How do you lose most of your wealth in the dot com bust and then rise from the ashes to become one of the 100 richest people in the world? Good question. Meet Masayoshi Son, the 59-year-old head of Softbank, an investment company that raised $100 billion last year alone for its Vision Fund. In watching Mr. Son interviewed by Carlyle group co-founder David Rubenstein, it’s hard not to like the man. Here’s a guy who at age 16 hounded McDonald’s founder Ray Kroc’s office with phone calls asking for just a few minutes of his time simply because he wanted to see him in person. When … [Read more...]
Archives for February 2018
The Freight Market is Red Hot
The market for freight shipping is red hot. Trucking companies are buying more new rigs in January than they have in the last twelve years. The pick up in freight shipping has created a shortage of available capacity, and prices are going up. Companies are willing to invest more in their fleets at higher prices, and so more trucks are being purchased. Jennifer Smith and Bob Tita write at The Wall Street Journal: In January, North American trucking companies ordered 48,700 heavy-duty trucks, the big rigs used for regional and long-haul routes, according to a preliminary report from ACT … [Read more...]
After Tax Overhaul, Manhattan Real-Estate Sales Seize Up
Manhattan real estate prices are in a standoff. With the tax reform package making owning property in high tax areas less desirable, buyers are looking for lower prices on New York real estate. Sellers don't believe the tax changes should have a large effect, and aren't moving their prices lower. Stagnation has ensued. Josh Barbanel writes: The number of contracts signed from October through January was down 6% from the same four-month period beginning in October 2016, according to figures from brokerage Brown Harris Steven. That was the slowest pace of activity during those months since a … [Read more...]
20-Year Review: Stock Market Cuts Investors’ Wealth Roughly in Half—Twice
“Monday’s madness is a reminder that investing in stocks doesn’t automatically make people rich. Twice in the past 20 years—between 2000 and 2002, and again between 2007 and 2009—the stock market has cut investors’ wealth roughly in half,” writes Jason Zweig at the WSJ. When you think about the mathematics of investment losses (see chart below), you quickly realize how difficult it becomes to get back to square one, especially for retirees. And when you think about it in terms of real dollars—seeing $1 million decline to $500,000—imagine how many hours you have to work to make that kind … [Read more...]
Will the Powell Fed be Steady-as-she-Goes?
Jay Powell is the new chairman of the Federal Reserve. Janet Yellen's term was marked mostly by her continuance of Ben Bernanke's policies. Now, will Powell be a steady-as-she-goes chairman who continues the plan of rate normalization set in place by Bernanke/Yellen? Or will he chart his own course, either ratcheting rates up faster than expected to fight any potential inflation, or putting the pedal to the metal by lowering rates again to combat any drop in asset prices? The FT's Sam Fleming discusses Powell's future: Jay Powell received a brutish welcome from the stock market on his first … [Read more...]
Investors Wary of Google’s Partnership Fees
It's getting more costly for Alphabet (formerly known as Google) to buy friends in the tech world. Currently Alphabet pays companies like Apple to setup its Google service as the preferred search engine in their browsers. The costs for this privilege are rising, and Alphabet's investors aren't very happy about it. Dan Gallagher writes for the WSJ: For Alphabet, the main issue for investors is the rising costs that Google has to pay partners to direct traffic to its sites. Those traffic acquisition costs totaled $21.6 billion in 2017—up 29% from the previous year. That outpaced the 20% revenue … [Read more...]
Dow Down Over 1,000 Points
What great news for me and for you if you are actually an investor. I mean a real, seasoned investor. One who embraces common sense, patience and the acuity that comes with decades studying the power of consistent cash flow matched with the most powerful word in investing: compounding. My business is, as are my own portfolios, based on exactly these concepts. Market volatility has zero to do with dividends, interest (the source of cash flow), or compounding. Absolutely zero. In that I have no plans to sell my major holdings (many owned for decades), I am not concerned about short-term … [Read more...]
Dow Down 1600 Points, Websites Crash, and Vanguard GNMA
When stocks were down 1,600 points yesterday, “The websites of two of the country’s biggest robo-advisers—Wealthfront Inc. and Betterment LLC—crashed,” reports Bloomberg. I’ve never been comfortable with the idea of robo-advisers. What if the technology ends up not working? Will the so called robos have the skill and patience that I know I have? Who knows? The same is true with stop losses. I will never trust my hard earned money with program trading. I’ve never been comfortable with the idea, especially when it comes to stop losses. With stop losses sell orders are placed when a … [Read more...]
Bitcoin is Interesting, But It’s Not the Next Gold
Last year the word bitcoin became part of the everyday lexicon in America, and many parts of the world. The phenomenon "investment," was being traded by grandmas and kids. Coverage of bitcoin's rises and falls has been on TV every day for months now. If there was ever a classic bubble, this was it. Olga Kharif reports at Bloomberg: Bitcoin tumbled for a fifth day, dropping below $7,000 for the first time since November and leading other digital tokens lower, as a backlash by banks and government regulators against the speculative frenzy that drove cryptocurrencies to dizzying heights last … [Read more...]
Bitcoin Down 70% from High
A central bank official quoted by the Wall Street Journal's Steven Russolillo and Andrew Jeong referred to bitcoin as the combination of a bubble, a Ponzi scheme, and an environmental disaster. That trifecta is only a symptom of the frenzied buying of bitcoin in recent months, followed by the somewhat predictable sell-off. Central banks are likely to cut short any attempt to make bitcoin great again. The WSJ writes: “If authorities do not act preemptively, cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability,” said … [Read more...]
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