The market capitalization of Netflix shares is now greater than those of America's most storied blue chip industrial company, General Electric (GE). For comparison's sake, in 2017 GE generated free cash flows of $5.6 billion, and Netflix had negative free cash flows of $2 billion. Despite that disparity in actual business success, GE is going through management and legal turmoil, while Netflix is riding high on its status as one of the FAANG stocks. Time will tell whether investors care more about potential future cash flows, or those that actually exist today. … [Read more...]
Archives for March 2018
FedEx Looks to Buy Tesla Semi-Trucks
FedEx has reportedly ordered 20 Tesla semi-trucks for its fleet. According to Commercial Carrier Journal: FedEx (No. 2 in CCJ’s Top 250) on Monday confirmed the company has placed a reservation for 20 Tesla Semi trucks. Those trucks are slated for operation in FedEx Freight’s less-than-truckload unit. FedEx is now part of a group of fleets that includes rival UPS, PepsiCo, Anheuser Busch, J.B. Hunt, Walmart, Ruan Transportation Management and others that have reserved the all-electric rigs. Late last year, UPS placed an order for 125 Tesla Semis, while PepsiCo reserved 100 and Anheuser … [Read more...]
Ignore Bonds (at Your Peril) and Be Average, Like the Next Guy
Originally posted November 1, 2017. A phrase I often hear from prospective clients is, “I don’t understand bonds, but I know I need them, and that’s one of the reasons I’m talking with you.” There’s a lot of wisdom in that phrase. It’s like saying to your dentist, “I don’t understand root canals, but my tooth is killing me and I know I need one, and that’s the reason I’m sitting in this chair.” Knowing what we need is different from understanding how to do it. When I think back to when I first joined Dick Young’s management firm in 1998, he had a huge following of investors seeking … [Read more...]
Where do you Begin Investing?
To the uninitiated, investing can seem daunting. There are thousands of stocks, bonds, and mutual funds to choose from, and probably just as many opinions on which you should buy and which you should avoid. Even the most diligent novice can become overwhelmed by the number of decisions that must be made. To get started, I have long advised a risk-first approach. That means a focus on fixed income. For most investors, it’s a little hard to know where to even begin. So where do you begin? Tops on my list is your fixed income component. Most investors fail to maintain an adequate mix of fixed … [Read more...]
China Started the Trade War
Greg Ip points out that the tariffs the Trump administration plans to enact on Chinese goods are not a preemptive strike. China has been engaged in predatory trade practices for years. This is well worth a full read and helps to put the tariffs into perspective . If there’s a trade war between the U.S. and China, don’t blame Donald Trump : China started it long before he became president. Even free traders and internationalists agree China’s predatory trade practices—which include forcing U.S. business to transfer valuable technology to Chinese firms and restricting access to Chinese … [Read more...]
Vanguard GNMA: There When You Need It
Yesterday the S&P 500 fell by 2.5%. At the same time, the Vanguard GNMA Index fund was up 0.2%. Having powerful counterbalancing bond funds like Vanguard GNMA in your portfolio can prevent you from taking massive hits to your wealth. Originally posted on Yoursurvivalguy.com. … [Read more...]
Dangerous Rules Make American Pensions Riskier
Originally posted on August 22, 2016. The abuse of expected returns assumptions at public pension funds in America is something I have regularly raised a red flag about. Take a look here at The Economist's comparison of American public pension fund rules with those for private funds and foreign public funds. The opportunity to use inflated future return expectations leads public pensions in America to make less than realistic assumptions about future liabilities, thereby threatening the system itself by making risk more attractive than it should be. Private-sector pension funds in America … [Read more...]
Facebook Feeding Frenzy
Traders are swarming Facebook shares, buying options to take advantage of the tech company's volatile stock prices. Gunjan Banerji reports in The Wall Street Journal: The tumble in Facebook Inc.’s FB -1.45% shares has triggered frenzied trading of the company’s options, including contracts that pay out if the stock falls more than 30% or regains most of its losses. The social-media company’s shares rose 0.7%, to $169.39, Wednesday but have slumped 8.5% this week after reports that the data of up to 50 million users was transferred to an analytics firm tied to President Donald Trump’s … [Read more...]
How Many “Retirees” Will Keep Working?: Part III
In my series this week about retirees working through retirement I told you first that 79% of retirees expect to keep working in retirement, but many find out that they cannot. Then I told you that 73% of Americans 50 and over are planning to delay retirement altogether. Now I'm turning the focus away from America's Baby Boomers, previously the nation's largest generation, to Millennials who are now America's largest generational cohort. Millennials are people born between 1981 and 1991 (though definitions vary). They are well educated, but thanks to a variety of factors, they are getting a … [Read more...]
How to Win in Retail? Unique Products
If a retailer is selling the same product lines as e-commerce giants Amazon.com and Walmart, it will be hard to compete. Unique product lines and a custom shopping experience seem to be the way for retailers to thrive in the post e-commerce world. One store that has been successful using these strategies is Crate & Barrel. The Wall Street Journal interviewed Crate & Barrel Chief Executive Neela Montgomery (Crate & Barrel is owned by Otto Group). Here's what she had to say about unique products. WSJ: Setting retail prices has become more complex. What is Crate and Barrel doing to … [Read more...]
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