“It’s easier to hold your principles 100 percent of the time than it is to hold them 98 percent of the time.” — Clayton M. Christensen, How Will You Measure Your Life?
A shorter piece this week, a little heavier on charts than usual though.
#MeToo: Hollywood Goes for the Jugular
What do Amy Schumer, Scarlett Johansson, Ryan Reynolds, Shonda Rhimes — producer of Grey’s Anatomy, former head of DreamWorks Jeffrey Katzenberg, Chrissy Teigen, John Legend, founder of wireless speaker and home sound systems company Sonos John Macfarlane, Chamath Palihapitiya of Social Capital, and Spotify executive Barry McCarthy have in common?
They are all backing Democratic presidential hopeful Elizabeth Warren.
Ricky Gervais may have reminded Hollywood of its hypocrisy at the Golden Globes and put off award winners from using the platform to push their political agenda. But Hollywood, as a collective, is clearly using the silver screen to push an anti-Trump / down with the old, white all boys club agenda.
If you are a movie-buff, as we very much are, think back to the subtle and not subtle ways in which Hollywood has responded to the fallout from the #MeToo movement and a Trump presidency in its movie scripts.
The remake of Aladdin introducing audiences to a stronger Princess Jasmine with a more pivotal role to the story, not defined by her romance with Aladdin. A progressively minded royal longing to steer her country in the right direction and vying to be Agrabah’s first female Sultan, a feat she eventually achieves — not Aladdin. The Avengers needing Captain Marvel, Marvel’s first stand-alone female superhero, to defeat Thanos. Woody, voiced over by Tom Hanks, handing his sheriff badge to Jessie at the end of Toy Story 4 and exiting Pixar’s long-running franchise. The Charlie’s Angel reboot revealing one of the few mainstay male characters of the series, John Bosley, to be a traitor and finally revealing who Charlie is — turns out Charlie is a woman.
This month, however, Hollywood, with the release of Bombshell, has gone for the jugular.
Bombshell, starring Nicole Kidman, Charlize Theron and Margot Robbie, is a fictionalised account of the women who brought down Roger Ailes, the chairman and chief executive of Fox News. We will save you from any spoilers but, as the trailers reveal, President Trump is featured in the movie and sexual predators, Roger Ailes and Bill O’Reilly, are clearly likened, if not linked, to the US President.
Will Hollywood’s overtures work in denying President Trump a second-term? We do not know but expect the upcoming US Presidential Election to be hotly contested.
On to more investment related matters.
A Few Charts
What About Tesla?
Today a dear friend of LXV Research asked us what we think of Tesla, the stock not the car. The short answer is, we do not think of Tesla — the company and the stock have too many emotions associated with it and we prefer our investments served cold and emotionless. Nonetheless, here is a chart comparing the relative performance of Ferrari, since its IPO, to that of Tesla.
Not what you expected, we bet. Certainly not what we expected. Ferrari has outperformed Tesla since its IPO, even after Tesla’s mind-boggling rally of late. The question is which one do you think will perform better from here. We know which horse we would back. (Hint: Ferrari’s logo is a horse, not Tesla’s.)
Software Over Semiconductor
Microsoft reported earnings after market hours yesterday, the software giant reported its tenth consecutive quarter of double-digit growth. Impressive.
We reiterate our call from the start of the year of preferring software over semiconductors.
The below is a chart of the software ETF $IGV to the semiconductors ETF $SOXX. Semiconductors have had a great run, the tide, however, appears to be shifting.
An idea that can potentially be added for this theme is IT security company Mimecast $MIME. The below is a chart of $MIME relative to $IGV. The stock is strongly outperforming the sector ETF, which in turn has strongly outperformed the S&P 500 Index over the last 4 months.
Pakistan
Since Pakistan was upgraded and included into MSCI’s Emerging Markets Index, it has, at a country level, been the worst performing constituent of the emerging markets universe.
With the equity market, on trailing- and forward-earnings multiples, appearing cheap, a private sector shorn of debt and the currency no longer overvalued, Pakistan could be one of the more interesting emerging markets, despite its over reliance on oil imports, in 2020.
The below is a chart of the Global X MSCI Pakistan ETF $PAK relative to the emerging markets ETF $EEM. On a relative basis, Pakistan looks to have bottomed.
Thank you for reading!
This post should not be considered as investment advice or a recommendation to purchase any particular security, strategy or investment product. References to specific securities and issuers are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed