Really? This reminds me of a point to ponder. In the private sector much focus is given to cutting the costs (pay) of workers. But when is cutting the cost (pay) of executives ever part of the discussion?
http://onpolitics.usatoday.com/2014/04/04/jim-moran-congress-underpaid/
During the GAME conference a presenter claimed 40% of the S&P 500 returns were due to reinvested dividends. I was curious to see how that was true. The attached PDF offers an explanation.
On_Dividend_Reinvestment.pdf
The message is similar to buying and selling cars. With cars, don’t deal with dealers. With stocks, don’t trade with high frequency algorithmic traders. In both cases reducing your transactions and holding long term is the individual’s best move.
http://www.forbes.com/sites/johnwasik/2014/04/02/how-to-beat-the-rigged-flash-boys-stock-market/
Please read the entire article. There is actually some good news at the very end: $800B+ in capital spending and $300B+ in dividend payouts last year. That will help the money circulate a little bit. I wonder how much cash is generated annually to enable such large stockpiles and payouts…
From Bloomberg, Mar 31, 2014, 8:36:53 AM
U.S. companies outside of the finance industry are holding more cash on their balance sheets than ever, with $1.64 trillion at the end of 2013.
To read the entire article, go to http://www.bloomberg.com/news/2014-03-31/apple-leads-u-s-companies-holding-record-1-64-trillion.html
Sent from the Bloomberg iPhone application. Download the free application at http://itunes.apple.com/us/app/bloomberg/id281941097?mt=8
Already married to someone wealthy? Why not eavesdrop on their phone calls and trade on insider information? The rich must get richer I suppose. Or pay fines. I wonder if the couples are still married. I wonder what the husbands do for a living. Maybe the husbands did not work. That would allow time and energy for them to listen to their wives’ phone calls since they had nothing else to do. Maybe their wives did not give them a large enough allowance. Maybe they are just greedy. Or, all of the above. 🙂
From Bloomberg, Mar 31, 2014, 12:14:43 PM
Two California husbands who allegedly heard their executive wives discussing nonpublic information on the phone were sued for insider trading by the U.S. Securities and Exchange Commission.
To read the entire article, go to http://www.bloomberg.com/news/2014-03-31/two-husbands-accused-of-trading-on-wives-overheard-talk.html
Sent from the Bloomberg iPhone application. Download the free application at http://itunes.apple.com/us/app/bloomberg/id281941097?mt=8
Guess where you can find a presentation (including YouTube video links) of my notes from the 2014 GAME IV conference? That’s right, my website! If you choose to view the YouTube videos please make sure you “like” them (if you do). Also, you may want to subscribe to my YouTube channel to catch any new posts.
What model and assumptions were used to establish the $22.50/share price? What do you think is the value of KING? What model would you use?
http://www.usatoday.com/story/money/markets/2014/03/26/candy-crush-ipo-king/6901439/
IPO shares of King Digital Entertainment, maker of the massively popular Candy Crush mobile app, fell 11% in their first day of trading Wednesday.
The initial public offering, which debuted on the New York Stock Exchange under the symbol KING, declined $2.52, or 11%, to $19.98. The shares original price was set late Tuesday at $22.50 a share, which was at the midpoint of the expected range.
King is the latest disappointment in a much-hyped and widely watched tech IPO. Facebook’s IPO in May 2012 also opened weak and the stock rapidly declined in its first few months of trading. King’s IPO reception a big hit to confidence to tech investors, who were hoping this deal would be the one that signaled that the IPO market was open again to young tech companies
The weakness in the stock demonstrates while investors are eager to get their hands on IPOs this year, they’re still being selective and choosy. IPOs have popped 22%, on average, on their first days of trading, Renaissance says. To see King display a decline this early on shows that investors may be concerned about the company’s future growth, despite its success recently.
King Digital is the maker of the popular game for mobile phones called Candy Crush. The company is highly profitable, earning $567.6 million during the year ended Dec. 31, 2013. But investors are worried that Candy Crush could lose its attraction with investors soon, causing the company problems in maintaining growth. Many online and mobile gaming operators hit on popular games that captivate consumers’ attention for a few months, only to fade away and be replaced by another hit title.
