Ray Dalio

Ray Dalio is the head of Bridgewater Associates, LP, the world’s largest hedge fund with about $150 Billion under management, according to its website.   I think it is very interesting to read and to learn about Mr. Dalio’s ideas and think about how they might apply to your life.


Mr. Dalio has written a new book, titled “Principles”.  As he is the head of the largest hedge fund, one would think that “Principles” is about how to find the best investments.  It is not.  “Principals” is about how to build and properly operate the best organization according to his main goal, the quest for Truth in all things, and his means of achieving the Truth, which he calls Radical Transparency.  Think about it:  What if, all day, every day, your whole purpose to everything you do is to seek the truth?  How would you change what you do?  How would you work with others?  Could you look at yourself in the mirror every night after having worked in your current job and believe that you have successfully sought the Truth?  It’s a very different way of thinking about your job, even if you aren’t the boss of a big company.  You would have to be fully trusting of everyone you work with.  That’s what Radical Transparency is all about:  No coffee break gossip; no holding back information from other employees in an effort to gain an edge over them; and really no place for office politics.  Tell everything to everyone’s face.  Be blunt to everyone.  Would you like to work in a place like that?  Or not?

I have not read “Principles”, but there is a PDF of Mr. Dalio’s ideas, circa 2011, that summarize the most important 210 points (that’s right, 210) of his ideas.  Perhaps they have been refined since then, and likely Mr. Dalio has embellished the 210 points with some good stories, but if you don’t want to buy the book, you can get a flavor of it through this link:


Economic Machine

Four years ago, Mr. Dalio posted a 30-minute animated video titled “How the Economic Machine Works”.  You can find it on YouTube and I highly recommend it.  As the title suggests, the video is big-picture focused.  Most specifically, it is focused on how governments have printed money and gone into massive debt over the years, and the macroeconomic ramifications thereof.  Mr. Dalio believes that history repeats itself and that massive money printing and government indebtedness does not end well.  The video moves quickly and the animation is very clever.  Go to YouTube and search for Ray Dalio.

All Seasons Strategy

Bridgewater’s asset allocation strategy is their own Secret Sauce.  Luckily, Tony Robbins, in his book “Money: Master the Game”, interviewed Mr. Dalio and got a basic idea of how Bridgewater allocates its assets.  A summary of Robbins’ interview and the asset allocation strategy, which Dalio calls the All Seasons Strategy, is through this link:

The end of the bull market

The All Seasons Strategy is predicated on containing risk.  Stocks are much riskier than bonds, meaning their returns fluctuate and are not consistent over time.  Therefore, according to Dalio, an investor should not put all of their money into stocks.  Dalio also sees other asset classes, including gold and other commodities, as natural hedges against stock risk.  The following is a summary of the All Seasons Strategy:

  • 30% Stocks
  • 40% Long-Term US Bonds
  • 15% Intermediate US Bonds
  • 7.5% Gold
  • 7.5% Other Commodities

As its name implies, the All Seasons Strategy is a long-term hold strategy that should do well during all economic cycles.  If you think about it, the 5 asset classes represent more or less the largest economic classes of the US economy.  If one sector is underperforming, it probably means that another is outperforming.  As the whole US economy moves forward, so should this All Seasons Strategy which mimics the broadest sectors of the US economy.  This is the type of portfolio that, once established, you might look at once or twice per year to see if it needs reallocation.  Kind of an autopilot strategy.  Does it work?  I have backtested a version of it, using ETF’s as proxies for the various sectors.  While my backtested returns didn’t match those of Bridgewater, they were positive, even during down markets.  There are other articles linked in Google that find similar results.


My main takeaway is a glimpse into the way Ray Dalio thinks about risk, how to limit it, and invest while being cognizant about risk.  He does view portfolio risk differently than do most investors.  As to his Principles and his non-stop quest for truth:  While it is admirable, I don’t view my mission the same way.  I view my mission as helping my clients achieve their dreams through their financial success.  I also think it is important for most people to have some sense of privacy, and the Radical Transparency concept of Dalio doesn’t allow for much personal privacy.  One can be truthful and still maintain privacy.  Nevertheless, Ray Dalio and his writings and his video are thought-provoking, especially coming, as they do, from the manager of the world’s largest hedge fund.

