Category: Wall Street


“If the Earth slammed into the Sun (or vice versa), what would the president do?” – CNN correspondent

“Guess, we would all fry and die.” – White House Trade Hawk Peter Navarro

Couldn’t believe that Navarro would answer CNN’s hypothetical question Friday about whether President Trump would impose $200 billion in even more tariffs on China, if the next 90 days of trade negotiations go nowhere.

Instead of bobbing, weaving and ducking the question, Navarro answered in the affirmative.

Why Peter, why?

American markets tanked Friday, led by a 558-point decline on the Dow.

The psychology on Wall Street is so negative right now. Traders are selling the bounces instead of buying on the dips. Forget about Buy Low, Sell High.

Why did the White House Press Office allow Navarro take an interview with CNN? Isn’t “prevention” one of the key components of effective crisis communications?

The liberal network openly despises … being nice here … Navarro’s boss (see Jim Acosta antics), and will not do the administration any favors whatsoever (e.g., benefit of the doubt).

Were you media trained, Peter?

Obviously, not.

Why didn’t you coordinate your talking points with Larry Kudlow?

Instead it was administration bad cop, trade hawk (Navarro) contradicting an administration good cop, trade dove (Kudlow), resulting in the media and markets seizing upon … Navarro’s negative response to a hypothetical question (e.g., more tariffs on China).

Shocking or more of the same from 1600 Pennsylvania Avenue … or both?

It’s now painfully obvious the happy talking points/tweets emerging from last weekend’s G20 Xi-Trump summit over Argentinian steak were over-done … way over-done.

Earth And Sun Collide?

Can’t tell you how many times Almost DailyBrett has been asked hypothetical questions, posed by the media to generate headlines particularly on slow news days.

If asked by a member of the Capitol Press Corps in Sacramento what my boss would do if the earth did indeed slam into the sun, your author would without doubt take the following approach:

“The earth and the sun vary between 91 million and 94 million miles a part each year, and the earth has been around for 4.543 billion years. We are confident this trend, which is our friend, will continue.”

Always remember, conditions can and most likely change between now and later. If that is indeed the case, why answer a hypothetical?

Here’s an even better answer:

“As a policy, we do not answer hypothetical questions. We will say is that we are cautiously optimistic about our trade negotiations with China. We are not going to prejudge this process.”

Boring? Sure. That’s the point.

Do the markets sell off, putting more pressure on the U.S. negotiators? Not likely.

Are the reporters/correspondents disappointed? Oh well …

Should an administration speak in one voice? Always.

Kudlow and Navarro should not be separate spokesmen with conflicting philosophies on the same question. The Alexander Hamilton-Aaron Burr duel would have gone viral in the 21st Century with the NASDAQ dipping into correction territory.

Kudlow mentions the potential of extending the moratorium on tariffs for another 90 days Friday, if the negotiations are making progress … markets go up.

A little later Friday Navarro confirms the possibility of raising $200 billion in additional tariffs, if the negotiations go nowhere … and the markets are pounded.

Who’s on first?

Maybe, Mr. Art of the Deal wants to deliberately send confusing, ambiguous signals to the Chinese to keep them off guard … Good Cop vs. Bad Cop?

Unfortunately, this latest market selloff and the related overly negative market psychology could have been avoided by simply refusing to answer hypothetical questions, and by an administration speaking in one voice.

Is that too much to ask?

http://www.businessdictionary.com/definition/hypothetical-question.html

https://www.cnn.com/2018/12/07/investing/stock-market-today-navarro-kudlow/index.html

https://www.space.com/17081-how-far-is-earth-from-the-sun.html

https://astronomy.stackexchange.com/questions/19833/about-how-many-revolutions-has-the-earth-made-around-the-sun

 

 

 

“I must be a mushroom because everyone keeps me in the dark and feeds me bullshit.” – Urban Dictionary

The rocket scientists at General Motors made the decision to close five factories in the United States and Canada, impacting 14,000 workers/15 percent of salaried employees. Meanwhile the GM truck production lines would keep on humming … in Mexico and China.

GM tenderly issued a Monday news results about these Ohio, Michigan and Maryland facilities/people … saying they will be unallocated in 2019.” 

Unallocated?

Hard to believe that any PR pro worth his or her salt could actually write these words, and with a straight face actually advocate for their approval with management.

Almost DailyBrett concurs with CBS Money Watch in its designation of “unallocated” as one of the worst corporate euphemisms ever employed, if not the absolute worst.

No one is laughing, General Motors.

Before going further, Almost DailyBrett will remind readers of the four tenets of Crisis Communications:

  1. Tell The Truth
  2. Tell It All
  3. Tell It Fast
  4. Move On

There is little doubt that GM’s corporate PR types toyed with the idea of dumping this dead-dog factory closure announcement on the ultimate bad news distribution day of any year – Black Friday or the second day of the long Thanksgiving Weekend.

Nice way for big bad GM to give thanks to its affected workers during the holidays?

Ultimately, the folks who used the ridiculous, twisted in knots verb – “unallocated” – couldn’t bring themselves to drop this bomb the day after Thanksgiving, so they opted for the following Monday, November 26.

