Author Archives: Edward Brownlee

Alphabet Announces Layoffs

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Google’s parent Alphabet announced it intends to eliminate 12,000 jobs, about six percent (6%) of its workforce. From a macro perspective, layoffs that began in 2022 are accelerating across technology companies. 

In an email sent to staff, Google’s parent Alphabet Chief Executive Officer Sundar Pichai wrote that, “Over the past two years we’ve seen periods of dramatic growth,” reports Bloomberg.  “To match and fuel that growth, we hired for a different economic reality than the one we face today.”

Moreover, Pichai said that he was “deeply sorry” to workers that will be let go and that it was a “difficult decision to set us up for the future.” The layoffs will be felt globally and across the entire company, and Pichai said he takes “full responsibility for the decisions that led us here.”

“Taking full responsibility without consequence seems like an empty platitude.” ~ Layed-off Google employee

With the layoffs, Google joins a host of other giant technology companies like Amazon, Microsoft and Facebook that have announced layoffs and drastically scaled back operations amid a faltering global economy and soaring inflation, reports Bloomberg.

Despite Google’s strong ad and cloud-computing divisions, the company saw a 27 percent drop in profit last quarter compared to the year before, and Pichai said Alphabet would need to reduce expenses and hiring, reports Engadget.

As Google announced the companywide layoff, many employees had been bracing for a potential layoff and have been questioning executive leadership about the criteria for layoffs which surprised some employees, who woke up to find their access to company properties cut off, reports CNBC. Some of the laid-off employees had been long-tenured or recently promoted, raising questions about the criteria used to decide which positions were cut.

References:

  1. https://www.bloomberg.com/news/articles/2023-01-20/google-cutting-12-000-jobs-in-6-slash-to-global-workforce
  2. https://www.engadget.com/google-parent-alphabet-is-laying-off-12000-employees-105523115.html
  3. https://www.cnbc.com/2023/01/21/google-employees-scramble-for-answers-after-layoffs-hit-long-tenured.html

JP Morgan’s CEO Called Crypto a ‘Pet Rock’

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“Bitcoin itself is a hyped-up fraud. Crypto is a decentralized Ponzi scheme…It’s a pet rock.” ~ Jamie Dimon

At the World Economic Forum in Davos, Switzerland, JPMorgan Chase CEO Jamie Dimon bashed cryptocurrencies as a distraction and fraud.

“I think all that’s been a waste of time and why you guys waste any breath on it is totally beyond me,”Jamie Dimon, chairman and chief executive officer of JPMorgan Chase told CNBC Squawk Box in Davos. “Crypto is a decentralized Ponzi scheme. Bitcoin itself is a hyped up fraud. It’s a pet rock.”

“They are decentralized Ponzi schemes, and the notion that’s good for anybody is unbelievable,” he told lawmakers in a previous congressional testimony, calling Bitcoin and other cryptocurrencies “dangerous.”

“Cryptocurrencies that don’t do anything, I don’t understand why people spend any time [thinking about them],” Dimon said, adding that JPMorgan was “not even sure that [Bitcoin] is a real market.”

Bitcoin, like all cryptocurrencies, is a risky and highly volatile investment, making it difficult to predict exactly how the market will play out in the short and long term.

References:

  1. https://fortune.com/2023/01/19/jpmorgan-ceo-jamie-dimon-bitcoin-hyped-up-fraud-cryptocurrencies-waste-of-time-but-blockchain-deployable-technology/amp/

Be Grateful Always

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“The best way to show your gratitude to God and people is to accept everything with joy….We may not be able to give much but we can always give the joy that springs from a heart that is in love with God. All over the world people are hungry and thirsty for God’s love. We meet that hunger by spreading joy. Joy is one of the best safeguards against temptation.” ~ Mother Teresa

Simply put, gratitude is both a mindset and a habit. It’s a way of looking at the world and all the good things in it with a feeling of appreciation, regardless of whether or not your current situation is to your liking.

