Black Friday, The Fiscal Cliff, the Perception of Banking, and Cyberwar in Israel-

The annual rights of passage known as 'Black Friday' came yesterday with all the fanfare which goes with it. The day after thanksgiving is very important to retailers as it is a day which helps set the tone for their performance during the fourth quarter. For many companies, the holiday shopping months account for the majority of their profits for the entire year. As a result, thoughtful enterprises put a great deal of planning, effort, and resources into having an approach which allows for high levels of execution across all areas of the business. Mobile based efforts are increasingly being integrated into existing strategies as more and more shopping moves to smartphones and tablets.

Consistent with this customer migration are the development of applications which take traffic away from web sites. Smart organizations use a variety of strategies to attract customers and make the buying experience as convenient as possible. I do not own shares in Amazon.com, but their management does a great job of attracting customers any way it can. I certainly think their efforts in the tablet space with the Kindle, Kindle Fire, and a growing library of content puts them in great position, along with Apple and Google (I know, really going out on a limb there, huh) , for many years to come. The hard part about technology based companies is they are constantly rapidly changing , but for that matter, so is almost every part of the business world, just not as fast as tech focused sectors.


The negotiations for averting the "fiscal cliff" will intensify this week as both President Obama and House Majority Leader John Boehner try to come to an agreement which will both please and upset their bases. The main players are Obama, Boehner, and Senate Minority Leader Mitch McConnell. Every other politician is not worth paying attention to as they only make the discussions more difficult. The people with the decision making power are the three I mentioned. A deal will probably get done, but it is hard to have any confidence at all in this group.

The market anticipates a deal and as a result had a nice run last week. Usually this is a time when the stock market does well, but one never knows as investors have been very pessimistic for a long time. If institutions ever get the sense the economy will grow quicker than they thought, or large companies will start to invest the large cash balances sitting on their balance sheets, the stock market will move higher. If the big boys do not believe those things, we will keep meandering along with performance based on individual company execution, which is what pretty much happens anyway.



The perception of bankers in both the United States and Europe is very poor-http://www.bloomberg.com/news/2012-11-22/jain-gets-silent-treatment-as-bankers-eat-humble-pie.html



Large institutions are now seeking retribution based on the idea J.P. Morgan Chase misallocated capital in an investment process designed for trading-http://www.bloomberg.com/news/2012-11-21/jpmorgan-turned-cio-into-prop-trading-desk-pensions-say.html


The media is focused on the war in Gaza, but even more interesting is the cyber efforts Israel is making to keep their government sites protected-http://www.bloomberg.com/news/2012-11-19/israel-wages-cyber-war-with-hamas-as-civilians-take-up-computers.html

I hope you had a great thanksgiving and enjoy the weekend. In addition, I hope the holiday season is a happy and healthy one for you and your family!!!!

Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.

Here are some articles written about specific companies by Yale Bock at Seeking Alpha-
http://www.y-hc.com/resources/newsletters/50-seeking-alpha-research.html

Reality Sets In, the Market Reacts, and Say Goodbye to Hostess!!

Well, it is all over but the shouting, as Mr. Obama gets another four years. The only problem is it is not really not finished, as the country has the mess that is the fiscal cliff to deal with, along with the joy that is Obamacare (let's not even discuss the Libya affair). In addition, businesses facing increasing regulatory costs are already starting to react. Papa John's pizza (you might know it from the Peyton Manning commercials) has decided to either reduce workers hours or cut back on health care coverage. There are other reports from fast food enterprises who are considering layoffs as well. Some eateries are considering a 5% increase in food costs to help pay for the implementation of Obamacare. The citizens of the U.S. voted for him, and now we have the joy that are his policies as well. Lovely.

The stock market certainly made its opinion felt regarding the outcome of the election as stocks have sold off for the last week and a half. An increase in capital gains, dividends, and marginal tax rates looks like a matter of when, not if. Investors figure they will take gains and a lower tax rate now versus holding and facing higher tax rates in the future. Unless of course, the holdings are in tax advantaged or tax free accounts, where your proceeds accrue until you have to withdraw the assets. Strategic thinking is necessary if one wants to build wealth, and tax advantaged accounts are great vehicles if utilized correctly.

Naturally, once we have a winner in the presidency, Hamas decides to rain missiles into Israel. Moreover, the lunacy of the muslim fanatics continues to show its ugly head. You have to think Iran will also instruct Hezbollah to attack from the north. With Egypt in the pocket of the Muslim Brotherhood, the middle east looks like a powederkeg waiting to explode. Leading from behind, huh?

