My big announcement yesterday; Twitter Sues Elon Musk; Why Now Is a Good Time to Ask for a Raise; So, What's a Good Raise Right Now?; More reasons not to check a bag

1) If you missed my big announcement yesterday, you still have the chance to watch it before it goes offline today...

Together with Louis Navellier – a $2 billion money manager whose fund saw a 4,000% return over 15 years – we predict a nightmare is coming to the market... but it could set in motion the biggest investment opportunity in three generations.

If you missed it, there's still time to catch the replay – and get a free recommendation to play this upcoming event – right here.

2) It's good to see Twitter (TWTR) standing up for itself and its long-suffering shareholders: Twitter Sues Elon Musk to Enforce $44 Billion Merger. This is exactly right:

"Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away," Twitter said in the complaint.

Here's a link to the 62-page complaint. Twitter seeks a four-day trial to be completed before the end of September.

I agree with this letter from Rangeley Capital, a fund with a 10% position in Twitter. Excerpt:

If the board chooses to negotiate a token price cut, we don't see how anything in excess of a 2-3% reduction would be reasonable based on precedent and the facts and circumstances of this case as we understand them.

One last point: we've seen a lot of bad takes on the acquisition saga in the public discourse. For example, we saw a former board member suggest Twitter should just "let the whole ugly episode blow over." Others have argued that, "Elon owning Twitter is bad for the public sphere, and employees don't want to work for him. The board should take whatever fee they can get and remain independent."

We strongly disagree.

The board represents owners, and the best thing for shareholders is to aggressively pursue legal action against Mr. Musk to compel him to close. Anything less would be a tacit admission that Musk's claims about the company's false reporting are true. We'd also note that this is in the board's best interest: the current drama with Mr. Musk will be cited as a precedent and taught for decades to come. This case will be the first thing mentioned when recapping the career of each director and will be the first thing shareholders use when considering Twitter's board members as potential future executives/board members at other companies.

It is clear the facts are overwhelmingly on Twitter's side to enforce the agreement. We are heartened by the board's serious and professional initial response to Mr. Musk's childish antics and meritless attempt to terminate the deal. Any potential price cuts or settlements should be negotiated from a position of extreme strength on Twitter's side – the best outcome for shareholders would be that Mr. Musk is the owner of the company when this process ultimately concludes.

I also agree with one of my friends, who wrote:

How does Musk come back from this filing?

There is no such thing as a Nobel Prize in Law, but there is a Nobel Prize in Literature. Maybe this complaint will be one of the finalists in Stockholm this year.
 
It does appear that Twitter played its cards exactly right, in anticipation of this course of events. It bent over backwards and met every request, while Musk put his foot in his mouth constantly. Terrific job by Twitter and presumably its legal and financial advisors.
 
One does get the impression here, that Musk has met an immovable object, an opponent that he can't bully. It may be his Waterloo in court.
 
And guess who weighed in with his own legal and market analysis? "Driverless cars that crash, rocketships to nowhere" – hysterical!

Popcorn time! And for Musk, check-writing time – after first selling another $25 billion or so worth of Tesla (TSLA) stock. Will that be another $200 billion hit to the market cap?

My take: To repeat what I wrote yesterday:

Musk is in a terrible legal position, and his antics are making a bad situation even worse.

Consequently, I think a Delaware judge is going to look to make an example of him and come down on him like a ton of bricks – mostly likely by forcing him to consummate the transaction he agreed to (at $54.20 per share) or pay a massive fine of $10 billion or more.

3) The most important thing you can do to ensure your long-term financial security isn't being a smart investor by picking great stocks and avoiding turkeys...

That's only third-most important.

The second-most important thing is controlling your expenses.

What's most important? Earning money!

For the vast majority of people who don't run their own businesses, this means having a career that consists of building skills and relationships that result in steady – and, ideally, increasing – income.

It would be nice if your employer recognized your growing value to the firm and increased your salary to reflect this, but this doesn't always happen – you need to demand (or at least ask politely) to be paid what you're worth!

And now is a particularly good time, given inflation and the tight labor markets, as this Wall Street Journal article notes: Why Now Is a Good Time to Ask for a Raise. Excerpt:

Asking for a raise is a good idea every year, but there is extra urgency to do it now as inflation eats into Americans' budgets.

Job growth is holding strong and worker turnover remains elevated, although some economists are warning of the risks of a recession. And wages, while going up 5.2% in May compared with the year before, aren't keeping pace with inflation, which rose 8.6% during the same time.

The combination of high inflation and continued strong job growth makes now an ideal moment to ask for a raise, say financial advisers and career coaches. Raises are the best defense against higher prices and companies might be more receptive than usual to requests for a raise given the tight hiring market, according to the advisers and coaches.

"Workers can leverage every advantage at their disposal to get that pay raise, that promotion or that bump up in title that they may want," said Lynnette Khalfani-Cox, founder of Ask the Money Coach, a personal-finance services company.

4) As for how much of a raise to ask for, this WSJ article has some good tips: So, What's a Good Raise Right Now? Excerpt:

Most Americans won't get a big enough raise this year to keep up with inflation.

With consumer prices up 8.6% in May compared with a year ago, it's hard to know what counts as a decent bump in salary. As higher prices for gas, food, and rent eat into our budgets, consumers are having to recalibrate the notion of value for nearly everything they buy. The same is true for the value of work, especially in a tight labor market where strong job growth and a 3.6% unemployment rate have prompted companies to spend to retain employees.

For a baseline, it helps to consider a typical raise.

As of May 2022, the median annual wage growth for employees who stay at their jobs was 4.5%, according to the latest data from the Federal Reserve Bank of Atlanta. Though that figure is higher than the 3% to 4% raises people were getting in 2019 before the pandemic, it doesn't come close to keeping up with inflation, said Nick Bunker, head of research for Indeed.com, the job listings website.

"There's nothing stopping you from asking for a raise at pace with inflation," he said. "But there's no guarantee you'll get one," Mr. Bunker said.

Companies have increased budgets for merit-based pay raises this year. A Conference Board survey in December found employers set aside an average of 3.9% of total payroll for wage increases in 2022, the most since 2008. To retain employees, other companies such as ExxonMobil (XOM) and T. Rowe Price (TROW) have also offered extra wage increases or one-time bonuses.

By starting with 4.5% as a benchmark, workers should seek specifics about their industry and their performance to determine what might qualify as a good raise.

5) Following up on yesterday's e-mail, I've always recommended not checking a bag when flying. But with travel snafus becoming increasingly common, I'm now saying it in all caps: DO NOT CHECK A BAG!

Having a checked bag magnifies a crisis when it happens. Airlines losing your bag is just one of many problems. For example, here's a story about what happened to my oldest daughter yesterday...

She's on a three-week trip in Iceland, Croatia, and Greece before starting at Dartmouth's Tuck School of Business next month. Yesterday, she was scheduled to fly to Split, Croatia on Scandinavian Airlines, but the pilots went on strike and her flight was canceled. She scrambled and found one seat on another flight to Split, but it involved a mere 40-minute layover in Croatia's capital, Zagreb. If she had a checked bag, she would have never made it, but she was able to book it because she only had a carry-on.

Or imagine you get stuck in traffic or a long line to check in – if you have to check a bag, you're probably going to miss your flight.

Or you get to the gate and discover that the flight is hours delayed – if you haven't checked a bag, you can book an alternative flight.

I could go on, but you get the idea...

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.