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Yale Bock
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Yale Bock is the President of Y H & C Investments, a Registered Investment Adviser based in Las Vegas, NV. My educational background is a B.A. in Economics from UC-Irvine, a MBA from UC-Irvine, and have earned the right to use the Chartered Financial Analyst designation. I have been managing... More
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Y H & C Investments
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Y H & C Investments Blog
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  • Are There Problems Everywhere?

    The winds of perception are clearly changing on Wall Street as Mr. Market has turned gloomy. Like a young child who cries one minute and is happy the next, global investors now see the world as full of all kinds of problems. First on the list has to be the potential U.S military involvement in Syria and all of the possible repercussions from an intervention. Obviously, the recent two day jump of oil prices gives a hint at how Syria can affect the price of an asset class or specific commodity. Even further, the emerging market currency rout in India, Brazil, and Indonesia underscores the idea that capital is now flowing towards the appearance of safe harbors. Yet another example of an area which is being seen as troubling is housing, where the spike in interest rates of the 10 year Treasury bond to nearly 3% has put a chill on red hot home building stocks. If we add to this cocktail a sprinkle of the woes of the retail industry, where Ambercrombie and Fitch, Target, Wal-Mart, and Sears issued disappointing financial results, well, the recent downturn in financial markets across the globe could be seen as understandable.

    A little bit further on the horizon is the debt ceiling negotiation at the beginning of October in order to prevent the United States Government from shutting down. You can rest assured the usual cast of characters will parade to the television cameras to warn us all of the impending world doom if our country is not allowed to borrow more money. The excitement of seeing Barack Obama and Harry Reid on television again might be too much to take for any sane person, let alone a rational one.

    One thing I want to highlight is how the potential conflict in Syria should only reiterate how crucial energy supplies are as a strategic resource for any sovereign country. One of the reasons why oil prices are spiking is the logistical importance of Syria within the Middle East. Syria itself is not a major oil producing country, but Iraq, Libya, Iran, and Saudi Arabia most certainly are. Any supply disruption in any of these countries changes the aggregate output on the oil market. The transport of oil by pipelines and ships are the major transportation methods used to move 'black gold', and a military conflict only makes it incredibly difficult to get it from point a to point b. As such, the longer the United States is potentially engaged, or actually participating, in Syria the more I would anticipate oil prices to rise.

    I would expect September to be a very interesting month in the global financial markets as the full range of market participants will be engaged and actively participating. Summer is winding down and many money managers will return from the Hampton's, or wherever their second or third houses may be. Trading volumes will probably rise dramatically as the past few weeks it has been very minimal. The recent outage at the NASDAQ is not helpful in trying to restore confidence the public might have in the integrity of capital markets. When you look at opinion polls by those who consider investing, many still are very skeptical of Wall Street and what transpires there. I consider it a shame because investing is still an activity which is can help change peoples lives for the better if it is done well.

    A great story on Marissa Meyer, how she got the job at Yahoo, and her efforts to change the whole business-http://www.businessinsider.com/marissa-mayer-biography-2013-8

    An interesting attack on a company it seems can do no wrong- http://www.bloomberg.com/news/2013-08-28/costco-s-second-class-citizens.html

    Even though they may deny it, the investment banking window is always open for IPO's-http://www3.cfo.com/article/2013/8/capital-markets_ipo-window-equity-markets-timing-vix-bookrunner-pricing-underwriter-share-price

    Thank you for reading the blog this week, and I hope you have a great Labor Day Weekend!

    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.

    Disclosure: I am long COST.

    Aug 28 5:48 PM | Link | Comment!
  • Retail Rolls Over, Price Is Truth (Huh?), And The End Of Summer-

    It happens every single summer, almost like an annual July 4th holiday, only for investors who participate in the stock market. Last week, Wal Mart, Cisco, and Macy's reported earnings and the investment community was certainly not impressed. Wal Mart's whopping miss of one cent per share, along with Cisco's tepid forecast for the rest of 2013, and Macy's future guidance caused the downturn last week as the Dow Jones Industrial Average sold off over 200 points. All over Wall Street, analysts and strategists are questioning the strength of the domestic consumer for the rest of the year. It seems we get this same kind of issue every summer, as if this period is not a time where activity naturally slows down. On an anecdotal level, almost every family we know has been on vacation the past few weeks. Yes, back to school shopping is in high swing, and the summer driving season is hitting its peak as well. Still, anyone who participates in the business cycle on a consistent basis knows the summer months just are not a rip roaring time. Unless of course, you reside on Wall Street.

    The 10 year Treasury bond yield keeps advancing higher and is now approaching 3%. You would think borrowing costs are incredibly high the way some people are reacting to the dreaded three number. Anyone who has some knowledge of financial markets knows current borrowing costs are historically low. Until the 10 year bond hits 5%, any other conclusion about borrowing costs is just silly. However, for bond investors, the dramatic and quick rise of the 10 year yield brings serious pain as every tick higher in that rate brings additional capital loss. The simple lesson is no matter what financial asset an adviser recommends, there is always some kind of risk in owning it.

    If ever there was a questionable comparison of companies whose market worth is diverging, the current valuations of Tesla against the large integrated oil companies is, shall we say, interesting. The Elan Musk creation is now priced at a little below $18 billion dollars and will sell below 25 thousand cars this year. The largest oil companies in the world are priced between five and ten times earnings (trailing or forward, you choose), and all come with nice dividend yields which could very well increase, even dramatically, over the next 20 or 30 years. Still, if you follow these stocks every day, TSLA goes up and the oil companies go down. Until it changes, I continue to hear traders say, "Price is Truth." Tell that to Buffett, or in this case, the oil companies, who have been buying back their own stock. One final note, I have been very wrong on both Tesla and the oil companies for quite some time, so please take my thoughts with a grain of salt.