Weak Dollar

I am writing this on Thursday, January 25, 2018.  Trading action over the past week has shown how much the stock market has traded off of changes in the value of the dollar.  Specifically, earlier this week, Treasury Secretary Mnuchin publicly stated his and the administration’s desire for a weaker dollar.  Most administrations have sought a stronger dollar.  Not the current administration.  The result of Mnuchin’s comments:  The Dollar Index dropped almost 1% that day, and the US stock markets soared to new highs.  Then, today, while at the annual Davos economic conference, and in an interview on CNBC, President Trump mentioned that he would like to see a strong dollar at some point.  The result:  A wild ride for the Dollar Index, including a reversal upward of about 1% when Trump made his comments, and a commensurate correction in the stock market.

Tale of Two Charts

Here are charts for the S&P 500 Index and the US Dollar Index for the past several months.  Do you see perhaps any correlation between the two?

These charts are since July 2017.  If I was able to show you charts since 1/1/17, the negative correlation between the two would be more marked.  However, I am not technologically adept enough to figure out how to do that.  The takeaway:  The stock market has gone up as the Dollar Index has gone down.  Dollar Index going down means things like stocks are more expensive in dollar terms.


Dollar Index going down also usually means inflation, especially for Americans purchasing imported goods.  However, inflation in the US for 2017 was only 2.1%, which is historically low.  Of course, that is based on the Fed’s “basket of goods” method, which some consider outdated.

Interest Rates

Dolar Index going down also usually means that interest rates rise in reaction to the currency going down.  Yet, US Treasury rates remain in the 2.6% range, at least for the 10 Year Bond.  That is also historically low.  The Federal Reserve Bank raised rates in December 2017 and indicated there will be more increases in 2018.  The Fed affects short-term rates, and long-term rates typically follow, which they have, to some extent.  They are still relatively low.  There is a lot of debate among large institutional investors regarding rates, as you might expect.  My take is that longer-term rates will adjust as the Fed adjusts and that we will not fall into an inverted yield curve situation (where long-term rates are lower than short-term rates) because we are not moving toward an economic recession, which an inverted yield curve portends.

Rest of the World

There is another body of thought that the decline of the Dollar Index is a result of the rest of the world catching up to the US.  Europe, in particular, has undergone a great deal of turmoil over the past several years due to issues in Greece, Portugal, Spain, and Italy.  If they are not fully corrected, issues in those countries are at least out of the headlines for the time being.  There are still negative interest rates in Europe, so there are still major issues there.  However, the US Dollar may be just reacting to the rest of the world now being under more stable footing.  In addition, as I wrote about in an earlier posting, India is finally getting its economic act together after decades of mismanagement.


There is a lot of talk about a “perfect storm” of good economic news throughout the world, and that stock markets are going up as a result.  I think there are still a lot of geopolitical risks out there and that the US Dollar has traditionally been a safe haven in times of turmoil.  That said, I do believe you should hold on to any assets you currently own – stocks, real estate, or other valuable assets.  If you don’t already own, it’s not too late.  Trends in the values of currencies tend to take a long time – months and years – to play out.  The new Fed Chairman (Powell) does not seem like the type to upset the apple cart, meaning he will likely not raise interest rates any more than has been projected.  This is more good news for stocks.

Average True Range

Average True Range (ATR) is a technical analysis indicator of a security’s volatility.  Although it was originally developed for commodities, ATR can also be used for stocks.  It is a measure of the average trading range of a stock each day.  If you look at a stock candlestick daily chart, you will see the high and low for the day, in addition to the last or closing price for the day.  The height of the chart is the trading range.  Average those daily trading ranges over some time using Calculus, and you calculate the ATR.

Volatility Measure

Beta is the most used measure of a stock’s Volatility, but Beta is a measure of Volatility in relation to the S&P 500 Index.  ATR, on the other hand, is a measure of absolute Volatility, meaning it is in relation to itself, not to an index.  It answers the question, “How wide a range does this stock trade in each day?”, instead of “How does this stock trade in relation to the S&P 500 Index?”, which is answered by a stock’s Beta coefficient.

Day Traders

Day Traders like stocks that have a high ATR because daily trading range volatility means profit opportunities for Day Traders.  Day Trading also probably contributes to a stock’s ATR – a stock that is highly day-traded probably has a higher ATR because of the day-trading activity.  Smaller tech companies tend to have relatively high ATRs, whereas established “old economy” companies such as utilities have lower ATRs.

