Archive | March 11, 2013

Joining the Bandwagon? Don’t Lose Your Balance

Now that the Dow Jones hit it’s all time high, many people are starting to re-invest in the stock market. However do not be too eager to jump into this bull market. If you are going to invest, you have to do it wisely. Pick the right time, right stocks, and make a very diverse portfolio. Have different stocks to outperform bonds, and have bonds to create a strong base to maintain your initial investment. Even if you do that, it might not be the best time to invest unless you believe the bull market will keep rising. Hopefully the Dow Jones is not at it’s pinnacle and about to drop. Investors urge that people don’t invest blindly and that they keep a diver portfolio.

I think that the stock market is inflated due to unnatural reasons. Therefore you should be cautious, but that doesn’t mean you should not invest. If more people invest, even though the market has risen artificially, it will continue to rise.

URL: http://www.nytimes.com/2013/03/10/your-money/if-stocks-look-irresistible-dont-forget-to-diversify.html?partner=rss&emc=rss&_r=0

 

-Jonathan Chan

Fuel Prices Revive Small U.S. Pickups

The rise of gas prices has been one of the top concerns for Americans in the past few years. The rise of gas prices also has a relationship for the increase in sales of smart cars. The demand for fuel efficient cars has definitely increased because of gas prices and who could blame the consumers for choosing this route. With gas prices hovering around four dollars per gallon there is no wonder why big vehicles such as pick up trucks and sports utility vehicles to have a lower number in sales as oppose to a fuel-efficient hybrid like the popular Prius. 

Even since the recession of 2008, the sales of mid-sized pick up trucks has significantly dropped. There is no question for these automakers to have a change in their strategy, and that strategy should be downsizing. By doing so, it will make trucks more fuel efficient and have the trucks still doing their heavy duty. 

As a car owner myself, fuel economy and efficiency was one of my top concerns when I was buying a car. Although I didn’t buy the best of fuel efficient cars like Toyota Prius or a Chevy Volt for example, but I did choose a car that is a little more efficient than a SUV or a car with a faster engine. I would be lying if I said I didn’t worry about gas prices and if gas prices weren’t at a all-time high I would probably have bought a faster and bigger car. 

Accommodating to all of the consumers needs is a tough task to do but every great company finds a way to do it

-Derby Ng

http://online.wsj.com/article/SB10001424127887323549204578316502619407298.html?mod=WSJ_business_LeadStoryCollection

Got Beef?

It is not unusual for food prices to rise in China especially when the lunar New Year holiday rolls around, but this year, the price of food has stayed up, especially for meat (beef and lamb in particular). This can be attributed to inflation, which China’s Consumer Price Index points to. China’s CPI was 3.2 percent in February compared to 2 percent in January and China’s top economic planning agency, the National Development and Reform Commission predicts there will be 3 percent consumer price inflation throughout 2013. The price of beef in Beijing supermarkets is more expensive than what one would find in the Boston area of the U.S., while pork, China’s staple meat is 23 cents per pound. Prices like these reflect the limited spending power of Chinese citizens, whose incomes are about a tenth of their U.S. counterparts. In addition to inflation, China’s rising food prices can also be attributed to urbanization because of the rate Chinese cities are growing, along with degradation of suitable farm land, which in turn leads to beef becoming more expensive since they take at least a year to raise.

The rise of meat prices not only highlights the problem of inflation, but also the decrease of consumer led growth of the economy.  Carl Weinberg, the China-watching chief economist at the New York consulting firm High Frequency Economics points out that “Accelerating food prices mean less growth in spending on other goods and services in the economy,”. A price increase would only serve to further deter China’s economic growth, which hit it’s lowest point in 2012, lower than any point within the decade. Right now, China should be focusing more on controlling inflation, rather than growth, which it has been predominately focused on.

Written by: Kevin Zhang

Source:

Reuters. “Food Costs Threaten Rebound in China.” The New York Times. The New York Times, 11 Mar. 2013. Web. 11 Mar. 2013. <http://www.nytimes.com/2013/03/12/business/global/food-costs-threaten-rebound-in-china.html?ref=business&gt;.

