The Good, The Bad, And The Undervalued 🤷🏻

Did you know that the U.S. dollar's origins in the late 18th century laid the foundation for its global dominance?

Even in modern times, its strength against other currencies remains a symbol of economic stability.

In this edition, we explore three intriguing topics:

• Is The Dollar Doomed: First, we’ll explore how despite speculation, the dollar continues to lead in the currency world 💲

• How To Spot Cheap Stocks—And Avoid “Value Traps”: Next, we’ll talk about how to spot genuinely undervalued stocks and steer clear of value traps 🔍

• Apple Is No Longer A Top Idea At Goldman Sachs. Could It Be A Lack Of Clarity On AI: Finally, we’ll examine the impact of unclear AI initiatives on Apple's market position 🤖

Whether you're a novice trader or a seasoned investor, Equity Eats promises to equip you with the knowledge to navigate today's global economy.

Is The Dollar Doomed? 💲

If the dollar is doomed, there needs to be an alternative.

The media talks about the BRICs countries as the possible replacement, which really means China 🐲

China is in the midst of protracted economic decline which has no end in sight.

Its political system is growing increasingly authoritarian.

That doesn’t sound like a leading candidate to replace the dollar.

What about Russia? 🐻

Putin’s paranoid, narcissistic personality has undermined all autonomous institutions including businesses, and has reduced the economy to not much more than an oil producer.

What about the euro? 💶

Europe’s military is not able to stand on its own against aggression from Russia.

It depends entirely on its alliance with the United States.

All the chatter about the end of the dollar is nothing but noise.

The dollar still reigns supreme in the currency world 💪💵

How To Spot Cheap Stocks—And Avoid “Value Traps” 🔍

“Value stocks” look attractive right now, but simply buying the cheapest ones isn’t the best idea.

That’s a sure way to get stuck in a “value trap” 🕳️

Value stocks are those that look most likely to be significantly underpriced.

They’re often companies that are more mature in their life cycles and have seen the fastest growth they’re likely going to see.

Sometimes, that’s because the business is no longer in its infancy and has already become fairly large.

Sometimes, it’s because a business has faced strong competition.

Sometimes, there’s just not a lot of growth to be had.

Either way, there’s a hard ceiling on the price investors are willing to pay to own these firms 🤔

Such low valuations are fairly pronounced today.

The Small Cap 600, with a majority of its market value comprised of companies in the relatively mature sectors of financials, real-estate, manufacturing, commodities and consumer, trades at about 14 times earnings estimates for the coming year.

That’s less than half of the almost 36 times for the Russell 2000 Growth Index,  which is home to higher-growth companies.

Sometimes, stocks are cheap because they deserve to be cheap 💸

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Apple Is No Longer A Top Idea At Goldman Sachs. Could It Be A Lack Of Clarity On AI? 🤖

Apple stock has fallen nearly 8% this year.

Goldman Sachs’s decision to remove the tech giant from its “Conviction List” on Friday is sending the shares lower.

The list includes between 20 and 25 “of what we believe to be our most differentiated fundamental Buy ideas across our U.S. stock coverage,” the firm said.

Apple has been lagging its peers this year in the Magnificent 7—the group of tech stocks leading the market higher thanks largely to excitement around artificial intelligence—owing to a lack of a clear AI strategy that could help to drive the stock higher 📈

Apple has spent the year underperforming the market, with shares of the iPhone maker down 7.6% so far in 2024 while the tech-heavy Nasdaq has gained 7.9%.

Chief Executive Tim Cook said on the company’s earnings call in early February that when it comes to generative AI, Apple continues “to spend a tremendous amount of time and effort and we’re excited to share the details of our ongoing work in that space later this year” 🗓️

But it isn’t just a lack of an AI strategy that has hit the stock.

Sales in China dropped 13% to $20.8 billion in the December quarter from the previous year as Beijing’s economy has slowed and competition has increased with lower-priced, alternative smartphone options.

Still, Apple has risen to the occasion in the past, so it's probably premature to count Apple out ❌

Inner Circle Macro Update 🔍

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