And yet, there was the little matter of the resident at 1600 Pennsylvania Avenue, who carried Ohio and Michigan.

The Fifth Tenet of Crisis Communications

There may even be a fifth tenet of Crisis Communications: Never Blindside The Boss.

Could GM inform Donald Trump concurrently with the factory closures/14,000 layoffs announcement? Not a chance.

Even at the risk of a leak/premature disclosure, General Motors Chief Executive Officer Mary Barra had no choice but to pick up the phone and call the president this past weekend.

The alternative of the mushroom treatment, keeping POTUS in the dark and feeding him fertilizer, was clearly not an option. The resulting Trump tweets about being disappointed could well have reflected that he was furious, if he was not informed in advance.

In a series of wrong calls, give GM credit for getting this one right … there was absolutely no upside in blindsiding the president.

Seven Layoffs in Three Years

When the Internet Bubble burst in March 2000, the technology business – particularly semiconductors — crashed into the wall … and there were no skid marks.

For Almost DailyBrett’s employer, LSI Logic, we enjoyed a post-split share price of $90 in 2000, full-running factories, $2.7 billion in revenues, and about 7,700 employees.

Within three years, our stock price plunged to $3, we eliminated two factories, revenues sank to $1.8 billion, and our workforce was reduced to 3,900.

In short, we did everything we could … to survive.

Included in this effort was the issuance of seven news releases, announcing a cumulative series of job cuts and factory curtailments-closures (i.e., Gresham, Colorado Springs, Santa Clara). Eliminating jobs and closing factory gates does not get better with age.

We also instinctively knew there were certain audiences, who needed to be briefed in advance, preferably hours before the news release crossed the wires. Predictably, they (i.e., governors, city council members, county supervisors …) were disappointed, but they understood the economic imperative of our decisions.

The GM case is much trickier. The company received a $39.7 billion taxpayer bailout in the dark days of 2009. Is this “unallocation” of factories and people the way GM says thanks to America during Thanksgiving?

At least Mary Barra picked up the phone and called the big boss.

Can you imagine being a fly on the proverbial Oval Office wall?

https://www.urbandictionary.com/define.php?term=treat%20em%20like%20a%20mushroom

https://www.cbsnews.com/news/worst-corporate-euphemism-ever-gms-unallocated-factories-a-contender/

https://www.post-gazette.com/opinion/editorials/2018/11/28/General-Motors-layoffs-factory-shutdown-Lordstown-Ohio/stories/201811280038

 

 

 

The national Twitter Bull-in-a-China-shop champion may not be the one you suspect.

Would you allow Elon Musk to baby-sit your retirement nest egg?

REUTERS/Rashid Umar Abbasi

Consider the following:

In the last three months, Tesla common shares (NASDAQ: TSLA) are down $69.59 or 19.74 percent.

Tesla confirmed today the Department of Justice (DOJ) is launching a criminal probe into les affaires at Tesla.

Earlier, the Securities Exchange Commission (SEC) announced its own civil investigation following Tesla founder Elon Musk’s August 7 tweet, proclaiming “funding secured” for taking Tesla private. Is Musk guilty of selective disclosure of material information (e.g., “Funding secured) in violation of SEC Reg FD (Fair Disclosure)?

There was also the inexplicable video of Musk smoking dope on television.

Why Elon, why?

Musk charged not once but twice that one of the heroes, saving the Thailand boys’ soccer team from a flooded cave, is a “Pedo guy.”

Nomura Securities downgraded TSLA from “buy” to “neutral,” reducing the company’s price target from $400 to $300, concluding that Tesla shares are “no longer investable.”

“Notwithstanding improving fundamentals, we believe that Tesla is in need of better leadership, an about face, and are moving to the sidelines until we see what happens with management. “ – Nomura Securities analyst Romit Shah

Does Elon Need His Own Mad Dog Mattis?

The best-and-brightest public relations counselors in the world can do absolutely nothing with Elon, if and until he is willing to ponder sage advice for even a nanosecond.

Tesla co-founder and CEO Elon Musk takes a drag from a cigarette laced with
marijuana in this screenshot from the Joe Rogan Experience podcast on
Thursday, Sept. 6, 2018.

Some have suggested shaking up the Tesla Board of Directors to include strong-willed  independent hombres and mujeres willing to practice tough love with Elon (e.g., no public smoking marijuana for whatever reason).

Elon ‘Musk’s brother and board member, Kimbal, is not a candidate for his job. Did you see his CNBC interview this week from the floor of the venerable NYSE wearing a cowboy hat?

Why Kimbal, why?

Besides trying to run both publicly traded Tesla (EVs/solar) and privately held SpaceX (rockets) at the same time and thus needing more sleep, maybe the biggest issue is way too many sycophants kissing Elon’s derriere for way too long.

Remember the gushing CBS 60 Minutes Scott Pelley interview of Elon back in 2014? Musk was hailed at the time as the second coming of … Steve Jobs including  Almost DailyBrett. Your author repeatedly bought and sold Tesla shares for a nice profit, except the last time, selling for a modest loss.

The CNBC pundits were asking out loud circa 2014 whether Tesla was 1.) An electric vehicle company, 2.) an energy company or 3.) Elon Musk’s company?