Gratitude is a heart-centered approach to being at peace with yourself and with all you have. When you practice this feeling of gratitude, it attracts even MORE things into your life for which to be grateful.

Mother Teresa is credited with saying, “Gratitude to God is to accept everything, even my problems, with joy.” In short, be grateful and joyful always, in both the good times and bad times

Gratitude makes us humble and elevates us to a higher way of living at the same time, writes Jack Canfield. In all of the stages, ebbs, and flows of our lives, we can be grateful for the life we are living.

We’re either living our best life or preparing to.

To increase your gratitude and attract more abundance to your life, focus on being grateful always.

The best way to activate your gratitude is by acknowledging the gifts most people take for granted, explains Canfield. If you have food in your refrigerator, clothes in your closet and a roof over your head, you are better off than 75 percent of the world’s population.

If you eat three meals a day, you are far better off than the 1 billion people on the planet who eat once a day at most.

Do you have a phone?  How about a car that allows you to travel to work or to explore the country? Is your family healthy? Do you have a computer and Internet access to stay in touch with the world, get access to education, and perform work for which you are paid? Do you have clean water to drink?

Celebrate these simple blessings. These daily conveniences are gifts that most people across the world do not enjoy.

a short story about gratitude.

A blind boy sat on the steps of a building with a hat by his feet. He held up a sign which read, “I am blind, please help.”

There were only a few coins in the hat – spare change from folks as they hurried past.

A man was walking by. He took a few coins from his pocket and dropped them into the hat. He then took the sign, turned it around, and wrote some words. Then he put the sign back in the boy’s hand so that everyone who walked by would see the new words.

Soon the hat began to fill up. A lot more people were giving money to the blind boy.

That afternoon, the man who had changed the sign returned to see how things were. The boy recognized his footsteps and asked, “Were you the one who changed my sign this morning? What did you write?”

The man said, “I only wrote the truth. I said what you said but in a different way.”

I wrote, “Today is a beautiful day, but I cannot see it.”

Both signs spoke the truth. But the first sign simply said the boy was blind, while the second sign conveyed to everyone walking by how grateful they should be to see…

References:

  1. https://jackcanfield.com/blog/6-daily-gratitude-habits-that-will-attract-more-abundance-and-joy-into-your-life/
  2. https://www.thetappingsolution.com/blog/short-lesson-gratitude/

Difference Between Being Rich vs. Being Wealthy

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“Taking a nuts and bolts approach to your money is a pretty good indicator that someone is going to be successful. If you know how much you earn, what you need to live on, and where your money is going, you have a foundation on which to build your financial future.” ~ Paul Sullivan, “Wealth Matters” columnist, The New York Times

Between New York Times columnist Paul Sullivan’s ”Wealth Matters” first column in 2008 through of his final column in October 2021, he cataloged the shifting attitudes surrounding what it means to be wealthy in the U,S., the money habits of the rich, and which billionaire excess is worth the money. Among his biggest takeaways: “I always drew the line between people who are wealthy and people who are rich,” he says.

The No. 1 money habit of wealthy people

“You can be wealthy ‘whether you’re a schoolteacher or a billionaire’” ~ Paul Sullivan

 

  • Wealth can be defined not as a dollar figure but in terms of what your savings allow you to do.
  • Lack of control over your own financial decision-making can be a key indicator of not being wealthy.
  • The number one money habit of wealthy people is to write everything down.

Over his tenure writing the column The New York Times, Sullivan talked to nearly several thousand about wealth in America. Unsurprisingly, his No. 1 piece of advice from this collective money wisdom boils down to a rather simple idea. “Have a plan. Write everything down,” Sullivan says.

“As simple as it sounds, it’s important to know how much I’m making, how much I’m saving, how much the house costs,” he points out. “It’s a tedious exercise, but people are always shocked.”

