Joseph Sherman

Wall Street Breakfast: Must-Know News

Wall Street Journal - "Pensions bulge while market caps shrink. Pensions rose an average of 19% for top executives in 2008, even as their companies' stock prices fell by 37% amid a global downturn" - This is a great way to kill the heart of a tribe. To lead with a cause, the tribe needs to know that the executives are supporting them, not taking everything for themselves. Massive benefits during falling stock prices kills the cause of a tribe.

Wall Street Breakfast: Must-Know News

IMF boosts Asia growth outlook. - The world is moving to Asia, it is not a passing fad.

The Problem with iPhone Killers

IBM once dominated the computer market, Microsoft dominated software, and Yahoo lead search engine pack. Apple cannot fall into the same trap of thinking that it will always dominate the market. No firm can be a leader by standing on yesterdays competitive
advantage.

Dividend Aristocrats: 3 to Watch

Avi Morris explains that "Dividend Aristocrats are companies in the S&P 500 which have minimum track records of 25 consecutive annual increases for their dividends." He has a good article, and I would like to see an international profile of Dividend Aristocrats from European and Asian stock markets.

Brazil: Do Olympics Make It a Better Investment?

Roger Nusbaum asks "Do Olympics Make It a Better Investment?" I think the investment brought into a city by the Olympics is like an economic espresso. Specific forms of infrastructure will grow, Tourism spending will spike and the country will be on show to the world. But, what are the long term implications for the economy. Consider the effects on Athens and Beijing.

Wall Street Breakfast: Must-Know News

U.S. group enters race for Volvo. - What could be in the future for Volvo. Volvo's greatest asset is a tribe of people who love Volvo.

Will Chimerica's Demise Take Down Global Economy?

China has many strategic partners around the world, and the US is one key part in their overall strategy. Consider that European Aeronautic Defence and Space Company EADS established Eurocopter China as the first aeronautical wholly foreign-owned enterprise in 2006.

How Low Can the Dollar Go?

In regards to Bill Cara's article "How Low Can the Dollar Go?": A. Does the data presented reflect the whole picture considering President Obama's policies on the stimulus package, health care and military spending. B. Will the US sacrifice inflation and a weakened dollar for the prospect of higher employment?

Two Ways to Invest in Ukraine

Mary L Daniel writes that "The new generation has produced a highly competitive, educated, and skilled workforce taking advantage of the country's university system." Perhaps investments should be based on these strengths.

Wall Street Breakfast: Must-Know News

Kraft's offer to buy Cadbury at a high premium on one hand looks like strategic plan to expand market share. In a press release, Irene B. Rosenfeld, Chairman and CEO of Kraft Foods, said:"This proposed combination is about growth. We are eager to build upon Cadbury's iconic brands and strong British heritage through increased investment and innovation.... Cadbury's brands, which are highly complementary to our portfolio, would benefit from Kraft Foods' global scope and scale and array of proprietary technologies and processes." Perhaps the two companies will complement each other, or perhaps this is a sign by Kraft of defeat. The rejected offer was at a 42% price primeum from Cadbury's July 3 share price, and a 31% premium on the September 4 share price. This means that for every pound or dollar of share, Kraft is offering 31 to 42 additional cents, or an additional 3.95 Billion USD above Cadbury's 12.74 Market Capitalization. Four Billion Dollars is a significant amount of money that Kraft could use to create new products, improve existing infrastructure and build better marketing campaigns. With nearly four billion Dollars, Kraft could reach out and connect to people, build on its tribe rather than buying a competitor.

The Five Worst Bailouts

Rick Newman notes "Has anything good come from $3 trillion worth of bailouts over the last 18 months? To be fair, probably. After Lehman Brothers failed in September 2008 and other Wall Street firms began to founder, urgent government intervention forestalled a deeper financial panic and perhaps even a depression."

The Chairman of the Board of Governors Bernanke holds that the bailouts prevented a depression, but do these bailouts have a limit, and do these bailouts set a precedence for the future?

China Is Trying to Rein in Overcapacity

The issues of overcapacity is also evident in light industry, especially as other parts of Asia develop a manufacturing base. While limiting growth may curve the bubble effect in the near future, what can China do to build a lasting advantage?

Sirius Radio: Glowing or About to Burn Up?

Alxsteele's article Sirius Radio: Glowing or About to Burn Up? notes ".... I watched a satellite pass over and could not but wonder if that brief glimmer of light was but a foreshadowing of Sirius Satellite Radio’s (SIRI) recent run-up in price. SIRI has doubled in the past 3 months—while the broader indices have gained some 14%. Inclinations suggest that SIRI experienced an undervaluing greater than the broader markets. But did it? The fundamentals are much less free of pollution than the Midwestern sky. With 3.9 billion shares outstanding, the current PPS puts SIRI market cap at $2.93 billion—or 39% SIRI claims that its current assets are worth: $7.5 billion."

Valuation of future market potential is difficult to determine. Will Sirius increase profitability by attracting more users, gaining economies of scale, by building partnerships. The fundamental question is what is the potential for Sirius' service to ...broadcast in the United States our music, sports, news, talk, entertainment, traffic and weather channels for a subscription fee through our proprietary satellite radio systems." If this growth is limited, what new markets can Sirius enter before it becomes a dinosaur. Are they creating a tribe behind Sirius as Apple has been so successful in doing, or are there simply disconnected consumers? How are they listening to their people? These are questions the firm must address.

China: Exactly Where Japan Was in the 1980s?

Vitaliy Katsenelson writes "China: Exactly Where Japan Was in the 1980s? - "I know, I may sound like I’m beating a dead horse – how much printer cartridge can one spill over China? – but I have a very high burden of proof to overcome. Let me demonstrate it by this analogy: Let’s rewind 20 years. It is 1989 and I am writing that the Japanese economy is on the verge of severe decline."

Katsenelson makes an interesting point, but needs to consider how the world has changed since the 1980s. In some ways China may be in a weaker situation. It has the large manufacturing base to produce goods cheaply and efficiently, but many other countries are catching up, and some of it is paradoxical. For example, as wages increase, the real estate market drives prices up, and environmental standards start to rise, then the cost of manufacturing in China increases. This will in turn send some of their current customers for other locations.

Wall Street Breakfast: Must-Know News

YouTube, Time Warner ink distribution deal - Could this become a model for future deals? Soon we may see YouTube brokering news and the news networks clamoring for the privilege to have their work on YouTube.