The best move for yahoo shoulders could have been accepting Microsoft’s $33/share offer in Q1 2008. However, that could have been bad for Microsoft (http://massivegreatness.com/turning-purple-into-red).
Strangely enough, yahoo is up 4.12% today at 28.82. Perhaps Mr. Market is having another moment.
-Dr. Moore
P.S. Peter: I bet you read this one!
A few observations:
1. I am a bit surprised that discriminatory lending practices are still happening even today.
2. Toyota, Hondas, and GM financing units were caught.
3. The ability for dealers to mark up loans is an example of how the agent (sales person trying to “help” you buy a car) is not acting on your behalf. You would prefer no markup. The agent would prefer maximum markup.
4. The government agency that caught Toyota et al.is a result of the Dodd-Frank regulation. Sometimes regulation helps.
5. Consider financing your purchases through your credit union. I don’t believe credit unions add any “mark up” to loans. I believe their rates are based solely your credit profile, not your race or ethnicity.
6. Perhaps you can ask your dealer to disclose if there is any markup on the rates. If they refuse to document the amount of the markup in writing then walk away from the deal. Tell them Dr. Moore said its better for the consumer to have transparency in their transactions.
-Dr. Moore
http://www.latimes.com/business/la-fi-toyota-settlement-20160202-story.html
I mentioned in class that the United States does not have the monopoly on Enron/Worldcom type cheaters. Here is a recent example from China. Apparently there are “a growing number of cases of fraud and flameouts” in the country.
I find the chosen evidence disposal approach interesting. The company placed documents in bags and buried them in the ground. What happened to old fashioned shredding or fireplaces?
More importantly for those here stateside, it is worth noting the company was in the peer-to-peer lending space. It may serve investors well to do their due diligence in US based companies in that same market.
Finally, for my FIN101 class, this is yet another example of what happens when risk and return are out of balance. If someone seeking your money promises you a low risk 15% remember this: “a promise is a comfort to a fool.”
-Dr. Moore
Five to seven percent is the forward-looking long-term equity return guess from Vanguard’s CEO. His advice towards the end of the article: maintain the long-term focus and ignore the short-term noise. Stay calm everyone…
http://www.cnbc.com/2016/01/25/vanguard-ceo-no-2008-but-market-will-struggle-for-gains.html
Our academic textbooks preach that index funds outperform actively managed funds 70% of the time. What about the remaining 30% of actively managed funds that outperform index funds? There is no reliable method to know who will be in that 30% ahead of time.
Will market efficiency decline as money moves out of actively managed funds into index funds? I pose this question since actively managed funds are “active” in conducting research on companies, their competitors, their suppliers, and the global economy. Active fund managers subsequently trade on that information and that impacts the market price. So, if all the money goes into passive funds, who is left to do the research?
Just a thought. Enjoy the read…
-Dr. Moore
Risk and return arise together. This article focuses on the high fees charged by equity funds and the risks they take. What I don’t see are actual month to month or year to year returns (net of fees) vs. the S&P500. With that data one could see clearly whether or not private equity has outperformed net of fees. If not, CalPERS would be better off with a 0.05% fee index fund from Vanguard rather than the 2 and 12% of private equity.
For example, the S&P 500 was up +32.15% in 2013 and +13.48% in 2014[1]. What were CalPERS’ private equity returns in those (and all) years net of fees?
When will that data be available?
Who will sign off on the audit of that data? 🙂
-Dr. Moore
http://www.latimes.com/business/la-fi-calpers-private-equity-fees-20151125-story.html
[1] http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
It has been said that anyone who wins all the time is cheating and not gambling. No comment on the New England Patriots. 🙂
Perhaps a loss here and there is good for Berkshire Hathaway. Anybody out there prepared to buy BRKA “low” at roughly $200,000 a share?
http://www.cnbc.com/2015/11/18/warren-buffett-is-having-a-very-unusual-bad-year.html
As a student eloquently said a week or so ago in regards to IPOs: wait for the hype to pass. I wonder what P/E and P/B will be for Square’s stock at close. Also, how is their business? Do they have a higher ROIC than their peers or a plan to do so in the future? These are questions to consider before jumping in on an IPO (either at the IPO price or opening price). An efficient market will answer these questions via the stock price. We shall see.
-Dr. Moore
I mentioned the musical chairs played by Goldman Sachs executives, treasury and Fed officials, politicians, and lobbyists. This article mentions that three of the recent new Fed presidents are former Goldman employees.
I am not saying the musical chairs is right or wrong. However, it is something to be aware of and something to contemplate.
-Dr. Moore
P/E over 900? Is that sustainable? Can Amazon “grow into” a reasonable P/E? I don’t know, but I am contemplating put options on all the stocks listed in this article.
http://www.usatoday.com/story/money/markets/2015/11/11/amazon-pe-ratio-valuation-price/75519460/
Efficient Minds™ 