The shock, the horror, yup, Hostess will be liquidated-http://dealbook.nytimes.com/2012/11/16/hostess-brands-says-it-will-liquidate/?ref=business

Kyle Bass is a unique investor with strong opinions. He also has very good performance, so you might take a look at what he is invested in-http://www.bloomberg.com/news/2012-11-16/bass-says-half-his-fund-is-invested-in-subprime-bonds.html

It is always nice to see good products for kids- http://techcrunch.com/2012/11/16/timbuktus-educational-app-for-kids-relaunches-with-new-design-daily-content/

Lytro is trying to revolutionize the taking picture business, and they have an updated new product-http://techcrunch.com/2012/11/15/lytro-reinvents-the-camera-once-again-now-lets-photos-change-perspective-along-with-focus/?icid=trending4&grcc2=5476355bc666b2e92559cb464a7025ed

Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.
Here are some articles written about specific companies by Yale Bock at Seeking Alpha-
http://www.y-hc.com/resources/newsletters/50-seeking-alpha-research.html

Obama's Win, Money Moves Before the New Year, and Amazon's Wine Venture-

Barack Obama got reelected President of the United States on Tuesday in a bitterly fought election. Many Republicans are offering reasons and explanations on what happened, why Romney and other Senate candidates lost, and how to proceed in the future. Democrats are hailing the election victory a mandate for their policies. Without question, the citizens of the United States sent a message to people who are wealthy that they are not wanted as political leaders, at least not in the contests of 2012. Across the country, voters also in some instances approved tax increases, certainly in California. I find it interesting, and in my opinion wrong, to believe a country with 50 trillion dollars of unfunded liabilities, and a state like California, which is running 10 billion dollar annual deficits, is not going to focus on ways to cut costs first. Any successful business person knows you take care of what you can control, which is your own spending. If you can find ways to become more efficient you do it right off the bat, as a more productive business is more profitable. However, the majority of the voters across the country apparently do not feel the same way.



With respect to the political situation between the two parties, you must look at the demographics to understand what happened. It is very simple, and obvious, the current Republican party is not seen as an attractive alternative to the Democratic party for young people (especially young women), hispanics, asians, and african americans. The percentage of these voters the democratic party won is way too large of a hurdle for any opponent to overcome. These voting blocks will continue to grow, and the percentage of the vote which is caucasian, around 72%, continues to decline. Barack Obama spend the last 5 years courting these voters and getting them to register to vote, and when it was time to show up to vote, they certainly did. The unwillingness or lack of effort the Republican party made in attempting to engage these constituencies decided this election, and could continue to plague the party of Lincoln for many years to come.



I believe there were many other issues which contributed to the Obama win, certainly with to respect to a few of the choices Mitt Romney made, some of which were forced on him. First, with so much of the Republican primary devoted to a race to see who could be more conservative, Romney had to take positions on immigration and abortion to get himself elected. When the Republican primary dragged on and on it hurt his financial position, so it left him depeleted at the ouset of the general election. At that point, Obama used his resources to paint Romney in such a way as the swing voters in the midwest became convinced Romney was not somebody who they could relate to. Certainly, a legitimate question is how can a guy worth $200 million talk about tax fairness and economic opportunity with someone who earns 30-50 thousand dollars a year? Romney did a good job of trying to answer those questions in the debates, but mindshare is earned by repitition, like advertising. When people see things a thousand times, eventually, they begin to believe the narrative. I also believe picking Paul Ryan was a major mistake, as Romney went 0- for the midwest. The obvious choice was Marco Rubio, and Rubio has a very good chance to be the nominee in 2016. My last thought on the election is I think Mitt Romney very much helped Obama because his ideas about leadership and working with the other side are mandatory for Obama to have any success in his second term. The interesting question is whether Republicans, after having been the recipeint of a brutal advertising campaign by President Obama, are going to want to cooperate.



The stock market has sold off the last few days after Mr. Obama got reelected. Investors are obviously concerned about the fiscal cliff, impending dividend and capital gains tax increases, possible marginal tax rate increases, and the implementation of Obamacare. The stock market always has stocks which are trading where people think they are a bargain. Currently, you can probably find many companies where you can look at the valuation and the stock may be trading near multi year lows. Stepping in to buy these equities can be painful as you are trying to "catch a falling knife." However, you will only know 2-3 years later how wise a decision it was to buy the stock.

Here are some interesting thoughts about how investors are approaching the new year- http://www.bloomberg.com/news/2012-11-08/obama-victory-leads-wealthy-to-make-quick-pre-2013-moves.html



Voters decide to raise our taxes-http://www.bloomberg.com/news/2012-11-08/voters-to-congress-raise-our-taxes.html



Amazon decides to make a big push into wine-http://techcrunch.com/2012/11/08/third-times-a-charm-amazon-tries-again-with-launch-of-new-vertical-amazon-wine/

Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital
. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.

Here are some articles written about specific companies by Yale Bock at Seeking Alpha-

http://www.y-hc.com/resources/newsletters/50-seeking-alpha-research.html