June 27, 2019
il prices were certainly in the news this past week as military tensions boiled up with Iran and a huge refinery explosion lit up the city of Philadelphia. Interestingly, even after Iran destroyed a US drone over international waters, the price of crude rose, but only to about $58 per barrel. Historically this type of overt aggression between the US and a Middle East country would have shot the price of crude up over $100 dollars a barrel or more. Why then, thankfully, is there such a muted reaction in the price of oil? One comforting notion, both to our safety and our economy, is that in 2019, the US may be a net exporter of oil for the first time. This is an important, if not largely talked about phenomenon. Refineries pose a separate issue, as the lack of investing in the US, puts them all at peak usage and none of them are getting any younger. As investors we need to understand the long term effects of energy independence paired with a dependence on aging refining infrastructure.
June 12, 2019
As you begin, and throughout your employment career, it is important to remember who should get paid first, and that is you! While there is no magic number, according to a recent study done by the Employee Retirement Research Institution their best guess is that at least 10% of your gross wages should go toward your retirement. Fortunately, if you are in a plan where let’s say your employer matches 4% of your savings, you only need to come up with 6% to hit the number. Finally, based on a 25 year old making $30,000 who commits to saving 12% a year, his future value in today’s dollars would be $669,000 at the age of 65. So give yourself that 10%, you deserve it.
May 8, 2019
With all the attention that new issues are getting over the past several months, it is interesting to see that a privately held fast food chain, Chick-Fil-A, has now become the third largest restaurant chain, only behind McDonalds and Starbucks. Founded by the late S. Truett Cathy, the chain is known for not being open on Sundays, Thanksgiving and Christmas but still has led the fast food industry in average sales per restaurant since 2010. Keeping with their private company roots, Chick-Fil-A has partnered with Door Dash for delivery services, but we wonder how long before IPO darling Uber, with their Uber Eats division, partners with them as delivery represents almost 13% of their current sales. Eat Mor Chikin!
April 25, 2019
Fourteen years ago on April 23rd, 2005, the first YouTube video, “Me at the Zoo”, was posted. A year later, YouTube was purchased by Google for a little over $1 billion dollars. Today, YouTube has over a billion users (a third of all people on the internet), and every minute more than 100 hours of video is being uploaded. Talk about the incredible amount of video data and intelligence being processed by Google all day long and talk about the investment opportunity that this represents. Totally, like wow man!
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.