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Market Moves Yesterday
S&P 500 @ 5,918.25 ( ⬆️ 0.16%)
Nasdaq Composite @ 19,478.88 ( ⬇️ 0.055%)
Bitcoin @ 93,800.17 ( ⬇️ 2.9%)
Hey Scoopers,
Welcome to today's special edition, where we break down some JUICY insights from Morgan Stanley's latest report, "Charts From the Vault."
Let's dive into what the Wall Street brainiacs discovered!
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🏦 THE BIG PICTURE INSIGHTS:
Buffett’s Favorite Metric is Screaming
The ratio of market value to GDP (Warren Buffett’s fav indicator) hit 233% in 2021
That's WILD, considering it was “only” 160% during the dot-com bubble
It's cooled to 187% in 2023 thanks to some post-COVID normalization but remains high given historical levels.
Big Tech = Capital Monsters
Plot twist: Big Tech now spends MORE on capital expenditure than Big Oil
In 2013, energy companies spent 6.5x more than tech companies
By 2022, tech companies were spending DOUBLE what energy companies spend
Cloud computing and AI are expensive toys, folks!
The Magnificent 7 Are Dominating
Top 10 stocks went from 14% of total market cap in 2014 to 27% in 2023 and almost 40% in 2024
Active fund managers who bet big on these mega-caps crushed it in 2023 and 2024
Those who didn't... well, let's say they had a rough year 😅
The IPO Myth Gets Busted
Everyone thinks companies have terrible returns right after an IPO
WRONG! Data shows they have their best ROIC-WACC spread at IPO
It drops after year 3 (probably when the founders start buying yachts)
Mutual Funds are Playing the Long Game
Everyone says fund managers are getting more short-term focused
The data says NOPE! Average turnover has DECREASED since 2010
Current holding period: about 3 years (longer than you'd think!)
Is Concentration the New Normal?
Active funds now hold 39% of assets in their top 10 positions
Index funds? Only 31% in their top 10
Plot twist: Active managers are more concentrated than passive ones!
The Digital Transformation is Real
Microsoft's R&D-to-capex ratio dropped from 8.2x in 2002 to 0.5x in 2024
Translation: They're spending WAY more on physical infrastructure
Why? Because cloud computing needs actual buildings, not just code bros!
Intangible Assets are the New Gold
In 1975: Physical assets were 2x intangible assets
By 2025: It's expected to flip completely
Software is eating the world!
Survival of the Fittest is Real
60% of public companies "die" through M&A
Companies need to adapt or get acquired
It's giving "corporate Red Queen hypothesis" vibes
The Index Fund Revolution
Index funds now own about 33.5% of all assets
But plot twist: they're not as passive as you think
Still lots of action under the hood
Energy vs. Tech: The Great FLIP?
Tech companies used to be asset-light
Now they're building more physical infra than energy companies
AI and cloud need actual hardware - who knew?
Is GDP understated?
Traditional GDP measures miss a lot of digital value
It makes historical comparisons tricky
We might be richer than we think!
The Future? Concentrated
The market is getting more concentrated, but...
U.S. is still less concentrated than other major markets
Sometimes bigger is better
🔥 FINAL THOUGHTS
This report says everything is getting bigger, more concentrated, and more digital. The old rules are changing, and the most prominent players are winning more than ever.
That's all for today, fam!
Drop a 🏦 if you learned something new!
See ya tomorrow with more alpha!
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.