    The fall swiftly approaches and the joys of football, the leaves turning, and a little cooler air will be upon us. The toxic and noxious fumes coming from Washington regarding the debt limit negotiations also approach as well, so if you are concerned about your health, or sanity, try not to pay too much attention to the windbags. At the very least it will be a welcome relief to have the kids in school, at least until the first moment they make you help them with their homework.

    The shale oil and gas revolution in the United States will have consequences for quite some time-http://www.bloomberg.com/news/2013-08-18/shale-grab-in-u-s-stalls-as-falling-values-repel-buyers.html

    Another area where the U.S continues to lead is in cloud computing, which also brings a dramatic shift to both small and large enterprise technology use-http://www3.cfo.com/article/2013/8/the-cloud_gopro-camera-cloud-netsuite-nick-woodman?currpage=1&pid=00000000-0000-0000-0000-000000000000

    A nice story on how one CFO is managing growth- http://www3.cfo.com/article/2013/8/growth-strategies_wayfair-nick-malone-technology-international-growth-infrastructure-?pid=00000000-0000-0000-0000-000000000000&currpage=2

    Thanks for reading the blog, and I hope everyone has a great final few weeks of summer. If you have any thoughts or comments on the blog, please post them!!!!

    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.

    Aug 19 2:53 PM | Link | Comment!
  • Summer Stuff, More Big Oil, And Google Vs Apple-

    It is always interesting to see how businesses in the same industry are operated, and last week I experienced a notable difference between two theme park operators. Both are located in San Diego, and one is a public company which recently had an IPO. The other is owned by a European family and also by Blackrock. Both parks charge premium rates to attend their locations. The former had very old facilities, and for lunch, we had to stand in line for an hour to order a sandwich. When we got to the front of the line to place my request for a healthy turkey burger, we were then told they were out of those burgers, it would be another half hour before they would have them. In this eating area, they had one register working, and the other two registers were not being used. They also had no trays to place food on. An interesting way to treat ones guests.

    The second park was noticeably different in there were eating locations all throughout the park. The facilities, while not new, have been recently upgraded. The food establishments also offered an assortment of good nutritional choices for those of us who are interested in maintaining a healthy lifestyle. There were a few areas where this park could have improved on as the long wait times for rides were a turn off. In graduate school, we had to take a mandatory course on manufacturing and part of that entailed line theory. At the time, the object was to understand how to reduce plant waste and make manufacturing situations as efficient and profitable as possible. However, the queing issue is important because customers don't like to wait. I hate waiting in lines and think companies which force you to wait don't respect other people's time. The group which is the most responsible for this is doctors, but they have the insurance companies to partly blame. Anyway, the big theme park operators have a captive audience because parents are not going to leave a theme park after dropping a lot of money for a once a year event. Still, having to wait 30 minutes to an hour for a ride is indicative of design and operational weakness. All in all, I will only say the company which recently went public is not on my buy list, while the European group most definitely is one which I am eagerly awaiting for an IPO.

    Regarding recent events in the market, investors are discovering that macroeconomic predictions are a fools errand. The most recent economic numbers out of Europe have been encouraging, in addition to better growth figures from China. Today, the July retail numbers in the U.S were also a bit better than many predicted. Investing in stocks does require one to pay attention to the global economy, but I think investors are far better off reading trade journals and specific 10-Q's, annual reports, and 8-K's than placing too much emphasis on specific macroeconomic or country reports.

    As part of the recent information the market has received, it now appears oil demand in the United States is increasing, and not on the decline as it has been for a number of years. Some in the media are making it a priority to highlight the stock market performance of the independent oil producers, especially in the shale area, versus the lack of success over the last five years by the major integrated companies. I would not be so quick to discount the majors, as whenever they want, they can buy these smaller enterprises. With size, comes strength, especially in the the very capital intensive oil business. Here is a nice link to a recent Financial Times story illustrating this very issue-http://www.ft.com/intl/cms/s/0/843f1b9c-fea1-11e2-b9b0-00144feabdc0.html#axzz2bsMl5xTl

    Another positive for the large integrated oil companies is the fact that Mexico is now looking at opening up it's energy sector for foreign investment. As always, the devil is in the details, but certainly, having another possible area to produce oil could be a very good thing for the large oil companies. Here is a link to that story-www.ft.com/intl/cms/s/0/edb0ed38-0263-11e3-a9e2-00144feab7de.html#axzz2bsMl5xTlhttp://www.ft.com/intl/cms/s/0/843f1b9c-fea1-11e2-b9b0-00144feabdc0.html#axzz2bsMl5xTl

    The horse race between Google and Apple is an interesting one because there are a few different dimensions involved. Most developers currently make the Apple system a priority, but because Google has nearly double the number of users on Android based devices, there are some who believe Google has a definitive advantage in the future. There are reports Apple will release a low cost I-phone in September to help address the low end area of their product line. Other areas where the two will probably go head to had would be in televisions, wearable devices, and connected devices for all sorts of appliances like cars, washers and dryers, sprinklers, locks, security systems, microwaves, and who knows what else.

    Politically speaking, the summer is almost over and the next travesty the public has to endure will be the battle over how to extend the debt limit. The deadline is October 1, so we get to see a lot of the politicians in September. I am sure you cannot wait.

    I hope the last few weeks of summer are great and I appreciate you reading the blog. If you have any comments or thoughts regarding this or any other post, please share them. Thanks for taking the time to hear my voice and have a great week!!

    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.

    Disclosure: I am long AAPL.

    Aug 13 4:07 PM | Link | Comment!
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