Earnings Season, Energy, and Startups-

It has been a while, so please indulge me as I bring to the table a nice assortment of topics. First, let's consider what is happening in the capital markets, specifically the stock market. Earnings season is upon us, and the large money center and investment banks generally have reported results which are reflective of their specific situations. The same cast of characters give us the same roles in the same movies. Should we be surprised? No, of course not.

The one area which was interesting was in the investment banking world where Morgan Stanley indicated they are looking forward to concentrating on growth. With the improvement in the housing industry, one would think the large banks focused on consumer credit, mortgage underwriting, and commercial lending would stand to prosper. Shareholders in these companies would certainly welcome better performance as the stocks have been so bad for so long any kind of return to normalized earnings power would boost the entire sector. In fact, they were so beaten down that in 2012 financials were the best performing industry in the stock market.

I just had to bring up the fact that Berkshire Hathaway is rebounding strongly and has had a big move recently. Just to show you how well Mr. Buffett has positioned Berkshire, their ownership of the Burlington Northern railroad was a great investment. Burlington now carries approximately 35% of all the oil in North America which is not moved by pipeline. With a five year backlog on railroad cars, profitability for Burlington is guaranteed for as far as the eye can see. Equity markets reward profits, and about 6 months or a year ago Berkshire's stock was languishing and the critics of Buffett were out in full force. If the energy boom is even remotely as strong as many suggest, it will be a long time before Berkshire Hathaway's stock performs poorly.



I found it interesting that Dell is now discussing a transaction which might take the company private. In the same domain, Hewlett-Packard decided to pay Meg Whitman 14 million dollars for her work last year. My own opinion is the boards of both companies are making big mistakes with these decisions. Dell faces challenges but to go private with a small premium in the hopes of coming back to the public markets in a few years is stupid. As for the board of the largest computer company in the world, maybe they think Meg has stabilized the situation. Still, if you take into consideration the mood of the public for entities like banks which pay executives big compensation packages for poor performance, it is hard to see how this is any different. With the stock at decade lows and questions about how HPQ will compete in tablets and smartphones, as well as being a second tier competitor in enterprise consulting, it would be smart of Mrs. Whitman to reconsider accepting the pay package.



The events in Algeria again point out the importance of energy in the global marketplace. It even further underscores the increased demand of large multi national corporations for security information and services. During this week I read a report on energy trends by a large oil company. The report mentioned the increase in fuel standards (by yes, the Obama Administration) as helping improve efficiency. A few key points were straightforward:

First, there is a massive shift occurring because of the improved capability of producing oil and gas in North America. In 2012, North America produced more energy related resources than ever before, up by about 15% over 2011. Second, emerging countries in Asia are where the vast majority of demand growth in energy will take place. Countries like China and India are going to be dependant on the rest of the world for energy supplies. As much as I hate to admit it, Russia is in a very strong position with respect to energy. The issue there is how effective their companies can be in getting the resources out of ground and to the market. Just as pertinent, the sources of energy production are going to be pretty stable for a long time. Even though the current administration loves to talk about alternative energy investment, the facts indicate materials like oil, natural gas, and coal will remain dominant for a long time. A great deal of the growth in supply will come from alternative energy areas like solar, wind, and nuclear, but they only make up about 7% of total inputs. With energy, the time frames to be considered are decades, not months or years.



Recently, I have been looking into the investment merit of startup companies. My rationale for doing so is the current investment climate is one where income is being taxed at a slightly higher rate than in 2012. In any taxable account, investors will keep less of their dividend income. You might reinvest the dividends, but you will pay a higher tax on that income. One way to counteract the higher tax rate is to own companies which don't pay dividends, but use their income to buy back their own stock more aggressively. Certainly, we own plenty of companies which already do that. However, if you are faced with higher tax rates on your investment capital, why not invest in startups? A startup might be a situation which takes a long time to become a good business, but if it flourishes you stand to eventually reap the rewards. In the meantime, your capital has to go somewhere and you can choose what areas look promising and leaders you want to take a chance on. So how has it gone so far?



Having contacted a few interesting startups, I must say I think a lot of the founders have a much in common. First, they are enthusiastic about their opportunity. Many are very highly educated with impressive resumes and backgrounds. In most cases, the markets they are targeting are massive. Where the wheels come off the track is the ability to provide or communicate a business plan which shows how the company will grow and attain profitability. Many startups are looking for investors with high-profile networks who can help them reach their goals. Of course they should be discerning about who they get involved with. However, many of these individuals are not realistic about how much their companies are worth. I find venture capitalists and startup founders are completely delusional about the valuations they afford their prospects. At a time where you can find all kinds of situations in the public markets which are very interesting with respect to valuation, to go invest a ton of money on a startup would be giving up potentially great situations in seasoned companies. Perhaps in time the situation may change.

