As one gets older, you learn to appreciate the idea that quality speaks for itself. Something highly thought of or very valuable, or possibly an individual who has helped create tremendous value, needs no explanation. The Hope Diamond, rare and precious, strikes me as a fine example. Another might be something like a one of a kind Patek Phillippe wristwatch (Rolex, Cartier, Piaget, Bulgari are right there as well). A person like a Phil Knight, founder and largest shareholder of Nike, strikes me as appropriate in the retail area. Conversely, in today’s society, we are smothered with opinions which offer little substance.
Between what one sees in social media sites Facebook, Twitter, Instagram, Snapchat) and then the ‘experts’ on supposedly neutral media outlets (Fox, CNBC, CNN, MSNBC), probably half or more of all information can be considered a waste of time. If you are a person with a full schedule, often times the best moments are ones of peace and quiet. Consequenly, you learn the essence of Rockefeller’s wisdom, that of listening and seeing more, and speaking less. Not easy in today’s data driven world.
In the financial realm, January job report showing a gain of 227 thousand jobs helped bolster markets in a week where it struggled. Also helping was the executive order by our quiet and understated President to begin rolling back the Dodd-Frank financial regulations. Many of it’s supporters, especially Senator Warren and Sanders, believe these laws helped bolster the stability of the large money center banks by making them become less risky with more conservative lending practices. Many regional and community banks have long chafed at the burdensome regulations of Dodd-Frank, and compliance costs have exploded in this area, making small business lending tedious and tough.
On the earnings front, technology titans Apple (NASDAQ:AAPL), Facebook, and Amazon (NASDAQ:AMZN) reported huge numbers with one of the three companies having their stock pop (the nice shiny one in case you needed a hint). The others were burdened by high expenses and lower than expected revenues, if ten jillion dollars of profit doesn’t impress you. The pain continues in retail as Under Armour and Ralph Lauren (NYSE:RL), long time standouts, posted disappointing results. In the oil space, Royal Dutch Shell (LON:RDSa) showed it’s dividend is sustainable with a cash generation quarter of 9 billion smackers. There is a reason why they call it big oil.
Here in Las Vegas, the big news was that Sheldon Adelson, Las Vegas Sands CEO, pulled out of the chance to help fund the Oakland Raiders attempt to move here. Some believe it is because the NFL won’t let Adelson own a piece of a team as a result of the long time NFL disassociation of anything gambling related (yeah, right). Goldman Sachs, the investment bank which took Las Vegas Sands public and has been involved with Adelson for many years, supported Adelson by backing out of partly funding the Raiders move here. Adelson is probably far more interested and occupied with obtaining a gaming license in Japan. You see, Japan recently revealed it will have gaming and every major casino operator is drooling over the prospects of being in what could be a $40 billion dollar market.
Still, my own feeling is if the Raiders want to move to Las Vegas, it is doable as long as they can find some other bank to underwrite the debt. The issue is can they cover the interest payments based on the earning power of the franchise. The NFL contract with the major networks is a nice start, but figure 4% of 650 million is about 30 million a year in interest payments, so baby boy Davis needs something along the line of 100 million a year in profits from operations. Like the Super Bowl game tomorrow, it probably could go either way.
In the political world, delightful Donald is reviled as the President with the lowest approval ratings to start his term. Usually, President’s are hated when they leave office, not when they enter. Between a botched role out of the immigration executive order, the mass protests of the left, and Mr. Trump’s inability to be quiet, not the greatest start. Still, it is not how you start but how you finish that counts.
Senate Democrats, still drawing a salary from taxpayers, have decided it is ok to not show up to work and actually cast votes for cabinet nominees. It speaks to the poor choices our country has in the political universe. If Donald would ever heed Mr. Rockefeller’s sage advice, maybe the public could begin to have some confidence he could actually do the job. Of course, that Rockefeller, he was a wise old bird.
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.