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Unexpectedly Intriguing!
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25 мая, 11:20

Where Did All the Young Adults Go?

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We're about to go into a long holiday weekend, with something of a mystery to consider, in that it would seem that young adults between the ages of 20 and 24 are vanishing from the state of California. That's according to population data that has been published by the state's Employment Development Department in its monthly Demographic Labor Force Summary Tables, where we find that after reached a peak of 2,992,000 in October 2015, the trailing 12 month average of the state's population of these young adults has been nearly decimated, falling to 2,715,000 in April 2018. That's not the case for every other age demographic in California's population over the last two and a half years. The following chart shows the overall change the state's population by age group from October 2015 to April 2018. And for the sake of filling in the gaps in between this 31 month span, the following spaghetti chart presents how the population of each of these major age groups has evolved from October 2015 to April 2018 as a percentage of its October 2015 population level, where you can quickly determine which age groups have grown and which have shrunk over that time. The same phenomenon is showing up in national population data for the U.S. Looking at national data for the Age 20-24 population and rounding to the nearest thousand, we find that there were 22,693,000 young adults in 1 July 2015, which decreased to 22,381,000 by 1 July 2016. Taking advantage of the available cohort population for 2017's Age 20-24 population, we can project that the numbers of this demographic group will continue to decline, with an early estimate of 21,774,000 that would apply for 1 July 2017. That's a 919,000 decline over two years for the entire U.S., where if we limit California's Age 20-24 population change to an average 24 month period since October 2015, we find that its equivalent population decline over a two year period is 198,000, which would account for 21.5% of the national decline. Overall, the population of California represents one out of every eight Americans (or 12.5%), so that 21.5% figure seems like a disproportionately large share of a seemingly vanishing population. Fortunately, there's a non-nefarious explanation for why so many Californians between the ages of 20 and 24 are disappearing from the state's population count: the population of this age group within California had been over-represented compared to the rest of the nation in previous years. In 2015, Californians between 20 and 24 years old made up 13.2% of the nation's total in this age demographic, which has rapidly fallen in the period of time since, where April 2018's population of 2,715,000 young adults in California make up about one out of eight Americans in our early estimate for 2017's population of this group. This portion of the state's population is reverting back to its mean share within the national population. Meanwhile, the age cohort that produced that over-representated share of Age 20-24 year old Californian among the national population in previous years has aged up into the Age 25-34 group, which is seeing a significant boost in its numbers, and is second only to the state's population of senior citizens (Age 65+). But perhaps the most amazing thing is how fast the population of Age 20-24 year olds in California has been nearly decimated in such a short period of time. You might normally think of demographic change as something that takes generations to play out, but what's happened in California took place in the amount of time it takes a newborn to grow into a toddler ready to be toilet-trained! Data SourcesCalifornia Employment Development Department. California Demographic Labor Force Summary Tables. [PDF Documents]. October 2015 to April 2018. U.S. Census Bureau, Population Division. Annual Estimates of the Resident Population by Single Year of Age and Sex for the United States: April 1, 2010 to July 1, 2016. [Online Database]. Release Date: June 2017. Accessed 24 May 2018.

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24 мая, 11:09

GE Deflocks from the SP 500

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It didn't last very long. At all. But it was still beautiful when it happened! In case you missed it, we're referring to what happened to the stock price of General Electric (NYSE: GE) just one day after it had finally converged with the main flock of stocks that is the (Index: SPX) after months of having so sharply deviated from the trajectory of so many other stocks, where our leading paragraph in this article is a play on the final paragraph in our previous entry! We live to capture "before" and "after" moments like this, and what happened to GE's stock price on Wednesday, 23 May 2018 was truly a thing of chaotic beauty, because after finally catching back up to the S&P 500, investors collectively decided that GE didn't belong anywhere near it. The following chart shows how decisively investors made that call.... Now, let's talk about why it happened. Something happened on 23 May 2018 to specifically provoke this kind of negative reaction from GE's shareholders and stock market investors, so let's see if we can pinpoint exactly when it happened. The following chart provides a timeline for GE's stock price during 23 May 2018. Shortly after opening, we see that GE's stock price dropped a little over 2% below its previous day's closing value of $15.29 per share. Not great, but also not greatly out of the ordinary for the kind of volatility that GE's stock price has shown since the end of January 2018. More importantly, we see that after dropping early in the morning, GE's stock price was fairly stable at that lower level. Until about 11:40 AM EDT, when it suddenly dropped nearly another half a percent. But that downward move would pale against what happened after 11:55 AM EDT, when GE began steadily dropping over the next two and a half hours, losing another 5% of its value before bottoming for the day. It improved a little after that, but by the end of 23 May 2018, GE's stock price had dropped by nearly 7.3%. So what happened to cause GE's investors to become so demoralized about the company's future prospects so quickly? We can't put it any better than MarketWatch's Tomi Kilgore: Shares of General Electric Co. plunged in very active trade Wednesday, putting them on track for the biggest selloff nine years, with losses accelerating after Chief Executive John Flannery started talking at an industry conference.

