Can't Stop, Won't Stop

Entering the 3rd week of the year now - this just keeps getting better! 3 claps for 2023 👏🏼

Year to date (as of Friday's close) the market is reading as follows:

The S&P 500 is up 4.2%The Dow is up 3.52%The Nasdaq Comp. is up 5.9%Bitcoin is up 25.47%Ethereum is up 28.64%The Scatt Capital Strategy is up 16.57% (up approx. 14.12% since inception)

BOOM! Big week. Last week we had Consumer Price Index (CPI) figures out on Thursday. CPI is a measurement which tracks the general change in prices over time (i.e. inflation). Analysts were spot on with the 6.5% YoY increase expectation. The markets gave us a half-smile and posted tiny gains, but ended the week on a high note.This, in theory, implies that The Fed will most likely be more dovish going forward (smaller and fewer hikes). Their goal is to lasso inflation and bring it back under the 2% mark, all while doing so without tilting the economy into a recession. In other words, jump through a flaming circle the size of a soccer ball from the 30th floor, with a chimpanzee pulling at your hair. Godspeed, Jerome Powell.We're also seeing a significant increase in the number of layoffs happening across big companies such as Goldman Sachs, Blackrock, Coinbase and Crypto.com. This is also a good sign in the eyes of Fed, and will likely result in a more dovish approach going forward. A tight labor market perpetuates the inflation cycle, so increased unemployment is taken positively by the markets right now.

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The Halvening

Bitcoin - a fascinating, frightening & feared topic by many. Often dubbed 'digital gold', Bitcoin is a protocol which runs on a highly available, public and decentralized ledger. Bitcoin transactions are verified by network nodes (computers which host and synchronise a copy of the entire Bitcoin blockchain) through cryptography and recorded in the public ledger, also known as the blockchain. Mining is a process by which Bitcoin transactions are validated digitally on the Bitcoin network and added to the ledger. It is done so by solving highly complex cryptographic hash puzzles to verify blocks of transactions that are updated on the decentralized ledger. In return for solving said puzzles, the miner receives a reward in Bitcoin. This mining process is what's known as Proof of Work (PoW), and it requires A LOT of energy. When I say A LOT, I mean more energy consumption than Denmark, Chile, Finland, & the Netherlands. Bitcoin is the slowest blockchain at only 7-10 transactions per second (others can do as many as ~65k per second), however, it is the most reliable with NO major hacks taking it down in its 14+ year existence (that's super impressive compared to the rest of the crypto world).

Keep in mind Bitcoin does not function like the US dollar (or any forex) in that it's supply doesn't fluctuate based on current monetary policy. Currently, there are around 19 million BTC in circulation, but there will ONLY EVER be 21 million BTC. Back to the matter at hand... After every 210,000 blocks are mined - roughly every 4 years - the reward given to miners for processing the transactions, is cut in half. The event is referred to as THE HALVENING. This makes the supply of Bitcoin less inflationary (as there are less BTC going into circulation), which is a bullish sign for investors. Every halving has historically resulted in a bull run for the coin.

We are building up to the next halvening, which is set to happen in 2024 (anywhere between Feb and June). The build up before each halvening (12-16 months prior), generally tend to be good times to build positions in Bitcoin, as the price pumps closer to the actual event. I have slowly been building a position over the last few months, and will continue to do so.

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Chart of the Fortnight: Apple Inc.

To give you all a bit of context, in each newsletter I will briefly discuss one or two companies within my portfolio and attempt to make some sense of their chart and any news-related events they are involved in. This week we'll be discussing Apple Inc. ($AAPL) which was down 26% in 2022, and is up 7.75% YTD, potentially opening up some opportunity in 2023. Closely rivalling Saudi Aramco, Apple is arguably the largest company in the world by market cap. Originally formed in 1976, Apple has grown into a household name for portfolio managers across the globe. "You don't hold Apple? Are you feeling 100%?". It will forever be remembered as the first company to ever hit a 1, 2 and 3 trillion dollar market cap - absolutely wild when you think about it.

Tim Cook unofficially took control of Apple in 2009, and stated that their mission was to own and control the primary technology behind all of Apple's products. This has quite literally defined his tenure as CEO - having developed the main chips that go into iPhones, tablets, watches, streaming boxes and Macs. They also created the wireless components inside the Airpods and Apple watches, AND made their own mapping software. Mind blowing 🤯 A joke was once made about Google offering a new line of phones for half the price of an Apple product - and someone responded "They could hand them out for free and I would still pay for an iPhone". THAT RIGHT THERE, LADIES & GENTLEMEN is why I am a strong advocate and holder of Apple. And no, not because some strange guy made a funny joke. Apple's fundamentals: stronger & more solid than cement; Technicals: beautiful and healthy indicators (it would be hard to lose money on Apple stock in the long term); and Management Team: could probably run the USA better than Trump & Biden combined. The metaphorical 'moat' they have created has and will continue to differentiate themselves. I strongly believe in their future and their products, especially their eagerly awaited Virtual Reality headset which is set to launch later this year.

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Scatt's Seeds for Thought

I fully understand the pain of having to go through all the admin and effort of setting up a brokerage account, sign all the documents, fund your account, choose stocks etc. however being someone who has gone through that metaphorical tunnel, I can easily say it's one of the best things I ever did. Whatever your reasons may be: retirement; passive income; multi-generation wealth building etc. one of the best things you can is to start investing. The cool thing is that there are so many platforms and products out there, anyone can invest according to their personality. If you're the type to sit back and watch your money ride with the market, that's great, and if you're the type to wake up at 4am to read Bloomberg headlines and day-trade the hell out of all the companies in the S&P, well first of all good luck to you, but that also works and there's options for you.

If you zoom out and take a long enough time horizon, look at how the odds of making money adjust. A 1 month timeline looks like a gamble, but a 15 year horizon dwarfs almost all possibility of losing money. That might sound like a long time, but the sooner you do it, the sooner you'll reap the benefit. No massive check needs to be written to get started either. If you've got $50, awesome you can start with that; and if you've got $50 million, well... you can probably disregard this, you'll be fine. Jokes aside though, a quote I recently heard resonates well here: Say to yourself 'One day.... or Day One?'. It doesn't matter how, but just start.

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Rugby-Related

Unfortunately there were no rugby fixtures this past weekend, and the URC will only reconvene on January 27th.

19 days until the Six Nations 🤑

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That wraps up the 4th edition of The Hoot.

Let the rest of the year be as positive as the first 2 weeks! See you soon. 🦉

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.