Finally, the debt ceiling negotiations will probably heat up after the inauguration and State of the Union address. It appears as if Republicans will extend the ceiling for 3 months in return for a discussion about how to reform entitlement spending. You wonder if some sense of rationality will ever prevail in Washington?

Maybe the politicians could use some help to find a way to agree?http://www.nytimes.com/2013/01/19/business/negotiation-experts-consider-how-to-reach-a-budget-deal.html?ref=business



The building blocks of our society are in databases-http://techcrunch.com/2013/01/19/your-database-is-probably-terrible/

A nice story on why the future is always bright-http://techcrunch.com/2013/01/18/the-weekly-good-the-problems-of-today-will-be-solved-by-the-minds-of-tomorrow/

Thank you for reading the blog and hopefully I will be more timely in getting my posts up. Have a happy and healthy week!

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 charter holder.

Welcome 2013, Is Change A Comin?, the Fiscal Cliff, and More!

Happy New Year!!! 2013 is upon us and the Mayan calendar was wrong, we made it through 2012 ok. Investors even survived the fiscal cliff, and apparently all is well in the world as the stock market gained 5% last week. I don't think anyone should expect 5% weeks to be normal, but it is consistent with how the market performs. One of the best investors ever, Peter Lynch of Fidelity, always emphasized being fully invested, among other principles like doing a whole lot of homework. Lynch believed you had to be fully invested because history proved that something like 80% of all market gains occur on less than 5 days during the year. If you are trying to time the market by buying and selling, the small number of days when it roars are literally impossible to predict. If you are always fully invested, you participate in full and reap the entire benefits. Certainly, much depends on the individual circumstance and as one gets older, many should not be risking capital they need to live on. Still, the results from last week are important as there may be some big changes occurring in the capital markets.

So what exactly am I referring to? First, last week bond yields rose and the notes the Federal Reserve released showed many members of that board being inclined to start getting hawkish at the first signs of economic growth. Indeed, if the economy starts to perform better and grow quicker, employment and inflation tick up at all, the Federal Reserve will start to walk back their (low) interest rate targets. Now, the caveat is we saw this last January as well, when money poured out of the bond market and into stocks. Money also left gold and went to oil. The important question is will this continue? Earnings reports will start to roll in next week so there is quite a bit to pay attention to in the equity markets.

My two cents on the fiscal cliff deal is it is more evidence of how poor of a job our elected leaders perform. Waiting until the last minute to get deals done is awful for work product and what you get is the result. Essentially, the key issues of spending and entitlement reform were not addressed. Many corporate leaders were very disappointed in the deal. The ex-CEO of Wells Fargo, who ran a very disciplined company when he was in charge, said the country was going to hell and it was a joke that they spent months negotiating to come up with such a poor result. It is more indication we need to have term limits for Congress, not pay for their retirement packages and benefits, and elect better leaders (as President, for example- my editorial comment).

Even worse, it now sets up the end of the February and March as deadlines for a debt limit negotiation between the warring parties again. Pretty much the same bunch arguing about the same issues they have for the last 3 years. For investors, the market focuses on moving from one problem to another. Of course, it is illustrative that long term success in the stock market, like Berkshire Hathaway's recent out performance, is dependant on profits and not political events.

Costco, Sam's Club, or BJ's- I know which one I favor-http://finance.yahoo.com/news/best-warehouse-store-bj-costco-104106736.html

The new Obamacare health care law is not changing the long term trend of health care insurance costs- all they do is keep going up. There are quite a few issues to consider in health care and the following article brings many of them up-http://www.nytimes.com/2013/01/06/business/despite-new-health-law-some-see-sharp-rise-in-premiums.html?pagewanted=2&_r=0&hp
David Rosenberg is a perpetual bear on the stock markets and always talks up bonds, but you need to pay attention to all points of view so here is his 2013 outlook-http://www.businessinsider.com/david-rosenbergs-2013-outlook-2012-12

The idea of traction capital in venture capital is illustrative of the idea to wait until you have proof of concept-http://techcrunch.com/2013/01/06/iterations-traction-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 charter holder.

Learning from History, A Calm Market?, Pokes, and 5G-

History is a great subject because it is full of all kinds of great stories, events, people, and situations which actually took place. Many of these events caused great sorrow and destruction, like World War One and Two, the murders of the Holocaust, and the massive loss of human life during the Civil War and Crusades. It is instructive to pay attention to these events because you can learn how the world came to be where it is today, and how countries and regions were shaped from previous generations.

