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The month that was:
In the past month, the S&P 500 went down by about 1.8% and the Nasdaq went down by about 2.2%. This was the first month since February that both indexes went down, which ended their five month winning streak. Bond yields also went up during the month, which made stocks less attractive.
The month started with surprising news. On August 1st, a company called Fitch Ratings downgraded the credit rating of the United States from AAA to AA+. A credit rating is like a report card for borrowers. It tells lenders how likely a borrower is to pay back its loans. AAA is the best possible grade, like an A+. Individual people have something similar called a credit score, which banks look at before giving someone a loan for a house or a car.
Fitch lowered the grade because the government keeps borrowing more money every year, and because of the fight over the debt ceiling that I wrote about in May. This is only the second time the US has been downgraded. The first time was in 2011, when S&P downgraded the US after another debt ceiling fight, and the S&P 500 fell almost 14% that quarter. This time, the market reaction was much smaller. The S&P 500 went down about 1.4% the next day, and many experts, including Treasury Secretary Janet Yellen, disagreed with Fitch's decision. The US is still considered one of the safest borrowers in the world, but the downgrade is a reminder that the government's debt is growing fast.
This month, I made more trades than usual. Many of my companies reported earnings, and their prices moved up and down a lot. I tried to buy when prices dropped and sell some shares when they bounced back. Not all of these trades worked out, and I will talk more about what I learned in a future newsletter.
Sells -
Sold 10 SWK at $101.68
I bought these shares on the last day of July. On August 1st, SWK reported results that were better than expected, because its cost cutting is starting to work, and the stock went up more than 4% that day. I sold these shares for a quick profit.
Sold 15 RBLX at $30.51
Bought 15 RBLX at $29.54
Roblox is a gaming platform that is very popular with kids. On August 9th, Roblox's earnings missed expectations, and the stock went down more than 20% in one day. I bought some shares after the drop, and when the price bounced back the next day, I sold them for a small profit. This was a short-term trade, which is not my usual style. Roblox is not profitable, so I did not want to hold it for the long term.
Target trades:
Bought 4 TGT at $133.10
Bought 2 TGT at $130.69
Sold 3 TGT at $128.53
Bought 1 TGT at $131.20
Sold 6 TGT at $123.91
Bought 6 TGT at $121.77
Target reported earnings on August 16th. Its sales went down for the first time in six years, partly because of the Pride Month controversy and partly because people are buying fewer non-essential items. However, its profit was better than expected, and the stock went up that day. Later in the month, Target went down along with the rest of the market. I traded in and out of Target as the price moved, and ended the month buying shares at a lower price than where I started.
Estee Lauder trades:
Bought 2 EL at $172.86
Sold 10 EL at $169.50
Bought 9 EL at $162.17
Sold 3 EL at $156.45
Sold 10 EL at $150.95
Bought 6 EL at $153.28
Bought 2 EL at $163.10
Estee Lauder is one of the biggest beauty companies in the world, and it owns brands like Clinique and MAC. About 30% of its sales come from Asia, and a big part of that comes from duty free stores at airports and travel destinations in China and South Korea. On August 18th, Estee Lauder gave a forecast that was lower than expected, because travel in Asia is recovering much more slowly than it hoped. I sold some shares when the stock went down, and then bought shares back when I thought the price was too low. Estee Lauder has great brands, and I think the travel business will recover in the long term.
Buys -
Bought 1 ADSK at $205.77
Bought 1 ADSK at $204.90
Bought 1 ADSK at $198.76
I first bought Autodesk in April of last year at around $205, and the price is still about the same. Autodesk makes design software used by engineers and architects, and I use one of its products in my engineering class. I added a few more shares at a good price.
Bought 3 MRVL at $57.77
Marvell makes chips for data centers, and more and more of its business comes from AI. On August 24th, Marvell reported good results and said that its AI revenue would be even higher than it expected. The stock still went down a little after the report, but I think AI will help Marvell grow for many years. I started a new position.
Dollar General trades:
Bought 1 DG at $163.00
Bought 4 DG at $155.04
Sold 2 DG at $154.81
Bought 3 DG at $157.01
I added to my position in Dollar General before its earnings report. On August 31st, DG lowered its forecast again, because its customers are spending less and because more products are being stolen from its stores. The stock went down 12% that day. I will explain what I decided to do in my next newsletter.
Thanks for reading my newsletter!