Stocks

Square IPO Not Worth $6 Billion?

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square ipo logo

Sometimes, the “I told you so,” moments just take too long to happen. They do, eventually, but by then, either people don’t remember, or they aren’t around any longer. I still remember people refusing to sell the Qwest stock in their 401k in order to diversify because it was, “the best investment I have,” and then seeing the stomach churning drop that must have wiped out 50 percent or more of their retirement money. Then, of course, were all the people sitting smugly across from me saying that “real estate never really goes down,” as they talked about pooling money with family to buy a house in Phoenix. Square Not Worth $6 Billion in IPO? For years, people have been saying that the venture capital market and the various valuations given to technology companies before they go public are maybe a bit unrealistic. Of course, something always seems to come along and save the two Simpson children, as they say. (Well… as I say, anyway.) Tumblr was reportedly running out of money fast, but Yahoo swooped in and paid them a billion dollars anyway. Instagram got a billion from Facebook. And, so on. Today, maybe, indicates the first I told …

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Tech Earnings, The Economy and Stocks

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Well, this is an interesting week for investing and stocks. Many technology companies are releasing earnings this week. These companies are not more, nor less, important than other companies, but many of them have become both household names, and some of the most commonly owned household stocks. That makes the earnings more interesting to a lot of Main Street investors. Due up for earnings reports today was Twitter, which recently welcomed back former CEO Jack Dorsey, who is also still the CEO of his startup company, Square, presumably at least until he can finish taking it public. (Dorsey can then claim victory and a “big exit” for Square, which is a bigger thing than you might think in Silicon Valley.) Twitter stock is down 10 percent as I write this because things are just as bad as everyone thought. Google, now Alphabet, reported good earnings and its share prices have been climbing, same with Amazon. Microsoft is up, Yahoo is down. And so on. The big news today, was Apple stock which beat estimates thanks to growth in China, among other things. That will be business as usual for the markets, which is good news. There could have been a …

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Stocks Freak Out, You Shouldn’t

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The stock market is down big again. What is going on? Two weeks ago it was the Federal Reserve and interest rates, last week was something. Now it’s… well… A big drop in Biotech stocks comes after the least sympathetic man in all creation bought the rights to a decades old drug and then raised the price more than 5000%, then went on television to defend the increase. You remember that old Simpsons episode where they show Richard Nixon in a debate with Kennedy looking like Satan. Yeah. I was just like that. Having attracted enough attention that politicians smell air time, Congressional Democrats now want to subpoena Valeant Pharmaceuticals (VRX), which although unrelated, has recently pushed the same business model of acquiring the rights to old drugs and then driving up the prices. Biotech stocks are down across the board. Oh, plus the uncertainty around the Fed and interest rates is still a thing. Oh, and China too. Market News and Reality Here is where you can start to see the cracks in the idea that the stock market always rationally follows current new events. First, Democrats do not control Congress. Republicans do, and they do not cooperate with …

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Investor Types

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Often, when I write about stock market news, or other economic events, I conclude by reminding long-term investors that there is no need to overreact (or really react at all) to the current short-term events. It was brought to my attention that not everyone is a long-term investor. That’s not true, but what is true is that not everyone is solely a long-term investor. And, that being the case, perhaps it is worth me addressing other investing types and issues, here on Finance Gourmet. That sounds fair, but in order to do so, I think I need to start with the different types of investors. Different Types of Investors Long-Term Investors The most common type of investor is the long-term investor. Everyone with a 401k or an IRA falls into this category. The goal of this investor should be to construct a well diversified portfolio and then review and rebalance it regularly. The strength of this type of investor is that over time, this is a sound approach that has never failed. The weakness of this type of investor is forgetting the strength and reacting inappropriately to short-term events. This category could be broken into two sub-types, those who are only investing …

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Stock Market See-Saw

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Yesterday, I wrote about how the stock market plunge in China and the subsequent drop in the U.S. markets was not something anyone other than short-term investors should be worried about. Typically, I wouldn’t write another article about the stock market again right away, because I believe that most people would be better off watching the markets less, rather than more. But, I couldn’t resist today. Yesterday, there was an article that included the word “Bearmageddon” suggesting that a bear market of armageddon-like proportions was in the offing after the U.S. markets closed down six-days in a row. Other articles couldn’t stop pointing out thing like the biggest drop ever, or the longest-streak of down days since whenever, and so on. Today, the markets closed up. The stories today are about the “biggest gain in almost 4 years.” Talk about whiplash. The reality is that the U.S. stock market trades, in the long-term, based upon the fundamentals of the United States’ economy. While it is true that the issues in other countries, like China, can inform potential issues in the U.S. economy, it is important to remember that those issues must be American issues, not Chinese issues. The truth is …

