My appreciation for Andy Kessler’s way of thinking began with Wall Street Meat and Running Money. A few years ago I had the opportunity to hear him speak at a Cato 200 gathering in Laguna Beach, CA. I continue to keep up with him through his commentary at the WSJ where, in this piece, he shares some thoughts from another great mind, futurist George Gilder: My friend the futurist George Gilder outlines a theory in “Life After Google,” his forthcoming book. He suggests that while advertising prices might be correct, the free-service model cannot deliver sustainable growth. Mr. Gilder explains … [Read more...]
Archives for July 2018
Can Cyrpto-currency Revolutionize the News Business?
Can an initial coin offering selling "tokens" that will fund media ventures be used to revolutionize, and even save the news business? The Civil Media company is testing that model. Benjamin Mullin reports for The Wall Street Journal: The company is trying to sell a maximum of $34 million in “tokens,” digital currency that its owners can use in a new online marketplace for media ventures being created by the company. The tokens — which will be valued between $0.94 and $0.27 each — will eventually give their bearers the ability to pay freelancers, support news organizations and help resolve … [Read more...]
Netflix “Biggest Disappointment in Two Years”
Shares of Netflix are down today because reported subscriber numbers didn't increase fast enough for the Wall Street analysts covering the streaming video company. It's hard to imagine how Wall Street could have been so surprised at a slowdown in Netflix growth, given the number of competitors coming into the market. Tim Bradshaw reports: Until the abrupt reversal in fortunes, Netflix stock had more than doubled in value so far this year including having added more than $40bn in market capitalisation since April’s forecast-busting results. The latest miss on subscribers is its biggest … [Read more...]
Tax Cuts to Improve Your Retirement Portfolio
President Trump has a golden opportunity for a second round of tax cuts by indexing capital gains for inflation. I can’t tell you how many times investors have wanted to make their portfolio more conservative but did not because of onerous capital gains. In other words, they kept more money in stocks, against their more prudent instincts, simply to avoid cap gains. This is how serious money is lost as witnessed in the markets twice so far this century circa 2000 and 2008. Kimberley Strassel of the WSJ explains how Trump could cut taxes with the stroke of a pen: What if President Trump had the … [Read more...]
A Facebook Killer?
Facebook is now the fifth largest business in America as measured by market capitalization. The bulls are of the opinion that Facebook’s network effect is simply too powerful for any competitor to overcome. The bears would point out that Facebook’s most promising segment today is Instagram, a startup that Facebook acquired only six years ago. Is Facebook’s moat really as impenetrable as many investors assume? We may soon find out. Openbook, a project backed by cyber security and privacy pioneers is launching a crowdfunding campaign to build an alternative to Facebook. The new platform, … [Read more...]
Do Old Investing Rules No Longer Apply?
Do the old rules no longer apply? Can you live on corporate earnings alone? Is ignoring your margin of safety advisable? It turns out, unsurprisingly that the answer to all these questions is no. Back in November of 1997 I wrote the following (my emphasis added in bold): Ben Graham’s Margin of Safety Graham died in 1976, yet his wisdom is as fresh as if he were standing before us today. Ben Graham & Co.’s advice to investors is to evaluate a stock as if you were considering buying the entire company. Graham’s secret of sound investing can be distilled into three words—margin of … [Read more...]
How Red States are Winning the Jobs War
It turns out that one of the keys to business success is lowering costs. That doesn't just mean for raw materials, but also for government imposed costs like taxation. The places doing the best job of lowering those taxes and attracting more business are red states like Texas. In The Wall Street Journal, James Freeman explains how one private equity firm is making money moving software firms from high tax states to low tax states like Texas. Yesterday I told you that CNBC had classified Texas as the best state for business. This is an example of what makes that so. Freeman calls it the … [Read more...]
FOMO a Dangerous Investment Strategy
In a market where a narrow band of equities is producing the lion's share of gains, it can be tempting for fund managers to chase those stocks because of their fear of missing out, or FOMO. That FOMO can cause managers to do things they wouldn't normally. Charley Grant discusses some of this activity in the market at The Wall Street Journal. He writes: Fear of being left behind is a powerful force among fund managers, even if it means taking big risks. This year, managers not invested in tech stocks should be polishing their résumés. In the first six months of the year, technology shares … [Read more...]
Can You Outguess the Market?
Many investment gurus, panelists, and wunderkinds attempt to prove, day in and day out, that they are smarter than the market. Often they suggest that if you simply buy when they buy, and sell when they sell, you will have investment success. But reality is that most of the time, such market timing behavior leads investors into playing a losing game of catch up. They often end up chasing the market and buying near the high, then selling near the low for the same reason. In 1992 I warned readers about the dangers of trying to outguess the market. I wrote: How many investors are lucky enough … [Read more...]
Is Your Investment Game Plan Ready for Action?
History has a way of repeating itself. In early 1995 I wrote about a math professor named Tom Nicely, who worked at Lynchburg College. Nicely was examining prime numbers using a group of five personal computers. While four of the computers gave Nicely the correct answer to a problem, 1.2126596294086, the fifth turned up a slightly different answer, 1.212659624891157804. The cause of the fifth computer’s error was the Intel Pentium processor installed on it. Nicely called Intel to explain, but was given the cold shoulder. Next, he did something which at that point was still novel, he asked … [Read more...]