Iron Mike
Hi, The Investor’s Podcast Network Community!
Ladies and gentlemen, the weekend! Not only that but also (unofficially) summer!
We’ll be doing our part this Memorial Day weekend, grilling burgers and hot dogs by the pool 🍔
But we’ve got some great weekend reads queued up for you on Saturday & Sunday, and we’ll be back Tuesday with markets coverage.
Turning to the financial world, it’s striking how top-heavy this year’s stock market rally has been. Indexes like the S&P 500 are market-capitalization weighted, meaning the biggest companies disproportionately impact returns.
💭But the S&P 500 Equal Weight index, more broadly representative of how stocks are doing, is actually down for the year -0.14%.
Our Chart of the Day visualizes this performance disparity.
— Shawn
Here’s the rundown:
Today, we’ll discuss two items in the news:
- Gas prices heading into summer
- Solar investments exceed expenditures on oil for the first time
- Plus, our main story on one boxing legend’s (financial) rise and fall
All this, and more, in just 5 minutes to read.
POP QUIZ
How much does the average American household spend on gasoline each year?
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IN THE NEWS
⛽️ Gas Prices Stay Low(er) Ahead of Summer Travel Season (NYT)
Memorial Day marks the start of the summer travel season in the U.S. Fortunately for Americans, gas prices have fallen way down from a year ago.
- Credit a stronger oil supply and weaker-than-expected demand for why some families could save hundreds of dollars on Memorial Day road trips this weekend.
- The national average price for regular gasoline is a full dollar a gallon lower than a year ago. Drivers paid over $4.60 in May 2022, and prices had reached $5 by the second week of June when inflation peaked. This week, they paid about $3.50 a gallon for regular gasoline, according to AAA.
Prices spiked last year after Russia invaded Ukraine in February. But the U.S. and other large countries released oil from their strategic reserves when prices surged, which has helped keep prices lower.
Why it matters:
Gas prices are posted on big colorful signs along major highways and in small towns. Thus, they can have a powerful psychological impact on consumers and their feelings about prices, inflation, and the overall economy.
- Thanks to better-than-expected supply and relatively low demand, the U.S. benchmark oil price gradually fell from around $120 a barrel last summer to about $72 a barrel on Thursday.
- Gas impacts millions of Americans, as AAA forecasts that Memorial Day road trips will be up 6% over last year, with more than 37 million Americans driving to their destinations.
In a notable shift, many people buy fuel at big-box retailers such as Costco, BJ’s, and Sam’s Club, which often have lower prices than independent gas stations. They took market share as prices rose in 2021 and 2022 and might not relinquish it anytime soon.
☀️ Solar Power Investment to Exceed Oil for First Time (FT)
Speaking of energy, solar power investment is set to exceed spending on oil production this year for the first time, the head of the International Energy Agency (IEA) said.
- If the trend persists, it could help curb global emissions and spark continued growth in clean energy projects.
- “If these clean energy investments continue to grow in line with what we have seen in the past few years . . . we will soon start to see a very different energy system emerging,” the IEA’s executive director told The Financial Times.
In 2023, $1.7 trillion will be spent on clean tech vs. $1 trillion on fossil fuels. In 2018, the roughly $2 trillion in annual energy investment was split between fossil fuels and clean tech.
Why it matters:
A rebound in economic growth following the Covid-19 pandemic is driving increased spend on clean energy. Plus, concerns over the energy supply’s reliance on just a handful of countries, such as Russia, have also fueled the trend.
- The U.S. Inflation Reduction Act, which provides $369 billion in subsidies and tax credits for clean energy technologies, also has helped.
- Annual clean energy investment is expected to jump by 24% compared with 2021, while spending on fossil fuels will rise by 15%.
Solar power is the key theme in the coming decades. Total solar spending in 2023 could hit $380 billion, exceeding the $371 billion on oil production. Compare that with a decade ago, when oil production spending outpaced solar about five-fold.
MORE HEADLINES
🤝 Debt ceiling negotiations close to a deal, sending stocks higher
📉 Cathie Wood’s ARK Invest sold most of its Nvidia stake before big rally
🚗 Ford partners with Tesla to give EV drivers access to superchargers
🧠 Elon Musk’s brain-implant company wins approval for human tests
CHART OF THE DAY
A few mega-cap stocks (Meta, Amazon, Apple, Microsoft, Alphabet, Tesla, and Nvidia) have driven markets higher
BOXING LEGEND
The Iron Mike
Mike Tyson ruled the sports scene in the ’80s and forever imprinted his name on boxing.
