Something else to remember, not just for VZ, but for most companies with high debt levels - the cost of refinancing is much higher now than it was during all those years when the FED was maintaining those artificially low, near zero, rates. I forgot to mention that in my last post. I don't see interest rates going much lower for quite a while. They won't keep going up for a long time, but I think they will come down slowly. And hopefully we won't have the FED creating artificial near zero interests rates ever again. A free market should regulate itself, for the most part. Exceptions should be few and very temporary.
Something that I often think about, and I'd love to hear your opinion, WXYZ, as well as the opinions of others: What long term effect will all the 'work from home' have on office real estate holdings? There are literally TRILLIONS - not billions - of dollars valuation in office real estate. The latest and best estimate I've seen was something on the order of $20 to $23 TRILLION in the United States. If long term 30% or 40% or 50% of that office space - or more - lies VACANT - what effect will that have on the economy - not just the specific investments with exposure? In addition to WFH, won't AI reduce the need for office space, as well? I have some real estate and real estate related holdings in my portfolio, but during the COVID lockdown timeframe, I sold the ones that had significant exposure to office space/buildings for this very reason - I am NOT advising others to do the same! What say you?
Yeah Zukodany.......it is a big issue for collectors....what to do when they are getting older and they dont think their kids will care about any of their items. There always seems to be a lot of big time "stuff" coming to market from older collectors that want to spare their kids having to deal with selling everything when they die. We have tried to educate our children about what things are worth. I am sure there are some things they will keep that they or their spouses like. BUT....for the most part there will be much they will have to sell. I have tried to make a list of particular auction houses that handle particular items.....and....that I think are the best seller. At some point if we have to downsize into Senior Living or some other arrangement.....we will have to sell some items while alive.....or.....start to divide things up with the kids.
Yeah Rayak. I am not too sure that "employee surveys" about productivity are very accurate when their obvious BIAS is to not have to go in to work. The operative word in that sentence is......"think". This stuff will all sort out over the next couple of years. I suspect that a lot of people that face a job loss due to AI are going to find out that in person "relationships" count for something.......at least in terms of whether you are in the first round of lay-offs or the last round.
I dont follow VZ but I do know that their big issue is loss of subscribers. This could obviously pressure the dividend. For what they are worth....a couple of articles: Verizon's first quarter doesn't inspire confidence that it will turn things around this year. https://www.fool.com/investing/2023/05/15/verizon-will-keep-losing-subscribers-in-2023-if-th/ Verizon Has Big Hopes for myPlan: Exec Shares Economics, Goals https://www.telecompetitor.com/verizon-has-big-hopes-for-myplan-exec-shares-economics-goals/
Maybe there is a big pool of consumers who will go for VZ myPlan - but I don't see why... It doesn't appeal to me, certainly. I never had any cell phone provider but Verizon for the first 20 years that I used a cellphone - the other networks just couldn't compete on quality, signal and reliability where I was. But by 2017 or 2018 they were catching up, and more good options were available. I have very good service now for much less than I would pay with Verizon, and I don't care about their 'new' $10 a la carte 'perks'... Still, I separate my view of them as a consumer from my view of them as an investor. I like them a little better as an investor than as a consumer, but after I mentioned my small holdings in a previous post, I checked to see exactly how much VZ I've got. Less than 100 shares... less than 1% of my account.
I am with WXYZ in that I think working from home for a lot of people is a recipe for coasting and laziness. That and people physically being present bouncing ideas off each other in real time and having that real presence is invaluable. It's essential for our social and mental acuteness. As long as a company has real human workers, most of the time, they should be working with each other in some domain, whether that be an office or park, I do not care. Now as far as AI and the future is concerned, I really cannot see an need for all that office space when so many jobs are becoming automated and slimmed down. I see a LOT of white collar jobs gone in the next 20-50 years. It's the blue collar trade jobs that will remain for much longer. Some of these office skyscrapers will probably need to be repurposed for residential. Probably not commerce thanks to internet shopping. City centers are going to transform drastically in the next 50 years for sure. And not to get too political, but the concept of UBI needs to start becoming a more common discussion. World population is increasing and the number of jobs being obsoleted by technology is growing. Bored people with no sense of belonging leads to crime and a decline of society. We can already see signs of it with this new "gig" economy. Overworked and no benefits. UBI might be the only thing that keeps our consumer economy going in the future.
