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11 Legitimate Survey Sites for 2020

That which isn’t good for the hive, isn’t good for the bee.

Marcus Aurelias, Meditations

Negative Interest Rate Policy: The Fed is flirting with Negative Interest Rate policy, a radical failed experiment everywhere it has been tried.

Japan’s stock market is flat for the last 30 years. Their economy is irrelevant. Their government owns their economy via ETF purchases. Most international mutual funds and indexes do not even include Japan. It is irrelevant.

Apple is up 39.22% for the month. The company has no guidance. Couldn’t provide earnings visibility on the recent earnings call. They issued bonds this week to buy back more stock. Buybacks are the cotton candy for today’s investors.

Warren Buffett in 1962 and Benjamin Graham in 1947

Warren Buffett: Oddly enough, we began this week with warnings from two very influential investors.

Warren Buffett announced he had sold his entire airline stake on the premise that he wasn’t sure if air travel would return in two or three years.

That’s the most bearish assessment anyone has heard from Mr. Buffett in quite some time. But, few investors or Algorithmic programs paid much attention to him these days.

Zell: Sam Zell mentioned this week that he was quite cautious about the future.

“Too many people are anticipating a kind of V-like recovery,” said in an interview with Bloomberg Television.

“We’re all going to be permanently scarred by having lived through this.”

Just as the depression left behind a generation that couldn’t shake the experience of mass unemployment, hunger and desperation, the burdens this crisis has forced on society may be similarly hard to forget.

Zell, 78, said it won’t be easy for people to live as they did before the “extraordinary shock” of the pandemic.

And so today the market continues its march towards new highs. Investors are cheered on by administration talking heads promising a V like recovery. It is an election year, so what would you expect them to say?

The money printing is unlimited as are the stock gains.

Buffett had this to say about the Fed Actions:

“We’re doing things that we really don’t know the ultimate outcome to,” the 89-year-old investing legend said at the virtual meeting. “I think in general they’re the right thing, but I don’t think they’re without consequences, and I think they could be of extreme consequences if pushed far enough. But there would be kind of extreme consequences if we didn’t do it as well.”

What about the 30 Million unemployed? They stay on the government statistics for 6 months and then they are removed. When 12 Million find some sort of new employment (probably less well paying), the talking heads on CNBC and the government economists will gleefully tell you that the job market is “strong”.

It never ends.

Be careful friends.

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11 Legitimate Survey Sites for 2020

Stay Smart while the Stock Market Crashes

March 1, 2020 by Frugal Prof

Its Sunday Night March 1st 2020.

The futures are down about 300 points. Last week, the market was down about 12%.

Guest Post From Reminiscences of an American Capitalist:

I’ve been through many panics and selloffs in my years as an investor and trader, although each is unique. This one has a wildcard component of science, pandemic, and contagion. There are so many unknown unknowns that it’s extremely challenging to know what comes next.

Here are some thoughts and strategies I’ve had throughout the day that may be helpful to you.

You Don’t Have to Watch Every Tick

There is so much attention on the stock market that it’s easy to get sucked in to the drama element of it all. Resist it. Fear and speculation coupled with CNBC talking heads is a prescription for bad decisions. Jim Cramer famously told investors to sell at Dow $6K on the Today Show.
In fact, you don’t have to trade or make any decisions right now. The premise of all CNBC guests is that action is better than inaction. Most of the time in the markets, that’s simply not true.

I’m Missing Out

What if you’re not missing out? I run value screens almost every other day. And the past year and a half there have been practically no good opportunities. And guess what, even after a 12% selloff, there are still few opportunities. I’m watching energy names like OXY and XOP and a few energy and oil names, but these aren’t Great opportunities by a long shot.

Wait for a Base

I had this post-it on my monitor for Many years. Wait for a base. Which means don’t try to catch a falling knife. But, wait for the stock to bottom and base. It saved me a lot of money over the years.

Know What you Own

After I finish this post, I’m going to check my deltas and positions. So that I know if I need to make adjustments. Know what you own in terms of stocks and groups. As well as the level of risk you can withstand.

All or None Thinking

In the self help realm, there is a distinction that successful people are able to make partial decisions while less successful people fall into a trap of all or none thinking. This is very useful here. You don’t have to decide to be in or out of the market per se. If you’re uncomfortable with a position, there are typically many possible solutions. Look for solutions. Sell Calls. Sell one third. Sell one quarter.

Take Care of Yourself

Seems like an easy one, but its not. There is a lot of excitement right now. The overnight futures are trading. The Pajama Traders. Many traders and investors will make the mistake of staying up too late or checking the futures in the middle of the night. This doesn’t help with good decision making. Sleep. Rest. Recharge. These are fast moving markets but you don’t have to see every tick. Think long term.

Valuation in a World Turned Upside Down

What is a business worth if the next six months or a year will be a disaster, but the long term may be fine? It’s an interesting question. And it cant be answered today or this week. It depends on many factors for each business. Debt is a huge issue. As a value investor, this is where owning companies that have a strong balance sheet, is a huge advantage. Value investors have under performed so much recently that some began to wonder if, “Value investing was dead.” Probably not going to see more of those headlines. We have entered a world where valuation matters again. Leverage matters. So, know what you own. Low interest rates will help many companies survive for some time, but that is no guarantee.

Focus on the Big Picture

What are my investment goals long term? We don’t know how long this will play out, but every other crisis has turned out for the best for long term investors. The 1987 crash, the 2008 Great Financial Crisis, and the Dot Com Crash. This country is incredibly resilient and full of smart companies that will lead the way. The Big Picture is always one of progress.

Goodnight friends.

Compare Retirement Accounts IRA and a Roth IRA

October 8, 2018 by Frugal Prof

An individual retirement account, or IRA, can be a highly effective way to save and invest for retirement. The tax-deferred nature of these accounts can allow your money to grow and compound far more efficiently than in a standard taxable brokerage account. There are two main types of IRAs to choose from: traditional and Roth.

With that in mind, here’s an in-depth look at the differences between the two main types of IRA, the qualifications for each one, and what you need to know about how these accounts work.

What is an IRA?

Value Investing

IRA stands for individual retirement account. An IRA is a savings vehicle designed to help Americans save and invest for retirement in a tax-advantaged manner.

For most people (self-employed individuals have a few more options), there are two types of IRAs available — traditional and Roth.

Both types of IRA have certain characteristics in common.

Specifically, investments held in an IRA are allowed to grow and compound without any tax implications for as long as they remain in the account.

