Archive for category Investment Primer

LAST WEEK WAS A REALLY DOWN ONE FOR THE STOCK MARKET, ESPECIALLY TECHNOLOGY. TIME TO SELL? PANIC? NO WAY!

The market doesn’t ever go straight up, nor does it go straight down!  Besides, investing should always be considered a long-term vehicle for building you resources to fund education, the new house, retirement, etc.  And certainly, it should not be engaged in for a mere one-to-three years.

The current upward climb in stocks is just a continuation of the sustained economic rally that started during President Obama’s Firm Term.  If the numbers look bigger, keep in mind that, let’s say, a one percent rally, or decline, with the Dow Jones Industrial Average at today’s 23,000, will be significantly more than the Dow declining toward 6,500, which George W. Bush let for Barack Obama.

Lately however, many investors’ euphoria has been based on the assumption that the GOP Tax Scam would jumpstart the market run-up even more.  That sort of thinking should have been quickly dismissed by anyone who looked back at the Republican Party’s recent inability to “Repeal and Replace” Obamacare.  In essence, after ten months, the Trump Regime has produced no meaningful legislation: just photo-ops!

When you see a market decline, there are several key points to consider:  Does it effect the overall stock market?  Just one industrial sector (health care, financials, tech, etc.)?  Or, is it limited to just a few stocks?  And then, try to find out what happened, and does it look temporary, or might the problem(s) be permanent in nature?

Those who jump, either to buy or to sell, without knowing what is going on, and why, often find themselves regretting their quick trigger soon afterward.  And many astute investors often find value when particular stocks or sectors have become oversold!

Over the past decade, several economists have won Nobel Prizes for their research, proving that the markets are irrational.  Before you consider making any changes in your investment portfolio, just think: are acting rationally—or irrationally?

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HERE’S WHY I BELIEVE THAT AMAZON SHOULD BREAK ITSELF APART!

There have been various calls, from different quarters, to break Amazon up.  Those have been mostly due to the Seattle behemoth’s eating into the retail business of many others—big box stores, stand-alone businesses and even mall stores, such such as venerable Macy’s.  In essence, however, Amazon is just doing what Wal-Mart, and other big boxes, did to smaller retailers, years before.

Amazon doesn’t have a monopoly on the retail sector; rather, it had just anticipated that Americans, as well as overseas customers, were ready for a new way of shopping—On-Line.  Most of the other stores in the sector; however, can certainly invest in similar advanced systems, but they haven’t.  Wal-Mart, for instance, would cause massive layoffs in the various job occupations from which it draws its customer base.  And, the mall stores and stand-alone retailers mostly have long-term store leases at their current locations.

My suggestion that Amazon split into two separate corporations—let’s say Amazon and Amazon Web Services—is due to, what I believe are, significant operational differences between the two business segments.  As shown on the chart below, Amazon has two different sectors. Most Americans are well aware of Amazon’s retail business; but, few know how active, and expanding, it is in technology—Amazon Web Services.

Amazon is the largest provider of cloud computing, has its own robotics company—which has improved its own logistics systems, as well as provides robotics to other companies globally.  It has also been been expanding its Artificial Intelligence operations. To me, the retail and AWS segments should be totally split into two different corporations, with Amazon shareholders receiving their proportion number of shares in each.

First off, the mindset for managing retail is quite different from that of the AWS segment. So would the occupational skills of both the employees and management of the two.  The chart below shows the differences between retail and AWS, regarding Revenue and Operating Profit.

Revenue, between North America and its International operations was $123, 768 million in 2016.  AWS, on the other hand, was a mere $12,219 million—or just 10.0% of Amazon’s Total Revenue.  Operating Profit was even more revealing. AWS had $3,108, as compared to the net combined retail profit of just $1,100 million.Lastly, AWS had a Profit Margin—operating income divided by net sales or revenue—of 25.4%, while that of Retail was only 1.03%.

I am an Amazon shareholder; however, I still believe that the break-up, between the two dissimilar business segments, would make good sense.  There are so many dissimilarities between retail and AWS, that the split is certainly called for, in order to improve the overall Amazon operation.

Currently, AWS distracts from the retail operations and, I believe that retail also  holds AWS back.  In summary, this is truly a case where the two halves would be more effective—and more valuable—than the total!

 

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TWINS SEPARATED AT BIRTH—NORTH KOREA’S KIM AND TRUMP?

Have you ever noticed the various similarities between the two narcissistic bullies—Kim Jong-Un and Donald Trump?  Both are obese, have birds’ nest hair-dos, and seem to walk around endlessly, clapping at nothing.

The 33 year-old Kim, by the way, really is a twin; however, he is believed to have had his brother assassinated at the Singapore International Airport earlier this year.  So much for brotherly love!

Both “Leaders” (using the word quite loosely) seem to focus on advancing their own status, rather than doing what is best for their respective countries.  Kim exhausts most of North Korea’s resources on the Weapons of War, as the starving, impoverished North Koreans have been totally destitute for decades.

