Navigating Abnormal Market Outcomes: Investor Expectations and Mickey Mouse Impact

TLDR; Investors want a return to normal in 2024, but historical data shows abnormal outcomes are more common. Apple faces concerns after a stock downgrade. Mickey Mouse is now public domain, impacting Disney's IP. A comparison of sports betting and stock market investing is presented.

⏰ Return To Normalcy

Investors hope for a return to normal in 2024, with moderate inflation and middle-of-the-road interest rate policies.

However, historical data shows abnormal outcomes are more common, with only 20% of years seeing normal returns of 1-10%.

Investors may have unrealistic expectations, as the S&P 500's historical returns indicate that abnormal outcomes are more normal than the expected 7-10% return.

The data challenges the common belief of a 10% market return, highlighting the need for accurate expectations to navigate the market's unpredictability.

The market's normal state is constant change and unexpected events, making it impossible to predict future outcomes with precision.

Setting correct expectations can make investing more tolerable, as 80% of the time, the market experiences abnormal events.

Investors should anticipate unexpected and abnormal outcomes, as historical data shows that abnormal returns and market volatility are more common than the often-cited 7-10% return.

This challenges the conventional wisdom about market returns and highlights the need for realistic investor expectations.

🍏 Apple Downgrade

Barclays downgraded Apple due to concerns about softness in iPhone 15 sales, slowing growth in services, and flat earnings.

The company's high-margin services business, including the App Store, is facing risks of deceleration and reduced sales.

Despite the concerns, the stock's massive multiple expansion in 2023 and relatively flat fundamentals indicate a valid reason for the downgrade.

While the concerns are valid, they are viewed as temporary, with potential for changes in the company's performance.

🐭 Mickey Mouse Becomes Public Domain

Mickey Mouse is now public domain, impacting Disney's exclusive ownership of the iconic character and its ability to enforce copyright.

This development poses challenges for Disney in competing with others selling Mickey Mouse merchandise and potential negative impacts on the brand's equity.

The public domain status allows others to sell Mickey Mouse merchandise without pretending to be Disney, raising concerns about increased competition and potential negative brand impacts.

While it may not have a major impact on Disney's stock, it presents challenges for the company's merchandising business.

💰 Stock Market vs. Sports Betting

A comparison is made between the stock market and sports betting, highlighting the potential to make more money in sports betting.

However, the evidence presented to support these claims is limited, with the speaker emphasizing the potential for higher earnings in sports betting compared to the stock market.