Just as important, you can also digest how people have been successful in various different situations or industries. I think the whole process of learning encourages and stimulates growth in many different ways. There is much in the media about how college costs, especially student loans, are so great that it has renedered a generation saddled with so much debt it will be hard for them to get out from under the loan repayment burden. However, there is always another perspective. Knowledge can be gained in many ways, and growing as an individual is a never ending process. Part of the growing process is meeting and socializing with people who have different backgrounds and knowledge bases than you do. They can help you discover worlds which you may not have known existed. Most people change jobs many times during their lives. Yet, in many instances, the group you meet and become friends with in college or high school are your most cherished acquaintances and may even become part of your immediate family. Can one really put a price or value on those relationships? I think not.



As my focus usually involves the equity markets, this week I spent some time learning about some of the legends in the financial world and how they approached investing. Many are people I am very familiar with or had extensive knowledge of before this weeks quest. Still, what I found interesting about many is the mindset they had in their approach to the market and life in general. The common theme was staying optimistic, constantly learning about new companies and industries, and to not worry about broader problems in the global or domestic economy. In addition, having a healthy lifestyle and a robust social life were important as well. Many of these individuals lived very long lives, made huge fortunes, and are a shining example of good for their communities. All of these attributes are noteworthy for anybody and if I can have a smidgen of their success I will consider myself very fortunate.



In the financial world, the major events of last week included the focus on the fiscal cliff negotiations, as well as Bill Ackman's announcement and presentation of his best investment idea ever, the short of Herbalife. Herbalife's stock, as well as those of similar ilk (Avon, Nu Skin Enterprises), suffered losses of over 30% during the last two days. Yes, 30% in the last two trading sessions. Mr. Ackman has what is called market credibility. Having seen many of Mr. Ackman's presentations, he is incredibly thorough and spent a year researching Herbalife. Not all of Mr. Ackman's investments have had great success, as Border's and Target come to mind. Many are openly skeptical of how his position in J.C. Penny's will fare, and as of today, it remains to be seen how the famous department store can turn their financial performance around. However, I would not want to take the other side of the Ackman trade because he is like a dog with a bone. He will not exit the position if he feels he is right. It took him many years to take down MBIA, yet he ultimately prevailed and made a ton of money doing so. The position with Herbalife all goes to charity, so he really has no personal skin in the game. Still, it is a situation I will definitely keep my eye on.



The fiscal cliff situation remains unresolved and most analysts believe it will not get solved before 2013 arrives. During the presidential election, I commented to friend's and family the same belief I have today, only I will apply it our entire political leadership in Washington. Please take no offense at the language as it is harsh. If it is bothersome, I am sorry. THEY COULD NOT LEAD A WHORE TO BED. A major problem is neither side cares that the positions they take and will affect the other side. The President does not want to cut spending for fear it will hurt his group of constituents. John Boehner does not want to raise taxes as it is a bedrock principle of Republicans. So what do they do? They do what they do best- go on vacation, and next week they will probably give themselves a raise. Fabulous. (Sorry for the sarcasm)



Many believe market participants are way too calm given the number of problems facing the global and U.S. economy. If the answer is cash, CD's or Treasuries, I would rather be calm-



http://www.businessweek.com/articles/2012-12-19/in-a-world-full-of-risk-why-are-investors-so-calm

Don't look now, but look what is the number one free application- http://techcrunch.com/2012/12/22/its-a-facebook-and-google-world-on-apples-app-store-poke-hits-1-a-day-after-its-release/



A pretty cool article on where mobile networks are headed-

http://www.businessweek.com/articles/2012-12-19/the-future-of-mobile-networks-beyond-4g



If you are really into the tax situation, an interesting editorial commentary on the capital gains debate. I do not agree with the reasoning at all because it does not take into consideration incentives, but that is just my two cents-

http://www.bloomberg.com/news/2012-12-19/the-capital-gains-tax-a-tragedy-in-two-acts.html

Finally, I hope you have a great 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.

Innovation and Why It Matters, Contenders vs Pretenders, a Broken Market?

One of the great things about the investment business is it constantly forces you to learn. You have to keep abreast about what is going on all over the world, and in many different industries. The longer you are a market participant, the more you experience situations where you wake up one day and something happened in the world which affected the price of one of your positions. Interestingly enough, what usually builds wealth over time is the consistency and predictability of business performance. When you see revenues and profits marching in a pretty chart that slants upward and to the right, you have found exactly what you want. However, it is not easy to find these companies, and with the advent of new technologies and innovative thinkers all over the planet, markets are the least static they have ever been.


