on what covid is doing to universities: “In 2020, COVID may have accomplished what hundreds of years of competitors and critics have not, and exposed the underbelly of the university model.”

• “More Farmers Declare Bankruptcy Despite Record Levels Of Aid” (Wall Street Journal). ~580 farmers filed for chapter 12 bankruptcy protection year ended June 30, 8 percent than a year earlier.

• “The Stock Market Will Be Flying High In A Year — For 2 Simple Reasons” (MarketWatch). A bullish perspective on U.S. equities based on (1) a plausible path to a covid vaccine and (2) unprecedented government stimulus transmitting through markets.

• “The Robinhood Craze Is Now Moving Stocks Everywhere” (Bloomberg). “Retail’s [i.e., retail investors’] tentacles are everywhere. In the U.K, tax-free savings account openings at Interactive Investor jumped 238% for investors between 25 and 34 years of age in April and May…Small-time investors in Moscow bought almost twice as many Russian shares in June than in April. In Malaysia, individual buyers are at least partially behind giant rallies in medical glove makers -- one gained more than 1,500% this year. In Japan, tiny investors boosted an obscure biotech venture with seven straight years of losses by almost 11-fold on optimism for an unproven coronavirus treatment.”

• “We Read Hundreds Of Pages Of Emails That Congress Collected From The Biggest Tech Companies In the World — Here Are The Most Revealing Things We Found” (CNBC). Congress released “a curated selection” of the ~1.3 million documents produced for discovery in its investigation into competition among the tech giants that culminated in last week’s hearing.

What we’re reading (8/5)

• “Coronavirus Has Upended Everything Airlines Know About Pricing” (Wall Street Journal). As part of our ongoing coverage of the airlines, we’d be remiss not to share The Journal’s reporting that “[a]irlines have lost the ability to extract as much money as possible from travelers. And their pricing computers may stay confused for some time to come.”

• “We Need The Export-Import Bank To Help Take On China” (The Hill). A pretty good primer from Newt Gingrich about export credit agencies, and the U.S. Ex-Im Bank in particular, and the role the latter can play as a counterweight to the substantial support the Chinese government provides to PRC-domiciled exporters.

• “Ford, Struggling In A Changing Industry, Replaces Its CEO” (New York Times). “Jim Hackett, who failed to impress Wall Street, will be replaced by James Farley, an auto industry veteran who started his career at Toyota.”

• “The Ballooning Money Supply May Be The Key To Unlocking Inflation In The U.S.” (CNBC). Quoted in the article, Morgan Stanley’s chief U.S. equity strategist Mike Wilson recently observed that “[i]t’s fair to say we have never observed money supply growth as high as it is today.” Conventional macroeconomic models hold that, in the long-term, money creation leads to a general rise in the level of prices (i.e., inflation).

• “Financial Experts Recommend Americans Set Aside Giant Mesmerizing Pearl To Rub Obsessively In Retirement” (The Onion). “Hear more about the benefits of investing in an awe-inspiring pearl to tenderly caress while whispering, ‘Yes, my sweet,’ to it every night.”

What we’re reading (8/4)

• “Kodan Loan Disclosure and Stock Surge Under SEC Investigation” (Wall Street Journal). Eastman Kodak (allegedly!) shared news about an agreement with the Trump administration to make drugs at its U.S. factories with media outlets before the announcing it publicly. Apparently, some options had been granted to executives that very day.

• “It’s Past Time The Tax Code Faced The New Home-Office Reality” (New York Post). “The American home is no longer just a place for family and leisure, but also a place of business.” Hear, hear!

• “Former Uber Self-Driving Car Exec Sentenced To 18 Months In Prison” (CNN Business). A salient tale of trade secrets theft in the Valley’s notoriously hot labor market.

• “Square Stock Is Soaring After Its Earnings Results Were Leaked A Day Early. What You Need To Know” (Barron’s). Two prongs to this story: (1) someone external to Square had accessed the company’s quarterly results early, forcing the company to release the results publicly ahead of schedule, and (2) those results included Square saying “that it had seen a July recovery in the gross amount of cash its retailer clients were moving across its payment networks.” #2 seems to bode well for the recovery. #1 seems to bode poorly for capitalism in general and society writ large.

• “The Fed Is Expected To Make A Major Commitment To Ramping Up Inflation Soon” (CNBC). As they say, don’t fight the Fed.

What we’re reading (8/2)

• “Families File First Wave Of Covid-19 Lawsuits Against Companies Over Worker Deaths” (Wall Street Journal). “Employers across the country are being sued by the families of workers who contend their loved ones contracted lethal cases of Covid-19 on the job, a new legal front that shows the risks of reopening workplaces.”

