- The Finance Gourmet

Is Disney Stock a Buy? A Quick Analysis

December 9, 2022 by Finance Gourmet

I don’t do a ton of individual stock analysis on Finance Gourmet because everyone’s investing goals are so different that when I’m saying Disney is a buy, I mean Disney is a buy for me based upon my investment objectives and existing portfolio. That might be totally different than other’s investing strategy. Is Disney a Good Company? Disney is a large, diversified company that operates in various industries, including media and entertainment, parks and resorts, and consumer products. However, Disney does not pay dividends, and in a world full of great companies, why would I pick one that doesn’t pay dividends? Like many other companies, Disney may choose not to pay dividends to reinvest its profits in the business or for other strategic reasons. Dividend policy is ultimately determined by a company’s board of directors and can change over time depending on the company’s financial performance and other factors. Is Disney the Biggest Media Company? Disney is one of the largest media and entertainment companies in the world. The company has a diverse portfolio of businesses, including its iconic theme parks, its film and television studios, and its consumer products division. Disney also owns several cable and television networks, including …

Jeremy Grantham Calls S&P 500 Down 26%

February 1, 2023September 12, 2022 by Finance Gourmet

I don’t mean to pick on Jeremy Grantham, I was asked to write something once in my role as a professional financial writer and it got his name stuck in my head. So, whenever I see Mr. Grantham’s name scrolls by on my market news feed, I just have to take a look. I’ve written about Jeremy Grantham prediction history before. Some of Grantham’s calls were great, and everyone seems to remember, but also about the calls that were flat wrong, early, or just money losing. No one seems to remember those. So, let’s do the honorable thing. Let’s see how Jeremy Grantham’s predictions work out this time. Jeremy Grantham Stock Market Prediction Let’s get the details right. On September 8, 2022, Jeremy Grantham told the Reuters Global Markets Forum (GMF) that the S&P 500 could be trading at 3,000 in a year from now. On Wednesday, the S&P 500 index traded from around 3,900 in the morning, to around 3,997 in the afternoon, so we’ll call it 3900ish. If on September 8, 2023, the S&P 500 is trading around 3,000, we can say he is “right” this time. Of course, Grantham called a crash in 2019. He called an …

S&P 500 Hits 52-Week Low

May 9, 2022 by Finance Gourmet

Now, things are getting interesting. There is a new SP500 52-week low. I’ve spent most of the first part of this year making the argument that the 2021 stock market run, especially the October 21 to January 22 was overdone and that the corresponding downturn in the markets from around February 2022 to April 2022 could be considered more of a return to “normal” than any sort of market correction. Reasonable minds may differ. Market Downturn Gets Real Today, the S&P 500 took out its 52-week low. From here on out, everything down, is truly down. Our one big sideways stock market ends here, and we really are heading for a potential correction here. This is why people calling for the Fed to raise interest rates so fast are dead wrong. The signs of the economy slowing, but not declining, are everywhere. That is exactly where you want to be. That is what a soft landing is. An economy gliding back to normal growth, normal employment, and normal interest rates all without triggering layoffs, housing crashes, and so on. All the Fed needs here is a little tap on the brakes. If it were me, I would skip a rate …

Stock Market Melt Up

April 22, 2022 by Finance Gourmet

Oh, goodie. It’s time for some more stock market terminology. What Is a Melt Up? The world of finance, like any specialized group, has numerous terms, acronyms, and phrases that apply to managing money and investing in the stock market. Things like “Santa Claus Rally” are less about being able to describe something, and more about having fun, sometimes clever, ways to describing events, strategies, and happenings that occur. Santa Claus Rally — The somewhat common phenomenon of the stock market rising into the end of the year. Today’s word of the day comes courtesy of CNN Finance and Luke Lango, InvestorPlace senior investment analyst who wrote that they believe there will be a massive melt up over the next two years in which the stock market would rise 20% or more before tipping over into a recession or crash. I haven’t had a chance to look into Luke Lango’s track record. Maybe I’ll do that when I finish writing my freelance finance writer projects. Should We Worry About a Melt Up? Good news, investors. As always, the best way to invest for long-term goals is with a well-diversified portfolio tailored to your goals and risk tolerance. Such a portfolio …

Stock Market Trading Sideways

April 19, 2022April 5, 2022 by Finance Gourmet

Update: It’s been 15 days of breathless up and down headlines from the financial media since I first wrote this article, and the stock market is STILL trading sideways. Take a look at three months of the Dow. The stock market often trades “sideways” as it consolidates after moves up or down. This is very common after big run-ups or drops, as well as when the economy is sort of waiting to see what happens. Of course, the stock market doesn’t literally trade sideways with the S&P 500 chart moving to the right as some sort of straight line. Instead, the market goes up and down, sometimes daily, sometimes over a period of a few days, all with the eventually outcome of having not moved up or down much at all. However, that doesn’t make for a clickable headline for financial reporters and financial news sites. So instead, we see things like this from Marketwatch. U.S. stocks fell Tuesday, with the Nasdaq Composite leading the way down after the previous session’s technology sector gains, as investors kept a close eye on plans for more sanctions on Russia and remarks by Federal Reserve policy makers. Nasdaq leads stocks lower as investors …

