It was a very eventful week in the stock market last week, as
investors started with gloomy news from France and the Netherlands with
respect to their political results. On Tuesday, Apple crushed it, and
on Thursday, a slew of companies reported, including Starbucks and
Amazon.com. The market viewed Amazon's results very favorably, not so
for Starbucks. Interesting interpretation, and in time it will be
interesting to see how those companies fare. I would imagine both will
do very well, as both are strongly positioned to benefit from the growth
in the global digital economy.
In looking at the displacement by
digital goods against off line competitors, I recently was talking to
my brother about whether or not satellite and cable companies are going
to be losing customers. He believes they will, and I have changed my
mind and come around to thinking he is correct. The key is to have
content which is unique, and can be distributed by the owner in any
number of ways. Controlling the distribution method now means little
when you can go straight to the internet or a mobile device and download
it directly. It won't happen overnight, but three years from now you
could see a vastly different picture about how people consume content,
with most of it probably directly from the provider.
One thing
which I really enjoy as an investor is sticking with companies when they
have subpar or mediocre performance, and even adding to the position.
In many instances, it takes a few years of sticking with the company,
but when performance turns around, you really benefit from your
patience. It is not easy to do, however, what can really help is when
you get a nice dividend so you get paid to wait. An existing situation
like that would be Johnson and Johnson, BP, or HP- full disclosure, I
own them all. All recently raised their dividends, and if they start to
grow just a little bit quicker, well, lets just see what happens.
There
are going to be a slew of earnings reports this week, so I look forward
to seeing how the market digests them. Lots of media and technology
companies report, or at least a number of those that we own. Here is a
nice story on how the Gap is reinventing itself-http://www.nytimes.com/2012/04/29/business/a-humbled-gap-tries-a-fresh-coat-of-pep.html?_r=1&ref=business
April 2012 was a tough month for the stock market industry as investors fled in droves-http://www.bloomberg.com/news/2012-04-27/equity-fund-redemptions-in-april-are-largest-in-17-years.html
Looks like the entire venture capital industry is facing a bout of Schumpter's Creative Destruction (about time)-http://techcrunch.com/2012/04/28/the-seven-forces-disrupting-venture-capital/
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 Seeking Alpha articles about specific stocks written by Yale Bock,
Saturday, April 28, 2012
Tuesday, April 24, 2012
Apple Crushes It, Concerns In Europe, Groupon New Leadership, and Zuckerberg Upsets Wall Street!-
It is only two days into the week, and already the see saw mentality of the financial markets is on display. Yesterday, the market sold off on the political ramifications of new elections in France and the Netherlands. It seems as if austerity is not loved by Europeans, as if that is a surprise.
Ten minutes ago, Apple reported huge numbers, again what a shock. The company has been a machine for 10 years, and if you walk by a store in a mall anywhere in the world, you cannot get in. If you want to download a cool application for your son or daughter, they are the first destination. Hard to see this changing any time soon. As for the topsy turvey nature of Wall Street, ditto. If you have a hard time with volatility, this is a tough market for you. Try and use it to your advantage- or as they say, roll with the punches.
Nice to see things on the political front slowing down. I am sure Mitt is out pounding the pavement for donations, as he should be. In looking at our government, we have Medicare warning they are going busted sooner than they thought. We have the GSA scandal where tax payer funds are used for conferences for an entity designed to make sure tax payer funds are used correctly. We have the Secret Service hiring prostitutes when they go outside the country. We have a Senate which has not passed a budget in three years. Not going to even bring up the huge deficits we consistently run. Any wonder why people are a little fed up?
Groupon had a material deficiency in their accounting- which is a terrible operational no no for a public company. Most professionals say when you see that, you sell- no questions asked. Some think Groupon is going to be a bankruptcy candidate. I strongly doubt that, especially with Howard Schultz as a director. http://www.bloomberg.com/news/2012-04-24/groupon-is-said-to-seek-new-directors-after-revenue-restatement.html
Here is some more information on the concerns from Europe and the selloff yesterday- http://seattletimes.nwsource.com/html/businesstechnology/2018049439_apuswallstreet.html
Wall Street is upset at Facebook's Mark Zuckerberg- http://www.nypost.com/p/news/business/facebook_deal_surprised_bankers_HHuWwRbV6DE55tIpScowxI#ixzz1rkSom1uw
I hope everyone is enjoying their spring and looking forward to the NBA Playoffs. Naturally, there will be some upsets, but the teams that defend and do not make mistakes are usually going to be around at the end. It also helps if you have a great player who can bail you out from time to time.
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.
(If you are interested in seeing the latest Seeking Alpha articles about specific stock picks from Yale Bock and Y H & C Investments, click the following links)
Ten minutes ago, Apple reported huge numbers, again what a shock. The company has been a machine for 10 years, and if you walk by a store in a mall anywhere in the world, you cannot get in. If you want to download a cool application for your son or daughter, they are the first destination. Hard to see this changing any time soon. As for the topsy turvey nature of Wall Street, ditto. If you have a hard time with volatility, this is a tough market for you. Try and use it to your advantage- or as they say, roll with the punches.
