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Google taking on Amazon in retail market

Retail market

While Amazon is head and shoulders above any other retailer in the world, with a massive online presence, it seems that Internet giant Google is not happy to sit on the sidelines. Over the last few weeks the company has announced an array of partnerships with the likes of Walmart and Home Depot with Target yet another confirmed partner. It seems as though the introduction of Amazon’s Echo system, which allows users to order products in their own home from Amazon using voice commands, has pricked the intrigue of competitors.

Massive retail market

You can imagine how people would be interested in sitting back, speaking into a smart speaker and ordering whatever they required. The Google Home “smart” speaker system is very similar to Amazon’s idea but obviously Amazon already has access to millions of different products. However, Google is now building up a very strong supply line with the likes of Target, Walmart and Home Depot offering a massive range of different retail products between them. Continue reading “Google taking on Amazon in retail market”

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Cost saving mergers don’t always work

Learning to hold your investment nerve

How often have you come across a merger of two companies where there were “obvious synergies” and cost saving opportunities? These events seem to happen on a regular basis although when they are visited further down the line all is not as it was promised. There is nothing wrong in a merger of two companies to save money and increase the value of the sum of the parts but cost savings are not necessarily everything.

Short-term gains

When two companies merge and there are opportunities to save costs, merge head offices, merge operations and utilise the skills of a wider workforce, everything looks rosy. What tends to happen is these cost savings drop into the bottom line very quickly and can show a significant increase in the short-term profitability of the merged group. However, there are many other issues to take into consideration! Continue reading “Cost saving mergers don’t always work”

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Why do stocks tend to move before fundraising?

Would you trust Donald Trump with your investments?

If you follow the stock market you will understand that on numerous occasions you will see share prices fall for no apparent reason only to find out there is a funding operation in the pipeline. Once you know what is going on behind the scenes everything seems to fall into place but how does this work and why do stocks tend to move downwards before fund raisings?

Information exchange

As we have mentioned on numerous occasions, stock markets should be seen as information exchanges as much as trading platforms. There are literally thousands and thousands of different views and opinions injected into the marketplace via trades and the “natural” price emerges. Some of this information is in the public domain while some of it may not yet be available to the wider public and deemed to be inside information. Whether the authorities like it or not, there is no doubt that share prices do react to both public and non-public information and this will always be the case. Continue reading “Why do stocks tend to move before fundraising?”

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Is this the beginning of the end for free speech?

Can older companies/sectors compete with new technology?

Free speech has been the cornerstone of democracy since time began and while governments have attempted to censor free speech in years gone by the Internet brought a very different challenge. There have been some very embarrassing leaks of data from governments around the world which seem to have jolted the politicians into action. While there is no doubt that many people do abuse the idea of “free speech” there is also no doubt it has kept politicians “honest”.

Stock market whispers

In years gone by we heard allegations of insider trading rings making millions of dollars by trading on inside information. The Internet has in many ways disbanded these insider trading rings, although some of the larger ones still exist, as the information is often readily available on the Internet. Speed has always been of the essence when it comes to investing and it is no different today. Continue reading “Is this the beginning of the end for free speech?”

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Why the market always wins in the end

Currency movements and inflated profits

If we look back in history there are many examples of times when politicians have attempted to influence stock markets around the world. In the short term the may have had an impact upon sentiment and valuations but in the medium to long term, and in many cases the short term, the market always wins.

George Soros, the man who broke the Bank of England

The 16th September 1992 is commonly referred to as “Black Wednesday” when the UK government was forced to withdraw from the European Exchange Rate Mechanism (ERM). One of the main problems with the ERM was the fact that the Bank of England had attempted to maintain a consistent level between sterling and the German mark. This continued despite the fact that British inflation was far greater than that in Germany and it gradually became harder and harder to maintain a consistent level between the two exchange rates. Continue reading “Why the market always wins in the end”

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Why disappointing news is not always bad for a share price

Why constant stock-market gambles never pay off

It may sound a little strange to suggest that disappointing news from a company is not always negative for a share price. The idea that the company has disappointed is obviously negative but there are situations where share prices can actually respond in a positive manner. How can this be?

