Well, they say misery loves company, so I thought I would share with you a personal anecdote on last week’s stock market selloff. I recently mentioned in the blog the market environment was incredibly harsh. If last week did not prove that, I do not know what someone would be looking at. For example, I own two companies which reported earnings last week, each of which had an issue which the market punished them for. One company is in the housing domain, (yeah, I know, great place to be moron) and they would not provide guidance for the rest of the year because of the economic climate and because mortgage volumes were down. Stock gets crushed by 30% in a day.
Another company, profitable as any company anywhere, mentioned they might not be used by Microsoft in Windows 8. The company also is seen as tied to the PC industry which is now seen as a no growth industry because of the rise of tablets and smartphones. Yup, company goes down 30% in a day. Another company I own is the only company which has net additions to its subscriber base in the industry, and is adding two million net customers a year. Stock goes down 10% in two days.
Let me add, I have zero complaints about the stock market and will invest in it till the day I perish. I think time will prove the current environment to be incredibly harsh and pessimistic. Moreover, in my way of thinking, to think one will be better off loaning the U.S. government money for 10 years at 2.50% per year is safe, well, to hell with safety. After watching our leaders for the last month, I want no part of any of their financial prowess. I will take my chances on finding what I think are good companies in the stock market, at good prices, and the best leadership and managers I can find to grow those businesses.
Much depends on each persons time horizon and comfort level when dealing with stocks. Many people cannot handle the volatility of the market. If you need money now you might forget about investing in the stock market. Last week was very tough, and this one might be too. However, I am a strong believer in time, the ultimate market value of a business eventually shows up, and I am confident nothing has changed in that regard.
Good stuff on the digital wallet market-http://techcrunch.com/2011/08/07/how-visa-plans-to-dominate-mobile-payments-create-the-digital-wallet-and-more/
Lots of hatred for Google in the tech world: http://techcrunch.com/2011/08/06/ive-abandoned-my-boy/
Great story about unemployment and lack of skills- in my opinion, this is the pertinent issue: http://seattletimes.nwsource.com/html/businesstechnology/2015840625_mismatch07.html
As always, on any company mentioned here, past performance is not a guarantee of future returns. 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 charterholder.
Yale Bock, CFA
President, Y H & C Investments