Something Old, Something Updated

By |2018-05-31T07:19:05-04:00May 31st, 2018|Global Market Update|

Software is more important than we think. Old Chrysler and new Tesla Model 3. Photo: Doug Tengdin Recently, Consumer Reports refused to recommend the Tesla Model 3 to its subscribers. This is a big deal. The Model 3 is Tesla’s first attempt to produce an affordable, mass-market car, and Consumer Reports is highly prestigious. They have an incredibly powerful reputation for integrity. Their subscription-based model means their writers and testers don’t have to worry about offending a corporate sponsor. Consumer Report recommendations are big [...]

Falling Down, Getting Up

By |2018-05-30T06:02:11-04:00May 30th, 2018|Global Market Update|

What makes a successful innovation? Photo: Dani Simmonds. Source: Morguefile The modern world has been dramatically changed by its innovations: air travel, electric lights, telephones, automobiles, computers. These have had a revolutionary impact, changing not only how we do our jobs, but the jobs we do. Indeed, mastering the dynamics of innovation is critical for any company. Companies talk about innovation in their quarterly reports almost as much as they discuss earnings. But innovation is unpredictable. Doing new things in new ways upsets the [...]

Competitive Drive, Competitive Pressures

By |2018-05-29T07:48:03-04:00May 29th, 2018|Global Market Update|

Is competition always good? Photo: David Iliff. License: CC-BY-SA 3.0. Source: Wikimedia Competition has been touted as “good for what ails us.” Competitive markets spur innovation, lower prices, and better customer service. Upset with your cell phone provider? Encourage competition: another provider that wants to win your business by providing better cell coverage, better customer service, or charging lower prices. The economist Milton Friedman attributed many of our social problems to a lack of competition in the public sphere: in schools, roads, on the [...]

Real Returns, Real Differences

By |2018-05-25T06:26:07-04:00May 25th, 2018|Global Market Update|

Why is the US so fortunate? Public Domain. Source: NASA When you look at global stock market returns, the US stands out. Over the past 10 years, money invested in the US has grown almost 150%, while global investments are up by half that much. That’s a significant difference for any investor. This isn’t just a recent thing. Since 1900, a dollar invested in the US grew to $1,400 after inflation. In the UK, it only grew to $500. The countries with the best [...]

Bad News?

By |2018-05-24T06:30:01-04:00May 24th, 2018|Global Market Update|

Are traditional newspapers doomed? Photo: Florian Plag. Source: Wikimedia Ever since the first newsfeed appeared on the web, the traditional news business model – local business ads, subscriptions, and classifieds – was threatened. A few decades ago, newspapers were filled with lots of non-news items: real-estate listings, grocery store coupons, want-ads. These money-making inserts were bundled with a journalistic product that usually focused on a defined geographic area. Distribution was limited by the cost of physically delivering a bundle of paper. Gradually, each area [...]

The Only Game in Town?

By |2018-05-23T06:28:00-04:00May 23rd, 2018|Global Market Update|

Should we invest in monopolies? Photo: Matthew Hull. Source: Morguefile A monopoly exists when a company is the only provider of what we need. The electric company in your area is the only way to get electricity for your home. The cable or phone company is the only way to get high-speed internet service. Companies that enjoy a huge market share have one less thing – one big thing – to worry about. They don’t have to worry about what the competition will do [...]

Revolution and Flood

By |2018-05-22T06:29:51-04:00May 22nd, 2018|Global Market Update|

Where did we come from? “Washington Crossing the Delaware” by Emanuel Leutze. Source: Metropolitan Museum of Art Every society has stories of its founding. In school, we learned about the American Revolution, how a rag-tag band of settlers were able to hold the field against the strongest army in the world. This story has given Americans a sense of identity and direction. My own family came to America from Scandinavia in the 19th century and settled in the Midwest. The gradual settlement and development [...]

Go with the Flow

By |2018-05-21T07:03:01-04:00May 21st, 2018|Global Market Update|

What is “free cash flow”? Photo: Redmark. Source: Wikipedia Free cash flow is an accounting term that measures how much cash a company can generate from its business after taking out capital expenditures – money spent for new computers or new buildings or new delivery vehicles. It’s the cash that’s left over after you spend what you need to keep the business going and growing. It’s important: it allows companies to pursue new opportunities without relying on the kindness of their bankers, or the [...]

Hostage-Taking Bond Markets

By |2018-05-18T06:39:35-04:00May 18th, 2018|Global Market Update|

Is the bond market holding Italy hostage? “Hostages” by Laurens. Public Domain. Source: Wikimedia Over the past few days the Italian bond market has sold off. Market participants have been spooked by the prospect of a political alliance between the two major populist parties there – the Northern League and the Five Star Movement. The leaders of the parties have been in talks for months, ever since Italy’s elections in early March were inconclusive. The country has been operating without a government since then, [...]

The Player’s Dilemma

By |2018-05-18T10:25:16-04:00May 17th, 2018|Global Market Update|

What is “Pay to Play”? Photo: Dodger Harrison. Source: Morguefile “Pay to Play” is a pernicious system where nonprofits use their business needs to generate donations. Periodically, a nonprofit will ask vendors to submit business proposals – say, for snowplowing services, or investment management. When the proposals are evaluated, the nonprofit also examines the record of charitable contributions they may have received. Unless a business is on the list of the organization’s donors (they “pay”), they don’t have a chance of being hired (they [...]