Gainers📈 & Losers📉

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

For the 5th July 2024:

• All Aboard the Rocket 🚀

• Falling Knife or Smart Buy? 🔪

All Aboard the Rocket 🚀

Meta was on fire last week. We had 4 days in a row of gains & they capped off the end of the week with a near 6% rise.

Even though Meta was our biggest gainer, it doesn’t look like they were a particularly special snowflake. The Nasdaq was up 0.9% on the same day. Big tech stocks were all on the same rocket too. So what’s fuelling the rocket?

The gains are coming from a positive sentiment around the US economy on the back on US jobs data. So it does make sense that Meta will thrive on that.

June reported more jobs & less unemployment.

Less unemployment = more consumer disposable income. More consumer disposable income, means more spending & businesses wanting to capture spending. And what’s the best way to try & capture that spend?

You guessed it.

Facebook (Meta) Ads.

Meta is perfectly positioned to print money when the economy comes back to life. It’s the go-to spot for businesses to reach new customers & grow. It makes sense that they’d surge on the back of news that the economy is showing signs of growth.

Meta is trading at a 52 week high & in the short term is looking a little overbought for my liking. That being said, trading volume for Meta was 50% high than usual on Friday. High trading volume on a rise or fall is usually an indicator it’ll keep going that way. For a long term play, you can’t go far wrong with giving part of your portfolio to Meta & averaging in.

They’re currently my 6th largest holding & make up 3.5% of the portfolio we’re building to $100,00.

My open position is currently up over 6% & we have closed positions with over 11% profit.

I’m happy to hold right now but would be cautious about adding any more. If we see a pullback or a cooling off of the market in general, I’ll look to add to the position.

Falling Knife or Smart Buy? 🔪

My biggest loser today was China Construction Bank. It was a close race to the bottom but all three we’re Chinese financial institutions.

So what’s going on with them?

Spoiler alert: it involves pay cuts, economic slowdowns & (as always with China) government policies.

The headline news is CCB asked its HQ employees to take a pay cut of at least 10%. 😬 Higher-ranking officials are taking higher cuts. The idea is it’s an easy way to cut costs in a tough Asian economy.

As you can imagine, investors (and employees) aren’t thrilled to hear that. And they showed it with the stock price.

But it’s not exclusive to CCB, all the Chinese banks are feeling it.

China’s economy isn’t growing as fast as it used to. Banks are being pressured by the government to offer cheaper loans to boost economic activity, but at the same time, loan demand is weak.

So they’re lending less money at cheaper prices.

That’s not ideal for profitability.

My currently position is very small at 0.5% of my portfolio. On current financials, they’re actually trading at a great valuation if you believe this is a short term storm for them to weather.

And I do think it is. But I am reluctant to pile in the cash until we can at least see the sun through the clouds. If we get a signal the Chinese economy is starting to grow again, it’ll be a good time to enter or add.

That 8% dividend yield is also very tempting at this price. Doesn’t mean much if they don’t have the profits to pay it out though. Something to think about it.

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 ❤️