• “Big Data Has Yet To Hit The Ball Out Of The Park” (RealClearMarkets). A fantastic primer very relevant to what we’re doing here at Stoney Point: “Are big events caused by the same forces that drive day-to-day changes? Or are they reactions to previous and distant big events? Does a sudden dramatic change in an ecosystem result from an unstable system randomly drifting to a crisis point? Or is there some longer-term evolutionary principle at work that builds punctuation into equilibrium via natural selection?”

• “Why The S&P 500 May Now Be Easier To Beat And What This Means For Your Investments” (MarketWatch). Apparently, the long-run impact of being added to an index is negative as company’s subsequently make worse decisions about investment, dividends, repurchases, and financing—perhaps related to the significant presence of index funds that buy the whole index without regard to these idiosyncratic, company-specific details. One implication is that there could be an edge from avoiding the index (although worth noting that one of the authors of the actual study “balked” at this idea, noting that it is never easy to “beat the market”).

• “Why Facebook’s Ad Business Is Doing Better Than Google’s During The Pandemic So Far” (CNBC). In investor notes and flash reports on Thursday and Friday, “analysts said factors like the amount of revenue coming from direct-response versus brand advertising, exposure to areas like travel and Google’s sheer size gave Facebook’s ad business a leg up over Google during the second quarter.”

• “‘America, What a Country'. Michael Dell On His Life And Business” (Dell). An interview with Michael Dell. “‘While 2020 will be seen as a kind of a tragic year with economic disruption and loss of life, there’s a couple of other stories that are going on here,’ Mr. Dell said. ‘One is, it’s kind of amazing how much business and commerce and education and health care and everything else continued while all that was going on. That would not have been the case 15 or 20 years ago.’ And this is just the beginning, he said. ‘I also think that 2020 will be a year of kind of great accelerations,’ he said. ‘We’ve kind of got a glimpse of the future here.’”

July 2020 performance update*

We’ve crunched the numbers for July. The market overall (measured by the S&P 500-tracking “SPY” ETF) was up an unusual amount—5.48 percent from the open on 7/1 through the close on 7/31.

But our picks were up even more. Our subscribers-only Prime picks gained 8.30 percent and our free Select picks gained 5.65 percent over the same time period. You can check out the position-level performance for our Prime and Select picks in July on our performance page.

After three full months publishing our picks, both our Prime picks and our Select picks continue to outperform the “SPY” ETF (an index-tracking ETF we use to proxy the “market”). Our subscribers-only Prime picks, in particular, have outperformed “the market” by about 5.77* percent in the last three months—a magnitude that is not far off from the average performance of the market in an entire year historically.

As an example, if you had put $10K to work in our Prime picks three months ago when we first started publishing them, you’d be almost* $600 richer than you would have been just buying “the market”; and if you’d put $100K to work, you’d be almost* $6,000 richer—in just three months.

You can check out our picks for August here to get in on the action and, if you haven’t already, follow Stoney Point on Twitter for the latest updates (@StoneyPointCap).

*Restated on Sep. 3, 2020 to correctly account for contribution of SPY June dividends to SPY’s June total return. Prime and Select returns unaffected.

Prime and Select Picks v. SPY*
(May 4 - July 31, 2020)

What we’re reading (8/1)

• “Amazon, Apple, Facebook Show Dominant Results, Grip On Society” (Wall Street Journal). That is, uh, quite a headline from the typically staid folks at The Journal, but it’s true. Q2 earnings from these three tech behemoths were great. Per a Jefferies analyst cited in the article: “The internet is the connective glue in Apple devices, Facebook ads, the Amazon shipments…[u]ltimately, we think there is a more permanent tailwind behind these big tech companies.”

• “Gross Domestic Product, 2nd Quarter 2020 (Advance Estimate) and Annual Update” (U.S. Bureau of Economic Analysis). Notwithstanding the fantastic tech earnings, seasonally adjusted GDP fell over 9 percent in Q2. That’s real GDP by the way (inflation was also down).

• “Apple Announces 4-For-1 Stock Split” (CNBC). Every “old” share of AAPL will now equal four “new” shares (each worth 1/4 as much). Importantly, “[s]tock splits are cosmetic and do not fundamentally change anything about the company, other than possibly making the shares accessible to a larger number of investors because of their cheaper price.”