“The wealthiest and most successful people have a plan,” he said. “And it’s not necessarily rigid. They’re regularly looking at it, revising it, and they know where they stand.”

By writing everything down, Sullivan says, you can establish the beginnings of what he calls a “locus of control” — an intentionality around money that is common among people who have the wealth to freely spend on the things that they want.

This content is provided for informational purposes only and is not intended to provide, and should not be relied on for, financial, accounting, legal, or tax advice. Consult your accountant, tax, or legal advisor regarding such matters.

No level of diversification or asset allocation can ensure profits or guarantee against losses.

The views expressed are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product.

References:

  1. https://www.acorns.com/learn/earning/wealthy-vs-rich/

New Year’s Letter

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“The struggle ends when the gratitude begins.” — Neale Donald Walsch

Motivational speaker Tony Robbins reminds us that, “Life is a gift, and it offers us the privilege, opportunity, and responsibility to give something back by becoming more.” So, it’s important to live this gift of life with gratitude, meaning and purpose.  And, the best and simplest way to live a life of meaning and purpose are by embracing an attitude of gratitude, giving back to your community and serving others without expecting anything in return.

Forget resolutions. Write a letter to yourself each year instead

The beginning of the year is a natural time for reflection and the New Year is a good time to commit to leading your best life, explains Fast Company. Goals and resolutions, however, can be impersonal, says Scott Simon, author of Scare Your Soul: 7 Powerful Principles to Harness Fear and Lead Your Most Courageous Life.

To encourage people to hit the core of their goals and values, Simon suggests taking time to write yourself a letter.

“This is a letter that nobody else will see,” he says. “It’s not about resolutions; it’s about feelings and values, and it comes from your heart. Most people have probably never taken the opportunity to write a letter to themselves, but when you do it, magical things start to happen. You start to lead your life according to your own set of goals and wishes that that come from within.”

HOW TO WRITE YOUR LETTER
Your letter should talk about the year you want to have ahead. Simon says the letter should answer five questions:

  • What are the fears you plan to tackle, those things you believe are holding you back?
  • What are adventures you will embrace in the year to come?
  • How will you connect or reconnect with others in your life?
  • How will you plan to grow?
  • What can you do to serve others?

“These are the key questions that seem to evoke the deepest reactions,” says Simon. “They are what bring up key issues. They’re not necessarily what you’re going to do in Q1 and Q2 for goals. It’s deep, internal, intimate value work.”

REVIEWING YOUR LETTER
Once you write your letter, refer to it over the course of the year. Reading your letter over again will become a key motivator throughout the course of the year. Since it’s personal to you, it will remind you what your key values and goals are.

View your letter as a gift. “Use it to push through and say ‘yes’ to something that may feel uncomfortable but that you feel is the right thing to do,” says Simon. “It can be an incredible upward spiral where one thing will lead to another, then all of a sudden you are leading your best life.”

Your letter should address each of these 7 areas of your life in which you want to win, succeed or grow in 2023!

  1. Spiritual
  2. Financial (Building Wealth and Financial Freedom)
  3. Career
  4. Intellectual
  5. Health and Fitness
  6. Family
  7. Social and Emotional Well-being

Setting goals in this many areas may seem overwhelming, but you can do it! You have the power to make significant change in your life, and even though that change won’t happen overnight, you can start today.

You should never lose sight that true happiness comes from fulfillment and the sense that life has meaning and purpose. The choice to pursue spiritual growth, health, wealth or fulfillment is personal. Whichever decision you make, you must live it.

References:

  1. https://www.fastcompany.com/90824133/forget-resolutions-write-new-year-letter

Return on Invested Capital (ROIC)

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Return on invested capital, or ROIC, is a valuable financial ratio. Understanding ROIC and using it to screen for high ROIC stocks is a good way to focus on the highest-quality businesses.

Put simply, return on invested capital (ROIC) is a financial ratio that shows a company’s ability to allocate capital.

