investments

Is Slack a Good Investment

by
Is Slack a Good Investment 1

Got some questions about the (semi) big news about Slack getting a new investment. The catchy headlines say that Slack is “now worth over $5 billion”. Of course, with snazzy numbers like that, more than a few readers are wondering if investing in a Slack IPO is a good move. How Much Is Slack Really Worth? First off, let’s back up and do a reality check. Slack is not “worth” $5 billion now. It’s latest funding gives it a valuation of $5 billion, but that isn’t the same thing. Example time! Let’s say I have a company. We’ll use my freelance writing business of ArcticLlama. Now, I don’t have any funding, but if I did, it would work something like this. An investor offers me $1 million for 10% of ArcticLlama. I say yes. So, if the 10% of the company is worth $1 million, then mathematically, the whole company is worth $10 million. That is what a valuation is. This does not mean anyone would actually give me $10 million for the company, just like there isn’t likely anyone out there willing to pay $5 billion for Slack right now either. This is kind of a game, and it’s …

Read More

Inflation Disappears (Again)

by
no inflation

Update: Yea! It looks like I was right, and everyone has come around. It’s August now, and it looks like those low inflation numbers were neither an aberration, nor temporary. There simply is no inflation, the job market, while full, is not hot, and there is no need to raise rates the rest of 2017, so say we all 🙂 The Fed has been working to raise interest rates because of the specter of inflation. However, with the exception of energy prices, there really hasn’t been much in the way of inflation. As a result, the Fed keeps explaining that they think that all those reports of low inflation were temporary. That all took a bit of knock today as the U.S. Government reported that inflation in June was zero. That’s right, zero, as in no inflation (again). And that comes after the actual 0.1% drop in inflation in May. This is of course, a far cry from the Fed’s so-called target of 2.0% inflation, and calling two months in a row of data temporary starts to look like ignoring data, so the tone has changed. A lot hinges on the July report. Check out my Credit Sesame review. Fed …

Read More

Why You Shouldn’t Worry About a Market Top

by
market top plan

Worried about whether or not the market is overvalued? Did the markets set ANOTHER record? You aren’t alone. Seemingly every day, a major financial website or magazine publishes an article about how the stock market is overvalued, how this is a top, and that you should feel very, very scared. But, should you even bother worrying about a market top? Not if you aren’t talking about short-term investments. If you are talking about a 401k , an IRA, or any other form of long-term investing, you should ignore all the market top talk. What To Do For a Market Top The biggest problem with a market top is knowing WHEN it is going to happen. Remember, the stock market does not move based upon absolute truth. Rather, the stock market is a popularity contest where people vote for companies, or their shares, by buying them, and vote against companies, or their shares, by selling them. It is driven entirely by people (and computer programs made to anticipate people’s reactions, but that is another article). What that means, is even  if the market really is truly overvalued, right now, today, it still does not mean that the sell off will begin …

Read More

Betterment IPO a Distant Future?

by
is betterment a good investment

Betterment, one of the robo-advisor firms, raised an additional $70 million in financing this month (July 2017), according to Bloomberg and others. This values the company at $800 million, although such valuations on pre-market companies are largely meaningless. (Mental note: Write article about the so-called valuations of pre-exit startups.) Is this additional Betterment investment a good idea? It all depends on if they can shove a Betterment IPO down unsavvy investor throats. Check out how Betterment works at this Betterment review. According the article, the company has nearly $10 billion under management, which begs the question why they need to raise more money. Update: There is a new CEO. Is the new CEO’s purpose to get the company to an IPO? Check out my Digit app review. A money management company with $10 billion under management should be profitable. The need to raise another $70 million suggests the company is not profitable, and that begs the second question. At what level CAN the company be profitable? An can a Betterment IPO happen fast enough? If you’re interested in Betterment vs Wealthfront vs Robinhood vs Acorns vs Stash I have that here. Can Stand Alone Robo-Advisors Survive? Obviously, as an add-on …

Read More

Another Stock Market Record

by

For the past year (and longer) we’ve been reading article after article about how the stock market is set to implode, and yet, here we are… another intra-day record high for the Dow Jones Industrial Index. The Market Will Go Down… Eventually The truth is that the stock market will go down sooner or later. It always does. And, when it does, many of the people writing these now year-old doomsday articles will attempt to claim credit for “predicting” the market crash. (Although, there may not be a crash. A simple months-long 5% correction would take care of a  lot of the market’s pricing issues.) What they won’t do is tell you how much money they would have cost you if you had listened to them while the run up continued. Consider this: The Dow is up over 17% for the 1-year period. In other words, if you had gotten out when last year’s alarm bells started ringing, you would have missed a 17% increase in your investments. That 17% increase would have a very large cushioning effect on any sort of coming 10% correction, or even a 20% crash. In other words, if you had been listening to these …

Read More

Was Buying Jet.com a Waste of Money?