• “Permanent WFH: Easier Said Than Done” (CNN). One interesting data point from this article: 43 percent of respondents in a survey of 150 HR execs said they would keep most of their employees remote after the pandemic. My guess is that number is trending up. Once companies start shedding commercial office leases there will be no going back.

• “How will A Coronavirus Vaccine Work?” (JSTOR). “Four different ways researchers use the virus’s own structure to train our immune systems to exterminate it.”

August Prime + Select picks available now

The new Prime and Select picks for August are available starting now, based on a model run put through early this morning (July 31). As a note, we’ll be measuring the performance on these picks from the open on Monday, August 3, 2020 (the first trading day of the month) through Monday, August 31 (at the closing price). If you’re following the strategy perfectly, you’d want to close out your July positions by end-of-trading today (Friday), and re-balance at start-of-trading on Monday (though some members do all of their re-balancing in one fell swoop).

You can check out the latest picks here here.

What we’re reading (7/30)

• “Congress Grilled The CEOs of Amazon, Apple, Facebook and Google. Here Are The Big Takeaways” (CNN Money). I watched the whole thing—some good, on-point questions, and a whole lot of totally off-point posturing completely tangential to the central antri-trust questions, as expected.

• “Index Giant S&P Faces Potential SEC Lawsuit Over Volatility Guages” (Wall Street Journal). S&P received a Wells notice indicating the SEC plans to bring an enforcement action against S&P for “failing to provide sufficient disclosures on certain volatility-linked indexes in 2018.”

• “JetBlue CEO Warns Of ‘Day Of Reckoning’ For Airlines As Coronavirus Continues To Devastate Demand” (CNBC). Continuing coverage the whole airline saga, and coverage that is supportive of our view that the airlines are generally garbage stocks at that. Apparently, the CEO of a major airline actually agrees with us. But note: the issue isn’t just that the “coronavirus pandemic continues to ravage travel demand”—a big part of the issue is that the airlines spent the better part of a decade going on a debt binge and then using said debt to make NPV-negative investments in their own value-destroying stocks.

• “As The Pandemic Forced Layoffs, C.E.O.s Gave Up Little” (Dealbook). “Some corporate bosses offered to cut their pay, but most did not. Those who did gave up less than 10 percent of what they received last year.” Nothing like a nice cushy job where your comp goes way up when things go well, and just simply doesn’t go down when they don’t. More on this from our perspective here.

• “Tech CEOs Testify Before Congress In Antitrust Hearing” (The Onion). “What’s the big deal? We still have four companies to choose from.”

What we’re reading (7/29)

• “Why Google’s New WFH Plan Is A Game Changer” (CNN). According to Mauro Guillén, a Wharton prof. quoted in the article, “[i]f all its people can operate for a year remotely, maybe a year from now they will say: ‘Maybe we don't need all this office space after all.’” The author goes on: “[t]hat could hurt the commercial real estate market in New York City and parts of California, especially if other big companies follow suit.” Agreed. But what the article doesn’t mention is how great that could be for shareholders.

• “Why Amazon May Have The Most To Lose From Tech’s Hill Showdown” (Politico). “Jeff Bezos has spent the past five years trying to become a fixture in Washington — hiring President Barack Obama’s press chief, flooding the town with lobbying cash, buying The Washington Post, and even choosing a spot along the Potomac River for Amazon’s second headquarters. But all that money isn’t likely to buy Bezos a break on Wednesday.”

• “Where Is All That Gold Being Stored?” (New York Times). Apparently, about half of Americans are thinking about buying gold, and one in six already has since May. If you think widespread social unrest is ahead, that’s probably a good bet, but you’ll have to find somewhere to store all that metal. Enter The Times with a helpful primer.

• “Chapter 4: The Big Cycle Of The United States And The Dollar, Part 1” and “Part 2” (Ray Dalio). A two-part chapter covering, in depth, Ray Dalio’s (founder of Bridgewater, the world’s biggest hedge fund) view that U.S. history is evolving along the lines of “the archetypical big cycle of dominant powers.”

• “Why Europe’s Top Asset Manager Expects U.S. Stocks To Outperform—And One Reason Is Stock Buybacks (MarketWatch). According to a team at Amundi Asset Management, “[b]eyond the lower investment in innovation, technology and health care inherent in non-U.S. equity markets, structural and economic pressures persist as growth capital expenditures are restrained.” The authors go on, “[t]he combination of world-class universities that develop technology and serve as launching pads for startups to commercialize it, a well-developed venture capital industry, and a cultural willingness to take risk make it difficult for other regions of the world to surpass the U.S.”