Must be having fun, how else could I not have known that a quarterly column is overdue?
Reread June 30, 2016 column: 3rdQtr16 – All Good News for U.S. Common Stocks… “geopolitical situation(s) is(are) aligning with secular macroeconomic conditions to create a Centenary bull stock market event.”
Two years ago we also described current conditions as “2ndQtr16 – Rolling Bear Continues, Stay Fully Exposed to U.S. Common Stock.” That can be reported again at this date.
Continuing shake-outs are due to yield chasers having no alternative than to speculate on capital appreciation and, poor allocation by sham corporate governance “participants.”
Boards of directors have become as important to stock selection as ratio analysis, determining per share intrinsic value, executive management, balance sheets, cash flows, income visibility, etc. Remember our warnings on General Electric (buying when they should be selling and selling when they should be buying – arrogance and fiduciary breaches of corporate governance participants) — we’re doing quite well on their mistakes thanks to Synchrony Financial.
Examples of misleading behaviors (bubbles) include foods and advertising. Campbell Soup’s demise had nothing to do with not understanding consumer changing wants but being blind to half the population (execution – remember “Ivory Tower?”). As a shareholder until Spring, 2016 I did not want Campbell Soup to buy carrot farms, lettuce farms, expensive drinks turned junk with diluting their purpose, and exclusive and expensive “organic” premium priced baby foods limited only to the pretty people. What the market wanted is to update its existing soup business to all natural. Campbell Soup was morally and financially inept.
Kraft Heinz jumped out of the gate with all natural Oscar Meyer hot dogs and deli meats. Together with zero based budgeting and international capabilities, it was too much not to buy even with such oppressive debt. Just as quickly though it was too risky to maintain ownership when they instead of following-up with other offerings of all natural to instead play with packaging! Ouch! Sell! We own again now on a watch due to price (on sale with proper execution) and belief that of all large food companies, if anyone can figure this out, it will be them.
Lucky for Google it owns popular video platform. That should keep it relevant longer than otherwise. Facebook and Google (without You Tube) are price fluffed due to digital shifts where half (my estimate) advertising dollars mistakenly placed due to their advertising customers lacking knowledge or expertise to yet see how wasteful and misplaced those dollars are as they disappear unused. As a non investable company though, much more important is their condescension as to own a share you defer ownership voting rights. Remember the King of England?
Just as retail is not disappearing due to Amazon.com, Artists, Fun and Funny People are a growth category of our economy thanks to video.
Concentrated Income Portfolio:
CVS Health Corp.; The Kraft Heinz Company; Synchrony Financial; and, Swing Trading new technologies free from debt and well into the black.