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Buffett unveils his will

21st June 2024 – 28th June 2024 | Another week in the markets

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Source: MarketWatch 

Hello Saturday,

This week, The Oracle of Omaha unveils his will, Toy R Us releases an all AI-ad made using Open AI’s Sora and Bharti Airtel and Jio team up in hiking tariffs up to 25%. 

  • Famous investment guru Warren Buffett unveils his will, Gates Foundation to receive no donation from Buffett after his death.
  • A new ad by Toys “R” Us made using Open AI’s tool Sora triggers a debate on the future of marketing
  • Bharti Airtel and Jio join forces and pump up tariff charges by as much as 25%, customers will incur an additional expense burden of ₹47,500 crore annually
  • SEBI overhauls delisting procedures and F&O rules; puts fetters on finfluencers

Taking stock| Buffett unveils his will | Sora sores | Tariffs on a tear | Regulatory reforms | Invest wisely | Another week in the markets

Taking stock

The S&P 500 declined by 0.4% on Friday but ended the day within 27 points of the bourses record high. The tech-heavy Nadaq ended the day shedding 0.7% but floating close to its all-time high. The Dow Jones inched down by 0.1% or 45 points. 

Buffett unveils his will! 

The Oracle of Omaha has revealed his plans vis-a-vis bequeathing one of the largest fortunes in modern history.

Speaking to the Wall Street Journal, the chairman of Berkshire Hataway divulged that after his death, all of his remaining wealth would go to a new charitable trust operated by his daughter and two sons. 

Warren Buffett also said that the Gates Foundation, overseen by Bill & Melinda Gates, will not be receiving any donations from the trust after his death.

As of now, the Omaha billionaire has given away more than half his shares of Berkshire, a company that he acquired control of in 1965 and transformed into an investment powerhouse. As of Friday morning, Buffett owns over $130 billion of the company stock.

Buffett’s three children — Susie, Howie and Peter —- will have the liberty to decide which philanthropic causes the money would benefit. 

In the interview with WSJ, Buffett remarked: “It should be used to help the people that haven’t been as lucky as we have been. There are eight billion people in the world, and me and my kids, we’ve been in the luckiest 100th of 1% or something. There are lots of ways to help people.”

Sora sores!

Toys “R” Us has released a new ad made using Open AI’s Sora, a cutting-edge new tool that uses text commands to deliver visual output.

The ad made entirely using Generative Artificial Intelligence is triggering a larger debate on the future of marketing worldwide. The ad shows Charles Lazarus, the founder of Toys “R” Us, as a child who dreams of owning a toy store and features the brand mascot Geoffrey the Giraffe.

The origin story of Toys “R” Us elicited a range of reactions from marketing professionals on LinkedIn with some describing the ad as “brilliant” while others largely panned it, terming it as “an abysmal insult” that “should terrify you”

Marketing experts commented that the strong response to the video emerges, in large part, from the fear that AI might lead to employment destruction as well as a drastic decline in the output quality of marketing projects.

Nik Kleverov, the Chief Creative Officer at Native Foreign, the ad and production agency that worked on the Toys “R” Us ad said that approximately 20 team members with backgrounds in animation, art direction and design collaborated on the project. To greater effect, he also added that the ad took more work than simply pushing a button on the AI system.

Kleverov said that each shot or frame was generated by giving Sora instructions running into several paragraphs. He said that the text had to be revised hundreds of times as Sora quite frequently misunderstood the writers’ intention.

Kleverov clarified that one of the main challenges in working with Sora comprised explaining to the AI tool, the motivations underlying the behaviour of the characters, which was key to clinching the right facial expression of the characters. 

Online critics have pointed out that there are numerous inconsistencies throughout the video. The advertisement’s virtual child does not look the same in every shot. 

In the coming months, more global brands will be releasing ads produced by AIs.

Tariffs on a tear!

Telecom companies joined forces to raise tariffs in the aftermath of the election. On Friday, Bharti Airtel and Vodafone Idea (Vi) raised their mobile tariffs by 21%.