The issue now is what would happen if a stronger, independent Board of Directors took the helm at Tesla? Would they have the cojones to fire Elon Musk? Would that stunning action be the 21st Century equivalent of John Sculley firing Steve Jobs at Apple? How did that move play out?

Most of all, what would happen to Tesla’s stock? The shorts have already gone crazy; they presumably would have a field day.

Maybe what Elon needs is his own version of a chief operating officer Mad Dog Mattis or some other chain-of-command George S. Patton type to knock off the nonsense?

Until there is some sense of consistent operating discipline (see Tim Cook’s management of Apple following the 2011 passing of Steve Jobs), the shorts will continue to bet against Tesla and its common shares.

Anybody want to “short” Apple? Didn’t think so.

Most of all, Elon Musk should be precluded from even going near Twitter. These 280 characters can lead to a heap of trouble, including twin probes by the DOJ and the SEC.

Audi today unveiled its $75,000 luxury EV SUV. There is considerable competition because electric cars are not going away.

Static photo,
Colour: electric green

Tesla still maintains considerable advantages: Market leadership, pure-play, first mover, visionary company.

Even with its present cash burn and convertible notes coming due next March, Tesla can more than survive and continue to drive technology leadership.

All Tesla needs is for a Mad Dog to put a discipline leash on one, Elon Musk.

https://www.forbes.com/sites/jimcollins/2018/09/05/elon-musks-increasingly-erratic-behavior-comes-at-a-price-for-tesla-shareholders/#1058c7323944

https://www.mercurynews.com/2018/09/11/elon-musks-erratic-behavior-continues-to-rattle-wall-street/

https://www.cnbc.com/2018/09/18/tesla-stock-drops-after-company-reportedly-to-face-us-criminal-probe-over-musk-statements.html

https://www.nytimes.com/2018/08/13/business/dealbook/tesla-elon-musk-saudi-arabia.html

https://almostdailybrett.wordpress.com/2014/04/02/only-in-america/

https://almostdailybrett.wordpress.com/2014/07/18/donate-to-united-way-or-invest-in-tesla/

https://www.cnbc.com/video/2018/09/17/kimbal-musk-says-his-brother-elon-is-doing-great.html

 

“Believe in something. Even if it means sacrificing everything.” – Nike multi-million dollar NFL marketing campaign starring Colin Kaepernick.

Wonder if Nike marketers ever pondered those who literally sacrificed everything for the red, white and blue?

They made the ultimate sacrifice.

Where is their multi-million-dollar marketing campaign?

Guess they are not cool.

Nike knew it was going to stir the pot (not cannabis). Guess all publicity is good publicity, even coverage that brings into question the quaint notion of proudly standing for the national anthem and saluting Old Glory.

Seems Nike investors are making a stand this morning driving shares down 3 percent or $3.75 billion in lost market capitalization, while the company is taking a knee on America.

Based upon the early returns with shareholders of NYSE: NKE, there is no doubt the stock is under pressure.

The reason is Nike’s decision to base its NFL marketing campaign, its reputation, and its brand on a guy who disrespected the Star Spangled Banner and Old Glory.

By pouring millions into NFL non-player Colin Kaepernick, who by the way is suing the league for collusion, Nike is taking sides.

Nike claims it stands with the athlete, except Kaepernick is not a player. He’s a litigant.

Almost DailyBrett upon hearing the news of Nike’s controversial marketing campaign seriously considered selling all 451 shares of Nike stock

Investment discipline dictates that one does not sell dividend-paying shares producing a 77 percent gain in a down market. Remember: Buy Low, Sell High.

My hope is that Nike does not use my investor dollars to bestow millions upon a man, who defied our country, our national anthem and our flag.

Can Almost DailyBrett make this humble request to Just Do It management? Please.

Boston Massacre

Keep in mind, the Colin Kaepernick campaign is not the first time that Nike screwed up.

Remember the company’s “Boston Massacre” campaign?

Nike hopes you forgot the misguided Yankee colored t-shirts with bullet holes and blood.

The t-shirts were unveiled on 2013 Patriots Day … yep the same day as the Boston Marathon terrorist bombing.

Back to the point, who thought that a t-shirt with bullet holes, blood and the Nike Swoosh was a good idea? The answer is the same marketing department that is giving us the middle-finger Colin Kaepernick campaign.

There are some besides POTUS, who disagree with Kaepernick and his imitators taking a knee during the playing of Francis Scott Key’s poem, America’s national anthem.

How about campaign featuring NFL Hall of Famer and Civil Rights Champion, Jim Brown? He dares disagree with taking a knee before the red, white and blue.

Kaepernick is claiming the collusion against the NFL, Nike’s marketing partner. The only problem is another NFL Hall of Famer and Nike model, John Elway, stated ex-cathedra the Denver Broncos offered a contract to Kaepernick.

Details, details sometimes interrupt a pre-determined narrative. Right CNN?

Championing The Athlete, Not The Flag

As long as Nike is condoning the behavior of Kaepernick, maybe the company may want to add its iconic swoosh to the statue of black gloved John Carlos and Tommie Smith, displaying their defiance during the playing of the Star-Spangled banner during the 1968 Olympics.

