💰 2024 brings opportunities

and big problems for stocks

Good morning investors! The market sent some shockers yesterday but investors are as resilient as ever despite the challenges.

Fun fact: Venezuela is the world's cheapest country to buy petrol, where amazingly it costs just $0.03 a liter. This is because it's home to some of the biggest oil reserves in the world.

Today we cover:

  • Some great investment opportunities in 2024.

  • Big challenges for big stocks.

  • Ways to make money with stocks - II.

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🔈 Audio version: Apple Podcasts | Spotify | YouTube

📊 Economy and News 

Risks and opportunities in 2024

Investors need to be vigilant as a bunch of opportunities lie ahead.

  • The oil market will face supply shortage by end of 2025, warned Occidental CEO. The commodity hasn’t risen this year as expected despite the conflict but some see this as an opportunity as it is bound to cross $100 again soon, according to experts.

  • Gold is another asset one needs to keep an eye on as some think it will hit $2,200 this year. This will be slightly lower than the highest point it hit in December 2023 when it traded at $2,150. A lot, however, depends on interest as when interest rates dip, gold becomes more appealing compared to alternative investments like bonds.

  • Higher shipping costs due to the Red Sea crisis could add 5 percentage points to OECD member import costs, warned OECD.

  • Also, big mergers mean big opportunities and we might have some this year. Thoma Bravo is buying Everbridge for $1.5 billion. Moreover, drug maker Novartis AG is negotiating to acquire MophoSys AG. Yandex NV is selling ‘Russia’s Google’ for $5.21 billion. Lastly, Danish pharma giant Novo Nordisk’s parent company is buying drug manufacturer Catelent for $16.5 billion.

  • Keep an eye on IPOs as the wave is expected to start again this year. Some big names expected to go public soon include Shein, Skims, Plaid, Discord, Chime, and Turo.

Global hits:

Good news: Faith in economy the has been growing. Moreover, the Organization for Economic Co-operation and Development (OECD) has raised its global growth forecast for the year.

📈 Stocks

S&P 500 4,942.81 (-0.32%)
DJIA 38,380.12 (-0.71%)
NASDAQ 17,613.04 (-0.17%)
BRENT CRUDE 77.68 (-0.40%)
* Prices as of Feb 6th, 12:20 AM UTC

Too many problems?

US stocks fell Monday after Federal Reserve Chair Jerome Powell emphasized the central bank is not ready to cut interest rates yet.

He suggested Fed wants to wait to see more ‘data’ before making a call. Traders now say there is a 17% chance of a rate cut in March, down from 46% a week ago. For June, financial markets are pricing in a 93% chance for a cut.

In addition, big names such as Tesla, McDonald’s, and Boeing appear to be in trouble too. The car manufacturer (TSLA, -3.65%) fell after reports suggested Elon Musk having unusual financial ties with members of the carmaker’s board of directors, fueling concerns on Wall Street about a lack of real oversight on one of the world’s most powerful CEOs. Tesla is now down 27.03% since the beginning of the year.

Boeing (BA, -0.84%) just can’t seem to cut it. A new problem has been found during the production of 737 Max jets that will force Boeing to rework about 50 planes that have not yet been delivered. Also, Emirates called it the ‘last chance’ for the company.

Lastly, after Starbucks, McDonald’s accepted that the situation in the Middle East is impacting its business. The company reported mixed fourth-quarter results on Monday, beating earnings estimates, but missing on revenue as international markets lagged.

Not surprising: UBS beat earnings expectations and announced up to $1 billion share buyback. Furthermore, BP shares rose 6% after the British oil giant announced plans to boost shareholder returns. Lastly, Nintendo has hiked sales forecast of flagship Switch console to 15.5 million unit

💵 Personal Finance

Ways to make money with stocks - II

Let’s continue yesterday’s issue and have a look at some more ways to use stocks to make money:

  • You can get money by getting a loan against your shares. Some brokers have tie-ups with banks or NBFCs who can issue loans. However, there is a downside because the rate is usually higher. Also, this might not be the smartest move as it may give you access to money but it isn’t the same as ‘making’ money. Also, when you take these loans, you will have to hypothecate the shares to your lender. This means you will have to part ways with your stocks if you fail to make payments.

  • Lastly, you can lend your stocks to make money. The stock lending happens through the exchange mechanism and hence it is entirely risk-free. Also, since the shares are not sold, there are no capital gains implications in this case. Candidates for stock lending typically include people who wish to short shares due to a bearish view but they don’t own those shares. Since rolling settlements only permit intraday short selling, they can borrow shares and sell them. Secondly, there are people who could have sold shares without delivery and now need a way out to avoid auction losses.

TLDR: The best way to make money through stocks is to buy and hold stocks. When you invest in stocks, i.e.: when you buy stocks, you will enjoy benefits such as dividends (if it’s a dividend paying stock) and capital gains.

Still, even this method is not completely risk free, but has the best long-term track record and is most suitable for nearly everyone.

💰 Be a Better Investor

“The stock market is a device to transfer money from the impatient to the patient.”

Warren Buffett

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