The internet of things (IoT) is one of the more exciting secular themes just starting to reshape many industries across the global economic landscape. At Young Research we follow developments in the Internet of Things to remain current on the emerging threats and opportunities to the companies we advise for both our Intelligence Report subscribers as well as clients of Richard C. Young & Co., Ltd’s white-glove managed account service. You might expect that a cutting-edge Silicon Valley startup would have the drop in the IoT, and while that is likely true to some extent, old economy … [Read more...]
Amazon Innovates with Old Tech
Who knew big rigs were on the cutting edge of technology? The Wall Street Journal reports that Amazon is using trucks to move data from its clients' servers to the cloud servers its web services unit manages. The amount to data warehoused on company servers has grown so large that it could take up to 26 years to move an exabyte (1 billion gigabytes) of data to the cloud via the internet, but with trucks, the time can be reduced to 6 months. Transporting data from companies to cloud providers has become immensely time-consuming as corporate data storage has ballooned from terabytes to … [Read more...]
It is Time to Scale Back Trade with China
The Financial Times explains why the West should take a close look at its trading relationship with China. Free trade tends to be a net positive over the long-run when both parties play by the same rules, and both parties run free-market economies. Does China play by the same rules? Does China run a free-market economy? As the FT explains in detail here the answer to both questions is a resounding no. China is in fact moving further away from a free-market system. At the Chinese Communist party plenum three years ago, party leaders pledged to support private entrepreneurs and break down the … [Read more...]
Portfolio Strategy: This is What Happens When You Try to Pick up Nickels in Front of a Steam Roller
After enduring years of the Federal Reserve’s zero percent interest rates and trillions worth of long-term bond purchases meant to drive widows and orphans into riskier assets, many investors capitulated, reaching for yield in long bonds and other risky assets. You can see the tracks of this behavior in the stock market as well as the bond market. In the bond market, the reach for yield may have climaxed over the summer. The 30-year bond yield hit a low of 2.11% on July 8th. That is lower than the lowest-low during the height of the financial crisis. What were these investors thinking … [Read more...]
The Cuba Trade
Here MarketWatch reports that Fidel Castro’s death is causing the shares of a Cuba related mutual fund to soar. Investors in a fund with the ticker symbol “CUBA” cheered Monday, as the share price surged in active trade in the wake of Fidel Castro’s death over the weekend. The Herzfeld Caribbean Basin Fund Inc. doesn’t directly invest in Cuban businesses, but it could if that becomes possible. In the meantime, it invests in companies that are likely to benefit from “economic, political, structural and technological developments” in the Caribbean Basin, according to the fund … [Read more...]
Rising Rates a Threat to Commercial Real Estate
The Wall Street Journal reports on the risks a reversal in interest rates presents to the bubble conditions in commercial real estate created by far too easy money from the world's central banks for far too long. The commercial real-estate boom of the past few years has been driven by global investors seeking out returns better than those found in low-yielding bonds. But that dynamic could start reversing, analysts said, as ultrasafe government bonds start to offer yields that make commercial property look less desirable in comparison, given the potential risks. Bonds have sold off beyond … [Read more...]
Portfolio Strategy: This is the Opportunity in Small Company Stocks
Small-cap stocks are on a tear. After crashing into bear market territory early this year, small company shares are up almost 40% from their lows. Since the election, small stocks have been smoking hot. Trump’s surprise victory lit a match under small company shares. The Russell 2000 index is up 11.6% from its November 8 closing level—that was only 11 trading days ago. According to Bloomberg’s exchange traded fund (ETFs) flow data, the four largest small-cap ETFs have gathered over $7 billion in assets since the election. As our chart shows, the magnitude of the inflows dwarfs anything … [Read more...]
These Companies have the Highest Sales Per Employee
The table below shows the top five industry groups that have the highest median sales per employee according to Bloomberg. Real Estate, Energy, and Utilities make the top five. Why are these industries so profitable? All three are highly capital intensive. Owners are earning returns on the capital investments they make more than the labor they manage. Insurance and diversified financials also make the list. Diversified financials includes investment banking, investment management, and mortgage REITS. The financial industry is one of the most competitive industries, but also one of the most … [Read more...]
This is What You Want to Hire a Stockpicker For
In recent years, the active investment management industry has taken a beating in the financial press and at the hands of the exchange traded funds market. That is partly an issue of the press putting too much emphasis on returns instead of focusing on risk-adjusted returns, but also a result of bad investment management. There is no doubt it is a tall order for investment managers to beat the large-cap U.S. indices on a return only basis. This is especially true if you are running a big mutual fund that doesn’t have the agility to move into or out of positions without incurring meaningful … [Read more...]
Who are the Stock Market Winners of the Election?
It has only been 10 days since the presidential election, but the equity markets have moved markedly on a change in outlook. A Trump victory and a Republican sweep in congress has created some winners and losers--at least in the short-run. With big moves in markets ahead of any concrete policy actions, this could be a case of the stock market jumping the gun. Below is a graphic that shows the performance of the 11 S&P 500 sectors since the presidential election. The big winners are financials, followed by industrials, discretionary stocks and healthcare shares. The losers: utilities, … [Read more...]
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