Stock Chart Sites

Free stock chart sites Stockcharts.com and Finviz.com will tell you a stock’s ATR.  I don’t see it on Yahoo! Finance but perhaps I am missing it.  In Stockcharts, you select ATR in the Indicators section below the chart.  In Finviz, ATR is also listed below the chart with no additional selection by you required.

Whole Number vs. Percentage

Average True Range is calculated as a whole number.  Thus, higher-priced stocks such as Amazon, at $1,259 per share, have a larger ATR than do lower-priced stocks.  To get a true measure of the ATR, divide the ATR number by the stock price.  This will give you a percentage trading range, which will help you determine which stocks are truly volatile and which are less so.


One stock that I follow but don’t own is Ambarella, Inc. (AMBA), a chipmaker whose products are used in GoPro cameras, among other customers.  Here is a chart of AMBA as I write this post:

AMBA has an ATR of 2.42, which, when divided by its current price (as I write this) of $54.32, means that its ATR is 4.45% of its stock price.  That’s very high!  It means that, on an average day, AMBA trades within a range of 2.42 points or 4.45% of its value.  Compare that with the SPY, the S&P 500 Index ETF, which has an ATR of 1.56 or 0.6% of its stock price of $275.62.  AMBA is much more volatile.  If you are looking for a stock with large price swings on a daily basis, AMBA is one possibility.  There are many others.

Other Applications

I believe the concept of Average True Range can be applied to other aspects of life.  For instance, do you know people where you don’t know what to expect next?  And do you know people who seem to be very steady and even-tempered?  Perhaps you work or go to school with both types of people.  The former can be said to have a high ATR, while the latter can be said to have a low ATR.  I used to use High Beta and Low Beta to describe these personality traits, but I think I will start using ATR instead because they are volatile in and of themselves and not in relation to greater society.  High ATR people tend to have a lot of drama surrounding them.  Sometimes you can handle the drama, or even crave it, and sometimes you want less drama, perhaps because you have more drama going on in your own life at that time.  The same holds true for stocks.  It doesn’t imply that higher ATR people have a higher upside, just that the highs and lows they and you experience throughout an average day are wide, and wider than those of other people.


I am pointing out ATR as another item to look at when looking at individual stocks.  It doesn’t work as well for funds or indexes because of the many holdings within a fund or an index.  Please let me know any thoughts you have and perhaps if this helps you think differently about your interactions with other people.



India may finally be getting its economic act together.  Its Nifty 50 index was up about 35% in 2017.  A new book titled “Our Time Has Come” by Alyssa Ayres (Oxford Press) details the economic and political history of India since it became independent in 1947, which is only 70 years ago.  Ms. Ayres had studied in India while an undergraduate at Harvard.  The book shows how Jawaharlal Nehru, the first prime minister of independent India, and the father of future prime minister Indira Gandhi, instituted socialist principals that almost bankrupted India.  India was forced to sell its gold reserves in 1991 to stay solvent.  Thereupon it started to reform its socialist ways and now seems to be heading in the right direction for its citizens and all involved.

Despite its recent growth and good news, there is still a lot of potential.  India remains an agrarian economy.  Think of the USA right after the Civil War, as our Industrial Revolution was commencing.  According to Ayres’ book, half of the employment is in agriculture, which contributes 17% of GDP.  Only 18% of GDP is in manufacturing, compared with 30% in China.  India has a long way to go to catch up with China’s economy, and therefore a lot of potential.

As Ayres’ book notes, there is little downside for the USA regarding India’s emergence.  India doesn’t seek to displace the USA as either an economic or political powerhouse, and it doesn’t seek Asian hegemony, as does China.  Remember that Tibet’s issue is with China, not neighboring India.  True, India and Pakistan still don’t get along, but their dispute has been confined.  Ms. Ayres doesn’t mention that one downside is for American manufacturing workers faced with its employers outsourcing to less expensive Indian labor. Nevertheless, the point is we are highly unlikely to go to war with India.


Unless you want to become an India expert, travel and/or live in India for a while, and read the Wall Street Journal India edition, rather than to invest in Indian companies through ADR’s here in the US, the best way to invest in India is through ETF’s.  Through ETF’s, you get broad, diversified exposure to India indexes and to the broad India economy without taking individual company risk.  I am not suggesting loading up on India but it is a great idea to have some exposure to the broad India markets.

