LyrArc Article Gist
The NASDAQ index reached 5000 by April 2015, a level reached in the stock market boom in 2000. Yet investment strategists who were wary of the stock market in the period before the 2000-2002 collapse of the market see this market differently. The NASDAQ itself is not what it was in 2000, with the 2015 NASDAQ component stocks being different for the most part, and the healthcare and other sectors better represented in the index. Only three of the stocks in the top ten in 2000 are in the top ten today, including Microsoft. The S&P 500 trades in April 2015 at 18.5 times its company earnings for the past 12 months, compared to an historical average of 15.5, according to research firm Bespoke. A big part of the difference today is the investment climate of low inflation, which gives the U.S. Federal Reserve flexibility in raising rates. Low rates make bonds with lower yields less attractive, and increase the present value of future earnings. The yield of the 10 year U.S. Treasury was 1.917% on April 25, 2015. In April 2000 it was 6%, and in mid 2007 it was 5.3% before the financial crisis in the two periods. James Paulsen, chief investment strategist at Wells Capital Management oversees $347 billion in fund investments. He also was wary of the U.S. stock market in 1999, yet he does not see the similiar kind of risks today, and sees a long term bullish trend. The scenario he envisages is more of a pause or temporary decline. Paulsen has shifted money to European markets, as U.S. stocks are becoming more expensive relative to their European counterparts, a strategy that is being followed by other money managers since 2014. Higher price volatility is seen in the markets in 2015, with the S&P 500 up 2.9% for the first four months of 2015, and the Dow up 1.4%. ...

LyrArc Article Gist
Thailand's finance minister, Mr Kittiratt, says the capital inflows into Thailand are about three times more than the inflows before the 2008 global economic crisis. Surging investment in Thai government bonds because of higher interest rates in Thailand is leading to a stronger Thai currency. This makes Thai exporters less competitive than exporters in Vietnam and Malaysia.

LyrArc Article Gist
LinkedIn's IPO is offered at a price of $45. This is up from estimates of $10 a week before the IPO. The career networking site opened at $83 and in a few hours zoomed to $122, before closing at $94.

LyrArc Article Gist
The U.S. Federal Reserve Open Market Commitee takes a position of pause and wait as it decides in March 2012 not to take any new further bond buying stimulus measures. There is uncertainty in equity markets about the effect this will have on equity prices. During the last two pauses in 2010 and 2011 the equity markets experienced downturns after withdrawal of bond buying measures by the Fed, leading to Fed action with QE 1 and QE 2 followed by a surge in equity prices and the S&P at over 1400. At the peak during the 2001 and 2008 dot-com and housing propelled booms the S&P reached over 1500. At this rate the curve for U.S. equity prices for the 2008-2012 period resembles a repeat of a narrow steep V shaped curve with only a 7% climb in April 2012 needed to reach the 1500 point in the S&P 500 average at which the previous two booms in prices ended up in a bust. John Taylor, Stanford economist, in a separate op-ed in the Wall Street Journal on March 29, 2012, called for a change in the mandate of the U.S. Federal Reserve for a more rule based policy because of the dangers of repeated boom and bust periods in the U.S. economy as a result of ultra loose monetary policies. The problem at this point in April 2012 is that profits of companies are not expected by analysts to come in strongly in the second quarter, with a slightly improving unemployment picture, expected upward pressures on oil prices from the Iranian situation, eurozone debt problems in Spain and Italy, and slowing growth in China, India and Brazil. These fundamentals do not support an S&P at the levels seen during the height of the last two booms of 2000-2001 and 2007-2008....

LyrArc Article Gist
Priceline.com, the online airline and hotel reservation site, shows growth taking business away from Expedia and Orbitz. Priceline.com's revenues come mainly from hotel bookings. Second quarter 2013 earnings were up 24% to $437 million and revenue was up 27% to $1.68 billion. Its share price has flucuated wildly from $1000 in the dotcom bubble days down to single digits and now back up to $1000 in August 2013. The stock hit $990 in 1999, then fell to $10 after the burst of the dot com bubble. After heavy spending to expand its U.S. presence Priceline.com's share price increased by 50% in the first 8 months of 2013. It recently acquired travel site Kayak to expand its access to customers.