For example, if you own a stock in your IRA and receive dividends, you won’t have to pay dividend tax each year. If you own bonds in your IRA, you won’t have to pay federal income tax on the interest you receive. And finally, if you sell investments in your IRA at a profit, you won’t be liable for paying capital gains tax as long as you don’t withdraw the money.

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The main difference between traditional and Roth IRAs is the way they are treated by the IRS, so that’s where we’ll start.

As I mentioned, both types of IRA allow your investments to grow and compound without income taxes as long as the money remains in the account. The main difference is how contributions are treated.

With a traditional IRA, qualifying contributions are eligible for a current-year tax deduction. In other words, if you qualify for the traditional IRA tax deduction (we’ll get into the qualifications later) and you contribute $2,000 to a traditional IRA for the 2018 tax year, you’ll be able to exclude this amount of money from your taxable income.

Traditional IRA funds are not taxed until they are withdrawn from the account. Your eventual traditional IRA withdrawals, regardless of when or why they are taken, will be considered taxable income.

Roth IRAs give you a tax break later

On the other hand, Roth IRA contributions are never deductible in the year they’re made. If you contribute to a Roth IRA for the 2018 tax year, that money will still be included in your taxable income.

Instead, the tax benefit of a Roth IRA comes later.

Qualified withdrawals from a Roth IRA are 100 percent tax-free To get this tax-free treatment, your Roth IRA must have been open for five years or more, and you must meet a qualifying withdrawal condition, such as reaching a minimum age.

We’ll get into the specifics of IRA withdrawals later, but the point is that Roth IRAs are designed to prepay your taxes now so you don’t have to pay tax on your Roth IRA income in retirement.

Roth IRAs have some other key advantages

Finally, there are no minimum distribution requirements from a Roth IRA as you get older.

Read the best side hustle ideas in retirement here.

Traditional IRA account owners are required to start taking distributions after reaching 70 1/2 years of age. The idea is that traditional IRAs are tax-deferred accounts, and the IRS wants to start getting some tax eventually. Since Roth IRA withdrawals can be tax free, there’s no reason for the IRS to force account owners to take distributions.

IRA Contribution Limits

If you are under 50 in 2018, you can contribute as much as $5,500 to your IRA(s) for the 2018 tax year.

The IRS determines the IRA contribution limit each year. For the 2018 tax year, there are two different IRA contribution limits, depending on the age of the account owner.

If you are under 50 in 2018, you can contribute as much as $5,500 to your IRA(s) for the 2018 tax year.

If you are 50 or older in 2018, you can contribute as much as $6,500 to your IRA(s) for the 2018 tax year. The extra $1,000 is known as a “catch-up contribution.”

The timetable for IRA contributions is a little more flexible than the calendar year. Contributions for a specific tax year can be made any time between the first day of that calendar year and the regular tax deadline in the following April. This means that 2018 IRA contributions can be made anytime between January 1, 2018, and April 15, 2019.

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Another advantage: Roth IRA contributions — though not any investment gains — can be withdrawn at any time and for any reason. If you have contributed $5,000 to a Roth IRA each year for 20 years, then you can access $100,000 of your savings whenever you need to.

I don’t recommend withdrawing this money, but it is nice to know it is an option. Read why an emergency fund is so important here.

With a traditional IRA, you’re at the mercy or uncertainty of what future higher tax rates might do to your retirement savings. But With a Roth IRA, you don’t have to worry about future rates, because you wont have to pay tax on the withdrawals.

Check out the free retirement calculator at Marketwatch here.

Take it from me, the years will roll by faster than you can imagine. Contributing to a retirement account now is the best way to prepare for retirement.

Apple: The Valuation Debate

June 12, 2018 by Frugal Prof

Apple: The Valuation Debate

What is the correct p/e for Apple stock? Analysis and thoughts.
Should it have a p/e ~24 like a consumer products company?
Iconic tech companies can become irrelevant. History and analysis.

What is the correct p/e for Apple stock?

Recently, some investors have suggested that Apple ($AAPL) is so stable that it deserves a p/e ratio closer to a consumer products company like Clorox.

A p/e of 24 would propel Apple shares significantly higher. However, the reality of the comparison leaves much to be desired.

Historical perspective of past iconic tech companies like Xerox and Atari shows the risk to tech investors.

Investing - Wall Street

“The four most dangerous words in investing are: ‘this time it’s different.'” – Sir John Templeton

*Disclosure: My aim is to recommend products that will truly benefit you. I believe in transparency and want to disclose that I’ve included certain products and links to those products on this page that I will earn an affiliate commission for any purchases you make.

Apple Stock: The billion dollar question

If investors treated Apple the same as the rest of the market, the shares would be a lot higher.

In fact, if you applied the same P/E ratio to Apple as the rest of the stock market, the technology juggernaut’s shares would be 19 percent higher, according to calculations by Bespoke Investment Group.

Applying the same multiple as rest of the S&P’s tech sector gives Apple an estimated value more than 30 percent higher than where it is right now.

Chart

AAPL data by YCharts

The valuation question was recently put to Apple CEO Tim Cook in an interview.

Jim Cramer: Question to Tim Cook (AAPL)

Let’s think about that notion of the consumer and what you care about. Lets say

a consumer product company had 5 percent organic growth

10 percent earnings per share,

beat by $0.08, and at the same time

had price increases when all consumer products companies are struggling with price decreases.

I believe that you would sell at 24 times earnings,

the same price-to-earnings multiple of Clorox (NYSE:CLX), which is a bleach company.

Q: Jim Cramer;

Do you find it somewhat ironic that the most basic commodity has a much higher price-to-earnings multiple than the greatest consumer product of all time?

“You know, for us, we look at that and we say, you know, we can invest in our company and invest in our stock and we do believe it’s undervalued. -Tim Cook, Apple

“And so we’re buying it back, and so from that point of view there’s an opportunity in that as well.”

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Personally, I believe that Mr. Cramer was trying to curry favor with Tim Cook as a way to thank him for an “exclusive” interview. I believe that seasoned investors find the comparison between a stable consumer products company and a tech company to be absurd.

There is large difference between a defensive consumer products company like Clorox and a tech based- consumer product company like Apple.

I see Apple as more akin to a technology company than a consumer product company.

But, it is a distinction that can be debated.

Below we see the large gap between the valuations of these two companies.

