PC Sales, Apple Stock, UAW
Set on Expanding to the Big 5,
2024 Tax and Retirement Changes

Brent Wilsey, President, Wilsey Asset Management, a Forbes “Best-In-State Wealth Advisors” for 2023 comments on the PCs decline in global shipments, growth company WeWork bankruptcy, UAW expanding the union’s power to the “Big Five,” Apple stock defying gravity, and Financial Planning: 2024 Tax and Retirement Changes.

PCs Way of the Dinosaur?

We have seen global shipments of PCs decline to 245 million this year, a drop of nearly 100 million from 2021 when global shipments reached 342 million. You may think that PCs are going to go the way of the dinosaur, but that is not the case. Personal computer companies are preparing new PCs that will begin arriving within the next few months that have AI in them. I’m sure you’ve heard of the CPU, which is the central processing unit, a GPU which is a graphics processing unit and now there is a NPU, which is a neural processing unit. The NPU can process very large data sets efficiently and will pick up most of the AI computing requirements. Just recently, Intel unveiled an AI PC acceleration program which will use AI techniques on such things as content creation, security, audio effects and video collaboration. It is expensive and time consuming to run AI in the cloud which has 1.76 trillion parameters but a PC can be more focused just on certain areas as opposed to the entire universe of AI. Maybe in the next couple years we will see a big boom in PC sales.

Growth Companies

People and investors always like the excitement of growth companies with high expectations that they will have great returns. Recently, the growth company WeWork filed for bankruptcy in New Jersey. This company has never seen a quarterly profit but yet the stock price did reach a high of $130.80, it currently trades for less than a dollar. The big problem with this growth company was excessive expansion which caused excessive losses and rising debt they could not pay. At our firm, Wilsey asset management, I still continue to believe as I have for many, many years we will not invest into or hold a company that has no earnings and high debt. I may have missed some huge gains on a few companies, but I do believe being cautious and not having losses from companies filing bankruptcy is a far better plan for a long-term return and also, I think it is much easier on the emotional side.

UAW Strike

With the UAW strike now resolved, the President, Shawn Fain, has his eyes set on expanding the union’s power. Fain has said he wants to move beyond the “Big Three” and expand to the “Big Five or Big Six” by the time the current 4 ½-year contracts expire in April 2028. Fain in a statement recently pointed to workers at Tesla, Toyota, and Honda as the “UAW members of the future.” The unions power has shrunk over the last several decades as membership stood at just 383,000 at the beginning of this year vs around 700,000 in 2011. Membership peaked at 1.5 million in 1979. I do believe with the amount of support that was seen for the striking workers, there could be some problems for Tesla, Toyota, and Honda ahead. This would likely be a benefit the “Big Three” companies that currently unionized as it would level the playing field, but I do worry this would ultimately drive-up costs for the end consumer. Even though the strike has ended, the UAW may continue to make headlines over the next few years.

Apple Defying Gravity

Apple continues to defy gravity with the stock down only about 10% from the high of $198. To be blunt the company is not growing. For the fiscal year that ended in September, the revenue fell 3% declining $9 billion from fiscal 2022. It was noted that Mac sales were down 34% and analysts pointed out that appeared to be a loss of market share. In the most recent quarter, the company did buy back $15 billion in stock. Generally, companies that buy back stock don’t have a forward PE around 27. There does not seem to be a catalyst to drive growth going forward. The company did mention the magical word, artificial intelligence on the conference call, but did not go into detail. It is very surprising that a company that is treading water on their sales and earnings is still maintaining its stock price. Be careful if holiday sales disappoint, investors could find a lump of coal in their Apple stockings.

Financial Planning: 2024 Tax and Retirement Changes

As we get closer to the end of the year, more information is being released about 2024. Each year the IRS adjusts the tax brackets for inflation and in 2024 the increase will be 5.4%. This is a good thing as it allows slightly more of everyone’s taxable income to fall in lower brackets and results in a tax reduction. The standard deduction, which acts as a deductible expense for most taxpayers, is increasing for married couples from $27,700 to $29,200 plus an extra $3,100 if 65 or older. For single filers it is increasing from $13,850 to $14,600 plus $1,950 if over 65. Retirement account contributions are receiving an increase as well as the maximum contribution for employer plans like 401(k)s is increasing from $22,500 to $23,000, plus an extra $7,500 for savers older than 50. IRA contribution limits are increasing from $6,500 to $7,000 plus a $1,000 catch-up contribution for those older than 50. With these upcoming changes everyone should review their income and savings plans for 2024 to make any necessary adjustments.

Editors Note: As one of San Diego’s leading investment advisory firms, Wilsey Asset Management has built a reputation for effective investment management, experienced financial guidance along with financial planning services nationwide. For a complimentary consultation visit www.wilseyassetmanagement.com.