I found these funny. Perhaps you will too. Thank you Nuriddin!
http://www.huffingtonpost.com/the-motley-fool/stupid-things-finance-people-say_b_4810315.html
By Morgan Housel
My job requires reading a lot of financial news. It’s one of my favorite parts. But it gives me a front-row seat to the downside of financial journalism: gibberish, nonsense, garbage, and drivel. And let me tell you, there’s a lot of it.
Here are a few stupid things I hear a lot.
"They don’t have any debt except for a mortgage and student loans."
OK. And I’m vegan except for bacon-wrapped steak.
"Earnings were positive before one-time charges."
This is Wall Street’s equivalent of, "Other than that, Mrs. Lincoln, how was the play?"
"Earnings missed estimates."
No. Earnings don’t miss estimates; estimates miss earnings. No one ever says "the weather missed estimates." They blame the weatherman for getting it wrong. Finance is the only industry where people blame their poor forecasting skills on reality.
"Earnings met expectations, but analysts were looking for a beat."
If you’re expecting earnings to beat expectations, you don’t know what the word "expectations" means.
"It’s a Ponzi scheme."
The number of things called Ponzi schemes that are actually Ponzi schemes rounds to zero. It’s become a synonym for "thing I disagree with."
"The [thing not going perfectly] crisis."
Boy who cried wolf, meet analyst who called crisis.
"He predicted the market crash in 2008."
He also predicted a crash in 2006, 2004, 2003, 2001, 1998, 1997, 1995, 1992, 1989, 1984, 1971…
"More buyers than sellers."
This is the equivalent of saying someone has more mothers than fathers. There’s one buyer and one seller for every trade. Every single one.
"Stocks suffer their biggest drop since September."
You know September was only six weeks ago, right?
"We’re cautiously optimistic."
You’re also an oxymoron.
[Guy on TV]: "It’s time to [buy/sell] stocks."
Who is this advice for? A 20-year-old with 60 years of investing in front of him, or a 82-year-old widow who needs money for a nursing home? Doesn’t that make a difference?
"We’re neutral on this stock."
Stop it. You don’t deserve a paycheck for that.
"There’s minimal downside on this stock."
Some lessons have to be learned the hard way.
"We’re trying to maximize returns and minimize risks."
Unlike everyone else, who are just dying to set their money ablaze.
"Shares fell after the company lowered guidance."
Guys, they just proved their guidance can be wrong. Why are you taking this new one seriously?
"Our bullish case is conservative."
Then it’s not a bullish case. It’s a conservative case. Those words mean opposite things.
"We look where others don’t."
This is said by so many investors that it has to be untrue most of the time.
"Is [X] the next black swan?"
Nassim Taleb’s blood pressure rises every time someone says this. You can’t predict black swans. That’s what makes them dangerous.
"We’re waiting for more certainty."
Good call. Like in 1929, 1999 and 2007, when everyone knew exactly what the future looked like. Can’t wait!
"The Dow is down 50 points as investors react to news of [X]."
Stop it, you’re just making stuff up. "Stocks are down and no one knows why" is the only honest headline in this category.
"Investment guru [insert name] says stocks are [insert forecast]."
Go to Morningstar.com. Look up that guru’s track record against their benchmark. More often than not, their career performance lags an index fund. Stop calling them gurus.
"We’re constructive on the market."
I have no idea what that means. I don’t think you do, either.
"[Noun] [verb] bubble."
(That’s a sarcastic observation from investor Eddy Elfenbein.)
"Investors are fleeing the market."
Every stock is owned by someone all the time.
"We expect more volatility."
There has never been a time when this was not the case. Let me guess, you also expect more winters?
"This is a strong buy."
What do I do with this? Click the mouse harder when placing the order in my brokerage account?
"He was tired of throwing his money away renting, so he bought a house."
He knows a mortgage is renting money from a bank, right?
"This is a cyclical bull market in a secular bear."
Vapid nonsense.
"Will Obamacare ruin the economy?"
No. And get a grip.
________________
Morgan Housel’s columns on finance and economics appear on The Motley Fool on Tuesdays and Thursdays.
Read more at The Motley Fool:
Investing’s Biggest Irony: Everyone Thinks They’re a Contrarian
77 Reasons You’re Awful at Managing Money
The Average Investor Is Incredibly Boring
Top 8 Financial Worries Of Americans(CLONED)
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