The Highs and the Lows

By | 2018-04-20T07:42:25+00:00 April 20th, 2018|Global Market Update|

Quality is destiny. Joe Kittinger’s 100,000 foot jump. Source: US Air Force Aldo Gucci, the Italian fashion king, is supposed to have said, “Quality is remembered long after price is forgotten.” People may forget how much they paid, but how a product performs is in their face every day. That cheap suit doesn’t look thrifty, it just looks cheap. The same can be said of investments. How much you pay for your investments matters a lot. The price you pay is a big factor [...]

Moving the World

By | 2017-10-17T08:24:21+00:00 October 17th, 2017|Global Market Update|

Archimedes was right. Source: Wikipedia. “Give me a lever and a place to stand and I shall move the earth.” That’s what Archimedes said when describing the advantage that leverage gives. Force times distance on one side of the fulcrum equals force times distance on the other side. That’s how you can lift a hundred pound weight with only five pounds of push – if the distance on one side is twenty times that of the other. Of course, this only works if the [...]

PC David and Goliath

By | 2017-07-17T16:47:00+00:00 July 7th, 2017|Global Market Update|

Remember Compaq? Photo: Tiziano Garuti. Source: Wikipedia The PC maker was founded in 1982. It went from start-up to $1 billion in sales in only five years. It tripled that number in four more years, becoming the third-largest PC-maker – a leading producer of a revolutionary product. Compaq made a “luggable” computer – a PC that weighed 25 pounds or so. You could “lug” it from place to place, unlike desktops, which needed a lot more time to set up. It was one of [...]

Cubs Win! Cubs Win!

By | 2017-07-17T12:21:38+00:00 November 3rd, 2016|Global Market Update|

What can investors learn from this year’s world series? Source: Wikipedia First, my condolences to all the Cleveland Indians’ fans. I know what it’s like to see a championship slip away. I’ve rooted for the Twins, Cubs, and Red Sox. From Bill Buckner’s dropped grounder to Sandy Koufax’s complete game shutout in 1965 (on two days’ rest!), I’ve felt that sinking feeling when a victory is so close, but so far away. Nevertheless, there are some larger lessons for investors from this year’s Fall [...]

Pennies from Dividends

By | 2017-07-17T12:21:39+00:00 October 25th, 2016|Global Market Update|

What good are dividends? Public Domain. Source: PD Photo It’s a good question. Dividends can limit a company’s options, forcing them to cough up cash that could be used to run the business. If they money flows out of the company, they might have to increase their borrowings. Ford paid a big special dividend in 2000—they called it their “Value Enhancement Plan.” Management probably wished they still had that cash a few years later during the financial crisis. You’d expect that paying dividends would [...]

Right Track / Wrong Track / Off Track

By | 2017-07-17T12:21:40+00:00 October 19th, 2016|Global Market Update|

What makes some companies thrive while others struggle? Photo: Lexcelsior. Source: Animal Photos We see lots of examples in the marketplace: Facebook created the dominant digital social network, while other platforms—MySpace, Friendster—never took off. Costco has grown as a discount club while Wal-Mart struggled. Johnson & Johnson has succeeded across a range of health-care businesses, while others faltered—brought down by scandals or shrinking markets. What’s the difference? It comes down to management. Successful companies need visionary leadership—leaders that create a sense of community where [...]

Follow the Money (Part 2)

By | 2017-07-17T12:21:54+00:00 July 6th, 2016|Global Market Update|

Where do our wages come from? Source: Wikipedia As long as there has been work, there have been wages. Wages have been part of society from Ancient until the present. There are many references to wages in the Bible. Wages can be calculated by the task—a piece rate—or by the amount of time put in. Day wages were typical in the ancient world, but as soon as clocks were invented, hourly wages became more common. Paying people by the hour has the virtue of [...]

Stock Market Values (Part 2)

By | 2017-07-17T12:21:58+00:00 May 12th, 2016|Global Market Update|

What’s a company worth? Photo: GetRefe Key to successful investing is not paying more for a stock than it’s worth. We need to compute the intrinsic value of any asset and compare that number to the market’s valuation before we buy something. A firm may be a great place to work, have a wonderful management team, and have strong financial performance but be priced so high that the stock is unlikely to perform well in your portfolio. Conversely, a company may be performing poorly, [...]

Finding Quality

By | 2017-07-17T12:21:59+00:00 May 3rd, 2016|Global Market Update|

So how can investors beat the market? Photo: Jason DeFillippo. Source: Morguefile There are lots of answers to that question. One approach is to find a stable of well-managed companies and stick with those. It’s harder than you think. For one thing, good management is hard to find. A great CEO can inspire people to deliver results that even they don’t think they can do; can to envision markets that don’t exist right now; and avoids professional and personal potholes that erode trust and [...]

Chickens and Eggs

By | 2017-07-17T12:22:07+00:00 March 1st, 2016|Global Market Update|

Chickens and Eggs Are you a chicken farmer, or an egg farmer? Photo: Ilona Couleur. Source: Pixabay Chicken farmers raise chickens for their meat. Egg farmers raise chickens for what they lay. Investors who plan to sell their stocks to pay for college or to buy a second home are chicken farmers. Investors who hope to use the income from their investments are egg farmers. The financial press doesn’t understand egg farmers. Every day they report market prices and how they’ve changed. But they [...]