As I read this article, I thought of my son. My son, now a college freshman, has never had a job. This is one thing I wish I had pushed harder for over the years. But, being across the country, there’s only so much letters, phone calls, and infrequent visits can do.

So now we have a generation or two not accustomed to working. Corporations, in order to build shareholder wealth, now recruit from retirement homes, churches, and AARP. Who would have thought it?

Well, hopefully my son reads this post. Son: you better get good grades because school is your only job now. If you perform poorly, do not expect me to further subsidize the endeavor. At that point you will have to do the unthinkable: get a job to pay for your own food and shelter.

-Dr. Moore

Senior Citizens Are Replacing Teenagers as Fast-Food Workers
https://www.bloomberg.com/news/articles/2018-11-05/senior-citizens-are-replacing-teenagers-at-fast-food-joints

U.S. corporate tax breaks lead to bonuses and stock buybacks. Japanese corporate tax breaks are tied to reinvestment in R&D, training employees, and purchasing equipment. Maybe the policy makers in our government can reconsider blanket tax cuts in the face of this “new” evidence (read: common sense).

What Global Slowdown? Japan Inc. Is Roaring Ahead
https://www.bloomberg.com/view/articles/2018-10-10/japan-s-companies-ramp-up-spending-after-tax-change

Apologies if this is a repeat.

Interesting article. Here is one quote that caught my eye:

“Over the summer, Tesla advertised online for technicians to repair vehicles coming off the assembly line, suggesting that a significant number needed rework.”

Pause. Repair vehicles coming off the assembly line? Why not fix the assembly line or product design that produces defective vehicles?

I wonder if Musk will complain about all of the public exposure of activities such as this. If so, how could he defend going public and having repeated rounds of seasoned offerings? How could one reconcile accepting public money (IPO, SEOs) but not accepting scrutiny from the public that provided the money?

The article notes that the next quarterly report will be scrutinized by the SEC. This could get more interesting…

-Dr. Moore

New York Times article:

https://www.nytimes.com/2018/10/01/business/tesla-cars-questions.html

To me this Is more a story about a mother’s love than a Ponzi scheme.

While his former friends and family wanted the maximum penalty his mom asked the judge for leniency towards her son – a son that ripped $50,000 off of her. God bless his mother.

-Dr. Moore

Trader Who Ripped Off His Mom, Friends Gets 8 Years
https://www.bloomberg.com/news/articles/2018-09-27/trader-who-ripped-off-mom-friends-in-n-y-suburb-gets-8-years

Greetings everyone,

The new Inclusive & Quantitative Student Investment Fund (IQ-SIF) is now live. Please visit the fund’s website, www.iq-sif.com, read what we are about, and submit your email to “follow” if so inclined. I would really appreciate your support.

The inaugural IQ-SIF meeting will occur this Monday, September 24, 2018, at 3:00 PM in LIB 2029. That meeting will give an overview of the fund’s goals, the path to attaining that goal, organization, and will have two guest speakers from the financial industry. The meeting announcement is included in this post.

Much thanks to all that have supported, are supporting, and will support this effort.

Regards,

-Dr. Moore

Nike executives are doing what they are supposed to: maximize shareholder wealth. Some would disagree with their decision, but as a shareholder I do not!

After Short-Lived Kaepernick Dip, Nike Hits an All-Time High
https://www.bloomberg.com/news/articles/2018-09-13/nike-erases-short-lived-kaepernick-dip-hits-all-time-high

While discussing the goal of a company, maximize shareholders wealth, in FIN101 this week a student asked a thinly-veiled political question: “what are your thoughts on the Nike-Kaepernick deal.” I connected Nike’s decision to the goal just discussed: maximizing shareholder wealth. True, Nike is down a little bit, but time will tell if Nike’s calculations were correct.

Another point to consider, but not mentioned in the Bloomberg article, is the fact that Nike is a global company. As such, the opinions of a few Trump supporters or right wing folks in the United States may be meaningless compared to additional revenue generated outside the United States. In short, on a global scale, there may be just a few loud and irrelevant people burning Nike products (instead of giving them to homeless veterans or something) and billions of quiet people buying more Nike products in support.

-Dr. Moore

Nike Orders Rose in Four-Day Period After Kaepernick Ad Debut
https://www.bloomberg.com/news/articles/2018-09-07/nike-orders-rose-in-four-day-period-after-kaepernick-ad-debut

As I read this article two things came to mind:

1. Does the exit of large tech companies from the short term corporate bond market add yet another factor driving yield curve inversion?

2. Did our policy makers consider what may follow when implementing the tax cuts earlier this year?

I know, I know, $306 billion brought back from overseas was supposed to produce jobs here in the U.S. but what really happened? The companies paid special dividends and repurchased stock (http://time.com/money/5267940/companies-spending-trump-tax-cuts-stock-buybacks/). They did not build factories.

This is an example of trickle-up economics. For who is harmed by tax cuts? Those who rely on public services that must be cut in order to pay for the tax cuts. Maybe the wealthy people who benefit from the special dividends, stock repurchases, and tax cuts will use the extra cash to buy Ford and Chevy cars Or maybe they will buy Mercedes and Ferrari.

Tax cut -> repatriate dollars -> stock buybacks and special dividends -> lack of funding for smaller corporations -> yield curve inversion-> recession.

Time will tell his this all plays out. I don’t know the future, but I am a bit concerned.

-Dr. Moore

Apple, Oracle Dump Bonds and Create $300 Billion Hole in Market
https://www.bloomberg.com/news/articles/2018-08-31/apple-oracle-dump-bonds-and-create-300-billion-hole-in-market

Wouldn’t it be ironic if we reach “peak car” (that is the turning point where individual car ownership declines as more and more people use scooters, Uber, etc.) just as Tesla figures out how to mass produce cars profitably? That would be a big bummer for Tesla shareholders – to own stock in a company finally able to mass produce cars just as the demand for those cars wanes.

Maybe Tesla has “mobility” plans.

-Dr. Moore

‘Peak Car’ and the End of an Industry
https://www.bloomberg.com/news/articles/2018-08-17/-peak-car-and-the-end-of-an-industry

Interesting opinion article that includes some basic facts: BMW is a profitable dividend-paying forward-looking and electric-car investing automobile company that makes millions of cars per year but with a lower market valuation than Tesla. And, BMW’s controlling family stays out of the public eye. They don’t publicly whine about stock market scrutiny. They just run their business, meet or exceed market expectations, and make money.

Contrast this to Tesla. A money-losing ($8B since 2014) company that has made just 100,000 cars total with a boisterous impulsive Twitter-loving CEO/major shareholder that complains about the very market that funded his money losing operation all these years. Why are market participants even entertaining what appears to be a nonsensical LBO? Perhaps Musk and Trump have more than Twitter usage in common – the ability to manipulate and distract with “alternate facts” and selling a “vision” for the future.

Is this the “new-normal” for the USA and what it means to be an “American?” Don’t actually perform. Then whine, distract, and manipulate when people call you on the poor performance?

I hope not. May you seek clarity with your own vision, not with what someone tells you to see.

-Dr. Moore

Never Mind Tesla, BMW’s the Real Deal for a Buyout
https://www.bloomberg.com/view/articles/2018-08-08/never-mind-tesla-bmw-s-the-real-deal-for-a-buyout