The following are some broadly traded ETF’s sponsored by top managers that invest only in Indian stocks:

  • PowerShares India ETF (PIN):  This is a broad Index fund that tracks the Indus Advisors, LLC India Index, which has 50 constituents.  This fund was up nearly 40% in 2017.  https://www.invesco.com/portal/site/us/investors/etfs/product-detail?productId=PIN&ticker=PIN&title=powershares-india-portfolio
  • IShares India ETF (INDY):  Tracks the Nifty 50 Index.  Up 35% in 2017.  IShares is a division of BlackRock, the largest funds manager in the world.  https://www.ishares.com/us/products/239758/ishares-india-50-etf
  • IShares India MSCI Index ETF (INDA):  Also run by BlackRock, but tracks a similar but slightly different index called the MSCI India Index.  MSCI is derived from Morgan Stanley Capital International.  This is the largest of the three index funds listed here.  https://www.ishares.com/us/products/239659/ishares-msci-india-etf
  • The Emerging Markets ETF (EEM) is not a pure India play but, with over 8% of its allocation, India is the 4th largest country of allocation, behind China, Korea (South, not North, of course), and Taiwan.  Also, run by IShares, EEM is much larger than any of these other funds, with over $35 Billion of capitalization.  https://www.ishares.com/us/literature/fact-sheet/eem-ishares-msci-emerging-markets-etf-fund-fact-sheet-en-us.pdf

Although I don’t recommend it as an investment manager, if you want to go ahead and buy individual companies, some of the largest in Inda include:

  • Reliance Industries
  • HDFC Housing Finance
  • HDFC Bank
  • Tata Motors
  • Tata Consulting
  • Infosys
  • ITC (Cigarettes)
  • Axis Bank
  • Hindustan Unilever


Allocating some of your portfolio to India, or at least to the EEM, is a good idea.  It is likely that India’s economic growth in the next few years will outpace that of the US, and you are well-advised to get in on some of that action.  Buy ETF’s instead of individual stocks.  I think there is a lot of room for India to grow, although there are still a lot of issues such as its social class system that they need to address.  It will take time but the patient will be rewarded.

One final note:  India would be well-advised to spend some money to develop decent athletes.  Their Olympic and World Cup performance has been terrible.  They are good at Cricket but only they and a few other countries care about Cricket.  India is also good at motion pictures and that is starting to have an impact outside of India.  Having decent athletes would have more impact.


Boeing (BA) earlier this week (as I write this) announced their 2017 airplane deliveries and results, and they are outstanding.  Boeing in 2017 delivered and industry-record 762 airplanes and took orders for 912.  Their backlog is 5,864, which is over 7 1/2 years worth of backlog, based on 2017 deliveries.  Today (Friday, January 12) their stock closed at $336/share, which makes their market capitalization over $200 Billion.  My source for all of this is their outstanding website, http://boeing.com.  

I own BA – it is one of my only individual stock holdings.  As you can tell, I am very bullish on BA and its future prospects.  The following are several reasons for my bullishness:

  • Backlog:  Any company with a 7 1/2 year backlog has great future prospects.  Orders, of course, can be canceled, but probably not that many.
  • Barriers to Entry:  When I was in Business School 30 years ago, we used the famous Boeing vs. Airbus Case Study.  Guess which two companies are still the dominant players in the commercial jet market?  There have been no new (consequential) entrants into the commercial jet business since then, and I dare say there won’t be over the next 30 years.  True, there are Embraer, Bombardier, and other smaller commercial jet companies.  China’s Comac is getting started, and they may be the most likely to compete with Boeing and Airbus, but their story shows how high the barriers to entry are in this market:  Comac was started in 2008, and they are still in the test flight stage 10 years later.  Their prospects are good, but if it takes 10 years and all of the financial and technical might of the Chinese Government to get this far, it is unlikely there will be another company to build commercial jets.
  • No Threat of Substitutes:  Many industries are disrupted from below, meaning that cheaper substitute technology or products render existing industries obsolete.  Think of Eastman Kodak and photographic film, and how it was made obsolete by digital cameras.  Can you imagine a scenario whereby people will cease to fly in commercial jets?  What would that be?  Individual planes?  Teleporting?  Hyperloop?  Something else Elon Musk concocts?  FaceTime and Skype are nice but are no substitute for face-to-face interaction – ask any grandparent.  My point is that I don’t envision any technology disrupting the worldwide market for commercial air travel.
  • Boeing’s People:  Boeing has the world’s best aeronautical engineers already working for them.  Where else are they going to go and do what they already do?  Maybe some few will leave for smaller ventures here and there, but the likelihood of Boeing’s employee retention is very high.
  • Product Innovation:  Boeing is innovating with things like carbon planes (777 Dreamliner) and other cockpit technologies, always improving their products.  Boeing has not at all become complacent and looking to milk their product stable for cash.
  • Air Freight:  One of the macroeconomic trends going on right now is the emergence of online retailing and the demise of traditional stores.  Now you buy something online and it is shipped to your front door.  By what means is it shipped?  By truck, true, but also by airplane.  Who makes the airplanes, especially big cargo planes?  Boeing, of course.  The growth of air freight has also led to growth in the used airplane market.  If a commercial airline wants to sell an old plane, they increasingly sell it to an air freight company, which will convert it to carry freight instead of people.  Guess who sells the parts to convert these planes and keep them flying?  Boeing, among others.

The above I believe are long-term factors that support Boeing’s continued prosperity.  The following are some other short-term factors that Boeing currently has going for it that could change with political or economic conditions here in the US and worldwide:

  • Weaker Dollar:  Boeing is truly a worldwide company.  Its website shows each airline and each airline and each company worldwide that buys from Boeing.  The US Dollar has weakened somewhat during the past year, which makes Boeing products less expensive for overseas customers.
  • US Trade Balance:  Boeing is hugely important to the US Trade, as its products account for a very high percentage of US Exports.
  • Defense Buildup:  With the current political administration, there is likely to be a buildup of US military capabilities.  Boeing doesn’t just make commercial airplanes; they also are a huge player in defense contracts.  Boeing also sells its defense/military products to other countries.


I am bullish on BA because I really don’t see any downside to their business.  Think about this:  Apple is the largest US company with a market capitalization that is approaching $1 Trillion.  Apple’s largest product is the iPhone.  Can you imagine in the future that there will be a product that will replace the iPhone?  I can, for sure.  The iPhone is a great product but it has only been around for a little over 10 years.  Some company somewhere may very well come up with a product or technology that will replace the iPhone.  I don’t see any scenario whereby there will be a product that will disrupt and replace Boeing’s airplanes.  If Apple is worth nearly $1 Trillion, then I believe Boeing is significantly undervalued, even at a $200 Billion market cap.  This is not a knock on Apple – it is just a way of illustrating how I think about Boeing.  Lastly, I really do recommend you look at Boeing’s website – you will be amazed!

Causes and Effects

As I write this during the first week of 2018, the stock market is continuing its upward trend and making new highs.  (Maybe by the time this is actually posted we will have a correction, but bear with me.)  Many are touting the recently-passed tax package as the reason for the continued upward trend.  The Man Himself, President DJT, credits himself.  Would you expect anything else?  He had better watch out – there will be a correction at some point in the next 3 years.

While the tax package and Republican/Trump policies likely play a part in the explanation of the market uptrend, they are not the only reason.  When it comes to the US and global economic ecosystems, cause and effect are very complicated.  Imagine the biggest supertanker in the world, many times larger than one that already exists.  That is the economy.  That super supertanker cannot be maneuvered easily.  Once it starts on a path, that’s where it is going to go.  Tweaks such as the US corporate tax cut, significant though it is, must work in concert with additional tweaks in order to have a real effect.


