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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
  • Traveling, Turnarounds, Gross's 'New Normal', And March Madness 0 comments
    Mar 9, 2013 4:21 PM

    I can recall when I was a kid, I used to really enjoy traveling by plane. The excitement of a new destination and going on a plane was really a joy for me. My family and I decided to make a long trip to Johannesburg, South Africa to attend a family function. The length of the excursion, over 24 hours each way, made it challenging. The stopover was in London after about a 10 hour first segment. The same process took place on the way back, except the layover in London was nine hours.

    My feelings about airline transit are now completely reversed as I think there is not a worse user experience. First, people's time is not really considered by government authorities as you have to spend hour upon hour waiting in lines to have a full body cavity search. Next, many airports are not equipped with wireless internet access, making every landing spot a treasure hunt to find places with wireless capability. If you are a tall person and you are not traveling business class, you are in a flying sardine can where your knees are in your chest for 98% of your trip. The planes are also typically full of coughing and sneezing passengers, making sickness prevention a priority. Many of the airlines customer service representatives do a superb job of trying to help customers and their hard work goes overlooked far too often. Notice I never mentioned the new pricing methodologies the airlines have implemented for baggage and other items. I understand airlines need new methods to raise revenue in order to become more profitable. Indeed, if ever an industry had to think out of the box on finding additional revenue sources, it was the airlines. However, I think for myself, and for most people, traveling has become something I will try to avoid at all costs. If the destination is not far, it may be different, but I still think the user experience leaves plenty to be desired.

    J.C. Penny's is right in the middle of a legal fight with Macy's over the exclusivity of the Martha Stewart brand. (http://www.nytimes.com/2013/03/09/business/the-headache-in-housewares-for-j-c-penney.html?ref=business&_r=0) In addition to this legal drama, Penny's performance in 2012 was terrible, and the CEO is now being questioned all about the viability of the turnaround strategy. If ever there was an example of why turnaround's are very difficult investment propositions, this would be it. It also explains why Warren Buffett makes sure to avoid turnaround's at all costs.

    Pimco's Bill Gross came out with the term the 'New Normal' as a way to describe the revision downward of economic growth in mature countries like the United States. Gross and Pimco's Mohamed El- Erian have repeatedly pounded the drum of slowing economies over the last few years. On Friday, the United States came out with a job report which showed the number of jobs being created far exceeding analyst estimates. In fact, most of the job gains came from the private sector, with government actually losing positions. Guess what? Mr. Gross now raised his estimate for U.S. economic growth to 3% for the year. (http://www.bloomberg.com/news/2013-03-08/gross-raises-u-s-economic-growth-forecast-to-3-in-2013.html) Like a rainbow follows after a downpour, the 10 year bond yield jumped dramatically over 2% as the market suspects growth will start to accelerate. It may yet be premature, but the consistent speculation about a secular move from bonds to stocks is very much front and center in the financial markets and money management profession.

    March madness is upon us as the annual rite of passage known as the NCAA basketball Tournament will start in a few weeks. I was recently reading a little bit of Bobby Knight's recent book, titled Negative Motivation or something close to it. One of the premises of the book is victory usually goes to teams which make the fewest mistakes. Investing is very similar in many respects as there are many mistakes which can impede a an investor's financial progress. Firms use the term 'risk management' to have policies in place to mitigate the potential problems of investing or operations in a business. However, many mistakes in investing come from errors of omission as Charlie Munger calls it, 'The Sucking One's Thumb' syndrome. If an investor does not allocate capital to a great opportunity when they are present, and admittedly, there are very few great investment possibilities, the inability to capitalize can be tremendously costly. Evaluating risk management without considering the opportunity cost of doing nothing is not accurate either.

    James Altucher is always an entertaining read (know there is a bit of profanity in the blog)-http://techcrunch.com/2013/03/09/how-to-make-a-million-dollars-with-a-hot-dog-cart/

    CFO magazine is typically informative, in this case about cash usage and the lingering issues in Europe with respect to financing for businesses:

    http://www3.cfo.com/article/2013/3/cash-flow_toll-brothers-revenue-cash-economic-recession?mid=152102&rid=152102.68300.17080

    http://www3.cfo.com/article/2013/3/credit_ecb-southern-europe-credit-crunch-lending-commercial-loan-italy-portugal-spain-

    Spring is right around the corner, and I am sure many people are looking forward to the nice weather. I hope all readers have a great weekend and week. Thank you as always for reading the blog and if you have any comments, please feel free to 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.

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