The Executive Review: Season 1, Episode 1

Welcome to The Executive Review, a brand new series in the Rambler. This series discusses everything related to business and economics. From world news to insider stories, we will explain it all and help you navigate this complicated part of our economy.

***

This article was written on October 17th, 2024. Things may have changed by the time you read this. For more information on stocks and the stock market, go to Trading View. 

Independent Companies

With the presidential election coming up, Elon Musk, the founder and owner of Tesla, has chosen to endorse Trump for the White House. Just after a speech in Butler, PA, on Saturday, October 5th, Musk decided to use all the resulting media attention to unveil his new ‘Cybercab’ robotaxi. Tesla released images of multiple different robotaxis, with no steering wheels, aimed to revolutionize driverless taxis. Musk also unveiled a new Tesla Robovan, which is also a driverless taxi but can fit up to twenty people. Both of these designs are heavy on the metallic, shiny sci-fi aesthetic of the future. Musk himself even referenced the classic science fiction movie “Blade Runner.” Investors seemed unimpressed by, or at least doubtful of, these prototypes, and shares of Tesla (TSLA) were down more than 8% in late afternoon trading on Friday, October 11th.

Now onto a Seattle-based company that has been going through rough times lately. Boeing is now set to lay off 10% of its workforce. “Our business is in a difficult position, and it is hard to overstate the challenges we face together,” said Kelly Ortberg, who started as CEO of the troubled aircraft manufacturing company two months ago. Since then, he has been dealing with a strike by 33,000 hourly workers. This announcement doesn’t even scratch the surface of what Boeing has been going through over the past 5 years. They have faced losses of more than $33 billion; a string of severe, sometimes fatal lapses; and increased scrutiny from regulators and law enforcement as a result.

7-11, a global chain known for offering a wide variety of everyday items, is now set to close more than 400 locations. These North American locations are said to be underperforming, as was announced by the CEO of 7-11. The chain has more than 13,000 stores across the United States, Mexico, and Canada, so the number of closures amounts to 3% of their North American portfolio. The leaders of 7-11 have also released a statement saying that they noticed a “more prudent approach to consumption” from middle- and low-income earners because of persistent inflation and high interest rates.

Stocks

As you read this, please know that I am not an expert, so if I make any mistakes, please do not risk your life savings on my advice.

The world of stocks is a complicated one. But what makes it so complicated? Is it the numbers, the percentages, the money, or the part where you risk your life savings? Well, this part of the Executive Review is made for you to understand this.

The stock market is a marketplace where investors can buy and sell shares of publicly traded companies. Companies issue stocks as a way to raise capital, offering investors partial ownership in exchange. Each share represents a percentage of the company's ownership, and the value of this ownership fluctuates based on market demand, company performance, and broader economic factors. For example, if a company issues 1 million shares, and an investor owns 10,000 shares, they own 1% of the company. Once a company's shares are listed on an exchange like the NYSE or NASDAQ, they can be traded among investors in what is known as the secondary market.

Stock prices rise or fall based on the company’s performance, investor sentiment, and economic conditions. If a company shows strong growth, such as increasing sales or profits, its stock price might go up, benefiting shareholders. On the other hand, poor performance or negative market conditions can lead to a decline in stock prices. Investors can make money by selling their shares for more than they paid, or through dividends, which are periodic payments made by the company based on its earnings. The overall market can grow as more companies go public or expand, and as more people invest, increasing the total value of all shares in the market. Market indices like the S&P 500 or Dow Jones track the performance of groups of stocks to give a snapshot of how the broader market is performing, with growth measured in percentages over time. For example, if the S&P 500 rises by 5% in a year, it indicates that, on average, the value of stocks in that index has grown by that percentage.

U.S. stocks ended in September and the third quarter with new record highs as investors responded to Federal Reserve Chair Jerome Powell's promise to keep the economy strong, while also signaling that he won’t rush into more interest rate cuts. The S&P 500 went up by 0.4%, setting a new record, and the NASDAQ Composite gained close to 0.4% as well. The Dow Jones Industrial Average rose slightly, ending the day at its latest all-time high. Despite September usually being a difficult month for stocks, Wall Street saw solid gains. The S&P 500 recorded its best year-to-date performance by the end of September since 1997 and had its best quarter since late 2021. Over the past three months, the Dow led the charge with an 8.2% increase, while the S&P rose by 5.4%, and the NASDAQ added nearly 3%. The Federal Reserve’s large interest rate being cut, combined with signs of strength in the U.S. economy, gave investors more confidence, helping stocks see three consecutive weekly gains. As the month and quarter wrapped up, there was also some profit-taking and rebalancing among investors. Looking ahead, the focus is now on the upcoming September jobs report, which is expected to provide more clues about the state of the labor market and whether the Fed’s recent moves are helping to maintain economic growth. Investors are particularly interested in how fast the job market is slowing down and whether the Fed’s actions are meant to protect a strong economy or to support a weakening one.

For this month of October, analysts are saying that important stocks to invest in are ServiceNow, Goldman Sachs, Nvidia, and Uber, as they are all reaching all-time highs. ServiceNow is a small startup in Silicon Valley with a bright future. As of 2023, they have had a revenue of 8 billion dollars a year, and their stock has increased by 3.34% ($29.71) over the past month. Goldman Sachs is an investment banking company with a 46.25 billion dollar revenue expected in 2024. Their stock has increased by 10.05% ($48.50) over the past month. Nvidia is also an important stock to invest in as they work with the up-and-coming rise of AI. This sector of business is expected to skyrocket and already has. Nvidia’s stock has increased 18.12% ($21.22) over the past month. Lastly, Uber is expected to work on and revolutionize robotaxis and electric vehicles, as said by their CEO, Dara Khosrowshahi. With investors looking into the area of business, Uber’s stock has already gone up 12.47% ($8.94) over the past month and is expected to continue growing. 

This concludes it for this month’s Executive Review. Please read the December issue for November and October’s monthly roundup.