What’s the difference tween Kaepernick and Messrs. Carlos and Smith?

Almost DailyBrett writes this blog post with a high degree of sadness.

Your author champions Uncle Phil Knight, his entrepreneurship (read his best-selling “Shoe Dog”) and his philanthropy. He deserves every dollar of his estimated $35.4 billion net worth.

He is happily retired. Too bad, he is not on the scene today on behalf of the millions of silent Americans, including thousands of military families, who don’t think Colin Kaepernick is cool.

And never will.

https://www.washingtonpost.com/news/early-lead/wp/2018/09/04/serena-williams-lebron-james-back-nikes-just-do-it-campaign-with-colin-kaepernick/?noredirect=on

https://almostdailybrett.wordpress.com/2012/09/25/taxing-uncle-phil-to-death/

 

 

 

The University of Oregon’s student run newspaper, The Daily Emerald, reported that one registered Republican serves on the university’s Law School faculty, and another in its Political Science Department.

To these two poor souls Almost DailyBrett promises to keep your political affiliation, secret. Seriously.

For those of you scoring at home, these two departments sport 44 registered Democrats and two Republicans. Since 2015, more than 98 percent or more than $235,000 in donations from university faculty has been directed to liberal causes.

Only 98 percent?

Working on my 2012 master’s degree at UO, your author could imagine Adam Smith and his “Wealth of Nations” being embraced at the Lillis School of Business. According to the Emerald, only 50 percent of the business school faculty are registered Democrats.

About 100-yards to the east, the School of Journalism and Communication (SOJC) offers a totally different atmosphere.

Close your eyes. You can envision a lecture by Che Guevara being packed to the rafters. Don’t have to imagine the championing and teaching of Karl Marx, even though his philosophy continues to fail today (e.g., Maduro’s Venezuela).

Is the real philosophical gulf between the overwhelming number of faculty Democrats vs. the un pequito Republicans or more between those who embrace Social Justice and those who defend Capitalism?

For What It’s Worth

“The cultish professor who self-evidently reinforces a set of political beliefs is not something that just about anybody openly and consciously says is okay.” – Professor Craig Parsons, UO Department of Political Science chair

Amen.

The regular readers of Almost DailyBrett long ago determined your author is a registered Reaganite Republican and a staunch supporter of Buy Low, Sell High.

For my M.A. at the University of Oregon, your author created a college course in corporate communications and investor relations and taught it for more than five years.

Remember telling my students each quarter that whether they individually support or oppose capitalism, the main purpose of the class is to provide a realistic explanation of how global markets work. We also assessed the vital role public relations professionals play in presenting to investors an accurate picture of company financials and how a corporation makes money.

As Professor Parsons correctly states, it’s not appropriate for professors to indoctrinate their students. Instead, they should instill their profession-based knowledge – in this case, Wall Street and SEC disclosure rules – about how the real world works.

Is the goal of a university to develop activists or to prepare professionals to succeed in our free-market-driven, digital economy?

Does Political Stridency Enter The Classroom?

Alas, way too many times strident political discourse is being posted on the Facebook, LinkedIn, Twitter or other social media pages by professors. They will piously claim they are exercising their cherished First Amendment right of free speech and therefore commenting as a private citizen.

But what happens when their online rhetoric becomes the subject matter for a course syllabus, and thus is transformed into the classroom for discussion, follow-up quizzes, midterms and/or finals?

Will the student toe the philosophical line in order to secure a good grade?

One overly eager activist associate professor was requiring her students to watch the anti-Vietnam War documentary, “Hearts and Minds.” What about the individual hearts and minds of her students?

Another dean prompted her college to sponsor a series of lectures on mass incarceration, which is all well and good … except there were no speakers from the correctional/law enforcement community.

When asked about the absence of balance in the lecture series, she retorted: “There are no other views.”

Okay?

Disgraced commentator Bill O’Reilly was once lamenting to the late great Charles Krauthammer about the preponderance of liberal faculty on America’s college campuses. Krauthammer told him to accept a reality, which will never change.

The real issue is whether a professor’s political philosophy permeates into the classroom. Almost DailyBrett for the most part was impressed with Millennial students. They are the most-educated generation in the planet’s history and the most moved by experiential learning.

Let’s provide them with the facts about how the real world works and life-long skills (e.g., how to read an income statement and a balance sheet), and then give them the opportunity to excel and grow.

Dominating a classroom to forcefully instill your chosen political philosophy to develop activists is wrong and inappropriate.

Starting later this month, this practice will undoubtedly raise its ugly head once again.

https://www.dailyemerald.com/2018/08/20/does-it-matter-if-your-professor-is-a-democrat/

Mark Parker of Nike is also one of my mutual fund advisors.

Ditto for Marc Benioff of Salesforce.com

Let’s not forget of Dennis Muilenburg of Boeing.

Can’t tell you how many times Almost DailyBrett has been told to invest anything and everything into mutual funds.

For the record 70 percent of your author’s Charles Schwab portfolio is held in mutual funds, the largest amount managed by William Danoff of the Fidelity Contrafund.

Having made this point, let’s take a contrarian stand.

Why can’t investors create their own mutual fund comprised of individual and diversified stocks within their own portfolios?

