Great ideas don’t always translate into great investments. Remember Amazon almost going out of business in the dot com bust? When I think of Jeff Bezos I think of Steve Jobs. Both are, and were one of a kind. That doesn’t mean I’d buy their stocks. There’s plenty of ways to benefit from Bezos’ Law, which I define as whatever business Bezos decides to get into, “prices will be lower.” But, and here’s the catch, to make Bezos’ Law into the law of the land, Mr. Bezos needs LOTS of capital and GREAT people working for him. The ONLY way to make that work is with a high stock price to reward both … [Read more...]
Archives for May 2017
This Computer Can Hold the Entire Library of Congress Collection, Five Times
HPE has built a new computer for the big data era. Known as "The Machine" it has enough memory to hold the contents of the Library of Congress five times over. The Machine prototype can hold 160 terabytes of data, spread across 40 physical nodes. HPE writes of the prototype: The prototype unveiled today contains 160 terabytes (TB) of memory, capable of simultaneously working with the data held in every book in the Library of Congress five times over—or approximately 160 million books. It has never been possible to hold and manipulate whole data sets of this size in a single-memory … [Read more...]
Trump’s “Taxpayer First” Budget Explained
The Trump administration has released its first full budget plan and it is indeed radical by Washington standards. For starters, it increases spending, but not as fast as the spendthrifts in D.C. would like. Naturally no one is happy. Dan Mitchell, a scholar at the Cato Institute and a friend of mine, has written a piece at International Liberty on "The Five Most Important Takeaways from Trump’s Budget." Here's a summary of his five main points: First, the budget isn’t being cut. Indeed, Trump is proposing that federal spending increase from $4.06 trillion this year to $5.71 trillion … [Read more...]
Why Apple is like a Picasso
Is it better to be creative or to steal? It’s a good question. Which leads me to Apple and Microsoft founders Steve Jobs and Bill Gates. They both founded ultra-successful companies using Xerox’s ideas. “Later, when he was challenged about pilfering Xerox’s ideas, Jobs quoted Picasso: ‘Good artists copy, great artists steal.’ He added, ‘And we have always been shameless about stealing great ideas.” That’s from The Innovators, by Walter Isaacson, author of Steve Jobs. Hence the Macintosh personal computer with its Windows-like interface. At the same time, Bill Gates was helping Jobs … [Read more...]
China’s Debt Downgraded for the First Time Since 1989
After lowering China's credit ratings outlook to negative in March of 2016, Moody's has now cut the country's credit rating to A1 from Aa3. Moody's cited a likely rise in China's debt as the culprit. Bloomberg reports: Stocks and the yuan slipped in early trading after Moody’s reduced the rating to A1 from Aa3 on Wednesday, with markets paring losses in the afternoon. Moody’s cited the likelihood of a “material rise” in economy-wide debt and the burden that will place on the state’s finances, while also changing the outlook to stable from negative. It’s “absolutely groundless” for Moody’s … [Read more...]
Are These Popular Funds in a Mini-Mania?
For 11 weeks straight tech focused mutual and exchange traded funds have been pulling in investor money. Since the start of 2017 the funds have gathered $8.7 billion in new investment according to BofA Merrill Lynch and EPFR Global. The tech funds are on their way to the fastest pace of growth in at least 15 years. Chris Dieterich writes at the Wall Street Journal: It’s not hard to see why big-cap tech names have been en fuego. These companies have well-known brands and dominant businesses. At the same time, middling economic growth in the U.S. has made fast profit and earnings growth harder … [Read more...]
Is This the End of the Age of Oil?
You can see on my chart that, aside form a couple hiccups, consumption of oil has been rising without much difficulty since the early 1980s. The big declines in oil consumption you can see on the chart are all recession driven (the shaded areas represent periods of economic recession in the United States). But according to the Wall Street Journal's Lynn Cook and Elena Cherney, that may be about to change. While most big oil companies foresee a day when the world will need less crude, timing when that peak in oil demand will materialize is one of the hottest flashpoints for controversy … [Read more...]
When Will this Bull Market End? Because it Will End
Here, "stocks are advanced on hopes and expectations” - Robert Rhea When will this bull market end? Because it will end. The market is simply a collection of people’s emotions. How stable can that be? Over the weekend I re-read The Dow Theory Today by the late Richard Russell. It’s a collection of twelve articles which were written and published in Barron’s during the period of December, 1958, through December, 1960. This is not a history lesson because the articles were written, much like writing about today’s markets, while taking on live fire. The future was not known. That’s the life … [Read more...]
Is There Some Life Left in Retail?
Perhaps brick and mortar stores can learn to compete with Amazon in a new age for retail. Wal-Mart's online business surged last quarter. As Amazon attempts to build out its footprint in physical stores, and Wal-Mart expands online, maybe a combination of brick and mortar and e-commerce sales will be the key to retail longevity. In the U.S., which accounts for two-thirds of Wal-Mart’s sales, foot traffic rose 1.5% in the quarter ended April 30. That rise was supported in part by strong sales of groceries and household goods. Wal-Mart has been lowering some prices in those categories, in part … [Read more...]
Massachusetts MBTA Pension Problems
The $1.5 billion pension fund has 5,786 bus and train divers, track workers, and other employee members, reports the Boston Globe. And there are 6,685 retirees participating in the fund. Those numbers aren’t sustainable. Apart from numbers that look hard to reconcile, the fund is now embroiled in a bit of a scandal. Beth Healy reports at the Globe: Michael Mulhern took home $2.2 million in compensation as chief of the MBTA Retirement Fund in the eight years after the financial crisis, including $216,329 in 2016, when he worked just seven months. The compensation, released in response to a … [Read more...]
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