Share Buyback Myths

March 4, 2022 by Finance Gourmet

Arrgghhh! Share buybacks, or stock repurchases, are a tool that publicly traded companies use to manipulate their shareholders into making them think that they are working for them. Unfortunately, with big business schools still teaching a curriculum that starts with The Wealth of Nations and doesn’t much update from there, there are all too many stock analysts and pundits out there pushing share buybacks as good corporate governance. Returning Capital to Shareholders The gold standard of returning capital to shareholders is paying cash dividends. There is a catch though. You can’t use accounting to create cash that you pay out. The other catch is that shareholders don’t like it when you cut a cash dividend once you start paying it. In other words, if you are going to pay a cash dividend, you better really be in a good position. Share Buybacks Wasting Money Enter share buybacks. A share buyback is where a company takes the extra cash it has and instead of paying a cash dividend, which it can’t play around with, it buys back its own shares. A share buyback is supposed to happen when a company feels its shares are undervalued. That isn’t what really happens anymore. …

Is Draft Kings Stock a Buy?

February 19, 2022 by Finance Gourmet

Draft Kings stock got hammered on Friday (2/18/22). Why? Well, there are plenty of self-important, chest-puffing, stock analysts’ pieces out there for you to read up about if Draft Kings is a sell, a buy, or hold, but you don’t have to read them. The promise of far too many recent IPO stocks, stocks heading for IPO, and plain old venture capital backed unicorns is “unlimited growth potential.” This is the key to big venture capital raises, and huge IPO numbers. Profits? Nope. Stable customers? Puh-lease. Silicon Valley tech bros and their Wall Street counterparts don’t like being shackled down by old world metrics like GAAP and reality. They prefer knowing exactly how much potentially unlimited limitless is out there. Everything else is for brick and mortar stocks. How Draft Kings Got Unlimited Potential Once upon a time almost no states allowed online gambling and betting. In fact, it was just over two decades ago that the Feds got mad at all the online gambling websites out there pretending they weren’t violating U.S. law by having some part of their operation outside the United States. It took the Feds about a year to scare the banks into cutting off the …

Is Ark Innovation a Scam?

February 18, 2022 by Finance Gourmet

Sometimes, a fast rise comes with expectations that are difficult to live up to. Sometimes the person rising fast doesn’t really help matters. Cathie Wood came into the “mainstream” of financial news with a prediction of a huge rise for Tesla. She was “right,” at least over that sample period, and then some guy anointed her best stock picker of 2020. That will attract some eyeballs. But, just like Abby Joseph Cohen rose to fame by always being more optimistic than the next stock market analyst who said, “Are we really sure all of these no-earnings, no-profit, internet stocks should be pulling everything this high?” while the market rose and rose during the internet bubble, being right isn’t always so much being right, as being the last one to ignore the iceberg. Cohen told investors to “buy the dip” as the internet bubble popped, and the market crashed. I hope everyone who thought she was amazing just didn’t listen to her that time… Wood’s problem is that when you become famous for catching unicorn, people only think you’re amazing while you still have one. Since finding another one is almost impossible, there is a tendency to hold on too long, …

AT&T Slashes Dividend

February 4, 2022 by Finance Gourmet

AT&T is making big moves, are they good for AT&T, or bad for AT&T. As everyone knows, I’m a dividend guy. I believe in buying the stocks of good companies and then treating them like bonds, collecting interest payments while ignoring price movements. Usually, when you buy a solid, US company stock with a dividend, that dividend is yours more or less forever. If you buy Apple today (2/4/22) you’ll get about a 0.50% dividend yield. If you like, you can choose to think of it as buying an Apple CD that pays 0.50% with a five-year (or 10, or 3, or whatever) maturity date. When you do that, the daily price movements of Apple stock are irrelevant to your financial plans which count on nothing more than receiving 0.50% interest, and some day getting your principal back (with some risk). AT&T Dividend Cut But, sometimes, a company can cut its dividend. Usually that isn’t a huge surprise. In the case of AT&T, there has been talk of changing (cutting) the dividend for some time now. That being said, a 50% cut is a big deal. As of yesterday, the annual dividend yield for AT&T stock was over 8%. As …

Blaming the Fed

January 27, 2022 by Finance Gourmet

Selective amnesia and analysts dying to be “right” is contributing to a flood of inaccurate articles seeking to blame the Fed. I saw this in my Twitter feed this morning and I just couldn’t let it go by. It’s filled with the kind of half-truths and misinformation that builds an analyst’s career, unfortunately, but that doesn’t make it true. Here we go. According to this tweet, The Fed spent 12 years creating an “everything bubble,” a term so bizarre that it requires quotes. Oh, and the Fed didn’t spend 12 years creating this so-called everything bubble. Oh, and before we start pointing fingers, until THIS YEAR neither this analyst, nor almost any other was asking for the Fed to tighten monetary policy because the economy was teetering on a cliff and every bit of the stimulus was required to prevent the Great Recession II, or worse. Yep. For exactly, ONE MONTH, inflation has been a bit crazy. Too bad the graph they posted as “evidence” is so far zoomed out that you can’t see what really happened. Maybe they couldn’t find one that showed more recent events. Oh, wait! Here’s one. The crazy, reckless Fed that has been pumping up …