- - Page 3 of 15 The Finance Gourmet

Uber’s First “Profit”

September 22, 2021 by Finance Gourmet

One of the reasons I write Finance Gourmet is because of all the bizarre finance articles out there masquerading as news while actually serving as cheerleading, PR pieces for companies. It’s a little bit like those articles from White House press briefings that are basically stenographers taking the White House pronouncements as the full news while leaving out all sorts of necessary information just because the Press Secretary didn’t serve it up on a platter. Uber Projects Quarterly Profit The headlines out there in the financial press all say that Uber projects that it might have its first every quarterly profit next quarter. The facts? Well… It’s always refreshing when the non-finance guys aren’t willing to go along with the company dog and pony show. I don’t get to quote Gizmodo a lot here on a blog about financial independence, but the guys over at Gizmodo, where they write about technology, get full marks for their headline, “Uber Says It’s on Track to Maybe Make a Fake Profit.” Now THAT’S a legitimate headline. Even the subheadline spits some truth. Uber’s profit will be based upon adjusted EBITDA. If you’re into investing enough, you’ve heard of EBITDA. It’s a real financial …

Upcoming Correction or Stock Market Crash

September 20, 2021 by Finance Gourmet

Here it comes. No, not the stock market crash. No, not a stock market correction, either. OK. Well, maybe those things are coming. But, what most definitely IS coming are the analysts’ notes, financial stories, and money website articles about a possible 10% correction, or even 20% crash. How To Get Credit For Predicting The Crash You’ve seen the ads a hundred times on the internet. “He predicted the real estate crash, now he recommends this one company!” So, how do you get credit for calling a stock market correction or stock market crash, anyway? The sad reality is that it doesn’t take much. As long as you have some sort of statement, article, analysis, or investor note floating around out there mentioning a crash or correction when one actually happens, you (and your PR department) simply rush out to take credit. Whether the financial media decides to buy it depends a bit on how long ago your “prediction” happened, and how accurate it was. But, as I’ve tried to point out time and again here on Finance Gourmet and other places I do financial writing for, these predictions aren’t always what they are cracked up to be. Often, the …

Fed Chairman Jerome Powell Second Term

September 14, 2021 by Finance Gourmet

I don’t like to write about politics, and certainly not speculation about politics, but the potential announcement of Federal Reserve Chairman Jerome Powell getting a second term is interesting. First off, Powell, is a Trump appointee. That gets people mad in certain quarters, like the Postmaster guy. However, Powell is a solid, seasoned hand acting as Fed Chief, and no one really cares who appointed him. In fact, Powell has done such a good job keeping the economy floating with minimum rocking that the only reason people were thinking there might be someone new was in order to make a “historic” appointment of someone who wasn’t a white guy — or white woman, since Janet Yellen already broke that ceiling. Now, it looks like President Biden has enough fights to pick with Congress, including ones within his own party (Dems really don’t know how to win, do they?). So, a sure thing like renominating Powell seems like a good way to be able to focus energy elsewhere. And, lucky for everyone else, he’s a good choice for the job. Check out my review of Acorns investing here. Then, look for my Capital One Miles redemption chart. You can read about …

Extra Unemployment Ends

September 10, 2021 by Finance Gourmet

Here in Colorado several restaurateurs wrote a letter to Governor Jared Polis earlier this summer asking him to join the other states that ended the extra unemployment benefits enacted in response to the global Covid-19 panic. Their theory was that the higher unemployment checks were keeping restaurant workers on the sidelines making them unable to appropriately staff their restaurants. Extra $300 Unemployment Payment Ends Until earlier this month, many recipients of unemployment were getting an extra $300 per week. This is a substantial amount considering typical unemployment benefits are around $400 per week under normal circumstances. Another way to look at is that the $300 per week represents $7.50 per hour when compared to a full-time 40-hour workweek. The restaurant owners concluded that the ability to earn a total payment of approximately $700 per week, or $17.50 per hour as a 40-hour workweek. With numbers like that, it’s no wonder that hard working restaurant jobs paying near minimum wage of $12, or even $13 or $14 per hour would not entice workers to come back. Supporters of the extended benefits looked at the same data and concluded that it is the restaurateur’s own fault for paying such low wages. Who …

