Thursday, July 20, 2017

Amazon: Just Keeps Rolling

Mixing rivers is almost as bad as mixing metaphors but Paul Robeson's words about the Mississippi sung in "Ole Man River" from the 1936 musical "Show Boat" are in this instance appropriate. Amazon .com 's namesake the river is also just "...rollin' along..".This morning it electronically cyber inked a deal with the legendary but disappearing Sears. Sears once offered mail order brides in the 19th century along with coffins with lids among many other gadgets etc.Today Amazon founder and CEO Busy Bee J. Bezos agreed to sell Sear's brand Kenmore on the Amazon website.This offering expands the list of goods and services available to shoppers every where.Recently Amazon purchased Whole Foods . This moved the Big A into organics. Heretofore Amazon mostly offered plastic composition products.I wondered about Bezos' choice of Amazon as a company name. I wonder no more. Amazon some what like the South American River is delivering plastic and now organics in mind numbing cubical steady volumes in card board packages. But unlike the River that brings life to its thousand mile shores the Company brings mostly plastic. I think of the square miles of plastic floating islands in the oceans.Could we be in the silly part of the always unfolding tech world?

Tuesday, July 18, 2017

BlackRock: Short The Bubble Stock

Yesterday BlackRock reported second quarter earnings that narrowly missed estimates. BlackRock is the largest money manger.It has $ 5.6 trillion under management.They are now experiencing a kind of being of victim of their own success syndrome. ETF's a.k.a. known as exchange traded funds are getting a bigger share of new inflows by eager stock market investors. Problem is that ETF's have much lower management fee. Hence the shortfall in earnings. Hence the squeeze in profitability. Chairman and President of BlackRock Larry Fink simultaneously with the earnings miss release announced his firm would switch to more use of artificial intelligence when picking stocks.Larry praised AI. But he also stated that the headcount at BlackRock would be the same next year as it is today.In other words AI's supposed market expertise is secondary. Lopping heads is the real reason so to combat profit squeeze.Actually AI is more expensive than monkeys throwing darts at a stock page which has been proven to be a better performer than pros picking stocks.In 1973 Princeton University professor Burton Malkiel wrote " Random Walk Down Wall Street" . In the book Malkiel states " A blind folded monkey throwing darts at a financial newspapers stock page could select a portfolio that would do just as well as one carefully selected by experts."Actually the underlying metaphysics of that result was the fact that there were more smaller capitalization stocks on the page than large ones. Consequently the smaller stocks would probably do better over the long run. Bottom line is that BlackRock is an expensive stock. It's market cap is six times sales. It also trades at 2.50 times its book value. It yields 2.50 percent. But its stock trades at $423.00 per share. So a 3% loss on the stock rubs out the dividend return but what's going to happen to the 420.00 left over? I'm short BlackRock. It's the perfect bubble stock in a bubble market.

Saturday, July 01, 2017

Federal Reserve Janet Yellen: Background & Prospects

Somewhere in Manhattan there is a Kosher deli that once employed Janet Yellen. She was hired on the spot for the top job at the Federal Reserve. She left so quickly that her umbrella is still there on the hook. In a better world, hopefully soon,Janet will be back at the deli almost indistinguishable from the dill pickles.The story goes that Baron Rothschild was in the deli ordering a pastrami and cheese on rye and was bemused with Janet popping her "P's" when she spoke.The baron thought two things.One if Yellen were Fed Chair it would be a potent example of the Jewish aristocracy pissing on what's left of our shabby culture . And two she would definitely make the baron look better in comparison.