Their move comes a day after Reliance Jio implemented an across-the-board tariff hike. 

Airtel’s tariff hikes pale in comparison to Jio’s, which has implemented an increase of 12-25%. However, Airtel has bumped up the tariffs of its 2G subscriber base, whereas Jio has decided not to revise the charges from this category. Meanwhile, Vi raised tariffs for the unlimited data plans, with validity ranging from 28 days to one year.

Airtel and Jio’s tariff hike will come into force from July 3, whereas Vi’s will be implemented from July 4. 

Airtel raised the charges on its voice plan by 11% translating into Airtel’s cheapest monthly plan’s price jumping to ₹199 from ₹179. Other plans ranging from ₹455 to ₹1,799 also saw similar price hikes. 

In the postpaid data segment, considered a premium segment, Airtel has pushed prices of its ₹399, ₹499, ₹599 and ₹999 plans by an average of 15%. In the prepaid data category, Airtel jacked up prices by 17%.

Vi raised tariffs on two of its postpaid plans, namely, the ₹401 plans and the ₹1001 family plan by 12% and 20% respectively, taking the current price to ₹451 and ₹1,201.

The last time the three major telcos had effected a price hike was in December 2021, when prices had gone up by an average of 20%. At that time, it was Bharti Airtel reported the maximum tariff hike.

Source: Google Finance 

Regulatory reforms!

On Thursday, India’s stock market regulator unveiled multiple reforms that will have wide-ranging effects on the capital markets ecosystem. 

Delisting procedures have been streamlined by the regulator giving promoters a fair chance at taking their companies private. For companies looking to voluntarily delist themselves, SEBI has introduced the fixed price process, under which the promoter could offer to buy back all the shares from the public at a 15% premium to its “fair price”.

SEBI reduced the threshold of the under-the-counter mechanism from 90% of public shareholders to 75%. As per the reverse book-building process, a delisting is considered successful if the promoter’s shareholding after making an offer comes to 90%.

The reverse book-building process is deemed to be very stringent, by market experts, who believe that the delisting price arrived at by this process is quite high, making the offer unviable for promoters.

SEBI Chairman Madhabi Puri Buch commented that as India’s markets were maturing, it was necessary to open new gateways for promoters to take their companies private.

“This is not Hotel California,” she said, where you can check in anytime but you can never leave.

Further, SEBI also revised the quantitative parameters for the inclusion of stocks in the F&O segment. SEBI officials indicated that if the new criteria for stock selection were to be applied, the total number of stocks in the F&O segment would rise by a small number from the current figure of 182. Officials also indicated that a few stocks could be added to the list, while some others will be kicked out.

SEBI Chairperson also pointed out that an expert group had been formed to address certain concern areas around F&O trading. She expressed worry about the fact that people were borrowing funds to trade derivatives and that a large segment of India’s savings were flowing into trading activities. 

The regulator also tightened the rules for fin-fluencers. 

 “Entities regulated by SEBI and their agents are prohibited from associating, directly or indirectly, with any individual or entity that offers financial advice or makes performance claims without SEBI’s permission. This includes any form of monetary transactions, client referrals, or IT system interactions.” a press release issued by the regulator said.

Invest wisely 

A sapling, which is planted and uprooted repeatedly, cannot spread its roots deep enough to grow strong. In the same spirit, your investments also cannot come to full bloom, if they are not accorded enough time to grow strong. Repeatedly churning one’s portfolio stops it from delivering strong returns. Corporate narratives change in step with the larger economic sentiment. Economic animal spirits often have cyclical movements that span 7-10 years. Many investors err, not in choosing the right company, but by not staying invested in it for a long enough timeline. This results in premature profit booking, effectively hurting the investor’s interests. To avoid such mistakes, investors can fall back on Appreciate’s deep and rich research troves. The Appreciate app can help you grow your wealth and safeguard your investment for the long run.

Warm regards,
Another week
in the markets

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