The Wall Street Journal released the inaugural ranking of the 250 most effectively managed U.S. companies. The rankings are based on the work of the late business management guru, Peter Drucker. The rankings are based on a score of 37 specific metrics that fall under five dimensions of performance: customer satisfaction employee engagement and development innovation social responsibility and financial strength Factors include everything from market-share and patent applications to employee ratings. To qualify for the rankings, a company must be a member of the Fortune … [Read more...]
What Tax Reform Means for You: Part II
One of the big disappointments (among many) in the GOP tax-reform is that there was no reduction in dividend and capital gains tax rates. With the Obamacare investment tax add-on, the maximum dividend and capital gains rates are almost 25% today. That’s up from 15% during the Bush and early Obama years. Capital gains taxes are one of the easiest taxes to dodge. Investors simply hold their investment positions instead of selling them and paying taxes on the gain. The simplicity with which capital gains taxes can be avoided means there is almost no correlation between the maximum capital … [Read more...]
Nestlé Expands its Nutrition Portfolio
Nestlé has been focused on the idea of food as nutrition for a long time now, and the company's new CEO Mark Schneider is continuing that vision. Nestlé just announced that it will buy Atrium Innovations, owner of the Garden of Life and Pure Encapsulations brands of health supplements. Nestlé is trying to keep up with fast changing Millennial tastes by innovating its own more nutritional foods and buying up smaller competitors who already service the market for healthier fare. Ben Dummett and Saabira Chaudhuri report: Packaged-food makers such as Nestlé and Kraft Heinz Co. are being buffeted … [Read more...]
What does Tax Reform Mean for You? Part I
The Senate passed a historic tax-reform bill in the wee hours of the night on Friday. The tax overhaul slashes the corporate tax rate to 20% from 35%, reduces the rate on pass-through businesses, and simplifies and reduces rates for individuals. That’s the good, there is bad and ugly in the bill as well. To meet arcane Senate and budgetary rules, there were many sacrifices made starting with the expiration of a simplified individual income tax code in 2026. Lawmakers are saying publicly that they expect a future Congress to maintain the reformed tax-code, but with a bill that was passed … [Read more...]
Can Breakfast at Tiffany’s Get Americans to Shop Brick and Mortar Again?
U.S. retailers are looking hard for anything that can prevent them from going under. Focusing on in-store events and promotions that can't be duplicated online is how many retailers are hoping to fight the e-commerce sales growth that has been gutting brick and mortar stores. The Financial Times' Anna Nicolaou reports on the efforts of retailers to bring in foot traffic: On the fourth floor of the Tiffany flagship store overlooking Central Park, Audrey Hepburn fans can now recreate her famed breakfast for $29. Since opening last month, tourists have flocked to the restaurant, snapping photos … [Read more...]
How Expensive is the Stock Market?
In case the Bitcoin and FAANG stock manias have you envious and pondering a decision to abandon a thoughtfully crafted investment plan, we offer you the following wet blanket. This is now the most expensive stock market on record. The S&P 500 price-to-sales ratio shows that stocks have pushed through the highs, relative to sales, reached at the peak of the biggest stock market bubble in history. High valuations aren’t usually a catalyst for a bear market, but starting valuations are still the single best indicator of long-term returns—with added emphasis on the long-term. … [Read more...]
Goldman: Be Afraid, Pain is Coming
A recent analysis by Goldman Sachs says the last time valuations were so high for so many parts of the market-including stocks, bonds and credit-was 1900. That figure should be startling to anyone invested today looking for return tomorrow. Recently I wrote to you about Jack Bogle and his predictions of 4% returns for some time. Even those may be too optimistic in the future reality painted by Goldman. Bloomberg reports: A prolonged bull market across stocks, bonds and credit has left a measure of average valuation at the highest since 1900, a condition that at some point is going to … [Read more...]
Is China’s Economy Addicted to Real Estate?
In The Wall Street Journal, Nathaniel Taplin explains the link between steel and coal companies and the real estate market in China. The commodity industries are heavily indebted, and if the real estate market turns south, they might be worst hit. Taplin writes: The improvement in steel and coal finances—the two most vulnerable indebted sectors—has been real. Both industries were close to insolvent by late 2015, with aggregate operating earnings just 1.5 times and 1.8 times interest costs, respectively. Two years later, the ratio in both sectors is around 5 times. Unfortunately, only part … [Read more...]
Are Telecoms Doing Better than They Seem?
Jack Hough writes in Barron's that there's more than meets the eye to telecom performance. Verizon Communications shares have been laid low by the Great Wireless Price War of 2017. But how many of its customers feel as though service has suddenly gotten cheap? Not many, we’d wager. The truth is, cellular competition this year has been little different than before, apart from some statistical quirks that made it appear as if the bottom were falling out of the market this past spring. If anything, a long price war is now easing, not worsening. For the third quarter, Verizon reported its … [Read more...]
Remember the Last Time the Tech Sector Did This?
The last time the global tech sector outpaced the next best performing sector as much as it is this year was in 1999. This year alone the NASDAQ Composite has closed at a new record 67 times, so far. As Riva Gold reports in the Wall Street Journal, "Just eight companies—Facebook Inc., Apple, Amazon.com Inc., Netflix Inc., Alphabet Inc., Baidu Inc., Alibaba Group Holding and Tencent—have increased by $1.4 trillion in market cap in 2017, a sum roughly equivalent to the combined annual GDP of Spain and Portugal." Gold continues: While technology companies have helped take U.S. and some Asian … [Read more...]
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