Music Industry Sales Rise, and Digital Revenue Gets the Credit

The music industry’s global sales increased last year for the first time since 1999.  Although total revenue increased by only 0.3%, the news is encouraging for the music industry, which has been hurt by online piracy over the years.  New sources of revenue such as digital sales have compensated for a decrease in CD sales.  While sales of singles and albums from services like iTunes have gone up, the truly reassuring news is that subscription-based offerings such as Rhapsody saw a 44% increase in users.  There has also been growth in the marketing use of music and royalties from performances.  With digital sales accounting for over half of the music industry’s revenue in the United States, profitability is expected to rise as digital delivery of music lowers record companies’ costs.

Had the music industry embraced the new technology and its growing popularity during the digital age, it is possible that these last ten years of revenue decline could have been avoided.

Written by: Constantine Kostikas

Source: NYTimes.com

http://www.nytimes.com/2013/02/27/technology/music-industry-records-first-revenue-increase-since-1999.html?ref=economy&_r=0

Oversea Tax Shelters

It has been reported that approximately $166 billion in corporal profit has been hiding in foreign countries to avoid taxes. The United States policy holds that profits made in other countries that are not brought into the United States are not taxed. This creates a large incentive for corporations to hold their money over shores since The United States has higher tax rates than most other countries. This policy has led to a government lost of $42 billion in taxes for this year only. Some companies that keep their money overseas hold more money overseas than their net worth in the United States. The United States has previously tried to tax money overseas in hopes to create new jobs, but little improvement was seen, so it is not likely that such situation would happen again any time soon.

Even though taxing all this money may not create new jobs, it may still be beneficial to the economy. The government should compromise with the corporations, and tax the oversea income, but at a lower rate than income that is taxed here, so that the taxes paid are not too high, and the government can make money from all the profit being made.

 

Written by: Jessica Ho

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887324034804578348131432634740.html?mod=WSJ_business_whatsNews

Amazon’s Quest for Web Names Draws Foes

The fear of a monopolizing business comes across every company’s mind, especially now that the Internet Corporation for Assigned Name and Numbers is selling ownership of domain names. They plan on assigning rights for organizations to serve as registries for suffixes that include .book, .author, and so on. Amazon is one company that is being under attack by publishing industries because it wants to control certain addresses. Many other companies such as Microsoft, Google, and Apple also intend on purchasing these new names, where some would also be able to sell off to other companies to make profit.  Another fear is that these companies who have ownership over certain domain names would get a higher competitive advantage when people are looking for goods to buy online. The online market is very crucial to a company’s profits, so having domain names would link to only one company and not the others.

I also agree with the publishing companies, Authors Guild and the Association of American Publishers, because controlling domain names would allow larger companies to reduce the competition and increase the abuse of making profits by selling them later on. Although Amazon believes that past domain names have not led to market power, there is a high possibility that releasing names related to a company’s product will give control to those who buy them.

Written by: Samantha Chin

Source: The Wall Street Journal

Bensinger, G. (2013, March 10). Amazon’s Quest for Web Names Draws Foes. Retrieved March 11, 2013, from The Wall Street Journal: http://online.wsj.com/article/SB10001424127887324096404578352532206088970.html?mod=WSJ_business_whatsNews

Fujifilm Aids Microsoft with New Technology

It is good news for Microsoft Corp, since Fujifilm has agreed to help develop new technology that will advance the current technology that are used in touch screen industry. Fujifilm, known for their camera technology are developing new ways of using metal to replace the traditional touch screen technology.

The typical method used in touch screens are made from rare and fragile material called indium tin oxide (ITO). This material is relatively expense, especially when ITO are used in large screen devices. The cost –one of adding touch screen based ITO on a 23 to 27 inch all-in-desktop is close to $180.

Fuji Film Company are integrating their photographic film technology to create cheaper and more advance touch-screen sensors alternative. The use of a new material called silver halide detects touch input from fine gridded metal wires. Aside from the cost factor of the ITO technology, the material cannot be bent and can be easily broken; the new material used for touch screens are metal-based panel technology can withstand flexible displays.

Shares of Fujifilm rose .6 percent to 1,827 yen at today’s closing (March 11, 2013).