Whoa … aren’t you the investor taking on too much … risk? Shouldn’t you diversify?

The humble answers are “not necessarily” and “yes.”

As legendary investor Peter Lynch once said: “Know what you own, and know why you own it.”

When it comes to investing and in the spirit of Lynch’s axiom, Almost DailyBrett follows these self-formulated rules:

  • Never invest in a stock in which you personally detest/loathe the lead executive (e.g., Oracle’s Larry Ellison)
  • Buy shares in firms you personally use or have a 100 percent understanding of how the company makes money (e.g., Apple).

For example, ever cutesy Scott McNealy of extinct Sun Microsystems once labeled Microsoft’s Steve Ballmer and Bill Gates as Ballmer and Butthead. McNealy would have been funny, if his company stock wasn’t trading at the very same time at $3 per share.

Whatever happened to Scott McNealy? His company was devoured by Oracle.

Another example: your author won’t touch Bitcoin because even though it is the choice of money launderers around the world, the crypto currency is not associated with any country and there is zero logical explanation of how it makes money.

Isn’t Tim Cook A CEO?

Why is Tim Cook my mutual fund portfolio manager?

Doesn’t Cook run the largest capitalized – $1 trillion-plus – publicly traded company in the world? Absolutely.

Almost DailyBrett clearly understands that Apple is not a mutual fund, but still it offers the complexity, confidence and diversity of a mutual fund.

Apple plays in the hardware (i.e., smart phones, tablets, wearables, PCs) space. Ditto for software (e.g., iOS) and services (e.g., iTunes). Think of it this way, Apple has as many if more investors as any mutual fund … including mutual funds themselves – both buy side and sell side institutional investors – and 75 million shares recently bought by Warren Buffett too.

And who runs this diversified enterprise with the expectation of $60 billion to $62 billion on the top line in the next (fourth) quarter? Revenues grew 17 percent year-over-year. Gross margin remained steady at 38 percent. EPS jumped year-over-year from $1.67 to $2.34 and dividends grew from $0.63 to $0.73.

The dilemma for every Apple investor, particularly today, is when is it time to ring the register at least for a portion of the shares? Almost DailyBrett does not hear very many bells clanging.

There is little doubt that Apple is tearing the cover off the ball. Apple has proven it is not necessarily the number of smart phones sold – even though these mobile devices are an absolute must for our lives – in many ways it is the average sales price, climbing closer to four figures for every unit.

Back to Danoff and Fidelity Contrafund. Today it has a reported $130 billion in assets under management. Cook counters with $1 trillion in investor confidence in Apple’s shares.

Which “mutual fund” manager would you choose, if you could only select, one?

And for diversification, you package Apple with Boeing (U.S. commercial airliner and defense aircraft innovator and manufacturer) …

And Nike, the #1 athletic apparel manufacturer in die Welt.

Finally, Almost DailyBrett has bought Salesforce.com nine times and sold eight times for a profit. To describe Salesforce.com as business software company seriously understates its business strategy.

With all due respect to Satya Nadella of Microsoft, Salesforce.com is THE Cloud pioneer selling software as a service (SaaS) to enterprises around the world.

Let’s see: Apple, Boeing, Nike and Salesforce.com in the Almost DailyBrett mutual fund.

Is your author right? Only time will tell. Will this “mutual fund” adjust and change its holdings? No doubt.

Here’s the point: As Ken Fisher of Fisher Investments would say, it’s time to “graduate” from pure mutual funds.

There is risk associated with selecting stocks for your portfolio, but isn’t that also the case for mutual funds? Some think that mutual funds are no brainers. Not true, and let’s not forget the fees.

When it comes to my “mutual fund” portfolio — AAPL, BA, NKE, CRM — the only fees yours truly pays are $4.95 per trade.

Not bad, not bad at all.

https://fundresearch.fidelity.com/mutual-funds/summary/316071109

https://www.apple.com/newsroom/2018/07/apple-reports-third-quarter-results/

Oregon’s Mary Jane dispensaries are seemingly ubiquitous … They’re everywhere too.

Almost DailyBrett frequently wonders out loud how even über-liberal Eugene can support its preponderance of yoga studios and tattoo parlors.

Keep in mind that yoga mats and ink tats have nothing on Mary Jane.

What happens when a popular product, which was once Verboten and is now decriminalized (read: legal), loses its naughtiness and more than a tad of its hipness (e.g., demand side)?

And at the same time, what happens with the literal explosion of Mary Jane shops, sometimes two-or-more on the same street (e.g., supply side)?

Oregon is not Colorado.

Realtors will tell you that when the supply of houses goes up, the prices at best will stay flat or more likely, they will plunge (e.g., 2005-2010).

And when the supply diminishes and the number of buyers goes north, the prices most likely will go through the roof … no pun intended (e.g., the present).

Is the Mary Jane market a buyers’ market or a sellers’ market? Without a doubt: A buyers’ market.

Reportedly, the growing of Mary Jane in Oregon is three times the amount that legally can be sold.

According to the Bend Bulletin, there is more than 1 million pounds of Mary Jane in the supply chain.

Which brings us to the obvious supply chain question?

How long will it take for the weakest of all the Mary Jane shops (e.g., Economic Darwinism) to start going under?

