Earnings, BOJ Bolster Wobbly Markets

"Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas." - Paul Samuelson

With all the available information at ones fingertips and eyeballs today, you might be tricked into believing investing capital is a quick event activity where one earns or loses money in short periods of time. Mistake. Big Mistake. In my experience, the most consequential investment decisions are based on finding business situations where the underlying business is consistently profitable. Day after day, week after week, month after month, year after year, decade after decade, these entities make money. Lots of money. More and more money. Money, money, money, kind of like the cookie monster says cookie, cookie, cookie, if you get my drift. There are mutual funds, pension funds, and other investment entities which have owned things like Wal Mart and some of the big pharmaceutical and oil companies for multiple decades, maybe even over half a century. Why is that? Simple, they generate income and grow the income and cash flow streams. When these businesses go on sale, it is not hard to imagine these owners adding to their stakes. No such thing as owning too much of a good or great thing. Bernie Sanders, Hillary Clinton, and Elizabeth Warren might demonize capitalism and corporate greed, but for plenty of shareholders, including public unions (teachers, firemen, policemen, city and state employees) through large pension funds, the rewards through ownership can be beneficial for generations. Shhh, don't let the secret out as it can be quite pleasant an experience.

The world was an interesting place this week as we saw Janet Yellen and the Fed decide to keep interest rates the same. On Friday, the Bank of Japan decided to adopt a negative interest rate policy, similar to Switzerland, in an effort to boost inflation and fight deflation. Fouth quarter GDP growth came in at .7%, and for the entire year the U.S. registered 2.4% growth, the same as in 2014. Those figures, especially the last quarter total, helped investors reach the conclusion lower for longer on the interest rate front remains the most likely course of action. With no fiscal policy movement for the last 10 years and nothing on the horizon until, at minimum, election results in November, interest rates at rock bottom levels is going to be with us for quite some time. Imagine that.

On the earnings front, a boatload of major companies reported results which were solid, but the strong dollar continues to affect the bottom line after translating the foreign currencies. Apple (O:AAPL) sold nearly 100 million units in three months and reported the most profitable quarter ever, but Wall Street was not impressed. Tough crowd. Johnson & Johnson (N:JNJ) showed nice organic growth but the dollar hurt the international results. Facebook (O:FB) killed it and is now worth over $300 billion bucks. Better you than me on that one, but remember, two years ago it traded at 18. I know, I missed it too. No one is perfect. However, maybe there is an opportunity out there resembling the big FB? Others which reported included McDonald's (N:MCD), Microsoft (O:MSFT), Harley-Davidson Inc (N:HOG), and Chevron (N:CVX). The latter decided to cut capital expenditures and keep the dividend where it is. The price of oil actually went up three days in a row last week, hard to believe, huh? Still a ways to go before we get some sunshine in the oil patch, and it is not hard to imagine lower prices for a while. Consolidation is coming, its a coming in energy, don't you worry. Next week brings more of the same as Chipotle Mexican Grill Inc (N:CMG) and Exxon (N:XOM) lead the charge, among others.

Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charter holder.