Over the past year, the total return for Vanguard Wellesley has been just over five and half percent. “Five and a half percent? What’s so great about that,” you might think. Well, it can be great if you’re a patient investor and you allow the miracle of compound interest, what Albert Einstein is said to have referred to as the eighth wonder of the world, to work its magic for you. Father Time can be your friend, as I will explain in a moment. Yesterday, I was speaking with a client whom I’ve been working with since his mid-50s. He’s in his early 70s now but it hardly feels like close to … [Read more...]
Where’s the Value in Tech?
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...]
Details, Details. Amazon Unveils 100 Million Prime Members
In a letter to shareholders, Amazon CEO Jeff Bezos unveiled that the company has 100 million subscribers to its Prime membership service. Myles Udland reports at Yahoo Finance: After declining for years to disclose how many people pay for Amazon Prime, Amazon (AMZN) CEO Jeff Bezos revealed on Wednesday in his annual letter to shareholders that over 100 million people globally have joined Amazon’s membership club. “13 years post-launch, we have exceeded 100 million paid Prime members globally,” Bezos wrote. “In 2017 Amazon shipped more than five billion items with Prime worldwide, and … [Read more...]
Red Alert! $164 Trillion in Global Borrowing Exceeds Pre-Financial Crisis
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...]
Facebook: “A Giant Blood-Engorged Tick Hanging off Your Frontal Lobe”
“Designed to be addictive, Facebook feels like a giant blood-engorged tick hanging off your frontal lobe,” writes Matt Taibbi in Rolling Stone. You may recall, Taibbi coined Goldman Sachs as a “[G]reat vampire squid wrapped around the face of humanity.” In his piece on Facebook, where the median salary is $240,430, Taibbi makes a case for breaking-up the band which is more like a cult. What is it like to be on the inside of Facebook’s corporate walls? Former senior Facebook worker Antonio Garcia Martinez wrote the book, Chaos Monkeys, in a way that Michael Lewis did about his time … [Read more...]
Amazon Establishes Foothold in Big Box Retail with Best Buy Partnership
Amazon and Best Buy have announced a partnership that will combine the companies' efforts, integrating Amazon technology and reach and Best Buy's foot traffic to expand business for both. David Pierce reports on the combination at The Wall Street Journal: The two companies say they have been partners for years, and Amazon products such as Kindle e-readers have long been sold in Best Buy stores. But the new partnership brings potential benefits for both companies as sales of so-called smart TVs continue to climb. It provides Best Buy with access to Amazon’s online customers for the first … [Read more...]
Meet a Long-Time Friend and Advisor: The Stissing, Mountain Man
You Might be a Mountain Man if… If you live on a mountain and regularly send pictures of nosy black bears sniffing around your front door and casually note in your email: “Had some visitors last night,” then, you might be a mountain man. Meet Tim Jones. He is: “The Stissing Mountain Man.” Tim Jones lives on Stissing Mountain, located in the Hudson Valley in Pine Plains, New York. I met Tim when his son, also Tim, began working with us 11 years ago. I’ll refer to them as Tim Sr. and Tim Jr. for this piece. You know when you meet someone and there’s a genuineness where you know they … [Read more...]
This Chart Has a Concerning Look
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...]
East Coast LNG Sets Sail
The first cargo of LNG from the East Coast departed Cove Point terminal on Monday. The terminal makes Dominion Energy the second American company to export LNG, after Cheniere Energy's Sabine Pass terminal on the Gulf of Mexico became the first operation to export gas back in 2016. Bloomberg reports: Cove Point’s startup is accelerating America’s emergence as an LNG powerhouse that’s expected to challenge Australia and Qatar for worldwide dominance in the next five years. Three more export terminals may open on the Gulf Coast by 2019. While Cove Point’s East Coast location could give it … [Read more...]
Yes, Vanguard is too Big: Part II
Has there ever been a bigger supporter of Vanguard than Dick Young whom, unlike other promoters and hucksters out there today, never had a horse in the race? And could there be a better triple play combo than Wellington Management, Vanguard, and Dick Young’s approval? Vanguard’s low-cost expense ratios, no 12b-1 fees, and its history with Wellington Management were, among other valuable investor tenets, enough to recommend Vanguard to you. Buying Vanguard Wellington and Wellesley was simple. Owning them gave you a balanced portfolio with a stock to bond mix of 60/40 or 40/60. There … [Read more...]
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