- - Page 8 of 16 The Finance Gourmet

Why You Shouldn’t Worry About a Market Top

July 24, 2017 by Finance Gourmet

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 …

Was Buying Jet.com a Waste of Money?

May 18, 2017 by Finance Gourmet

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 …

Snap Inc. the Snapchat Company Sued

May 16, 2017 by Finance Gourmet

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 …

Best Argument For a Coming Recession

May 4, 2017May 2, 2017 by Finance Gourmet

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 …

The Uber IPO

April 24, 2017 by Finance Gourmet

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 …

Oil Drops Below $50 Again – Now What?

April 21, 2017 by Finance Gourmet

Not long ago, I posted about how oil prices would never see anything near $100 a barrel again, because as soon as prices started climbing above $50 or $60, U.S. producers would crank up previously idled oil fields, and that is just what happened. With OPEC’s oil production cut earlier this year, prices indeed did start rising, and U.S. producers turned the pumps back on. Prices have made it back up in to the fifties. Today, however, prices slipped back below $50 per barrel ahead of a report on U.S. oil rig count that most analysts predict will show even more U.S. production coming online. Couple that with uncertainty about whether OPEC — and Russia — will extend their supply cuts, and you have investors nervous that prices have nowhere to go but down. Oil Prices and U.S. Stock Prices The reality is that, for America, $50 per barrel is a pretty happy medium spot. At $50 per barrel, oil value is high enough for most U.S. producers to make a profit, and for banks to continue feeling good about credit backed by oil reserves. Together, this keeps the stocks of S&P 500 companies like Exxon and Shell and so …

Is The Stock Market Really Overvalued?

April 13, 2017 by Finance Gourmet

Hang around the world of finance very long, and you’ll see history repeating itself, especially when it comes to financial news articles. When it comes to a stock market in the middle of an extended rally, all manner of financial and investment analysts turn into Professor Trelawney, seeing the Grim in every cup of tea. The longer the rally goes on, the more pundits who join in predicting a stunning market collapse. The reason is that doing so, is a low-risk way to get your name in the papers, and, if you get lucky, to be labeled a guru based on “predicting” the inevitable stock market crash. Remember the analyst who predicted the muni bond crash that never happened? No? Neither does anyone else, but she built up quite a lot of business based on that publicity before everyone forgot all about her. (And, before she changed her story.) Of course, you can make a name for yourself the other way. Back during the internet bubble, one analyst earned a reputation for “always being right” about the market going higher. She predicted it would go higher quarter after quarter, right on through the top… and after the top… and …

Is Snap a Good Investment?

March 7, 2017March 2, 2017 by Finance Gourmet

Today was the IPO for Snap, Inc., the company that makes Snapchat. As one of those people who doesn’t “get” Snapchat I won’t be analyzing the product or what makes it special. Instead, I’m going to take a quick look at the reality of the financials and let you figure those other parts out for yourself. Snap IPO All IPOs are fairly ridiculous when it comes to pricing, subscribing, and issuing shares. They get doubly so when the company going public is famous enough to attract the type of people who don’t usually buy IPO shares, and in fact, those that actually have no idea how it is done. In these cases, one often sees a huge “pop” in the stock price. Keep in mind that as an individual investor without an established relationship with one of the companies underwriting the IPO you cannot get the IPO price at all. Instead, you could theoretically get the “open” price. So, here is how it works. Established customers got the opportunity to buy into SNAP for the IPO price of $17 per share. Regular investors got their first chance to buy at the open price of $23.71. The stock is now (around …

Apple Stock High Again

November 9, 2021February 14, 2017 by Finance Gourmet

February 14, 2017 Apple stock price hit an all new high. Yea! Cue the people who know me rushing to ask me if I should invest in Apple stock. I’ve written about this before, of course. I also wrote about that Apple earnings miss that made everyone freak out a while back. I took a look and saw that I wrote an Amazon stock vs Apple stock article. I’ll have to re-read that when I get a chance and see if I was right 🙂 As was the case when I wrote those finance articles about Apple, the reality is that there isn’t much different about Apple stock today, that wasn’t also true yesterday, and a month ago. So, just because there is a BIG NEWS story today shouldn’t change your investing strategy. Keep in mind, that this all new high isn’t the result of FINALLY breaking through a long losing streak. The last all-time high for Apple stock was back in 2015. It’s been a few years, but it’s not like this is a long suffering stock, or anything. Is Apple a Buy Here? For years, betting against Apple has been a sucker’s bet. The company seemingly could do …

Dow 20,000

January 25, 2017 by Finance Gourmet

This post will not be long, and there won’t be much analysis. Why? Because, the Dow hitting 20,000, or Dow 20K, as some like to say, is not that important. The reality is that Dow 19,823 is not really any different than Dow 20,107. Round numbers are not magic. So, what’s the big deal? Why Does Dow 20K Matter? I’ve noticed an increasing number of financial publications describing the Dow Jones Industrial Average hitting 20,000 as a “psychologically important” milestone. In other words, it matters for really cool newspaper headlines and not much else. Remember, the Dow is just 30 stocks. Those 30 stocks are all large, U.S. companies, and they change them from time to time for numerous reasons, including when that stock just isn’t very good anymore. In other words, it isn’t really representative of much of anything. But, like a fake credit score from Credit Karma or the like, it is a useful way of getting a general idea of whether stocks are going up or down, and to a lesser extent, by how much. This is why the news often states, “The Dow was up 50 points today…” It’s a quick, no effort, way to say …