The Stock Market Today [An Op-Ed]

Update – March 2017

While my launch vision plans to run a regularly updated professional insurance and finance blog haven’t come to fruition (curse you outdoors and offline social activity), I felt compelled to circle back on this post. It’s been a smidge over three years since it was originally published and I wanted to hit on where things have come regarding the 3 main points.

ACA and US Healthcare

It appears the ACA was bailed out just in time. With the health care company marketplace pullouts of 2016, the non-subsidized citizen is realizing fewer options and and skyrocketing premiums.

The exodus of providers effectively crated the market balance and the platform as a whole. Regardless of what Obama says, the ACA was a disaster. Either incoming party would have had to overhaul the ACA with major legislation updates.

As I write this, Trump is now President and there is no telling what we have coming. His campaign plan for health care updates was reasonable although lacking in detail.

The chances of that version making it through both houses is non-existent after everything is tweaked and adjusted to get the votes. I am confident it will be an improvement over the ACA (it has to be).

Google

Google stock (GOOGL) closed at $835 today, up from $600 when the original post was published.

A lot had changed in three years, including a stock class split and a restructuring with a new parent company, Alphabet. Overall, I don’t think Google is as dominant of a player as it was in 2014, but I do think they made the right moves.

They have aggressively entered new markets and diversified the overall business away from such a heavy dependence on search ads. Search ads are still the driving component of Google revenue.

I’m impressed with their progress in the areas of cloud computing, home automation, video (YouTube) and especially their business app division. Google has done an incredible job of penetrating the elementary, secondary and college education markets with their G Suite offering. Kids are learning the interface and growing up with the product.

That might not have a huge impact on the bottom line now, but you better believe it will over time (Microsoft, you’re also doing well, but you go on the education front. Google is officially drinking your milkshake).

Google will continue to win and so will the stock (if you’re waiting for a dividend, don’t hold your breath)

Amazon

Amazon stock (AMZ) closed at $845 today, up from $373 when the original post was published.

In my opinion, Amazon has taken the reigns as the most dominant company in the world. Jeff Bezos stuck to a long-term vision and it is hitting, hard. The non-stop reinvestment of revenues is now turning a profit and the snowball is picking up speed. Bezos continues to spend heavily in new markets which has been fruitful with Prime Video and the Echo / Alexa personal assistant combo.

In spite of rising fears of AI and privacy erosion we can’t get enough of Amazon making everything faster, easier and cheaper. Expect Amazon to continue to push the boundaries with new tech, AWS, grocery, fashion, foreign markets (mainly India and China) and supply chain. Amazon will eventually capture and own the shipping component and attain end to end control of their supply chain.

This will only make competition more difficult for traditional retailers. Major brick and mortar chains will fold, the survivors will become exclusively e commerce brands that also happen to sell on Amazon’s marketplace.

Amazon will continue to crush all competition and so will the stock.


Originally published March 7, 2014

Many years ago I was heavily involved in stock market analysis and financial advice. While I am far removed from that today I do still get asked about the market and for stock recommendations several times a week.

Since it is such a popular topic I figured I would share my thoughts and let this post act as a disclaimer for any of my opinions.

So, you should all know that anything I mention here is my own opinion and that it should not be used solely for investment advice.

Always perform your own research and/or consult an active professional before investing in the stock market.

With that out of the way, let’s proceed.

My Thoughts on the Stock Market

Changing Times

Depending on what day you visit this page the stock market may have hit an all-time one day high or low…. and that would not be uncommon!

All kidding aside, today’s “bouncing ball” market is much different than it was just 15 years ago. As the Internet and technology have evolved, the pace of everything has moved to warp speed. Communication is instant and investors have complex algorithms that trigger automatic trades all day long.

Today we have “right now” sentiment and automated trade reactions heavily weighted in stock prices. The net result is a market on steroids.

Sometimes a picture says a lot more than words. Any guesses when technology really started having an impact?

The bottom line here is that the market moves much faster today than my Father’s market.

If you are in it for the long haul then you should be fine with the caveats that it is more important to diversify a retirement plan out of the market sooner than years past and that more emphasis should be put on when to get out.

