Episode 136: MAANG Dynasty

Welcome back to Money with Mak & G.  This is dad, and though I was going to take off today because the first week of November is my birthday, there is just too much to talk about.  So, we’ll make it quick. This is for the week ended October 29, 2021. Don’t forget to like, subscribe and comment, and thanks again for being here.

Even though trick or treat ended on the 31st with Halloween, we definitely saw some treats in the month of October.  The Dow, S&P, Nasdaq, and Bitcoin all ended the month at record highs.  Spooky, maybe, a treat, absolutely. What’s happening? Let’s see if we can do this in record time.

• We’ve seen improvements in our re-opening 2.0 for COVID not only here at home but all over the world. That’s good news that drives financial activity.
• We’re also seeing earnings for companies exceeding expectations.  Which will push stock prices higher. Microsoft had earnings over $20B for last quarter which was higher than expected, and really good news can help the entire market.
• President Biden’s social spending was a plus. The tax hikes for corporations were off the table which help earnings and drives stock prices higher.  The market likes that.

Ok, that was simple and to the point.  Make sure to check our stocks and bonds course, if you want to learn a bit more about markets.  Go to EduCounting.com. Great stuff and it was a group effort with Mak & G.  It wasn’t me just talking, but fun discussions and interesting stories to explain some prickly topics. But, I’m sure you’d love it.

Ok, we do have some risks in the market related to inflation. Remember, higher costs reduce earnings normally and drive stock prices lower.  We’re seeing less pressure in the supply chain which is great, and companies think things should lighten up in the near future.  If things get too heated, the government steps in and tries to slow it down by raising interest, which makes it cost more for corporations.  Here we go again… it will lower earnings and will drop stock prices. Yes, you heard here 3 times.  

Wow, that was a lot, probably a bit technical, but I wanted you to see that there can be some straightforward reasons for what’s going on.  Knowing some foundational items help. 

Ok, when we can’t get the pieces needed to build a product, things get delayed and sales are hurt.  Uncle Tony is still waiting for his Tesla, but computer chip production and shipping is slowing things down. Yes, those are supply chain issues.  His delivery date has been pushed back a year. Ouch, but that hasn’t hurt Tesla.  They signed a deal with Hertz, the rental car company which made news last week.

Yes, Hertz. They went through bankruptcy proceedings over the last 13 months. But, sometimes bankruptcy just means there are a lot of money troubles and the company needs help from the courts to make adjustments, reduce payments and get some “protection” from creditors.

Hertz is buying 100,000 Teslas which is a $4B deal.  They’ll start renting cars to customers in early November, which will also be UBER drivers. Electric is going mainstream.  And, they’ll actually sell their USED cars to Carvana.  Wow, coming in the front end and going out the back.  The Carvana deal is the first of its kind for rental companies.  Tesla is about ready to double production with their manufacturing sites opening in Texas and Germany.  Anyway, Tesla’s stock jumped and when you multiply the higher stock price which was over $1,000 per share times the number of shares, that total is over $1 trillion. We call that Market Capitalization. It looks like they are the sixth company in the US to do that, after some very well-known companies…. Facebook, Amazon, Apple, Alphabet, and Microsoft.

It’s crazy to see Tesla in this class, as they had around $31 Billion in sales last year while Walmart, with almost $560 Billion in sales has less than half the market capitalization number.

FAANG, which is F-A-A-N-G is an acronym referring to five of the most popular and best-performing American technology companies. Facebook, Apple, Amazon, Netflix, and Google.  But, names change.  Google is now Alphabet, so FAANA???  But, we have another change.

Unless you’ve hidden under a rock, you would’ve heard of Meta.  Not Metra, like the rail system in Chicago.  Meta. It’s meant to be all the apps and technologies under one new company brand, which includes Instagram and What’s App. It has a digital wallet called Novi, a video calling device called Portal, and a virtual reality system called Oculus.  Skeptics say the change is to move the attention away from the “Facebook papers” which has revealed how Facebook either ignored or downplayed the negative consequences of its social network.

Anyway, Meta is a “prefix” that is put before another word.  It means “after” or “beyond” in Greek.  The Metacarpus are the finger bones after the wrist.  the new name is about bringing the “Metaverse” to life in the virtual world. You could be a hologram and meet a friend at a concert or call them to a meeting and it will be like they are right there with you.  The Matrix and Ready Player One have explored this virtual world concept in their movies.  The idea is that it’s a place where people could interact, work and create together, with the hopes of reaching a billion people within the next couple of decades. It’s a world of endless, interconnected virtual communities. 

So, is it FAANG, FAANA, or now MAANG or MANGA?  Well, if it’s the popularity of US tech companies and we want size, shouldn’t we add Microsoft and Tesla, and ditch Neflix with a $300 Billion market cap?  If you like that, then let’s move to MAMATA.  Microsoft, Apple, Meta, Amazon, Tesla, and Alphabet.  Seems only fair, right. I guess we’re closing Halloween week, so let’s put the FAANG away.

Hey, but before I go, let me leave you with one last thought, with Halloween in mind.  Did you know that in Hebrew, I found that “Meta” means “death”.  Go figure. 

Thanks for being here, and we’ll see you next time for more…..Money with Mak & G.  Bye!!