The Right Investments

By |2018-08-14T07:14:08+00:00August 14th, 2018|Global Market Update|

Should investors have a “Bill of Rights”? US Bill of Rights. Source: Wikimedia We ought to. After all, it’s our money. But the financial industry is filled with fast-talking rascals who take advantage of our good-hearted tendency to trust other people. Ponzi schemes and outright fraud are just the tip of the iceberg. There are all sorts of ways for advisors to abuse their position that aren’t illegal. So we should think about what we have a right to expect. First, investors have a [...]

The Most Important Think …

By |2018-08-13T07:05:39+00:00August 13th, 2018|Global Market Update|

What’s the most important thing to know about investing? La Pensadora by Jose Luis Fernandez. Source: Wikimedia Is it values and valuation? No. Economics and market history? Nope. Stocks, bonds, and asset allocation? Uh-uh. Corporate finance and fundamental analysis? Heavens, no. All these things are important and something every investor should be familiar with. But the most important factor for any investor to “get” is the self-factor: our own personal objectives, limitations, insights, and personal – or personality – issues that helps us when [...]

Throw Out the Bums

By |2018-08-10T07:13:02+00:00August 10th, 2018|Global Market Update|

Bonds are different. Photo: Pixabay Fads come and go in finance. Value investing is in, then it’s out, then it’s back in. Global investing is out right now, mainly because it’s underperformed the US for so long. Sometimes fads and fashions have a permanent impact. This has been the case with index funds. A stock-market fund that holds everything in proportion to the company’s market size makes a lot of sense, and it’s the closest thing to a market-neutral portfolio that anyone has been [...]

Of LBO’s and Private Co’s.

By |2018-08-09T07:39:55+00:00August 9th, 2018|Global Market Update|

This is like United Airlines in 1989. Tesla Model S as electric taxi. Photo: Thomas Mezger. Source: Flikr. CC-BY-2.0 (Full disclosure: Charter Trust holds a modest position in Tesla. This discussion is NOT a buy, sell, hold, tender, tinder, or conflate recommendation. If you think the Global Market Update is a place to get stock tips, you’ve come to the wrong web site.) That’s what I thought when I heard that Elon Musk tweeted out that he has the financing to take Tesla private [...]

Weathering the Market

By |2018-08-08T06:57:19+00:00August 8th, 2018|Global Market Update|

Why should the market listen to economic forecasts? Broad Street in Manhattan. Source: Wikimedia The short answer is, to make predicting the weather look easy. But seriously, the market depends on earnings, earnings depend on revenues, and revenues depend on the economy. All else being equal, a strong economy should lead to strong earnings and a strong equity market, which feeds back to the economy. But all else is never equal. Good economic news can become bad market news when filtered through the Fed. [...]

The Heavy Down Under

By |2018-08-07T14:18:21+00:00August 7th, 2018|Global Market Update|

Is Australia doing some heavy lifting? Australian Paralympic powerlifter. Source: Wikimedia In the world of bilateral national relationships, the US-China nexus is tops. Together, our two countries constitute almost a third of global production, and our combined economic growth creates the equivalent of a new Australian economy every year. But the Australia-China relationship is also critical. Australia exports the raw materials that China needs to build its roads, factories, and ports. This connection allowed Australia to avoid a recession during the global financial crisis. [...]

Hidden Assets

By |2018-08-06T09:41:51+00:00August 6th, 2018|Global Market Update|

Why is Tesla worth more than Ford? Source: Company financials, Bloomberg (Full disclosure: Charter Trust holds modest positions in both Ford and Tesla. This discussion is NOT a buy, sell, or hold recommendation. If you think the Global Market Update is a place to get stock tips, you’re at the wrong site.) Both car companies are growing. But Ford had $160 billion in sales last year while Tesla had about $12 billion. Ford employs 200,000 people while Tesla has less than 40,000 workers. Ford [...]

Interval Training

By |2018-08-03T08:19:09+00:00August 3rd, 2018|Global Market Update|

Stress plus rest equals growth. Facebook stock price. Source: Bloomberg app. That’s what I thought about when I heard the latest Facebook numbers. Stock analysts saw them as an unmitigated disaster: year-over-year revenues were “only” up 42%, after growing 60% just a couple years ago. But more important was the fact that expenses were up 50% and accelerating. Wall Street said to Facebook’s management, “You can’t keep doing this.” No one can grow expenses faster than revenues indefinitely; eventually they run out of margin. [...]

Innovation, Competition, and Non-Competes

By |2018-08-02T07:51:23+00:00August 2nd, 2018|Global Market Update|

Why is California so prosperous? Map of US economic activity by metro area. Source: Bureau of Economic Analysis, A map of economic activity in the US is telling. In our $20 trillion economy, New York City produces 15% of our production, but four cities in California produce almost 20%: San Francisco, San Jose, LA, and San Diego. The wealth amassed in places like Newport Beach is impressive. On a recent trip, I was struck by the forests of masts belonging to million-dollar yachts [...]