Profitable Investing Tips
Bleak Future for Coal
A strong message from Donald Trump during the presidential campaign was that he was going to reduce environmental regulations and bring back jobs in the coal sector. That is probably not going to happen. In the USA coal mining companies like Peabody Energy, Arch Coal, Cloud Peak Energy and Alpha Natural Resources produce about 491 million tons of coal a year. This may be the peak of their production and not the trough because power companies are relying more on natural gas and renewable energy sources. They are even closing coal burning power plants. And that includes are areas where […]
Moody’s Debt Downgrade Will Only Make China’s Problem Worse
For the first time in thirty years Moody’s has downgraded China’s debt. Bloomberg discusses the ramifications of China’s downgrade from A1 to Aa3.
The downgrade of China’s debt by Moody’s Investors Service may push Chinese companies to borrow even more money from domestic banks as overseas debt becomes more expensive, increasing risks for the nation’s finance industry.
With growing indebtedness at home, compounded by a slowing economy, there’s a risk of a “negative feedback loop,” said Khoon Goh, head of Asia research for Australia & New Zealand Banking Group who sees state-owned enterprises and property developers feeling the biggest impact. The downgrade […]
What Would a Pence Presidency Mean for the Economy?
As troubles mount in the Trump White House the talking heads on TV have started to utter the “I” word, impeachment. As the independent prosecutor investigation proceeds into the question of coordination between the Trump campaign and Russian hackers this issue will linger. No one is really predicting a Trump exit and a Pence presidency just yet but a year ago no one was predicting a Trump presidency! On the outside chance that things go from bad to worse for the 45th president what would a Pence presidency mean for the economy and for the stock market?
Different Economic Messages
The stock […]
Is the Economy Strong or Weak?
The stock market is a forward looking institution. That is to say investors and traders buy and sell based on their beliefs about what tomorrow will bring. However, the eventual price of any given stock always moves toward its intrinsic value, its value based on forward looking earnings. Looking forward the market has moved up with the election of Donald Trump because investors have expected to see tax cuts, infrastructure spending, repatriation of offshore corporate cash and a lot of deregulation. But not all sectors of the economy are doing well so the stock market advance is not spread out […]
Are Cyber Security Tools Worth the Price?
The current ransomware attacks spanning the globe have taking down computer systems in schools, offices, hospitals and factories. According to Reuters cybersecurity stocks are up.
A global “ransomware” attack disrupting factories, hospitals, shops and schools spurred investors on Monday to buy up stocks expected to benefit from a pick-up in cybersecurity spending by firms and government agencies.
The cyber attack began spreading across the globe on Friday and by Monday had locked up computers in more than 150 countries, with experts warning of an even wider impact as more employees logged on and checked e-mails.
European Union police agency Europol said on Monday […]
Has Over-Regulation Been Killing the US Stock Market?
In the last forty years the market capitalization of all stocks listed on US exchanges has risen from $704 billion to $27 Trillion. Forty years ago there were nearly 5,000 stocks listed on US exchanges and that rose to about 7,000 by twenty years ago. Today there are 3,600 listed companies in US markets. How is it that while market cap has gone up forty-fold the number of listed stocks has fallen by a third? Business Insider discusses the case of the missing US stocks.
The U.S. seems to be the only developed country that lost so many stocks. Most other […]
How to Evaluate Investment Opportunities
Investment opportunities come and go. Success comes from recognition of an opportunity and accurate analysis. It is in learning how to evaluate investment opportunities that investors find long term prosperity. Here are some thoughts on how to evaluate an investment from an article in Forbes.
Successful investing boils down to buying assets at a discount to intrinsic value. The greater the discount, the more likely the investment will perform. Benjamin Graham, the father of value investing, called this “margin of safety.” The concept is simple in theory and extremely challenging in practice, with the valuation process anything but straightforward.
The problem, as […]
Investing When There Are Too Much Oil and Steel and Too Many Workers
Proponents of automation envision a world of plenty with resources shared by all. But the real result of automation has been increased production coupled with fewer jobs. Workers produce products and they get paid. Then they use their money to buy products. And manufacturers turn around and produce more products. But when fewer workers make products there are fewer people with money to keep the cycle going. Today we look at investing when there are too much oil and steel and too many workers, many without jobs. The New York Times writes that we may be in a long term […]