I like that roadtonowhere08 has expanded the question above to include the impact of AI. Work from home has obviously had a HUGE impact on the market value of office buildings.....especially in the city center. AI will probably have an even larger impact on the office or commercial building market...in both the city center and everywhere else. In addition.....all the political issues that touch on culture, society, the homeless, crime, etc, etc, will continue to escalate and impact the city center office building and retail building market. This is going to be HUGE and long term impact. BUT......we have seen collapses in office and retail buildings in the past....even if they happened from other causes. The market will simply slowly.....very slowly...... adjust over time. Values will adjust. Some owners will go bankrupt. It will be the market at work. There are no guarantees in business. Some cities......will thrive...even with all that is happening in the city right now. Many more cites will FAIL to thrive and will end up in a long term spiral downward. As people flee......they will be caught up in a inescapable whirlpool of decline as the tax base goes down, down, down. I think the difference between the few cities that thrive and the many that sink into decline will be the extent that the city can evolve to residential high-rise living. Austin is currently a good example of a city that has made the transition to being a residential city center. I think we are looking at a 25-50 year process......before there is any clear answer. The big wild card will be how long the political, social, cultural, "stuff" continues and the ultimate impact on the city. At this point I would say it DOES NOT LOOK TOO GOOD.
I have been siting and watching and listening to the markets since the open today.....to get a "feel" for the day. We have now evolved for the day to green across the board on the averages. It seemed like a typical open based on what we have been seeing lately. My guess.....we are in for a day similar to yesterday with the markets moving up in spurts during the day and closing UP very nicely.
A good thing to keep in mind. When Startups Turn Down https://www.fisherinvestments.com/en-us/insights/market-commentary/when-startups-turn-down (BOLD is my opinion OR what I consider important content) "Contrary to myth, start-ups aren’t one-way investments. Editors’ Note: MarketMinder doesn’t make individual security recommendations. The below merely represent a broader theme we wish to highlight. Once upon time, apple pie and baseball were supposedly the biggest American hallmarks. But these days a challenger has seemingly usurped them: the obligatory congressional testimony from the head of every financial company that implodes. So it went today, with former Silicon Valley Bank (SVB) CEO Gregory W. Becker testifying to the Senate Banking Committee on the bank’s risk management practices and his opinion of why it failed. Most coverage honed in on his assertion that Fed rate hikes bear the blame, but we found a far more interesting rabbit hole in his prepared remarks: When you marry the eye-popping growth in SVB’s business deposits in 2020 – 2021 with a Wall Street Journal report on venture capital funds’ sweeping writedowns Tuesday, you get a pretty good look at how the market is squeezing the froth out of Silicon Valley—and a very timely reminder that start-ups aren’t one-way investments. Ever since the Tech boom started in the 1980s, there has been a big public fascination with startups and Initial Public Offerings (IPOs). Apple. Microsoft. Dell. Netscape. Google. Facebook. Even when booming companies busted in equally spectacular fashion, onlookers dreamt of getting in on that initial jump and then selling at the exact right time. Startups often lure workers with generous stock compensation packages, offering visions of a huge windfall that will land them a Bay Area house when they inevitably conduct an IPO or get bought by a larger competitor at a huge premium. As headlines hyped success stories and press releases glowed about every company that got new funding at a huge valuation, it cemented the perception that startups go one way and one way only. Myths like this tend to attract money. A lot of it. A massive wave poured in during COVID lockdowns and their aftermath. While some basic COVID winners in Tech and Tech-like industries saw returns, profits and valuations jump, speculation also kicked in. The boom in Special Purpose Acquisition Companies (SPACs)—holding companies that go public with the express purpose of merging with a private startup—was another. But a lot of the froth was stealthier, building up in startups. They attracted money hand over fist, and so did their venture capital investors as institutions and high-net-worth folks sought to juice returns. Given startups had stayed private for longer and longer since Sarbanes-Oxley raised compliance costs for publicly traded companies in 2002, getting in on the action pre-IPO increasingly looked like the only way to capture big riches. Froth is hard to measure, but SVB’s numbers give a pretty solid clue as to how much money chased startups in the COVID era. In his testimony, Becker reiterated that SVB’s deposit base was concentrated in technology and life sciences companies and described it as a place “where start-ups and later-stage companies could keep their deposits, borrow to expand their businesses, and create jobs.” From 2015 – 2019, he said SVB’s assets grew around 10% a year. In 2020, that growth rate ballooned to 63%. In 2021, it grew “another 83%.” Those are huuuuuuuuuuuuuuuuge figures that imply startups and later-stage