Morning News: November 28, 2018
Posted by Eddy Elfenbein on November 28th, 2018 at 7:18 am

Brazil Oil Tanker Collision Reveals Offshore Regulatory Gaps

New Zealand Blocks Huawei, in Blow to Chinese Telecom Giant

Trump Open to Deal with Xi at Dinner but with Conditions

Mnuchin Asked About Fed Option That Could Avoid Rate Hikes

U.S. Housing Market Seen as ‘Tough’ for Both Buyers and Sellers

What’s Behind the G.M. Cutbacks, and Why Trump Is Angry

GM Needs China More Than It Fears Trump

The $15 Billion Money Pit Dragging GE Down

United Technologies’ Split Will Create A Giant Of A Different Kind

Spotify Secures Rights to Booming Indian Music Market

“I Hereby Confess Judgment”

Energy Speculators Jump on Chance to Lease Public Land at Bargain Rates

Nick Maggiulli: What You Can’t Buy

Roger Nusbaum: A Little More Defense

Howard Lindzon: I Like Charts!

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Elfenbein Correct, Internet Wrong
Posted by Eddy Elfenbein on November 27th, 2018 at 1:55 pm

Yesterday, I posted this on Twitter:

If you had invested $10,000 in Apple on June 6, 1983, by April 17, 2003, you'd be sitting on $8,400.

— Eddy Elfenbein (@EddyElfenbein) November 26, 2018

My point is that even with a revolutionary business like Apple, its stock may not be a winner in the very long term. Markets are inherently dynamic and as such, they can be very frustrating.

The tweet got a lot of attention, and I think my point was clear. Being the internet, however, I got a few unusual responses.

For example:

1-not true 2-you picked the exact bottom of the dot com crash and still didn't prove your point 3-in 2018 to you would be rich. Buy and hold works.

— John Herndon (@JohnHer04901688) November 26, 2018

Oh boy.

1. No, it’s not wrong. It’s accurate.
2. Of course I picked the exact high and low. That’s my point.
3. Of course I’d be wealthier. Again, that’s the point. Even an amazing company like Apple can be dead money for a long time. Plus, I’m an odd person to lecture on the merits of buy-and-hold.

Some people pointed out that I didn’t include dividends.

If you count in the dividends you would get a much bigger number.

— CubicAngstrom (@cubicangstrom) November 26, 2018

In my defense, I never claimed they were dividend-adjusted returns. Apple did pay a modest dividend from 1987 to 1995. That dividend wasn’t raised after 1990. It was discontinued and eventually brought back in 2012.

The dividend would have helped returns, but not by much, and certainly not “much bigger.” Unfortunately, the numbers at Yahoo Finance don’t adjust the dividends for splits. As a result, the adjusted returns look much larger than they really are.

Here’s an example:

Very wrong. Adjusted for dividends and stock splits[1], it'd be worth almost $125,000. That's an annualized return of more than 13%.

[1] Based on Yahoo Finance's adjusted close value.

— Tentacular Economist (@TentacularEcon) November 27, 2018

No, no, no. You can tell Yahoo Finance’s numbers are wrong because it means Apple would have had a double-digit dividend yield over 20 years even though it only paid a dividend for eight years. That, or Yahoo Finance’s numbers are wrong. They have the dividend right, they just didn’t split it.

According to this website, with dividends, the $10,000 would have become $9,137.76, which sounds about right. The dividends would have added about 9% to the total haul.

Many more responses, including the uninformed:

Curve narrative to fit bias

— Веnјаmіn Fortuna (@fortunabvr) November 27, 2018

Are you on drugs ? Apple did a lot of splits

— Edi (@edixonve) November 27, 2018

Nope, not on drugs and they only did two splits in those 20 years.

These numbers are definitely wrong..

— Alex Martinez (@amarty310) November 27, 2018

He probably doesn’t even know what a stock split is given such an ignorant tweet.

— DC ⚡️ (@bitcoinization) November 27, 2018

ADS Weighs Sale of Epsilon Marketing Business
Posted by Eddy Elfenbein on November 27th, 2018 at 9:41 am

From the Wall Street Journal:

Alliance Data Systems (ADS) is exploring a potential sale of its Epsilon marketing-services business, the company said Tuesday.

The company said it will review strategic alternatives for the business, which generated revenue of $2.2 billion in the year ended Sept. 30, though there is no guarantee a transaction will occur. Alliance Data said that it will make disclosures as appropriate and that its board will make a final decision on any specific action.

The move was the result of an internal review of operations, Alliance Data said. The company said that if it divested the business it would use proceeds to reduce debt and return capital to shareholders through stock buybacks or dividends.

Analysts had viewed a sale of the Epsilon business as a possible result of the review. Susquehanna Financial Group analysts said in a note last month that Acxiom Corp.’s ]deal in July to sell its marketing-solutions business to Interpublic Group of Cos. for $2.3 billion likely “opened the eyes” of Alliance Data management to prospects for Epsilon.