LyrArc Article Gist
Jason Zweig cites the St. Petersburg Paradox in questioning how much someone should pay for a bet on Facebook shares at the high valuation set for this inital public offering. This riddle asks how much would one pay for playing a game in which one gets $1 for winning the first toss of a coin and the game ends, or $2 if the coin comes up heads the second time, or $4 the next time, $8 next and keep doing this , the payment doubles each time. The point is that the payoff is infinite because at each toss the probability is 50% and 12.5% for the next toss, and one could get to the 30th toss or the 60th toss, with payoff in hundreds of millions. People also could be out of the game when the heads come up and not see the later supposed gains. Because of this experts say the most people should pay for playing is $20. The Facebook offering has infinite potential of this sort, but the reality is that for businesses of this type one can only see a couple of years ahead in terms of growth, with large uncertainties ahead about growth beyond that point. Charles Lee, professor of accounting at Stanford Business School, and former head of equity research at Barclays Global Investors, says its hard to see further than two or three years for this type of company. Another problem is pointed out by Prof. Ritter of the University of Florida. He says the valuation is so high today that even if Facebook followed Google's growth and had a total market value of $190 billon that Google has today in 10 years, the annual return would be around 6.8%....

LyrArc Article Gist
Experts at Stanford Law School say the fewer IPO's expected in coming years will be a good thing as it reduces the boom and bust cycles in tech and internet IPO's of previous years. New technologies enable firms to reach breakeven at a much earlier stage with smaller investment- using founders money and capital from angel investors and less reliance on venture capital- so that companies can focus on the long term. The result will be fewer jobs created in investment banking and more in other places.

LyrArc Article Gist
The 4.7 billion euro loss at German steelmaker ThyssenKrupp for the fiscal year ending in Sept. 2012. The loss stems mainly from management's bet on a large project to make steel slabs in Brazil and ship it to a plant in the U.S. state of Alabama for finished product of high-grade sheets. The project suffered delays and by the time the Brazilian plant was running in 2010, the strength of the real Brazil's currency and higher wage costs had affected the economics of the plan. Steel demand also slowed in the U.S. The plants which required an investment of 12 billion euros now have a book value of 3.9 billion euros. Thyssen bet too much on one project and it failed. Three management board members who had oversight over the compliance, steel and building technology areas had their contracts terminated, and a new CEO was appointed in 2011. Heinrich Hiesinger, a manager from Siemens AG is the new CEO. ThyssenKrupp's image has been sullied by reports of price fixing of rail tracks and scandals involving the communications head for foreign railroad contracts. Hiesinger says "until recently there has been an understanding of leadership in which old-boy networks and blind loyalty were often more important than the success of the company." He faces a difficult challenge of changing the corporate culture and developing a new strategy. His plans are to turn ThyssenKrupp into a high-tech engineering business by selling the steel mills in Brazil and Alabama, and the stainless steel division to Finiish company Outokumpu Oyj. This will shrink steel from 41% of sales to 30%. To implement this strategy Hiesinger needs a capital increase. This runs into problems as the Krupps Foundation headed by Berthold Beitz, which controls 25% of the stock, does not want to see its influence diluted. Other problems include the role of Gerhard Cromme, head of the supervisory board, which failed in oversight over the failed project. Cromme is also the head of the supervisory board at Siemens AG. At Siemens he helped a company cleanup after a bribery scandal and brought in new management. He also headed the Cromme Commission on corporate governance code for German business, which makes the current corruption allegations embarrassing for Cromme....