I know way too many people that had to put off that 2008/2009 retirement because their retirement fund was too heavy in the stock market, or even worse, individual stocks.

On the flip side, the market now is awesome for short term investors and day traders. If you have the skills, luck and enjoy a good gamble more power to you.

Yes, I realize there are some really sophisticated trading tools out there. I cannot predict the future so I have nothing to offer here.

The Market Right Now – 2014 (ACA)

For those that ask me what I think about the market right now I typically don’t have much to say.

The reason is that I do not really get what has happened over the past year and especially the last 6 months. The DOW had a record run in 2013 and although we have had a few dips along the way the market continues to move higher.

What I do not understand about this run of late is what appears to be a blind eye to the forward looking impact the Affordable Care Act (ACA) will have on consumer spend. We have major stocks with P/E ratios hovering around 1000 (LNKD) but we cannot see the potential economic disaster of a sweeping hit on consumer spend?

Perhaps I am missing something but the numbers for the premium hikes with the ACA are startling. I ask A LOT of people about their health insurance situation and I have yet to talk to one here in the South that is spending less than last year.

Most of those I have talked to are spending at least $100 more a month and/or have a worse plan. This goes for people at Fortune 50 companies, small businesses and the self employed.

I personally am self employed and have an individual Aetna family plan which I kept. While I was not forced into the marketplace I did recently get a $300/month increase which is by far the most I have ever incurred.

As for the folks that work lower wage jobs, the ones that were supposed get help, I have seen most either not take the insurance option or have their employer cut their hours to avoid the cost burden. The result for many is less hours (pay), adding another job and still no health insurance.

Even though I have yet to meet this person let’s say I myself did move to a marketplace plan. I could have gotten similar coverage with a similar premium now that my rates have gone up. That might seem OK on the surface but the MAJOR difference is my deductible would have gone from an out of pocket max of $6,000 to $12,000 year. No thank you!

The sole focus on the “affordable” premium with the ACA promotions drives me absolutely insane! It is like advertising a new car with a super low monthly payment and ignoring the 12% interest rate. What this effectively does is get people insurance but it does nothing about actually insuring them from financial disaster.

Most people making $25,000 to $50,000 can not incur a $12,000 out of pocket expense. Something that could easily result from a broken bone or minor surgery.

While my major concern is the impact on consumer spend the impact on SMBs is not far behind. The ACA dramatically impacts the ability of small business to grow and scale. The health coverage burden put on companies with 50 or more employees is nothing short of insane. It is not that these companies did not want to provide health coverage for their employees before.

They simply could not! Nothing has changed. Forcing coverage will only have an adverse effect on the employees unless the company charges higher prices for their products and services to cover the extra cost burden. How do you think that will help them compete?

Before I get off of my soap box, let’s take one more look at that consumer spend thing. I mentioned that small and medium businesses may have to raise prices to keep the doors open. This can be hard to quantify due to various market factors but I have already seen it directly with restaurants charging an ACA fee so it is clearly taking place.

Maybe I have it all wrong but this is what I am seeing:

  • Higher Monthly Premiums
  • Higher Deductibles (More Financial Risk Exposure)
  • Less Work Hours / Adding Jobs (For Many Working for SMBs)
  • Higher Prices From SMBs (From Those That Opt To Offer Coverage)

How is this not going to impact consumer spend, and thus the economy and stock markets?

Needless to say I have a bearish short-term outlook.

So What About Stocks?

Regardless of the current environment I am a firm believer in long-term stock market investing.

With all of the uncertainty and variables to consider I typically only mention liking two companies. They both have the same thing in common and that is a position of massive scale to the point of having few real competitors – Google and Amazon.

GOOG

You can think of Google as a “tech” company if you like but you would be wrong. They are the biggest data company we have ever seen and they are rapidly entering consumer markets and doubling up with product sales and user data. While this data has allowed them to become the best source for advertising on the Internet, the possibilities are endless in terms of uses.