Industries change, and sometimes very quickly, which affects individual enterprises dramatically. For example, if you look at the coal industry today, almost every analyst believes it faces huge challenges competing with natural gas, regulations which make it hard to compete, and issues about scale relative to substitutes. Coal companies have been going out of business for the last year, and still, even today, coal makes up almost 30% of all energy produced. The only constant is change, and it has a dramatic effect on how to view the investment world.


Still, nobody wants to hear about the challenges, what people are interested in is how to succeed. As a result, I believe you have to allocate capital to companies who have management teams who are leaders and not imitators. Imitation not only does not work, it is actually a very sloppy and lazy way to approach business. The risk is immense, when you do not innovate, do not push the envelope, do not think about new products or new ways to be more efficient. A company can now literally disappear in a few years. For example, look at what Apple has done to Microsoft, or what Netflix did to Blockbuster, or Amazon.com has done to Sears or Best Buy. You can also extend this to LinkedIn vs Monster.com, Facebook vs Myspace, or Apple (again) vs Sony or Nokia. So when I see Microsoft and Hewlett Packard attempting to imitate Apple with a new smartphone, I have to think in these instances, they are going to fail, and flame out miserably. Innovation can take many different forms, from new materials being uses, to new processes developed, or a new way of approaching the supply chain. Let me offer a few examples to help illustrate my point.



Having been a shareholder of Starbucks for many, many years, and hopefully for many more, I believe they are an innovative company. I also believe McDonald's is an imitative company. Yes, both have done very well for shareholder's, but if we are talking about taking chances on new products, or new acquisitions, or integrating new concepts into your business methods, it is not even a contest. Starbucks has failed with some of its innovative ideas- like the infamous Chantico (heavy chocolate drink), or an attempt at italian ices. Still, if you look at their new attempts at buying a juice company to compete in health and wellness (Evolution Fresh), or in tea (buying Teavana), or buy buying La Boulange (French Bakery) to help improve their food offerings, Starbucks is thinking, searching, striving for improvement. Some of their new store designs (more mobile for hard locations), the introduction and improvment of the Starbucks card, and the integration and investment in Square, are illustrative of using new methods to become more efficient in all areas. Pushing into new countries like India and Vietnam, show more aggressiveness about growing their business in untapped markets. On the other hand you have McDonald's, which I believes just copies what others try. You have a new smoothie, ok, McDonald's introduces a new smoothie. Got coffee? Ok, McDonald's now has that too. On Wall Street, the investment world worships both Starbucks and McDonald's, but it was not always that way. I think it will be fascinating to see how these two companies perform over the next decade. (Please know in no way am I recommending anyone invest in either or any company- see the disclosure at the end of the blog) Latte or Quarter Pounder?


A company I am not a shareholder of and made a big mistake with is Google, which I believe is as enterpreneurial as any large public business in the world. I just think they try all kinds of different ways of improving and growing their business. They were originally a search engine, and have bought Youtube, and then they purchased Motorola (among others). The development of the Android operating system may yet prove to be Apple's undoing, and certainly poses a huge threat to Microsoft as well. I just read where Google has a trial in Kansas City for fiber into the home for 70 bucks a month. Something like that could displace the telecom and cable companies if it were ever to catch fire on a large scale, maybe five to ten years out. Certainly, a few of their efforts have not paid off, which is the nature of trying new things. Typically, they do not pay off. The important question is if it does work, what is the potential benefit? Fiber in the home could be a 10-50 billion dollar business, so if Google invests $50 million and has a potential winner, they could make 100-1000 times their investment. Innovation makes it possible, whereas the copycat approach is just a way to cover the backside.


The fiscal cliff approaches and our political leadership remains wedded to idealogy. More speeches, more tv appearances, more of the same nonsense. The only guaranteed action will be to vote themselves raises and take a vacation. Forward huh?


Square is a very interesting company and will probably be an emerging leader in the payments space-http://techcrunch.com/2012/12/09/square-introduces-gift-cards-the-slow-death-of-physical-credit-cards-and-cash-continues/



Now more than ever, and increasingly so going forward, online personal data becomes a critical area of focus. Here is an interesting approach to this subject-
http://www.nytimes.com/2012/12/09/business/company-envisions-vaults-for-personal-data.html?ref=business&_r=0



Is the stock market broken? It looks like the ex-CFO of the NYSE feels it is-http://www.bloomberg.com/news/2012-12-02/stocks-markets-that-flummox-masses-do-no-one-any-good.html

I hope you had a great 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.

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