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How To Spot Market Stars When Interest Rates Are High

text caption "Weekly Brief" with a animation bull and bear and logo of Wealthor

🚀Last Week's Highlights:


US:

  • OpenAI's Leap Forward:

    • The Big News: OpenAI, the mastermind behind ChatGPT, is on the move. They're planning a share sale, and the buzz is that this could push their valuation to an impressive $90 billion. That's a huge leap from the $30 billion earlier this year.

    • What's the Deal? OpenAI is already making a splash with the paid version of ChatGPT and business licensing. But now, they're eyeing a bigger goal. The share sale is all about funding their ambitious mission to change the world. And with potential valuations tripling since Microsoft's investment in January, they're on a tech rollercoaster ride.

  • Target's Dilemma:

    • Store Closures: Target is pulling down the shutters on nine of its stores. The reason? Massive thefts, or what insiders call "shrinkage."

    • The Real Culprit: Target blames organized crime rings for these thefts. While this issue is shaking up the retail industry, other retailers seem unaffected. So, is there more to Target's story? Investors, keep your eyes peeled.

Europe:

  • Coty's Parisian Pursuit:

    • Paris Bound: American beauty giant Coty is setting its sights on Paris. They're planning to list on the Paris stock exchange.

    • The Goal: Raise funds, reduce debt, and get a brand makeover. By joining the ranks of L’Oréal, LVMH, and Hermès in Paris, Coty hopes to charm Europe's luxury investors. But will they sway from their European favorites?

  • Europe's Economic Woes:

    • Warning Signs: Europe's economy is showing cracks. Service and manufacturing activities are dwindling. And the numbers? They're now below the critical 50 mark, hinting at a potential economic downturn.

    • Market Reaction: The Eurostoxx 50 index has dipped to a six-month low. It seems the market is bracing for more.

Asia:

  • China's Property Drama:

    • Evergrande in the Spotlight: The Chinese property market is in turmoil, and Evergrande is at the heart of it. The company's shares took a break in Hong Kong amidst whispers of its chairman being under police watch.

    • The Big Question: Will the government step in to save Evergrande, or will they let it crumble?


Spotting Stars in a High-Interest Rate Sky: Interest rates are on the rise, but savvy investors know there's always a silver lining. You can uncover the market's next big stars with the right strategy.

Everyone's talking about the impact of these high rates. Consumers might cut back on spending, and companies might be more cautious with their cash. But remember, the market has already factored in these changes. So, what's next for investors?

A market dip can be thrilling if you're an optimist and a long-term thinker. Think back to December 2008 or March 2020. Those who took the plunge and invested then are reaping the rewards now. While we hope the market doesn't plummet that low again, the idea remains the same.

Investor Tips:

  1. Cash is King: Seek companies with more cash than debt. In a high-interest world, these companies can earn more from their cash than they spend on debt. Top picks? Apple, Microsoft, and Nvidia.

  2. Invest Wisely: Target companies that make smart investment choices. A key metric? The "return on invested capital" or ROIC. Companies with an ROIC above 20% are on the right track.

Upcoming Events:

  • Monday: US ISM Manufacturing Purchasing Managers' Index for September.

  • Wednesday: US ISM Services PMI for September.

  • Friday: US Nonfarm Payrolls for September and Canadian unemployment data for September.

🔔Stay informed, stay smart. The market might be challenging, but for those in the know, opportunities are everywhere

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