CLX PE Ratio (Annual) data by YCharts

Risk: Of course, there is risk involved with companies like Samsung and Apple, which is why the valuation that investors give the shares is lower.

Product Risk:

Apple produces incredible products. There is no debate.

Technology products are incredibly complicated and present risks to investors. The most recent example being the Samsung Note fire hazard and recall.

It is unrealistic to operate under the impression that Apple is immune from the risks of producing complicated technology products.

An overview of the supply partners Apple uses to make it’s products:

The company’s top-200 list of supply partners includes 753 listed office and manufacturing facility locations worldwide. As you’d likely guess, the majority of those addresses are in China, Japan, and the United States. But other nations, large and small, appear. The full list of of countries involves every continent except Australia and Antarctica, including:

Austria, Belgium, Brazil, China, Czech Republic, France, Germany, India, Indonesia, Ireland Israel Italy Japan Malaysia Malta Mexico, Morocco Netherlands Norway Philippines Singapore South Korea Taiwan Thailand United Kingdom United States and Vietnam (via Consumerist)

Stability:

Clorox:

Boring and simple products: Clorox is made from chlorine and sodium hydroxide.

Selling essentially the same product for over 100 years.

The product and the company date back to May 3, 1913, when five entrepreneurs, invested $100 each to set up the first commercial-scale liquid bleach factory in the United States.

As we see, the operating income line (in purple) is so stable. This is very attractive for investors.

Chart

CLX PE Ratio (NYSE:TTM) data by YCharts

(CLX)

I am not saying either company is a better investment.

Consumer products companies have much less risk. I can’t think of one example that got into financial distress or became insolvent. It never happens. So, the valuation is viewed completely differently.

P/E Expansion:
The question of whether Apple deserves a higher p/e presumes that the shares will retain their current higher p/e ~17/18. This seems to be a more serious question for investors.
Gains from passive investing:
Apple benefits from inflows by passive investors into the S&P 500. However, should these trends slow or reverse, Apple could be at risk.
S&P 500 gains due largely to the likes of Apple and Facebook

Chart

AAPL PE Ratio (TTM) data by YCharts

Other issues:

Adoption of new iPhone models
Strong upgrade cycle of new phones
Slipping iPad sales
Airpod Adoption

“Business success contains the seeds of its own destruction,” “Success breeds complacency. Complacency breeds failure.Only the paranoid survive.”-Andy Grove

Iconic Tech Companies:

Investors have long memories. Especially for losses.

It is unthinkable to imagine a future without Apple being a dominant company. However, it is also extremely unthinkable that iconic tech companies of the past like Xerox, Blackberry, America Online, and Atari could wind up bankrupt or irrelevant.

Xerox:

On it’s best day, Apple may never achieve the dominance and financial strength of Xerox in the 1960’s.

Their revolutionary copy machine was introduced in 1959 and was one of the most dominant and profitable inventions of all time. By the time the 914 copier was retired in 1973, it was the biggest-selling industrial product of all time, and Xerox was in the dictionary as a synonym for photocopy.

Some may not see Xerox as a tech company. However, Xerox invented the computer mouse as as well as many other breakthroughs and helped create silicon valley.

How Steve Jobs Invented The Computer Mouse By Stealing It From Xerox

According to Gladwell, when Steve Jobs visited Xerox’s Palo Alto Research Center in the late 1970’s, he was amazed by what he saw: a demonstration of a new three-button computer mouse.

Atari:

My personal view is that Atari is the coolest tech company of all time.

You might not understand how this could be true. Steve Jobs and Steve Wozniak were dying to work there, so that should say something. As an investor, knowing that Atari went bankrupt illustrates the risk of investing in tech companies.

I’d known Steve Jobs for a long time. And I had seen Pong in a bowling alley and I had to have one. And pop in my head: I know how televisions work and I know how to design anything so I built my own Pong. And Steve came back from Oregon at the time, where he had been going to school, and I gave him my board. He wanted to run down and apply for a job at Atari. –Steve Wozniak

“Atari started it all.

Atari is what brought video games into the mainstream,” says Sean Kelly, director of the Videogame History Museum.

Space Invaders became the most popular arcade game in the United States, and the most popular Atari game cartridge. Atari followed up with other blockbuster cartridges like Defender, Missile Command, and Asteroids; by 1980 it commanded a 75% share of the burgeoning home video game market. Thanks in large part to soaring sales of the VCS system, Atari’s annual sales grew from $75 million in 1977 to more than $2 billion in 1980, making Atari the fastest growing company in U.S. history. But it wouldn’t stay that way for long.

Atari is one of the most important names in video game history and the news of its recent bankruptcy marked a sad day for the industry.

Blackberry:

BlackBerry’s share of the global smartphone market is now officially 0%‘

In the fourth quarter of 2016, more than 432 million smartphones were sold, according to a report published on Wednesday by the research firm Gartner. Of those, just 207,900 were BlackBerry devices running its own operating system.

It is incredible that Blackberry could have become so irrelevant when it used to be so dominant.

Again, the risk of competition is intense in the technology sector.

BBRY data by YCharts

Of course, there is no better example of a great tech company going bankrupt than Apple itself.

Apple was on the verge of bankruptcy in 1997 and needed to be bailed out by Bill Gates and Microsoft (MSFT). Smart investors remember that this bailout was the result of luck as Microsoft needed to prove to the Justice Department that it wasn’t a monopoly.

It would seem ridiculous in 1984 to imagine Apple being close to bankruptcy.

But that’s exactly what happened.

Apple Computer:

Apple Computer on the verge of bankruptcy:

At the time, Apple was hat-in-hand. It had sustained losses of more than $1.5 billion in the prior year-and-a-half. It especially needed a public guarantee from Microsoft that it would keep providing and supporting software for Macs; Apple’s share of the then-booming PC market had dwindled to about 5 percent from about 15 percent in 1992. (bloomberg)

1997: Microsoft rescues one-time and future nemesis Apple with a $150 million investment that breathes new life into a struggling Silicon Alley icon.

“The unexpected revelation … prompted gasps of disbelief and loud boos from the audience of thousands of Mac users and software developers.”

In a remarkable feat of negotiating legerdemain, Apple co-founder Steve Jobs got needed cash — in return for non-voting shares — and an assurance that Microsoft would support Office for the Mac for five years.

Conclusion:

Tech companies offer a different risk/reward profile than consumer products companies.

