The market took a beating last week.
And then mostly recovered.
You would have thought investors would have learned their lesson when it comes to China making big announcements.
Last week the announcement was that DeepSeek could destroy America’s AI industry. That Nvidia (NVDA) in particular would be the biggest victim.
Hence why Nvidia’s stock price fell 18% in one day.
But as the week went on, it became clear that maybe DeepSeek wasn’t quite as big a threat as it first seemed. Which isn’t surprising. China has a history of making big claims and forecasts and not sticking to them.
Remember the forecasts of pretty much infinite growth from a few years ago?
As for the UK market, the FTSE 100 is back at a new record high. And even after the Nasdaq slump, it looks as though the trend is heading higher again.
Is that good news? Maybe. But as John Butler noted in his essays this past week, there’s plenty that should give an investor pause for concern.
In particular, John is concerned about the current Labour government’s obsession with taxes, more taxes, and even more wasteful spending.
But all isn’t lost. Even in bad economic times, there are always individual opportunities to invest and build wealth.
As John explained in his essays last week, where he continued his series on evaluating and valuing companies.
Links to last week’s essays below.
Hope you have a great week.
Cheers,
Kris Sayce
Publisher, Southbank Investment Research
The golden ratio?
Did you know that, following the recent rally, less than 20 US-listed megacaps account for about 75% of total large-cap market capitalisation? Perhaps this is justified. Perhaps AI and other new technologies will revolutionise entire industries and these megacaps will reap the rewards. Perhaps, perhaps. There is certainly plenty of hype around. Read more here…
Show me the money!
Cash is king. There are many factors to consider when valuing a company. But the ability to generate cash is one of the most important, especially when the company in question is relatively immature or has recently restructured in some way. Read more here…
Might Labour plug the “black hole” with “black gold”?
The moment Labour’s first budget arrived in late October I predicted it would fail to deliver on its promises. In particular I predicted that tax revenues would disappoint, and the budget black hole would grow. Little did I know this would become plain already this month. Read more here…
“Don’t mention the (trade) war!”
Ever since the Ukraine war broke out, there has been a general sense of foreboding that nothing good would come of it. When the Nord Stream pipelines were blown up and the government failed to figure out who did it, there arose a sense of disbelief and distrust. Read more here…
What is DeepSeek and why did it tank the US market?
Just as a word of caution, if you had qualms about handing over your data to Big Tech in the US, probably worth checking out the DeepSeek privacy policy. But if you’re not as keen on reading it as I am, there are two key points to consider. Read more here…