Our Biggest Gainers & Losers of the Day in the $100,000 Build Portfolio

For the 7th August 2024:

I know this is supposed to be my biggest gainers & losers but I have to get this off my chest.

The market looks scary. There’s red everywhere you look. You read a headline with the words “Trillions Lost” and your white underpants & ready for the bin.

But here’s the thing. It looks scary right now. But if you get a little closer it’s really not that scary at all.

So what’s actually going on?

The main driver for the fall was the US reporting a rising unemployment rate up to 4.3%, from 4.1% previously. It’s also the fourth month in a row unemployment has risen so it’s got everyone shouting "The Sky is falling!”. I’ll admit it’s not the best signal in the world but to put things into perspective the historical average unemployment rate in the US is 5.7%.

That means unemployment could rise by another 0.2% every month for the next 7 months and it’d only be at the historical average.

See why I think things aren’t so bad? 😊

Add to that the fact that US interest rates are high enough where they can make meaningful cuts to stimulate the economy & I think it’ll be a while yet before we’re in a full blown recession.

The other big news was the unexpected?? interest rate hike by the Bank of Japan. I say unexpected?? because I think everyone at least should of expected Japan to do something about the Yen. It was the weakest it’s been in recent memory & an intervention was inevitable.

(I actually spoke about this in my forex email & made some money trading the Yen. Here’s a 7 day free trial to the daily forex emails where you get signals with exact entry, exit, stop loss & take profit levels)

What’s Japan’s interest rates got to do with the US & the rest of the world, you ask?

Well, because Japan kept their interest rates at virtually 0% there was a lot of carry trading going on. In simple terms, you borrow money in a low interest currency like the Yen & you invest that money in assets (like all the US tech stocks) in higher yielding currencies.

When the Bank of Japan increased interest rates this strategy becomes a lot less sexy all of sudden. The Yen is more expensive to borrow & the Yen appreciates in value so it’s more expensive to convert back to Yen to pay your loans.

Still with me? 🤔

So anyone doing this strategy had to dump the assets they’d bought with borrowed money from Japan to minimize the damage. Turns out, a lot of the cash was sitting in the US market.

All that to say, if you’ve got cash on the sidelines now is a good a time as any to get involved especially if you’re looking to buy an index like the S&P500 or Nasdaq.

The drop has come from an overreaction to unemployment data & a one off event in Japan that won’t have any long lasting effects on the overall market.

Overreactions = Buying Opportunities

Since we’ve had such a fast & hard drop, I’ve been averaging into TQQQ. It’s an index that does 3x the return of the Nasdaq. It’ll also give you 3x the losses if it goes the other way so not without any risk.

Currently makes up about 4% of the portfolio. Happy to make it up to 10% & with my average entry, my target price will give me somewhere around a 45%ish return.

I’ve mentioned this index a few times in the past but if you want to hear more about it, let me know & I’ll do a deep dive tomorrow.

Gain Free Access Here

Samsung was my biggest gainer today, up just shy of 5%.

It come about after they reported some top notch numbers for the second quarter of 2024.

It was so good that’s been the fastest they’ve grown since 2010! 🤯

Their operating profits skyrocketed. The fuel in the rocket was from a rebound in chip prices & booming demand for generative AI tech. That’s great news for me because it means their semiconductor business is doing great, which is a big part of their overall revenue.

What else should you know?

Well, this boost in profits is mostly due to the high demand for memory chips, which are the lifeblood of AI applications. Companies like Nvidia rely on these chips, and with the AI market heating up, Samsung is perfectly positioned to benefit. It looks like investors are (rightfully) optimistic about it.

Even with the boost today I’m still down quite heavily on Samsung for now. That’s fine. I’ll bring my cost average down as cash frees up. High hopes for this one in the future, especially if they can even come close to maintaining this growth.

Now for my least favourite part. My biggest loser.

It was a tight race a the bottom today & plenty to choose from but the winner (loser?) is Novo Nordisk!

Mostly famous for its diabetes and obesity treatments. they definitely left all of the sweet treats out of today.

Q2 2024 earnings were released & it wasn’t what Wall Street were hoping for. Revenue sat at $3.8 billion, missing the expected $4.1 billion. Their earnings per share (EPS) wasn’t any better at 65 cents compared to the forecasted 69 cents.😬

So, what happened? Is this a buying opportunity at a discount? Hold? Sell?!

Even though they had strong sales growth driven by their popular type 2 diabetes & obesity drugs, they just didn’t meet the high expectations set by analysts.

Maybe it’s our own fault for expecting too much? 😢

The miss expectations caused the panic sell off more than the actual results themselves.

So with that, I think keep your hands off the panic sell button. Maybe even hover your hand over the buy button, instead.

Novo Nordisk’s CEO pointed out the solid demand for their innovative treatments, and they’re confident about their growth outlook for the year. It’s a classic case of the market reacting strongly to a short-term miss, even when the long-term prospects remain strong.

In short, Novo Nordisk had a bit of a rough patch this quarter, but their core business is still solid.

I guess it’s a discount…

That’s all! See you same time tomorrow 👋

P.S Hit reply & let me know what you thought of today’s newsletter. All feedback is welcomed ❤️