If iconic tech companies like Xerox, Atari, and Blackberry can become irrelevant or bankrupt, then any tech company could be vulnerable. Apple investors should be aware of the recent p/e expansion and be cautious of idle speculation that, “This time it’s different.” The names in tech may change, but the risk to investors is the same.

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Becoming a Better Trader: Five Keys to Trading Success

June 5, 2018 by Frugal Prof

How to be a Trader: Five Keys to Successful Trading

These 5 Keys will help you become a better trader today.

What does it take to make consistent money as a trader:

Discipline,
Focus,
Patience,
Intelligence.

There is also the mental game of trading. Keeping one’s ego in check is always a struggle even for the best traders.

My aim is to recommend products that will truly benefit you. I believe in transparency and want to disclose that I’ve included certain products and links to those products on this page that I will earn an affiliate commission for any purchases you make.

“I wait until there is money lying in the corner and all I have to do is go pick it up.

I do nothing in the meantime.”

-Jim Rodgers – MarketWizards

Here are five keys to improve your trading today.

1. Know the Markets

“A prudent speculator never argues with the tape.

Markets are never wrong, opinions often are.” – Jesse Livermore

Trading can be viewed as a war between you and another trader. The only difference is the knowledge you possess.

How much information do you have about the markets?
What makes them move?
What strategies can be employed to take advantage of market movement?

If you are well-armed, your confidence will increase as you go off to engage in battle. Increased confidence leads to lower stress and higher profits.

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2. Have Acceptable Trading Capital

The toughest problem is to establish a sufficient capital base to begin trading effectively.

Most people are constantly struggling to pay their bills and save a little money every month. Putting their savings on the line can be very stressful.

In fact, not having enough money is the primary cause of stress for an investor.

Investing or trading with very little capital is a dangerous situation. A trader must be willing to lose some money in a trading account. Do not use the rent money to trade or you will assure yourself of failure.

If you have enough money in you account to be able to absorb a few losses, you”ll be able to focus on winning instead of worrying about losing.

According to Jack Schwager, the author of The Market Wizards (basic training for all serious traders), the most common trait for all successful traders is to avoid thinking about money when trading. Of course, this is easier said than done.

However, successful traders have managed to remove money from the trading picture and eliminated it as a source of stress.

3. Set Reasonable Expectations

“People who look for easy money invariable pay for the privilege of proving conclusively that it cannot be found on this earth.” – Jesse Livermore

You don’t have to be right all the time to be profitable.

For most styles of trading like

forex,
options,
swing trading,
and day trading,

You don’t even need to be right 50% of the time. The trick is to set and sustain a reasonable level of consistency. Keeping track of your winners versus losers is critical.

For example, some traders look to have a ratio of $3 in gains on winners vs $1 of losses for a loser. This way, even if 60% of the trades are losers, they are still profitable. Of course, this depends on the style of trading.

“Losing money is the least of my troubles.

A loss never troubles me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocket book and to the soul.”

-Jesse Livermore

4. Understand and Assess Risk:

“If you can’t sleep at night because of your stock market position, then you have gone too far. If this is the case, then sell your position down to the sleeping level.” – Jesse Livermore

There are three general market directions: market up, market down, and market sideways.

It is important to assess potential market movement when you are placing a trade. If the market is going up, you can buy calls, sell puts, or buy stocks.

Do you have any other available choices? Yes, you can combine long and short options and underlying assets in a wide variety of strategies. These strategies limit your risk while taking advantage of market movement.

Limiting your risk is the name of the game. It is by far the most important part of setting up a trade. However, I am constantly amazed by how many traders do not know how to accurately assess the risk of every trade they place.

If you are simply buying stock, the risk is the stock going to zero. If you are short selling stock, you have unlimited risk potential. Options can provide necessary insurance to limit your risk.

Two rules of trading:

Always calculate the risk of a trade before placing it.
Never take a risk unless you can afford to lose the money involved.

Trading is about probabilities. Using these rules, you have a higher probability of limiting your risk and increasing your chances of becoming a successful trader.

5. Review Regularly

“A man must study general conditions, to seize them so as to be able to anticipate probabilities.”

-Jesse Livermore

How often you should review your overall performance depends on your trading frequency. If you make fewer than five trades per month, for example, a monthly or quarterly review should be sufficient.

If you’re trading every day, on the other hand, you should check in more often.

The important thing is to make it a regular habit. Consistency and discipline are the hallmarks of successful traders. It’s important to carefully study your strengths and weaknesses as a trader.

Trading should be a lifelong endeavor. The best traders are constantly learning and trying to improve. The only way to lose in trading is to ignore risks or to quit.

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The Most Undervalued Stock in the Stock Market (SIG)

May 23, 2018 by Frugal Prof

*Please see disclaimers at the bottom of this article

Signet: (SIG)

Investor fear has been overdone and left the shares incredibly undervalued.
Initiatives to enhance shareholder value: large stock buyback, debt repayment, and a dividend raise.
Overview of the current situation and the best way for investors to participate.

“I wait until there is money lying in the corner and all I have to do is go pick it up. I do nothing in the meantime.”

-Jim Rodgers – MarketWizards

My recent investment articles:

Ralph Lauren (RL) recommendation is up 100%
Dillards (DDS) is up 54%
Fossil (FOSL) is up 225%

Subscribe to my free Investing Newsletter at Bottom of this Article

Summary:

Shares in Signet have fallen by nearly 50% this year. The company is in the process of selling its financing portfolio and will have tremendous flexibility to retire debt and pursue significant buybacks. Strong cash flows and significant liquidity has been ignored and left the shares incredibly undervalued. Management is taking numerous moves to enhance shareholder value including debt repayment, raising the dividend, and a large stock buyback.

As such, the risk/ reward is very attractive at current levels. The best way for investors to participate in the stock and take advantage of elevated implied volatility.

About Signet: (SIG)

Signet is the largest specialty retail jeweler by sales in the US, Canada, and the U.K.

On May 29, 2014, the company acquired Zale Corporation for $1.458 billion. The company issued $1.4 billion of long-term debt to fund the purchase.

The Sterling Jewelers division: formerly the US division, operates 1,588 stores in all 50 states. Its stores operate nationally in malls and off-mall locations as Kay Jewelers, and regionally under a number of well-established mall-based brands.

