Hi Multis
Aaaah, it’s Sunday again. Every week you get the Overview Of The Week and every week, I hope you enjoy reading it as much as I do writing it.
Before we dive in, I’m leaving on holiday starting Wednesday. Sardinia is a great place to blow the dust off my Italian. I studied the language 30 years ago, but the last time I spoke it was 12 years ago.
It’s the very first time since I launched Potential Multibaggers as a paid service 6 years ago that I’m taking almost 2 weeks off.
That means there will probably be no Overview Of The Week next week and the week after that. But there might be an odd article. Writing is one of my favorite activities next to reading, so maybe I can’t resist the temptation. But in the first place, I want to be present with my family and the friends who join us. So, it is possible that you don’t get any articles in the next two weeks. Next to my Italian, my chess game should improve in those two weeks as well.
I’ll be on our internal discussion platform for paid Multis but probably not as much as usual. And I might post some vacation posts in our Casual Corner channel, the only channel that’s not about investing.
Multi Flo (and countless other Multis) have noticed that when I’m not at home, the markets tend to react very negatively to that, so brace yourself for the next few weeks. You could find some buying opportunities.
Articles In The Past Week
This is only the second article this week. One of the main causes was the abundance of material Axon has put out since the earnings. But it was a great investment of my time. I had already done a deep dive when I picked Axon, of course, but this taught me a lot more about the future of the company. And it left me even more optimistic about the company.
You can read the article about Axon here.
Next to that, I also continued my deep dives in some companies that are on the watchlist and could become a new pick. Don’t expect it any time soon.
Memes Of The Week
Just one meme this week. Not as much an investing meme, but still funny. Thanks for sharing, Multi bep.
Interesting Podcasts Or Books
This week, I did some catching up with one of my favorite podcasts, Invest Like the Best with Patrick O’Shaughnessy.
Very often, I don’t know the guests, but they always are very interesting. The first episode I listened to was with John Kim, on money raising. It was great to hear the other side of investing, which is not often talked about and how it is a game of trust. You can listen to it here.
The second episode illustrated what I like about this podcast. It was totally different and went in all directions but all interesting. Jeremy Giffon argued that internet fame, and especially that on X, where you have to have an opinion, is now worth more than money. But that was just one thought. You can listen to the full episode here.
The markets in the past week
Let’s check.
The Nasdaq continues to be the biggest loser, down 2.13%. The Russell 2000 lost 1.09% and the S&P 500 0.61%.
The Greed & Fear Index stayed in FEAR territory.
Quick Facts
1. Optimism and Creative Destruction
This is not really a quick fact, but a quick thought.
One of the things I repeat over and over again is that optimism wins. That’s not naive but reality. If you look at history. Things just get better over time, with shorter periods of setbacks. Very much like the stock market, in other words.
But it’s also a warning signal for investors. Very often, the companies that play on defense lose. The new and better paradigm will almost certainly win and if you don’t adapt, you’ll be disrupted and perish. Joseph Schumpeter called this creative destruction, the idea that the economy can only stay vital when the new destroys the old.
That’s also how you have to look at the Mag7 capex boom. The risk of NOT investing so much is much higher than that of investing too much. Multiple Mag7 executives have already said this aloud, but many investors don’t seem to realize that it’s either going all-in or be disrupted. That’s why Alphabet announced more investments and that’s why others will invest more as well. They know that their very existence is at stake.
Morgan Stanley still expects a big jump in capex in 2027, but only a small one in 2028.
2. The Worst July In 22 Years?
This week, I saw this table.
This is about the Nasdaq. As you can see at the top, the average gains for July are 3.45% but right now, it’s down 7.08%. If this holds, it would mean the worst July month since 2004.
But you should also see this in the context of April and May, which were exceptional. You can’t have higher upside with deeper downside. The Nasdaq has been much more volatile than the S&P 500, but which would you prefer to have held in the last 20 years?
This is something many investors still don’t appreciate enough. The short-term volatility is the entrance price you pay for higher long-term returns. So, the choice is yours. What will you focus on? The short-term drops or the long-term climbs?
I see that most choose the short term. 99% of the news about investing, be it on mainstream media or social media, is about the short term. That leaves an edge for investors who look at the long term. It sounds easy, but it’s not. You have to have the stomach for it.
By the way, this image also fits into this picture. You have to know that the S&P 500 is up 8.5% and the Nasdaq 7.5%.
In other words, up to now, the average individual investor is underperforming the indexes by about 20%.
Just to be sure, this is not looking down on the individual investor, as I am one myself. Every single investment strategy will underperform the indexes at certain moments and sometimes for a few years in a row. Look at the year before the dotcom bubble popped and how Warren Buffett did compared to the Nasdaq 100.
That’s an underperformance of 122%. But look at the next three years.
It’s important that you know what game you play and that you accept the ups and downs that come with every approach. The current winners are tomorrow’s losers and vice versa. That’s why yearly returns don’t mean anything.
Below: this week's news on the picks and much more. The perfect moment to join the Multis.