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23 мая, 15:25

GE and the S&P 500 Finally Converge

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We've been tracking the random, yet curiously synchronized movements of the S&P 500 (Index: SPX) and General Electric (NYSE: GE) since the S&P 500 peaked back on 26 January 2018, where the two have diverged and then nearly reconverged before diverging once again during that time. But as of the close of trading on Tuesday, 22 May 2018, it would appear that GE has returned to the S&P 500 flock, where the trajectories of the two have converged once more. At least as measured by their percentage change since the 26 January 2018 peak for the S&P 500! That condition may not last very long, but you have to appreciate the beauty of it all when it does!

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22 мая, 11:22

Snapshot of Cumulative Dividend Cuts in 2018-Q2

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Earnings reporting season for 2018-Q2 is now mostly in the rear view mirror, which makes now a good time to review the state of dividend cuts for the quarter, which are the early warning system of whether any major industrial sectors are experiencing financial distress. Our first chart of two today reveals that compared to the first quarter of 2018, dividend cuts in the second quarter of 2018 have been announced at a faster pace through the current quarter to date. However, compared to the second quarter of 2017 (2017-Q2), the current quarter of 2018-Q2 is nearly on exactly the same pace. As for which industrial sectors are being hammered in 2018-Q2, the following sample of firms that have announced dividend cuts in the current quarter offers some insight. The list is presented in chronological order: Paradise (OTC: PARF) Franklin Street Properties (NYSE: FSP) Mesabi Trust (NYSE: MSB) Alliant Energy (NYSE: LNT) Mesa Royalty Trust (NYSE: MTR) Blackstone Group (NYSE: BX) Permian Basin Royalty Trust (NYSE: PBT) Dynagas LNG Partners LP (NYSE: DLNG) SandRidge Mississippian Trust II (NYSE: SDR) SunCoke Energy Partners (NYSE: SXCP) NuSTAR Energy (NYSE: NS) NuSTAR GP (NYSE: NSH) Carlyle Group (NASDAQ: CG) Och-Ziff Capital Management (NYSE: OZM) Aceto (NASDAQ: ACET) Apollo Global Management (NYSE: APO) AllianceBernstein (NYSE: ABDC) Chesapeake Granite Wash Trust (NYSE: CHKR) Salient Midstream & MLP Fund (NYSE: SMM) ECA Marcellus Trust I (NYSE: ECT) TC PipeLines (NYSE: TCP) Medley Capital (NYSE: MCC) Computer Programs and Systems (NASDAQ: CPSI) National Bankshares (NASDAQ: NKSH) PermRock Royalty Trust (NYSE: PRT) Cross Timbers Royalty Trust (NYSE: CRT) San Juan Basin Royalty Trust (NYSE: SJT) Enduro Royalty Trust (NYSE: NDRO) Of the 28 dividend cutting firms in our sample, 16 are in the oil and gas production sector, where we note that 6 of the listings represent firms whose businesses are structured as Master Limited Partnerships (MLP) or Limited Partnerships (LP), which were negatively impacted by a tax rule change that was announced by the U.S. Federal Energy Regulatory Commission in March 2018, which would reduce their earnings and thereby prompt them to cut their dividends. In the oil and gas sector, these are firms that predominantly operate pipelines. The majority of the remaining 10 dividend cutting oil and gas firms are those that pay monthly distributions of dividends to their shareholders, which fluctuate with their earnings from month-to-month. Here, we suspect that a dip in West Texas Intermediate crude oil prices in the first quarter is showing up as negative noise in the second quarter where these firms dividend announcements are concerned. The second biggest cutters of dividend payments to their shareholders in 2018-Q2 are to be found in the financial sector, which includes a number of Real Estate Investment Trusts (REIT). Many firms in this sector are sensitive to interest rate hikes, where the Fed has been steadily raising short term rates in the U.S. since December 2016. The remaining four dividend cutting firms represent the food, healthcare, technology and utility industries respectively. On the whole, if not for the FERC's tax rule change, we believed that 2018-Q2 would appear stronger than is suggested by our charts above! Data SourcesSeeking Alpha Market Currents. Filtered for Dividends. [Online Database]. Accessed 18 May 2018. Wall Street Journal. Dividend Declarations. [Online Database]. Accessed Accessed 18 May 2018.