Destination superstores operate nationwide as Jared The Galleria Of Jewelry.
The Zale division consists of two reportable segments: Zale Jewelry, which operated 970 jewelry stores at January 28, 2017, is located primarily in shopping malls throughout the U.S., Canada. and Puerto Rico.
Zale Jewelry includes national brands Zales Jewelers, Zales Outlet and Peoples Jewellers, along with regional brands Gordon’s Jewelers and Mappins Jewellers. Piercing Pagoda, which operated 616 mall-based kiosks at January 28, 2017, is located primarily in shopping malls throughout the U.S. and Puerto Rico.
The U.K. Jewelry division, operated 508 stores at January 28, 2017. Its stores operate in major regional shopping malls and prime locations.

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Overview:

Shares of Signet have had a sizeable decline relative to the overall market and the retail index (RLX). This was due to weaker earnings, poor visibility, and a real fear among investors of mall based retailers. However, based on the cash flow and valuation of the underlying business, the fears seem overdone.

Investors have placed too much focus on the negatives and ignored excellent cash flow as well as the announcement of a plan to reduce debt and buyback around 25% of the shares outstanding.

Companies don’t become incredibly undervalued unless there is some risk involved with the business.

Risks to shareholders in Signet include a continuation of negative same store sales trends and a lack of earnings visibility. In my opinion, the shares have priced in much of the negative trend scenario.

Company initiatives include: Cost reductions, a transition to digital, and reducing underperforming stores.

Weak Earnings and visibility:

Current Fiscal 2019 guidance:

Same store sales down low-to-mid single digits,
Total sales of $5.9 billion -$6.1 billion,
non-GAAP diluted EPS of $3.75 – $4.25

Earnings Estimates:

For fiscal year 2019, analysts estimate that SIG will earn USD $3.97.
For fiscal year 2020, analysts estimate that SIG’s earnings per share will decline by 5% to USD $3.77.

Negative analyst sentiment:

9 out of 10 Wall street firms have a “HOLD” rating on the stock. (vis S&P).

Analysts don’t have earnings visibility due to recent disappointing comps and sales as well as concerns regarding mall based retailers in general.

Mall traffic continues to be a concern but the question for investors is, has the worst of these trends already been priced into the shares?

Positive Catalysts:

Selling credit portfolio: Sold in October for $950M. The company has stated on their earnings conference call, they plan to repurchase nearly one quarter of all shares outstanding.

At the completion of Signet’s transition to a fully outsourced credit model, we expect that the credit transactions will have generated more than $1.3 billion in proceeds, which are being used for debt repayment and significant share repurchases. – Gina Drosos, CEO

Growing E-Commerce business:

Ecommerce sales at banner websites and R2Net rose 52.8% to $253.8M in the latest quarter.

Signet aims to grow its digital sales as a percentage of total revenues to at least 15% in Fiscal Year 2021, compared to 8% in Fiscal Year 2018.

Closing underperforming stores; Signet expects to close 200 stores by the end of 2019.

Use Cost Reductions to transition to higher online sales. The Company estimates online savings will total $85M in 2019. (CC)

Financial Strength:

With Signet, we see all the classic signs of a value stock that is significantly undervalued:

P/E: 5 (well below historical average of ~ 15)

Price to Cash Flow: 1.56 – Incredibly attractive

Price to Book Value: .912 –

Based simply on the valuation, Signet is clearly one of the most undervalued companies in the stock market. Since management is being pro-active, so I would not expect the shares to stay at this level.

P/E Ratio:

Price to earnings is not the most sophisticated metric to evaluate a company. However, in this instance, it provides a good representation of how undervalued the shares of signet have become. A pretty consistent 14.5 x earnings has deteriorated to a p/e of five. The shares are incredibly undervalued relative to the stock market as well as to its’ historical value.

One would expect a return to a double digit p/e once earnings normalize. In addition, the announced buyback will shrink the shares outstanding by up to 25% resulting in improved earnings as well.

Liquidity:

The current ratio (liquidity) above 2 demonstrates a company that has tremendous financial strength.

Deep value investors (like Ben Graham), typically look for a current ratio of 2 or higher. As we see, Signet has consistently had a current ratio over 3. This is due to the tremendous cash flow that their business generates.

The company is forecasting free cash flow of $781M for this year. (CC)

As we can see, even compared with some of the best performing companies in this market, like Apple (AAPL) and Amazon (AMZN), Signet has tremendous liquidity.

Again, it’s hard to find any valuation metric where Signet isn’t incredibly attractive to a value investor.

Dividend: The company raised the dividend 19% to .37 creating a yield of ~3%. Another move to enhance shareholder value.

Technical Overview & Earnings:

Signet has a relative strength of (4), which means that 96% of the stocks in the market have outperformed it in the past year. The shares seem to have support at the $40 level and with a large buyback, would expect the shares to hold this level unless the upcoming earnings (6/6), disappoint analysts’ very low expectations.

How to participate:

The uncertainty surrounding the company has resulted in high implied volatility for the upcoming earnings (June 6th). Investors who are comfortable with options should consider using this situation to their advantage.

Regular:

For regular investors, I would advise a buy/ write strategy: buying the stock ~ $39.49 and selling a call to take in premium and take advantage of the high volatility.

Buy/ Write: Buy the stock and sell the $50 calls for $1.45 at the October 19th Expiration. If the shares are called away, the position gains ~$11.45 or ~28% for the position and ~58% annually.

Conservative:

For more conservative investors, I would advise selling a put.

Sell: The $37.50 Signet puts for 1.33 expiring on June 8th.

If the stock trades below $37.50, the cost basis would ~$36. If the stock continues to trade at or above $37.50, the investor makes about 3.5% on the position or ~42% annually.

Conclusion:

Investors have driven Signet shares down nearly 50% on fears of short-term earnings and sales trends. When we step back and look at the overall picture, Signet is incredibly undervalued based on liquidity, cash flow, p/e, and price to book. Positive catalysts for Signet include: debt repayment, a 25% stock buyback, and a dividend raise For Signet, the shares are too attractive to stay at this level too long.

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*Legal Disclaimer: Investing involves risk. Options may not be suitable for all investors. Consider your risk tolerance before investing. The Frugal Prof is not a registered broker/ dealer or registered investment advisor. Recommendations are for educational purposes only.

Value Investing vs. Jim Cramer

April 3, 2018 by Frugal Prof

The Value Investor Wins When The Mad Money Crowd Panics

Thesis:

By most measures, this Nine year bull market is quite expensive. It takes discipline to wait for attractive prices in stocks, but it is always worth it.

The “Mad Money” Crowd always finds a stock to buy no matter what the valuation. The problem is that buying overpriced stocks leaves you with little ammunition during a panic and when prices are incredibly attractive.

