Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Amazon.com smashed profit expectations after the close Thursday, while supports my personal belief in cloud computing as a lucrative investment theme,
"Amazon reported first-quarter net income of $513-million, or $1.07 per share, on $29.13-billion in revenue. Those figures compare with a loss of 12 cents per share and $22.72-billion in sales for the previous year … Despite tough competition, Amazon Web Services sales rose 64 percent to $2.57-billion from $1.57-billion in the prior-year period. That slightly topped estimates of $2.54-billion, according to StreetAccount."
"Amazon posts EPS of $1.07, shares pop 12%" – CNBC
"Amazon Web Services is now a nearly $9 billion-a-year cloud-computing machine" – Quartz
" @amberkanwar Amazon Web Services 8% of sales, 56% of profit $AMZN" – Twitter
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Deutsche Bank research attempted to answer the question at top of mind for many Canadian investors, "Can the oil rally continue?",
"Our worry that the rally would pause has been premature. Floating storage inventory, although high, has only moved to a new record high. The same can be said for non-commercial investor positioning . We are nearing an inflection point in U.S. inventories at the end of April, when seasonal builds typically turn to seasonal draws as refineries return to service in preparation for the summer demand period. On our estimates this means that inventories could begin to level out and then fall over the course of Q2 … Other possible drivers could be US vehicle miles travelled which grew by 4.6% yoy [year over year] in February … It is not until Q3 that OPEC production upside could be a dampener"
"@SBarlow_ROB DB: "Can the oil rally continue?" pic.twitter.com/cSUIqW9ti7 " (includes research report excerpt)- Twitter
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It's tempting to look at the performance of the average mutual fund and conclude that all portfolio managers are morons.
After ten years as a mutual fund analyst, I think one of the main reasons for underperformance is that so much money entered the industry in the 1990s that many people wound up managing client assets that probably shouldn't have been.
In a terrific report, Motley Fool's Morgan Housel details what, in my opinion, is the other major reason for mutual fund outperformance, structural career risk,
"Most are disastrous at what they do. Ninety percent of active stock funds underperformed their benchmark over the last 10 years, according to Vanguard.
"In order to outperform, a fund has to look far different from its benchmark index. ('Active share,' in industry lingo.) But when you have a lot of active share, you are nearly guaranteed to have years when you dramatically underperform. And when you dramatically underperform, your clients withdraw their money faster than you can blink, and your career's over. What's left is an industry with very low active share, even among smart managers who know it's the wrong thing to do. This guarantees a fund will never outperform, but it also promises big underperformance will never show its face, which is what the manager needs to run a viable business."
" The Path of Least Resistance: Conflicts among good, honest, people." Housel, Motley Fool
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The online financial community is abuzz about a Bloomberg report detailing dissention in the ranks among the writers of the famous (or infamous, depending on your point of view) Zero Hedge financial blog.
Zero Hedge has been a fascinating mix of trenchant investing analysis – they are particularly good at presenting and breaking down prominent Goldman Sachs reports – and what looks a lot like conspiracy-minded hokum. One of the site's primary writers, all of whom were previously anonymous, is leaving with some parting shots while a remaining writer wishes him all the best with his mental health issues. The money quote is saved until the end,
"'I can't be a 24-hour cheerleader for Hezbollah, Moscow, Tehran, Beijing, and Trump anymore. It' s wrong. Period. I know it gets you views now, but it will kill your brand over the long run," Lokey texted Ivandjiiski. "This isn't a revolution. It's a joke.'"
"Unmasking the Men Behind Zero Hedge, Wall Street's Renegade Blog" – Bloomberg
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Tweet of the Day: "@RBAdvisors Another week of equity fund outflows & bond inflows. Clearly no stock bubble, but bond one maybe? " – Twitter
Diversion: "Stop Crashing Planes: Charlie Munger's Six-Element System " – Farnam Street
Scott Barlow