January #hottakeoftheday

Here’s the full list.  Most popular was January 19th (but who’s counting…)

fire wallpaper
Photo by Pixabay on Pexels.com

January 31, 2019

The first full month of #hottakeoftheday is behind us. The takeaway: “Some days you hit the nail on the head. Some days you accidentally put the hammer through the wall.”

Perhaps Eleanor Roosevelt said it better: “Do what you feel in your heart to be right – for you’ll be criticized anyway.”

And anyway – people have short memories. Remember Christmas Eve day when the world economy was collapsing, interest rates were rising, stocks were tanking and the best thing about Christmas was that the market was closed so it couldn’t fall? Exactly. Neither do I! Now where’s my e-trade account password…

January 30, 2019

Some days, you feel like the Ray Dalio of your generation. Other days, you wonder why you got out of bed. I am just grateful to live in a country where I have the opportunity to do both. And I can trust the results of our elections or say and write whatever comes to mind without fear of anything other than looking silly (which clearly I am fine with)

What is happening in Venezuela is shameful. And I know writing that doesn’t make it better. So I reflect on being lucky and hope it comes to a fast resolution for the betterment of everyone living there.

January 29, 2019

Venezuela sanctions. China negotiations. Government back to work. I’ll leave those to reporters today. I’ve seen three shows on Netflix in the last two weeks that have blown my mind. “Tony Robbins: I’m Not Your Guru”, “Fyre” and “Bird Box”. Different. Intense. Surprising. Definitely worth watching.

And I’m not just saying that because I own Netflix in the #SIUIndex … although if you upgrade your subscription to the HD streaming, I won’t stop you….

January 28, 2019

I wrestled all day yesterday with the subject of corporate share buybacks. Are they “good”? Are they “bad”? What does that even mean? You can spin yourself in circles debating the impact on share prices, companies and shareholders. And then I came across the chart below.

To state the extremely obvious – the thing that bankrupts companies are not share prices going to zero – it’s not being able to pay your debt. Executing buybacks and not paying down corporate debt may jack earnings per share but if the economy is truly slowing – the debt level chart is what is gonna bite us and scares me most.

Paying down debt isn’t fun. Or sexy. But you have to eventually – don’t you?

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January 27, 2019

Would you interview this guy? Neither would I! And it’s me. (It was for a party – I promise).

You might not care how you dress or appear to other people but I promise you – they care a great deal.

The lesson – don’t limit your potential because of a misdirected sense of fashion or need to express yourself in a unique and external way. Conform! You can dress anyway you like after you retire!

In the meantime – if you feel compelled to make a statement – wear fancy socks.

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January 26, 2019

I put money in my sons 529s this year so I had my financial planner do some modeling. Apparently- they want to go to Michigan and Harvard. How cute. The planner came back, handed me the model and told me it will cost $390,000 per kid. Not a typo. I’ll send the model if you want.

Think about that! What job with what degree pays that debt? At 5%, you have to make $30,000/year before tax just to pay the interest!

Way back when, I was recruited to Princeton to play squash (and presumably get a degree). I toured campus and stayed overnight. Amazing place! Then my dad saw the tuition: $30,000 per year. The other option was to stay at home and go to University of Calgary at $1,800 per year. (These are 1995 dollars) My dad and I discussed it and eventually I said – “give me the money and I’ll educate myself”. He never did – but assuming he put the $110,000 difference in tuition in a stock account – it’s probably worth $400,000 today and that means he and my mom don’t have to move in with me now! Win-win.

Would my life have been different going to Princeton? I hope not.

Needless to say – I told my boys to start looking into University or Phoenix – it is, after all, the Harvard of the online world.

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January 25, 2019

800,000 government employees miss their 2nd paycheck today. I’ll bet if you asked them December 15 how “secure” they felt with their jobs and their income, almost all would have said “very secure” (it’s the government, after all!)

How many months of income do you have socked away for a surprise “shutdown” in your employment?

 

January 24, 2019

Write drunk.  Edit sober.  (This post used to be longer)….

 

January 23, 2019

I am deleting my Twitter account today. Why? The “student in the MAGA hat video” was the tipping point for me. The source of the video was a “schoolteacher”. This industrious “schoolteacher” tweeted 130 times a day; had 40,000 followers and got 2.5 mm views of the video. Guess what?!

