Hurricanes,
typhoons, and cyclones are all tropical storms. Mostly they differ only in hemispheric location. Does it matter what we call them? All create chaos and loss, with a halftime pause. This year’s hurricane season ends on Saturday, November 30th.
Wall Street and those who comment on said have no season. They create chaos and toss shit around all year long. We saw that this week. Xerox? You Fa King kidding? 92%YTD. Oops. But then the Real Real’s apparently not all real, and neither is scads of the coffin nail-pounding hog shit spun by the street. Spin is just business, like loose electricity, regardless of the brute nonsense it’s made of.
We do our own homework, like a mad typhoon. Why? It’s nobody’s money but ours, and trust is no substitute for knowing. Even really smart, savvy, and honest people disagree, and blunder sideways to the tune of billions. On Wall Street you often can’t even tell you’re in a blow, until you’re already spinning. Besides, you don’t really want to repeat goofy moves made by others while crouched in “The Eye of the Storm.”
Who
knew? You can run a business focused on maintaining commercial copies in the digital age, and your stock will rocket over 92%YTD. That’s crazy. Copier maintenance? That’s about as digital as a service that trails socially indifferent dog walkers. That’s Xerox. Up 92%YTD. Hum. Does anyone remember the Xerox spots with the woman dodging the golf ball? What do we learn? Xerox tracks subway fares. And that’s supposed to be impressive? Now they want to acquire a company four times their market cap. You want impressive?
Madoff whistle-blower Harry Markopolos called out GE as a fraud and everyone yawned. On All Hallows Eve GE reported a Q3 beat of 42%. Behind that number loomed their $9.5 billion write down of Baker-Hughes. And behind that sat their humongous debt. Total Debt/Equity 333.8. That means GE’s debt is 333.8 times greater than the value of all outstanding shares. Scared yet? Behind that sits GE’s dividend payout ratio–1154.2%. That means they owe in dividend payments to shareholders more than 11 times what they have. They have a trailing P/E ratio of 1336.4 and a PEG ratio of 303.3. Remember that a 2 is considered “expensive.” They do have a forward P/E of 18.9. Amazon sells for a PEG of 1.59. With horrific metrics like that buyers have yet bought in, pushing the price up 31.8% over the past 20 days.
Who doesn’t love 92% growth, or 31.8%? Yet investing’s not speculating and paper copiers and massive debt are not the future. Investing’s about expansion, a sane balance sheet, development over time, and that doesn’t mean Fa King satellite TV. How many vanishing subscriptions does it take to sink a ship?
Why
talk T? T’s working. T can pay you. T has a payout ratio of 95.6%. That means after they pay, they have lunch money left over–not much. AT&T’s Direct TV sub losses are definitely sinking that small and embarrassing part of their monstrous and unmanageable business. But so what–they can pay. “Debt?” you ask? Total Debt/Equity 90.2. That means they owe 90-to-1 of equity. 5-to-1 debt to EBITDA, not equity, is considered marginal. 2.5/1 debt to EBITDA is good.
A pale reminder of AT&T’s dishonesty shambled back into the light again this week. T finally ceased it’s brainless fighting and settled with the FTC over the “throttling” scandal begun in 2011. Embarrassing. Why point this out? Because both business and investors often seem to have great difficulty behaving rationally. Lies and deception are irrational. T’s deception from 2011 is yet floating around today. Will we learn that GE’s been doing the same
When technology proceeds in reverse we’ll buy Xerox. When bulldozers fly Xerox will buy HP. When the apocalypse comes AT&T will make money off Direct TV. When we grow a sixth finger per hand, and begin to believe everything we’re told, GE’s PEG ratio of 303 will become attractive. The share price move in XRX has no second act. No long term underpinning exists. CFRA’s now suggesting that XRX’s largest 2020 revenue source will be inorganic; the resolution of their twisted and now antagonistic dealings with Fujifilm. And that is the story. And why go over any of this?
The market routinely offers up crazy for our consumption. And occasionally, in the moment, it may even seem plausible–or smart. Think WeWork. SoftBank’s Vision Fund, the venture capital operation, is neck-deep in Uber. VC’s are often regarded as visionaries–thus the name. Yet SoftBank, a Japanese conglomerate just took a $4.7 billion loss due to it’s VC arm’s huge stake in office sharing venture WeWork. What did billionaire Masayoshi Son, the founder of SoftBank Group say?
“Really bad Judgment.” That’s what SoftBank founder and tech-centric Vision Fund brain Masayoshi Son had to say about their billions wasted in floundering WeWork. Investing’s more than piggy-backing on the thinking of so-called knowledgeable people. That’s why we do our own thinking. Even the savviest insiders blow it.
This
week Jim Cramer spoke directly to the issue of forthrightness. What did he say? Powell’s been hiding behind the data. He’s “following the data” as Powell puts it, rather than simply admitting that he blew it by raising rates earlier this year. What else? No recession is on the horizon. And all the recession talk? Money managers are lagging the benchmarks as the year nears its’ close. And?
The job of any money manager depends, ultimately, on their performance. The benchmark is king and many are behind. Thus much of the recession talk was an attempt by money managers attempting to manipulate the market, thus allowing them an opportunity to catch up before the calendar runs out. That’s what he said.
Big surprise. How many buy
“recommendations” have you heard that make absolutely no sense at all? Think 3M(MMM), or yes–Johnson & Johnson(JNJ), or Uber. It seems as though Wall Street and so-called “financial firms” set the very standard to dishonesty in business. You don’t really need to look any further than a fund manger telling you to buy Uber, a company that told you directly “We don’t know if we’ll ever be profitable.”
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BAM!!! Straight talk is good!
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