In Search of the Perfect Investment

Amazon craters 5% on a weak quarter. But 11 analysts have over targets over $1,000 — some as high as $1,250. If you believe them, Amazon is a bargain at this morning’s $777.

The one-year chart looks solid.

Google is another of my recommendations. Here’s its latest one-year. Nice. And nice pop today based on handsome Q3 earnings report.

Rounding out my triumvirate of tech recommendations, here’s Facebook for the past year:

I’m increasingly impressed with Microsoft and its new management. It’s introducing neat new equipment, new software, doing great ads.. It’s the most technology — hardware and software — I’ve seen from them in 20 years. It’s also the most enticing. Here’s MSFT over the past year:

Everyone should own a portfolio of AMZ, FB, GOOGL, and MSFT. And leave them alone. They’ll do just fine.

Other tech stocks I like are NFLX and SQ.

CHECK. CHECK. CHECK.

+ There is no federal law requiring used car dealers to fix — or even disclose — problems related to safety recalls.

Many more people buy used cars than new ones. A California woman was killed by a recalled Takata airbag last month, when her used Honda collided with another vehicle.

+ Only buy packing tape made by 3M. The private labelled stuff — e.g. from Staples — is garbage.

+ Dietary supplements and vitamins are useless — except Vitamin D3. Take 1000 iu each day. There are no specific foods or pills that will limit your chances of getting cancer. But fruits and vegetables probably help. Don’t drink herbal tea if you’re on chemo. I learned these from a 2 hour morning symposium held yesterday by the Breast Cancer Research Foundation of America, a truly awesome charity.

+ Watch your step. Watch steps — especially the last one going down. You’re not 25. You will fall. You may damage your leg for the rest of your life. Hold the railing and don’t rush.

Email addresses are your greatest asset

When I sold my business I valued it less by earnings and more by names of prospects and customers we had.

That’s why every web site these days offers a 15% discount on your next order if you give them your email address.

Once you’ve collected zillions of email addresses, don’t abuse your customers. don’t inundate them. Be clever. I like getting emails from my favorite vendors. But there’s only a handful.

Weekend reading

+ The one thing our next president needs to know about the economy by Joseph Stiglitz
It’s not about immigration, trade deals, or any relationship with Russia. Instead, we need to re-think our most fundamental measurement.

….And then there is the economy. There is an ongoing battle in America over the budget and the deficit. On billboards and in public squares, the digital “debt clock” showing how our debt is increasing, second by second, provides a very visible metric. Here again, our statistical measures are failing us. It’s not the debt that should be our focus, but the difference between our assets and our liabilities-in other words, our net worth. Measuring what we owe is easy. Measuring our total assets is incredibly hard. So we focus mainly on one side of the balance sheet-the part that’s under the lamppost. But doing so grossly distorts decisions. All too often we conclude that we shouldn’t spend money on high-return, wealth-creating investments in education or technology-the future value of which is difficult to nail down.

Read the full piece here.

+ Does it make sense for a cable and wireless provider AT&T to spend $85 billion to acquire the home of HBO, CNN and Warner Bros? Personally I think NO because what you bought walks out the door every evening. And won’t come back the following morning if you mismanage them — which is a likelihood if your skills are managing a regulated phone company not a creative jungle that produces such popular insanity as Game of Thrones and Westworld.

TV is changing. More of us are junking our pricey set-top boxes from DirecTV, FiOS and Spectrum (the new name for Time Warner Cable) and watching Netflix (and others) through Roku and our computers via Amazon Prime.

This weekend’s Economist has long piece on “AT&T and Time Warner: angling for the future of TV” It begins:

IMAGINE a television which, as in the old days, has only a handful of channels to choose from instead of hundreds, as a typical cable set-up might offer today. In a decade or so TVs will once again have only a few channels, but each will run miles deep, with content that can be viewed on demand. Netflix might be one such offering; Amazon another. Both firms are spending billions of dollars making and buying TV shows and films to sell directly to viewers to watch when they like, and on devices other than the box in the corner of the room. And other rich tech firms may join them.

It is this vision that is now driving the direction of television and media. Broadcasters are willing to pay more to show live sporting events, and to invest more in producing TV shows, to make their networks the must-see choice for viewers. This trend has spurred the largest-ever merger of a telecommunications company with a media firm. AT&T, America’s wireless and pay-TV giant, announced on October 22nd an offer for Time Warner, the owner of HBO, CNN and Warner Brothers studio, worth $109bn. In doing so AT&T is betting that a few vertically integrated platforms will dominate the future of viewing. This huge deal follows the $30bn purchase in 2011 by Comcast, a cable-TV company, of NBC Universal.

If approved, it would not be the last such merger. And the next buyers could be content companies buying distribution platforms. At 21st Century Fox, Rupert Murdoch might go after the rest of Sky, a British pay-TV firm, that he does not already own (Sky is a cheaper target with the fall of the pound). At Disney, Bob Iger mused recently about the need to reach consumers directly in an increasingly uncertain media landscape, leading many to speculate that he wants to buy Netflix, which has a market value of $54bn (almost one-third of Disney’s). At present such a mammoth deal appears to be unlikely, but were it to happen it could trigger a bidding war with Apple and Google weighing in as well.

You can read the economist’s article here.

Here’s AT&T over the past year. The market doesn’t like this deal:

And the government probably won’t like it, either.

 Irish fishing

The rain was pouring down and there standing in front of a big puddle outside the pub was an old Irishman.

He’s holding a stick with a piece of string dangling in the water.

A passer-by stopped and asked, “What are you doing?”

“Fishing” replied the old man….

Feeling sorry for the old man, the gent said, “Come in out of the rain and have a drink with me.”

In the warmth of the pub, as they sip their whiskeys, the gentleman cannot resist asking, “So how many have you caught today?”

“You’re the eighth,” said the old man.

 

Harry Newton, who’s eyeing a 5% drop in Amazon on open this morning. Now at noon, it’s 3%. I’m glad I picked up a few extra Amazon this morning. I also received dividends today from Goldman Sachs and a couple of real estate syndications. On balance I’m up today. Diversification pays.

Truck sales are up. I wonder what this fellow will do with his truck on November 9?