Federal Reserve Meeting Notes Meaning

August 18, 2021 by Finance Gourmet

The Federal Reserve meets once a quarter. After that meeting, they announce what, if any changes, they have made to the Fed’s interest rate policy. At the last meeting, there were no changes to the Federal Reserve’s interest rate targets. The Federal Reserve meeting notes refine the details of the main Fed announcement. Fed’s Meeting Notes Later, after they have been reviewed and made viewable for the public, the Fed releases the notes from it’s meeting. Financial analysts and market pundits then parse these notes for clues to the Fed’s thinking. This time, everyone is looking toward how the notes take about bond-buying tapering. What does this mean? The short version is that when the economy went so bad back during the Great Recession following the real estate market crash, the Fed had to do more than just cut interest rates to stabilize the economy. In my opinion, the Fed Chairman Ben Bernake saved the US economy from a hard recession by flooding the market with liquidity and saying that he would keep doing it for as long as it takes. Check out my Acorns review is Acorns Legit? Basically, as long as it takes, has never really come. One …

Baker Hughes Stock Buyback from GE

July 30, 2021 by Finance Gourmet

So, weird little bit of financial news today. There are a couple of moving parts, so let’s get those out of the way first. Last summer in July 2020, GE announced that intended to “fully monetized” its stake in Baker Hughes over the next three years. Fully monetize is lingo for sell. Earlier this year, GE said it sold $1 billion worth of Baker Hughes during the second quarter. GE also announced that it planned to sell another $1.3 billion worth of BKR during the third quarter. That brings us up to date. Baker Hughes announces a $2 billion stock repurchase program In part, the idea behind the share buyback is that Baker Hughes is using some of the profits it has reaped recently thanks to a recovering economy and a carefully controlled quota by OPEC. Buying $2 billion worth of stock would essentially soak up the $2 billion that GE is selling right now. In a world where supply and demand are the only factors that impact a stock’s price, GE’s selling would be pushing the price of BKR down. You can kind of see that in the April to May dip in BKR. Assuming that BKR sold its …

Biden’s Capital Gains Tax Increase No Big Deal

April 29, 2021 by Finance Gourmet

President Biden proposed increasing the capital gains tax and while that makes great headlines, it probably isn’t as big of deal as it sounds like. First off, the higher tax would only apply to those with income above $1 million. That takes out most taxpayers right there. Avoiding Capital Gains Taxes Also, capital gains is one of the easiest to avoid taxes. Most people hope to never lose that much money, but there are plenty of losses to be had even by the best investors. Matching those losses up to gains is called tax-loss harvesting and is frequently used by those with large enough investment portfolios to eliminate some or all of their capital gains taxes. Imagine a scenario where a wealthy investor purchases ABC stock and XYZ stock. A clever investor would make sure that ABC stock and XYZ stock pay an acceptable dividend based on their risk and expected return. So, over a couple of years, our investor collects his dividends. Since the only way this new tax applies is if the investor has $1 million in income, they will pay the highest dividend tax bracket of 20% tax on the dividends, still far lower than the 39% …

IBM Stock Spinning Off Kyndryl

October 20, 2021April 14, 2021 by Finance Gourmet

I have had a love/hate relationship with IBM for a long time. On the one hand, it’s an American staple that successfully spun off its PC business back when it could get a good deal for it. On the other hand, it insists on wasting BILLIONS of dollars on share buybacks that do nothing more than help its executives meet their targets before they ship the stock back out the front door as executive stock options. But, and this is the kicker, IBM kicks out a very sweet dividend. Even when the stock trades sideways, earning 4% in a zero-interest environment with an almost zero chance of bankruptcy, it a great investment. Check out my Stash stock back review. Now, IBM is doing another thing that I don’t really like. IBM is listening to short-term investors who don’t like steady, but non-growth income. Instead, these shareholders want stock price appreciation, even at the cost of a long-term stable business. That means the board wants price appreciation. That means the CEO only earns those millions in bonuses if the stock price goes up, even if the company prints money during the day. As a result, IBM is spinning off its managed …

New Home Sales and Post Covid Life

February 24, 2021 by Finance Gourmet

Here is a quick bit of news to inform how you look at investing and personal finance moving into a post-Covid world. New Home Sales Rise New home sales were up 19% annually. That is much more than predicted by analysts. There are few trends pushing the higher home sales and those same trends are worth noting across your investing. Covid knocked down the home buying market to basically zero, as showings were banned. Covid also made people more conservative and protective of their finances. Staying put seemed easier and less risky than trying to move. But… Now, as things move toward a post Covid mindset, buyers are looking for new homes. However, there is a very low supply of existing homes on the market, so one of the easy ways to buy a house is to buy new. That means that what existing homes do go on the market are selling for asking price or higher, and selling quickly because of all the demand. This is good news because that experience will lead others out of their cocoon to sell. This news obviously helps home builders, although that still remains a very risky investment. See Is Zelle Safe on …