Author: s4k

Looking at some potential new stocks to buy I come across Tesla. Two issues  jump out at me when taking a birds eye view.
First, I look at their cash flow.

Not bad. I look a little deeper to see where all this cash flow is coming from.

Answer: Net cash flow from financing…
Than I take a look at the free cash flow (FCF).

The stock price continues to go up. Investors do not seem to be concerned.
Second, I don’t like their story. Maybe I should say, I don’t understand their story. I don’t understand why people waste money on new cars. Buy an indestructible Japanese used car. They run for 250K miles.

As expected, no rate hike. Full statement below.

Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent. Market-based measures of inflation compensation have increased in recent months but remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. Inflation on a 12‑month basis is expected to move up this year and to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-1/4 to 1‑1/2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

Voting for the FOMC monetary policy action were Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Loretta J. Mester; Jerome H. Powell; Randal K. Quarles; and John C. Williams.

Personnel saving rates have plunged to more than a decade lower. It is not to far away from making an all time low, since accurate records have been kept anyway. This is a product of federal reserve policy over the last few decades. Pushing interest rates down discourages savings and encourages borrowing. Capitalism needs capital.

Visualizing the Venezuela disaster in one chart.

Housing continues its relentless climb into space. I don’t believe this is going to end this year.

Natural Gas is popping out of its 5 year minimum range.

I do not recall this happening in a very long time. Natural Gas is one of the few commodities that sits around the “How can it go any lower” band. We are sitting on a nice profit with natural gas from the last trade. Below is the buy zone.

The only issue, as mentioned before, is the cost of rolling the contracts from month to month. A post will follow on when it’s time to buy.

Crude oil production: Saudi Arabia vs USA

As a follow up to the last post on entrepreneurship and being in the minority is the story of Jack Ma. He was in a room surrounded by people when he told them about his idea. They told him it was a stupid idea. They told him he knows nothing about the internet. They told him he knows nothing about computers or programming.

Israel Kirzner contribution to economics was pointing out the entrepreneur sees an opportunity. More than that he acts on it. I consider the part of acting the most important. He draws a line between the capitalist, the man who has the money, and the entrepreneur, the man who sees an opportunity. You don’t need money to make money.