• 05 May
    There is a Huge GAP Between Reported and GAAP Earnings

    There is a Huge GAP Between Reported and GAAP Earnings

    • Real earnings are currently 25% lower than pro forma reported ones.
    • The other consolidated income statement can also hide surprises.

    Introduction

    How would life look if things were as you saw them or exactly like someone presented them? Surreal for sure as it would require a non-human mind to objectively process information and accept a situation as it is. People usually fall in love with the wrong person or feel depressed over nothing important. The same is applicable in business, but it’s strongly biased toward falling in love with one’s business and refusing to see the flaws of it. Such a behavior results in a large gap between pro forma reported earnings and official Generally Accepted Accounting Principles (GAAP) results. More →

  • 04 May
    Investment Opportunities in Iron Ore

    Investment Opportunities in Iron Ore

    • Iron ore as a commodity faces long term oversupply.
    • The shift to a service oriented economy lowers Chinese steel demand growth.
    • Short term euphoria makes iron ore and related assets great for trading.

    Introduction 

    Iron ore is the world’s most mined and commonly used metal as 98% of it is used to make steel. As steel is mostly used for infrastructure and building it is not surprising that China is the world’s biggest consumer of iron. China produces 50% of the world’s steel output and 47% of the world’s iron ore. More →

  • 03 May
    Tax Holiday Could Repatriate $2.1 Trillion

    Tax Holiday Could Repatriate $2.1 Trillion

    • US companies have more than $2.1 trillion abroad.
    • 12 years have passed since the last tax holiday.

    Introduction

    A tax holiday is a government incentive to businesses where it lowers or eliminates a tax for a period of time. The most interesting tax holiday for investors is a corporate income tax holiday on the repatriation of foreign cash. Typically, any repatriated cash is subject to a 35% corporate income tax and therefore US corporations are reluctant to repatriate it and keep their cash abroad. The last tax holiday was voted by Congress in 2004 when companies where allowed to repatriate cash at a 5.25% tax rate. Many companies took advantage and repatriated billions of dollars. 12 years have passed since then and it is time to look at what the investment opportunities are related to an eventual new tax holiday. More →

    By Sven Carlin Investiv Daily Tax Holiday
  • 02 May
    Facts, Fears and Opportunities in China

    Facts, Fears and Opportunities in China

    • Even if China is slowing down, the growth is still excellent and the potential is huge.
    • The Chinese market is 43% down from its 2015 high.
    • Short term fears might give trading opportunities as the long term trend is a growing one.

    Introduction

    In the last twelve months there has been a lot of talk around China with various economic forecasts and explanations which resulted in a severe negative influence on markets ranging from stocks to commodities. This article is going to give an overview of what happened in the last year, and some scenarios of what might happen and how that should influence financial markets. More →

  • 29 Apr
    Monetary Policies – US, Europe, Japan and China

    Monetary Policies – US, Europe, Japan and China

    • Central banks hesitate to increase interest rates.
    • Monetary easing does not manage to fuel inflation.
    • If inflation arises stocks should be the best protection.

    Introduction

    The central bank of a country determines the base interest rate at which it gives loans to banks who add a risk premium and give loans to corporate and private customers. The base interest rate is therefore the primary factor for the stimulation of economic growth and reach of target inflation. More →

  • 28 Apr
    An Analysis of the Latest Earnings Reports

    An Analysis of the Latest Earnings Reports

    • “Sell in May and go away” doesn’t sound so foolish anymore.
    • The Dow Jones Industrial Index average revenue has declined by 4.1%.
    • High liquidity and employment enables buybacks and pension funding that keep the market at high levels.

    Introduction

    Recently there have been some surprising earnings debacles. This article is going to elaborate on them and discuss possible reasons and consequences of the earnings misses. More →

  • 27 Apr
    The Buyback Conundrum

    The Buyback Conundrum

    • Buybacks should increase shareholder value, but that’s not always the case.
    • From a book value perspective most companies are destroying value.
    • From a return on investment perspective the logic behind buybacks is open for discussion.

    Introduction

    The goal of investing is to enjoy stock price appreciation and dividends, but there is another method for achieving interesting returns: buybacks. With stock buybacks, a company buys its own stocks on the open market. As a public company cannot fully own itself, the purchased stocks lower the number of outstanding stocks and increase the relative ownership of the remaining stockholders. In other words, the company is using its cash to invest in itself. More →

  • 26 Apr
    Copper as an Investing Opportunity

    Copper as an Investing Opportunity

    • Copper has declined due to a strong dollar, increased production and a slowdown in China.
    • In the long term a supply deficit is expected as mining grades are constantly getting lower and demand is steadily growing.

    Introduction

    Commodities in general have been in a slump for the last 5 years; the Dow Jones Commodity Index peaked exactly 5 years ago on April 26 2011. High 2011 commodity prices induced new investments that—combined with low interest rates—made it easier to finance new projects, eventually increasing supply. With limited growth in demand the inevitable result was a contraction in prices. More →

  • 25 Apr
    A Broader Perspective on the Global Economy

    A Broader Perspective on the Global Economy

    • Easing monetary policies go on globally but do not seem to fuel sustainable growth.
    • China is slowing, Japan is looking toward another recession, and the global outlook is adjusted downwards.
    • Bad news might be around the corner, but good news is as well.

    Introduction

    News is usually focused on the latest happenings. The fact that the human brain is set up in a way that it always tries to focus and eliminate marginal information brings to the consequence that most people do not objectively analyze the world around them. An example: How many blue cars have you seen today? Probably none because you were not looking for them, but as soon as you focus on them you will be surprised by how many you will see. The same applies to finance. More →

  • 22 Apr
    On International Diversification

    On International Diversification

    • Markets are more correlated in the short term but strongly diverge in the long term.
    • Currency movements further fuel international divergence.
    • Being overweight a certain market or currency means carrying additional risks that could be removed by international diversification.

    Introduction

    One issue that is more often off than on investors’ minds is international diversification. Historically, cross-country equity correlations have been far from perfect but they are becoming more correlated in recent times. The higher correlation is not a reason to shun international diversification. More →

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