Despite the role they played in spreading risk during the financial crisis, CDOs (collateralized debt obligations) are making a comeback. Christopher Whittall and Mike Bird report in the Wall Street Journal that investors are coming back to CDOs. In the U.S., the CDO market sunk steadily in the years after the financial crisis but has been fairly flat since 2014. In Europe, the total size of market is now rising again—up 5.6% annually in the first quarter of the year and 14.4% in the last quarter of 2016, according to the Securities Industry and Financial Markets … [Read more...]
As if On Cue, Amazon Cuts Prices at Whole Foods
For months I've been outlining my Bezos Law (see here, here, here, and here), which states that any industry Amazon (and more specifically Jeff Bezos) enters, will see prices reduced. Now, as if on cue, Amazon has announced it is lowering prices at Whole Foods. Amazon will formally take control of the grocery chain on Monday. Once again, my Bezos Law persists. David Shepardson and Lisa Baertlein report for Reuters: The planned price cuts would have been a tough sell to Whole Foods’ investors, who had grown used to fat profits from the upscale chain, but are more in line with Amazon’s … [Read more...]
The Road Less Traveled: Deep in the Sub-Continent
Here's a picture from a client of a road less traveled. Karakorums in the distance Not the I-95, but a great road! … [Read more...]
Retail’s Rise of the Living Dead
Imagine the feeling you have when someone at a store you frequent remembers your name. It feels good. That’s the level of service national chains will need to bring to the table. It will have to be all about you, as it should be. I wrote about what it will take for retailers to achieve that level of customer satisfaction back in June: The relationship between company and client has never been more valuable. And Jeff Bezos understands this. In Bezos’ world, you will not be a pest. You will be that valued guest and you will be treated with the service you want. Do you want a personal … [Read more...]
Cheeseburgers in Newport, RI and the Fiduciary Rule
A couple of years ago, after reading one of his investment articles, I reached out to Norb Vonnegut. We met in Newport and talked investments at my all-time favorite burger joint, Mission. Yesterday Norb hit the nail on the head about why Spotify is eschewing Wall Street for it’s IPO. It will basically be a DIY deal. The game is up for the self-dealing, old school wire houses. The future will continue to favor investment firms that abide by the fiduciary rule, or in other words, serve their clients' best interests. It’s a rule that Richard C. Young & Co., Ltd. has always … [Read more...]
The Trouble with this Bond Fund
You could almost see the trouble coming at Double Line Capital’s largest bond fund Total Return. Actually I did as I wrote to you back in 2014. Turns out chasing performance has a shelf life. Investors are taking on more risk—and are doing it in a major way. Bond funds, which should be your anchor-to-windward money, are loading up on junk. The below investment grade waste piling up in the 10 largest bonds funds is shocking. We’re not talking small potatoes here. These are the big dogs. “Who wants an index fund that yields 2%?” said Jeffrey Gundlach, manager of the Total Return … [Read more...]
How an Introvert and DARPA Revolutionized Autonomous Vehicles
David Hall, CEO of Velodyne, created what is probably the most important piece of technology in the self-driving vehicle business, LiDAR. Short for "light distance and ranging," LiDAR is found on all the automated vehicles you have seen. The sensor tells the vehicles' brains about their surroundings, giving them the data they need to react. In a Forbes profile, written by Alan Ohnsman, the story of how a DARPA contest drove Hall to build LiDAR is explained. At one end there's a barn-size industrial shed where Hall and a team of engineers are perfecting one of his latest obsessions: a … [Read more...]
Are State-Run Savings Plans a Good Idea?
Of course this sounds like a great idea, because saving early and often is the best way to secure a comfortable retirement. However, there are some drawbacks to a savings system with the government so closely involved. Anne Tergesen writes at The Wall Street Journal: Opponents—including some company owners, a trade group for small businesses and the main mutual-fund trade association—have lined up against the state initiatives. They argue that state-run programs may encourage companies to scrap 401(k) plans. They also say that lower-income workers who participate may wind up in worse … [Read more...]
iHollywood: Are You Ready for Apple Shows?
Apple is gearing up to produce or acquire its own video content. The company is looking for around ten TV shows to finance. The $1 billion effort might seem small compared to the scale of Apple's market cap of over $830 billion, but the effort could have a big effect on competitors like Netflix, Amazon and HBO. The market for internet delivered original video content is still young, and a big new entrant like Apple could upend its balance. Tripp Mickle explains the effort by Apple, writing: The budget will be in the hands of Hollywood veterans Jamie Erlicht and Zack Van Amburg,poached … [Read more...]
Are Apple and Facebook Stock Finally Losing Their Luster?
For years now hedge funds, institutions, and retail investors have been loading up the shares of a very small sliver of the stock market. The shares I'm referring to are the so-called FAANG stocks, and others like them. FAANG stands for Facebook, Apple, Amazon, Netflix and Google (now known as Alphabet). As the valuations of these stocks have pushed their company market shares ever higher, they have become a disproportionately large slice of the various indices they are included in. (Read more here and here). But now it appears that some hedge funds have tired of buying the FAANGs and … [Read more...]
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