The schoolteacher is actually a blogger in Brazil who’s video post hijacked CNN this weekend. Sure. CNN is to blame for picking it up and not asking “is this really news?” but the post got 2.5 million views! According to a study in 2018 by the Pew research center – 66% of all links sent out are “Bot” generated. My question – how many of those views driving videos viral are “Bots” and “fake” people.

If a fake teacher can spawn a national outrage, can I really trust anything on Twitter? I’m voting by deleting my account.

 

January 22, 2019

Wouldn’t it be refreshing if every right leaning person in the US had to watch CNN for a week while every left leaning person had to watch FOX News? And then go for dinner with someone they disagree with – to talk and to listen. Conversation is the most important part of democracy.

You could argue it would benefit everyone to hear a view different than their own. I argue that the biggest benefit of “crossing viewership” is that networks would have to generate real content and discussion and stop broadcasting news as sensationalist entertainment to one side or the other.

Amongst all the “real” issues we deal with to put food on our tables – a kid in a MAGA hat yelling and being yelled at isn’t a surprise – anyone watch the meeting in the Oval Office between the President, Speaker Pelosi and Leader Schumer?? I’m more apt to forgive a TEENAGER who doesn’t know any better than our AGED elected officials holding 800,000 federal workers hostage.

If you disagree – reach out to me. We should talk about it.

 

January 21, 2019

My son and I were in Philadelphia for a hockey tournament this weekend.  We went to Independence Hall, the American Revolution museum, toured Villanova and Penn and we accidentally drove through a neighborhood we most certainly did not mean to visit.

There were houses half standing, boards on windows and one clearly had a major fire that reduced the living space to one room – which was being lived in.  I’m sure I could have purchased half the cars we saw for the cash that I happened to have in my wallet at the time.

Between “Dad! Get us out of here” there was a lot of “Thank you for being my Dad- I am so lucky”.

Luck.  The difference maker between many million dollar ideas and failed entrepreneurs.  The difference between the 14 year old’s life that was watching us drive by and the 14 year old in the car saying “get me the hell out of here.”

How then do you break the cycle of poverty, when I can afford to take my son to Philly, learn about American history together, play hockey and plan and invest in his University career while the child on the street corner watching us drive by has none of those opportunities.  Not everyone in West Philadelphia has a rich Uncle in Bel-Aire like the Fresh Prince, it turns out.

Taxes may pay for schools but what if the students going aren’t seeing modeled behavior that cares about education?  More than half the children born into the families of the bottom 20% – stay in the bottom 20%.

Can I pay my income tax bill in community mentorship credits?

philly

January 20, 2019

When those of us who are over 30 were kids – we ran around the neighborhood, seldom saw our parents during the day, climbed trees, biked everywhere and generally self governed.

Kids of today – mine included – spend more time inside, more time with their parents supervising (or at least in proximity), less time with peers and more time in organized activity. And none of that to mention the access to knowledge and the world on their smartphone. What does this mean for our children in their 20’s and 30’s as they start their life without their parents…

My son is 14 today. I remember the day he was born and asking the nurses “are you sure I’m ready to parent?!” All these years later- I’m still not sure I’m ready as his world is so different than the one I grew up in. Like the China tariff/trade war – I may not be able to judge success or failure for another 15 years.

Nonetheless, as parents, we do the best we can with what we are given. For his birthday – I am buying him a paperback called “tell your therapist I wasn’t a horrible father because I gave you a cell phone as a kid”. Kidding. That’s not a real book. Yet.

 

January 19, 2019

40% of American adults don’t have $400 for an emergency expense if it were to happen today. That’s staggering. 10% of all groceries in America are bought on food stamps. Many have no option but to resort to credit card debt to cover bills which has 18+% interest rates.

On the flip side… a 63 year old who had saved all his life; never taken vacations with his family and had a list of all the things he would do when he retired, died his first day of retirement. True story. Ask Peter Mallouk. His advice. Your kids are going to get to use all the money you saved to do all the fun things you never chose to do. One way or another – your money will be spent.

Between the two scenarios – there is a happy medium. Invest hard in your career when you are young (I’m not joking- do it), save rigorously and live within your means until you have “enough” – and accept that you, me and everyone we know are going to die … so let’s try to have a little fun along the way.

