“Let Them Eat Spreadsheets”

By | 2017-07-17T12:22:41+00:00 July 31st, 2015|Global Market Update|

What good are financial statements? Photo: Anatoly Babiychuck. Source: Dreamstime Stock Photos Most of us have a vague idea that Apple makes iPhones, that Panera runs restaurants, and that Wal-Mart sells stuff. But how well do they do these things? Reports that Amazon earned 19 cents last quarter or that IBM had sales of $20.8 billion leave us cold. Numbers by themselves don’t tell us very much. Put another way, a text without a context can become a pretext. Financial statements are intended to [...]

Sweetness and Light?

By | 2017-07-17T12:22:41+00:00 July 30th, 2015|Global Market Update|

“Nothing is so permanent as a temporary government program.” “Still Life with Bread and Confectionary” by Georg Flegel, 1650. Source: Wikipedia I thought of that quote when I read that the Trans Pacific Partnership talks may “disrupt” US sugar policy. Our sugar program is a complex mix of import restrictions, price supports, and loan guarantees designed to protect the domestic sugar industry. Tariffs and quotas on sugar have been in place in one form or another since 1789, when a host of protectionist measures [...]

Timing Is Everything

By | 2017-07-17T12:22:41+00:00 July 29th, 2015|Global Market Update|

How important is time to an investor? Photo: Petr Broz. Source: Wikipedia The length of time investors have to plan for is the single most powerful factor in their investment process. If time is short, investments with the highest potential return are the least desirable, because they entail the greatest risk. But given enough time, assets that appear risky become desirable. Time transforms investments from least attractive to most attractive—and vice versa. Our time horizon has a major impact on our investment strategy. This [...]

Turning Play Into Work

By | 2017-07-17T12:22:41+00:00 July 28th, 2015|Global Market Update|

What’s wrong with the “PlayPump”? Source: Marginal Revolution The “PlayPump” uses a merry-go-round to pump water, transforming children’s play into a labor-saving way to obtain an essential commodity. The driver of the idea quit his job and raised millions from celebrities like Jay-Z, Steve Case, and Bill Clinton. He received prestigious awards and began installing the pumps in Africa. But it didn’t work out very well. In order to pump the water, the merry-go-round requires constant force. The children playing on them quickly get [...]

Jobs, Jobs, Jobs

By | 2017-07-17T12:22:41+00:00 July 27th, 2015|Jobs|

How tight is the labor market? Photo: Douglas Tengdin After hitting 10% in October of 2009, unemployment has fallen to 5.3%. That’s pretty good. But there are still areas where the job market feels week—especially in long-term unemployment. Folks unemployed 6 months or more currently make up a quarter of the unemployed. That ratio has come down from almost 50% in 2010, but it’s still pretty high. That’s one reason why this recovery doesn’t feel very strong. Another reason is the participation rate—the percent [...]

The Learning Discipline

By | 2017-07-17T12:22:41+00:00 July 24th, 2015|Global Market Update|

What’s the key to successful investing? Source: Get Refe There isn’t one key. There are lots of them: understanding ourselves, diversification, setting good goals, managing risk—the list goes on and on. And there are many fruitful investment styles: value, growth, momentum, factors, index investing. Successful investors have to pay attention to lots of things all the time. But when you study great investors like Mario Gabelli or Laura Sloate—the blind stock analyst whose blindness forces her to “see” everything differently—one thing stands out: they’re [...]

You Must Remember This …

By | 2017-07-17T12:22:41+00:00 July 23rd, 2015|Global Market Update|

You Must Remember This … Earnings are still earnings. Dooley Wilson as “Sam” in Casablanca Source: Wikipedia That’s what I thought when I saw the quarterly reports for IBM, Apple, and United Technologies. These companies disappointed the market and their share prices fell dramatically after their earnings announcements. By contrast, Google, and JP Morgan, and Harley Davidson did better than expected. Those stocks traded higher. It doesn’t matter whether management spins the story towards the usual suspects, claiming “it’s a building year” or “there [...]

Dark Matters

By | 2017-07-17T12:22:42+00:00 July 22nd, 2015|Global Market Update|

Dark Matters Is anything holding our financial universe together? Globular Star Cluster. Photo: Skeeze. Source: Pixabay In 1932 a Dutch astronomer couldn’t account for the movement of the stars given the current measurement of visible mass in the universe. He posited that dark matter must be holding the galaxies together. His hypothesis was confirmed 40 years later by another astronomer making observations about galactic rotation. In the same way, our economic galaxy appears to be spinning apart, lurching from one crisis to the next. [...]

A Room of One’s Own (In a Portfolio)?

By | 2017-07-17T12:22:42+00:00 July 21st, 2015|Global Market Update|

What good is real estate? Photo: Joao Pacheco. Source: Picjumbo I don’t mean as a place to live. Everyone needs four walls and a roof. I’m talking about real estate as an investment. Lots of people consider investing in real estate. By this they usually mean private real estate—buying a small apartment or office building and renting out the space. There may be a lot of specific, local demand for living and working space: college students cycling through; young couples relocating to an area; [...]

Fraud, Fraudsters, and False Financials

By | 2017-07-17T12:22:42+00:00 July 20th, 2015|Global Market Update|

Fraud, Fraudsters, and False Financials Can we see financial fraud before it hits us? Photo: Dave Meier. Source: Picography Not always. But published financials can give us some clues as to when managers might be cooking the books. Published financial statements are supposed to reflect reality on the ground. They’re supposed to give an accurate picture about how the business is doing in its day-to-day operations. But we live in a world where investors often fixate on one number—earnings per share (EPS). That number [...]