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,
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