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21 мая, 11:00

U.S.-China Trade Negotiations and the S&P 500

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If investors have really been concerned about the threat of a potential trade war between the U.S. and China, the S&P 500 will very likely let us know how concerned they've been about it this week. That's because investors continually absorb new information about the business prospects for the companies, where changes in the expectations for their future earnings are quickly realized in their stock prices. For trade-dependent industries, those changes in expectations can show up in the form of lowered expectations for future earnings, which would tend to lower the value of their stock, while industries that might materially benefit from the imposition of new or higher tariffs will have raised expectations for their future earnings, which would tend to increase the stock prices of firms in the "protected" industries. All that is highly relevant going into the fourth week of May 2018 because of news reports that came out over the weekend indicating that a potential breakthrough in trade negotations between the U.S. and China has been made, which would avert the negative impact of tit-for-tat tariffs and other trade sanctions between the world's two largest national trade partners. Since the impact of a trade war is generally believed to offer greater negatives than positives across the entire U.S. economy, the diminishment of the risk of trade war should generally boost stock prices, which we would see in the S&P 500. Since the news broke over the weekend, when markets were closed, we would anticipate seeing stock prices (and stock price futures) gap significantly upward as investors provide their initial response to the positive news when markets open for trading on Monday, 21 May 2018. The following spaghetti forecast chart shows where stock prices stood at the close of trading on Friday, 18 May 2018. The better question to ask is how of that positive change will remain at the close of trading, after investors will be flooded with new information about the potential trade deal and whatever other market moving new information comes out during the day. At present, our spaghetti forecast chart indicates that the S&P 500 is poised where investors would appear to be roughly equally splitting their forward-looking focus between the current quarter of 2018-Q2 and the more distant future quarter of 2019-Q1. If the news of the potential breakthrough in trade negotiations between the U.S. and China holds, and if the risk of a trade war breaking out between the U.S. and China have been greatly weighing on their expectations for the future, it would be reasonable for investors to shift more of their attention on the current quarter of 2018-Q2 in response to this news and send stock prices upward from their current position, where a single-day increase of 3% or more in response to the news would be relatively easy for the market to achieve. Such a move would also mark a very rare event for the U.S. stock market. For our daily trading records that extend back to 3 January 1950, covering some 17,207 trading days, we count just 104 where the S&P 500 and its predecessor indices closed higher by 3.0% or more, suggesting historical odds of 1 in 165 for such an event, where we have to go back to 26 August 2015 to find the last such occurrence. Or, it may not change by such an unusually large amount, which will tell us that investors haven't really been all that concerned about the prospects for an economy-damaging trade war between the U.S. and China, where it has only contributed to the regular daily noise of trading in the U.S. stock market. The cool thing is that we'll find out the answer, either way, perhaps as early as today from the day's news headlines. Speaking of which, here are the major headlines that we made special note of during the past week.... Monday, 14 May 2018 Oil gains while U.S. crude's discount to Brent deepens Higher gasoline prices restrain U.S. retail sales in April Fed's Bullard says U.S. yield curve might invert by early 2019 Maybe if he asks nicely? Fed's Kaplan says prefers that U.S. yield curve not invert Fed's Kaplan sees U.S. inflation rising but not 'running away' China says will work with U.S. for positive outcome in trade talks Wall St. ekes out gains as trade optimism pressured by defensive stocks Tuesday, 15 May 2018 NAFTA nations 'very close' to agreeing deal: Canadian prime minister At top of Fed, a dispute on policy picks up steam Fed's policy language 'served its purpose,' will need revisit: Williams Fed's Williams sees no rise in neutral rate from stronger growth Bullard says Fed's inflation framework warrants review Wall St. drops as Treasury yields surge Wednesday, 16 May 2018 Oil hits $80, highest since Nov 2014, on Iran concerns Fed's Bullard says further rate hikes will restrict growth U.S., China to launch trade talks; China hawk Navarro's role reduced: officials Wall St. gains as small-cap Russell 2000 hits record Thursday, 17 May 2018 Oil steady after retreating from 2014 highs on dollar strength Trade Wars not looking so warlike: China does not want to see escalation in Sino-U.S. trade tension China vice premier says proactively seeking resolutions on trade dispute with U.S.: Xinhua White House adviser expects China to bring proposal to trade talks China said to offer $200 billion U.S. trade deficit reduction package Fed's Kaplan: U.S. economy at or beyond full employment U.S. 30-year mortgage rates hit 7-year peak: Freddie Mac Tax cut windfall seen lifting U.S. companies' business investments Wall St. ends down slightly on trade, oil price concerns Friday, 18 May 2018 Oil prices fall, Brent set for sixth week of gains Trade Wars looking like some kind of negotiation: Cutting $200 billion from U.S.-China trade deficit is a tall order China denies it has offered a $200 billion package to slash U.S. trade gap China retreats from U.S. sorghum probe amid global market havoc Mexico says many NAFTA issues remaining but not complex ones Wall Street posts weekly loss as banks, chipmakers weigh Over the Weekend Trade negotiation breakthrough? US, China agree to abandon trade war: Beijing U.S., China putting trade war on hold, Treasury's Mnuchin says China agrees to 'significantly increase purchases' of US goods China central bank adviser calls for two-track financial opening Looking beyond these headlines, Barry Ritholtz listed the