Will they survive the calendar year? How many will remain? How many will enter the market?

Another question: How many prepared a business plan – yes, a business plan written by an MBA — before taking the plunge into the seven-point-leaf market?

Economies of Scale?

“No Industrialized Weed in the Neighborhood.” – Flatbed Bumper Sticker

Mary Jane may be the Wunder “medicine,” but the Laws of Economics still have this nasty habit of prevailing.

The average gram sale of Mary Jane ($4) is now less than a glass of wine ($8).

Does this price reduction mean that not only are the plethora of Mary Jane shops competing against each other (obvious result when the barriers-to-market-entry are so low), but will they also start cannibalizing the cannabis trade?

How many and who will prevail in an obviously overly saturated market?

Not that many, and those who can, benefit from economies of scale through sheer volume selling. Who will be the Philip Morris of the Oregon Mary Jane market?

Just as some low-barrier-to-market cigarette companies have still thrived by selling in volume even in the face of 400,000 of their customers dying each year, the same demands are placed on Mary Jane shops.

And when it comes to legal intoxicants, Oregon offers easy alternatives in the form of some of the world’s best microbrews – pales, ambers, IPAs, porters, stouts – from Deschutes, Full Sail, Ninkasi, Portland Brewing, Widmer and others.

Each of these brewers has also branched out into pubs, pairing finger-licking food with their own beers.

Did someone mention wine? Oregon has more than its fair share of wine bars and trendy restaurants.

Oregon’s temperate weather and terroirs are conducive to producing some of the best and yummy Pinot Noirs and Pinot Gris from the likes of, A to Z Wineworks, Adelsheim, Duck Pond, Firesteed, King Estate, Knudsen Erath, Rex Hill, Sokol Blosser, Sweet Cheeks, Sylvan Ridge, Willamette Vineyards, Youngberg Hill, and many, many others.

What is the lesson from this Almost DailyBrett epistle, and others that have been written on this subject?

Coolness is fleeting. Economics matter. Competition is inevitable. The Laws of Supply and Demand prevail.

In Oregon’s case, there are oodles and oodles of Mary Jane shops. Three-of-its-four neighboring states (i.e., Washington, Nevada, California) to the north, east and south have legalized cannabis. There is no Mary Jane Tourism to Oregon. That ship has sailed.

You can’t always get what you want, but if you try some time, you just may find, you get more than you need.

https://www.leafbuyer.com/blog/oregon-cannabis-market-in-trouble

https://www.opb.org/news/article/oregon-recreational-cannabis-supply-demand/

http://www.wweek.com/news/2018/04/18/oregon-grew-more-cannabis-than-customers-can-smoke-now-shops-and-farmers-are-left-with-mountains-of-unwanted-bud/

https://www.businessinsider.com/legal-marijuana-states-2018-1

https://almostdailybrett.wordpress.com/2014/01/20/nasdaq-weed/

Five years ago Hewlett-Packard (NYSE: HPE) was kicked off the Dow Jones Industrial Average, replaced by Visa.

Three years ago, AT&T (a.k.a., The Phone Company) was ingloriously removed from the index of 30 share prices, substituted by Apple.

And just last month, General Electric (NYSE: GE) was unceremoniously ushered off the exchange for Walgreen Boots.

Will Itty Bitty Machines (NYSE: IBM) be the next Dinosaur Tech heading for Dow Jones extinction?

Flintstones vs Jetsons

Under legendary CEO Jack Welch, GE was the most valuable (market capitalization) American company in 2000. The company was one of the founding companies of the Dow Jones Industrial Average in 1896. General Electric was a consistent standard on the exchange since 1907, 111 years.

What have you done for us lately, Fred and Wilma Flintstone? GE was replaced on the Dow Jones two weeks ago by a drug store company? How embarrassing.

Almost DailyBrett earlier wrote about companies that are absolutely rocking (i.e.,  Apple, Amazon, Facebook, Netflix, Google, Salesforce.com), metaphorically packing stadiums as opposed to those reduced to playing “greatest hits” at county fairs and desert casinos (i.e., Intel, Cisco, Dell).

These latter companies were/are directly tied to the mature PC market and thus became fairly valued with limited prospects for investor growth unless and until they credibly changed their story with compelling new information (e.g., Apple from Amelio to Jobs2 to Cook) & (e.g., Microsoft from Gates to Ballmer to Nadella).

Apple was on the precipice of bankruptcy in 1997; now the company is the world’s most valuable at $912 billion. The Wunder corporation may be first to ever to achieve a $1 trillion market cap (share price x the number of shares).

Microsoft has cleverly reinvented itself as the market leader in the cloud, even though the PC software company was late to the party. Macht nichts. MSFT has a $762 billion market cap.

Apple, Amazon, Facebook, Google, Netflix and Salesforce.com constitute the 21st Century version of the Jetsons.

Conversely, AT&T, GE, Hewlett-Packard and IBM are the Flintstones.

What Are Their Winning Narratives?

Having worked in corporate Silicon Valley public relations for more than a decade, Almost DailyBrett understands the virtue of championing a winning narrative.

What is your company’s raison d’etre?

How does it make the legal tender?

