Happy Birthday Google: Google is officially 13 years old this week. It is hard to believe a company worth $175 billion with $33 billion in revenues is only 13 years old.
Debt: I thought it would be interesting to see how the market performed broken down by debt ratios. In order to do so, we created three indices from the Russell 3000. The first index was comprised of companies with no net debt. The remaining companies were split in half by those with higher debt and those with less debt. My guess was that companies with higher debt levels performed a lot worse during the recent debacle. This did not turn out to be true. The chart below shows that all three groups, which together comprise an equal weighted version of the Russell 3000, all have moved similarly since the July 7 high.
Equal Weighted Indices: The above chart begs another question. If the broken down components of the Russell 3000 are down 25+%, why is the Russell 3000 itself only down 15% during the same period? It is because the Russell 3000 is weighted by market cap. This means that a company like Apple has 300 times the weighting of a typical $1.2 billion company. So, the performance of the “market” as defined by the Russell 3000 (which contains 98% of all market capitalization) can be and has been dramatically different than the performance of someone who would have bought equal amounts of every individual stock.
Lake Erie: The fall weather pattern has begun. Tomorrow, waves are forecasted to be 15 feet on the lake.
Jobless Claims: Initial jobless claims came in better than expected. Continuing claims were in-line with expectations. Both series have shown improvement, but has taken a long time, and jobless figures are still elevated.
Continuing Jobless Claims (four years)
Market Today: Today was another volatile market day. From peak to trough, the market moved about three percent. Most indices finished the day higher. Most stocks were higher, but there was clear weakness in stocks related to China. I noticed a number of luxury brands and tech stocks having Chinese exposure down strongly today.
Have a good day! Brent