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China and the Stock Market

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China! Aggghhhh! Everyone panic. (And China panic again…) The Chinese stock marketing is crashing, and it’s making everyone nervous. As always, long-term investors with diversified portfolios need do nothing other than sit back and watch. I, for one, like following along the headlines. You know, the ones that swing violently from doom, to fine, and back again. What Is Happening In China? Once upon a time, China was a communist country without much of an economy to speak of. Then, the government decided it wanted to be a big world economy, and in China, what the government wants, the government gets. The Chinese government devoted billions and billions of dollars to building up new cities filled with factories, and then spent even more money subsidizing those endeavors until, everything was made in China. With a new power economy, China also decided to get the other “regular” economy things like banks, lending and even a stock market. Fast forward a few years, and the Chinese stock market has been roaring along. Then, earlier this summer, the Chinese stock market started to drop. The government stepped in and put a stop to it. Unfortunately, real stock markets eventually end up doing what they want …

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Windows 10 and Microsoft’s Earnings

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I don’t usually do a lot of analysis of company moves. I just don’t have the time, and often don’t have the insight. But, as a freelance technology writer, I spend a lot of time looking at technology and technology companies. Microsoft is rolling out its new operating system called Windows 10, and it has some interesting marketing and PR behind it. Free Windows 10 Upgrade The first interesting thing about Windows 10 is that it is free. Well…. kind of… and sort of. If you already own Windows 7  or Windows 8, Microsoft will allow you to upgrade to Windows 10 for free, for up to one year. That is, you have one year from now to upgrade to Windows 10 and get it for free. Free? How does this make sense for a publicly traded, profit motivated company? The first thing to understand is that most customers don’t actually upgrade their operating system when new operating systems come out. For retail customers (that is, people who have their own computers that they use and set up themselves) the process of upgrading an operating system is complicated, and unnecessary. After all, if your computer works now, why bother doing …

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Tech Earnings and Stock Market Moves

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The U.S. stock market is composed of thousands of stocks. Of course, when it comes to moving the overall market, some stocks matter more than others. The biggest stocks, those in the S&P 500, and those in the Fortune 500, have some of the biggest impacts on the overall stock indexes. However, in most cases, the news that comes out of those companies is relatively expected. The exception to this rule are the technology companies. Unlike, say oil companies, or big manufacturing companies, it isn’t always easy to use the economic information surrounding them to accurately predict what will happen, especially when it comes to earnings reports. And, with those same companies forgoing the usual “guidance” that other companies provide, what happens in tech company earnings can be a true market moving surprise. This week saw a negative report from industry titan IBM. IBM is not only a household name technology company, but it is also the second highest weighted component in the Dow Jones Industrial Average, commonly referred to as The Dow. The company itself is down over 5 percent so far today, and the Dow is down over 1 percent, or more than 150 points. (Also dragging on …

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What Higher Apple Dividend Means for Investors

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I’m a huge fan of higher dividends. I’m less of a fan of share buybacks, but let’s get there in a minute. Apple Raises Dividend Theoretically, owning a stock means owning a part, or share, of a company. However, if you really break it down, being a shareholder means virtually nothing anymore. For example, in business classes around the country they will tell you that as a shareholder, one of your rights of ownership is voting for the company’s Board of Directors. That’s technically true, but these days, that means nothing. Only a certain number of seats are up for election at one time. Only the candidates that the company’s current management wants are on the ballot. In other words, even if you owned 51% of a company’s stock, your ability to vote would take years to actually affect the company. Your actual avenue for affecting any sort of change is the courts. If you don’t get to “own” the company, then what is your stock actually worth? Well, it is an item of limited supply that others believe have value. It’s the same way U.S. currency works, or Bitcoin. The exception is when a company pays a dividend. Then, …

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Do Young People Invest in the Stock Market?

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Do Millenials Have Money To Invest? A recent Bankrate survey shows that just 26 percent of Millenials say they own any stock. That sounds about right to me. As a former financial advisor, I never conducted any official, statistically valid surveys, of course, but I did talk to a lot of people, many of them younger. Younger people, like Millenials, almost never became my clients. The feeling was mutual. You see, most younger people don’t HAVE any money, even if they are currently making it. If you graduate from college at say 22, and you get a job paying $75,000 per year, then you are doing pretty well. But, you may have student loans; you probably would like to buy a house; you might be getting married and saving for a wedding. Of course, you might also be enjoying your freedom and taking trips, buying cars, and so on. The thing is, even if you were saving 10 percent of your income that still means you only have $7,500 of investable assets after a year. $15,000 the next, and so on and so on. By the time you had even the minimum of $100,000 that makes it worth even a …

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