It’s been only three weeks since we published our report on energy storage, but already the ever-evolving field of battery technology has seen another advancement. Jeff Dahn, a prominent battery researcher for Tesla at Dalhousie University in Halifax, Canada, announced at a talk at MIT last week that his team has substantially extended the lifetime of batteries of Tesla stationary charging stations. This is less than a year into his five-year research partnership with Tesla, and already he and his team have met a major research objective. Both the significance of this discovery and the potential that it signals for the pace of future research might make Tesla a more attractive buy.
This morning, the stock prices of GM and Ford tanked by about 4% each in response to a decline in April auto sales.
My first response, of course, was to have a brief heart attack. But in an effort to avoid giving in to my cognitive biases I decided to head to the news and see the details. The crux of today’s freakout seems to come from the fact that it’s seen as a confirmation of the recent narrative among automaker investors that auto sales are reaching a medium-to-long-term peak, which might be true for a few reasons. At the same time, I’m very hesitant to see this month’s numbers as actually indicative of a significant trend, for reasons I’ll explain.
When you hop onto the NASDAQ or whatever stock tracker you prefer and look at a classic chart of stock price over time, you’re not being told the whole story. If the aim of investing is to earn money, then it’s foolish to forget one of the major ways investors can make money – dividends.
Dividends are regular payouts of a company’s profits made to shareholders, paid per share. They are one of a few ways companies can use profits, other than buying back stock or simply retaining the earnings as assets. While often overlooked by beginning investors, dividends can constitute a significant portion of earnings. For instance, Ford (F) has paid out dividends equaling 5.25% of the share price over the past year, which is at least half as much as an average security’s price can be expected to gain in an average year. Simply put, even if Ford’s stock only gained a seemingly unimpressive 7% in a year, with dividends like that it would still add 12% to the total value of your holdings, a robust return.
One of Donald Trump’s latest eyebrow-raisers has been his conflicting statements about Chinese currency manipulation, or the lack thereof. This is yet another rehashing of an issue which has been debated since at least the Bush Administration, always loaded with implications for trade policy and the relative strength of particular industries.
There’s an element of truth to Donald Trump’s original stance – in the early 20-aughts, the Chinese government certainly engaged in currency intervention to manipulate the balance of trade with partners like the U.S., strengthening Chinese export prospects and, according to some, speeding the demise of American manufacturing. Trump’s lunch with Xi Jinping seems to have updated him on the state of affairs, though – for the last several years the situation has been more complicated, and in many ways the opposite. Continue reading “China: Monetary Meddlers?”
At the moment, nearly every investing advice platform is talking about one thing – Tesla’s (TSLA) recent and continuing stock bump following the unveiling of the Model 3 on March 31. As wary as I am of continuing the momentum of a story for its own sake, I think Tesla’s latest round of hype is worth talking about because it’s a good example of a broader pattern in the market that’s been emerging in the past several years.
As of the time of writing, Tesla’s market cap is neck and neck with GM’s, putting it at the top among U.S. automakers. This is where the similarities in their financials end, though – while GM consistently turns a steady profit, Tesla has yet to turn a positive net yearly income. Of course, this is no secret. So what’s the wind in Tesla’s wings if not actual cash? If a frequently-circulated remark by Piper Jaffray’s Alexander Potter is to be taken as a cue, for investors the decision to buy is about “optimism, freedom, defiance, and a host of other emotions that, in our view, other companies cannot replicate.” Continue reading “Are We Seeing Early Warnings of a Dot-Com Bubble 2.0?”