What other factors out there are working in concert with the corporate tax cut, such that they are starting to make music together?  I have outlined some in previous posts, but let’s review:

  • Low Interest Rates:  Although the US Fed has been raising rates over the past 2 years – up about 1% during that time – the European Central Bank (ECB) has not, and there are still negative interest rates in Europe.  Worldwide rates remain low.  Low rates allow companies (and governments) to borrow at lower costs.  Good for the economy.
  • Low Inflation:  Rates are low because inflation is low.  Economics 101 says that inflation is caused by too much money chasing too few goods.  Demand outstrips supply.  Well, inflation is low because there are not “too few goods”.  There is a surfeit, not a shortage.
  • Emerging Economies:  There is a surfeit because of emerging economies and global trade.  Products are made in Asian and African countries using minuscule labor rates and shipped to larger markets like the US and Europe.  There seems to be no shortage of people worldwide willing to work for little pay.
  • Low Oil Prices:  While oil has recently moved up to $60 or more per barrel, it is still lower than the $100 or more we had to deal with a couple of years ago.  Oil (and energy prices in general) remain relatively low because of our old friends, Supply, and Demand.   Supply is high because of technological advances such as fracking, and demand, while not low, has not increased as it has during previous economic upturns because technology-fueled upturn is not as energy-dependent as other upturns, such as the Industrial Revolution and war-related upturns.
  • TINA:  There is no alternative.  Investors remain invested in stocks because they want the level of returns that stocks have provided in the past and they are willing to go farther out on the risk spectrum to get that return.

Obama Policies

I am a Republican, but I believe President Obama’s and Democratic policies have also contributed to the current upturn in stocks, although I don’t believe they were intending to stoke the markets.  President Obama’s two terms were marked by increased regulation and government oversight.  The Dodd-Frank bill which was meant to “fix” problems which caused the Economic Crisis of 2008 is the hallmark of these regulations.  This increased regulation has been a disincentive for companies to go public, and for the smaller public companies to merge with larger public companies or even to go private again.  Current “unicorns” such as Uber and Airbnb are not public yet (though they may become public in the relatively near future) because they haven’t yet wanted to deal with the hassle of being public.  According to an article published by Harvard Law School, US public companies peaked during the dot-com bubble (early 2000’s) at over 8,000, and are now at about 4,200.  Moreover, the companies that remain public are much larger.  The larger scale is needed because of the higher cost of doing business through higher regulation and compliance requirements.  As I stated above, TINA is a factor, and so what you have is investors have more and more money that they are putting into fewer companies.  The stock prices of these remaining public companies are going up as a result.  Here is the link to the Harvard Law School article:

Looking Behind the Declining Number of Public Companies


All of these and many more factors are currently working together and the stock market has been going up as a result.  There may be a catalyst out there that will cause the macro uptrend to reverse, and there certainly will be bumps along the road.  However, it would have to be a really big negative catalyst.  I’m not going to speculate on what that might be.  For the near future, I remain long the stock market and I think you should be as well.


Facebook’s initial Mission Statement was “Making the world more open and connected”.  Last year, they tweaked it to be “Bring the world closer together”.  Based purely on my own Facebook experience, while they may think they are working toward their mission, I think instead that their real mission is to become an advertising machine.  Can’t fault them for it, nor can I fault the companies that advertise on Facebook – it is not news that companies are in business to make a profit.  Also based on my admittedly anecdotal experience, I think the engagement level of Facebook users has dropped considerably.  I will explain below.


I was a relatively early Facebook user.  My Timeline says I started using Facebook in 2007, so I have been on it for about 10 years.  During the first few years, it was great to “Friend” so many friends, relatives, and acquaintances from the past years of my life that I hadn’t heard from in a very long time.  I really enjoyed (and still enjoy) reading about what people have done or are doing, what they are thinking or feeling, and especially photos of their experiences and their children and families.  At that time, most users actually posted stuff – I’m guessing well over 50% of users were actively involved in keeping the rest of us updated with the goings-on in their lives.  It was very nice!

As the years have gone on, however, I have seen this level of what I call “active engagement” drop significantly.  It seems that Facebook is now following the 80/20 rule that many other enterprises face:  20% of the users are making 80% of the postings.  It may even be more like 10% and 90%.  At the same time, posted advertising has grown significantly, as has, in my case, articles posted from publications that I am “following”.  Whereas it used to be that 80% of what I saw on Facebook was postings by user “Friends” and 20% by advertisers or other of my “followings”, now that seems to have flipped to 80/20 the other way.  So, the 20% of my Friends who actually post comprise only 20% of what I actually see on Facebook.  At least that’s how it seems to me, in my unscientific, anecdotal observations.  Are you observing the same phenomenon?  Or am I out to lunch?