How is the company positioned in the marketplace against ferocious competitors?

What is its competitive advantage?

What is its legacy of results?

What are the prospects for reasonable and achievable expectations for shareholder joy?

For the record, Almost DailyBrett owns shares of Apple (NASDAQ: AAPL) and Salesforce.com (NYSE: CRM).

Both companies have delivered. Both are leaders in their respective fields. Most of all, your author understands their business strategies – lead in consumer innovation and services; provide selected software via the cloud to business customers).

Investing or Gambling?

When you understand how and why a company makes money then markets are investing, not gambling.

What is the winning narrative for GE? The company is restructuring yet again. Give it up J.C. Penney. Forget it, GE.

Tell me more about the business strategy for AT&T. How will it beat Verizon? Your author doesn’t know either.

Your author loves his Lenovo Ideapad. Who commercialized the PC? IBM in 1981. Reagan was president. “Watson,” can you help?

HPites love the 1937 story of HP founders William Hewlett and David Packard and the Palo Alto garage.

If the two gents could see their creation in the post-Carly Fiorina era, they would most likely would be turning over in their respective graves.

When contemplating these four Dinosaur Techs – AT&T, GE, HP, IBM — in a Jurassic Park era, the hardest questions are also the most basic: How do these companies make money? What product defines their respective businesses?

In stunning contrast, Apple is the #1 company in the world, defined by game changing innovation (e.g., iPhone X) and services (e.g., Apple Music).

Amazon is the #1 digital-retailer in the world with 100 million Prime memberships.

Facebook is the world champion social media company with 2.19 billion subscribers.

Google is the #1 search engine and developed the smart phone Android OS.

Netflix is the #1 digital-streaming-video company (at least for now) with 125 million subscribers.

Salesforce.com pioneered SaaS (Software as a Service) and is a leading-business-software-via-the-cloud provider.

Quick: Can you name a signature product/service directly associated with AT&T, GE, HP or IBM?

Being a jack of all trades, master of none leaves investors will absolutely … nothing.

https://www.cnbc.com/2018/06/19/walgreens-replacing-ge-on-the-dow.html

https://almostdailybrett.wordpress.com/2011/07/21/what-happens-when-the-music-stops/

 

 

Can Amazon’s HQ2 become … HQ1?

Did the Seattle Politburo go too far?

Talk about biting the hand that feeds you … Do they really want to Bern down Seattle’s competitive advantage?

Amazon employs 40,000 in Seattle (headquarters, roasteries and stores).

Let’s see an ANNUAL $275 Seattle employee head tax x 40,000 local workers = $11 million per year … just from Amazonites. Add in Starbucks, Nordstrom, Vulcan etc. and the per-employee tax reaches $48 million

The money  joins the $68 million already ostensibly allocated to fight intractable homelessness in Seattle.

But what inevitably happens when that amount of money is not enough?

As Mrs. Thatcher said: “The Trouble with Socialism is Sooner or Later You Run Out of Other People’s Money.”

Amazon already announced a short list of 19 American cities and one Canadian venue for its planned $5 billion, 50,000 new-employee HQ2 or Headquarters 2.

Are any of these venues threatening to impose a punitive tax on Amazon, just for the privilege of maintaining and hiring the best and the brightest?

What is the incentive to invest in Seattle, if entrepreneurial spirit driving, product producing, employee hiring multi-national, publicly traded companies are hit by its home town city council with the collective backs of their hands?

Let’s see, the State of Washington has no income tax. Seattle has a well-trained workforce.

The Great State of Texas has no income tax. The capital city of Texas has a well-trained workforce too. Austin is also the home of Whole Foods. Jeff Bezos and Amazon bought Austin-based Whole Foods for $13.4 billion last year.

Austin, Texas is on the short-list for Amazon HQ2.

Why can’t Amazon put Seattle in its rear-view mirror? The number one digital retailer/cloud evangelist could simply announce HQ2 (e.g., Austin) and the relocation of HQ1 (Seattle) in the same news release.

As mumsy always said: “If you are in a bad situation, get out of it.”

98 Percent Effective Tax Rate

Seven years ago, Almost DailyBrett wrote about how the UK was Taxing the Fab Four/Exiling the Stones.

Approximately 750,000 Brits qualified for an effective tax rate of 98 percent (no typo) including four from Liverpool and five more from London.

The Beatles responded by writing Tax Man as the first cut, first side of Revolver. The Stones left the UK for the South of France, and produced Exile on Main Street.

At a 98 percent effective tax rate, when does taxation stop and confiscation begin?

Surely, the Stones will never be mistaken for anti-tax warriors. Nonetheless, they demonstrated circa 1971/1972 that achievers can and will move in the face of excessive, unreasonable taxation.

Repealing The Tax … For Now

In the face of a potential referendum, which had already gathered 45,000 signatures, the Seattle City Council reversed course this week, repealing the punitive employee head tax on a 7-2 vote.

How often are tax increases, even so-called “temporary” taxes, rescinded?

The tolls for the Bay Area bridges were originally ticketed to be repealed once the construction bonds were retired. Try driving toward San Francisco on any bridge without first paying $5 or more?

