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The month that was:
September was a great month, even though it is usually one of the worst months of the year. The Nasdaq went up by about 5.6%, the S&P 500 went up by about 3.5%, and the Dow went up by about 1.9%. All three indexes set new record highs.
On September 17th, the Fed cut interest rates by a quarter point, to between 4% and 4.25%. This was the Fed's first cut since December of last year. The Fed also predicted two more cuts before the end of the year. The jobs report on September 5th showed that companies added only 22,000 jobs in August, and the unemployment rate rose to 4.3%, the highest in almost four years.
The big stock story of the month was Oracle. On September 9th, Oracle said that companies had signed contracts to buy $455 billion of its cloud services in the future, mostly to run AI. That is more than four times as much as a year earlier. The next day, Oracle's stock jumped 36%, its best day since 1992, and Oracle's founder Larry Ellison briefly became the richest person in the world.
In my August newsletter, I explained that the Fed has two goals: keeping prices stable and keeping as many people employed as possible. Right now, inflation is about 2.9%, which is still above the Fed's 2% goal. Normally, that would mean the Fed should keep interest rates high. But the job market is getting weaker. When the two goals point in opposite directions, the Fed has to decide which one is the bigger risk. This month, the Fed decided that a weakening job market was the bigger danger, so it cut rates. The risk is that if inflation goes back up because of tariffs, the Fed might have to stop cutting.
Buys -
Bought 2 SNPS at $400.06
On September 10th, the same day Oracle jumped 36%, Synopsys fell 36% after it reported weak sales in China and in a business that designs chips for other companies. Synopsys makes the software that engineers use to design computer chips, and I think it is a great long-term business, so I bought back two shares at a much lower price than I sold them for in July.
Bought 9 FDS at $338.51
Bought 7 IT at $247.18
Bought 2 EFX at $266.17
FactSet and Gartner have both fallen a lot because investors worry that AI tools could replace some of their research and data services. I think both companies have valuable information that is hard to copy, so I added more shares at lower prices. I also added to Equifax.
Bought 25 CNC at $31.27
Centene is a health insurance company that mostly covers people in Medicaid and other government programs. In July, Centene canceled its forecast for the year, and the stock fell about 40% in one day. I started a new position at a very low price.
Bought 20 CMG at $40.05
Chipotle kept falling after its disappointing earnings report in July. I started a new long-term position at about $40.
Sells -
Sold 3 SAIC at $114.02
Sold 1 TMO at $459.43
Sold 7 FTNT at $76.77
I sold some shares of SAIC, Thermo Fisher, and Fortinet for profits of about 7% to 13%.
Sold 20 CPRT at $44.83
Sold 5 ALSN at $85.08
I sold my Copart shares and some of my Allison Transmission shares for small losses.
Buys and Sells -
Bought 10 TREX at $62.00
Sold 10 TREX at $53.93
Bought 20 SWK at $77.29
Sold 20 SWK at $75.75
Bought 85 RKT at $20.25
Sold 85 RKT at $19.89
Bought 10 CRM at $257.27
Sold 10 CRM at $245.26
Investors expected the Fed to cut interest rates, which would help companies connected to housing, like Trex and Rocket Companies, which makes mortgages. I traded these stocks, and SWK, hoping they would go up, but they did not, and I sold them for losses. I also bought and sold Salesforce on the same day for a loss of about 5%.
Thanks for reading my newsletter!