A high return on invested capital (ROIC) means investors are realizing strong returns on their investment in a company.

The higher the ROIC, the better a company is investing it’s capital to generate future growth and shareholder value.

For example, let’s say a management team had $1 million dollars to invest, and they could either invest in a new product line, or enhancements to their existing product line. After thinking it over, the Company invests the $1 million in a new product line. One year later, the Company looks back at what they have earned on the new product line, only to find out that it’s a measly $100,000.

As it turns out, if they had invested in the enhancements to their existing product line, they would have earned $500,000 over the same period of time. What does this mean?

Well, there could be more factors at play, but based on this example, the Company’s management team made the wrong decision.

As an investor, you want your management teams making the right decisions and investing in the areas that will generate the highest returns for you as an investor.
The common formula to calculate ROIC is to divide a company’s after-tax net operating profit, by the sum of its debt and equity capital.

Once the ROIC is calculated, it is evaluated against a company’s weighted average cost of capital, commonly referred to as WACC. If a company’s WACC is not immediately available, it can be calculated by taking a weighted average of the cost of a company’s debt and equity.

Cost of debt is calculated by averaging the yield to maturity for a company’s outstanding debt. This is fairly easy to find, as a publicly-traded company must report its debt obligations.

Cost of equity is typically calculated by using the capital asset pricing model, otherwise known as CAPM.

Once the WACC is calculated, it can be compared with the ROIC.

Investors want to see a company’s ROIC exceed its WACC. This indicates the underlying business is successfully investing its capital to generate a profitable return. In this way, the company is creating economic value.

Generally, stocks generating the highest ROIC are doing the best job of allocating their investors’ capital.

By calculating  a company’s return on invested capital, investors can get a better gauge of companies that do the best job investing their capital. Yet, ROIC is by no means the only metric that investors should use to buy stocks.

References:

  1. https://www.suredividend.com/high-roic-stocks/#top
  2. https://www.discoverci.com/stock-scanner/roic-screener

Top Investing Rules

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The number one rule of investing is: Don’t lose money. In other words, preservation of capital and management of risk are most important for investors than maximizing returns and income.

What follows are 10 proven rules of investing to make you a more successful — and hopefully to build wealth — investor.

Rule No. 1 – Never lose money

Legendary investor Warren Buffett stated that “Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1.” The Oracle of Omaha’s advice stresses the importance of avoiding loss in your portfolio. When you have more money in your portfolio, you can make more money on it. So, a loss hurts your future earning power.

What Buffett’s rule essentially means is don’t become enchanted with an investment’s potential gains. Instead, focus on downside investment risks and preservation of capital. If you don’t get enough upside for the risks you’re taking, the investment may not be worth it. Focus on the downside risk first, counsels Buffett.

Rule No. 2 – Think like an owner

Think like an owner. Remember that you are buying fractional ownership of companies, not just stocks.

While many investors treat stocks like gambling, real businesses stand behind those stocks. Stocks are a fractional ownership interest in a business, and as the business performs well or poorly over time, the company’s stock is likely to follow the direction of its profitability.

Investing involves an analysis of fundamentals, valuation, and an opinion about how the business will perform and produce cash in the future.

Rule No. 3 – Stick to your process

The best investors develop a process that is consistent and successful over many market cycles. Be discipline and don’t deviate from your process because of short-term challenges and market volatility.

One of the best strategies for investors: a long-term buy-and-hold approach. You can buy stock funds regularly in a 401(k), for example, and then hold on for decades. But it can be easy when the market gets volatile to deviate from your plan because you’re temporarily losing money. Don’t do it.

Rule No. 4 – Buy when everyone is fearful

When the market is down, investors often sell or simply quit paying attention to it. But that’s when the bargains are out in droves. It’s true: the stock market is the only market where the goods go on sale and everyone is too afraid to buy. As Buffett has famously said, “Be fearful when others are greedy, and greedy when others are fearful.”

