Early in my career, a very successful investor shared this bit of advice with me. His logic follows: Companies do not like to report poor results or results that fall short of Wall Street estimates. Financial statements, both income and balance sheets, include a significant number of estimates. For example, balance sheets show accounts receivable … Continued
Everyone is probably familiar with the motivational efforts of sports teams’ managers and coaches and legendary half time speeches. Experience suggests that a team that expects to win, is more likely to be successful, and a team that expects to lose, probably will. Investors might want to consider if the same may apply to business, … Continued
Market observers are well aware of the immediate price reaction when a company’s quarterly earnings beat expectations, or fall short. Perhaps not quite as widely understood, is the significance of broader economic estimates. Over the last several years, economists have consistently underestimated economic strength, both in the U.S. and internationally. As a result, we have … Continued
We now live in age when news items are promulgated universally with amazing speed. This can create an interesting dilemma for investors. Any time you become aware of new information that could influence an investment decision, it is important to understand how new is new. New to you, that is, you just became aware of … Continued
It is well known that Amazon is seeking a location for a new major investment. Not so well known is the progress that Michigan has made since the Great Recession ended in 2009. The recently released 2017 Michigan Economic Competiveness Study confirms that Michigan is making great progress at the state level. Consider: Michigan’s economy … Continued
The concept of “cash is king” has often been associated with investment strategies. It now appears that the importance of cash as an incentive is becoming a larger factor in attracting business investment. For example, at first glance, it would seem that Wisconsin’s successful bid for Foxconn’s first major U.S. manufacturing facility was smaller than … Continued
“Que Sera, Sera” is the title of a song made famous by Doris Day in 1956. Investors might note the song’s chorus. “Que sera, sera, whatever will be will be, the future’s not ours to see, que sera, sera, what will be, will be.” Despite the seemingly never ending prognostications, by “experts”, both bulls and bears, … Continued
With many of the world’s stock indices hitting all-time record highs, it comes with no surprise that many investors are wondering if now may be the time to lock in profits, sit on cash and attempt buying into the next market downturn. This is defined as market timing. Sigma’s belief is that it is very … Continued
Conventional wisdom generally suggests that when costs rise, price increases follow. Most of the time, this may be accurate. However, investors should investigate carefully before jumping to a conclusion. Sometimes costs adjust to reflect prices rather than the other way around. An interesting case in point is the oil industry’s reaction to a major decrease … Continued
We have previously commented on the issue of lackluster U.S. economic growth. (See our blog from Jul-12) Among the possible causative factors, relatively modest gains for real wages has been highlighted by many economists. We have seen unemployment steadily decline to near record lows. At the same time, we have not seen much in the … Continued
Mean reversion is the theory suggesting that prices and returns eventually move back to the mean or average. This mean or average can be the historical average, or another relevant average, such as growth in the economy. Applying this theory to the major stock market indices, such as the S&P 500 and the Dow Jones Industrial … Continued
Infrastructure is defined by the “American Heritage Dictionary” as the basic facilities, services, and installations needed for the functioning of a community or society, such as transportation and communications systems, water and power lines, and public institutions including schools, post office, and prisons. Historically, politicians have tended to give infrastructure spending short shrift while favoring social … Continued
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