Nice to see things on the political front slowing down. I am sure Mitt is out pounding the pavement for donations, as he should be. In looking at our government, we have Medicare warning they are going busted sooner than they thought. We have the GSA scandal where tax payer funds are used for conferences for an entity designed to make sure tax payer funds are used correctly. We have the Secret Service hiring prostitutes when they go outside the country. We have a Senate which has not passed a budget in three years. Not going to even bring up the huge deficits we consistently run. Any wonder why people are a little fed up?
Groupon had a material deficiency in their accounting- which is a terrible operational no no for a public company. Most professionals say when you see that, you sell- no questions asked. Some think Groupon is going to be a bankruptcy candidate. I strongly doubt that, especially with Howard Schultz as a director. http://www.bloomberg.com/news/2012-04-24/groupon-is-said-to-seek-new-directors-after-revenue-restatement.html
Here is some more information on the concerns from Europe and the selloff yesterday- http://seattletimes.nwsource.com/html/businesstechnology/2018049439_apuswallstreet.html
Wall Street is upset at Facebook's Mark Zuckerberg- http://www.nypost.com/p/news/business/facebook_deal_surprised_bankers_HHuWwRbV6DE55tIpScowxI#ixzz1rkSom1uw
I hope everyone is enjoying their spring and looking forward to the NBA Playoffs. Naturally, there will be some upsets, but the teams that defend and do not make mistakes are usually going to be around at the end. It also helps if you have a great player who can bail you out from time to time.
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.
(If you are interested in seeing the latest Seeking Alpha articles about specific stock picks from Yale Bock and Y H & C Investments, click the following links)
Tuesday, April 17, 2012
Moving To the Next Crisis, Meredith Whitney's Reversal, Ipad Content For Kids, and Palestinian Investing-
| So the next major crisis is now in Spain and Italy as bond yields
were up yesterday, but they have retreated today so the market
rallies. For many investors, it seems like stock markets just move
from crisis to crisis to find something to worry about. Certainly,
there are always events and situations in the world which can have a
dramatic effect on how much business gets done. Still, I think it is
incredibly counterproductive to constantly be worrying about where the
next disaster is going to take place, and when. The only good thing
about it is it gives someone like myself a chance to buy stocks on a
more frequent basis, principally because other market participants have
no faith in the long term earnings power of their businesses. One of the things I love about the equity markets is that they continually test you. You have to know that when you buy a stock, it is going to go down if you are long, and it will go up if you are short. I find it almost hysterical that traders say buy on the way up. Ask them how many positions they own, what their price points are, and how long they have owned the stocks, and get documentation before you run out and listen to the tv guys. Oh yeah, tell them to take their pretty charts and graphs and, well, you get the idea.
So
Meredith Whitney has changed course about her opinion on Citigroup.
Could it have anything to do with the fact that she now has her own firm
and maybe, just maybe, could use some more business? Hard to get
clients when you are constantly ripping everything, wouldn't you say? http://www.cnbc.com/id/47074311
Nice to see there is content available for kids on the Ipad which is put together just for kids http://techcrunch.com/2012/04/17/happly-for-ipad-helps-curious-kids-discover-the-websafely/
My
definition of insanity is investing with the Palestinians. Apparently,
there is a big market for it. As if there are not plenty of
opportunities in the rest of the world. Knock yourself out Google and
investment bankers-http://dealbook.nytimes.com/2012/04/16/early-investors-see-promise-in-palestinian-start-ups/?ref=business
If you have any thoughts or comments on the current post, please share them, no matter how opinionated they are!!! 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. (If you are interested in seeing the latest Seeking Alpha articles about specific stock picks from Yale Bock and Y H & C Investments, click the following links) | |||
|---|---|---|---|
Thursday, April 12, 2012
A Pause that Refreshes, Romney vs Obama, Rite Aid, and Introducing Lending Club-
So, the market goes down five straight days, and is now in the process of recovering those gains (and then some) in the last two sessions. For many investors, the volatility is hard to stomach. Instead of looking at it that way, another prism might be more advantageous. More specifically, when the market falls, you get more for your money as a buyer. Yes, you lose money, on paper, temporarily (maybe permanently).
I was reading through Mr. Buffett's annual letters, and one key point struck me. He makes the comment he loves to buy businesses where the current year is a loss, but earnings and profit will resume for a long period of time- a great example would be his buy of American Express many years ago, or his recent investment in Bank of America. Yes, I know, his stock is down, but let's see how it winds up at the end of the year, or in 5 years. Also, want to point out a mistake I made in my last blog post. I inaccurately stated Best Buy has no debt, which is wrong. It does have debt, but one year of cash flow from the business covers the entire debt burden. (Sorry for that error and I will try to be correct in the future)
On to the main event, Romney vs Obama, Obama vs Romney, should be very interesting. I will only say it would be a great thing for Mitt Romney if Democrats see him as presenting no threat to their man. The best thing in a competition is to have your opponent assume they are invincible, or think the other side is not worthy. When a guy creates a dominant private equity firm like Bain, believe me, they are more than capable.
