How are Tax Dollars Spent?

 April 24 2017     Matt Woebkenberg
Interesting picture on where your tax dollars go from the National Priorities Project.We will be watching to see how increasing interest rates grow the relative allocation to interest payments on the Federal Debt.

Dogs Of The Dow Falling Further Behind

 April 23 2017     David Templeton
It has been several months since updating the performance of the Dogs of the Dow investment strategy. The strategy is one where investors select the ten stocks that have the highest dividend yield from the stocks in the Dow Jones Industrial Index (DJIA) after the close of business on the last trading day of the year. Once the ten stocks are determined, an investor invests an equal dollar amount in...

Emerging Markets Poised To Outperform

 April 22 2017     David Templeton
In our Spring 2017 Investor Letter we briefly commented on first quarter investment changes we initiated in client accounts, specifically, adding exposure to emerging markets. Expanded commentary follows on some of the rational for this change. Simply because an asset class or stock is cheap does not necessarily suggest the asset should be purchased; however, valuation does tend to matter in the l...

Brick & Mortar Retail Struggles Attributable to Growth In E-Commerce

 April 21 2017     David Templeton
Today another retailer announced it will be closing up shop, Bebe Stores, Inc. (BEBE), making it the 15th retailer to go under this year. By the end of May BEBE plans to liquidate its approximately 180 stores. This nearly matches the 18 retail bankruptcies for all of 2016.Source: S&P Global: Market IntelligenceWith the consumer accounting for nearly 70% of economic growth in the U.S., are the stru...

Friday Financial Terms: Alpha

 April 21 2017     Matt Woebkenberg
Alpha is a great finance term.  It is a simple concept that has been wrapped in an unnecessarily jargon-y word.  The barriers to entry in basic finance are about 98% jargon and 2% math.  Put simply, alpha is just any out-performance by an investment manager vs. his benchmark.  For example, if I was managing a portfolio of large U.S. stocks, I would most likely be benchmarked to the S&P 500.  If th...

Markets Only Look Forward: Tesla

 April 20 2017     Matt Woebkenberg
Tesla stock has been in the news recently as Tesla became (briefly) more valuable than both General Motors and Ford when measured by market cap.  This comes despite the fact that Tesla has never actually made money (had positive net income) and, in fact, lost over $650 million in 2016.  For comparison, GM had net income of $9.5 billion in 2016 and Ford made $4.5 billion. Tesla, despite losing mone...

Robot and Human Collaboration

 April 19 2017     Matt Woebkenberg
Here are a few videos showing how robots are working with humans in various industries.  In these scenarios robots are serving a complementary role to many human employees.  For the foreseeable future, this will be the norm far more often than entirely automated industries.

Pop Quiz

 April 18 2017     Matt Woebkenberg
Pop quiz: You invest $100 in a stock. The stock drops by 25% in year 1 and then increases in value by 25% the following year. How much is your investment worth today?       A. $125.25       B. $100.00       C. $93.75       D. Who cares, just tell me the answer.If you answered C, your answer is correct. If you answered A or B, don’t be discouraged. Many people struggle to think in terms of compound...

Markets Only Look Forward

 April 17 2017     Matt Woebkenberg
The Wall Street Journal recently wrote an article about Flipkart receiving a $1.4 billion investment.  FlipKart is billed as the Amazon of India and is a private company with the goal of dominating the growing India e-commerce market.  With this recent investment, Flipkart was valued at almost $12 billion (down from previous $15 billion valuation).  Fascinatingly, Flipkart managed this $12-15 bill...

Widespread Bearishness Indicating Market Nearing A Turning Point?

 April 14 2017     David Templeton
Bearish sentiment has over taken what was a bullish environment that unfolded after last year's election. The sentiment change can be attributed to a number of factors, such as continued gridlock in Washington, U.S. bombing campaigns in several countries overseas, etc. Most of the return generated by the equity market over the past two years has occurred since the election in November of last yea...
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