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18 мая, 11:18

Spring 2018 Snapshot of Expected Future S&P 500 Earnings

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Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings. And in the six years that we've been taking these snapshots, we've never seen anything like what has happened to the S&P 500's projected earnings per share during 2018, where those future earnings have been revised dramatically higher in two consecutive quarters. Last quarter, we could directly attribute the change to the passage of the Tax Cuts and Jobs Act of 2017, where money that had previously been subject to corporate income taxes was immediately reclassified as earnings, which boosted the effective earnings per share of the entire S&P 500. But in 2018-Q2, the projected future earnings per share of the S&P 500 was significantly revised upward again, apparently as the result of an organic improvement in the future business outlook for the companies of the S&P 500. Standard & Poor's Howard Silverblatt included the following comments in his 16 May 2018 report on the S&P 500's earnings. Q1 2018 estimate (93% real) up 7.2% from year-end 2017, as EPS setting record; 2018 estimate up 7.7%, 2019 up 8.8%. Operating margin record high at 11.05%, 20-year average is 8.08%, as retail pulls it down. Unsung hero, sales posting strong 9.5% Y/Y gain. Beyond that, Reuters is reporting that the tax cut is also boosting business investment, which would be a contributing factor to the improvement in future earnings expectations. U.S. companies could plow more of the money saved from sweeping tax cuts into business investment later this year, perhaps even surpassing a jump in first-quarter capital expenditure that was the highest in almost seven years, strategists and analysts said. Higher spending on technology, equipment and facilities could ease worries that S&P 500 companies have reached a peak in the profit growth investors are counting on to extend the nine-year bull market in equities. The increased spending in the first quarter follows significant cuts in corporate taxes approved late last year by the Republican-led Congress. Companies have also been returning the tax cut windfall to shareholders via share buybacks and increased dividends at amounts never seen before, highlighted by Apple’s $23.5 billion repurchase in the first quarter. With data in from 94 percent of S&P 500 companies, first-quarter capital expenditures total $159 billion, up more than 21 percent from a year ago and on track to be the highest year-over-year growth since the third quarter of 2011, according to S&P Dow Jones Indices data. The upward revision in projected future earnings stands in stark contrast to the typical pattern we observed in quarter after quarter during the Obama administration, where projected earnings would start with high expectations that would go on to steadily erode over time. We don't know how long the current situation of rising earnings expectations from quarter to quarter might continue, but it's certainly fun to watch while it's happening! Data SourceSilverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 16 May 2018.

