Thursday, June 23, 2022

Bad Luck Investing

Hopefully you realize that the best time to invest is when stock prices are low and the worst time is when prices are high. But patience is a virtue and can have rewards. A recent article introduces Betty Badluck, who just happened to invest at the stock market tops during the past 35 years. So what happened to Betty? As you will see, while the returns were not fantastic, over time, the stock market has historically rebounded and she still has three times her investment in real terms. This is an important note on stock market history: While we can't predict the future, over the long-term, the stock market has historically provided positive returns.

Monday, March 21, 2022

Volatility And IPO Slowdown

When a company is undertaking an IPO, surprises are not good. The CBOE Volatility Index (VIX) is a measure of the market's 30-day expectation of future volatility. When the VIX is high, the market returns are volatile, which makes pricing an IPO very difficult. When this happens, IPOs slow down. During early 2022, the VIX has been rising due to uncertainty in both the global and domestic economies. As a result, the IPO market has slowed down. In fact, IPOs are only 75 percent of last year's pace.

Tuesday, March 15, 2022

NPV Analysis

It is always interesting to see a real-world application of concepts you have learned in class. Recently, Voyageur Pharmaceuticals Ltd. released the results of its capital budgeting analysis of a barium sulfate project in British Columbia, Canada. Notice the company repeatedly refers to the project NPV, but also calculates the IRR and payback period. The report includes the key variable assumptions and the NPV per share. What we also find interesting is the sensitivity figure near the bottom of the article. The company shows the sensitivity of the project to changes in operating costs, revenue, and capital. It appears that the NPV of this project is most sensitive to changes in revenue.

Century Bonds Issued

With the threat of an increase in interest rates, it appears to be a good time for borrowers to lock on interest rates for a long time. TTUN is the latest to do so, issuing $1.2 billion worth of century bonds, that is bonds with a 100-year maturity, at a coupon rate of 4.45 percent. At the same time, TTUN issued $800 million of 30-year maturity bonds at 3.5 percent. Other Big Ten universities, including the University of Minnesota, Michigan State University, Rutgers University, and THE Ohio State University have issued century bonds in recent years.

Friday, March 4, 2022

Onshoring

Which automobile company exports the most cars from the U.S.? Most people would probably guess Ford or GM, but for the 8th straight year, BMW is the U.S. auto export leader. During 2021, BMW exported 257,876 cars valued at $10.1 billion from the company's plant in the U.S. Although many are concerned with the negative effects of offshoring manufacturing, there are also benefits to onshoring.  

Wednesday, January 5, 2022

BTCS Announces Bividend

Blockchain technology company BTCS became the first Nasdaq-listed company to announce a "bividend." The company will pay each shareholder the equivalent of 5 cents in bitcoin or cash, at the discretion of the shareholder. If you are not familiar with BTCS, the company has two full-time employees, a market capitalization of about $46 million, and hasn't shown a profit for the last four years. We should note that the market capitalization was based on yesterday's closing price as the company's stock has jumped about 50 percent so far today on the announcement!    

Monday, December 27, 2021

Apple Shines

Moody's recently upgraded its rating on Apple's long-term debt. Apple joins Microsoft and and Johnson & Johnson as the only three U.S non-financial corporations with AAA rated debt. Moody's credits the better credit rating with substantial operating scale, large installed base of products and services, strong customer loyalty, and brand positioning.