Y H & C Blog
Recession is Built In, the T-Hause, and Facebook gets the London Olympics-
July 4 has come and gone, and the summer Olympics in London are rapidly approaching. Summer is usually a more relaxed time, and the record hot temperatures across the United States have literally put a little fire under most people. In stock markets across the world, trading volumes are usually light and this year is no exception. In looking at the volumes over the last few weeks, the average volume is half of what it might be during the fall or winter. As a result, the volatility is more pronounced. With the profit warnings from Cummings, Nike, AMD, and the bankruptcy of Patriot Coal, investors are very nervous over the possibility of a global recession.
From my perspective, in many ways, the world economy is already in a recession. Unofficial unemployment in the U.S. is already 15%, and that does not include the underemployed. In many mature European countries, you have official unemployment rates hovering well above 10% and youth unemployment above 20% and in some cases closer to 50%. Stock markets have done very little for 15 years, and bond yields are incredibly low. Many believe the continued low interest rate policies of the Federal Reserve are the proper medicine to fight deflation. Many disagree as well, sighting a persistently sluggish economy and lack of jobs and hiring in the private sector. I think most people are sick of the finger pointing and want results, not excuses or blaming the opposing political sides. If people want bickering, they can look at their young children and teenagers and get enough disagreement to last a lifetime.
Let me include a shameless plug for a new business I am a part of, the T-Haus (www.californiathaus.com). 
I have been drinking loose leaf tea since my sister in law Jacci Aronson introduced it to me last December. Drinking tea has become a wonderful daily habit for me and I thoroughly enjoy preparing a different tea each morning and evening. If you have any gift needs or would like to try drinking loose leaf tea, you might go to the site and call Jacci for more information. She will certainly provide you plenty of information to make the experience enjoyable. (If you have any interest at all, just enter your email address and you will be added to our mailing list).
Social Media is just so powerful and it is helping change the business landscape very quickly. Those who embrace it will prosper, those who don't will fall by the wayside. Here is a nice piece about a fashion related startup- http://techcrunch.com/2012/07/11/social-media-for-the-fashion-conscious-chicisimo-chalks-up-800k-in-angel-funding/
The Olympics are going to be integrated with Facebook. Lots of people doubt the company, but I am not one of them-http://www.nytimes.com/2012/07/11/business/media/nbc-and-facebook-announce-facebook-partnership.html?ref=business
Nice article about how to help achieve your goals-http://www.businessinsider.com/five-steps-for-achieving-your-goals-2012-7
Finally, I know it is hot, hot, hot, so make sure you drink plenty of water, or tea- hint, hint, to make sure you stay hydrated. Have a great rest of the week and weekend.
Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.
Here are some Seeking Alpha articles Yale Bock has written about specific companies.
Summer Slowdown, A New Tea Store, Who Need's PC's, and the London Olympics-
Over the weekend, Greece citizens decided to elect a government that is more responsible than a completely idiotic party. Well at least they did not decide to do the stupid thing, however slim the margin was. In fact, many argue the best thing for Greece and Europe would be to have them leave the European Union. I know this, I am pretty confident Germany is fed up with all things related to Greece, and at this point so am I. I find it amazing there are those who believe the fault lies with Germany because they enabled poor fiscal habits by the countries in Southern Europe. Still, Germany finds itself in a tough position as 42% of its exports are to the rest of Europe. If you think Germany wants to see the Euro fall apart, you are badly mistaken.
In the United States, again we see the same old calls for more monetary stimulus to counteract a possible slowdown in the economy. Hello, do these people ever operate in the world? Do they not know the summer is always slower? People do take vacations, slow down, take it easy, you know, that kind of thing. Today, Federal Reserve Chairman Ben Bernanke decided to extend 'Operation Twist' until the end of the year. Great, continued record low interest rates at the long end of the bond curve. It has really worked so far, hasn't it Uncle Ben? He would argue it has, as the economy is not in recession, or even depression. I suspect until the election in November, we are at a stand still, in the economy, in the stock market, and politically, whether we like it or not.
The NBA Finals continues this week as the Miami Heat have jumped out to a 3-1 game advantage over the Oklahoma City Thunder. As always, playing smart and not making mistakes are usually the path to success, and this series has been no exception. Turning the ball over and not making open shots are not winning recipes.