And, the 71 year-old Donald seems hell bent on eradicating the legacy of former President Barack Obama, America’s first Black President.  Rather than focus on his promised major policies, Trump has created a Regime, which has operated through chaos and disruption, ever since he took office.

Trump, more so than Kim, has apparently escalated the stand-off between the two nations. He seems to have misinterpreted North Korea, which merely stated that it would launch a missile “near Guam.”  Neither nuclear missiles, nor Guam were cited as part of the launch in the North’s announcement.  Also, if Kim really did want to attack the U. S., wouldn’t he have targeted San Francisco, Seattle or, at least, Honolulu?

Kim, is also not the brightest light bulb in the box.  Most recently, he claimed that Trump was trying to initiate a Nuclear War in advance of his currant Asian Trip.  Now, since Trump’s first three stops—Tokyo, Seoul and Beijing—are all close to any potential Nuclear Fallout, it seems that Supreme Leader Kim seems to be trying to match Donald Trump in the Lunacy Game.

Both Kim and Trump appear to thrive on power, and saber-rattling is their way of demonstrating it!  And neither one seems to care about the innocent civilians—both at home and in other nations—who might perish from it!

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DONALD TRUMP NEVER GETS HIS HANDS DIRTY! HE DIRECTS HIS SURROGATES TO DO HIS DIRTY WORK FOR HIM, INCLUDING STEVE BANNON, THE PUPPET MASTER, WHO IS CURRENTLY ATTACKING HIS POLITICAL ENEMIES.

Which ever way the wind blows, Donald Trump chooses afterward as to whether, or not, he played an active roll in the whatever happened!  When things go well, Donald is out front, claiming every last bit of credit—regardless of whoever rightfully was responsible. On the other than, however, when the shit hits the fan, Donald acts like that was the first that he had heard of it.  Trump never gets his hands dirty!

For instance, when four Army Green Berets were killed in Niger, earlier this month, it took him twelve days to even acknowledge it, and then he began running feud with one of the widows.  Apparently, the soldiers were ambushed under questionable circumstances, and the Pentagon has been investigating.

Trump stated recently that he did not “technically” authorize the combat action.  Now, Donald, isn’t that your Secretary of Defense running the Pentagon?  Why would the so-called Commander-in-Chief receive a free pass, while the battlefield commander could be relieved of his Command?

Here’s where Steve Bannon, the Puppet Master, plays a vital role on Donald Trump’s behalf!.  This prior post provides an earlier description of Steve Bannon’s role in the Trump Regime.

In that earlier post, I had suggested that Donald Trump allows Bannon, who maintains a close relationship with the Ultra Fringe White Supremacist Wing of the Trump Political Base, to pull many strings from behind the scenes. Over the past nine months that Trump has been in office, Bannon has played his evil role, off and on, both from within the White House, and from The Shadows.  Through it all, Bannon and Trump have retained a close personal relationship.

Bannon has been attacking political opponents of Trump, and without shirking back into the shadows.  Perhaps the most visible target recently has been Majority Leader Mitch McConnell (R-KY), who Trump has previously castigated; however, he is currently counting on McConnell to pass his Health Care and Tax Scams.  Meanwhile, Bannon has established a Super Pac to Dump Mitch.

Lastly, let’s consider the 25th Amendment, which, at least temporarily, enables a majority of the Vice President and Cabinet, to relieve the President  when they believe that he is unable to fulfill the duties of his office.  When Donald Trump supposedly “Drained the Swamp,” he seems to have replaced the inhabitants with even more dangerous swamp creatures.

Just about every Cabinet member is a billionaire, who had worked in the various industries, which they are now supposed to regulate?  Would they truly damage the respective industries that they expect to return to?  Apparently, Trump selected the fresher, more dangerous Swamp Creatures, so they wouldn’t dare countermand his regulatory goals!

Meanwhile, Steve Bannon is shirking more openly, this time; but, still pulling the strings which Donald Trump wants to keep hidden.

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STEAM, NOT STEM!

Over the past 50 years, automation and the machines (robots, machine-reading, big data, artificial intelligence, etc.) have been creeping into our workplace, replacing workers in performing various routine job functions.  And, unlike other historical labor disruptions, the advance of machines—performing the tasks they have been programmed to do—is being felt throughout the entire industrialized world.

To better understand the advance of the machines, both in memory and speed, let’s review “Moore’s Law”.  Gordon Moore, before he co-founded Intel, 50 years ago remarked that the capacity and speed of silicon chips will double every two years, over the next ten.  Well, fifty years later, that hypothesis is still on target, and it is often used to describe the exponential advances of computers as their capabilities accelerate over time.

For instance, the computer that took the astronauts to the Moon in 1969 was merely comparable to the Nintendo of that era.  The capacity of today’s iPhone, however, is considerably faster, and can perform more functions, than the fastest super computers of even 30 years ago.  So, how are schools preparing our children for the labor market of the future?