 

Written by: Victor To

 

Source:

http://www.bloomberg.com/news/2013-03-10/fujifilm-touch-screen-poised-to-aid-microsoft-vs-apple.html

After Cashing In on Job Cuts, Wall St. Looks to Worker Upturn

Since the financial crisis, employment was continuously cut as the economy grew weaker. After years of this high rate of unemployment, we are beginning to see signs of slow recovery. With the new unemployment rate at 7.7% and the Dow Jones closing at an all-time high since the recession, there is much more optimism in the market.  Corporate profits were high because of the smaller work force. As Corporate America started to turn things around, normal workers began to feel the hit more because of the high unemployment rate. Stimulus plans were set to help the better the economy but it did not benefit much for ordinary Americans but recently there are reports of growing employment rates and higher wages for ordinary workers. The effects of the stimulus plans are finally reaching American workers.

After all these years of cutting employment rates, the economy is finally starting to see some recovery for both Corporate America and the ordinary American’s. This is a good sign for the economy and with all the positivity; there will be less uncertainty in the markets but more stimulation is required. This will influence people to flush more money in the economy and speed up the recovery of America.

Written by: Wilson Tang

Source:

http://www.nytimes.com/2013/03/11/business/economy/after-corporate-upswing-hopes-grow-for-a-consumer-revival.html?ref=business

A Camera To Capture Daily Life

In a generation where people enjoy logging the activities of their day through videos and photos, companies are coming up with products that would assist this hobby. Memoto created a wearable camera that is able to automatically capture photos of the user’s surroundings. The mindset behind this product is that everything that happens is memorable at some point. The accessibility of this camera will easily record and save this data. The camera is programmed to upload photos onto a compatible application for the user to review at the end of the day. In the future, the product is expected to develop into something that is even more accessible by connecting the device to various social media platforms.

Although it is important to record memorable moments throughout a person’s day, this device would disrupt one’s privacy. Not only would Memoto have access to all the data, they may be able to sell this private information. This product is also similar to Google Glass, which is another device aimed at letting users take photos without having to spend time to take out a camera. Memoto’s wearable camera is still at its primary stages in this questionable market. The successfulness of this product would be revealed as time passes.

Written By: Melody Mark

Source:

Wortham, Jenny. “A Camera To Capture Daily Life.” The New York Times 11 Mar. 2013, late ed., sec. B: 6. New York Times. The New York Times Company, 11 Mar. 2013. Web. 11 Mar. 2013.

Tick-Tock, Tick-Tock

Investors have begun hedging against the inevitable rise in interest rates in the belief that the monetary policy of the Federal Reserve will not be effective in the long run. Speculation says that the rise will not happen anytime soon but when it does “the ascent will be swift and steep”. The FED is currently buying up $85 billion of Treasury and mortgage-backed securities every month resulting in low rates but raising concerns as of late.

There’s a saying that the “good times never last” which reflects a certain sense of cynicism yet subsequently conveys rationality; the economy is a cyclical entity so there is no doubt that things will change. Investors are beginning to hedge with derivatives, betting on the eventually rise in rates although these contracts have an expiration date and it is unclear when the rise will occur. However, the economy is driven by perception and if faith in the FED diminishes, the rise in rates will be met with anticipated clarity.

Evan Chang

Source:

http://online.wsj.com/article/SB10001424127887324096404578352101873739508.html?mg=id-wsj

Re-Examining Board Priorities in an Era of Activism

The recent flurry of hedge fund intervention in the markets has created quite the racket in multiple areas. Investors like Bill Ackman and Carl Icahn are sweeping headlines with their investments, being scrutinized, criticized, and faithfully followed all at the same time. How far is too far when it comes to activist investing though? There are arguments saying that the activists are just scouring for a quick short term profit, and that they hurt the company and average investors in the process.

Ira M. Millstein has examined the issue. He points out the difference between the long and short term investors, indicating that the longs are “apathetic” while the shorts are the “squeaky gears” that get the attention. He considers trying to use incentives to encourage long term investing that aids all investors and creates company growth.

I quite enjoy the antics of the big investors, however, I can clearly see how their actions can hurt a company. I look at Ackman as the prime example of a “squeaky gear,” publishing hundreds of pages in order to bring down Herbalife, a company he put a billion dollar short on. I don’t fully approve of this action, even if he truly does believe the company is a Ponzi scheme. Meanwhile, Icahn has invested greatly into the company, and while it may be for just short term profits, I can’t help but wonder if it can also help create benefits in the long term for the company if Icahn truly sees value in his investment. I will be watching the actions of these two investors closely to see the effects on the markets.

Source:

http://dealbook.nytimes.com/2013/03/08/re-examining-board-priorities-in-an-era-of-activism/