pre-IPO Tech companies were attracting a wall of capital. Becker’s testimony didn’t include a growth rate for 2022 … or, for that matter, any stats on how the bank’s deposits trended that year. We think there is a simple reason for this: 2022 is when the party ended. Around Silicon Valley, there were anecdotal reports of venture capital funds pulling back. Many startups that still received funding did so in “down rounds,” at a lower valuation. In publicly traded markets, Tech and Tech-like industries got hit hardest during the bear market as the prior years’ excess reversed. Private companies didn’t immediately reflect the same hit, largely because their investors’ reporting requirements differ. Private equity and venture funds may report quarterly or annually, depending on the requirements where they are domiciled, but there is no set criteria for valuing their illiquid holdings, which enabled some to take their time when writing down the value of struggling startups. When we wrote about this last December, we noted that the delay created the misperception that unlisted securities were somehow less volatile than their publicly traded counterparts—a dangerous myth. But as the Journal reported Tuesday, more are now paying the piper. “For the first time in more than a decade, returns for venture funds were negative for three consecutive quarters last year, according to research firm PitchBook Data, as investors finally began to mark down startups that had ballooned in value. Initial data for the fourth quarter also show a negative quarterly return. The data also show that the yearly internal rate of return hit minus 7% in the third quarter—the latest data available for that measure—the lowest value for those three months since 2009. The internal rate of return is used to measure the profitability of venture funds on an annual basis and is a key performance metric used by the industry.”[ii] One fund has written down startup values by a third. Other funds and their limited partners see more pain ahead, with more writedowns and tighter liquidity. Higher long rates have torpedoed the old model of using cheap leverage to juice returns and startup valuations. Fundraising is down. Without a flood of new money coming in, startups will have to make it on their own, and many will probably fail. From a cold and rational perspective, this is a good thing for the Tech world and US economy’s long-term health. When companies that lack a viable long-term business model are allowed to fail, it cleans the slate (and frees up funding) for newer competitors to take their place. This “creative destruction” is a driving force of capitalism and long-term development, and it creates returns and rewards risk-taking in the long run. That propels economies forward and makes everyone better off. Economies that can’t go through this process stay bloated and uncompetitive, which usually means slower growth and weaker returns (see: Japan). But also, it is a very important reminder: Startups go down as well as up. Investing in them isn’t a free windfall, nor is private equity somehow an isolated asset class from public equity. Hard as it may be to fathom, the valuations that get attached to funding announcements are just one group’s estimate of the company’s value. In reality, as long as a company is confined to private markets, the only valuation that matters is the last one—the one on the IPO date, the one an acquiring company pays, or the goose egg that accountants pencil in when the company fails. That last one happens often; it just doesn’t get publicized because it isn’t a fun story. In our view, this is what those rushing into startups during lockdown missed. It was a classic hunt for the next big winner, the behavioral error of trying to buy a repeat of past returns. That may work, very occasionally, if you pick the right needle in a very big haystack. More likely, you will pay through the nose to participate in venture funds whose holdings are diluted and illiquid, and you will quickly find that between redemption gates and early withdrawal penalties your personal returns are nowhere close to what you envisioned. Now, compare that to publicly traded stocks. They are liquid, so you can know at any time what your holdings are worth. They are easy to access—you don’t need to go through intermediaries that charge several percentage points for the privilege. In many cases, commissions are zero or close to it. If and when you need to sell, you can do so with reasonable expectations that you will get the most recently quoted price—and that a buyer will be ready to step in. Best of all, while the broad market may have a less exciting return than cherry-picked startup successes, stocks’ roughly 10% average historical annualized return can compound to very large absolute returns over a long enough time horizon. That isn’t quick riches, but that isn’t what investing is about. It is about discipline, patience and a journey to long-term returns. MY COMMENT It all boils down to the usual......are you a speculator or gambler.......or.....are you an investor. With all the advertising and media attention given to people making a fortune on some investment, many new investors or young people see investing as a chase for that one big score. Most people that try to invest in the next big thing will FAIL. It will be part of the learning process for them. This is why I focus on the PROVEN.....DOMINANT companies. This is also why I am a fan of simple SP500 Index investing. For me it is all about the PROBABILITIES. Trying to hit that......."next great thing"......business and make a big score is an extremely low probability venture.