LyrArc Article Gist
Finance professors and experts on internet IPO's, Ritter at the University of Florida and Aggarwal, are skeptical that average investors would make money on the Facebook IPO. Ritter's information base shows that from 1980 to 2009, the average IPO's would jump 18% on the first day and 21% in the next three years, showing that hype and marketing with restricted supply of shares relative to demand created can artificially increase the price on the first day. As average investors get to invest after the opening day and on less favorable terms than the insiders and bankers doing the IPO, its not such a good deal for the average investor. Google performed well for the average investor, but this could be the exception rather than the rule. Google operates in a space, namely "search" engine, that is an essential part of the functioning of the internet space, which accounts for its continued growth. This may not be true for game firms such as Zynga, group discount sites such as Groupon, and social network sites such as Facebook, because their growth could stall suddenly. As Jason Zweig points out in the Journal, another factor is the starting price. At a high enough starting price the risk for investors could be high and returns may be no higher than the average 6-7% range....

LyrArc Article Gist
The impact on ASEAN countries of the monetary expansion policy of the Bank of Japan, Japan's central bank, and the policies of the Abe administration. Infusion of new liquidity into Malaysia, Singapore, Indonesia, Thailand and Vietnam.

LyrArc Article Gist
For senior executives of financial firms investing in August 2011- following weeks of extreme volatility in the U.S. stock market- is all about capital preservation. Executives interviewed here have moved all their money to high grade bonds and cash. This is happening even as the advisors of financial firms are telling the public to stay in the stock market for the long term, and even as many middle class investors have seen their savings shrink from the crash of 2008. It is the crash of 2008 that has made the executives interviewed here turn highly cautious.

LyrArc Article Gist
Amazon is tackling the Indian market by addressing the need of rural shoppers in all parts of India- home to nearly 800 million people. Here WSJ shows how this works with a customer in Dhowachal, in the northeastern state of Assam, who had no access to stores except by travelling for hours to the nearest town.  The customer is a teacher who received an Amazon delivery of pairs of jeans, socks, curtains, glasses and other items. Rural shoppers in India spent about $400 billion in 2017. Barclays estimates Amazon had $7 billion in gross merchandise sales volume in India in 2017, about 2% of what it does worldwide. More than 80% of customers in 2018 are from outside India's largest cities.  To do this Amazon has changed its app to work on cheaper smartphones and patchy cellular networks, added hundreds of thousands of Indian language descriptions of products and videos. It has also opened physical Amazon stores to teach people how to order online. Tens of thousands of distributors were added to deliver packages and take cash or digital payment. Amazon is spending $5 billion in India to set up a logistics network and warehouses, including staff and content development for Amazon Prime. In doing this Amazon has learned from China where Alibaba and other online retailers have grown seven fold by reaching rural areas. Amazon could not compete with Alibaba in China. In India Amazon has no strong local competitors like Alibaba. It is learning how to operate in India. The app offer tips on how to order, no email is needed, only a phone number, machine learning translates all descriptions into Hindi. Icons work well. A digital wallet lets customers without bank accounts or cards to pay or get money back. Amazon is investing aggressively using an advertising campaign and discounts to pass Flipkart which WalMart bought for $16 billion in 2018. Amazon is trying new ideas in India's situation where small stores often closet sized sell a limited number of products often going through multiple middlemen resulting in high prices. Amazon is now enlisting these small stores as package depots in its own unique distribution network. The small store gets an 8-10% commission on sales for helping guide shoppers make a purchase. In Amazon's unique "I Have Space" program 20,000 mom and pop stores in remote areas of India offer to take packages and deliver in neighborhoods for a commission. They get a uniform, a bag and a week of training. Many of these store owners know the addresses in their neighborhood having lived there a long time. The entire effort shows Amazon has adapted its delivery effort, logistics and payment systems to Indian conditions in a well planned way. Compare this to the failed effort by Apple in India, with high management turnover and lack of understanding of Indian conditions and pricing, and no real plan to tackle the Indian market.     ...