It seems that that many school systems, over the past ten to fifteen years, have emphasized the STEM subjects (Science, Technology, Engineering and Mathematics), while de-emphasizing the Arts and Humanities for college bound students.  Such a focus can make the job skills of such employees similar to those of the machines, and thus easier for the machines to displace.

Skills that reflect the humanity of the worker—such as intuition, relationship building, good writing skills, an ability to cope with adversity, creative thinking–may set him or her apart from their co-workers, in similar jobs.  “This is Money” provides a fairly in-depth list of job occupations that are most, and least, likely to be replaced by automation.

For the most part, school curricula, through the 12th Grade, appear to have changed little over the years.  As the advance of the machines continues at an ever-increasing speed, school administrators and teachers need to be honing their skills, and begin to plan for the challenges of the Twenty-First Century, which has already arrived.  Business, government and labor also need to be part of the planning process.

Many computer engineer jobs have already been outsourced to India.  And, this time, many white collar jobs, requiring college and advanced degrees—such as associate attorneys and some radiologists (yes, M. D. s), who perform many routine functions, may also be at risk.  That’s why it would be important for the employee to set him or herself apart from their colleagues.

Since automation will impact the entire labor market, to one degree or another, the number of displaced workers could easily outnumber the available jobs, and probably drive the pay scales.  That’s where the Arts and Humanities skills may set some employees apart from the crowd, and help them keep their jobs!

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SO FAR, DONALD TRUMP’S TAX PLAN IS JUST ONE BIG LIE!

Surely, most people realize that you cannot trust anything that Donald Trump and the GOP say.  The Tax Plan, which they released this past Wednesday, was a charade–focusing on what the middle class might expect, while burying the real meat, which they don’t want us to see.  This plan is intended to reinitiate the Bush Era tax cuts, skewed to the top one percent.  Additionally, they are selling the repeal of the Estate Tax–from which only 6,000 of the very wealthiest families will benefit–which adds to the top one percent of taxpayers.  Those cuts, early on in Bush 43’s first Administration contributed t The Great Recession (4Q07-1Q09).

There is no “reform” included in the proposal; but, rather, that is merely to enhance the appeal to the middle class.  Trump and the Republicans have claimed ad nauseum that America has the highest personal and corporate tax rtes on earth.  Au contraire, both of those rates fall in the dead center, after deductions and loopholes, according to  the OECD organization of industrialized nations.

Oftentimes, Donald Trump meanders around in various directions, suggesting one thing and then another; but in the end, he often reverts back to something that he said on the campaign trail.  Rather than get bogged down analyzing a his short outline, I am including a blog post that I published last January.  As you can see, little has changed after his nine months in office.

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HAS CHIEF-OF-STAFF JOHN KELLY CROSSED OVER TO THE “DARK SIDE?”

Donald Trump ignorantly said that former Presidents did not telephone the families who lost sons and daughters in hostel action, while serving their country.  That, of course is an outright lie!  All former Presidents have called or written the families, and many have specifically held functions for the so-called “Gold Star” Families at the White House.  But, telling such lies has become routine for Donald Trump.

Over the past week, once again, Trump was bitten by his own version of “fake facts.”   He had to be prodded to call the families of four Special Forces sergeants, who were ambushed and killed in Niger.  Thus, Donald Trump has once again created a mess; which, given the question of faulty intelligence, has blown the whole Niger issue way out of proportion.

Chief-of-Staff John F. Kelly, a retired four-star Marine General thus entered the fray. General Kelly has known the heartache over military troops killed in battle, from both sides:  his own son, Marine First Lieutenant Robert M. Kelly died in battle, in Afghanistan, nine years ago; also, he has walked among the gravestones at the Arlington National Cemetery, knowing that some of those men died, following his orders.

Since the details of the recent blow-up have been endlessly covered by the media, I will not go there.  The question that I ask, however, is: When Chief-of-Staff Kelly inserted himself into this brouhaha, was he speaking as a father and a former general, or was he acting as one of Donald Trump’s closest advisors?  Kelly had always preferred to keep his family’s loss out of the media, since one soldier’s life is as valuable as any other; however, Trump brought it up assumedly for his own thoughtless purposes.

In a prior post, I cited the fact that several recent Presidents—Kennedy, Johnson and Bush 43—virtually disregarded the Joint Chiefs of Staff.  And with Donald Trump, having three generals who answer directly to him—Chief-of-Staff John Kelly, Secretary of Defense James Mattis and National Security Advisor H. R. McMaster—the role of the JCS, in offering military planning and ideas, would be totally up to Mattis.  That is, however, if Trump listened to anyone!

Originally, all three of the generals appeared to provide their own advice to Trump, rather than just telling him what he had wanted to hear.  Currently, however, by getting involved in this latest flair-up, it appears that John Kelly has taken on the role of answering for the Chief.  After 43 years of serving his country, how much longer can General Kelly stomach defending Donald Trump?

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