I fall off the earth when I’m genuinely perplexed.
I sit and read and read and get more perplexed.
Recommending treasuries gives insipid a whole new meaning. But here I am, wondering….
+ How the Fed will react to today’s 9.1% inflation number — the highest in 40+ years.
+ How soon we’re likely to see a bottom (or are we there already?) I don’t think so.
+ How energy stocks will react to lower oil prices.
+ How and when the stockmarket will settle into figuring a way to value stocks. See below on DocuSign.
My friend sent me comments from a smart fellow called Al Goldman with long ties to the market, who writes:
MOOD-The mood in the stock market is very negative at this time. This is a bullish indicator as investors have probably already sold many stocks and are holding a lot of cash buying power. In other words, investors have already knocked stock prices down and are creating good values. Could investors have more stocks to sell? Yes they could but a lot of damage has already been done. I thus rate the mood as a bullish indicator.
MONEY-Americans are flush with cash and the unemployment rate is only 4.6% and falling. Consumers had $5.4 trillion in excess savings April,2021, acceding to CNN Barrons. Money sitting in banks or short term bonds are getting a very low rate of return. Given a change in mood, sidelined cash has classically come back to stocks. Long term, stocks are the place for appreciation not bonds or bank accounts. The supply/demand ratio among the public for stocks is very bullish.
MOMENTUM-Now, on to momentum which has been bearish for four months. This means that stocks have dropped sharply, and rally attempts have been weak and short-lived. Of course this action is what creates fear in the stock market. What some investors forget is that corrections are part of the deal. If stocks only went up, there could be no stock market as no one would sell and thus no stocks to buy. This correction has been worse than most because it came after a ten year bull market and the epidemic. Overall the news is still a mess. Our leadership in Washington is very weak. I know I’m going to piss off some of you. I believe the mid term elections will change our nation’s leadership and help the market.
The good news is that you and I can earn 3.14% on a one-year treasury — which is more than you can earn on a 30-year treasury, namely 3.11%. The yields are presently inverted. I think that means something, but I’m not sure what.
I now have a handful of shares in Amazon, Nvidia, Apple and TSM. My major ownership is in VGT and VTI.
So what’s with DocuSign?
I use it every day. It’s fabulous. But look at its chart. It’s miserable:
And why is it miserable? Because it’s losing money:
Why is it losing money? Because it has far too many employees — 7, 500.
Here’s an idiotic quote from their last investor conference call:
While we have made considerable progress bringing in leaders with significant experience at scale, it’s important to recognize that meaningful traction and better visibility will take multiple quarters. We have operating leverage in our business model and are committed to balancing growth with profitability while also exercising expense discipline. We remain on track to reach our long-term target operating margins. We will continue to make thoughtful and disciplined investments across the company with a particular focus on our highest priorities, which will drive our growth and success over time.
What’s amazing to my tiny bran is that you can have revenues in the billions and still be losing money with a service that costs virtually nothing to deliver. It’s all in the cloud.
It wasn’t worth $300+ at its peak when no one cared about earnings, just sales.
Maybe it’s worth $61 — if they’d fire half their people and focus on cutting expenses.
What am I missing?
Prime Day at Amazon, Best Buy, Walmart, etc.
Go for it. Buy something you don’t need.
My suggestion: An Apple watch. They’re really useful. They could even save your life.
Buy a Series 7. Click here.
Watch out for steps
I’ve nagged constantly about the danger of the last step going down.
A 70+yeard old classmate of mine living in England, emailed me:
The 40some daughter of a first cousin was with us at our family lunch for 26 in our garden on Sun. With 2 low teenage boys, husband in Scotland golfing. That night at their London home, she fell down the stairs, hit head, stone dead. Son of another friend ditto & broke a lot of bones. His wife had died of cancer 2 yrs b4 leaving 3 kids under 10. With this bad luck, I realise how lucky I was when I hit back of my head on Piccadilly Circus tube top steps, out cold for over an hour, awoke in an ambulance! Watch ALL steps, not just bottom one!
Travel in Europe is cheap
One Euro is equal to one dollar. The Euro used to be as high as $1.40. Now, it’s a bargain.
That’s the good news. This is the bad news. Overweight, unwashed people flying. And thousands of cancellations.
DirecTV is now AT&T
Which means it’s messed up. Its web site is beyond annoying. Its call center makes promises about your bill. But, when you get the bill it’s 44% higher. Whenever it rains, service drops. It’s the worst. The absolute worst.
Drop DirecTV for YouTubeTV. $65 a month — less than half DirecTV.
My favorite front page
Apparently he’s fled the country. He and his family bled it dry by stealing every penny they could get their hands on.
Amazing story.
Second amazing story
Go figure.
It’s far too early to be buying stocks. Nibbling is OK. But not buying.
I’m seeing friends doing ultra-well in alternative energy and residential real estate. In fields they understand.
I’ll actually be back tomorrow. — Harry Newton
