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Archives for March 2020

Coronavirus Snapped the Cord on the Market Elevator

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For the past ten years, the stock market has been an elevator that has only gone up. Now the cord has snapped. What floor are you falling from? Here’s how I explained what I call “elevator investing” some years back. I wrote: Elevator Investing Where do you want to be when the cord snaps? I often think of risk management with a simple elevator analogy. In the investment process, I quantify risk first. Then I evaluate potential gains. Just envision, if you were in an elevator and the cord snapped, where would you be better off? Dropping from the second floor or the 10th floor? Makes your … [Read more...]

Coronavirus Infects Stock Market: Part XVIII

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Before you hear about my conversations with successful Americans like yourself, let's take a quick step back and look at where the market has been over the last 20-years and consider that if you're receiving dividends they help you dollar cost average through thick and thin. Every day during this crisis, I'm hearing about what you're doing to survive and thrive, and thanks to you, I've gained some valuable on the ground intelligence. Here's an email I received after a relaxed morning call with a client who is certainly prepared to live off the grid: One thing I didn't mention... It … [Read more...]

Excessive Buybacks Come Back to Bite

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The buyback game may finally be coming to an end. One can hope at least. Over the last decade, many U.S. companies levered up their balance sheets to repurchase shares. Why did they do it? For starters, it drives share prices, and in turn the value of executive stock options, much higher. Why finance the buybacks with debt? Look to Mr. Powell and Mrs. Yellen and Mr. Bernanke at the Fed for keeping interest rates at ultra-low levels for an entire decade. The Fed will, of course, escape any blame for this debacle as it did the Financial Crisis, but the evidence should be clear as day for … [Read more...]

Coronavirus Stats Update: What’s the Latest?

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By Jozsef Bagota @ Shutterstock.com Below are updated coronavirus stats through yesterday. The good news is, South Korea has continued to keep new case growth at a manageable level and there are signs Italy’s lockdown has slowed the growth in new cases. There is also reporting that Italy may only be testing the sickest patients which is good and bad. Bad because the growth numbers may be skewed, but good because it means the fatality rate of the virus in Italy would be much, much lower than is being reported. The other potentially good news in Italy is that recovered patients should … [Read more...]

Facebook Still an Ad Business

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Facebook usage and traffic is soaring, but the company warned business may not be booming. At its core, Facebook (and Google) is still in the advertising business. If small and large businesses are drawing down credit lines and conserving cash, the ad budget is one of the first items that will be cut. Eric Savitz reports for Barron's: In the latest indication that the market for digital advertising is struggling in the face of the rapidly spreading coronavirus pandemic, Facebook disclosed in a blog post that the social network has “seen a weakening in our ads business in countries taking … [Read more...]

Coronavirus Infects Stock Market: Part XVII

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“Don’t let the cure be worse than the problem,” a thoughtful, and weary President Trump explained last night to America in a tone that was right on the money for the situation at hand. President Trump explained how we all need to do our part and that America was not built to be shut down and out of business. We need to flatten this curve and be open for business (my emphasis) because that’s what America does best. Let’s lead by example. Now that America is in day nine of self-isolation we’ve learned quite a bit about our politicians and how many are looking at this as an … [Read more...]

The Fed Announces New Corporate Debt Interventions

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The Federal Reserve has announced two new interventions into the corporate debt market. The first is the Primary Market Corporate Credit Facility (PMCCF) and the second is the Secondary Market Corporate Credit Facility (SMCCF). Here's how The New York Times describes the plans' operations: The Fed’s plan to bolster the corporate bond market will work through two new programs established using the Fed’s emergency lending powers. They should help market functioning while allowing companies to stay afloat. One of them, the Primary Market Corporate Credit Facility, is open to investment-grade … [Read more...]

RIP Kenny Rogers

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Long-time friend Bob Morrison wrote the Grammy-winning Kenny Rogers song “You Decorated My Life.” He was ASCAP’s Country Songwriter of the Year in 1978, 1980, 1981, and 1982, and inducted into the Nashville Songwriters Hall of Fame in 2016. Here’s an email exchange on the passing of Kenny Rogers. EJ It was great to hear from you. I hope you and yours are doing ok under the circumstances. Kenny was a genius at changing with the times musically. He had a very long career. Longer than most. And living 81 years with the wear and tear of the music business and the road is pretty damn good. I’m … [Read more...]

Airlines Put Unused Passenger Planes to Work

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Passenger airlines are finding a new use for all their currently unused jets, freight shipping. Jennifer Smith reports at WSJ: The coronavirus pandemic is reshaping global airfreight operations as passenger airlines ground planes and companies scramble for capacity to keep medical supplies, industrial parts and high-demand consumer goods moving. Some airlines are putting passenger planes to work as freight-only aircraft, with main cabins empty and cargo holds filled with shipments. The tactic provides some revenue for carriers hit hard by plunging travel demand and may help ease freight … [Read more...]

Here is Your Family’s Guide to the Coronavirus

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I visit Dr. Ward at least once a week when Debbie and I are in Newport for the Summer. -- Dick Young. Dear Patient, As promised, I am sending this email to share some useful information that I have found over the last week. As one of your healthcare providers, it is my intention to provide you with knowledge to keep you calm and healthy. I am lucky enough to have access to information coming out of Wuhan, China where this disease began. The treatments used on the front lines were a combination of western pharmaceuticals along with Chinese Herbal Medicine and shown to be quite effective. … [Read more...]