May 03, 2024 | Read Online

Byron Gilliam

Brought to you by:

"Time is the apex predator."

- Fallout

Friday Timeless Charts

There was no real news in this morning's jobs data and, for stocks, that is really good news.

That's not because it means the Fed will or won't do something — it's because, for equities to go up, all they need is time.

Consider shares of Apple, up 7% this morning despite reporting that sales were down 4%.

Apple's business may be getting worse, but it's still good enough to fund a record $110 billion buyback.

I take that as evidence that we shareholders don't have to worry too much about whether iPhone sales will be a little better or a little worse this year, as everyone else seems to do — we just have to sit on our hands and wait for them to have another $100 billion of stock to buy.

Consider Amazon, whose shares have always seemed weirdly expensive. They announced this week that AWS is now doing $100 billion of annualized revenue and still growing at a 17% clip.

Whatever you paid for your Amazon shares — 100x earnings, 200x — it didn't matter. You only had to wait for the business to grow into it.

AMZN now trades on 50x trailing P/E, but to make money, you don't need a financial model to figure out whether that's a good deal or not.

All you need is time — because time is the apex predator of investing.

This is not just an Apple, Amazon or Big Tech thing, either.

Investing in equities is a bet that, with time, people will continue to invent ever-more creative and productive things.

Yes, inflation is sticky, yes, geopolitics are precarious, yes, recession is overdue.

But just this week I learned that you can buy complete homes at Home Depot, that construction workers can now work from home and that frozen PB&Js are a thing (and an incredibly popular one, at that.)

Oh, the ingenuity!

Warren Buffett says his favorite investing period is "forever." If you're not an immortal Ghoul from Fallout, that might not seem very useful to you.

But we don't have to take "forever" too literally (Buffett sometimes sells, too) — we only have to take his advice as a reminder that time is the ultimate weapon in investing.

To be successful investors, we don't need things to be getting better, we just need them to not go horribly wrong while the companies we partially own sell more stuff, invent new things and make more money.

So let's check the charts and make sure nothing's going horribly wrong.

Flat is good enough:

Macro bears put a negative spin on this morning's BLS data, which showed both jobs and wage growth slowing — but that still means more jobs and more money, which is more than enough for investors.

Almost everyone doing their part:

At 83.5%, the prime-age labor force participation rate is back within 1.1 percentage points from the all-time high set in February 1999.

Doing more with less:

This week's data showed that US productivity continues to recover from its uncharacteristic post-pandemic slump. Productivity growth is almost always above zero, which means things are almost always getting better (economic things, at least).

We have more money:

There is now $6.3 trillion sitting idle in US money market funds, looking for something productive to do.

Less money is being unprinted:

For all the talk of profligate money printing, the Fed's shrinking balance sheet is a reminder that they've been doing the opposite — they've been unprinting it. The FOMC announced this week it would begin to reduce the pace of quantitative tightening beginning in June from a maximum of $60 billion to $25 billion per month — the Fed's balance sheet will continue to shrink, but more slowly.

155 yen to 1 dollar:

The yen plunging to new lows is a reminder that, if necessary, governments can print money for decades without any immediate consequences.

Yen-denominated stocks are higher:

The Nikkei making all-time highs as the yen makes new lows is a reminder that money printing isn't bad for investors — companies earn in fiat, so the more of it there is, the more they're likely to earn.

More money, less stocks:

There were over 8,000 publicly listed stocks in 1996 and just 4,600 in 2022. We keep making more money, and we keep having fewer stocks to invest it in — something to keep in mind next time someone's telling you stocks are expensive.

Make money in your sleep:

Stocks make nearly all of their gains between when they close one day and open the next. The FT once quoted a very silly person saying this is because fund managers manipulate stocks higher during after-hours trading and then sell them to retail on the open. But there's no need for conspiracy theories here, the real explanation is simple: On average, stocks open a little higher each day because, on average, the world gets a little better each day.

I'm pretty sure a similar chart would show that Monday-morning openings are the best for investors, because the world has had two and a half full days to get better since markets closed on Friday.

Time is all you need — because time is the apex predator of investing.

Have a great weekend, timely readers.

― Byron Gilliam

Brought to you by:

Shardeum is an autoscaling EVM-based layer-1 blockchain that provides low gas fees forever while maintaining true decentralization and solid security.

With 2 million community members strong, Shardeum recognizes the importance of community. Join them in shaping the future of Web3 by contributing to a free, public report on Web3 usability.

Weigh in Now

Why tracking bitcoin ETF flows matters. And why it doesn't. — Read
Bitcoin is back above $60K, stocks rally on cooler jobs data — Read
What 13F filings tell us about institutional appetite for bitcoin ETFs — Read
Coinbase cross-selling on display during impressive Q1 — Read
StakeKit launches market's most comprehensive self-custodial yield API, powering Zerion's new Earn section [Sponsored] — Read

The Rising Tide of Digital Asset Adoption in Asia

Join this webinar to learn from some of the top builders, investors, and market makers in crypto about what's fueling the growth and trajectory of digital asset adoption in Asia.

Igniting Liquidity Cross Chain At The Speed Of Light

This episode Alex Smirnov joins the show for a discussion on how deBridge is working to power the crypto economy with cross chain bridging & interoperability.

Watch or listen to Lightspeed on YouTube, Spotify or Apple.