Index Funds, Amazon Layoffs, and Ozempic's Business Model

Index funds are pooled investment funds that buy shares of stock in order to replicate the performance of major stock indexes, like the Dow Jones Industrial Average or the S&P 500. Since these stock indexes—groups of companies organized together to provide a snapshot of one segment of the market—can't be invested in directly, index funds buy shares in the companies listed in an index to replicate its performance. Today, more than 120 million Americans are invested in mutual funds and exchange-traded funds, the primary vehicles for index fund investing.

> Stock indexes, explained. (More)
> Index funds are typically structured as either mutual funds or exchange-traded funds, but investors can manually recreate an index through "direct indexing." (More)

Investment firm Vanguard Group pioneered index funds for retail investors in the 1970s. Since then, index funds have become the cornerstones of many American retirement accounts due to their relatively consistent long-term performance, comparatively low costs, and inherent diversification.

> Vanguard Group founder Jack Bogle created the first index fund for retail investors, the Vanguard 500, in 1976—but the fund didn't take off until the 1990s. (More)

> The "Big Three" asset managers—Vanguard, State Street, and BlackRock—collectively manage more than $30T in assets. (More)

On average, index funds that track the S&P 500, for instance, have an annual return of 10%. Index funds are also passively managed (meaning they simply track an index rather than relying on a fund manager's judgment), so they often have lower management fees than actively managed funds. Plus, because index funds spread investments across all companies listed in an index, the performance of the investment is less dependent on a single company's stock.

> In the early 2000s, Warren Buffett invested $1M in an index fund to show that passively managed investments would outperform hedge funds. (More)

> Learn how to invest in index funds. (More)

Discover more: 

> Why millions of Americans are now invested in SpaceX via index funds, whether they know it or not. (More)

> See how the S&P 500 stock index performed throughout the first 100 days of each modern presidency. (More)

> How mutual funds work. (More)

🫶 Humankind: Despite filing for bankruptcy, a local Pittsburgh newspaper will live on after a journalism nonprofit purchased it. 

In partnership with EnergyX

Big Oil Just Bet Big on Lithium

Eni, Italy’s largest oil producer, just signed an agreement to invest up to $225M to advance EnergyX’s lithium project in Chile. The project is expected to generate $1.3B in annual revenue at forecasted market prices. It’s just one piece of EnergyX’s portfolio holding up to 15M+ tons of untapped lithium, and it’s the latest proof of EnergyX’s progress. 

Until midnight PT, you can invest as an early-stage shareholder and share in that growth. Natural resources weren’t the only draw, though. EnergyX’s patented tech recovers up to 3X more lithium than traditional methods at 500X the speed, paving the way to commercial-scale production.

Lithium demand is projected to grow 5X by 2040, so the timing couldn’t be better. General Motors and POSCO are already EnergyX shareholders. Now it’s your turn. Become an early-stage EnergyX shareholder before midnight PT.*

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 News in Context 

1440 brings you the knowledge and context behind the week's stories:

Movie review platform Letterboxd seems like an acquisition target, with Netflix, Sony Pictures, and Paramount Skydance all reportedly expressing interest. (More)

> What is Letterboxd?

> How Netflix's sonic "Tudum!" logo was created.

Amazon's most extensive job cuts ever hit thousands of workers about eight months ago, and now, many of those impacted say they are still unemployed or have accepted roles with significant pay cuts. (More)

> Explore an up-to-date layoffs tracker.

> Where Jeff Bezos' enormous amount of wealth stems from, visualized.

The 21st Century Road to Housing Act, which aims to speed up building in order to backfill the US housing shortage, became law on Friday. (More)

> The history of US homeownership. 

> It takes an average of 14 days of work to afford a monthly mortgage in the US.

In the wake of New York City's massive nurses strike in January, 12 nurses were laid off from a hospital in the Bronx on Sunday after being replaced with AI-powered software. (More)

> How labor unions work, explained.

> Generative AI may automate nearly 10% of tasks in the US economy.

One Story We're Taking Stock In

Dubbed the "mini effect," companies are selling miniature versions of their signature products to capture consumers who want to make a purchase but aren’t willing to break the bank. For instance, Trader Joe’s is selling a mini version of its famous tote bag for $2.99, and Lowe’s Home Improvement is selling a pint-sized version of its five-gallon multipurpose bucket for less than $2. 

This new indicator offers insight into Americans' purchasing patterns, as many are increasingly skipping larger purchases as the cost of living continues to rise while wage growth remains stagnant. The feature story below explores the "mini effect" and how retailers are finding new ways to capture consumer dollars.

> Why everything is tiny: Maxed-out US shoppers embrace "mini effect." (Read)

> The "mini effect" differs from the "lipstick effect," which suggests that consumers opt for small luxuries amid tough economic times. (1440 Topics)

In partnership with EnergyX

The 1,700%+ Lesson From SpaceX’s IPO

Three days after SpaceX IPO'd, they became the 6th-most valuable public company. Those who bought at the open saw 40% gains. a16z, in since 2023, was up 1,700%+. The lesson? Today’s biggest growth can come at the private stage.

A similar dynamic’s playing out in lithium, and EnergyX is giving retail investors a seat. Their tech recovers up to 3X more lithium than usual methods. And it’s great timing: Demand is projected to grow 5X by 2040. Now they’re tapping into up to 15M+ tons. Invest by midnight PT.*

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 Etcetera 

> The incredible life story of Visa founder Dee Hock.

> Why commodities like oil are primarily bought and sold via futures contracts.

> How airline loyalty programs make money.

> The "Peter Principle" helps explain why bosses aren’t always good at their jobs.

> Inside Ozempic parent company Novo Nordisk's unique business model.

> How the "lump of labor fallacy" applies to the AI boom. 

> See how the median annual US salary varies by age group.

> Are utility companies considered monopolies?

> One short seller thinks the practice is more important than ever before.
 

> How insiders are cashing in on prediction markets.

> Why Peloton pays artists more for music than most streaming platforms.

> How Al Capone's business structure kept him from getting charged with bootlegging.