Netflix Stock Still Has A Profit Problem

If you enjoy movies and TV sitcoms, Netflix (NFLX) offers one of the best tradeoffs for consumers in Western Civilization’s entire experimentation with capitalism. If you watch 50 hours per month, your effective cost of entertainment is only twenty cents per hour. I don’t there’s a better value proposition in the market than that.

Consumers know a good deal when they see one, and Netflix reported yesterday that it picked up 5 million new subscribers to brings it total subscriber count to 93 million. Adjusting for the lower subscriber charges abroad, this means that Netflix is bringing in $5.5 billion per year from its subscriber base.

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How To Automatically Build Passive Wealth

Based on my own conversations with wealthy individuals regarding the arrangement of their estates, I have gathered that the process of building wealth is best done when the strategy is put on semi-autopilot, and I am outlining that process below:

First, you create a bank account for your investments that is separate from your bank account that is used to meet daily expenses. Your primary bank account takes on the function of a working capital account. It is used to pay your utility bills, car payments, food purchases, mortgage, and the other needs and wants of life.

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Thriving Investing While Interest Rates Rise

For over three decades, the interest rates on debts have been generally sloping downwards. This has been the status quo for so long that major banking houses like U.S. Bancorp need to conduct special training sessions to teach a new generation of employees that, yes, interest rates do rise. A lot of energy has been spent trying to figure out the sequence and degree to which the Federal Reserve will make the cost of money more expensive.

In my view, there are three things to keep in mind when thinking about rising interest rates.

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Revlon Stock Has Some Issues

I have noticed that the financial press has been looking favorably upon Ron Perelman’s Revlon stock, with even Barron’s describing “Revlon’s Beautiful Outlook.” The general argument in favor of Revlon is that its core beauty product lines seem recession-resistant, and it seems to be trading at a lower valuation than its peers Estee Lauder, Coty, and L’Oreal. At first glance, Revlon might seem like a worthwhile stock to consider.

As you can already guess, I don’t see it that way.

First, you should be aware of Revlon’s disastrous trading history. You might see the current price of $32 per REV share and compare it to the $24 IPO in 1996 and think: “Ok, so it hasn’t done much for shareholders.” The reality is far worse because Revlon executed a 1-for-10 reverse stock split in 2008. So, really, the effective price is $3.20 per share if you follow the reconfiguration of the equity structure. As a result, every $1,000 invested into Revlon back in 1996 would be worth only $124 today.

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Positioning Investments For A Trump Tax Cut

According to his website, President-Elect Donald Trump plans to lower the corporate tax to 15%. I’m getting this figure from page 3 of his tax plan on his website titled: “Tax Reform That Will Make America Great Again.”

It contains the following paragraph:

“Too many companies – from great American brands to innovative startups – are leaving America, either directly or through corporate inversions. The Democrats want to outlaw inversions, but that will never work. Companies leaving is not the disease, it is the symptom. Politicians in Washington have let America fall from the best corporate tax rate in the industrialized world in the 1980’s (thanks to Ronald Reagan) to the worst rate in the industrialized world. That is unacceptable. Under the Trump plan, America will compete with the world and win by cutting the corporate tax rate to 15%, taking our rate from one of the worst to one of the best.”

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