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.
When you see the price of Netflix stock climb to $143 per share in after-hours trading, the $60 billion valuation for the streaming giant at first sounds reasonable.
But the reality is more complicated than that. Netflix is distinguishable from firms like Pepsi, … Read the rest of this article!
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.
Second, you allocate a portion of your disposable income to get transferred from your primary working capital account (where your primary career income is deposited) into this second bank account that you created.
Third, you deduct a certain amount to invest each month that is less than the amount being added to your … Read the rest of this article!
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.
First, the prices of individual stocks may come down a little bit if interest rates rise at a rate greater than expected. Some of this may be company specific, as the balance sheets of corporations finally start to get scrutinized with new assumptions of higher refinancing rates. Other times, it may be a more … Read the rest of this article!
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 … Read the rest of this article!
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
… Read the rest of this article!