The more you invest when the market is overpriced, the less cash you have available to invest when prices are attractive.

I run value screens on the market everyday that tell me there are only a handful of stocks that are attractive. It’s not easy to be patient.

The issue is not one of bullish or bearish. It is one of probabilities and potential returns.

Relevant Articles:

Jim Cramer: Time to get out of the stock market

October 8, 2008: Jim Cramer Panics at the bottom

Bullish investors should turn into shrinking violets as the stock market continues its shocking downward spiral, CNBC’s “Mad Money” host Jim Cramer told Ann Curry on TODAY Monday.

In what Curry called a “dramatic statement,” Cramer emphatically urged any investor who has money they may need in the next five years tied to stocks to pull their dough out.

“I thought about this all weekend,” Cramer told Curry. “I do not want to say these things on TV.

“Whatever money you may need for the next five years, please take it out of the stock market right now, this week. I do not believe that you should risk those assets in the stock market right now.”

2008 Crisis: Lessons Learned (Genworth, Buffett, Goldman Sachs, And Washington Mutual)

While Jim Cramer was panicking on the Today Show, smart value investors like Warren Buffett (NYSE:BRK.A) were putting money to work.

His investment in Goldman, Sachs preferred shares was an incredibly successful investment in an undervalued company.

And since 2008 the stock market has had an incredible run thanks to buybacks, low interest rates, continued spending by the debt- heavy consumer, and expanding valuations. (SPY)

Relevant Articles:

The Country Has Racked Up $1 Trillion In Credit Card Debt

Debt: Clouds on the horizon

With consumers feeling better about the economy, the amount of money borrowed on plastic has reached a high not seen since the Great Recession.

Outstanding credit card debt topped $1 trillion at the end of 2016, according to The Nilson Report, a card and mobile payment trade publication.

While household income has grown over the past decade, it has failed to keep up with the increased cost of living over the same period.

To bridge the gap, more Americans rely on credit cards, one of the most expensive ways to borrow.

The average credit card interest rate is 19.36 percent and the average household pays a total of $1,332.80 in credit card interest each year, according to a separate report by NerdWallet.

Consumer Confidence:

I listen to a lot of conference calls and this quote from the Nike (NYSE:NKE) call stood out to me as we just passed this $1T mark in just credit card debt alone.

Nike conference call:

And one other things too I’d just say, that the brand is extremely strong in North America and consumer’s appetite for our brand continues to really be almost unsatisfied. Trevor Edwards, President Nike Brand

These comments refer to $150 basketball shoes and their main customer is a millennial. The consumer appetite here with $1T in debt is almost unsatisfied. Really.

Investment Fads: FANG Stocks

FANG stocks: The popular moniker for Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), Google (NASDAQ:GOOGL).

Investing fads usually end in painful losses when a bear market comes and the price to earnings ratios contract as well as share prices.

Expensive stocks based on p/e ratios versus their nominal growth rates.

FB PE Ratio (Annual) data by YCharts

The nifty fifty were very good companies for the most part. The problem was that due to p/e expansion, they were expensive and investors suffered huge losses.

It seems quite similar to what we see today with the “FANG” stocks.

NIFTY FIFTY:

Investment fads usually run their course quickly and end badly. The Nifty Fifty captivated investors for the better part of a decade prior to its demise in 1973, but not before reviving the high-risk investing that had been out of vogue since the Crash of ’29.

The 50 stocks identified by Morgan Guaranty Trust represented some of the fastest-growing companies on the planet in the latter half of the 1960s.

Their popularity among institutional and individual investors sparked a quantum shift from “value” investing to a “growth at any price” mentality that resurfaced with a vengeance in the tech-stock bubble a quarter century later.

By 1972 when the S&P 500 Index’s P/E stood at a then lofty 19, the Nifty Fifty’s average P/E was more than twice that at 42.

Among the most inflated were Polaroid with a P/E of 91; McDonald’s, 86; Walt Disney, 82; and Avon Products, 65.

Along came the stock market collapse of 1973-74, where the Dow Jones Industrial Average fell 45% in just two years.

As a Forbes columnist described it, the Nifty Fifty “were taken out and shot one by one.” From their respective highs, for instance,

Xerox fell 71 percent,

Avon fell 86 percent

Polaroid fell 91 percent.

Valuations: A very expensive market.

The best gains for the intelligent investor occur when others are fearful. Today, we have incredibly high levels of complacency. And we also have an incredibly expensive market.

Nothing to fear. Typically a bull market would climb a wall of worry. Today, there is almost nothing to worry about as evidenced by the VIX or fear indicator. (NYSEARCA:VXX)

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” –Warren Buffett

VXX data by YCharts

Pockets of value:

I am not saying one cannot make money in this market. In fact, a majority of my recent ideas have been very profitable.

I am saying that the probabilities of gains versus losses is now against the intelligent investor.

Every dollar of stock one purchased near the top in 2008 prevented one from buying lifetime bargains at Dow 8K and Dow 7K. There are pockets of value that I have written articles about.

However, for the index buyer of the S&P 500 stocks at 26x earnings and buoyed by buybacks, there is considerable risk both in the short-term and medium-term.

The goal is to buy when the risk/ reward is overwhelmingly in the investor’s favor. And by many objective factors, this market is more than fully valued. As evidenced by the Market cap to GDP.

Stocks in the mainstream:

1929: Shoeshine Boys

WHEN THE SHOESHINE BOYS TALK STOCKS IT WAS A GREAT SELL SIGNAL IN 1929.

JOE KENNEDY, a famous rich guy in his day, exited the stock market in timely fashion after a shoeshine boy gave him some stock tips.

He figured that when the shoeshine boys have tips, the market is too popular for its own good, a theory also advanced by Bernard Baruch, another vested interest who described the scene before the big Crash:

“Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day’s financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me tips and, I suppose, spent the money I and others gave him in the market. My cook had a brokerage account and followed the ticker closely. Her paper profits were quickly blown away in the gale of 1929.”

Investing Guru Tony Robbins:

Self-help guru, Tony Robbins, has released his second book on investing since this bull market began, Unshakeable. His investing advice is in addition to his full schedule as a self-help guru.

“If you don’t sell, you don’t lose money,” says Tony Robbins. “Every single bear market has turned into a bull market.”

Tony Robbins, March 2016

Conclusion:

We’ve come a long way from panic to complacency.

