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chabo11's blog

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Some Thoughts on the Energy Market

chabo11's picture
chabo11
     
 
(Orangutan, 310
 
Points)
 on 8/9/12 at 11:12pm
oil.jpg

Energy stocks haven’t been the best investment over the past several months largely due to falling oil prices. While the S&P 500 is up around 10% on the year, energy stocks within the index are up just 1%. Over the next 12 months, this trend could certainly reverse as crude oil and natural gas prices have already begun to rebound. But why wait until then? The energy industry is still profitable and undervalued, and I think this could be a great time to invest:

Evan Calio, an energy analyst at Morgan Stanley, wrote recently that many stocks trade "near liquidation value," and the group as a whole is valued at "trough" levels, based on such measures as price to cash flow and reserves relative to enterprise value, which is stock-market value plus debt. He likes stocks that can do well "without commodity support," which is to say rising prices. His favorites include Chevron, Anadarko, and Hess.

JPMorgan strategist Thomas Lee is likewise bullish on energy, noting that the price ratio of energy stocks relative to the S&P 500 is near lows reached at the 2009 market bottom and during the 2010-'11 low. After those troughs, energy rallied more than 25%.

Is now a good time to invest in energy stocks that have been punished by low oil prices? Which companies look the most appealing to you?

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MIST, BRIC, and the Future of Emerging Markets

chabo11's picture
chabo11
     
 
(Orangutan, 310
 
Points)
 on 8/7/12 at 7:11pm
globe.jpg

Former Goldman Sachs Chief Economist Jim O’Neill must really love creating acronyms. A decade after coining the term “BRICs,” O’Neill has been promoting a new bloc of emerging economies: meet the “MISTs.”

The so-called MIST nations -- Mexico, Indonesia, South Korea and Turkey -- are the four biggest markets in the Goldman Sachs N-11 Equity Fund. (GSYAX) Opened in February, 2011 to invest in what O’Neill considers the next big 11 emerging markets, the fund has climbed 12 percent this year, compared with a 1.5 percent gain in Goldman Sachs’s fund for Brazil, Russia, India and China.

In addition to the MIST nations, the N-11 Fund (Next 11) includes Bangladesh, Egypt, Nigeria, Pakistan, the Philippines, Vietnam, and Iran—although the fund doesn’t invest in Iran due to economic sanctions. Though much smaller in size and output—MIST total GDP was $3.9 trillion last year compared with BRIC output of $13.5 trillion—the N-11 countries are rapidly growing thanks to an improving credit outlook, a young average population, and a growing export market.

How many acronyms are too many? It’s getting a little out of hand with the BRICs, PIIGS, CIVETS, MIST, etc. I understand how at first glance, people may roll their eyes at what appears to be salesmanship on the part of Jim O’Neill and Goldman Sachs. But putting labels aside, MIST represents a new an important investment theme. Are smaller emerging markets better poised for growth than their larger, more popular counterparts?

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How Google Could Influence Central Banking Policy

chabo11's picture
chabo11
     
 
(Orangutan, 310
 
Points)
 on 8/2/12 at 11:04pm
google.gif

Over the years, Google has branched out to serve a number of different functions. What began as a simple search company has expanded into a mobile company, a cloud computing player, and potentially an engineer of self-driving cars. Could it also become a forecasting tool for central bankers?

The central bank stands at the forefront of the world’s hunt for new economic indicators, analyzing keyword counts for everything from aerobics classes to refrigerators -- reported by Google almost as soon as the queries take place -- to gauge consumer demand before official statistics are released. The Federal Reserve and the central banks of England, Italy, Spainand Chile have followed up with their own studies to see if search volumes track trends in the economies they oversee.

Did more people browsing for cars predict an increase in auto sales? Was a jump in research on unemployment benefits a hint that people were losing jobs?

Does this bode well for Google’s future? Is tracking Google searches a legitimate tool for central bankers to gauge consumer demand?

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Apple's Brand Image: Past, Present and Future

chabo11's picture
chabo11
     
 
(Orangutan, 310
 
Points)
 on 7/31/12 at 7:12pm
apple.png

When a company has its own Wikipedia page dedicated to its advertising history, it must be doing something right. For years under Steve Jobs, Apple's clever and inspiring advertisements really made you wonder how much more convenient your life might be with one of its products.

Fast forward to about a week ago, when Apple used the Olympics to reveal its newest line of commercials. Are the ads funny? Sure. Will they inspire people to buy a MacBook like they have in the past? Unlikely.

The new ads aren't about aspirations. They're a defensive move written for the one demographic the company's past commercials always seemed to ignore -- those seemingly hapless middle aged dudes. So they trot out some features -- old dudes like utility, right? -- and try to assure the forty-something male viewer that, yes, Apple cares about their lives too. But by doing it in such a predictable, shopworn way, they're essentially demeaning the audience. They're certainly not inspiring it.