The Epsilon business this year has been hurt by weaker-than-expected revenue from its agency services and site-based displays in addition to client bankruptcies, Alliance Data executives told analysts on an earnings conference call in October. Last year Epsilon accounted for roughly 30% of Alliance Data’s total revenue.

Alliance Data bought Epsilon in 2004 to help it expand into different industry sectors in providing loyalty-marketing services and bolster its private-label credit-card business. Epsilon in 2014 bought Conversant for $2.3 billion in cash and stock in a bid to bolster its digital-marketing capabilities.

Epsilon employs over 8,000 people in 70 offices world-wide, according to Alliance Data. Plano, Texas-based Alliance Data has about 20,000 employees across its businesses.

Shares in Alliance Data, which have fallen 9.3% over the past 12 months, rose 0.5% to $202 in low-volume premarket trading.

Morning News: November 27, 2018
Posted by Eddy Elfenbein on November 27th, 2018 at 7:17 am

What Oil at $50 a Barrel Means for the World Economy

‘Sleepwalking’ Markets Woke Up This Year. That’s a Good Thing.

Pre-I.P.O. Deals Add to Exodus From Public Markets

The U.S. Housing Boom Is Coming to an End, Starting in Dallas

Trump Signals U.S. Likely to Go Ahead With China Tariff Increase

G.M. to Idle Plants and Cut Thousands of Jobs as Sales Slow

Amazon Says Cyber Monday Was the Biggest Shopping Day in Company History

Little Known to Many Investors, Cryptocurrency Reviews Are For Sale

United Technologies to Split Into 3 Companies, Each With a Sharper Focus

Tesla China Sales Plunge 70% in October

Don’t Look Now, But Microsoft Is Overtaking Apple

The Ghosn Inquisition

Michael Batnick: The Nifty Fifty

Ben Carlson: When Cash Outperforms Everything

Jeff Carter: Crypto Breakdown; Crypto Regulation

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Morning News: November 26, 2018
Posted by Eddy Elfenbein on November 26th, 2018 at 7:10 am

How Cheap Labor Drives China’s A.I. Ambitions

Venezuela Settles $1.2 Billion Creditor Claim to Protect Citgo

Bitcoin, Ripple (XRP), And Ethereum Got Roasted Over Thanksgiving – Here’s Why

Pay Taxes With Bitcoin? Ohio Says Sure

Goldman Predicts Commodities Will Soar in 2019

Buy Emerging Markets, Avoid Credit: Morgan Stanley’s 2019 Plan

The Plug-In Hybrid Car Hits Its Stride, Just in Time to Die

In China’s Hinterland, Car Market Growth Engine Sputters

VW, Ford Alliance Borne Out of Need to Adapt to Fragmented Markets

GM Plans Closure of Canada Plant With 2,200 Workers

Carlos Ghosn Is Removed As Chairman of Mitsubishi Motors

Campbell Soup and Third Point Near Deal to Settle Proxy Fight

Jeff Miller: Weighing the Week Ahead: Do Plummeting Oil Prices Signal a Weak Economy?

The Economics of Le’Veon Bell’s Gamble

Joshua Brown: The Year No One Made Money & The End of the Beginning

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Morning News: November 23, 2018
Posted by Eddy Elfenbein on November 23rd, 2018 at 7:52 am

Big Oil Digs North Sea’s ‘Final Frontier’

India and Australia Move to Tighten Bonds to Counter China’s Rise

China Wants Trade Talks with United States to Be Equal, Mutually Beneficial

A Creator of the U.K.’s Libor Replacement Says It’s Still Too Complex

Holiday Looks Set to Be a Shopping Blowout: Black Friday Update

Black Friday is Starting Earlier Than Ever — and Companies Like Walmart and Lululemon Weren’t Ready

Trump’s Tariffs Haven’t Really Transformed Trade. Yet.

Apple to Defend iPhone App Fees at U.S. Supreme Court

Washington Asks Allies to Drop Huawei

Ghosn Arrest Exposes Stress in Japanese-French Auto Marriage

Amazon Workers Strike in Germany, Spain on Black Friday

German Court Rules Volkswagen Must Reimburse Owner Full Price of Car

D&G’s Racism Row Shows the Worst of Fashion

Howard Lindzon: Nasdaq 5,000? …Nasdaq 10,000 Still Inevitable

Ben Carlson: Ben’s Holiday Spending Tips

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Morning News: November 22, 2018
Posted by Eddy Elfenbein on November 22nd, 2018 at 8:41 am

Markets Are Revealing the Sum of All Risks

With Central Banks Out of Ammo, Governments Urged to Ready Stimulus for Next Downturn

Majestic Plans to Build Brexit Stockpile of European Wines

China Says U.S. Accusations of Unfair Trade Practices ‘Groundless’

China’s Christmas Village Isn’t Worried About Trump’s Trade War

Holiday Spending Should Be Strong. And Then?