The markets so far today: Stocks mixed amid debt debate, Walmart earnings https://finance.yahoo.com/news/stock-market-news-today-live-updates-may-18-2023-114726384.html (BOLD is my opinion OR what I consider important content) "Stocks were mixed on Thursday morning as investors await updates to the ongoing debt ceiling debate and quarterly results from Walmart (WMT) flashed resilience from the American consumer. The S&P 500 (^GSPC) rose 0.05%, while the Dow Jones Industrial Average (^DJI) lost 77 points, or 0.22%. The technology-heavy Nasdaq Composite (^IXIC) was up 0.45%. President Joe Biden left for Asia on Wednesday with no debt ceiling plan in place but enough optimism to help send stocks higher on Wednesday. House Speaker Kevin McCarthy told reporters that Wednesday's discussion “set the the stage to carry on further conversations.” “We are starting to see enough common themes in their views to feel confident that a deal is going to be announced in relatively short order,” Jefferies US Economist Thomas Simmons wrote in a note on Wednesday. “Given the June 1 X-date warnings from Treasury and the time it takes for the legislative process to play out, we could see an announcement of a framework as soon as Sunday when Biden returns from his trip to Japan for the G-7 meetings.” Meanwhile, Walmart (WMT) stock ticked up more than 2% in early trading as America's largest big box retailer reported higher same-store sales growth than Wall Street had anticipated. Walmart also boosted its full-year adjusted earnings per share forecast from a range of $5.90-$6.05 to a range of $6.10-$6.20. Shares of Chinese e-commerce giant Alibaba (BABA) fell more than 3% on Thursday morning after reporting mixed quarterly results compared to Wall Street's expectations. The company also announced the spinoff of its cloud business has been approved. The report comes after several warnings on the consumer, particularly in discretionary spending, have come from the likes of Home Deport (HD) and Target (TGT) earlier in the week. On the economic front, investors have been closely following hints regarding the Federal Reserve's next decision on interest rates. While markets had priced in a more than a 75% chance of a pause in interest rate hikes at the Fed's June meeting entering Thursday, Dallas Fed President Lorie Logan provided a more hawkish tone. "The data in coming weeks could yet show that it is appropriate to skip a meeting. As of today, though, we aren’t there yet," Logan said in a speech to bankers in San Antonio. Weekly jobless claims came in lower than expected. The U.S. Department of Labor reported 242,000 claims for the week of May 13. Economists surveyed by Bloomberg had expected 251,000. Unemployment claims the week prior came in at 264,000. Thursday's drop marked the largest weekly drop in US unemployment benefits since 2021. The drop comes after reports suggested that fraud inflated figures in Massachusetts. Existing home sales declined 3.4% in April. The 4.28 million existing home sales came in lower than the 4.3 economists had projected, per Bloomberg consensus data. In March, 4.43 million existing homes were sold." MY COMMENT The market averages info above is now out of date for the day. ALL are now green although the DOW is bounding around some. As to the debt ceiling....you will note that I did not BOLD anything about it. Pure political theater. Mostly the same with the FED......the markets are starting to simply ignore them. They do have the ability to still move the markets.....especially if they pull out a surprise rate hike once in a while. BUT.....people and the markets are tired of them and their constant trashing of the markets. At the same time they have little to no credibility. What really will matter to inflation and the economy will be the final normalization of all the economic distortions and disruptions of the IDIOTIC economic shut-down. As to earnings......the media gives them just a little lip service as they wind down.........there is no value in the HUGE BEAT that was earnings this time around.......it is not negative news so it will be generally ignored. In a month or two we will see the usual DIRE PREDICTIONS hitting the media regarding the next round of earnings.
