Monthly Market Debrief

The shortest month of the year sure didn’t feel like it. NVIDIA was everyone’s Valentine, Bitcoin is cool again, and a Lyft intern might have lost their job.

Market Snapshot

This month had some crazy ups and downs. On February 13th, the S&P 500 was down 1.45% and the NASDAQ was down 2.1% after the CPI report showed another increase. Although the markets are still performing well, investors teeter on the edge of every inflation report. The chances of interest rate cuts keep tumbling with every month that the CPI stays above 2%. 

However, NVIDIA came to save the month with a fantastic earnings report that showed revenue is up 265% from a year ago. Demand for everything AI is steaming hot. While I understand the hype and potential of AI, I am still in disbelief that computers and phones are even real. How does this microscopic chip contain millions and millions of atom-sized electric connections that my computer can then determine if they are on or off?? It’s not real. This is all a simulation.

Oh, and remember how Mike mentioned last month that Bitcoin (BTC) struggle-bussed through the start of the year? Well you could say it’s doing alright now–it’s up 16.62% year to date. Bitcoin ETFs have heated up, now holding over $10 billion of investors' money.

Company Highlight - Lyft

On Tuesday, February 13th, a Lyft employee made a simple mistake that caused the stock to soar 62% in after hours trading. In the 2023 4th Quarter report, Lyft forecasted a 500 point (5%) income increase for 2024. This may seem small, but for tech valley startups that haven’t made a profit, 5% is an uber (no pun intended) increase. This lift in their income forecast, if it materialized, would cross them into the green and finally turn a profit. The only problem is that the report should have said a 50 point increase or 0.5%. Big yikes. 

Only five minutes after the initial report, Lyft corrected the error. So how did the stock shoot up 62% that quickly? Most humans couldn't even read the report that quickly.

That is because robots are ‘reading’ the reports looking for specific indicators, then trading millions of dollars based on the information. Not only are the reports released after the markets closed for everyday investors, but the big investment firms have automatic trades built in based on the numbers in the report. By the time the markets open the next day for regular investors, the good news is already priced into the stock. Unless you owned the stock beforehand, you missed the benefit. 

Stick to ETFs and/or index funds. Don’t waste your time reading company reports because 1. They might have typos and 2. Robots are reading it faster and trading on the information before you can even download the report. 

After the correction, the stock still sat 37% higher. Although smaller than 500 points, a 50 point expected increase is still great news. 

Current Event - Moon Landings

On Friday, February 23rd, Intuitive Machines landed an unmanned craft onto the moon’s surface. This is the first time since 1972 that the United States landed on the moon, but unlike last time, this achievement was accomplished exclusively with private companies. A SpaceX Falcon 9 rocket carried the Intuitive Machines craft to the surface. NASA is planning to rely heavily on private companies for future plans to use the moon as a launching point for deeper explorations into our solar system. 

Although manned flights to the moon will be flown by NASA and the United Launch Alliance (ULA), the need for private companies to fly resupply missions is immense. Like everything the government does or fails to do, ULA is behind schedule and over budget for getting astronauts back to the International Space Station and the moon. Using the cheaper Falcon 9 rocket from Space X is a great way to save money on resupply missions.

If we went to the moon over 50 years ago, why is it so hard to do it again? Can’t they just dust off the plans and go for round two? Sadly, no. The benefit of new technology is increased safety and capabilities, but that also means everything going into space is an untested prototype. We are much better at simulating and testing things on the ground, but there is no way to truly rehearse for the life crushing difficulties of outer space. Cars from the 1960s are admired, but I would never take one on a road trip. Space travel is the same way.

Debrief on Deck

Next week, Mike is going to dive into the question about how much money to invest each money. His answer will surely help you Lyft your retirement planning to achieve the Uber results you deserve. 

Until then, stay the course.

2023