The reality of the presidential campaign is there are about 10-12 states that are going to decide the matter. Both sides will spend heavily in those states. The fundraising situation is also interesting because Obama has a huge war chest of his own to spend. Romney will have a war chest, but the Superpac's will be the where he have the majority of his support. Expect a brutal advertising campaign on both sides. The debates will matter immensely, especially the first one. Here is a nice article summarizing where we currently are in the process: http://www.realclearpolitics.com/articles/2012/04/12/romney_trails_obama_but_key_numbers_break_his_way_113816.html
One of the biggest problems in corporate america is when an enterprise takes on too much debt. We could also say the same thing about sovereign countries- see Europe, the United States, and many more. Debt is available in many forms, but the key is to use it to your advantage, and not have the tail wag the dog. Here is an article about Rite Aid, which took on too much debt in a private equity transaction-http://online.wsj.com/article/SB10001424052702304444604577339432385367746.html?mod=WSJ_hp_LEFTWhatsNewsCollection
Finally, an interesting development that John Mack joins the board at Lending Club. John Mack is the ex-CEO of Credit Suisse and Morgan Stanley and was a very good CEO at both of those Wall Street firms. The fact that he joined a lending startup lends a lot of credibility to the entity-http://www.bloomberg.com/news/2012-04-12/ex-morgan-stanley-ceo-john-mack-joins-lendingclub-board.html
If you forgot the Covestor Next Invest conference, here is a link as it is available through April 21, 2012-presentations.inxpo.com/Shows/Covestor/R...
I hope everyone is enjoying the spring. It was interesting being in Toronto and seeing the difference in the weather versus Las Vegas. Las Vegas has its issues, but the weather now is hard to beat. Really appreciated the comments last week, and if you have any on the current post, please share them, no matter how opinionated they are!!!
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.
(If you are interested in seeing the latest Seeking Alpha articles about specific stock picks from Yale Bock and Y H & C Investments, click the following links)
I was reading through Mr. Buffett's annual letters, and one key point struck me. He makes the comment he loves to buy businesses where the current year is a loss, but earnings and profit will resume for a long period of time- a great example would be his buy of American Express many years ago, or his recent investment in Bank of America. Yes, I know, his stock is down, but let's see how it winds up at the end of the year, or in 5 years. Also, want to point out a mistake I made in my last blog post. I inaccurately stated Best Buy has no debt, which is wrong. It does have debt, but one year of cash flow from the business covers the entire debt burden. (Sorry for that error and I will try to be correct in the future)
On to the main event, Romney vs Obama, Obama vs Romney, should be very interesting. I will only say it would be a great thing for Mitt Romney if Democrats see him as presenting no threat to their man. The best thing in a competition is to have your opponent assume they are invincible, or think the other side is not worthy. When a guy creates a dominant private equity firm like Bain, believe me, they are more than capable.
The reality of the presidential campaign is there are about 10-12 states that are going to decide the matter. Both sides will spend heavily in those states. The fundraising situation is also interesting because Obama has a huge war chest of his own to spend. Romney will have a war chest, but the Superpac's will be the where he have the majority of his support. Expect a brutal advertising campaign on both sides. The debates will matter immensely, especially the first one. Here is a nice article summarizing where we currently are in the process: http://www.realclearpolitics.com/articles/2012/04/12/romney_trails_obama_but_key_numbers_break_his_way_113816.html
One of the biggest problems in corporate america is when an enterprise takes on too much debt. We could also say the same thing about sovereign countries- see Europe, the United States, and many more. Debt is available in many forms, but the key is to use it to your advantage, and not have the tail wag the dog. Here is an article about Rite Aid, which took on too much debt in a private equity transaction-http://online.wsj.com/article/SB10001424052702304444604577339432385367746.html?mod=WSJ_hp_LEFTWhatsNewsCollection
Finally, an interesting development that John Mack joins the board at Lending Club. John Mack is the ex-CEO of Credit Suisse and Morgan Stanley and was a very good CEO at both of those Wall Street firms. The fact that he joined a lending startup lends a lot of credibility to the entity-http://www.bloomberg.com/news/2012-04-12/ex-morgan-stanley-ceo-john-mack-joins-lendingclub-board.html
If you forgot the Covestor Next Invest conference, here is a link as it is available through April 21, 2012-presentations.inxpo.com/Shows/Covestor/R...
I hope everyone is enjoying the spring. It was interesting being in Toronto and seeing the difference in the weather versus Las Vegas. Las Vegas has its issues, but the weather now is hard to beat. Really appreciated the comments last week, and if you have any on the current post, please share them, no matter how opinionated they are!!!
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.
(If you are interested in seeing the latest Seeking Alpha articles about specific stock picks from Yale Bock and Y H & C Investments, click the following links)
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