The longest economic expansion in the entire history of the United States lasted from March 1991 through March 2001, a period of 120 months. Right now, the United States has not experienced a recession for 118 months, with economic expansion characterizing the period from June 2009 through the present. If there is no recession prior to summertime, this will be the longest uninterrupted period of growth in the history of the United States.
When we are amidst such a period of economic growth, I believe the question of “What to do next?” involves re-focusing on the very things that we ought to be doing all along.
Primarily, this means focusing on cash and fair valuation for any investments that you make.
Regarding cash, the appeal of keeping 10% to 20% of one’s assets available as dry powder is nearly self-evidence. To paraphrase Warren Buffett’s citation of his grandfather, “Cash is … Read the rest of this article!
One of my friends from Seeking Alpha, Robert Allan Schwartz, recently pointed out to me this article in the Wall Street Journal that was sharply critical of IBM as a long-term investment, with the brunt of the criticism aimed at IBM’s monstrous buyback program, which typically retires 1-2% of the company’s shares outstanding in a given quarter. You should probably read the article yourself, but the gist of the piece was this: when IBM invests into its business, it achieves growth of 18.1%. When it does buybacks, it achieves growth of 6.5%. The commitment to buybacks at the expense of fresh investments in the business is a form of corporate cowardice that exhibits “playing not to lose” thinking and resting on laurels, rather than the boldness and imaginativeness you’d like to see in order to achieve significant corporate growth. Very provocative article.
Since I’ve written a lot about IBM in … Read the rest of this article!
Square, Inc. is a tremendously fascinating company. It has played a real role in the democratization of payments systems, enabling small-scale businesses and even solo entrepreneurs the possibility of processing digital payments without having to make significant network purchases.
Additionally, it offers complementary analytics software that provides cumulative and per unit sales data that would have required the use of an accountant’s services and significant time delays even a mere generation ago.
The company is constantly innovative, launching the recent “Cash App” that allows individuals to transfer money among themselves even outside the business context (in a spirit similar to Venmo).
It is deciding to put its data to use, as it has filed paperwork to open a bank in Utah so that it can offer deposit and lending services to individuals and businesses. Given the avalanche of data that it stores, the company would seem … Read the rest of this article!
As I saw the news that Chevron was purchasing Anadarko Petroleum in a $33 billion merger deal, I revisited Royal Dutch Shell’s $50+ billion acquisition of BG Group several years ago that doubled down on Shell’s status as a colossus in the industry, boosting the annual revenues from the $360 billion to $430 billion range.
It is the dominant force. There are maybe one dozen companies in the entire world that sell as much “stuff” as Shell does. It is sitting on 16 billion barrels of oil and 40 trillion cubic feet of natural gas. Whatever world the energy uses, Shell is there with its hand as an original source provider, cultivator/refiner, and transporter of the energy source. If I had to make a list of the 50 companies most likely to exist as a profitable entity by the end of your great-grandchildren’s expected lives, Shell would be on the … Read the rest of this article!