A fear of the unknown

If we take for example Tesla and concerns about the company’s production of the new Model 3 we know these have hounded the share price for many months. The company took massive pre-orders totalling US$14 billion and even the modest deposits have assisted cash flow in the short term. However, despite assurances from the company that they would be able to deliver on time many analysts thought otherwise.

As a consequence, we have seen an array of different comments and suggestions about the future of Tesla with many using this information vacuum to create mischief. Concerns about cash flow, future profitability, gross profit margins and the ability of Elon Musk to lead the company in the future, were discussed openly. However, this week the company confirmed there will be a delay in producing enough Tesla Model 3 vehicles to deliver pre-orders on time. Continue reading “Why disappointing news is not always bad for a share price”

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Why a delay in Tesla’s Model 3 production is good news

Tesla shares surge

Over the last few days we have seen significant volatility in the Tesla share price although it ended the week relatively strong. There was a sell-off down towards $330 level on news of production delays to Tesla’s Model 3 mass-market vehicle. On the surface these delays are disappointing, there is no doubt about that, but if you dig a little deeper, things may not be as bad as they seem!

Production is ramping up

Within the next 12 months Tesla is expected to go from producing hundreds of vehicles a week to a staggering 5000 vehicles per week under a new manufacturing system. This has caused significant cash burn for the company which has raised billions of dollars over the last few years. However, the fact that the ramping up of production of the Tesla Model 3 has been put back should not be seen as a major disappointment. After all, the majority of analysts fully expected the timescale to slip! Continue reading “Why a delay in Tesla’s Model 3 production is good news”

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Billionaire fund manager Nelson Peltz praises Donald Trump

Are markets concerned about the US/Chinese trade war?

Billionaire hedge fund manager Nelson Peltz has this week been extremely vocal about the US economy and what he believes to be a positive impact from President Donald Trump. This is one of very few positive comments regarding Donald Trump and the US economy but the fact it comes from a billionaire hedge fund manager has not gone unnoticed. So, how does Nelson Peltz see the future for the US economy?

Much stronger economy than anticipated

When you bear in mind that Donald Trump has a long way to go to fulfil many of his central promises to the electorate, perhaps the economy is performing better than expected. This is certainly the view of Nelson Peltz who is very keen to keep the current status quo regarding interest rates. At this moment in time the dollar is relatively weak which has helped the US economy although this could change in the short term with further interest rate rises expected in 2017.

Continue reading “Billionaire fund manager Nelson Peltz praises Donald Trump”

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Were shareholders right to sue Mark Zuckerberg?

Apple banking on transformational 5G

There is no doubt that Mark Zuckerberg is the name, the face and the brains behind Facebook both in its early days and the current day. This is a man who took on the establishment, fought night and day for his business and has been handsomely rewarded with billions of dollars in riches. However, a group of Facebook shareholders recently sued Mark Zuckerberg’s over his plans to reclassify Facebook shares. Were shareholders right to take legal action?

Plans by Mark Zuckerberg

While Mark Zuckerberg has been named as the man behind plans to reclassify Facebook shares into three different classes, it was really a board decision. The idea was to create one class of shares with no voting rights and effectively allow Mark Zuckerberg to retain full control over the business despite selling down his stake in the past and probably in the future. In effect the lawyers argued that the company was looking to differentiate between economic consequences, i.e. selling shares in the company, and control over decision-making. Surely this is a fair point? Continue reading “Were shareholders right to sue Mark Zuckerberg?”

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Creative minds are not always the best business minds

What does 2020 hold for the US stock market?

In the world of business, we have all come across situations where company founders have created the catalyst for a great business but have been unable to maximise the potential. They may have created a life-saving drug, a technology which could change the world or simply refined and improved an existing product. In the early days the momentum behind growth businesses can push them to a certain level under little guidance and more led by potential than actual success. It is at this stage where company founders can often find it very difficult to “let go of their baby” and let somebody else take it on to fruition.

Knowing your place

Despite the fact creative minds are often very intelligent people that does not automatically mean they are the best business minds. There is a big difference between “thinking outside of the box” and structuring a business in regard to funding, staffing and direction. Just because you are good in one area does not mean that you will automatically excel in others. This is a common misconception not only amongst people on the outside looking in but also creative minds themselves. Continue reading “Creative minds are not always the best business minds”