There are small pockets of value, but the risk/ reward is very challenging. The consumer has tremendous debt, and interest rates are set to climb higher.

This is the market we have: full panic at 8,000 and full complacency at 25,000.

Read my post, How to profit from the next panic.

Things can and do change quickly. And higher interest rates will have an impact on both consumers and investors.

I expect buying opportunities as volatility returns and uncertainty comes back in the market.

That allows me to be patient and wait for better opportunities to come.

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Facebook Stock (FB): Insider Selling and 9 Serious Risks for Shareholders

March 20, 2018 by Frugal Prof

Financial Freedom

Facebook Stock (FB): Insider Selling and 9 Serious Risks for Shareholders

Thesis:

Up until now, money managers competing with the S&P 500 (SPY) had to own Facebook (:FB) shares due to the performance. That trend could be reversing as risks to the business model appear. The medium-term risks to Facebook stocks are significant:

- Increased regulation,
- Unhealthy product,
- No barriers to entry,
- Competition for younger users
- Trends away from social media
- Depression Link
- Privacy issues
- Few barriers to entry
- Extreme valuation,
- Insider selling.
- Business strategy of copying or buying better competitors
- “Facebook is for old people”

Insider Selling:

Mark Zuckerberg will sell up to $12.7 billion in Facebook stock over the next 18 months

Facebook CEO Mark Zuckerberg will sell up to 75 million shares of Facebook over the next 18 months, he said in a post on Friday.
At the current Facebook share price of $170, that means Zuckerberg could sell up to $12.7 billion in Facebook stock.
He could also sell as few as 35 million shares of Facebook, which would work out to just under $6 billion in Facebook stock.
Zuckerberg is selling some of his Facebook shares to fund the Chan Zuckerberg Initiative, the philanthropic organization he formed in late 2015.

The significant selling begs the question of how committed Mark Zuckerberg is to continue as CEO of Facebook. It seems as if his interests in philanthropy and politics make it unclear whether he will continue to be with the company beyond three to five years from now. Especially in light of regulatory battles in Europe and the growing political scandal involving Cambridge Analytica.

1. Risk: Unhealthy Product for User

Investors can make money in companies that sell products that are unhealthy:

cigarette companies,
liquor companies,
soda,
burgers, on and on.

The real issue is that we now live in an information age. And investors used to be protected by the lack of customer knowledge.

It should be startling to any investor in Facebook not only how quickly everyone in the world realized the product was linked to depression, but how fast the research supported it. In previous generations, this type of information would have been hidden from the the public for decades.

Using Facebook actually makes you feel depressed, research says

“Exposure to the carefully curated images from others’ lives leads to negative self-comparison, and the sheer quantity of social media interaction may detract from more meaningful real-life experiences,” the report says.

Exploring Facebook Depression (via Psychology Today) Facebook seems to be a perfect social tool for staying in contact with friends and family members without ever needing to leave the house. So why do so many Facebook users report feeling depressed and lonely?

Risk: Consumers’ reaction to an unhealthy product.

The expectation for investors is continued growth and expansion. A change in consumer behavior or parents attempting to curb social media use is a known risk being ignored by shareholders.

As we see from the soda industry, when consumers deem a product to be unhealthy, there are consequences for growth and valuation.

Without a diversified offering, Pepsi Stock and Coke Stock (:KO) would have suffered significant losses as soda consumption declines. Facebook is a pure play in social media.

Soda Consumption Falls to 30-Year Low In The U.S.

… also reported that annual per capita consumption of carbonated soft drinks dropped to about 650 eight-ounce servings in 2015 – the lowest since 1985.

The industry has found itself out of favor as consumers seek beverage alternatives to soda that they deem healthier, notably juices and flavored waters. Those alternatives don’t contain as many calories as soda, and also don’t include ingredients like the sweetener aspartame, which has fallen out of favor in recent years.

The changes in soda consumption happened over a long time period. However, we know about the effects of social media now. Facebook needs growth and engagement to sustain the stock at these levels.

2. Risks: Social media loses momentum

The hottest topic for discussion on social media is the best strategy to leave social media. Again, since the valuation of Facebook is predicated on continued growth in users and engagement, these are clear risks to the shares at this level.

Google Search Results:

Social media break: 98,000,000 results

Kylie Jenner: 33,000,000 results

3. Risks: Competition, New Trends, and Innovation:

Instagram was a very good acquisition for Facebook. And copying Snapchat (SNAP), appears to be successful for now, although its user metrics are being questioned by some.

Regardless, the issue for Facebook shareholders is if buying and cloning competitors will be enough in the future to stave off competitors, sustain growth, and justify current valuations.

Noted investor Andrew Left of Citron on competition:

the continued rise of Snapchat as well as the Pokemon Go craze as demonstrative of how “volatile and fragile” Facebook might be to new trends.

“We all are addicted to our phones, that we know, but what it shows is that people will do different things with their phone if given a choice … the company lives and dies on engagement levels,” he said.

4. Cloning and buying competitors

Instagram: Good and Bad

Facebook buys Instagram for $1B

Instagram was an excellent acquisition at a very reasonable cost to Facebook. It was a great acquisition due to an unbelievable price: $1B. That’s the good news, but also the bad news. Since Snapchat has gone public, everyone in the space now realizes that Instagram left at least $49B on the table and more like $79B.

Next time: Facebook is not going to buy its next competitor at such a discounted price ever again, in my opinion. Continuing to buy or clone competitors is a risky and difficult business strategy.

You Pay A Very High Price In The Stock Market For A Cheery Consensus – Warren Buffett

‘As sweet as Cookie Layer Crunch’ – analysts are still incredibly bullish on Facebook post-earnings

Deutsche Bank: “Results as sweet as cookie layer crunch”
Stifel: “The best is yet to come”
Citi: “4Q16 results were ahead of even the most bullish expectations”
Goldman Sachs: “More beats to come”
Pacific Crest: “Significant room for growth in excess of current estimates over the next several years.”
Raymond James: “We reiterate our strong buy rating”

Groupthink:

What’s amazing about Facebook is the amount of group-think involved, thinking that they can just evolve, evolve, evolve, without any hurdles in the way,” Left said in an interview with Bloomberg TV.

“I just think that expectations and investor expectations are a little bit outpaced the realities of what they’re going to face in the next 12 to 24 months.” Andrew Left, Citron

5. Risk: Younger users

“Facebook is for old people”

Three Reasons Young People Think Facebook Is Lame

Facebook no longer discusses teen user rates.