by
walmart jet.com waste

Walmart bought Jet.com earlier this year for over $3 BILLION. If you questioned the wisdom of that purchase then, you’re going to love today’s news. It seems that there was a 63 percent increase in online sales during the most recent quarter. That’s good. Even better, most of that increase came from shopping at the flagship site Walmart.com. That’s also good. It seems that the primary driver to this increase was free two-day shipping. That’s great. Check out the Digit review. Free Shipping Equals Higher Online Sales at Walmart You see, all it took to turn Walmart into a bonafide Amazon competitor was to match the latter’s beloved shipping terms. There was no need to panic. All Walmart had to do was take the same website it already had, and offer better shipping terms than it was. There was no need to do anything rash like run out and buy some online shopping company just so that you could say to investors that you were doing SOMETHING. Walmart chief executive, Goug McMillion, even said, “The acquisitions have received a lot of attention, but our plan in ecommerce is not to buy our way to success.” WHAT!?!? Then what in the world did …

Read More

Snap Inc. the Snapchat Company Sued

by

It seems that some people are having some buyers remorse after getting in on the Snap Inc., the Snapchat company after the stock failed to maintain its manufactured IPO bump. There is now a class-action lawsuit filed against Snap. If only someone could have seen that a money burning company like Snap going IPO on the promise that more users would someone end the money burning with greater revenues but no extra expenses might not have been the best investment for anyone looking past the, “Hey my kid uses that!” buzz. Oh wait… I might have said something like that. Will Snap Lawsuit Work Against Snapchat Company? Anyway, don’t get your hopes up. This whole thing rests on a former employee stating that Snap overestimated user numbers. The defenses against the suit are both easy and numerous. The company SAID in its pre-IPO docs that the user numbers were not precise and that estimating any number at all was “difficult.” – In other words, even if that employee saw one number, and we went with another number, we already disclosed that. Even if the number was different, the company can argue it isn’t material, so long as all the rest …

Read More

Best Argument For a Coming Recession

by
no inflation

Recently, I wrote about how lots of various financial analysts and pundits predicting a coming stock market crash or imminent recession are more interested in trying to take credit for making a guess than in accurately predicting what the facts actually support. However, there is one very good case for predicting a recession coming in the next few years. Predicting Recessions It is as likely as not that the next recession will trigger the next stock market correction. Of course, the opposite has been known to happen as well. Most recently, the internet bubble popping took the economy with it, when it caused the bankruptcy and fire sale of dozens of formerly high-spending technology companies and sent their employees flooding onto the market, just when the demand for them vanished. On the other hand, the slow motion implosion of the housing market, and its affects on poorly leveraged, and managed, banking companies, followed by their panicked actions to stay alive, is what caused the so-called Great Recession of the Bush the Younger era. Is Acorns safe? Read this review. These days, most analysts like to predict a stock market crash based on “knowing” that the market is over-valued, or propped up …

Read More

Lowest Cost Mutual Funds No Minimums

by
low cost investing mutual funds

When it comes to getting started investing, it is often that first step that becomes the biggest hold up. For many would-be investors the most formidable barrier is actually free, that of setting up an actual account. However, for those with the momentum to cross that line, the next barrier is the cost of investing, most often in the form of a minimum investment. Skipping over these two barriers is one of the things that makes automatic investing apps like Acorns so attractive to new investors. They both eliminate the need to choose and set up a brokerage account and offer a way to get started investing with as little as five dollars. No Minimum Investment Mutual Funds with Low Costs Theoretically, a single investment in a mutual fund with a $1,000 doesn’t sound insurmountable. However, when every reputable financial advisor recommends diversifying your investments among several different funds, that $1,000 minimum quickly adds up to a $5,000 or even $8,000 minimum, to obtain the right kind of diversification. Throw in a 5.25% up-front load for many mutual funds sold by advisors, and that’s a lot of initial overhead. Fortunately, there are many low-cost, do-it-yourself mutual funds that you can …

Read More

The Uber IPO

by

The topic of Uber’s IPO came up at lunch today. This is a shock, because, as of today, there is no Uber IPO. In fact, it will probably be a long time before there is an Uber IPO, if ever. Why No Uber IPO Yet? Wondering why there is no Uber IPO, and why there is still no Uber IPO planned? The answer may surprise you. Uber actually loses money. A lot of money. In fact, Uber isn’t so much a business, as a cash incinerator desperately trying to make the transition to viable proof of concept. Uber does a pretty decent job keeping this fact out of the headlines, but the truth is that Uber loses money hand over fist. If it were to file for an IPO, it would have to break out and detail its finances, and it really doesn’t want people focusing on that right now. However, Uber did recently release some financial data, even though it isn’t required to do so. (Keep in mind that such numbers are unaudited, and not subject to any sort of SEC scrutiny). In that data, it reported gross revenue from bookings of $20 billion. That’s pretty impressive. However, after …

Read More