Market Stays Flat as Retail, Oil, Surprise-

Market Stays Flat as Retail, Oil, Surprise-

 

 Remember that time is money. He that can earn ten shillings a day by his labour, and goes abroad, or sits idle one half of that day, though he spends but sixpence during his diversion or idleness, it ought not to be reckoned the only expence; he hath really spent or thrown away five shillings besides. Benjamin Franklin

In one of the first jobs I ever had as a coach, I assisted an excellent head coach. However, the biggest issue with this person was the lack of punctuality. If a practice was supposed to start at x, usually it would not begin until a half hour or hour after that announced time. I am sure you have experienced similar such inconvenience. As one has more responsibility, constraints become more frequent on each day, so associating with people who don’t respect your schedule becomes trying at best, and quite irritating at worst. We can also apply this idea to the financial markets as well.
The time value of money is one of the first concepts of finance. A dollar today is worth more than one a year from now. An investment in a portfolio that performs well this year is better than one that performs well next year. Entities that have plans for three and five years from now are better left for venture capital and private equity fields as public investors have very little patience for those time horizons. The idea of opportunity cost also applies as capital allocated to something today which has poor performance could have been in a position which was ok, or even better, outperformed. Over and over, in such a simple form, the value of Franklin’s advice becomes wiser by the day.

In the financial markets this week, the biggest story revolved around the Supreme Court decision which struck down the prohibition of sports betting at the Federal level (with the exemption in Nevada). Essentially, this was another version of the conflict between Federal power and States rights which Hamilton and Jefferson made famous. In this instance, Jefferson would be quite pleased. The implications will become evident over time, but for quite a few industries, it could be quite substantial. Obviously, for the casino industry, those entities with properties in many jurisdictions should be helped in terms of attracting more patrons. Anecdotally, a while back we used to own the largest independent sports betting company in Nevada. We learned quite quickly the sports betting business is not a high margin business. In fact, the sports book really has thin margins, and the parlay piece is where margins are higher. In any event, it will be a nice feature in states where sports betting was not allowed, and if the state next door doesn’t, well, that certainly is helpful. The media companies have their thinking caps on about how to incorporate it into their operations, as do the fantasy sports entities. The sports leagues, naturally, want their piece of the pie, and I suspect they might get a little reward, but given their cooperation, or lack thereof, for the last hundred years, I don’t think the gaming entities are going to be in a hurry to hand over big licensing fees so quickly. It certainly is something to monitor as the idea Congress can agree to any kind of Federal legislation is far fetched, and that is what will have to happen for the NFL, NBA, and MLB to get a national gaming law. Don’t bet on that, anyway.

Elsewhere, the retail sector was a focus as Wal Mart, Nordstrom's, and Macy’s all reported this week. The biggest surprise came from Macy’s as it really put a shot in the arm to the entire retail space. Quietly, the energy complex is attracting more capital as black gold busted through the 80 dollar a barrel mark. Usually, oil does not do well when interest rates rise, and with the ten year breaking through 3% and holding, many prognosticators think energy will remain unloved if this situation persists. Not so for now, and it bears our attention, as does dollar weakness.
Finally, our thoughts and prayers go out to the families of the victims in the Ante Fe, Texas situation. While the second amendment remains a political battleground, e-sports continues to boom. As part of e-sports, the video game industry which makes all the popular titles for the gamers, bears some scrutiny in terms of the violence in these games. With their unit volumes soaring each year, perhaps our hard working regulators should take a good hard look at what is in this content. If it can help stop the slaughter of innocent people, especially kids, it certainly is worth the effort. Then again, it would require the pols to get off their patoots and take the time to do so, and we know how valuable time is, just like Franklin told us many years ago. Thank you for reading the blog this week, and if you have any questions about investing, please email me at [email protected].

Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the potential loss of ones principal.  Past performance is no guarantee of future results.  All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one's overall financial situation.  The fact that Yale Bock has earned the right to use the Chartered Financial Analyst in no way means or guarantee performance better than market indexes.