Happy Friday and Happy New Year! It’s Jan. 19, 2024. We have three great stories to wrap up the past few weeks in markets, business, and the economy for you and your family.
Here are the highlights:
- Apple has lost its crown. Microsoft is now more valuable than the iPhone creator… why?
- Bonds are the asset to watch in 2024. Here’s why they affect everything.
- Crypto’s first ETF has been approved. The first Bitcoin ETFs listed last week.
Apple Lost Its Crown: Why Analysts are Turning on the iPhone Creator
Source: https://unsplash.com/photos/apple-logo-in-front-of-a-building-f-3mUXFLY2o
For more than a decade, Apple has been the world’s most valuable company. But even after a 48% increase in its stock last year, it started the year by ceding that crown to Microsoft — and analysts think it might not be in any shape to regain its glory anytime soon.
- What happened? Despite commanding a cult following, Apple’s COVID-era growth has been cooling off as consumers prioritize other types of spending. In the third quarter of 2023, it revealed that its Mac sales were down 34% year-over-year, iPad sales were down 10%, and iPhone sales grew just 3%. And in spite of strong results from its software services like iCloud and the App Store, Apple was the only big tech firm to see its revenues contract in the last four quarters.
- That’s why investors looked for other pastures. Apple’s stock was the worst-performing megacap tech stock of 2023 — and the least magnificent of the Magnificent 7 tech stocks, which includes names like NVIDIA (+238% in 2023), Meta (+194%), and Tesla (+101%). Those names became popular destinations for investors seeking exposure to artificial intelligence (AI) technology.
- And analysts are thinking more of the same is in store. To start the year, Apple received **two** downgrades from investment banks, who cited weaker iPhone sales. But Apple’s underlying diagnosis could be a lack of exciting innovation — and the company is arguably more focused on protecting its App Store monopoly than innovating through upcoming products like its $3,499 Vision Pro mixed reality headset or rumored electric vehicle.
Why does it matter for EarlyBird families?
Apple might be a convenient punching bag considering it underperformed the tech-heavy Nasdaq-100 last year, but its weak 2023 demonstrates the value of passive investing: some companies will have good years and others will have bad years. That’s why buying a diversified portfolio is the easiest and most-effective way to generate wealth — and worry less about individual stocks.
Bonds are the Asset to Watch in 2024: Here’s Why
Source: https://unsplash.com/photos/100-and-20-euro-banknotes-bnW9O5ZOys4
Over the last 22 months, the Federal Reserve raised interest rates in an effort to diffuse sky-high inflation — and now, they’re preparing to declare victory. This year, Federal Reserve members expect that America’s central bank will start cutting rates from their highest point in 22-years. Their decisions could affect every aspect of the U.S. economy, but one asset in particular will be worth watching: bonds.
- What’s up with bonds? When the Fed began raising rates in March 2022 to combat inflation, the price of bonds began to plummet — investors abandoned their less-attractive, lower-yielding bonds for safer and more-attractive higher-yielding bonds. That created the “greatest bond bear market of all time” according to researchers at Bank of America**.**