I read an excellent little write-up this morning from Alon Bochman, CFA on the CFA Institute's Enterprising Investor blog. It was called, "Do Valuation Shorts Work?" The writer talks about the two main concerns mainly attributed to short selling: fraud and valuation. By his calculations shorting on fraud concerns heavily outperforms shorting based on valuation concerns. Keep in mind this data is a little biased as it only take into account the best and most well known short sellers.
One of several articles that I've read over the past week discusses a trend that I think will be with us for a while...cheaper oil and therefore gas prices. In this morning's WSJ, there was an article titled "Oil Glut Ignites Gasoline Price Swoon." I think we're in a sustained period of declining oil prices. While some may view this as a negative sign for economic growth, I tend to disagree. The US is producing more oil and gas than any other time in its history. There don't seem to be many signs of this slowing down vs. OPEC that historically controls the supply of oil. This obviously leads to larger inventories worldwide and we all know that when supplies go up price declines usually follow. The USD is also strengthening against most currencies, making it more expensive to buy oil internationally, which could hamper demand. Finally, the trends of making everything more energy efficient/increasing usage of alternative energy sources keep a lid on oil demand surging too quickly IMO.
I wonder if Cleveland will ever get the support it needs for this new form public transportation. Some may view it more as a tourist destination. Either way, it would be pretty fun to ride this to work! Check out the Cleveland SkyLift here!
I know everyone is going to be talking AAPL, AAPL, AAPL today, so I'll focus on something a little different. There was a great article that I read in the WSJ last night called "Why More Renters Aren't Buying (Hint: Weak Incomes, Savings)." I haven't honestly seen this trend within my realm of friends because most of them want to live in cities, but I definitely believe it. I bought a condo out of college and it was one of the most painful experiences in my life. The lenders were ridiculously unorganized, slow to respond (talking days between emails or calls), and they had a hard time believing that someone out of college had enough money to put a down payment on a place. It will definitely be interesting to see how this trend flows over time, especially as it seems multi-family strength has been driving the housing recovery. I also thought this quote from the article above was really interesting, "One popular trend cited frequently in the press is that millennials and other renters have permanently turned away from owning homes after watching their parents’ generation take it on the chin during the housing bust."
So I've had a bunch of extra time on my hands lately (if actually interested as to why...shoot me an email) and it's impossible for me to sit still. That being said, I finally read through the several hundred articles I had saved on my safari reading list. I stumbled upon this excellent article from a while back and I COULD NOT AGREE MORE. Check out this writeup by a former AMZN employee discussing their misunderstood business model. To any Amazon skeptics out there...please read and comment, so we can discuss...if you'd like!