April 10, 2019
Several weeks ago traders took notice of the inverted yield curve (short term rates higher than longer term rates). Their concern is that every recession since the 1960’s was preceded by this inversion. But this may be a bull inversion as a more accommodative Fed and historic low rates around the world have kept the cost of money low, so the bull market continues, until it doesn’t. The other interesting inversion is the large number of unicorn IPO’s that are coming out in 2019, possibly a record number, and the huge amount of losses these companies are experiencing. In the past, private companies would create a product, get to market, have some profits and then IPO to access growth capital For this herd of unicorns, future profits will be the story for Wall Street to tell.
March 22, 2019
We all know them, the late night TV ads that spur us on to buy the golf chipper that is “guaranteed” to get you out of the sand or the “guaranteed” weight loss pill that will change your life with three easy payments. What was interesting about the recent school admissions scandal was the way Rick Singer, college placement specialist to the elite, sold the idea of “guaranteed” admission to your school of choice as opposed to putting the child in the best position to be admitted. Guaranteed, on top of a tax write-off for the bribes, pushed these elites to make gross moral choices and now the wrath of the nation and the legal system. When investing, beware of the guarantees, think Madoff and never a losing month, or other Ponzi type schemes, because as they are finding out in Hollywood, the fact is more powerful than the fiction.
March 13, 2019
This week Forbes named Kylie Jenner the youngest billionaire ever as she achieved this feat at the mere age of 21. The youngest of the provocative Kardashian clan, the new mother has been promoting her make-up line since she was 13 and with 125 million followers on Instagram, she has harnessed the exponential power of social media. Congratulations to Kylie, who had to grow up in what can only be described as an “off-beat” family that was broadcast live for the world to see. As for compounding, at 8% a year, Kylie will hit $25 billion by the time she is her mother’s age of 63 without adding another dollar. Go girl.
February 13, 2019
With yesterday’s announcement that Peloton, the “best cardio machine on the planet” according to Men’s Health, is interviewing banks this week in anticipation of going public later this year, the IPO market is heating up to a sweat. With expected IPO’s from Uber, Lyft, and Slack Technologies, 2019 could go down as the biggest year in dollar terms since the halcyon days of 2000. This is also happening while the government has been shut down, putting a stop to IPO’s for that period of time. Wall Street likes big deals, so we should keep an eye on the big bank stocks. Systematic exercise combined with systematic investing, now feel the burn.
January 28, 2019
In 2018, the best performing national market according to Bloomberg was Jamaica, up about 28% in US dollars. Now granted, this is a very small market and there are zero Jamaican stocks in US exchange traded funds, but this does point to the fact that as investors we have to continue to look for the best opportunities around the world. Our 328 million people in the US represents less than 5% of the over 7 billion people in the world, so there is and will be opportunities in international and emerging markets for stocks and bonds. “Ya mon, money flows to where it is treated best.”