They have brilliant people, piles of cash and really smart leadership. They have so much new innovation going at all times that they really need only a few to stick to keep the snowball going. Even if they have setbacks they have enough of a lead and cash buffer to get back on track. The company has entered all of our lives with awesome free or low cost products.

They have quietly integrated deeper and deeper and we are past the point of breaking ties as a society. Fear of the “Big Brother” is really the only thing that could slow them down so it would be wise for them to focus on that “Do No Evil” slogan.

Google will win and so will the stock.

AMZ

See above without the cash stockpile. Amazon has a goal of being the single source of everything you buy. They have sucked it up for years now reinvesting everything into new infrastructure and markets. The earnings might not always be stellar but that is perfect for what they are doing. They are reinvesting in market share and have also reached that point where they do not have any serious competition.

They are smarter than everyone else and they have so much room to grow. The company owns almost all of its consumer product supply chain with the exception of shipping. Guess who should be worried (hint: UPS, USPS, FedEx)? Amazon will own shipping before long and it will also be innovative. Hello drones!

I expect we will soon see most of Amazon’s eCommerce competition submit and promote on the Amazon marketplace.
Oh, did I mention Amazon is also a major player in the super lucrative and critical web hosting market? Yeah, that too.

Amazon will win and so will the stock.

There you have it folks. Like it, or not, I feel better.

I will attempt to be a bit less emotional and leave my soap box at home moving forward.

Thank you if you made it this far!

Agents I Recommend

Over the years I’ve been blessed to run into and get to know thousands of agents across the US with the majority of them being here in my home state of Texas.  I regularly find myself giving agent/agency recommendations to consumers and thought I should keep an online journal of these as I go.  I’m starting small with just a few but I plan to add to this list and keep it running as I go.  Below are active agents I’ve recently recommended.

Adam Pisani

Adam Pisani Allstate Insurance
(Updated Main Office)

4502 Riverstone Blvd, # 402
Missouri City, TX, 77459

Phone: 281-980-6200
Allstate Page: https://agents.allstate.com/adam-pisani-missouri-city-tx.html
Google+

 

5 Ways to Take Better Care of Your Car

You should never take your car for granted. It gets you to and from work, the store, and anywhere else that you need to visit. For the endless service provided by your car, you should be willing to return the favor from time to time. In short, this means taking better care of your car.

Note: the more TLC you provide the better chance you have of your vehicle lasting a very long time. In turn, you are able to save a lot of money. 

Here are five ways to ensure that you are taking good care of your car:

1. Wash it regularly. This is one of the easiest ways to not only care for your car but to make it look better. No matter if you do it yourself or pay for a professional car wash, in the end the result will be the same.

Tip: as you wash your vehicle, keep a close watch for anything that is out of place and may need replaced or repaired.

2. Change the oil. Hands down, this is one of the best things you can do for your car. If you want to keep the engine in good working condition you need to change the oil based on the manufacturer’s recommended schedule.

Begin to skip oil changes and you are asking for a major problem.

3. Make repairs as soon as possible. Do you need a new battery? Are your tires worn out? Are your brakes at the end of their life? No matter what type of issues you are having, it is important to deal with them as soon as possible. A problem that is not taken care of is one that could lead to more damage in the future.

Read more

3 Ways to Scare the Pants off your Insurance Agent

If you are going to purchase any type of insurance you will probably be conversing with an agent at some point. Even if you buy online, there will probably come a time when you communicate with a local professional.

There is nothing better than having a good relationship with your insurance agent. This will make it much easier for you to buy the right policy and feel safe day in and day out.

But did you know that there are many things you can do that really scare your agent? Here are three situations that your agent wants to avoid at all costs. Unfortunately, many consumers put them in this compromising position time after time.

1. Holding back important information.

For most insurance agents, this is the thing that they worry about the most. An agent never really knows for sure if a client is telling the whole truth and nothing but the truth.

For example, a client may fail to mention the fact that they have a health concern that could increase the cost of his or her life insurance. This may not sound like a big deal, but it is the job of the agent to ensure that the client gets the right coverage at the right price. The last thing an agent wants is for a client to pass on and to realize that the death benefit is not going to be paid to the beneficiary. 

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