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17 мая, 10:51

How Much Do You Need to Save for Retirement? (Part 1)

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There are several different schools of thought for determining how much money you need to save to be able retire someday. Over the next several weeks, we'll explore what those schools are and what they tell you about how much wealth you need to stash away to be able to afford not ever having to work at a job again! The first approach we'll check in with is the "income replacement" school, where how much you earn at your job determines how much you will need to save. This kind of approach is often championed by investment firms, like J.P. Morgan Asset Management, who provides the following illustration from their retirement guide to illustrate how much of your annual income you need in order to continue living as if you never stopped working when you retire. The overall idea is have enough wealth built up by the time that you retire that, after you deduct expenses that you'll never have again, like commuting, work wardrobe, etc., will let you keep being able to spend money as if you never retired in the first place. But accumulating the amount of money that you need to support the income replacement strategy is easier said than done over the decades of one's working life, where it can be difficult to know if you're on track. To that end, J.P. Morgan provides the following table to indicate what your accumulated savings needs to be at certain age milestones and income levels to be able to generate the wealth you need to effectively replace your working income in retirement, based on how much they assume you're setting aside and the rates they project for both your investment returns and for inflation. But we all know that the world doesn't cooperate quite like that, so the savings multiples indicated in the table can tell you how far away you might be if you choose to follow the income replacement strategy for preparing for your future retirement. We've built the following tool to approximate what those actual savings amount are for the age and income you choose to enter to get to that magic number quicker. If you're reading this article on a site that republishes our RSS news feed, please click here to access a working version of this tool at our site. Age and Income Data Input Data Values Age of Primary Income Earner Household Income Milestone Accumulated Savings Target Calculated Results Values Accumulated Savings Our tool works best when covering the range of ages (25 to 65) and annual household incomes ($50,000 to $300,000) indicated on the milestone retirement savings chart. The further outside of those ranges you get, the less reliable the tool's results will be. The downside of using the income replacement approach to determine how much you need to save up for retirement is that the real world can have very different ideas about how stable your income will be throughout your working life, what actual rates of return might be, and what inflation will be, to name just a few factors. You could easily find yourself in a position where you cannot reasonably attain the income replacement savings targets you might have set, because things change over time. Sometimes dramatically. There are other approaches to saving for retirement to consider however, which we'll take on in upcoming parts of this series!

