SOMETHING INTERESTING

Anyone who tells you “luck” is not part of their equation is either a narcissist or they got lucky (see what we did there). Anyways — studying risk & luck is an important part of a well-rounded investor. Here’s a great thread on the art of gambling and probabilities:

MARKET MOVERS

  • There's been a slight tapering in the housing market, no big crash coming. Economist Mark Fleming says, the underlying fundamentals driving the housing market signal that booming house prices are poised to gradually moderate, rather than bust. Like we said in this digest, no bubble, no “pop.” Listen to the discussion here (7:19).

  • Pfizer CEO Albert Bourla thinks it's "likely" a COVID variant could emerge that evades protection by the company's current COVID-19 vaccine. Surprise, surprise. Other scientific experts have expressed similar views. However, Bourla stated that Pfizer could quickly develop a new vaccine that could fight any new variants. Pfizer to the rescue {sarcasm}! They’re doing everything possible to secure the bag, and so far it’s been working in their favor. Just check out their bull run. Read more here.

  • More US spending ahead = inflation, inflation, inflation. The US Gov will easily justify more spending on defense or anything COVID-19 / Afghanistan-related. In fact, the $3.5T infrastructure bill might go through if they throw in some emotional angle surrounding one of those two topics {Cue the violins}. Don’t be surprised when they pass more trillion dollars plus spending bills. We’ll see higher prices that disproportionately harm the working poor and middle class. So glad the government is for the people, right? Read more here.

  • Business travel may now be a thing of the past. If the pandemic has taught us anything, it’s how to run a lean operation. Innovative new communications tools are making most pre-pandemic business trips unnecessary. With Zoom revenue skyrocketing, this isn’t surprising. As businesses seek to find more and more ways to minimize overhead, it will be interesting to see how this continues to impact the airline industry. Like we said in this digest, airline stocks are probably in big trouble. Read more here.

WHAT TO WATCH

  • Facebook’s grip on the digital advertising market could be slipping. New restrictions from Apple’s app store, competitive pressure, and the rise of ad-supported options for streaming video (like Hulu, Disney +, and Paramount +), all could slow the company’s advertising growth and curtail their ballooning stock trend. Not to mention, ad share momentum is shifting to Gen-Z favored short video apps (like Snap, TikTok, and YouTube). We utilize Facebook for advertising in all of our companies, so this is something to watch, for sure. Read more here. And here.

  • Housing Rentals, HIGH. Commercial Rentals...Watch Out! Reis reported the office vacancy rate is going up. We’re currently seeing the highest vacancy rate for offices since the early '90s. Reis also reported that office effective rents declined in Q2; the fifth consecutive quarter with declining rents. Could seriously hurt certain sectors of the commercial real estate market. Read more here.

  • Innovative tech is continuing to replace employees. In light of the pandemic, QR codes, for example, have been replacing retail and restaurant workers - likely saving service and hospitality businesses quite a bit in overhead costs. Women and people with lower education and economic status are the ones who will be losing jobs to computers, but a fine-dining waiter at a high-end Michelin starred restaurant won’t be affected. As we mentioned in both this and this digest, tech and luxury are winning. Listen to more on Financial Times Podcast (1:12).

  • In light of the above, some businesses are finally wising up and requiring their workforce to adopt new tech-savvy skillsets. Bank of America is retraining some of their staff to do coding and data analytics. This program helped them scale their technology skills when the pandemic forced everything to become automated. CTO of Bank of America, Cathy Bessant, said that the roles that they’re training for today are really for the jobs of the future. Remember: Adapt or die. Pro-action vs Reaction. Listen to the discussion here (4:44).

FINAL THOUGHTS

“The recognition that all things are transient can fill you with a destabilizing sense that your life (and everything you cherish) is hopelessly precarious. It’s tempting to live in denial. But it’s prudent to acknowledge that we’re skating on thin ice and can never be sure when it might crack.” (William Green, Richer Wiser Happier)

Green interviewed the greatest investors in the world and wrote a fantastic book about it. This might sound doom & gloom but it is, in reality, power — the ability to see the world as it is rather than getting lost in pie-in-the-sky narratives. Keep in mind your own mortality. In doing so, you will actually live longer due to being able to point out your own blind spots.

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