#781: Fidelity's Public 2023 Financial Resolutions Study

 An interesting bird's eye view of American attitudes about our current economy.

#745: Dow Jones Birthday Info from Morning Brew

MARKETS

Dow Cruises to 125th Birthday

125 years ago yesterday, the Dow Jones Industrial Average first appeared in the Wall Street Journal. It consisted of 12 stocks that Mr. Pennybags would approve of, such as gas and electric companies. 

Since then, the Dow has expanded to 30 companies and has grown from about 40 points on its inaugural trading day to over 34,000 today. But in the era of meme stocks, is it time for the Dow to retire and move to Florida?

Here’s one thing aging the Dow: It’s weighted by share price rather than market capitalization, like the S&P 500. That means the performance of companies with higher share prices have outsized influence, even if others may be more valuable. 

For example, United Healthcare (worth $390 billion) affects the Dow more than Apple ($2.1 trillion), because Apple has split its stock and United Healthcare’s individual shares cost more.

Some say this makes the index a good reflection of less-flashy “value stocks” favored by investors such as Warren Buffett. 

But Dowters say the index’s share-price weighting, plus its limited number of companies, makes it a poor representation of Corporate America.

#738: Understanding Quarterly Earnings courtesy of Morning Brew

Q&A: Why Should I Care About Earnings?

Every Wednesday, we answer a reader-submitted question about business and the economy. Want clarification on something you read in the Brew? Click here and ask. Question from Reha in Boston: How does a company's quarterly earnings report affect its stock price? Brew's answer: Whew. It's that time of year again. Every three months, publicly traded companies give the Securities and Exchange Commission a detailed account of their financial performance from the previous quarter. Then, execs usually host a conference call to parse the data in front of analysts and whichever media interns drew the short stick. "Earnings" is basically a fancy word for profit: what companies make after expenses. But an earnings report can also show metrics like revenue, subscriber counts (in the case of companies like Netflix), and predictions for future performance, aka "guidance." Creditors use earnings information to help determine a business's creditworthiness, and investors use it to gauge things like whether a company is tracking on long-term goals, the leadership team's effectiveness, and industry standing. Generally, if a company's earnings underperform analysts' expectations, shares might decrease; if they beat expectations, shares  may rise. But sometimes, if earnings were underwhelming but the company drops some exciting information about what's ahead, investors send prices up.

#732: From Morning Brew - Explanation of Market Capitalization

 Click here for an excellent article on what market capitalization means.

#731: Game Stop? Reddit? An Explainer

 This short article from the Today Show website, along with the video from Stephanie Ruhle, provide a good explanation of what is going on with GameStop's stock this week.

Please note this post contains 2 different links - one to an article and one to a video.

#714: Apple's Stock Split

 From a recent edition of Morning Brew - a fabulous source of daily business news:

TECH

Apple’s Stock Must Be Using One of Those Big Charging Blocks

Francis Scialabba

Apple’s market cap surpassed $2 trillion for the first time yesterday, cementing its status as the biggest company in the world. Its stock, which will undergo a 4-1 split in the coming weeks, has increased over 50% in 2020. 

Apple wasn’t the first to break the $2 trillion valuation mark—that honor goes to the oil conglomerate Saudi Aramco—and it (probably) won’t be the last. Big Tech buddies Amazon and Microsoft are both sitting at valuations around $1.6 trillion.

A crazy stat: it took Apple 42 years to reach a $1 trillion valuation, but only two years after that to break $2 trillion.  

How’d Apple do it?

Pretty much by just being Apple. The iPhone maker hasn’t released an entirely new product since the HomePod in 2018, mostly focusing on tweaking or updating existing lines. But if there is one thing Apple does well, it’s make money: Despite the pandemic, Apple’s Q3 profits rose 12% while sales of every single product increased. 

But it doesn’t just sell iPhones: Part of investors’ Apple fever has been fueled by CEO Tim Cook’s increased focus on its services business that includes Apple Music, Apple TV+, iCloud, and the App Store. In 2017, Cook outlined his goal to double 2016 services revenue by 2020, which he achieved six months ahead of schedule. 

It was a prescient move. With iPhone sales plateauing worldwide, Cook’s pivot has investors valuing Apple less like a hardware company and more like a software one.

There will always be controversy

After Cook testified in the antitrust showdown with Congress last month, Fortnite creator Epic Games poked the bear by attempting to circumvent Apple’s 30% cut of in-app purchases. But even as other developers have joined in to criticize Apple’s alleged monopolistic control of the app marketplace, investors remain unfazed. 

Looking ahead...Apple optimism continues to abound. The iPhone 12 coming this fall is widely expected to come equipped with 5G connectivity.

#713: Major Shakeup at the Dow

 See also previous post (#712).  This article from Morning Brew details which stocks remain part of the Dow index.

#712: Apple and Tesla Set to Split Their Shares

 Here's an article that is relevant to ACC 201's chapter 11.  A perfect example of how stock splits increase access and then push the shares back upward as more investors show interest.  Evidently there is quite a bit of interest in fractional trading for Apple and Tesla, along with other popular stocks.

#691: The Economic Fallout of Coronavirus

Click here to access this CBS Sunday Morning story which has a video embedded. Part of the segment's video is also embedded below.

#682: Personal Finance Expert on Smart Retirement Strategies

Click here if video fails to load

#646: GE Stock Rebounds as Investors Push Back

A whistleblower has accused GE of substantial irregularities, but many investors (including the GE CEO) are sticking by the stock and increasing their holdings. This Washington Post article may require you to register for free access to a limited number of articles each month. Here is the article.

#629: Abigail Disney Speaks Out Against Bob Iger's $65.6 Compensation

Click here to access this short segment from NBC Nightly News covering Abigail Disney's comments on income inequality. An additional story on Vulture highlights her tweets about the topic of disparity between CEO pay and pay for the lowest level of workers in the company. As she mentions, Disney is not alone in this disparity. Disney is among a number of companies who have used their savings related to corporate tax cuts to focus on stock buybacks and other measures to improve profitability. They did use some savings to pay a one-time only bonus to employees last year; again, something other big name companies did. The relevance for ACC 201 is the connection to the topic of purchasing treasury shares. Also, this WaPo opinion piece by Abigail Disney adds to the discussion. You may have to register for a free Washington Post account to gain access to a limited number of articles each month.

#588: Mellody Hobson on Stock Market Volatility 2/6/28 & 2/7/18

Click here for 2/6/18 segment. Click here for 2/7/28 segment.

#558: What is Amazon's Long-Term Strategy for Whole Foods?

Click here if video doesn't load.

#394: Words of Wisdom from Jim Cramer

Jim shares tips on saving for retirement, investing, and diversification.

#387: A Must See for Students Who Will Take Finance In the Future - Is the Stock Market Rigged?