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16 мая, 11:22

Overcoming Fear of Investing in Stocks

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Although the media reports that they spend much of their free time killing things, two-thirds of millennials appear to be unable to fully capitalize on their natural killer instincts enough to take on the risks of investing in the stock market to increase their wealth outside of having a job. Whether that's because their parents failed to teach them to invest or because they find it too "scary and intimidating", it seems strange that so many Americans of the millennial generation haven't grasped that investing can be as easy as buying the products that you want to have and isn't much more expensive than that. In fact, to quote Girl$ On The Money's Mabel Nuñez from her presentation (HT: J. Money) at the LOLA Retreat money event for women that was held in New York City last month, "if you can afford the product, you can afford the stock". That's really a great way to think about it. If you like a product enough to buy it, odds are that there are a lot of other people like you out there also buying it, which is what keeps the company that makes or sells the product in business. And if you and a lot of others like the company a whole lot, odds are that the company makes a positive net margin (or profit) as it does business. But, if you're only a customer of what the company sells, you're missing out on the opportunity to make money from the company's success in providing the kinds of products and services that you and lots of other people like you are happy to buy at the prices at which they sell them. One way you can do that is to buy shares in the ownership of the companies whose products that you like to buy, which is what you're really getting when you invest your money in those companies' stocks. The stock market is simply the place where you can publicly buy, sell or trade those shares of ownership. Let's go shopping, shall we? A great resource to find companies whose products that you like to buy is Dividend.com's listing of stocks by their industrial sector, which is kind of like the mall directory for the stock market. Starting here, you can zero in on the companies whose products you like to buy. Let's say that you like to buy a particular retailer's apparel products. These kinds of businesses will be grouped in the stock market's Services sector, where you can find them listed under Apparel Stores. We've gone ahead and pulled the list for the Apparel Stores whose shares of stock are available to be bought in the stock market, where we've focused on those company's who pay a dividend to the owners of the shares of stock that they have issued. Company (Ticker) Dividend Yield Annual Dividend (per Share) Stock Price (per Share) American Eagle Outfitters (NYSE: AEO) 2.62% $0.55 $20.97 Abercrombie & Fitch (NYSE: ANF) 3.16% $0.80 $25.31 Buckle Inc. (NYSE: BKE) 4.13% $1.00 $24.20 Cato Corp (NYSE: CATO) 8.04% $1.32 $16.42 Chico's FAS (NYSE: CHS) 3.29% $0.34 $10.35 Citi Trends, Inc. (NASDAQ: CTRN) 1.09% $0.32 $29.45 DSW Inc. (NYSE: DSW) 4.07% $1.00 $24.56 Finish Line Inc. (NASDAQ: FINL) 3.39% $0.46 $13.55 Foot Locker (NYSE: FL) 3.18% $1.38 $43.44 Guess, Inc. (NYSE: GES) 3.67% $0.90 $24.52 The Gap Inc. (NYSE: GPS) 3.19% $0.97 $30.38 Nordstrom Inc. (NYSE: JWN) 3.00% $1.48 $49.32 L Brands Inc. (NYSE: LB) 7.22% $2.40 $33.23 Children's Place Retail Stores, Inc. (NASDAQ: PLCE) 1.50% $2.00 $133.55 Ross Stores (NYSE: ROST) 1.09% $0.90 $82.66 Shoe Carnival, Inc. (NASDAQ: SCVL) 1.22% $0.30 $24.64 Stage Stores (NYSE: SSI) 7.46% $0.20 $2.68 Now, let's put Mabel Nuñez' proposition to the test. Let's say that you happily paid $120 for shoes from Foot Locker (NYSE: FL), where you believe you got a good deal on them. A single share of stock in Foot Locker cost $43.44 at the close of trading on Monday, 14 May 2018, so there's no doubt that if you could afford to have paid $120 for a pair of shoes, you probably wouldn't have had any trouble in buying a single share of stock in the company. In fact, you could have bought two shares and had change left over, even after paying any commissions or fees to a broker, which is what they call the salespeople of the stock market. We focused on the dividend paying stocks among the apparel stores for a reason, which is because they provide an opportunity to get a fraction of the profits that the company earns and doesn't reinvest back into the business thanks to your ownership of it. In this example, that would mean that you would get $1.38 every year for every share of Foot Locker stock that you own. This is where it gets interesting. What if you had the money to buy 100 shares of stock in Foot Locker? While those 100 shares would have cost you $4,344, they would also give you $138 that could pay for the $120 pair of shoes you liked so much in the first place, so not only could you get the shoes, you would have up to $18 left over. And you could potentially do that every year.... Ideally, over time, the management of Foot Locker would work to increase the value of the company, where the value of the shares you own would likewise grow in value. That's the other way that owning stocks can increase your wealth, where say a 10% increase in the price of the stock would increase the total value of the shares you own by the same percentage, which you can collect by selling your shares. At this point, we should caution that increasing stock prices and dividends over time are not a guaranteed result, where companies that run into financial troubles will sometimes cut their dividends and will see their shares decline in value, which is a risk that comes along with being an owner. It is no different for people who own their own businesses, no matter how big or small that they might be - the value of their business and the income they have left over after paying all their bills and reinvesting in the business is what determines how much they get paid. That risk can be minimized by diversifying the stocks you own, so that not all your investing eggs are in one basket, and also by periodically selling stocks that are facing such troubles and replacing them with the stocks of companies that have stronger businesses or growth prospects. Companies that are selling the kinds of goods and services that people like you are willing to buy at prices that you believe are a good deal. Since we're just focusing on individual companies, we'll stop there for now, but there is so much more to investing. On the whole, it's a lot less scary and intimidating than many millennials would appear inclined to believe!

