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...]
Thank You Mr. Johnson
Yesterday, Edward “Ned” Johnson announced he is stepping down as Chairman of Fidelity Investments. What I remember most from my time working at Fidelity Investments circa 1995 is how Mr. Johnson’s imprint on the company, and his desire to run it like a small family business, were felt by all 30,000 of us. Dick Young’s relationship with Johnson goes back to circa 1971. He wrote in the February of 2013 issue of Intelligence Report, "I have done business with the Boston-based Fidelity Funds since the early seventies, when the iconoclastic J. Stewart Harvey was director of research. And I first … [Read more...]
Is the World Witnessing a Frenzy of Better Robo-Retail?
After years of development, Lowe’s has rolled out its Lo Bot, a helpful machine created to guide customers around the company’s massive big-box stores. Ask Lo Bot where an item is and the robot will take you right to it. The Lo Bot isn’t the only robot showing up at retail operations. Another robot, a humanoid known as Pepper, has been showing up in different stores around the world. A version of Pepper has been infused with IBM’s Watson cognitive computing technology. The Watson integration is open to app developers and could lead to all new capabilities for the robot. Behind the … [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...]
Trump Tax Code Implications for Investors
There’s a lot to like about the Trump tax code reform, especially on the estate tax front: Republicans’ race to rewrite the U.S. tax code on the heels of this month’s election relies on years of work that is suddenly—and quite unexpectedly—poised to pay off. A 2017 tax overhaul would be a case study in the benefits of dead ends and behind-the-scenes preparation. Failure would show again how hard it is to reshape the U.S. tax system, even with rare political momentum and one-party control of government. Republicans have long sought a rate-lowering, base-broadening revamp of the tax code, … [Read more...]
America’s Relentless Expansion of Entitlements
The Trump administration must put the breaks on the frightening explosion of entitlements. The Cato Institute’s Dan Mitchell lays out what is ticking time bomb for America: [T]he federal government is spending more today on defense than it was back in the 1960s, even after adjusting for inflation. And outlays for "domestic discretionary" programs also have increased. But what's obviously driving fiscal policy is the relentless expansion of entitlements (referred to as "mandatory spending" for purposes of the Budget Enforcement Act). And because of demographic changes and bad policy … [Read more...]
I Challenge You to Uncover a Sounder Long Term Strategy
The Wall Street Journal offers a summary analysis on what FedEx and UPS are up to. At youngresearch.com you can regularly follow the progress of both strategic powerhouses. Parcel delivery companies are getting closer to online retailers—literally. The package-delivery operations at FedEx Corp. and United Parcel Service Inc. have been opening more and larger sorting facilities that are readily accessible to their customers—shortening the often time-consuming first leg of a shipment, from e-commerce fulfillment center to shipping hub. This week, UPS announced plans to open its … [Read more...]
Fidelity Investments: 5 Social Security Myths
The myths and misconceptions regarding Social Security are many. When can you get your full benefits? Can you claim a small amount early, and get bumped up later to a higher benefit? Can your ex-husband or ex-wife take part of your Social Security? What part of your life are your wages based on? Will you get all your money back? These are some of the questions Fidelity answers here in, Five Social Security myths debunked. Below I've sampled some of the more common misconceptions people have about Social Security benefits. Many people are adamant that Social Security benefits must begin … [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...]
Did Wells Fargo Silence Whistle-blowers for Profit?
Lisa Beilfuss, writing for The Wall Street Journal's Wealth Advisor blog, reports that it's possible Wells Fargo fired employees who spoke up about the questionable cross-selling tactics the company was employing. Additionally it appears that some of those fired may have had their reputations tarnished by negative characterizations on their industry records. Beilfuss writes: Wells Fargo is facing increasing scrutiny over whether it wrongfully fired employees who pushed back on questionable sales practices, and sometimes mischaracterized their behavior on their industry records. The latest … [Read more...]
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