CWS Market Review – September 2, 2025

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The stock market got off to a weak start for September. Historically, September and October have been the two worst months for the stock market. Perhaps Wall Street wanted to start the downtrend immediately.

What’s interesting is that today’s damage was mostly felt by those High Beta names. I’ve been talking a lot about them recently, and you can see why. The S&P 500 was down by 0.7% which isn’t that bad. At one point, the index was down more than 1.5% for the day. At its low, the index was down 100.68 points.

Notice the red rightmost cross in the chart below. You can see how low it fell during the trading day.

This has been an odd market in that it’s been internally volatile but externally calm. In other words, the overall market is placid, but the riskier stocks have done well. I’ve been waiting for High Beta stocks to get their comeuppance.

I’m starting to feel like Linus in the pumpkin patch. Instead of the Great Pumpkin, I’ve been waiting for the rotation out of high-risk names. Now might be a good time, but the market has easily repulsed any attack led by the bears. Just recently, the market had a five-day losing streak, but that lost ground was quickly regained by the bulls. In fact, it happened again this afternoon, but on a smaller scale.

Today was the worst day for stocks since August 1. Interestingly, that was also the first trading day of the month. Take that away and today was the second-worst day for the market since July 7.

August was another good month for Wall Street. It was also the fourth monthly gain in a row. As an investor, it’s hard to argue with a strong trend. Trying to spot market rotations is a dangerous game and I try to avoid it. Instead, I watch for what the market gives us.

I’m closely watching to see if the S&P 500 falls below its 50-day moving average. Let me be clear that this is an imperfect metric, but it does have its merits. The index is still above its 50-DMA, but it got a lot closer today. If the market does lose its 50-DMA, which it hasn’t for several months, that could be a signal for the bears to continue attacking.

Kraft Heinz to Split in Two

Kraft Heinz (KHC) announced today that it’s splitting into two companies. The company had to make a move, and this was building for years, but not everyone is happy.

Warren Buffett, whose Berkshire Hathaway owns more than one-quarter of the shares, said he’s “disappointed” in the news. That almost sounds like a scolding parent. Shares of KHC fell 7% today.

If you recall, ten years ago, Buffett was the one who pushed for the original Kraft-Heinz merger. He hasn’t touched his shares since 2015. Berkshire originally partnered with 3G Capital to get the deal done, but 3G sold all of its KHC shares two years ago.

The plan is simple. What Kraft Heinz wants to do is divide the current company into two publicly traded companies. One company focuses on sauces, spreads and shelf-stable meals. The other would include staples like Oscar Mayer, Kraft Singles and Lunchables.

Buffett conceded that the merger hasn’t worked out as well as he has hoped. That’s some classic Midwestern understatement. He said that any splitting apart will cost a few hundred million dollars, and it will take several months. That’s true, but the present course isn’t working.

The fact is that Americans’ tastes have changed and packaged food isn’t as popular as it once was. CNBC noted that some analysts “blamed the company’s slump on cost-cutting measures that kept Kraft Heinz from investing in its brands at a time when they needed it most.”

Will Buffett sell? That’s not clear. He did say that if Berkshire is offered a block deal, meaning someone ponies up a few billion to take KHC off Buffett’s hands, he won’t take it unless the same deal is offered to KHC shareholders.

This story brings me to an important lesson about investing: it can take a long time before you can properly judge a business. It’s been ten years at Kraft Heinz, and management and the major shareholder still disagree.

Here’s an interesting stat that might surprise you: Shares of Nvidia (NVDA) were dead money for more than 13 years. It’s true!

If you had invested in Nvidia on January 2, 2002, by September 1, 2015, you would be down about 4% with your investment (not including dividends). Make no mistake – this is a massive example of cherry-picking data, but nevertheless, those cherries are real. Nvidia really did very little for more than 13 years.

Over the next ten years, shares of Nvidia have risen about 340-fold. Over the last four days, the stock has lost $340 billion.

Shares of Pepsi (PEP) got a nice pop today when Elliott Investment Management said that it has taken a $4 billion position in the soda company.

Elliott is a well-known activist hedge fund. By activist, I mean a fund that takes a large position in a stock and then advocates for some important changes in the hopes of giving the stock a boost. Oftentimes, this means paying out a dividend or boosting capital expenditures.

Pepsi’s stock hasn’t been doing that well this year, and it’s even been lagging Coke (KO).

The problem with being an activist investor is that the easy part is finding a company that’s not doing well. The hard part is finding a company that’s not doing well and that can easily get back to health. Elliott said that Pepsi should “evaluate the potential refranchising of its bottling network, while streamlining its portfolio by divesting non-core and underperforming assets.”

Elliott’s position is different than Buffett’s with KHC. The reason is that even despite Elliott’s big position, it’s still small compared with the overall company which has a market value of $200 billion. As a result, Elliott needs to get investors on its side. Elliott said that Pepsi has the potential to rally 50% from here. That certainly got attention from a lot of folks.

What I don’t get about Elliott’s position is that it doesn’t involve any major strategic gain, outside some generalities. It doesn’t advocate for a new dividend, or spin off, or merger. Instead, Elliott seems to say that Pepsi can somehow do better. I hope that’s right.

The next big test for the market will come this Friday when the government releases the jobs report for August. The July report was weak, and the other months were downgraded. We’ll get the ADP report on private payrolls tomorrow.

That’s all for now. There will be no Tuesday issue next week. I’ll be at the Future Proof Festival in Huntington Beach, CA. AdvisorShares will be at booth #327. If you’re around, come on by! I’ll have more for you in the next issue of CWS Market Review on September 16.

– Eddy

Posted by on September 2nd, 2025 at 10:11 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.