I also question some of Facebook’s mathematics.  As of 3rd Quarter 2017 (the latest data available), Facebook claimed to have just over 2 Billion registered users, of which over 1 Billion, or 50%, is “active” as defined by logging in to Facebook at least once per month.  The World’s Population is about 7 Billion – maybe a little more, but let’s use that.  That means Facebook claims that 29% of the World’s population is a Facebook user, and 14% of the World logs into Facebook at least once per month.  Does that make sense to you?  Think about every person you know – that includes friends and family, neighbors and their children, everyone you went to high school and college with, and everyone you have worked with over the years.  If you are on Facebook, does it make sense that almost 30% of Everybody You Know is a Facebook user?  That includes people in Africa and India that still don’t have running water or electricity, not to mention Internet access so they can even access Facebook.  Something to me doesn’t add up.


I am not posting this as a warning that you should sell Facebook stock.  In fact, I own it, albeit indirectly, through my ownership of various ETF’s.  I am simply questioning whether Facebook is really following its own Mission Statement and if its true level of engagement might be a bit overstated.  I am not doubting Facebook’s internal metrics as to how they calculate registered users, and I am certainly not dissing the level of revenues and profits they are generating.  I do believe the breadth and the depth of engagement in Facebook is overestimated.  I don’t know what that means for Facebook’s future but it is still a growth story.  How deeply it sticks with and how much difference it makes in greater society remains to be seen.

Yahoo! Finance

Yahoo! the company has imploded and has been passed by, beset by data leaks, associated bad press, and poor management.  Perhaps it will turn around and become relevant again; perhaps not.  Despite the parent company’s issues, one service, Yahoo! Finance, remains an outstanding free resource for investors doing company research.  Here is the link to the Finance home page:


Company Research

Once on the Finance home page, there are a lot of options for you.  If you want to research a particular company, type in the name of the company or the ticker symbol if you already know it in the top search box.  The stock quote you get is 20 minutes delayed, which is fine for research purposes.  The Chart feature has been enhanced.  In addition to the standard length-of-time charts (1 day, 5 days, 1 month, etc.), you can now choose a specific date range of any length.  Very nice feature on a free site!  You can also add various standard technical Indicators – moving average, relative strength, and Bollinger bands, for instance.

Historical Data

I have used Yahoo! Finance a lot for historical price data research.  Type in the time period and voila!  What I find very useful is that you can download the historical price data into an Excel spreadsheet and work with it – graph it, compare it with other stocks or etf’s, overlay indicators to see how they work.  It is very helpful for backtesting.  If you are working on a major quantitative investing program, you can use Yahoo! Finance as your source of data.  Again, very nice for a free resource.

Other Information

If you are looking at a particular company, you can click the other links under the company’s name and current price to learn more about that company.  Conversations:  If you want to add your two cents about something related to the company, you can here.  Statistics will take you to a lot of data.  In Profile, in addition to a description of what the company does, you can see who is running the place.  Financials will take you to the company’s balance sheet, income statement, and cash flow statement for past few annual and quarterly reporting periods.  If you are an options trader, you can view recent options trade in the Options link.  In the Holders section, you can view major individual and institutional stockholders, including mutual funds that own the stock.  All of this information can be otherwise found on the company’s website, but you have to dig for it:  First, find the company’s website, then find the Investor Relations section, then dig further.  In Yahoo! Finance, all of this information is readily available without much digging.  It is very handy.

Market News

Back to the Yahoo! Finance homepage, if you are looking for general market information rather than company-specific information, you have come to the right place.  The homepage acts as a news amalgamator – it links to content from other news outlets.  There are also Sponsored stories:  these are stories that someone or some company has paid to place there, so take them with a grain of salt.  It is a very handy way to keep on top of the general market news.

My Portfolio

If you have a list of individual stocks or ETF’s that you want to follow, you can keep track of them in one place through Yahoo! Finance, and thereby stay fully up-to-date (at least on a 20 minute delayed basis).  Of course, you could do the same if you have a brokerage account and you use your broker’s platform, but Yahoo! Finance offers a free alternative.


The word I have used several times is handy.  You can find most of everything you want to find out (superficially, anyhow) without working too hard by using Yahoo! Finance.  It has been used for years as a resource for those looking into stocks, and it remains as such.  There are other free charting sites out there, but their emphasis is on the charting, whereas Yahoo! Finance’s emphasis is on overall company research.  For those of you who like to backtest and maneuver data, the Historical Data feature is especially useful.  Check it out – why not?  It’s free.

