Showing posts with label Profitability. Show all posts
Showing posts with label Profitability. Show all posts

May 7, 2020

The Coronavirus Stock Market

I believe this photo best summarizes where we are with the Coronavirus stock market.

As they say:
Don't count your chicken before they hatch.

This market has gotten way ahead of itself and the pending economic realities of the Coronavirus and the consequences of the trillions of response fund debt. 

Remember:

- The virus does not yet have a vaccine, and it is mutating and may become even more virulent!

- The deaths continue to soar in the U.S. with now over 75,000 dead in just two months.

- The deaths involve much pain and suffering both for the victim and his/her grieving loved ones. 

- The unemployment is at all time highs since the Great Depression. 

- Companies are starting to move from temporary layoffs to permanent firings and contraction, and many eventually to bankruptcy. 

- Profitability and gross domestic product are way down and may be even worse in the next quarter.

- Price Earning ratios are around their 10-year highs even looking out toward a possible 2021 recovery. 

- Restarting the economy does not mean a return to what was as the extreme trauma from the pandemic, shutdown, and social distancing rebalance us to a "new normal."

- A second and third wave of Coronavirus may be as bad or even worse than the first. 

- The two biggest global economies of the U.S. and China are facing a deteriorating and toxic relationship.

- The lingering $3,000,000,000,000 that we just added to our National Debt is going to increasingly strangle our future economic outlook. 

- The election is in November and brings increasing instability and likely volatility. 

In summary, the term used by former Fed Chairman, Alan Greenspan of "irrational exuberance" seems like a gross understatement when it comes to our current stock market.  

Get ready to see the froth come painfully off this drunken market--these eggs are about ready to crack.  ;-)

(Credit Photo: Andy Blumenthal)
Share/Save/Bookmark

June 23, 2017

Uber Overconfidence

As everyone knows, Uber is essentially--for now--a high-tech taxi company.

And high-tech tends to command high price.

But they are IMHO very overconfident of their position. 

And while I generally like taking Ubers, I would go so far to say that in many respects they are potential dead cab meat!

Why?

- Not because their leadership is in disarray and their founder and CEO was just forced to resign.

- Not because they have a disastrous corporate culture.

- Not because of their uber low or not profitable margins.

- Not because of the threat of autonomous driverless vehicles.

- Not because of the (alleged) stolen documents from Google.

- Not because Uber is (potentially) overvalued at nearly $70 billion (more than GM, Ford, or Honda)!

- Not because of its numerous competitors coming up from behind, including Lyft.

But a major reason is because:

They just gave you a not-so-hidden increase in price by tacking on a new tipping mechanism that will result in many people paying as much as a 20% hike to their overall fares.

Uber is now losing a sizable portion of their price point competitive advantage!

With the risks involved here, who could be so overconfident?
Perhaps, it's time to take a cab or hovercraft somewhere else. 

(Source Photo: Andy Blumenthal)

(All represents my own opinions)
Share/Save/Bookmark