Remember me

Register  |   Lost password?


 

Musings on Markets's Blog

January 2019 Data Update 7: Debt, neither poison nor nectar!

February 21, 2019 Comments (0)

Debt is a hot button issue, viewed as destructive to businesses by some at one end of the spectrum and an easy value creator by some at the other. The truth, as is usually the case, falls in the middle. In this post, I will look not only at how debt loads vary across companies, regions and industries, but also at how they have changed over the last year. That is because last year should have been a consequential one for financial leverage, especially for US companies, since the corporate tax...

January 2019 Data Update 6: Profitability and Value Creation!

February 21, 2019 Comments (0)

In my last post, I looked at hurdle rates for companies, across industries and across regions, and argued that these hurdle rates represent benchmarks that companies have to beat, to create value. That said, many companies measure success using lower thresholds, with some arguing that making money (having positive profits) is good enough and others positing that being more profitable than competitors in the same business makes you a good company. In this post, I will look at all three...

Back to Class: A Teaching Manifesto!

February 21, 2019 Comments (0)

I am convinced that each of us is granted moments of grace, where, if we are open to the possibility, we find out what we are meant to do with our lives. For me, one of those moments occurred in the second year of my MBA program at UCLA, when, cash poor, I decided to be a teaching assistant for a quarter to earn some money. At the time I made that decision, my plans were typical of many of my MBA cohort, to get a job in consulting or investment banking, and to make my work up the corporate...

January 2019 Data Update 3: Playing the Numbers Game!

February 21, 2019 Comments (0)

Every year, for the last three decades, I have spent the first week of the year, looking at numbers. Specifically, as the calendar year ends, I download raw data on individual companies and try to decipher trends and patterns in the data. Over the years, the raw data has become more easily accessible and richer, but ironically, I have become more wary about trusting the numbers. In this post, I will describe, in broad terms, what the data for 2019 looks like, in terms of geography and...

January 2019 Data Update 4: The Many Faces of Risk!

February 21, 2019 Comments (0)

I think that all investors would buy into the precept that investing in equities comes with risk, but that is where the consensus seems to end. Everything else about risk is contested, starting with whether it is a good or a bad, whether it should be sought out or avoided, and how it should be measured. It is therefore with trepidation that I approach this post, knowing fully well that I will be saying things about risk that you strongly disagree with, but it is worth the debate. Risk: Basic...

Is there a signal in the noise? Yield Curves, Economic Growth and Stock Prices!

December 7, 2018 Comments (0)

The title of this post is not original and draws from Nate Silver's book on why so many predictions in politics, sports and economics fail. It reflects the skepticism with which I view many 'can't fail" predictors of economic growth or stock markets, since they tend to have horrendous track records. Over the last few weeks, as markets have gyrated, market commentators have been hard pressed to explain day-to-day swings, but that has not stopped them from trying. The explanations have shifted...

Investing Whiplash: Looking for Closure with Apple and Amazon!

December 3, 2018 Comments (0)

In September, I took a look, in a series of posts, at two companies that had crested the trillion dollar market cap mark, Apple and Amazon, and concluded that series with a post where I argued that both companies were over valued. I also mentioned that I was selling short on both stocks, Amazon for the first time in 22 years of tracking the company, and Apple at a limit price of $230. Two months later, both stocks have taken serious hits in the market, down almost 25% apiece, and one of my...

The GE End Game: Bataan Death March or Turnaround Play?

November 14, 2018 Comments (0)

It seems like ancient history, but it was just 2001, when GE was the most valuable company in the world, commanding a market capitalization in excess of $500 billion. The quintessential conglomerate, with a presence in almost every aspect of the global economy, it seemed to have been built to withstand economic shocks and was the choice for conservative investors, scared of the short life cycles and the volatile fortunes of its tech challengers. Unlike other aging companies like Sears that...

An October Surprise? Making Sense of the Market Mayhem!

October 29, 2018 Comments (0)

I don't know what it is about October that spooks markets, but it certainly feels like big market corrections happen in the month. As stocks have gone through contortions this month, more down than up, like many of you, I have been looking at my portfolio, wondering whether this is the crash that the market bears have been warning me about since 2012, just a pause in a continuing bull market or perhaps a prognosticator of economic troubles to come. If you are expecting me to give you the...

High and higher: The Money in Marijuana!

October 16, 2018 Comments (0)

In 1992, when Bill Clinton was running for president of the United States, and was asked whether he had ever smoked marijuana, he responded that he had, but that he did not inhale, reflecting the fear that being viewed as a weed-smoker would lay low his presidential ambitions. How times have changed! Today, smoking marijuana recreationally is legal in nine states, and medical marijuana in twenty nine states, in the United States. Outside the United States, much of Europe has always taken a...