U.S. Weighs Steel Quotas, Instead of Tariffs, on Canada and Mexico

Americans’ Shopping Habits are Fundamentally Changing, and It’s Killing Cyber Monday

Nissan Ousts Ghosn, Moves to Assuage Concerns Over Alliance

Tesla Cuts China Car Prices to Absorb Hit From Trade War Tariffs

How Facebook’s P.R. Firm Brought Political Trickery to Tech

Chinese E-Commerce Sites Ditch Dolce & Gabbana in Ad Backlash

Goldman Sachs Sued Over ‘Central Role’ in 1MDB Scandal

Joshua Brown: Yards After Contact

Roger Nusbaum: Aaaaand An Options Selling Fund Blows Up

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Morning News: November 21, 2018
Posted by Eddy Elfenbein on November 21st, 2018 at 7:10 am

Sweden’s Push to Get Rid of Cash Has Some Saying, ‘Not So Fast’

Moneyball in Switzerland: A Bidding War for Private Bankers

Beijing to Judge Every Resident Based on Behavior by End of 2020

What Could Go Wrong With the Economy? The Markets Are Offering Hints.

Texas Is About to Create OPEC’s Worst Nightmare

USTR Says China Has Failed to Alter ‘Unfair, Unreasonable’ Trade Practices

Harvesting In A Trade War: U.S. Crops Rot as Storage Costs Soar

Carlos Ghosn’s Arrest Rocks Auto Empire

Cuomo and de Blasio Saw the Amazon Deal as a Winner. Now Comes the Backlash.

Apple’s Biggest iPhone Assembler Planning Deep Cost Cuts

GE Could Be a $41 Billion Problem for Big Banks

Walmart, Target, Best Buy Take Steps to Curb Gift Card Fraud

Nick Maggiulli: Four Things Leonardo da Vinci Can Teach Us About Investing

Ben Carlson: Surveying the Damage in Stocks

Michael Batnick: Animal Spirits: How to Ask the Right Questions

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Hedge Fund Manager Apologizes to Clients
Posted by Eddy Elfenbein on November 20th, 2018 at 9:38 pm

This is painful. James Cordier, a hedge fund manager, apologizes to his clients for blowing up his fund. It’s believed he managed $150 million. He apparently lost it all on a wrong-headed bet on natural gas.

A Florida-based hedge fund manager is tearfully apologizing to his 290 clients after losing their money.

In a video made public earlier this week, James Cordier of Optionsellers.com blamed recent volatility in the oil and gas markets for wiping out his fund — and his clients’ savings.

“The events of this past week have been incredibly devastating for our clients — who I rarely call clients,” Cordier said in the 10-minute video, noting that he often refers to them as “family.”

Cordier — who is believed to have managed $150 million, according to a Bloomberg report — went on to address some of his 290 clients personally.

Here’s the chart of natural gas:

AdvisorShares Focus Equity ETF (CWS)
Posted by Eddy Elfenbein on November 20th, 2018 at 9:30 am

I want to wish everyone a happy Thanksgiving!

I also want to remind you that the end of the year is approaching, and that’s when we’ll make changes to the Buy List. That’s the only time we touch the portfolio. As we’ve done for the past 13 years, five new stocks will go in, and five old stocks will go out.

If you’re a shareholder of the AdvisorShares Focus Equity ETF (CWS), there’s no need to worry; the changes will happen automatically inside each of your shares.

If you’re not a shareholder yet, this is also a great time to consider CWS for your portfolio. The ETF is designed to mimic our Buy List, and it’s been doing well lately, but we need your support. The net value is now up to $14.3 million which is nearly halfway to our goal of $30 million. For those who have joined us, thank you!

We’re still a small rowboat in the ocean of Wall Street, but we’re clearly making a difference. We were the first ETF to use a fulcrum fee, and now the big fund families are following our lead. It’s about time Wall Street put the interests of shareholders first.

CWS is now in its third year of operations. We started at $25 per share, and a few weeks ago, we got as high as $34.75 per share. Plus, we’ve been holding up well during the market’s recent turmoil.*

A few things to remember.

First, CWS is completely transparent. Just 25 stocks, and you know what’s in it all the time.

Second, we have low turnover. We trade just once a year.

Finally, the newsletter keeps you abreast of important news regarding the Buy List.

There’s no product quite like this on all of Wall Street. Please continue to support CWS and help us change the investing world for the better!

Eddy

* Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. For the standardized performance and most recent month end performance, click https://www.advisorshares.com/fund/cws.

Shares are bought and sold at market price not net asset value (NAV) and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined) and do not represent the return you would receive if you traded at other times.