Joel Shulman CIO, CEO, Founder, EntrepreneurShares Market Update (08/28/23)
EntrepreneurShares — First Thematic Investment Strategy in Entrepreneurial, Disruptive, Innovative Stocks
AUGUST PEELS BACK MARKET GAINS AS SUMMER WINDS DOWN AND INVESTORS LOOK TO WEAK SEPT o Equities have experienced a difficult August o The fall has coincided with a rise in the long bond yields (rising by 50bp since June 1) o September is usually most challenging month of the year (falls by 0.7% on average) o Speculative, loss producing, high debt equities are the most vulnerable o September is shaping up as another difficult month o CPI continues to decline — eye on labor costs and real estate sales levels and price changes (Mortgage rates 7.23%--22 year high) o Next Catalyst will be Sept 19-20 Fed meeting — Fed likely to pause o Next Major Catalyst will be Oct 31/Nov 1 Fed meeting — Fed likely to indicate an end to rate hikes NVDA CONTINUES TO RISE, BUT NO LONGER A “BARGAIN” AFTER EARNINGS ON 8/23 o Entrepreneur Shares has owned this stock since 2005 o NVDA was a $5 stock on 12/31/2014 (stock is now $435--increased 90X in last 10 years) o NVDA is a tremendous company but has appreciated 260% since last October o Valuations are now stretched to limits o Stock has modest potential to rise further w/speculative trading and passive indices pushing stock higher o Stock appreciated approx. 20% from last earnings to recent highs then returned to same levels as last earnings report (approx. $400) o Stock is back to all time highs, but is no longer fueling broader AI Market push o EntrepreneurShares has had a long term overweight, but has recently placed stock as an underweight
o YIELD CURVE HAS INCREASED AT LONG END — BUT NO EXTREME DANGER YET o Most of the recent action related to the yield curve (Fitch & PPI) has been to long-end of the curve o 5yr, 10 yr and 30 yr rates have all increased o Rates have increased approx. 50 basis points from June o 30 yr rates at 4.3% are still well below historical levels (e.g. 8/31 2007 — 4.85%; 8/31/1981 — 14.8%) o Long Term treasuries may be overbought — hedge funds are shorting (offset risk on equities) o Speculative stocks will need to adjust with higher rates (most of impact is over) o Economy is resilient — no major danger yet o Fiscal policy needs to be addressed — Fitch highlights systemic problems with National Debt
Made with FlippingBook - PDF hosting