Happy New Year!

New Year’s Day, as I write this, is always a day of optimism and hope.  Think of it this way:  Who goes into a new year thinking the next 12 months will be bad?  Probably some people, but not most people.  I am very optimistic for 2018.  It probably helps that I live in the sunshine and relative warmth of Southern California.  If I still lived where I grew up and went to college, in Upstate New York, it is probably more difficult this year to be optimistic because it is so bloody cold – highs barely above zero.  Tough to be optimistic when your tuchus is freezing.  Today is when people watch the Rose Parade and decide to move to Southern California.

Here are some reasons why I am (financially) optimistic for 2018:

  • The new 21% tax rate for businesses will be very stimulative.  Businesses who currently hold money overseas will face a one-time repatriation tax it, but thereafter will be free to put the remaining money to work in their businesses.  Goldman Sachs just announced a $5 billion tax hit – other companies will follow suit.  But Goldman Sachs and the others will be winners in the long run as their tax rates will be much lower.  I believe either that companies will use the tax savings to expand and hire new workers (to the extent possible given our already low unemployment rates) or to enhance their per share profitability by increasing dividends or buying back shares or by increasing research and development for future growth.  All of these are bullish for shareholders.
  • We have not tried stimulative fiscal policy 9 years into a market upturn, and I am very curious to see what happens.  After the Financial Crisis of 2008, the market bottomed in March 2009 and we have basically been in an upturn since then, with a couple of bumps along the way.  Classical economics teaches that governments should use fiscal stimulus at the bottom of a cycle, not at the top, as we are now.  Classical economics further would teach that any further fiscal stimulus at the top of a cycle will be inflationary.  However, inflation seems to be well under control, probably due to the globalization of the world economy.  When you think of an entire world market, the “too few goods” part of the equation doesn’t come into play.  Yes, the Federal Reserve is tapping the brakes with some quarter-point interest rate hikes, but I don’t think they see a rapid rise in inflation in the offing.
  • US stock markets had a good 2017, but they weren’t alone.  The Emerging Markets Index was actually the best 2017 performer, up about 32% vs. 25% for the Dow Jones Industrial Average.  Even the Japan Nikkei Index showed signs of life by posting a gain of about 20%.  European markets were also up, although not as strongly as US and Emerging markets.  Could it be that emerging markets are finally getting their act together?  Could some prosperity be coming to some previous economic basket cases in Africa, South America and Asia?  That would not only be good economic news; it would be great humanitarian news.
  • India in particular was a hot market in 2017, with its index rising 27%.  Remember that India has been an independent country for about 70 years, during which time they flirted with socialism and alliances with the Soviet Union.  Now perhaps this nation of over a Billion people is moving forward toward greater economic prosperity for all.  I’m no India expert, but India’s continued domestic growth could be outstanding news for companies throughout the world and could also affect world inflation in both positive and negative ways.  I will continue to watch how India performs and emerges this year – they are truly an emerging market.
  • As I have stated in previous blog posts, while I recognize geopolitical threats such as North Korea and Iran, I do not believe they will result in armed conflicts.  I believe there is a whole lot of bluster by all parties.  ISIS has proven to be overrated as a governing force.  Terrorism will remain with us but will be played out through lone wolf strikes that tend not to roil markets for lengthy stretches.
  • Despite the Fed’s increases, interest rates remain low.  Even though there are lower limits on how much mortgage interest you can write off, housing will remain strong particularly in areas that are growing because there is insufficient supply to meet demand.  We don’t build nearly enough housing for lower and middle-income Americans.

These are just my opinions and they are worth to you what you are paying for them.  If you are new to my blogging, Welcome!  Please go back and read some of my earlier posts.  I have been blogging for the better part of 2017, 2 posts per week, and plan to continue.  If you want me to blog about something you are interested in, please send me a reply.

The purpose of my blog is to show you how I think and to get you to think that you might want me to help you with your finances and/or your financial planning.  My financial planning business is fee only, and I can customize my services and my fees to address your particular concerns or issues.  My firm is Hutchison Road Partners, LLC, and you can check out its website at hutchisonroad.com.  Thank you for reading and I hope you will continue to do so.

Once again, Happy New Year and all the best to you in 2018!