Morning Download 

Personal finance + economics + markets

Together with Danelfin

Good morning investors! It seems nothing can derail stocks with the market continuing to be having a dream run.

Fun fact: The S&P 500 was first introduced by financial services company Standard & Poor's on March 4, 1957.

Today we cover:

• Nvidia hits a new high before earnings.

• Investors want Musk gone.

• Why the 4% rule sucks.

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📊 Economy and News 

Stocks hitting all time highs

Shares of Nvidia closed up 2.3% at an all-time high, topping $504 on Monday. 🎉 

The record comes ahead of the company’s fiscal third-quarter results on Tuesday after the bell. Analysts are expecting to see revenue growth of over 170%.

While Nvidia doesn’t typically provide guidance for the upcoming year, any indication of how demand looks for 2024 will be heavily scrutinized.

Worth trading? The options market appears to be very bullish on Nvidia. Implied volatility for the calls is rising, which suggests that the demand for the calls is stronger than that of the puts.

The Nvidia long straddle, which means owning one call and one put for the same expiration date, suggests the stock rises or falls by 6.8% after the result.

Another stock that reached a new high is Microsoft that hit $377.44 after hiring former OpenAI CEO Sam Altman. However, the situation at OpenAI is still not good and now 500 plus employees are threatening to quit over Sam Altman's firing.

Global hits:

• Can Argentina really move from the peso to the dollar?

• McDonald’s has increased its minority stake in China business with the Carlyle deal.

• Asia markets largely rise, following tech-fueled gains on Wall Street.

📈 Stocks

S&P 500 4,547.38 (+0.74%)
DJIA 35,151.04 (+0.58%)
NASDAQ 16,027.06 (+1.19%)
BRENT CTUDE 82.04 (-0.34%)
* Prices as of Nov 21st, 12:20 AM UTC

Calls on board to suspend Elon Musk for agreeing with antisemitic post

Some Tesla investors want the board to suspend Elon Musk for endorsing antisemitic views on social media.

Spearheading the campaign is Jerry Braakman, president of First American Trust, who wants to make Musk realize that he went too far last week by agreeing with an antisemitic post on X, which claims Jewish communities push “hatred against Whites.

Tesla’s board should put Musk on leave for 30 to 60 days and require him to attend empathy training and/or therapy, Braakman argued. 🥊 

Will it happen? We do not see this happening. Santa Ana, Calif.-based First American owns a relatively tiny stake of 16,000 shares in the company, whereas Elon Musk is a co-founder with a strong hold over the company. He owns 411 million shares, amounting to about a 13% stake.

Who will decide? Tesla board is led by Denholm and includes James Murdoch, venture capitalist Ira Ehrenpreis, Musk’s younger brother Kimbal and Musk himself. However, suspending Elon Musk is not on the board’s agenda yet. Furthermore, Elon has strong support from big names such as hedge fund billionaire Bill Ackman, who said that Musk is “not an antisemite.”

On the other hand, Musk called the controversy bogus.

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🔐 Crypto

Bitcoin $37,514 (-0.01%)
Ethereum $2,011 (-0.15%)
Total market cap $1.42T (-0.01%)
* Prices as of Nov 21st, 12:20 AM UTC

What’s happening in the crypto world

• Ripple has been eclipsed by Polkado. Polkadot accounts for a smidge more exposure than Ripple, coming up to 2.1% of the total amount. Ripple, on the other hand, only contributed 1.9% to the $10.27 billion crypto exposure. This puts investors in a very difficult position as Ripple appears to be losing its grip.

• Crypto exchange Bullish buys news website CoinDesk. Launched in 2013 and bought by DCG three years later, CoinDesk will continue to be led by Kevin Worth and operate as an independent subsidiary within Bullish.

• US Is seeking more than $4 billion From Binance to end case. Resolution could come as soon as the end of this month.

💵 Personal Finance

The 4% rule, which proposes that retirees can safely withdraw 4% of their retirement portfolio's initial value annually, adjusted for inflation each year, is a reasonable place to start, but it doesn't fit every investor's situation.

In some cases, it might be a better option to go for a higher or lower rate. Here’s why:

• You might have more or less years: The formula is based on a 30 year horizon. However, retirement age is changing. People are living and working longer, which means you may have more or less than 30 years to enjoy retirement. The average remaining life expectancy of people turning 65 today is less than 30 years, which means you might be able to go for a higher rate. Similarly, people who retires at a very young age may have more than 30 years to enjoy after retirement, which makes the 4% rule not suitable.

• Unreliable data: Analysis by Charles Schwab Investment Advisory, Inc. (CSIA) projects that market returns for stocks and bonds over the next decade are likely to be below long-term historical averages. Thus, it doesn’t give a true picture of what’s to come. Most experts agree that this data offers an unreliable or high withdrawal rate.

• It's a rigid rule: The 4% rule is based on assumptions, i.e.: that you will increase your spending every year by the rate of inflation. It doesn’t link spending to your portfolio performance. Furthermore, it assumes that you never have years where you spend more, or less, than the inflation increase. Most people do not follow this formula and it is common for expenses to change year after year during retirement.

• It applies to a specific portfolio composition: The rule is for people who have invested 50% in stocks and 50% in bonds. There are very few such people. Most investors have a diversified portfolio, which makes the rule unsuitable for most.

• It neglect costs: The rule presumes that any applicable taxes or fees are expenses covered by the withdrawn funds. For instance, if you withdraw $50,000 and incur $4,000 in taxes and fees by the year's end, these costs are deducted from the $50,000, resulting in a reduced amount available for spending. 

So, look at your situation and think of a rate that works for you. Also, do not shy away from changing the rate as your situation changes.

Here’s a video with some interesting information:

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.