Financial Floyd Blogspot

Good Morning, Late last week,  one of the most famous/beloved investors (Warren Buffet) took a big loss. CNBC posted about his company failing to meet earnings but unfortunately the issue is deeper than missing earnings. For anyone investing in the stock market, this should raise an eyebrow for the following reasons: 1. The loss that Warren took was associated to a host of issues with Kraft Heinz. 2. Berkshire Hathaway is a conglomerate company that mimics a high quality, value biased ETF based on the company strategy and stakes in various companies. 3. This loss should create renewed awareness of companies overpaying for acquisitions. Kraft Heinz was historically considered a safe stock, but after the massive write-down they took on intangible assets associated with their Kraft and Oscar Myer Brands along with the cut in dividend it raised a lot of red flags associated with sustainability of the business. Getting acquisitions price right is tough and as seen by Kraft Heinz, i...

Good Morning, The weekend is here and much needed! The past couple of years have been great for the stock market and companies have benefitted from lower interest rates, but it looks like that might be changing. Earlier this week Reuters posted an article about US companies being overleveraged. The article points out that 17% of public companies struggled to make debt payments last year and the median debt to income has risen past pre-financial crisis levels. The higher debt levels create a headwind for capital investments along with hiring/pay raises. Right now, the market is doing well but this is something worth considering if investing in individual companies or ETFs because in a downturn the highly leveraged companies always end up producing the worst returns. While the author is not doom and gloom, a realistic view of the economic landscape is given. There was a mention of the leveraged loan market being a canary in the coal mine, so for those interested, I have included a ...

Good Morning! Doesn’t it seem that time is moving so fast? I could’ve sworn it was still January if it wasn’t for social media. With that being said, it is always a good idea to stay mindful of the present but not lose sight of the future/long-term plan. USA Today published an article about retirement needs that provides good information about how we should think about/prepare for retirement. Some of the key focal points mentioned were:  1.    Life expectancy varies but is based upon current/past health conditions, but planning for 30 years in retirement is a reasonable estimate 2.    Most retirees spend about $46,000 a year in retirement with the largest monthly expenses being housing, healthcare, and food 3.    Social Security and Pension Plans make up a bulk of the retirement income This article does a good job at highlighting some items to keep in mind along with providing a link to an online retirement calcul...