In the remote outback of Australia, Rio Tinto is preparing to run autonomous trains filled with iron ore. It is easy to understand the appeal of autonomous vehicle technology in such a remote place. The farther you get from places where employees want to be, the more money they'll demand to be in those places, and the costs of operation will rise higher. Running unmanned trains through the desert will boost the bottom line at Rio Tinto. Robb M. Stewart writes of the project; MELBOURNE, Australia—Driverless trains hauling iron ore across Australia’s arid Pilbara region were meant to transform … [Read more...]
Are Index Funds Today’s Nifty-Fifty?
According to one seasoned value investing team that has been in the business for decades, index funds may be the next Nifty-Fifty. Many financial advisors are pushing index funds as one decision investments. Never mind the valuation ratios that have only been higher at the peak of the 1929 and the 2000 stock market bubbles these investors are told. It doesn't matter how expensive the FANG stocks are--they are winner take all businesses.t Barron's has more: Boniface (Buzz) Zaino of Royce Funds knows better than most the cost of charting a contrarian course. The value-oriented portfolio … [Read more...]
What’s Supporting Real Estate Prices?
Access to money is one of the key reasons for success in commercial real estate, especially here in the U.S. where REITs are everywhere. But with dividend yields near historic lows it begs the question: What is supporting these lofty prices? Even skyscrapers don’t grow forever. Now in Malaysia, where REITs seemed ready for prime time, things aren't looking so good. Shefali Anand writes: Until recently, Malaysia seemed to be on track toward building a successful market for real-estate investment trusts. Its market grew to a capitalization of around $10 billion, and included Kuala Lumpur’s … [Read more...]
It is Trucks, not Ships Slowing Relief to Puerto Rico
Last week President Trump temporarily removed Jones Act restrictions preventing foreign flagged ships from carrying aid to Puerto Rico. While the gesture is welcome, Costas Paris and Paul Page write that the real reason Puerto Rico's people are suffering isn't ships, it's trucks. Paris and Page report: Lifting the restrictions on foreign-flag vessels serving hurricane-ravaged Puerto Rico will help quell criticism over the relief efforts, but logistics experts say the action won’t do much to speed desperately needed supplies to the island’s shattered interior. The Department of Homeland … [Read more...]
Who Wins from a Corporate Tax Cut?
Writing for the Cato Institute where he holds the R. Evan Scharf Chair for the Public Understanding of Economics, Ryan Bourne explains that there will be many winners if corporate tax rates are cut. Shareholders, employees and consumers will share the spoils, but the proportion of the benefit each group receives is harder to predict. He writes: Cutting the corporate income-tax rate seems a rare area of consensus for Republican lawmakers considering tax reform, which is good news for working Americans. Despite opponents’ attempts to suggest otherwise, there is reason to be confident that … [Read more...]
Nestle Changing its Strategy to Remain Competitive
Last week I wrote to you that Nestle is undertaking steps to provide shareholders with even more value, including setting targets for increasing profit margins for the first time ever. For most of its long history, Nestle has been focused on increasing sales as the best approach to market success. But the sector is slowing, and Nestle is focused on wringing more profits out of the sales it is already generating. SwissInfo.ch reports: Against the backdrop of lacklustre growth, the emphasis in the industry has been on cost-cutting to boost profits. Leading the way has been Kraft Heinz, … [Read more...]
This is your Cue to Start looking at Retail Stocks
Retail is a competitive business. The barriers to entry tend to be low and far too many publicly traded firms have businesses that aren't durable enough for conservative long-term investment. Amazon has put the wood to many of these firms. The WSJ reports in the article below that the "Amazon Effect," (not to be confused with "Bezos Law") has led to a souring on global retail stocks. Amazon is a darling of the financial press and in many Wall Street brokerage houses. Amazon has had a real impact on brick and mortar retailers, but the most pronounced effect has been in the stock market. As … [Read more...]
Ikea Buys TaskRabbit, Customers Win
I like this development for customers of Ikea. Retailers that continue to figure out how to improve the buying experience will be rewarded. Kara Swisher and Theodore Schleifer outline the deal at ReCode: TaskRabbit is one of the best-known startups in the so-called “gig” economy that links freelance workers with jobs, from handymen to movers to assistants. It has about 60 employees, but over 60,000 independent workers use its platform. The purchase of TaskRabbit was fueled by Ikea’s need to further bolster its digital customer service capabilities to better compete with rivals likes … [Read more...]
German Grocers Lead Blitzkrieg on American Soil
Aldi and Lidl, two German discount grocery businesses are invading the U.S. with competitive prices. The stores don't offer too many products, but what they do offer is priced at rock bottom. NPR details how the German stores are expanding in America: Competition has been intense among U.S. grocers. Companies are trying to figure out the role of technology in our shopping habits, and Amazon is ever the elephant in the room, now in possession of Whole Foods. And the pressure to compete on price is always there. In fact, prices have been falling quite a bit. Analysts often cite two major … [Read more...]
GE Can Weather this Storm: Most Companies Couldn’t
In India, GE has been building a plant to manufacture locomotives for India's railway system. The locos GE planned to make are diesel, and GE built the plant in the middle of nowhere to bring jobs to a region in India where there is little infrastructure or development. But at the last minute India is trying to pull a fast one on GE. Most companies wouldn't be able to survive such uncertainty in a developing market. GE's size allows it to swing for the fences in such markets where the best infrastructure opportunities lie. While investors wait for the issue to be resolved, they can enjoy a 4% … [Read more...]
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