The Olympics is less than a month away, and I am very excited to see them. I think England will do a great job as a host and the world will be captivated, as always, by the pageantry and great competition. Apparently, tickets are very hard to get-http://www.bloomberg.com/news/2012-06-20/olympic-tickets-sell-for-20-times-face-value-on-secondary-market.html
I recently started drinking loose leaf tea and really enjoy the experience. There are many different kinds of flavors, with a great majority of them potentially very good for you. Many kinds are high in anti-oxidants, which have a number of positive health attributes. Apparently, Starbucks agrees with me as they are opening a store in Seattle which just sells tea-http://seattletimes.nwsource.com/html/businesstechnology/2018473295_tazo20.html
Finally, it is interesting to see more and more of the world move away from personal computers. I love the Ipad, and if Intuit ever makes a Quickbooks version for it I am in like flynn. The PC is probably not going away any time soon, but it will be nice to have more options than to be stuck with Microsoft products, which I think are awful. Here is an article about a move to virtual pc's-http://www.businessinsider.com/this-company-just-yanked-out-500-pcs-to-get-windows-7-from-the-cloud-2012-6
Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.
Here are some Seeking Alpha articles about specific companies written by Yale Bock.
How to Identify Winners, Beating the London Whale, and an Interview with Mitt Romney-
Success is not easy, and it is not supposed to be easy. The whole world admires and embraces winning, and people are rewarded for it, in many instances, far more than they should be. Failure is not tolerated, and in society today, ridiculed. However, what most people don't quite get, is that success is born from failure, if a person can learn from their experiences. So how does one identify people or businesses, or entities which are going to be successful? What qualities should you look for?
1) Leaders who are bold and not afraid to lose. It is easy to find people at the top who are always hedging their bets. Hedging is a good strategy, especially if you have large gains. However, to be a big winner, you need people at the top who have a bold plan about what they are going to do, and how they are going to do it. One such leader is Howard Schultz, the CEO of Starbucks. I can remember listening to a presentation by him when their stock prices was way down in the dump. Their strategy was impeccable, and they knew exactly what they had to do. Not once did their strategy change. Over time, the company executed and the performance spoke for itself. Shareholders get rewarded, and the success is played up in the press. Schultz and his team learn from their mistakes, and are applying those lessons to all areas of the business, in countries across the globe. If the stock gets pounded again, believe me, I buy a lot more.
2) Leaders who embrace the challenge, and stick with the task all the way from start to finish. Many people hope they get an opportunity with a successful business or organization. However, most often, the real big chances one has are in situations which look very bleak.
I am very familiar with the head coach of the Oklahoma City Thunder, Scott Brooks. Mr. Brooks has a background which anybody can and should admire. He was not drafted out of college, played a year in the CBA, and made the Philadelphia 76rs when they had Charles Barkley and Maurice Cheeks. After playing 10 years or so in the NBA, he wanted to coach and had to start by being an unpaid assistant in something called the American Basketball Association. He landed a job with the Denver Nuggets as an assistant, and then moved to Seattle to work for PJ Carlesimo. The team then moved to Oklahoma City, and Carlesimo was fired twenty or thirty games in after losing every game by nearly 20 points.
Brooks is given a chance to coach the team as an interim coach, which he embraced. The team wins 20 or 25 games that year, and the franchise rewards him with a 3 year deal to coach the team permanently. OKC wins 50 games in his first year, and has now made the Western Conference Finals two years in a row. Mr. Brooks takes advantage of his opportunities, and they have a heck of a chance to win the NBA championship. He played young players like Russell Westbrook, Kevin Durant, Serge Ibaka, and James Harden and has stuck with them, sometimes suffering losses which were difficult. Now the team is poised to reap the rewards of those lessons, possibly for a very long time. A big thing Brooks has done is to emphasize the essential habit of trying to improve each day. If you get better every day, over the long term, it adds up to tremendous improvement.
3) Leaders who are building for the future, as well as executing today. You should look for organizations who are strong today, but have large ambitions for how to go about growing in the future. I look for companies who are investing in the largest countries in the globe- China, India, Brazil, Russia, Indonesia, etc, as a way to grow for the future. You want companies or leaders who place a large emphasis on positioning for the path going forward. You want to see what plans are in place, and how the group is executing versus those plans. Many talk about their plans, but you don't want talk. I want to see action- partnerships, agreements, new stores, new products, goals for next year, three years, five years, etc. A great example of a company which invests in the future is IAC Interactive- led by Barry Diller (yes, full disclosure, my clients and I own shares in IAC). Diller is investing in the future, and has his hands in a lot of pots, across the globe. Will they all work out? No, but he does not need them to.
Nice story in the NY Times about how JP Morgan got unseated by a smart trader-
Great Interview by Peggy Noonan with Mitt Romney-?http://online.wsj.com/article/SB10001424052702304707604577424642695167400.html
Mobile Shopping is a huge opportunity-?Mobile Online Shopping Holds The Real Opportunity In Mobile Payments
A massive difference in global gas prices- http://www.bloomberg.com/video/93419911-where-in-the-world-is-the-cheapest-gas.html
Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital.
As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.
Here are some Seeking Alpha articles about specific stocks written by Yale Bock.
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