Regardless of the employee head tax repeal, what message has the Seattle City Council sent to the entrepreneurial dreamers, innovators, and job producers who are located (or plan to locate) within the boundaries of the city?

The mere fact that the city council was willing and able to impose an annualized employee head tax $275 on each-and every corporate hire speaks volumes about how publicly traded corporations are viewed by Seattle local government.

Instead of welcoming and embracing entrepreneurs, they are essentially driving them away, their employees and their tax dollars.

Maybe Amazon will take a hint and announce the $5 billion, 50,000 new job HQ2 venue as not only the winning city, but also the new HQ1.

Will the last Amazon employee leaving Seattle, please turn out the lights.

http://komonews.com/news/local/seattle-council-repeals-homeless-head-tax-on-big-businesses

https://almostdailybrett.wordpress.com/2011/10/04/taxing-the-fab-four-exiling-the-stones/

https://www.seattletimes.com/seattle-news/seattle-city-council-to-vote-at-noon-on-repeal-of-big-business-head-tax/

https://www.cbsnews.com/news/seattle-head-tax-amazon-starbucks-repeal-today-2018-06-12/

https://www.king5.com/video/news/local/councilmember-talks-on-repealing-seattles-head-tax/281-8158550

https://www.nytimes.com/2018/06/12/technology/seattle-tax-amazon.html

https://www.nytimes.com/2017/06/16/business/dealbook/amazon-whole-foods.html

https://www.batolls.info/

http://komonews.com/news/local/amazon-starbucks-pledge-money-to-repeal-seattle-head-tax

 

 

 

 

Can’t tell you how many times this familiar admonition has been heard in classes taught by Almost DailyBrett.

Even though the pre-flight instructions are boilerplate, mechanical and dull, this one statement always gets your attention.

Put on your own air mask first … before assisting others.

The point is how can you help anyone else, if you are gasping for air? You can’t.

Americans are recognized as the most generous and giving people on earth. That’s part of the reason we are an exceptional country.

Please feel free to argue in favor of Norway, Sweden, Denmark or any other über-government nation of choice.

According to the Charities Aid Foundation (CAF), charitable giving by individuals as a percentage of GDP: America led the way at 1.44%, New Zealand 0.79%, Canada 0.77% and the UK 0.54%.

If you are scoring at home that means that Americans are contributing nearly 2x more than their nearest competitor.

Is generosity based upon heredity and examples of kindness demonstrated by parents? These are certainly factors.

There is another reason: Many Americans have bought low and sold high. They have invested in their own education. They have used their discretionary income for their retirement, their children’s education, the dream vacation, that new business they always dreamed about starting.

They have put on their own mask first by building personal/family wealth and prosperity.

They have realized that taking care of No. 1 is not selfish, but selfless. They are now in a better position to assist others, to write checks, to give back, to volunteer time to make a difference.

Taking Money Away From The Generous?

There is an unfortunate movement calling for ever-expanding governments in the name of the “public good” to penalize societal achievers with redistributive taxation. In return, there is the vision of guaranteed public sector jobs, free college, healthcare for all and maybe even the ultimate in entitlements: universal basic income.

Who needs college, a job or frankly anything else, when one has direct deposit for governmental largesse and the option to sleep until noon?

Will these souls be willing to part with even a small portion of their entitlement money for little or no work performed to assist others? Is it selfish or selfless to receive government subventions for simply breathing, eating, sleeping and performing biological functions?

Or is there another way?

How about coming up with a great idea? How about becoming an entrepreneur? How about having a dream? And if your vision is realized, then how about giving back big time to those less fortunate?

A great example is the Bill and Melinda Gates Foundation, which donated $41.3 billion so far to fight extreme hunger and poverty in developing nations. Bill Gates through his dreams, the creation of Microsoft, the unveiling of the ubiquitous Windows OS, and earning $92.9 billion in accumulated wealth, has made sure his air mask is tightly bound.

In return, he has assisted literally millions of others through his philanthropy and generosity.

Gates and his co-founder Paul Allen actually created Microsoft in 1975, not government.

Almost DailyBrett can’t stop thinking about how the Obamacare website repeatedly crashed and even its calculator didn’t work. “If you like your doctor or health plan … “

In contrast, how many tens of thousands transactions do Microsoft, Amazon, Apple … process per hour? And they overwhelmingly get these calculations right thanks to ingenious algorithms.

Shouldn’t the mission of a wise government be to foster an environment in which entrepreneurs can continue to dream, to build wealth and to give back to society?

The United States did not become the most generous nation on earth by accident. Our exceptional distinction was powered by those who put on their own mask first, and then … they assisted others, millions upon millions of others.

https://www.independent.co.uk/news/world/americas/america-new-zealand-and-canada-top-list-of-world-s-most-generous-nations-a6849221.html

https://www.donnaschilder.com/articles/life-coaching-articles/put-your-oxygen-mask-on-first/

https://thedijuliusgroup.com/put-your-own-mask-on-before-helping-others-your-best-is-unacceptable/

https://almostdailybrett.wordpress.com/2016/07/06/universal-right-to-a-paycheck/

https://www.gatesfoundation.org/Who-We-Are/General-Information/Foundation-Factsheet

https://www.forbes.com/profile/bill-gates/

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