S&P 500 Nears Record High

Catch Up Quick

• Robert Trump, brother of President Trump, passed away at age 71

• The FDA granted emergency authorization for a saliva-based coronavirus test

• U.S. and Chinese trade officials canceled Saturday's phase one trade deal review

• The NY Fed revised its 2020 Q3 GDP estimate slightly upwards

• Biden’s average polling leads have declined over the past month

• Pizza Hut will close up to 300 locations

• UNC halts in-person classes after on campus coronavirus outbreak

• Sanofi agreed to buy Principia Biopharma ($PRNB) for ~$3.7B in cash

My Monday Opinion

• After the Apple and Tesla stock splits, shares soared— even though fractional trading already lends the ability to obtain equity ownership without spending an amount equal to the price of one whole share, stock splits still increase liquidity (volume) given trading fees (or increased spreads, etc for platforms that don’t charge fees) involved with fractional trades are still proportional to one whole share and, therefore, become much more expensive

Thought of the Day

• Companies such as Spotify, Netflix and Peloton have recently voiced complaints about Apple on the front of anti-competition

• The Cupertino based giant recently announced a bundled subscription service inclusive of streaming, music, news, exercise, etc

• I opine this will not gain significant traction— why pay for all of these services in a single offering?

• Given the current market penetration of Netflix and Spotify, among other platforms, there is a very small chance one would use all of these services in one package, even if the average price per each within the bundle is lower

• For example, think about how painful it would be for a Spotify user to move all their liked songs, podcasts, and playlists to a new platform

• Furthermore, Epic Games recently sued Apple after it pulled Fortnite from the app store due to an unauthorized in app purchase mechanism

• This is not the first lawsuit against Apple's app store, as many critics claim its closed end nature raises software prices (which represent COGS for many app store clients)

• Additionally, as tensions between the U.S. and China heat up, Apple faces huge risks

• It relies hugely on China not only as a crucial component of its supply chain but also as its 3rd largest end market by revenue

• Don’t be fooled by Berkshire’s large Apple stake— it's sizable bet on gold will likely be a huge winner if macroeconomic events tarnish Apple’s core business, greatly offsetting its risk

The Bottom Lines

• Goldman Sachs has repeatedly expressed concerns over Apple’s recent rally, and I personally couldn’t agree more

• Given the aforementioned, there are many less risky equities that bear just as much if not more upside than Apple

• Most investors focus outright on maximizing returns, given returns are exciting

• I believe minimizing risk (given a target return) is more important; focus here, and the former will come naturally

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