As more money piles into stocks, there’s never been a better time to get acquainted with Dick Young’s investment North Star, the Treasury bill. Backed by the full-faith credit pledge of the United States government, the T-bill is your risk-free rate of return. To see the chart, click here, and roll your finger, left to right, from the mid-80s to today. Do you see a problem with today’s investment environment? It’s a lot different from when Dick Young began writing to you, as I explain when you click on the chart link above. Originally posted at Yoursurvivalguy.com. … [Read more...]
Archives for October 2017
The Electrification of the Auto Fleet is Bullish for this Metal
The shift toward electric vehicles (EVs) promises to have a profound impact on the commodities landscape. Here the FT reports that nickel is likely to be one of the winners from the move to EVs. Nickel is likely to take centre stage at LME Week, analysts say. The metal is already emerging as one of the favoured ways to play the EV supply chain, as some of the largest battery makers shift towards models that use more nickel to increase the amount of power they can store, thereby boosting a vehicle’s range. Analysts at consultancy Wood Mackenzie estimate that nickel demand in EV batteries … [Read more...]
Will J.C. Penney Be the Next Legendary Retailer to Fall?
Shares of J.C. Penney are plunging as investors have gotten scared about the company's profit potential. The company's CEO, Marvin Ellison tried to reassure shareholders by explaining inventory decisions to them, but it didn't seem to have much of an effect. Is it possible J.C. Penney will be the next storied retailer to go by the wayside? Cara Lombardo reports: Penney’s profit was also hurt by increased sales of appliances, which carry lower margins than the apparel and other goods it sells. Penney said that despite the near-term profit shortfall, its inventory decision was right for the … [Read more...]
Would you invest 30% of your assets in Bitcoin?
Famed Value Investor Bill Miller is making news again by putting up to 30% of his fund’s assets in Bitcoin. Value Investor seems like the wrong label for a manager holding 30% of his fund’s asset in a speculative “currency.” Jason Zweig reports: In the letter [to shareholders], Mr. Miller pointed out that a “Murderers’ Row” of revered investors have been declaring that bitcoin is overpriced or a “bubble,” including Berkshire Hathaway Inc.’s Warren Buffett, James Dimon of J.P. Morgan Chase & Co. and Laurence Fink of BlackRock Inc., Bridgewater Associates’ Ray Dalio and Howard Marks of … [Read more...]
3M: From Scotch Tape to SmartPhones
3M has always been known for its great consumer brands like Scotch Tape and Post-It Notes, but behind those everyday brands have always been innovative products that end up as parts in other manufacturers' products. Today 3M is innovating technologies that are essential to smart phones and electric vehicles. Austen Hufford reports: The company also highlighted its car business, saying its traffic safety and automotive electrification units complemented each other, leading to higher sales, lower costs and increased foresight on future car trends. The company makes electric car displays, … [Read more...]
Is Donald Trump Really Paul Krugman’s Confidence Fairy?
In the dark days of 2010, Paul Krugman was coining the phrase “confidence fairy,” to explain his doubt that promising Americans better fiscal policy would encourage them to increase their economic activity. He wrote snarkily about people encouraging spending cuts: But don’t worry: spending cuts may hurt, but the confidence fairy will take away the pain. “The idea that austerity measures could trigger stagnation is incorrect,” declared Jean-Claude Trichet, the president of the European Central Bank, in a recent interview. Why? Because “confidence-inspiring policies will foster and not hamper … [Read more...]
The Truth Behind the S&P 500, Part 2
The S&P 500 is perhaps the largest “managed” fund in the world. Contrary to widespread belief, it is not an index of only the largest companies in America by market-cap as I explain here. It is an index comprising 500 stocks that are actively chosen by a committee. The committee, led by economist David Blitzer picks 500 stocks from a listing of 1,000 of the largest companies in America. It also decides the sectors and the sector-weightings. In the late 90s, for example, when technology was on fire, the committee finally decided to make technology its own sector. The committee had … [Read more...]
The Truth Behind the S&P 500
Let’s get a few things straight about the S&P 500. First, it’s a market-cap weighted index of large-cap companies based in the U.S. A company’s market cap is calculated by multiplying its shares outstanding by its stock price. The bigger the company’s market-cap the bigger its influence on the direction of the S&P 500. Imagine Apple or Amazon as the 800-pound gorillas and you get an idea of how the index works. How is it constructed? The S&P 500 is not a collection of the largest 500 companies by market cap in the U.S. It is constructed and managed by a committee. Part of the … [Read more...]
Pfizer Prepares Sale of Consumer Health Business
In November, Pfizer will begin an auction process for its consumer health business, which could sell for $15 billion. The business owns great brands like Chapstick, Centrum and Advil. A number of companies have already expressed interest. Reuters reporters Pamela Barbaglia, Martinne Geller, and Ben Hirschler write: Several global companies, including GlaxoSmithKline and Reckitt Benckiser, have expressed interest in bidding for the unit, which had sales of about $3.4 billion in 2016. The prospective sale, which is being led by Centerview Partners, Guggenheim Securities and Morgan Stanley, … [Read more...]
Growing Demand for Equipment Boosts Caterpillar
After a slump lasting for years after the financial crisis, it appears that Caterpillar is finally getting some of its momentum back. Sales are improving as demand rises for mining and construction machines. Bob Tita and Andrew Tangel write: The world’s largest producer of bulldozers, excavators, and other earth-moving machinery experienced widespread improvement in sales during the third quarter. Caterpillar’s fortunes have improved over the past year after a yearslong slump caused by a downturn in the global commodities markets and a slowdown in construction. The company’s stock price has … [Read more...]
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