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15 мая, 10:41

Identifying Undervalued and Overvalued Stocks, Part 2

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There's an old method for assessing whether the price per share of an individual company that pays dividends to its shareholders that we've played with off and on since we resuscitated it back in January 2017. The method takes advantage of the relationship that exists between the amount of dividends per share that the company is expected to pay out to its shareholders over the next 12 months and the current day price per share of its stock, which if you track its trend over time, provides a means for telling whether the company's share price is either overvalued or undervalued at a given moment for its expected level of future dividends. But it has a built-in weakness. In a stock market where many publicly-traded companies find it more advantageous to buy back shares of their own stocks rather than adjust their dividends per share, we can often run into the situation where the relationship between a company's dividends per share and its price per share shifts over time. We directly ran into that analytical buzzsaw last November, when we applied the method to evaluate the state of the share price of General Electric (NYSE: GE). We found ourselves having to take GE's share buybacks into account in our analysis because the company's share price changed in response to its buybacks much more than did its projected dividend payouts. We wondered if there was a way to take the changing number of shares out of the valuation picture. To that end, we hit on the idea of tracking the company's projected 12-month aggregate dividend payouts against its market capitalization, which theoretically eliminates the number of shares as a factor, but which are one step removed from the price per share and dividends per share data points that are much easier figures to come by. The following chart shows what we get track these measures for GE at the points of time when the company declared its future dividends from February 2010 through February 2018. There's more noise in the relationship than we'd like to see, but it initially does appear effective in negating the effects of GE's share buybacks in the period between April 2015, when they started, and June 2017, before the company entered into its current period of financial turmoil, which may have indeed reset the level of the relationship between the company's market cap and its aggregate dividends. GE should next declare its future dividend payouts in early June 2018. We'll check at that time to see how that relationship evolves, where we have other tools that we can apply to answer the question of whether there's a new relationship or if the old one still holds and we're just looking at the effects of pessimistic speculation on the part of investors. Previously on Political CalculationsIdentifying Undervalued and Overvalued Stocks Dividend Forecasts and Individual Stock Price Predictions GE Has Further to Fall GE's Further Fall

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14 мая, 10:56

Apple Pulls The S&P 500 To Its Highest Point In 2018-Q2

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As of the end of the second week of May 2018, the S&P 500 (Index: SPX) rose to reach its highest point in the second quarter of 2018, but at the index' closing value of 2,727.12 on Friday, 11 May 2018, is still 145 points below the peak value of 2,872.87 that it reached on Friday, 26 January 2018. Week 2 of May 2018 saw investors continue to split their forward-looking focus between the current quarter of 2018-Q2 and the more distant future quarter of 2019-Q1, althouth this week, our spaghetti chart forecast chart suggests that they slightly favored 2018-Q2. The biggest driver of stock prices during Week 2 of May 2018 was Apple (NASDAQ: AAPL), which at a market cap of $934 billion on Thursday, 10 May 2018, is close to becoming the world's first trillion dollar company as the company's stock price rose to a new record level. For the S&P 500, Apple now represents 4.15% of the market capitalization of the whole index, having increased its market cap-weighted share of the index by 0.3% during the last six weeks. Apple's new record stock price was the biggest market moving story of the week, which was otherwise characterized by stories like those listed below.... Monday, 7 May 2018 Oil surges on Venezuela-Conoco dispute, Iran sanction worries Fed officials say price pressures rising but no need to shift rate path In first speech, Fed's Barkin backs U.S. rate rises amid strong economy Apple leads Wall Street higher; energy rally fades Tuesday, 8 May 2018 Oil pares losses after U.S. exits Iran deal, dollar off 2018 highs Fed debates new vocabulary as it shifts away from loose policies Wall Street erases losses after Trump quits Iran deal Trump says U.S. pulling out of Iran nuclear deal Wednesday, 9 May 2018 Oil jumps 3 percent after U.S. quits Iran deal, U.S. stock drawdown NAFTA talks drag on as U.S., Mexico spar over autos Wall Street surges on higher oil after U.S. quits Iran deal Thursday, 10 May 2018 Oil edges up at settlement as supply questions vex market Wall Street rallies and Apple approaches $1 trillion value Friday, 11 May 2018 Oil prices fall as Iran nuclear deal retains support St. Louis Fed's Bullard says rates already near neutral, no more raises needed Negotiators fail to reach NAFTA deal, Trump launches new attack Canada sees long NAFTA 'to-do' list but 'solid' progress Wall Street rises with healthcare rally after Trump's speech Trump assails high drug prices, avoids direct hit on industry The Big Picture's Barry Ritholtz succinctly summarized the

