The major U.S banks have finished up their Federal Reserve stress tests. Nearly every bank passed, though a few (BB&T, JP Morgan, Goldman, Ally) didn’t pass or got a conditional pass which requires some changes to their financial plans.
Most of these banks are flush with cash and are wanting to increase dividends, buy back stock and retire debt. This stress test gives the banks the green light to move forward. If you are invested in corporate debt, this means more of the same: high interest rate debt will be retired plus newer issues will be at lower interest rates. The low interest rate policy of the Federal Reserve has helped to force all kinds of interest rates down. Even though everyone currently thinks that the economy is getting stronger, the interest rate picture still is the same story: debt interest rates are trending down. Unfortunately, this might mean that some of the debt I own now will be called.
This is still playing out, we will likely continue to see low interest rates even after the Fed starts to pull the punch bowl.
It’s not a good time to be an Apple investor right now. It may be a good time to become an Apple investor. If you are an experienced investor, you likely will get excited when quality companies are sold off, especially for what may be dubious reasons. Since the stock is damaged, you can sit back and take the time to perform a good analysis. You will have time to establish a position, maybe for even lower prices.
The question is, what is the bull case for Apple today, if any? I’m going to look at Apple not how the typical Wall Street analyst or mainstream financial writer looks at it, but as a value investor would who is interested in owning a great business.
For the new year, we will be bombarded with new investment ideas, portfolio returns from everyone, and the constant drumbeat of analysis/FUD/predictions from the major media financial programs. It’s a good time to take a step back and turn all this stuff off. Keep your focus on what your are trying to accomplish with your portfolio.
The biggest threat to your portfolio is giving in to the temptation that you need to do “X” (whatever it is this week) because its the newest “trend”, will get your awesome returns, and the story is “developing”. There are so many things you could invest in, some of them will be great ideas while many won’t be great ideas. Or if it is a good idea, you need to confirm that you (and not someone else) can actually make money with it.
During the weekend, it’s relaxing to drink coffee and…read the newspaper!
Newspapers still have value, there is an experience here that can’t be duplicated with an iPad. Though, I have to admit that I don’t read newspapers that much anymore.
If you are a person of a certain age (say over 35), you probably at sometime in the past remember getting a paper newspaper delivered to your home. It’s been over 10 years since I last had a NY Times print subscription. Like many things you develop as a habit when you are a child, I still have affection for reading newspapers – especially the Sunday edition. As much as I like everything available electronically, sometimes it is too much and overwhelming.
My company just notified me that I can now get my W2 form electronically.
I’ve been gradually moving all of my financial communications from paper mailings to electronic forms. The last straw for me was when the Post Office lost one of my tax returns last year. It was mailed on April 17th, probably went into the same truck that all the other tax returns were in, going to the same destination. And yet they still lost it. I can’t remember the last time I bought a book of stamps, it might be more than 10 years ago.