The good news if you’re a 401(k) investor is that once you set up your account you don’t have to do anything else to continue buying in. This structure keeps your emotions out of the game.

Rule No. 5 – Keep your investing discipline

It’s important that investors continue to save over time, in rough climates and good, even if they can put away only a little. By continuing to invest regularly, you’ll get in the habit of living below your means even as you build up a nest egg of assets in your portfolio over time.

The 401(k) is an ideal vehicle for this discipline, because it takes money from your paycheck automatically without you having to decide to do so. It’s also important to pick your investments skillfully – here’s how to select your 401(k) investments.

Rule No. 6 – Stay diversified

Keeping your portfolio diversified is important for reducing risk. Having your portfolio in only one or two stocks is unsafe, no matter how well they’ve performed for you. So experts advise spreading your investments around in a diversified portfolio.

“If I had to choose one strategy to keep in mind when investing, it would be diversification,” says Mindy Yu, former director of investments at Stash. “Diversification can help you better weather the stock market’s ups and downs.”

The good news: diversification can be easy to achieve. An investment in a Standard & Poor’s 500 Index fund, which holds hundreds of investments in America’s top companies, provides immediate diversification for a portfolio. If you want to diversify more, you can add a bond fund or other choices such as a real estate fund that may perform differently in various economic climates.

Rule No. 7 – Avoid timing the market

Experts routinely advise clients to avoid trying to time the market, that is, trying to buy or sell at the right time. “Time in the market is more important than timing the market.” The idea here is that you need to stay invested to get compounding returns and avoid jumping in and out of the market.

And that’s what Veronica Willis, an investment strategy analyst at Wells Fargo Investment Institute recommends: “The best and worst days are typically close together and occur when markets are at their most volatile, during a bear market or economic recession. An investor would need expert precision to be in the market one day, out of the market the next day and back in again the following day.”

Experts typically advise buying regularly to take advantage of dollar-cost averaging.

Rule No. 8 – Understand everything you invest in

“Don’t invest in a product you don’t understand and ensure the risks have been clearly disclosed to you before investing,” says Chris Rawley, founder and CEO at Harvest Returns, a fintech marketplace for investing in agriculture.

Whatever you’re investing in, you need to understand how it works. If you’re buying a stock, you need to know why it makes sense to do so and when the stock is likely to profit. If you’re buying a fund, you want to understand its track record and costs, among other things. If you’re buying an annuity, it’s vital to understand how the annuity works and what your rights are.

Rule No. 9 – Review your investing plan and goals regularly

While it can be a good idea to set up a solid investing plan and then only tinker with it, it’s advisable to review your plan regularly to see if it still fits your needs. You could do this whenever you check your accounts for tax purposes.

“Remember, though, your first financial plan won’t be your last,” says Kevin Driscoll, vice president of advisory services at Navy Federal Financial Group in the Pensacola area. “You can take a look at your plan and should review it at least annually – particularly when you reach milestones like starting a family, moving, or changing jobs.”

Rule No. 10 – Stay in the game, have an emergency fund

It’s absolutely vital that you have an emergency fund, not only to tide you over during tough times, but also so that you can stay invested long term.

“Keep 5 percent of your assets in cash, because challenges happen in life,” says Craig Kirsner, president of retirement planning services at Stuart Estate Planning Wealth Advisors in Pompano Beach, Florida. He adds: “It makes sense to have at least six months of expenses in your savings account.”

If you must sell some of your investments during a rough spot, it’s often likely to be when they are down. An emergency fund can help you stay in the investing game longer. Money that you might need in the short term (less than three years) needs to stay in cash.

Investing is effectively about doing the right things and about avoiding the wrong things. And, it’s important to manage your temperament (emotions) so that you’re focused and disciplined to do the right things even as they may feel risky, scary or unsafe.

References:

https://www.bankrate.com/investing/golden-rules-of-investing/