A Stansberry Research subscriber's incredible story; Instagram's Algorithm Delivers Toxic Video Mix to Adults Who Follow Children; At Meta, Millions of Underage Users Were an 'Open Secret,' States Say; Don't Believe the Story About 'Slowing' EV Sales; The World Is Becoming More African
1) Talk about an incredible story...
A Stansberry Research subscriber learned an astonishing "secret" that he says he used to opt out of all the fear and drama and guessing in the markets.
He accumulated so much wealth that he was able to retire at age 52, send four kids to elite colleges and graduate schools, and he even helped buy his elderly parents a beautiful retirement condo overlooking the Atlantic in South Florida.
In short, it's a simple strategy for seeing double-digit annual income – and triple-digit capital gains – with legal protections... even in an economic crisis.
He first came forward with his story four years ago, and now he's back with a special message. Before it comes offline, you can get the details about what this subscriber has called "the answer to retirement" right here.
2) My best stock pick over the past year, Meta Platforms (META) – which I pounded the table on last November when shares had crashed below $100 (they closed yesterday at $334.70) – is taking a double-beating in the media today...
Both the Wall Street Journal and the New York Times are out with major, negative stories about Meta's Instagram subsidiary.
Regarding the former, this WSJ front-page story shows how Instagram's algorithms fuel pedophilia: Instagram's Algorithm Delivers Toxic Video Mix to Adults Who Follow Children. Excerpt:
Current and former Meta employees said in interviews that the tendency of Instagram algorithms to aggregate child sexualization content from across its platform was known internally to be a problem. Once Instagram pigeonholes a user as interested in any particular subject matter, they said, its recommendation systems are trained to push more related content to them.
Preventing the system from pushing noxious content to users interested in it, they said, requires significant changes to the recommendation algorithms that also drive engagement for normal users. Company documents reviewed by the Journal show that the company's safety staffers are broadly barred from making changes to the platform that might reduce daily active users by any measurable amount...
The nature of the content – sexualizing children without generally showing nudity – reflects the way that social media has changed online child sexual abuse, said Lianna McDonald, executive director for the Canadian center. The group has raised concerns about the ability of Meta's algorithms to essentially recruit new members of online communities devoted to child sexual abuse, where links to illicit content in more private forums proliferate.
"Time and time again, we've seen recommendation algorithms drive users to discover and then spiral inside of these online child exploitation communities," McDonald said, calling it disturbing that ads from major companies were subsidizing that process.
And this NYT story highlights a legal complaint that's part of a lawsuit by 33 states, which claims that Instagram fails to block users under age 13: At Meta, Millions of Underage Users Were an 'Open Secret,' States Say. Excerpt:
Meta has received more than 1.1 million reports of users under the age of 13 on its Instagram platform since early 2019 yet it "disabled only a fraction" of those accounts, according to a newly unsealed legal complaint against the company brought by the attorneys general of 33 states.
Instead, the social media giant "routinely continued to collect" children's personal information, like their locations and email addresses, without parental permission, in violation of a federal children's privacy law, according to the court filing. Meta could face hundreds of millions of dollars, or more, in civil penalties should the states prove the allegations.
"Within the company, Meta's actual knowledge that millions of Instagram users are under the age of 13 is an open secret that is routinely documented, rigorously analyzed and confirmed," the complaint said, "and zealously protected from disclosure to the public."
The privacy charges are part of a larger federal lawsuit, filed last month by California, Colorado and 31 other states in U.S. District Court for the Northern District of California. The lawsuit accuses Meta of unfairly ensnaring young people on its Instagram and Facebook platforms while concealing internal studies showing user harms. And it seeks to force Meta to stop using certain features that the states say have harmed young users.
So, in light of these stories, would it be time to take profits on META? I think not...
While I have no doubt that both stories are true and I am disgusted by Meta putting profits over children's safety, I always try to put my emotions aside when making investment decisions.
Sadly, unethical behavior has been par for the course for Meta for its entire existence – yet that hasn't prevented the company from becoming one of the world's best businesses, with mouthwatering cash flows.
Due to the adverse publicity from today's revelations, Meta will invest more to fix the problem, settle the lawsuits, and keep cranking out extraordinary profits.
At $334.70 per share, the stock is trading at 19.2 times next year's consensus earnings estimates of $17.39 per share – a reasonable price for a company of this quality.
As such, I would do what I've said to do in the past: hold my nose and hang on to the stock...
3) I covered seven different topics in the e-mail I sent yesterday to my Elon Musk/Tesla (TSLA) personal e-mail list – I'll share one of them here...
These two stories in the WSJ generated a great deal of discussion: Are Americans Falling Out of Love With EVs? and EV Makers Turn to Discounts to Combat Waning Demand.