Apple's marketing has been the bedrock of its success and popularity for the past 30 years. Yet is the company's marketing and brand power starting to fade post-Steve Jobs? Here's a taste of old vs. new:

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Earnings Season: What It Is and What It Is Not

chabo11's picture
chabo11
     
 
(Orangutan, 310
 
Points)
 on 7/19/12 at 11:00pm
earnings.jpg

As second quarter earnings season gets underway, many of us are closely following the hype surrounding each day’s earnings reports. It’s easy to get swept up by the wave of analysis as pundits use the latest data to make dire predictions for the future. For the sake of our sanity, it’s important to remember what earnings season is and what it is not.

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Goldman Opens Private Bank for Wealthy Clients

chabo11's picture
chabo11
     
 
(Orangutan, 310
 
Points)
 on 7/17/12 at 6:56pm
lloyd.jpg

Today, this is a modest move that will deliver only minor returns next to its investment banking and trading divisions. Yet over the long term, it represents a significant shift in direction as Goldman and other banks are forced to adapt to new regulations and ongoing market turmoil. Executives hope to raise $100 billion in loans, up from $12 billion at the end of March.

The firm is revving up its lending to Goldman's wealth-management clients and other wealthy individuals. Rather than merely advising them on where to invest and offering investment funds, Goldman is now starting to collect their cash in the form of deposits and make loans to them for homes, art, boats and the like.

Is this a good move for Goldman? What does this shift mean for the banking industry as a whole?

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Don't Worry, Be Happy (Or At Least Pretend To Be)

chabo11's picture
chabo11
     
 
(Orangutan, 310
 
Points)
 on 7/12/12 at 10:57pm
debbiedowner.jpg

Everyone has that one person at the office. It doesn't matter what you're talking about, they will always have something negative to say. Sometimes it's gossip about a coworker. Other times it's criticism disguised as advice. Whether you call him a Negative Nancy, a Debby Downer or an Always-Has-A-Stick-Up-His-Ass Arthur, there's one common effect: this negative energy is contagious, depressing, and highly toxic.

How much do emotions matter in the workplace? Walk into any Department of Motor Vehicles and you'll feel the impact of the prevailing mood instantly — a dense fog of sourness, irritability, and listlessness. Walk into almost any Apple store and you'll experience the opposite — a sense of aliveness and excitement that raises your energy (and makes you want to buy something).

Emotional contagion can destroy a team's energy and productivity, but we all have a bad day once in while. How do you manage and monitor your emotions at the workplace?

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The Easiest Way To Make $44 Million

chabo11's picture
chabo11
     
 
(Orangutan, 310
 
Points)
 on 7/10/12 at 6:30pm
dukeenergy.jpg

When it comes to CEO compensation, I usually don’t make a big fuss about multimillion dollar paychecks. I understand the job comes with a ton of pressure and responsibility. But this is just ridiculous:

On June 2nd, Bill Johnson assumed the position of CEO of Duke Energy. Within 24 hours, he had resigned.

Despite his short-lived tenure, Mr. Johnson will receive exit payments worth as much as $44.4 million, according to Duke. That includes $7.4 million in severance, a nearly $1.4 million cash bonus, a special lump-sum payment worth up to $1.5 million and accelerated vesting of his stock awards, according to a Duke regulatory filing Tuesday night.

At what point do companies like Duke need to start rewriting their corporate governance guidelines? Would you still invest in a company with such glaring issues?

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The Primary Function of Wall Street

chabo11's picture
chabo11
     
 
(Orangutan, 310
 
Points)
 on 7/5/12 at 10:59pm
jobs.jpg

The dust has settled since Jamie Dimon’s appearance before Congress a few weeks ago, but there’s something that’s been bothering me about the media coverage. It’s the headline of a certain Bloomberg article, entitled: “Wall Street Forgets Its Job Is to Create Jobs.” I could not disagree more. However, I was intrigued by this quote from Representative Gary Ackerman (NY-D):

Fully warmed up, Ackerman got to his point about what all the hedging on Wall Street accomplishes. “I don’t see how that creates one job in America,” he said. “I don’t see how it helps the American economy. I don’t see how it helps the housing market or the building market or the let’s-make-steel or widgets market.

Fine. I can see his point, even though the objective of hedging is to lock in profits, not create jobs. But should Wall Street’s primary objective be job creation? Absolutely not, and here’s why:

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Wall Street’s Exodus to the Regional Office

chabo11's picture
chabo11
     
 
(Orangutan, 310
 
Points)
 on 7/3/12 at 6:30pm
NYC.jpg

In recent years, companies have outsourced low-level jobs to back offices overseas in an attempt to cut costs. Today, a similar trend is taking place as financial jobs are being relocated to regional offices outside the traditional financial hubs.

Despite good years for America’s investment bankers, the number of mid-level financial positions on the Street is slowly dropping as banks escape the city’s regulations, high taxes, and high labor costs to open offices in friendlier states like Utah, North Carolina, and Florida.

Will finance still be NYC’s flagship industry 10, 20, 30 years from now? This flight from NYC could have some lasting implications for major cities and for the industry as a whole:

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