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The Best of What They Said and I Read Week Ending 4/8/2018

 Short excerpts from articles I found interesting.

I may not agree with the author and the following material is not intended as investment advice.

Barron’s – April 6, 2018 – Tariff Fears and a Jobs Report Send Stocks Lower?  by Ave Salzman

“Before Thursday evening around 7 p.m., stocks were on an uptrend after closing higher three days in a row. Then came a directive from the White House, asking staff to find $100 billion worth of Chinese goods to hit with tariffs. Suddenly the trade “not a war” was back in the headlines, and stocks were back in the red. On Friday alone, the Dow Jones Industrial Average fell 572 points.”

“For the week, the Dow lost 170 points, or 0.7%, to 23,932.76. The Dow is down 10.1% from its January closing high, technically in correction territory. The Standard & Poor’s 500 dropped 36 points, or 1.4%, to close at 2604.47. The Nasdaq Composite fell 148 points, or 2.1%, to 6915.11. All three indexes have fallen in three of the past four weeks.”

The Wall Street Journal – April 6, 2018 – Can Big Tech Stocks Grow Without Limits – by Jason Zweig

“…Have big tech companies developed an unstoppable business model?  Charlie Munger, Warren Buffett’s business partner, rarely shows much mercy toward investing beliefs he regards as foolish. But when he was asked at the February annual meeting for shareholders in his Daily Journal whether Google, Facebook, Apple and Amazon are overvalued, Mr. Munger said, “I don’t know. Next question.”  Traditionally, the bigger companies have gotten, the harder it has become for them to keep growing at the same rate. For today’s leading innovators, however, growing might not have to mean slowing. Unfettered by the costs of raw materials or the burdens of manufacturing, distribution and advertising, these companies plan decades ahead, rather than fixate on hitting Wall Street’s quarterly earnings targets.

“…A small set of superior companies drive returns in the long run,” says Mr. Anderson…That study shows that the stock market’s entire return over time has come from fewer than 4% of all stocks.  Of course, history also suggests that every firm that was expected to dominate indefinitely — from RCA in the 1920s to IBM in the 1980s to Nokia in the 1990s — has ended up slipping.”

U.S. Global Investors – April 6, 2018 – Investor Alert – by Frank Holmes

“…For the first quarter of 2018 and for the month of March, small-cap domestic stocks, as measured by the S&P 600 Index, ended with a positive gain. The S&P 400 Index, composed of mid-cap stocks, did slightly less better in March…Both groups fared better than the 500 largest U.S. companies, which were hit by international trade jitters. S&P 500 firms, after all, derive about half of their profits from overseas markets.”

If you recall, small-caps skyrocketed  in the days immediately following the 2016 presidential election as investors anticipated the implementation of “America first” policies—deep corporate tax cuts, deregulation, tariffs on imported goods—that would greatly favor inward-facing companies.  Investors are making a similar bet today…Morgan Stanley says the rocky stock market could be rescued by the record $400 billion of dividend payments that will boost investor cash holdings during the period from March through May.”

“…Members of the tech industry are increasingly looking at blockchain as a solution to recent negative headlines, ranging from data breaches at Equifax to improper data collection with Cambridge Analytics. “Everything is moving toward people saying, ‘I want all the benefits of the internet, but I want to protect my privacy and my security,” says Bradley Tusk, founder of Tusk Strategies. “The only thing I know that can reconcile those things is the blockchain.” Venture capitalists have invested half a billion dollars in 75 blockchain projects during the first three months of 2018.


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