I think these stories are incorrect for reasons outlined in this article from Heatmap: Don't Believe the Story About 'Slowing' EV Sales. Excerpt:
If you've read about electric vehicles in the news lately, you know the vibes are bad. Over the past few weeks, the media has fixated on the idea that consumer demand for EVs is "slowing," "chilling," or "losing its charge."
But are sales even slowing? Has federal policy failed to spark the EV transition? Is there any cause for panic? The data shows none of that is true.
The best (and only) quantitative evidence presented for the dominant media narrative is data from Cox Automotive, as presented in a recent Wall Street Journal article, showing that dealers are taking more time and resorting to bigger discounts to move EVs off their lots. That's true, but does it really indicate that EV sales are "slowing"?
First, this data excludes the space's biggest player by far – Tesla – as well as other EV-only makers like Rivian who don't use dealer networks, so this is really a story about traditional automakers (Ford, GM, Volkswagen, etc.). And with high interest rates making a new car more costly to finance or lease, dealer discounts are trending steadily upwards for all vehicles in recent months, not just electric models, according to the Cox data.
Second, if we take a look at actual sales data, there's no sign the growth in EVs is flagging. In fact, sales of battery electric and plug-in hybrid vehicles in the third quarter of 2023 exhibited the strongest year-on-year growth since the fourth quarter of 2021.
And this thread on X:
In summary, I haven't changed my long-held view that electric-vehicle sales will continue to grow very rapidly – both in the U.S. and worldwide – and will continue to take share from hybrids and, especially, gas-fueled cars.
(To join my Musk/Tesla e-mail list, simply send a blank e-mail to: tsla-subscribe@mailer.kasecapital.com.)
4) Having just returned from Africa, the continent is on my mind – and not just as a tourist destination (which I highly recommend!)...
This article in the NYT underscores why investors should at least keep an eye on Africa: The World Is Becoming More African. Excerpt:
Astonishing change is underway in Africa, where the population is projected to nearly double to 2.5 billion over the next quarter-century – an era that will not only transform many African countries, experts say, but also radically reshape their relationship with the rest of the world.
Birthrates are tumbling in richer nations, creating anxiety about how to care for, and pay for, their aging societies. But Africa's baby boom continues apace, fueling the youngest, fastest growing population on earth.
In 1950, Africans made up 8% of the world's people. A century later, they will account for one-quarter of humanity, and at least one-third of all young people aged 15 to 24, according to United Nations forecasts.
The median age on the African continent is 19. In India, the world's most populous country, it is 28. In China and the United States, it is 38.
As the article notes, some people are calling this a "youthquake"...
The implications of this "youthquake"... are immense yet uncertain, and likely to vary greatly across Africa, a continent of myriad cultures and some 54 countries that covers an area larger than China, Europe, India, and the United States combined. But its first signs are already here.
It reverberates in the bustle and thrum of the continent's ballooning cities, their hectic streets jammed with new arrivals, that make Africa the most rapidly urbanizing continent on earth.
It pulses in the packed stadiums of London or New York, where African musicians are storming the world of pop, and in the heaving megachurches of West Africa, where the future of Christianity is being shaped.
And it shows in the glow of Africa's 670 million cellphones, one for every second person on the continent – the dominant internet device used to move money, launch revolutions, stoke frustrations, and feed dreams.
"It feels like the opportunities are unlimited for us right now," said Jean-Patrick Niambé, a 24-year-old hip-hop artist from Ivory Coast who uses the stage name Dofy, as he rode in a taxi to a concert in the capital, Abidjan, this year.
Africa's political reach is growing, too. Its leaders are courted at flashy summits by foreign powers that covet their huge reserves of the minerals needed to make electric cars and solar panels.
With a growing choice of eager allies, including Russia, China, the United States, Turkey, and Gulf petrostates, African leaders are spurning the image of victim and demanding a bigger say. In September, the African Union joined the Group of 20, the premier forum for international economic cooperation, taking a seat at the same table as the European Union.
Businesses are chasing Africa's tens of millions of new consumers emerging every year, representing untapped markets for cosmetics, organic foods, even champagne. Hilton plans to open 65 new hotels on the continent within five years. Its population of millionaires, the fastest growing on earth, is expected to double to 768,000 by 2027, the bank Credit Suisse estimates.
Dinner at Sushi Mitsuki, a new restaurant in a neighborhood with a rising skyline in the Kenyan capital of Nairobi, starts at $200 per person.
"Africa is entering a period of truly staggering change," said Edward Paice, the director of the Africa Research Institute in London and the author of Youthquake: Why African Demography Should Matter to the World.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.