 

January 18, 2019

If you are thinking about leaving your job to make 10-15% more cash – I would advise you to think very hard about it. Equity is more than cash comp: it’s your relationships, your knowledge of the politics and your realistic awareness as to how you fit in with your company. Kid home from school today – no problem. See you tomorrow. Parents in town – enjoy the day with them.

Here’s a thought – in 10 years, you will make 1 more year of salary (at 10%). If you change jobs and hate it, or get downsized (last in, first out) or your new boss quits and goes somewhere else or a million other things – how much “equity” did you trade away for cash.

Leave because you hate it. On a risk adjusted basis, you may find yourself much happier where you are. And happiness is the best form of equity I know. On the bright side – the statistics show most people know this as only 12% of people leave a job for more money (even though 89% of bosses think that’s the reason).

January 17, 2019

Jack Bogle, the man Warren Buffett has said did more for the average investor than anyone in the world, passed away yesterday. The founder of Vanguard Group created low cost index funds that allowed investors to buy baskets of stocks with a 0.08% management fee instead of the typical 1-2% for wealth managers. A life well lived. On the subject of fees, why are commissions for residential properties so friggin’ high? I search out the house; I can easily do comps online and I secure the financing. Please explain why I’m paying 6% for the seller’s broker to wait for me to show up? 1-2% feels a lot more reasonable. We need another Jack Bogle.

 

January 16, 2019

I would prefer to talk about this season’s “The Bachelor” but I have been told that’s not cool. Instead – I guess we’ll talk about first times. The UK has rejected PM May’s proposal to leave the EU; the US government has been shut down for the longest ever and the Chargers still haven’t won a Super bowl. How do we cross the precipice? Bottom line. There needs to be a win-win that everyone believes in. That means communication and a respect for the opposition. Sadly – we are in uncharted territory and I think that means “The Bachelor” guy may find a win-win before anyone else does…

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January 15, 2019

Brexit is the personification of what happens when you ask a question you don’t want to know the answer to. Do you still love me? Does this shirt make me look fat? Should we leave the EU? The downside of an answer in these cases usually dramatically outweighs the utility of knowing.

59% of Britons now favor staying in the EU. Oops.

 

January 14, 2019

Researchers have shown that productivity drops up to 66% in open office environments because of the impact on the auditory system.

Human brains are trained to decipher signals from the noise and when there are background conversations, they are almost impossible to ignore. Investing in sound masking technology can help recover some of the productivity loss (up to 46%).

If you don’t like open office environments, now you have some data to back it up.

 

January 13, 2019

What is the risk premium that should be built into the stock market when it is only one tweet away from wild swings up or down?

On the one hand – the President could capitulate with China and the market should love it – “I have signed a trade deal. Tariffs done.” And up it goes!

On the other – the President could tame inflation by driving oil prices lower – “thanks for the bbls OPEC, I’m delaying Iranian sanctions” and energy gets crushed.

It’s hard to be “invested” when it feels more like gambling on someone’s Twitter habit.

 

January 12, 2019

The average life expectancy of a man in North America is 80. Do you see your dad enough?

 

January 11, 2019

71% of S&P 500 boards have a mandatory retirement age – the most frequent being 72 (43%). 77% of companies have term limits. So America’s largest and most influential companies believe that there is an age and duration at which point you become less … useful.

It begs the question: why don’t the legislative, judicial and executive branches of our government follow best practice of the companies that drive the economy?

Something to think about when our government is shut down and our 85 year old Supreme Court justice is absent from the bench and the Senate and House leaders are well over 75.

 

January 10, 2019

There is no news to analyze.  Have a nice day…

 

January 9, 2019

Oil at $51! A trade deal coming! Jobs report amazing! Fed not raising rates! All in 3 days. Wow, that was easy….

January 8, 2019

2 weeks ago – I asked – “What happened to hostile takeovers?” Frankly – they are the only way to get deals done in this commodity environment and hedge fund/ private equity capital are the best positioned to get it started. With so much money on the sidelines in energy waiting to be deployed – what better way to recalibrate the industry?