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11 мая, 14:17

Building the Death Star

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Since being sworn in as President of the United States, Donald Trump has devoted considerable energy to reversing many of his predecessor in office Barack Obama's actions. But perhaps the most surprising reversal might come from undoing a January 2013 action by President Obama to reject a popular petition for the U.S. to build a working Death Star. For an administration seeking to expand the military capabilities of the United States, where the President has proposed creating a "space force", the Trump White House might soon revisit what would be the nation's largest ever defense infrastructure construction project. Advances in production technology and fabrication methods for space-based structures stand to make the project much more feasible and cost effective than in President Obama's day, as the following video demonstrating how a Death Star could be practically manufactured demonstrates (HT: Core77): Timelapse of Death Star Construction from Outside Hollywood on Vimeo.It's really not that much different from assembling an International Space Station. And it would certainly be a lot easier to see from the ground. For a nation whose private sector can launch a Tesla into space, how hard can it be for the government to do? Tesla Roadster Leaves Earth from Todd Lichtenwalter on Vimeo.Yes, the second video is real!

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10 мая, 15:30

Visualizing the Oil Boom in the Permian Basin

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The Permian Basin is a booming shale-oil producing region in the United States, which is located in western Texas and southeastern New Mexico. According to a 24 April 2018 article in Bloomberg, the region could very well grow into the largest oil patch on Earth in the next decade. The Permian shale play is all about setting records. Now, the region may even become the world’s largest oil patch over the next decade. Output in the basin is forecast to reach 3.18 million barrels a day in May, according to the Energy Information Administration. That’s the highest since the agency began compiling records in 2007. By 2023, the basin may produce 4 million barrels a day, according to the International Energy Agency. The Ghawar field in Saudi Arabia is currently the world’s biggest oil field, with capacity of 5.8 million barrels a day, according to a 2017 EIA report. This is all thanks to the size of the oil deposits, coupled with increased technology and efficiencies. “The technology is the biggest driver,” said Rob Thummel, managing director at Tortoise, which handles $16 billion in energy-related assets. “The basin in and of itself could end up being the largest oil field in the world, even bigger than Ghawar in Saudi Arabia." By contrast, top-producing members of OPEC such as Iran and Iraq pump less than 5 million barrels a day. Iran produced about 3.81 million barrels day in March, according to data compiled by Bloomberg. “If the Permian was part of OPEC, it would be the fourth-largest OPEC member, right behind Saudi Arabia, Iran and Iraq,” Thummel said. “By the end of the year, the Permian probably overtakes Iran.” We've been playing with NASA's Worldview application, and specifically with the filters that allow access to the nighttime lights imagery that NASA has created for its "Black Marble" projects for 2012 and 2016, and also the real-time imagery captured by NASA's Suomi National Polar-orbiting Partnership (NPP) satellite. In the following animated image, we'll show you how nighttime lights in the Permian Basin has changed from 2012 to 2016 and then on to a snapshot from 26 April 2018, which makes for a nice companion image to go along with Bloomberg's article. That's what an oil boom looks like from space! Previously on Political CalculationsPreviously, we've focused on regions of the world where real economic output declined, where the nighttime lights dimmed from an earlier point in time to a later one. New Tools for Assessing China's Economy in Near Real Time Locating Distress in California's Economy