Bye Bye Bear Market… Rally
After an impressive bear market rally over the past two months, returning 17.04% from the bottom, markets appear to be shifting course once again with back-to-back negative weeks.
But like anything else in 2022, it is nearly impossible to tell where we are headed in the near term.
So, rather than attempting to form our opinions about the broad market and the macroeconomy, here are some wise words from the legendary investor Warren Buffett:
“Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important.”
As Buffett states, what is truly important as an investor is finding excellent investment opportunities that are capable of enduring prolonged periods of economic turmoil, and that are sure to last well into the future.
Here is how major indexes performed this week:
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TOP NEWS
Peloton (PTON) reports big losses amidst company makeover
The post pandemic period has brought many challenges to the once prized fitness company, Peloton (PTON).
After consumers were no longer bound to their homes, like they were during the Covid lockdowns, the business experienced a sharp decline in sales as demand for at-home exercise equipment depreciated quickly.
🚴♂️ This marks the sixth consecutive quarter of reported losses for the company.
😭 Peloton’s Net Loss widened to $1.24 billion with Revenue falling 28% YoY to $678.7 million; the stock is down 90.75% over one year.
🏋️♀️ In the quarterly report, new CEO Barry McCarthy wrote to shareholders, “The naysayers will look at our financial performance and see a melting pot […] But what I see is significant progress driving our comeback and Peloton’s long-term resilience.”
💥 Since filling the role, McCarthy initiated drastic changes to try and save the company:
- Raised membership fees
- Hiked equipment prices
- Laid off workers
- Began selling their products on Amazon
Will Peloton (PTON) make a comeback in 2023?
US & China progress in deal to share audits of US-listed Chinese stocks.
This year, US-listed Chinese stocks are beaten down bad for a plethora of reasons including:
- Potential stock delistings due to lack of transparency on financial statements
- US-China geopolitical tensions
- Tech stock crackdowns by the CCP
- A maturing Chinese economy
But fortunately from one aspect, relationships are improving as US and China seek to resolve issues regarding the amount of financial information released by these companies.
🌇 China is permitting US regulators the opportunity to review documents of US-listed Chinese firms in Hong Kong.
💰 If they reach a deal, it may spare over 261 Chinese companies collectively worth $1.3 trillion from delisting.
👀 Stocks affected include: Alibaba (BABA), JD.com (JD), Yum China (YUMC), and more.
🤝 While this is certainly a positive step, SEC Chair Gary Gensler expressed in July that “It’s quite possible that there’s no deal here. I’m not particularly confident.”
Are you invested in any Chinese stocks?
Tenaz Energy (TNZ.TO) Reports Q2 Earnings Results
The oil industry remains profitable and healthy with supply constraints affecting the European market especially hard, and crude oil still trading above $90 a barrel.
If you are interested in oil stocks, here are the Q2 results for one Canadian micro cap stock benefitting from the current market conditions:
⛽️ Tenaz Energy commenced its two-well summer drilling program in the Leduc-Woodbend field; oil well production will begin in Q3, 2022.
🛢 Production volumes averaged 1,117 boe/d in the quarter, up 11% from Q1.
📈 Net income was $800 thousand for Q2 compared to a loss in the same quarter last year.
❌ Tenaz terminated its merger with SDX Energy after SDX shareholders voted against it; Tenaz considered a takeover but deemed the costs excessive and inadequate.
🤑 The stock is down 38.70% YTD and is trading at a PE Ratio (TTM) of 2.36.
Do you think Tenaz Energy is worth more than $56.53 million today?
Here is what our IG community had to say 👈🔥
🚨Want more on Tenaz Energy? We wrote a newsletter recently about them and four other small-cap oil companies. Check it out by clicking the link below. 👇
DID YOU KNOW?
Over a 15-Year Period, nearly 92% of actively managed investment funds failed to beat the market. (Vanguard)
Despite what many investors might tell you, beating the market is quite difficult, and only a few are capable of consistently generating superior returns.
Fortunately with the introduction of index funds and ETFs, many passive investors are out performing their professional counterparts by investing in broad market funds like the S&P 600 small cap index..
That being said, here are five investors who outperformed the market over an extended period of time; the S&P 500 (the market) returned a historic annualized return of 11.88% from 1957 to 2021.
🐐 Warren Buffett: 20.1% annually (1965 to 2021)
🐐 Sir John Templeton: 13.8% annually (1954 to 2004)
🐐 Benjamin Graham: approx. 20% annually (1936 to 1956)
🐐 Peter Lynch: 29.2% annually (1977 to 1990)
🐐 George Soros: 30% annually (1970 to 2000)
What do you think it is that all of these investors have in common?