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Strong Retail, Wal-Mart, and Tech Bolster Markets As Oil Slumps On Covid Europe Bump!

If you think Independence Day is America’s defining holiday, think again. Thanksgiving deserves that title, hands-down.” —Tony Snow

During the next week, most Americans will be preparing for and then celebrating Thanksgiving. It is the quintessential American holiday. Families gather with their loved ones and friends for the sole purpose of spending time with each other and eating. What could be better? When you add sports to the mix, well, it happens to be a really great day. Part of thanksgiving is the inevitable travel which goes along with it. You see, Wednesday is the busiest travel day of the year. Airports and roads are jammed packed. It is no wonder as grandma’s stuffing, mashed potatoes, and pumpkin pie are waiting. There is another important item which uses Thanksgiving as the line of demarcation. It is called Black Friday, the day after when holiday shopping starts in earnest. We all know this has been pushed forward earlier and earlier, but it remains a big day on the business calendar.

From a seasonal perspective, retailers know how critical the holiday time frame is for their yearly profits. In the financial markets, this time of year begins a period where markets usually rally. Investment banks line up plenty of stock and bond underwriting business. As the year winds down, companies use the year end as an opportunity to buy whatever is needed for the upcoming year. If there is a deduction out there to be had, now is the time to find a reason to buy that piece of equipment. It is amazing how accelerated depreciation can be a motivating factor. Advertising usually sees a big push as the end of the year is applicable in that area as well. All of these factors come together to combine for a quarter which is typically pretty strong.

In the markets last week, the big news came from Wal Mart as it beat earnings expectations. Two big tech titans, NVIDIA and Intuit blew past their estimates and helped the NASDAQ finish on an upbeat tone. In the media space, Liberty held their annual investor conference. For many years I attended the event, which is always run extremely well and in a first class manner. A few years ago I decided I was quite familiar with Liberty and didn’t need the hassle of traveling to the east coast when the weather could become pretty difficult. Still, it is always a good idea to pay attention to what Liberty is doing. You might watch the clip with Malone’s opinion on the current state of the market. I believe the term he uses is ‘land grab.’

On that note, next week will be a rather abbreviated schedule with Thursday an off day. I hope all readers travel safe and have a wonderful Thanksgiving with your family and friends.

Thank you for reading the blog this week, and if you have any questions about investing, please email me at information@y-hc.com.

If you know of anyone who could use our investment advice, please don’t be afraid to reach out or pass their name along.

If you would like a free consultation regarding your portfolio, click here to set one up!

Interested in finding out your investment style? Take an investment assessment from Positivly!

Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the potential loss of ones principal.  Past performance is no guarantee of future results.  All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one’s overall financial situation.  The fact that Yale Bock has earned the right to use the CFA designation does not mean Y H & C Investments will outperform broad market indexes.

Johnson & Johnson and General Electric Decide It’s Time to Split As Inflation Spike Causes Concern!

There Are No Secrets to Success. It is the Result of Preparation, Hard Work, and Learning From Failure.’ Colin Powell

Many years ago, TD Ameritrade held their annual advisor conference in Las Vegas. I don’t go to these kinds of events as they are not my cup of tea, but I made an exception in this case. You see, one of the legendary investors and corporate raiders was speaking at the event. Boone Pickens, the famous oil baron, was giving a fireside chat. Long familiar with Boone, these kinds of opportunities don’t occur frequently, so I decided to see what wisdom he would impart. Boone entertained and enthralled the audience for an hour. Between his stories of Texaco and Carl Icahn, along with his knowledge of all forms of energy, it was an hour well spent. The key takeaway was his famous quip: ‘A fool with a plan beats a genius with no plan every time.’

Let’s just apply the principle to one important event to see it’s validity. In the 2020 presidential election, Donald Trump campaigned extensively. Joe Biden, knowing how much the Donald was hated, decided to campaign by staying at home. We all know the outcome, and right now, most of the country is trying to forget it. In this case, only the most important contest in a very long time, a plan beat no plan (you could rightly say both sides are fools). Why is this important?

The reason I bring this up is because the fiscal year is ending. Many corporations are engaging in three and five year plan updates. It is a time to consider where things currently stand and how to approach the next twelve months. One area to think about is your tax situation and ways to be as tax efficient as possible. Let’s consider some actions you can take at year end to help your circumstances in April.

First, understand what range your adjusted net income might fall in (use last years returns as a guide). It is important because it determines the tax rate you will pay. Second, analyze your portfolio to see where you can take losses to offset gains. Third, consider giving gifts of cash or stock to your kids. Fourth, if there is a charity you admire, maybe donate cash or appreciated stock to that entity. Fifth, if you are over 72, make sure you take your required minimum distribution. Finally, if you own a small business, especially if you are in a high income tax bracket, consider setting up a 401k plan with a cash balance alternative (ESOP if you are in a high tech field or are large enough to think about issuing stock. Note: I can help you with the 401k situation through a partnership with Bidmoni/Fiduciary Shield). Now is the time to update or create your plan to make sure Mr. Biden doesn’t get more than his fair share.

In the market last week, the major corporate news came from two corporate giants deciding to split up their companies. Both General Electric and Johnson and Johnson believe they can create more value for shareholders by separating their enterprises into different pieces which have their own public stock. It is a sound strategy because it concentrates resources and allows for better incentives for employees in those businesses. It also gives each entity a currency once the separation is complete. Management teams are always energized when they can control their own destiny.

Elsewhere, on the earnings front, the headline performer was Disney. It missed subscriber numbers but saw a big rebound in its theme parks. The other big market news was the strong inflation number. The CPI came in at 6.2% for October, which was the highest reading in thirty years. A couple of more resignations from the Federal Reserve Board gives jumbled Joe plenty of responsibility for the future composition of the Fed. Even more interesting for the market is Mr. Biden is expected to announce a decision on Jerome Powell’s future relatively soon (most observers expect by the end of November). Powell is under increasing pressure from the emergence of inflation, and I would imagine Joe would like to keep the dovish Powell on the job. I’d lay the odds at 60-40 he stays- what do you think (drop me a line to share your opinion)? Thank you for reading the blog this week, and if you have any questions about investing, please email me at information@y-hc.com.

If you know of anyone who could use our investment advice, please don’t be afraid to reach out or pass their name along.

If you would like a free consultation regarding your portfolio, click here to set one up!

Interested in finding out your investment style? Take an investment assessment from Positivly!

Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the potential loss of ones principal.  Past performance is no guarantee of future results.  All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one’s overall financial situation.  The fact that Yale Bock has earned the right to use the CFA designation does not mean Y H & C Investments will outperform broad market indexes.

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