To The Moon

My Investing Muse (28Jul25)

Layoffs & Closure news

• Microsoft laid off ~16,000+ workers in 2025 (so far). Filed 6,000+ H-1B visa applications. To me, it was about the optics more than anything. The job market isn’t great. H1B isn’t new. But damn, y’all… They told the media it was “just flattening management.” (Only 17% of those cut were actually managers.) The real story? Headcount is shifting... to AI, to vendors, to overseas teams. This is labour arbitrage. - X user Amanda Goodall

• 58% of students who graduated within the last year are still looking for their first job, according to a recent report from Kickresume. - X user Unusual Whales

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• US small farm bankruptcies hit 173 in the H1 2025, the highest since the 2020 CRISIS. Over the last 2 years, bankruptcies jumped 150%. High interest rates, trade tensions, and collapsing Chinese demand are crushing farm margins. - X user Global Markets Investor

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The BLS just said the number of jobs reported for the 9 months ending December 2024 was likely overstated by ~800,000. This comes as the Quarterly Census of Employment and Wages (QCEW) data, covering 97% of employers, showed the US added 607,000 jobs during this period. This is 57% lower than the initially reported 1.4 million in the monthly non-farm payroll (NFP) reports. In other words, there was an unprecedented 793,000 gap between NFP data and QCEW data in March-December 2024. This means jobs were likely overstated by 88,111 PER MONTH, on average, during this time. Something does not add up here. - X user The Kobeissi Letter

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• As the goods economy has slowed, UPS has been feeling the pain. They've taken the unprecedented step to reduce their driver workforce by 20,000. This does not happen in a robust goods economy. - X user Craig Fuller

The above are some news items about layoffs and closures. As tariff negotiations drag on, the collateral to businesses (especially smaller ones) can compound.

What America’s real estate says about the Recession

America's Largest Home Builder, DR Horton, just reported 24% decline in net income. Less revenue, less income and revised guidance incoming at 8:30 Eastern - X user Mr Awsumb

“So, if you go back to January of 2000, and where a home should be based on just inflation over the last 25 years, homes are overvalued. Home prices nationwide need to come down about 29 to 30%.” - Nick Rizzolo / Fox News

Austin, TX home values have now contracted 3 years in a row. -13.9% in 2023 -4.2% in 2024 -5.4% in 2025. Note that this is the biggest housing correction Austin has experienced in the last 25+ years. Even bigger than what occurred in the GFC. - X user Nick Gerli

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Home builders have 9.8 months of supply on their lots. Has only happened 6 other times in U.S. history. 5 times it led to a recession. - X user Nick Gerli

The American Real Estate cannot be the only indicator used for recession. We need to combine the following:

• Employment data: Rising unemployment would amplify housing market weakness.

• Consumer confidence: Further declines could reduce demand further, as noted by D.R. Horton’s CEO.

• Federal Reserve policy: Rate cuts could ease pressure, while sustained high rates might exacerbate corrections.

• Regional trends: If corrections spread beyond Texas and Florida, recession risks would rise.

My final thoughts

WSJ has made a statement: “Why are the stocks up? Nobody knows”. Should this not be a concern?

Headline by WSJ

The below quote is a timely reminder from the late Charlie Munger about waiting.

"The big money is not in the buying or selling, but in the waiting." — Charlie Munger

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June had the highest margin debt balance ever (FINRA). It is now a modest $1 trillion. 25% up from last year. - X user Canada Stats hub

From FIRNA, Securities Margin Account reached USD$1.07 trillion in June 2025. This may not affect the fundamentals, but the “magnitude” of this Margin Call can be significant during a market decline.

Buffett told a 1991 audience at the University of Notre Dame, "The two biggest weak links in my experience: I’ve seen more people fail because of liquor and leverage – leverage being borrowed money." He specifically warned against being infatuated with how much money can borrow and not giving enough thought to how much money you can pay back." - Investopedia

While it is tempting, let us avoid using leverage for our investments. The magnitude of the returns can be great, but the extent of failure is not far from financial ruin. If we view this from a risk-reward lens, this does not make sense to me. If we have already used leverage, I hope that there is an option for us to make a payment and reduce the leverage.

Let us review our expenditures, income, and savings. Let us spend within our means, invest with what we can afford to lose, and avoid leverage. I am reviewing my holdings and plan to cut losses with businesses losing their competitive advantages. I would also consider hedging and adding some defensive positions.

Let us conduct our due diligence before taking on any positions. Let us have a successful week ahead.

@TigerStars

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