I, for one, am excited for the implications for the energy industry of Elliott Management’s hostile takeover bid for QEP. Elliott has $35b under management and was part of pushing Energen to get bought by FANG. QEP appears to be their new project. It is often forgotten at public company’s that they serve the shareholders and being the executive team is a privilege – not a right. If you can’t make your stock price go higher, someone else will – whether you like it or not.

So well done Elliott- I hope we see a lot more of these and that this activism has poorly capitalized companies looking over the shoulders saying “If we don’t merge with XYZ now – we might not have a choice later!”

 

January 7, 2019

Elliott Management proposes $8.75/share to buy QEP this morning. Hostile, opportunistic and brilliantly timed. What’s that I smell in the air…. the American Dream!

 

January 6, 2019

How does a situation where one party says “I will never sign any bill without my wall funding” and the other says “We will never give you your wall funding” get resolved? There is no out that saves face. Unless the objective is to keep government shut down until 2020, I don’t get it.

 

January 5, 2019

I am not in sales so I don’t know official statistics on this. However – my natural instincts yield the following: I cannot imagine that “Linking In” with me and immediately sending a note about your product has a high sales conversion ratio with anyone. I’ve probably had about 100 of these in the last few weeks – many from duplicative products and almost always in the hours following my accepting a request. Maybe I’m the only one who feels this way but … wtf?

Like raising capital or managing people, you need to invest IN to your network or employees over years, not days, so you can draw FROM them when you really need it. A note on day 1 isn’t that. Provide insight, comments and content and in so doing, you are far more likely to earn business that doesn’t migrate to the next “LinkedIn message” that arrives.

Maybe it’s just me, but I doubt it.

 

January 4, 2019

Everyone’s favorite part about the internet is it’s free. But then we (myself included) get mad by the behavior it generates. Sometimes we have to remind ourselves of the rules of the game.

Content is produced to generate clicks because clicks get ad revenue. Ads pay for our addiction to free content. So as a result, the media write salacious and extreme articles to elicit those clicks. It has made our society worse. It has made it more extreme. It has made it volatile. That is why I am taking action by writing LinkedIn content. I am not media. I don’t get paid. I care deeply about the energy industry. I like being helpful.

The funny thing about “taking action” is it seems to generate two types of responses: “I’m glad you are doing that” or “wtf are you doing?”

At the core, I am hopeful that data driven and/or from the heart assessments from someone who doesn’t get paid to; doesn’t do SEO and who’s compensation isn’t linked to anyone’s share performance stimulates thought. I know why those things matter – I’m just saying that’s not why I post. I post to stimulate thought, primarily on the energy industry.

So with that being said, pretty please, with sugar on top, shut down 30% of the rigs in the US. Love and hugs, David.

 

January 3, 2019

To December 2017, China consumed 12.8 mmbo/d of oil, 4% growth from 2016 (500 mbo/d). The US consumed 19.9 mmbo/d, up 200 mbo/d from 2016.

If AAPL is cutting $6b (5%) from its quarterly revenue projection – all from China – what does that tell you about the Chinese economy when the worlds largest (though 2nd largest now if the pre markets are any indication) company misses projections by that wide a margin in 1 quarter? 1 quarter?? They didn’t think to lower guidance in October when they stopped breaking out iPhone sales and got their stock hammered… which means this is new news.

If China isn’t growing as fast, world oil demand growth is slowing… at the same time, the US is on pace to add another 2 mmbo/d to the market at its current pace in 2019. How can prices be anything but lower for longer without a dramatic cutback.

 

January 2, 2019

“Do you think it’s just luck that gas prices are so low, and falling? Low gas prices are like another Tax Cut!”

No, Mr. President. It isn’t luck. The supply fundamentals in the world have been changed because of US shale production. We are now producing 11.7 mmbo/d. In large part, this has been financed with debt. Demand is slowing, in part because tariffs have slowed China’s economy. So with high supply and falling demand, prices fall.

And, since debt financing drove the production growth in the US and the fed is likely to raise rates 2x more this year, that will lead to bankruptcies with low oil prices. Perhaps you are familiar with that process from past experience.

 

January 1, 2019

If your investment advisor hasn’t been moving you to the sidelines since August and then aggressively buying Christmas Eve day, what are you paying them fees for?

Check out an investment letter classic from the best investor of all time – Pages 16-19 are most relevant.

http://www.berkshirehathaway.com/letters/2013ltr.pdf

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