Young Research & Publishing Inc.

Investment Research Since 1978

Where’s the Value in Tech?

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IBM reported quarterly results this week that weren’t to Wall Street’s liking. The company beat earnings estimates, but the Street didn’t care. As is often the case in the tech sector, Wall Street is more focused on financial metrics that don’t translate into shareholder value. Revenue growth is where the brokerage community tends to focus, but it is free cash flow, dividends, and share buybacks that create shareholder value. Over the last 12 months, IBM generated $14 billion in free cash flow, paid dividends of $5.6 billion, and repurchased $3.6 billion in stock. Today, IBM is trading at less … [Read more...]

Red Alert! $164 Trillion in Global Borrowing Exceeds Pre-Financial Crisis

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The IMF is sounding the clarion call on the world's excessive debt. With $164 trillion in total debt owed, the world is further in debt than pre-Financial Crisis levels. Chris Giles writes in the Financial Times: Global debt is now more than twice the size of the value of goods and services produced every year and at 225 per cent of global gross domestic product, it is now 12 percentage points higher than at its previous peak in 2009. The fund said there was now an urgent need to reduce the burden of debt in both the private and public sectors to improve the resilience of the global … [Read more...]

This Chart Has a Concerning Look

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Is the Smart Money Index sending a signal of caution? While the Dow has rebounded from its lows, the Smart Money Index hasn’t been able to stage a sustainable rally. The Smart Money Index measures the performance of the market at the start of trading and the end. The "smart money" is believed to trade more heavily at the end of the day. The index isn’t infallible, but the big divergence between the Dow and the Smart Money Index isn’t a bullish signal. … [Read more...]

Bearish Concerns on Netflix

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Netflix reports earnings after the close today and the Street is looking for another blowout quarter in terms of subscriber growth. Even the bears expect strong numbers, but those street analysts  who have the courage to think long-term (there’s only one or two) see challenges in the long-run. As Barron’s reports, the analyst from Webush sees changes in the competitive marketplace that could shake up subscriber loyalty. To wit: Changes in the competitive marketplace could shake up subscriber loyalty. “The combination of less content from Disney (DIS) (pulling the majority of its newer … [Read more...]

Is the Apple’s HomePod a Flop?

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Bloomberg is reporting that the Apple HomePod, Apple’s response to the Amazon Echo, is off to a slow start. In the first 10 weeks of sales, the HomePod has about 10% of the smart speaker market. And much of those sales came upon initial release. Price likely has something to do with the speaker’s slow start. The HomePod is $200 more than most smart speakers. Unless you are an Apple fanboy, it may be difficult to justify the premium price for what is a basic speaker with an inferior voice assistant. At first, it looked like the HomePod might be a hit. Pre-orders were strong, and in the last … [Read more...]

Is it Possible to Be Successful in Commodity-Index Investing?

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The short answer to the question above is, probably not. Using an indexed based approach to commodity investing is futile. If you're investing in commodities, it's best done using an active approach. Simon Constable explains why in The Wall Street Journal writing: 1. Unlike for stocks, the influence of technology on commodities is deflationary. Consider the massive profits generated by tech companies like Facebook Inc. and Alphabet Inc. New technology has helped power big gains in those stocks. And technology has helped fuel gains in stocks outside the tech sector, as well, by improving … [Read more...]

More Good News for the Economy

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Missed in all the noise about trade-wars and congressional investigations over the last few days is that the market got an employment report on Friday. The jobs numbers came in light which may say more about today’s low unemployment rate (or statistical noise) than it does about the health of the job market. One of the bright spots in the report was the growth in weekly earnings. Earnings growth is rising at its fastest pace in seven years. The hourly wage numbers aren’t yet as impressive as the Labor Department’s estimate of hours worked is up, but Americans’ paychecks are getting … [Read more...]

Surprise: Americans Still Love SUVs

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The WSJ is reporting that Chevy is pulling the plug on the Chevy Sonic and Ford is doing the same with the Fiesta and Taurus. The Sonic and Fiesta compete with the Honda Civic. Both are small compact cars, whose popularity probably peaked when oil prices soared to over $140 per barrel in 2008. But with oil prices now in a modest range, car buyers have decided they actually prefer a roomier SUV/crossover or truck to the cramped compact car. The Taurus isn’t a compact car, but it has apparently fallen out of favor with car buyers. The Taurus has been in near continuous production since 1986, … [Read more...]

Expect Some Pain

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Yesterday, President Trump ordered his administration to consider tariffs on an additional $100 billion in Chinese imports on top of the $50 billion already implemented. The extra $100 billion is punishment for the $50 billion in tariffs China announced in response to the initial $50 billion the U.S. put on Chinese goods. While many globalists, including some in Congress are wringing their hands over Trump’s tariffs, strong action against China is long overdue. China hasn’t played fair for decades. This is a single party system we are talking about, an economy that is far from the type of … [Read more...]

Ackman Faces the Flight of his Investors

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Famous hedge fund manager Bill Ackman of Pershing Square Capital Management is watching his investors flee his fund. It may take them some time to leave due to rules allowing the withdrawal of only an eighth of their investment each quarter, but even that slow rate of withdrawal is reducing the fund's assets under management. Scott Deveau writes at The Globe and Mail: Bill Ackman’s Pershing Square Capital Management is facing more bad news as many of the institutional investors in its private funds have asked to redeem their money. About two-thirds of the capital that investors could … [Read more...]