Do you remember the first rock concert you ever went to? Mine was actually more of a "Rap" concert. I was 16 years-old working at Oxford Creamery in Mattapoisett, MA scooping ice-cream and serving fried clams, lobster rolls, and coffee frappes. Some co-workers had an extra ticket to see rappers Run DMC and DJ Jazzy Jeff and the Fresh Prince the following night at the Providence Civic Center. The Fresh Prince is actor Will Smith. I was reminded of the concert over the weekend while watching this video at a baseball camp with my son. Will Smith is a winner. Here he gives a great message for … [Read more...]
Archives for April 2015
Raging Bull in China has Shaky Foundation
Bloomberg has a nice post up about the shaky foundation that lies beneath China’s raging bull market. No, this isn’t another post about the millions of undereducated Chinese “investors” who are fueling the bull market or the record level of margin debt that is pushing prices ever higher. Those too might make one hesitate before chasing returns in China, but the shaky ground that China’s stock rally is built upon is more fundamental than that. I’m talking about falling earnings. Earnings are the mother’s milk of stock prices. Without rising earnings continued stock market gains can’t be … [Read more...]
The Power of Compound Interest
Making money with your money is a no-brainer. Take a look at the difference in returns between two $40 investments in Coca-Cola in 1919. One had dividends put into a piggy bank. The other had dividends reinvested. Without reinvesting, the initial $40 investment grew to $456,273 by 2012. With dividends reinvested, the value increased to $9,876,106. That's a difference of over 2060%. That's the power of compound interest. … [Read more...]
The Monday Melee: American LNG Tsunami
A New World LNG Order: Ambrose Evans-Pritchard writes for The Telegraph: The United States is poised to flood world markets with once-unthinkable quantities of liquefied natural gas as soon as this year, profoundly changing the geo-politics of global energy and posing a major threat to Russian gas dominance in Europe. "We anticipate becoming big players, and I think we'll have a big impact," said the Ernest Moniz, the US Energy Secretary. "We're going to influence the whole global LNG market." Status of LNG Terminal Approvals and Proposals: The Geopolitics of LNG: The World of … [Read more...]
Stunning Wall Street
Amazon reported quarterly results last night that, in the words of one news outlet, stunned Wall Street. What was so stunning about Amazon’s results? The company reported a 15% increase in revenue, but that isn’t so stunning. Wall Street analysts were expecting about $22 billion in revenue and that’s what Amazon reported. Did Amazon finally turn a profit on their billions in sales? Nope, that wasn’t it either. On $22 billion in revenue, Amazon lost $57 million in the first quarter. Hardly stunning. Maybe it was cash flow. Amazon did report a nice jump in free cash flow (cash flow minus … [Read more...]
Assets Are Booming
With the Fed creating money out of thin air, real estate prices such as commercial and condos are going up like crazy especially in places like New York City and Miami. My family was in Key West in March and I can tell you restaurants aren’t lowering their prices. And there’s a ton of money in certain pockets. I’ll use the boat racing teams in Key West back in November as an example. There’s no shortage of spending power on toys here. Check out Miss Geico, which won the event. But again there’s deflation too. For retirees it’s a brutal deflationary environment for interest bearing … [Read more...]
When Fundamentals Don’t Matter
Barron’s ran an article this weekend on the distortions ETF flows may be creating in individual stocks. This is an issue we have written about at length in our monthly strategy reports. ETF investors along with High Frequency Traders, and corporations (think buybacks) now account for a majority of stock market volume. These investors aren’t focused on underlying company fundamentals and values. HFTs are focused on scalping the next penny increment or two from buyers and sellers, corporations are focused on propping up quarterly EPS via buybacks (IBM is the poster child here), and ETF investors … [Read more...]
Advice from My Father
When I was a kid my dad would talk to me about money. It was usually unsolicited advice. You know the kind. The advice he would give was the same advice his father had given to him when my dad was a kid. It was more of a question. “When is the best time to plant a tree?” he would ask. I had never planted a tree so I didn't know. Then he’d answer “Yesterday.” I would think, “Great I’m already behind.” Then he would ask, “When is the second best time to plant a tree?” And he’d answer, “Today.” And I would think, “But I have a baseball game.” Thinking back on his advice this morning I … [Read more...]
The Monday Melee: China Losing Control?
China Stock Exchange Goes Vertical: As the Chinese stock market goes vertical, and its housing market stagnates near record lows, the government’s solution is the same medicine that hasn't worked in Europe, Japan or the United States, more debt. China’s First Developer Default: Kaisa Group Holdings, a Chinese real estate developer has defaulted on two of its dollar-denominated bonds. The company failed to pay $52 million it owed last month, and wasn’t able to come up with the money by the end of the grace period that ended on Monday. Kaisa develops large residential properties and … [Read more...]
Thank You Julia Child
You never know the power of a hand-written thank you note. I was reminded of this yesterday reading about a thank you note Julia Child wrote before her death. She thanked Roger Berkowitz, president of Legal Sea Foods, for a clambake he had sent to her. It was a special note for Mr. Berkowitz. Julia Child was a loyal customer and a family friend. Their relationship went back to the days when his family ran the fish counter in Cambridge, MA. "We were her fish store," recalls Berkowitz. The note is framed and hangs in his office. I'm sure it reminds Mr. Berkowitz every day. It's a … [Read more...]