Nicknamed “Iron Mike” and “Kid Dynamite” in his early career and later known as “The Baddest Man on the Planet,” he clinched the heavyweight champion title before his 21st candle was blown.
Tyson built an empire on knockouts, earning hundreds of millions and becoming a pop culture phenomenon.
According to ESPN, Tyson, now 56, ended his gladiatorial career with 50 victories from 58 encounters, delivering 44 knockouts. The figures earned him a golden ticket to the International Boxing Hall of Fame in 2011.
He quickly became one of the highest-paid athletes on Earth, earning an astounding $30 million per fight. At his peak, his net worth was reported to be a staggering $400 million.
His influence on professional boxing was unmatched. His highly anticipated fight against Lennox Lewis set a new record for the largest live fight. With ringside tickets priced at $2,400 and even the least expensive nosebleed seats going for $250, the fight gathered almost 2 million pay-per-view spectators.
But his wild escapades outside the boxing arena started to overshadow his stellar accomplishments.
Extravagant living, an exclusive mansion, expensive separations, and legal tangles ultimately led him to file for bankruptcy in 2003, with a reported debt of $23 million.
The champion who’d once seemed invincible was on the canvas.
Red flags
There’s no shortage of examples in pop culture where our idols radiate brilliance only to be equally caught up in scandal.
The story of Mike Tyson’s fall is no different. For years, Tyson courted controversy with questionable personal exploits.
But then something bizarre happened to kick off a series of unfortunate events.
It was June 1997 in Las Vegas. The sporting world held its breath as Tyson and Evander Holyfield locked horns in the boxing ring.
Suddenly, Tyson bit off part of Holyfield’s ear. After the fight, ESPN revealed the Nevada State Athletic Commission’s decision to pull the plug on Tyson’s license, suspending him for a year.
He would eventually become almost as well-known for bad financial decisions as he was for boxing.
Reports suggest he would indulge in extravagant jewelry purchases, spending tens and hundreds of thousands at a time.
Another of his infamous purchases was getting three White Bengal Tigers as pets, which severely attacked a trespassing woman.
His journey to stardom was marred by many such tragic events, including arrests for cocaine possession, driving under the influence, and even rape charges leading him to serve a three-year sentence in prison.
Tyson’s tarnished image resulted in the cancellation of endorsements worth over $2 million by major brands like USA Today, Toyota, Kodak, and Suntory Beer.
Adding to the setback, Pepsi terminated a substantial $10 million deal, leaving Tyson with a Nintendo contract valued at $750,000, eventually meeting the same fate.
What doesn’t kill you makes you stronger
But Tyson didn’t stay on the ropes for long. He underwent a profound personal transformation and sobered up, becoming a humbler version of himself.
He started taking small roles in film and TV and engaging in lucrative celebrity boxing matches.
In 2013, he launched Iron Mike Productions, a venture promoting fighters. However, his interests extended beyond boxing. The former champion took the stage in a compelling one-person Broadway show, which later became a television series in collaboration with director Spike Lee.
In 2016, Tyson’s life took another turn, launching Tyson Ranch, a cannabis company. Although that business didn’t succeed, Tyson continued making his new name in the $13.2 billion cannabis industry.
Today, Tyson runs a cannabis brand, Tyson 2.0, which bagged $9M in a Series A funding round last year. In just a year, it sold over 4,000 pounds of cannabis flower.
On top of that, his brand has also started expanding into the European market, launching a new coffee shop under its brand name in Amsterdam, Netherlands. The boxing legend’s audacious leap into the cannabis arena seems to be delivering knockout results.
Though he hasn’t quite hit a financial home run like the old days, Tyson has proven he can bounce back from past mistakes.
Dive Deeper
To learn more about his fascinating life, read Undisputed Truth.
TRIVIA ANSWER
Some 92% of American households own at least one car, with the average American family spending around $5,000 annually on gas, per J.D. Power.
See you next time!
That’s it for today on We Study Markets!
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