Cover story: Artificial intelligence is moving from the realm of science fiction to real life, and has become the main focus of almost all money managers, including firms such as BLK, Vanguard, Fidelity, and TROW; The technology “has the potential to deliver an infinite workforce that never tires and virtually never makes mistakes.”
Features: 1) Positive on GOOGL:Despite having Google, YouTube, and the Android operating system under its roof, investors aren’t giving the company sufficient credit for its growth outlook and franchise value; 2) An overview of the demise of Toys “R” Us, which employed a host of financial-engineering tactics in a friendly credit market and still couldn’t survive; 3) Cautious on IAC: The consortium of dot-com companies has for two decades generated higher returns than Berkshire Hathaway—but the shares are “overtly mispriced,” says Anthony DiClemente of Evercore ISI.
Tech Trader: Cautious on SWKS, QRVO, QCOM, SYNA: A trend in which consumers hold onto their smartphones longer doesn’t bode well for chipmakers, though new players in the gadget sector, such as OLED, should remain appealing for investors.
Trader: Tim Bray of GuideStone Capital thinks the market’s glum mood will persist and that investors have yet to experience the lows yet; Spotify’s stock price may remain volatile in the months ahead, and the company might eventually need raise more money in a traditional equity offering; Rich Gates of TFS Capital continues to face problems liquidating shares of U.S.-listed Chinese companies he had shorted, and which turned out to be frauds.
Mutual Fund Quarterly: 1) Many of the 230 actively managed ETFs listed by Morningstar have been overlooked in the passive-investing wave despite having solid records; 2) Interview with Savita Subramanian, U.S. equity and quantitative strategist at Bank of America Merrill Lynch, who is bullish on stocks and thinks the S&P 500 could rise 14% to 3000; 3) Expense ratios for ETFs are now as low as 0.03%, but the funds are compensating by lending out securities, generating shareholder returns and manager fees; 4) Decades of research on factors, which predict handsome returns over long periods, have led to a range of related product launches, especially in the ETF space.
Follow-Up: FB chief Mark Zuckerberg and his advisors had no real choice about testifying before Washington lawmakers, and the outcome is unlikely to be positive for them.
European Trader: Positive on JD Sports Fashion: The company has shown it can successfully enter new markets, and investors are likely to benefit as the U.S. chain becomes British after its purchase of Finish Line.
Emerging Markets: Andy Rothman of Matthews Asia says if an unlikely trade war between the U.S. and China were to escalate, it would hurt the U.S. more than China and create a buying opportunity for Chinese shares.
Commodities: “An unusual confluence of factors could propel prices higher over the next couple of years, including declining output, an ethanol-led demand surge in China, and likely brutal weather.”
Streetwise: Tech IPOs are often an exit strategy for founders and insiders, and increasingly offer little opportunities for regular investors.