October 2012

The U.S. Presidential Election and its impact on the stock market

What to expect?

President Obama has seen the stock market at its best since World War II during his time in office. But it appears that regardless of the result on November 4, the stock market will soar. This is not disregarding the fact that the tight race is causing a lot of uncertainty in the stock market. The point is that when looking at history, Democrats have outperformed Republicans with regards to the stock market.

Furthermore, when the incumbent wins re-election, the stock market does extremely well and this is more so if the incumbent wins in a landslide. This will not be the case, unfortunately, this time. The presidential race is a dead heat.

U.S. Presidential Election: Is now the time to buy stocks?

Hey! I need to capture as much of the traffic as I possibly can.

Regardless, of which candidate comes to office, equities will rise. The issue is not whether stocks will rise, but when they will. Stocks won't rise significantly this time because it does not seem likely that the incumbent will have a landslide victory.

The tight race points to a pattern where equities will adjust to the news of the election results on November 4 and then gradually rise a year from the date. Investors should capitalize on this important timeline of the U.S. presidential elections that more often than not increases portfolio sizes.

There is a lot of stuff out there with analysts harping that it is the economy and not the stock market that will show who will win. Nonetheless, the S&P 500 performance three months prior to the election has been a reliable indicator of who will come to power. If it performs well, the incumbent (in this case, President Obama) will win and the reverse is true if the S&P 500 declines.

Host a variety show

Have some fun for a cause—or just for the hell of it!

Tonight we attended a free community theater variety show that we’d been looking forward to seeing, and we had such a wonderful time! I couldn’t believe that more people didn’t attend, since it was free (with donations accepted). I remember when we hosted a variety show in high school and we had a TON of supporters come to the event. Of course, most were parents, and this show was put on by adults, so I suppose their parents were busy!

Have you ever considered hosting a variety show—just for fun, or to raise funds for a cause you support? It can be SO much fun, and if you have a good turnout, you can raise hundreds of dollars for your charity or organization. When we hosted a show, we simply posted a sign-up sheet, held rehearsals, and advertised the show throughout the school and community.

Valuation

Add this to your investment skill set.

If you're going to be good at picking stocks and investments, you need to be well grounded in valuation. It is not just important to be familiar with terms like ‘burn rate’ and 'pre-money valuation.' An investor will always have an edge if he or she can do a sensitivity analysis and prepare a cash flow statement forecast.

One thing to remember about valuation is that it is not a hard science. Two people can pick up the same valuation method say Discounted Cash Flow (DCF) analysis and use the same assumptions and end up with wildly different valuations.

Analyzing Google stock: Is it time to buy?

Could the Internet giant actually be a value trap?

If there was one stock which investors could make good money out of by just buying 10 shares, it would be Google. It has been up and down over the last year with a range of $556 - $774. There was a hiccup by Google in releasing its earnings report early on Thursday which missed Wall Street expectations. As a result, the share price fell almost $68 to $687. The EPS of $9.03 was much lower than the Street's $10.65 and the revenue of $11.33B missed by $530M.

Moody's downgrades result in possible reviews for 32 California cities

This will impact the general obligation and lease-backed debt worth $14.8 billion.

The state of California is the dreamland for over two billion people across the globe. You have the excessive consumption of LA and then the high technology of the Bay Area.

"The Golden State" has faced a budget crisis since 2008. In light of this, Moody's wants to review for possible downgrades of as many as 32 California cities including Sacramento, Santa Monica, Fresno, Oakland and Berkeley. Even cities in Silicon Valley such as Santa Clara, Sunnyvale and Los Gatos might be downgraded on their debt and this is bad news coming at a time when the tech world is going through a resurgence. The U.S. economy needed a tech boom 2.0 to help it.

Have you heard of Braeburn Capital?

A little known hedge fund that could be the largest.

Braeburn is actually a subsidiary of the hottest company on the planet right now. Apple is the parent company whose cash is being managed by this little known yet highly successful hedge fund. Braeburn started with a cash pile of $10 billion that has grown to a massive $117 billion, surpassing Ray Dalio’s Bridgewater.

Yet, it is not located in a premium spot in a famous skyscraper in the finance capitals of the world: New York, London and Hong Kong. It is actually situated in Reno, Nevada, in a location that is a far cry from some of the large hedge fund offices in Connecticut.

Make bank…by doing good?

Profit-making ideas that you feel good doing.

I was reading a New York Times article about the Aga Khan that inspired me to write this post up on Investment Talk. The Aga Khan is the Imam of the Nizari Ismaili community and he collects tithes with hundreds of millions of dollars going to his personal use. But he only uses 10 percent of the money tithed to him for personal use.

The rest is used for investment in fairly low-key companies that provide a lot of employment and are great for the long-term for both the Aga Khan and the community he invests in. The reason why this article struck me was that I have always believed in investing in good businesses without corrupting your soul so to speak.