That is it for me right now.....I have some important work to do.....vacuum the house. The markets dont need my help anyway. We have now been in a rising market.....actually a BULL MARKET....since last July. Dont take my word for this....simply look at the return for the SP500 for.....1 day, 5 days, 1 month, 3 months, 6 months, YTD, 1 year, 3 year, 5 year......ALL are positive. This BULL MARKET in hindsight has been going on now for ELEVEN MONTHS. Yet.....as often happens.....it is disrespected and not accepted as real. This refusal to accept what has been happening now for nearly a YEAR.....is a classic hallmark of a young BULL MARKET. Actually......I am not hearing much out of all the so called "experts" that have been telling us for the past 6-12 months how we are going to retest and push to a new low in the markets. Their silence is deafening.
Good question rg7803.......it has been asked before, but long ago. ACTUALLY......I NEVER re-balance. I let winners run. Once in a while I will sour on a holding and sell it. When that happens I sell ALL shares and immediately reinvest in my other holdings or my two funds. I operate on the theory that as long as I am willing to hold a stock....I will let it run. I dont like to second guess what is happening over the short to medium term. Now when I was managing my mom's account.......I did re-balance a little bit. She got to where she had about 14,000 shares of PM (Phillip Morris). Those shares were throwing off tens of thousands of dollars in dividends per year which were reinvesting in more shares. It got to where that one position was huge in her account. Considering her age and the tobacco litigation danger.....I made the choice to not reinvest all those dividends. So I started to spread a good portion of them around to her other holdings. That company was a long term gold mine for her account. She held that stock from about 1966 till her death nearly 50 years later. I think she started with less than 100 shares....perhaps even less than 50 shares.
I am seeing a nice big gain in my account today. It is a BOOMER day for the NASDAQ and of course what I own. I have two down stocks today......HD and HON......and they are both very slightly in the red. SHOW ME THE MONEY.
in regards to refinancing, I seriously doubt that a company at the caliber of VZ will ever have to refinance, they can simply sell off assets to raise cash, buy back stock etc… if it was a smaller cap company - I can see that as a problem. in regards to AI and real estate. First off - AI is nothing but a trend now, it has massive speculation chatter and with that comes the higher prices. I wouldn’t go as far as saying that it’s in a bubble since the forward pe is not even remotely close to what tech stocks showed in 99. That said, it is a trending topic - there’s definitely money to be made there NOW, but in 3-6 months this will fade into the digital dungeons of so many other hot topics, be it clean energy, EV or medical marijuana. In regards to work from home and the risk of commercial real estate fading/collapsing. No. Way. will never happen, real estate is probably the most sound and secure investment you could ever have, and as anything else - key locations will always do well. Especially commercial real estate. There is definitely WAY too much doom and gloom talks about commercial real estate than warranted - look at a company like SL Green (slg), the stock has been punished because speculators fear that the end of commercial real estate is near for all the reasons you mentioned. But when you look at the actual numbers you see the real picture - occupancy ratio for SLG went from 94% before the pandemic to….. 90% today… that’s it! And for that the stock is being punished and had fallen off a cliff… are you kidding me? I can tell you that right now is an excellent time to buy commercial real estate associated stocks, go with big companies. I own O realty and they give you a monthly dividend and are very attractive right now, I likely will add more in a month or 2. Will these stocks go high by the end of the year, maybe, maybe not, but by next year they will be up again and the good news for those buying now is they will lock in that super attractive Div rate.
That said, I DID buy a small stake at PLTR this morning at the open. It’s tiny, so nothing to write home about, but I do like the company, management, vision, I do like that they’re the only game in town, they are profitable and oh yes, AI related, although not exclusive. If the stock falls in coming days I will bounce right out, if it goes up another 10% I will consider adding more right away.
Anyone caught that Musk interview on CNBC? Hysterical yet amazing. He was asked if he will let Tesla workers work from home… he said Eff no! According to musk he has 50,000 employees and over 1.8 applications processed. In other words, it’s tougher to land a gig at Tesla than get into Harvard
You have got to LOVE Elon. A great visionary business man and engineer......and.....great entertainment value.
I am STILL doing abut the same in my account as of a few minutes ago.....but......now, I am ten for ten to the green side in my stocks. I am not sure we can hold on to the close.....but I sure hope so. I want to lock in the gains that I have been seeing in my account all day.