Bloomberg notes that Facebook first warned investors a year ago that teens weren’t as active on the social network as they had been in the past. The company stopped discussing usage rates among teens on its earning calls after 2013’s numbers, alarming investors. Even as Facebook and its investors try to overlook the decline, with rising advertising revenues a welcome distraction,

The Verge reports that young Americans are not only crucial to the company’s advertising success but serve as an indicator of its future popularity.

Facebook Losing Teen Audience. Now, It’s Just Old People Socializing

Facebook isn’t the only social network apparently turning off young users. Twitter is also experiencing a notable decline in its demographic of 18- to 34-year-olds.

Again, since the real Facebook customer is advertisers, losing a younger user is problematic, since they are most sought after by advertisers.

6. Premium Valuation:

The issue for investors is whether the price to growth and price to sales are in line with a company facing medium-term and long-term threats and competition.

Again, we see the large move in the shares since the election and compare the market cap to revenue and income.

Valuation:

The company needs to keep growing users and engagement to sustain this valuation. 14-15x sales is an incredible figure and assumes sustained growth and engagement.

Estimates for earnings in 2018 of $6.72 (via Marketsmith) suggest 24% growth over 2017. The P/E of 41 suggests a premium to the actual growth rate in earnings.

Cash Flow:

As a value investor, it’s hard to imagine paying 35X cash flow for any investment. And this valuation assumes that none of these risk factors will impact earnings in the future.

Institutional Demand: Technical Buying

Institutions feel pressure to own Facebook:

Money managers that index to the S&P 500 are under pressure to own the shares, since they are such a large component in the index.

the top five S&P 500 stocks by market capitalization represent 12 to 13 percent of the index’s overall weight, and all of them – technology-related stocks – are trading in positive territory year to date.

Five companies have become the pillars of the stock market in 2017, and their names shouldn’t sound unfamiliar, either. Apple, Alphabet, Microsoft, Amazon and Facebook are carrying a load of weight on their shoulders.

Due to market cap weightings in the index, Facebook has a larger influence on the index than JPMorgan (JPM) or Berkshire Hathaway (BRK.A)

If I ran Berkshire Hathaway

Benjamin Graham: Dean of Wall Street

Institutional demand has not only helped the shares but also pushed the valuation to extreme levels. If trends reversed and Facebook lagged the indexes, money managers would feel less pressure to own the shares relative to the index. In fact, Facebook shares have outpaced the S&P 500 over the past 3 years by nearly 6X.

8. Medium-Term Risk: More users start to dislike Facebook:

Targeted Ads, privacy issues, and manipulation of users.

Survey: Facebook scores low in customer satisfaction

End Users of Facebook don’t like the company due to issues with Targeted Ads and Privacy Issues.

Some Americans still love to hate Facebook and other social media services.

That’s according to an annual survey from the American Customer Satisfaction Index (ACSI) released Tuesday.

Social media companies are the fourth-lowest scoring with consumers after Internet service providers, subscription television companies, and airlines.

Facebook and LinkedIn ranked the lowest of the seven companies surveyed. Twitter didn’t fare much better.

9. Manipulation of end-user:

Brain Hacking: A recent 60 Minutes piece caused a stir by suggesting social media companies were working on algorithms to make their productmore addictive for the end user (and especially kids).

The silicon engineer suggested that social media on a phone was similar to a slot machine. And users would be rewarded with likes, share etc…

Tristan Harris: And it’s not because anyone is evil or has bad intentions. It’s because the game is getting attention at all costs. And the problem is it becomes this race to the bottom of the brainstem, where if I go lower on the brainstem to get you, you know, using my product, I win. But it doesn’t end up in the world we want to live in. We don’t end up feeling good about how we’re using all this stuff.

Conclusion:

Optimism by Wall Street ignores looming risks to Facebook shares: an unhealthy product, no barriers to entry, competition, younger users looking elsewhere all loom as risks to the growth model and valuation.

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Buffett was Right about Sears Stock

March 14, 2018 by Frugal Prof

Financial Freedom

Buffett was Right about Sears Stock (SHLD)

The demise of Sears Stock (NASDAQ: SHLD) provides important lessons for every investor.

Media hype,
cult of personality,
overreaching,
management with different interests,

and other lessons can help investors avoid the next investment disaster.

Going Concern

After a recent $900 million sale of its Craftsman brand, store closures and other cost cuts, Sears warned late Tuesday that there’s “substantial doubt” that it will survive (via USA TODAY).

Lampert owns about 48% of Sears stock, according to the company’s annual report, including holdings through his hedge fund, ESL Investments. Besides his stock, Lampert holds about $381 million in unsecured notes issued to Sears.

USA TODAY estimates that the value of Lampert’s Sears stock has declined by roughly $519 million since the end of 2014.

Closing Stores:

Sears is closing over 100 more stores

Sears told its employees Thursday that it will be shuttering over 100 more stores.
That consists of 64 Kmart stores and 39 Sears stores, all of which are expected to close between early March and April of this year.
Liquidation sales will begin as early as Jan. 12.

Retailing Is Hard

Warren Buffett (NYSE:BRK.A) (NYSE: BRK.B) on why retailing is so hard:

“Retailing is like shooting at a moving target.

In the past, people didn’t like to go excessive distances from the street cars to buy things. People would flock to those retailers that were nearby.

In 1966 we bought the Hochschild Kohn department store in Baltimore. We learned quickly that it wasn’t going to be a winner, long-term, in a very short period of time.

We had an antiquated distribution system. We did everything else right.

We put in escalators. We gave people more credit. We had a great guy running it, and we still couldn’t win.

So we sold it around 1970. That store isn’t there anymore.

It isn’t good enough that there were smart people running it.” -Warren Buffett (via BI)

Articles related to Warren Buffett:

Buffett Investing Mentor, Benjamin Graham

Why Lebron James is a Big Risk for Nike Stock

Eddie Lampert:

AutoZone (NYSE:AZO) vs. Sears

This chart speaks for itself. It’s incredible. AutoZone shareholders have had an incredible run while Sears shareholders have suffered huge losses. And Eddie Lampert was running both companies.

Cult of Personality: The One Decision Stock

The pitch for investors via the media and some investors was that Sears was a one-decision stock, i.e. that investing alongside Eddie Lampert was the only decision an investor needed to make. And based on the performance of AutoZone, it was a simple decision.

Relevant Articles: