Balancing the Books (Part 1)

What is a balance sheet?

Source: Digital Juice

A balance sheet is a financial statement that lists all your assets and liabilities—what you own and what you owe. It’s a fundamental part of finance. It’s an accounting ledger that lists, on one side, what you are doing with your money, and on the other side, where the money came from. It’s a snapshot at a point in time. Everyone and everything that deals with money has a balance sheet: families, businesses, governments—even central banks.

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Apple’s Shine

How well did Apple do last quarter?


Source: FinePrintNYC.com

Yesterday Apple reported they earned $18 billion on $75 billion in sales. Earnings were up 50% from a year ago, and sales up 30%. They sold almost 75 million iPhones—34,000 every hour, every day, all quarter long. There clearly was a lot of pent-up demand for a larger phone. Well done Tim Cook.

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Stormy Weather

How do storms affect the economy?

Source: LINewsRadio.com

With a major nor’easter bearing down on New York and New England, a lot of people wonder just how much weather can change the economic outlook. Last winter was a great case-study. As 2013 ended, many looked for economic growth to pick up in the new year. Instead, the combination of record cold temperatures with an especially stormy winter led caused economy to contract at an annual rate of over 2% in the first quarter.

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Gassing Up (or Down)?

How long can gas prices stay so low?

Gas price from 1939. Source: Pinterest

Gas prices have fallen dramatically. And they feel really, really low because they seem to have fallen without a major catalyst. We’re so used to feeling helpless in the face of higher prices that we don’t know what to do with the good news. And so we speculate that the lower prices will just be temporary, as they were in 2009, or that weather, war, or some other disaster will push them back up.

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Draghi’d Forward

Exceeds expectations.

Photo: Frankfurt Skyline; Source: Wiki Commons/Thomas Wolf

That’s what I thought when I read about the European Central Bank’s program to expand the Eurozone’s money supply by buying government bonds, commonly known as quantitative easing (QE). A week ago, rumors were circulating that they would buy about €700 billion worth of bonds. But yesterday Mario Draghi announced that the program would be more than €1.1 trillion. Markets around the world rallied on the news.

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Beating the House

Is investing like gambling?

Global Market Update - Blackjack with Hands (AKblack)Photo: Casinocashjourney.com

I’ve written before how investing isn’t gambling. Gambling is a zero-sum game, while investing makes everyone better off. Gambling is entertainment, while investing is a fundamental part of business. Investors own something real—a share of a company, or a loan to a city; gamblers don’t own anything. They just participate in a process.

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Alarm Clock Investing

When does your alarm clock go off?

Image: Wikipedia

Henry David Thoreau once wrote, “The mass of men lead lives of quiet desperation.” He might update that today to read, “The mass of men are asleep.” In the early 19th century most folks had to fight just to feed and clothe themselves and keep a roof over their heads. Today, life isn’t so grim. We don’t struggle with starvation any more. Indeed, many of our diseases are ones of overabundance, not scarcity.

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Only A Game?

Should major league sports be exempt from anti-trust rules?

Source: ESPN

Football is a game. A rough, tough, violent game. A game where two teams pummel each other while millions of fans look on. At the end of each contest, one team wins, and one team loses. It seems silly to exempt them from anti-competitive rules. After all, competition is what the game is all about.

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(Currency) Wars and Peace

What’s happening in Switzerland?

Source: Wikipedia

Yesterday the Swiss National Bank announced they would no longer keep the Franc pegged to the Euro. The currency immediately jumped about 20%, roiling the markets. Some currency trading firms have been wiped out. They also lowered the deposit rates for banks to -0.75% to discourage inflows. Why did they do this?

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Douglas Tengdin's Global Market Update