Location? Location?? Location??? Earnings! Earnings!! Earnings!!!

 


Location? Location?? Location???

There is the age old saying in the real estate world that the three most important factors to consider before making a purchase decision are location, location, and location. Here is my ameture attempt at an enticing listing for a house.

Own a piece of history! This 4 bedroom, 2 bath castle built in the Second Empire architectural style is a commuters dream. Enjoy 360 degree water views while skipping ALL the traffic on your way into the big city. From Broadway shows to Wall Street deals - the world is your oyster from this one-of-a-kind perch. Fish in the morning mist and bask in the afternoon sun on your own private beach. Enjoy country living with downtown access. Bid early and bid often!

If you had read just the text and viewed just the photos, you might think that this was the find of a lifetime. Glancing at the map might add some cause for concern and make you think that this listing is not for everyone. Diving past the headlines and looking under the surface is part of our job.

Earnings! Earnings!! Earnings!!!

Under the surface of the beautiful office buildings and impressive products that adorn the glossy pages of an annual report are the true guts of the operation. These guts include sales revenues, variable expenses, fixed expenses, and net profits. Let us put this into summer terms that may make the story more entertaining. A fish generates energy by a combination of the food it consumes through its mouth and the oxygen it pulls through its gills. It expends this energy while either cruising around or evading predators. The faster it can swim, the more likely it will live to meet another day. This speed is akin to the net profits for a fish as it can be used to catch other fish for food and "reinvest" back into building more muscle. One of the most important concepts for investors is to understand the structure of an income statement for a company whose stock we may want to purchase.

We can see that AquaBounty Technologies, Inc. (AQB) has much higher expenses than revenues. This results in negative earnings that have been growing even more negative over time. Clearly, they are swimming slowly enough that they may get swallowed whole by their competition or a hostile acquirer. Their next earnings announcement is due between August 4 and August 9. Time will tell if they can turn their ship around fast enough before they hit a reef.

Sale? Sale?? Sale???

Wordsmiths have a way of bending reality through their spelling, grammar, or delivery. All retailers will try to lure you into a purchase by telling you how much money you will save when you purchase their goods that are on sale at any given moment. Of course, the best way to save money is to take it out of your wallet (for those who still carry cash) and deposit into your savings account. Better yet, invest it so that it works harder for you. After that skipped purchase is long forgotten, your revenue will surpass your expenses as you generate positive earnings. These can compound over time to provide you with the power of financial freedom that can be used to quench your thirst for adventure.

Sail! Sail!! Sail!!!

We Sail Wednesdays! https://docs.google.com/forms/d/e/1FAIpQLSc__tU1PIPpnR-Y4XJWh0RUNCIzEC40S3MYBMTyXrfXdlYr-w/viewform?usp=sf_link

We Sail Saturdays! https://docs.google.com/forms/d/e/1FAIpQLSfur8E7JVGPLp_9CTWEgECggIMlLYBrqCq0-L32vYpml5XIFA/viewform?usp=sf_link

We Sail Sundays! https://docs.google.com/forms/d/e/1FAIpQLSdOS3INtqxn-uSzRbJEZw1qz2mqhrj0_3dc1igMDJrH4ktwkw/viewform?usp=sf_link

Resources

https://www.ctpost.com/news/article/Closing-date-set-for-auction-of-CT-s-Penfield-16329115.php

https://en.wikipedia.org/wiki/Penfield_Reef_Light

https://finance.yahoo.com/quote/AQB?p=AQB

Location: 24 Mill Pond Dr, Granby, CT 06035, USA

Comments

Post a Comment

Popular posts from this blog

Strategic Versus Tactical Asset Allocation

Image
  Source : FRED Data, JQR Capital The Market Portfolio A few weeks ago we introduced a cash asset to augment our efficient frontier set of bond plus stock portfolios.The cash asset allowed us to combine cash with the one portfolio along the efficient frontier that had the highest return versus risk (AKA the Sharpe Ratio). This one portfolio can be thought of as the tangency portfolio or - more commonly - the market portfolio (MP). The mix of bonds versus stocks in the MP will change over time with changes in interest rates and changes in expected returns for our bond and stock indices. The chart below is a quick snapshot of how the risk free rate of cash interest (Rf) interacts with the efficient frontier to create the market portfolio (MP) at only one point in time. This snapshot was taken a few weeks ago. Source : FRED Data, JQR Capital Introducing Naive Forecasting  The chart shown above was generated using average return and risk data over the 1973 to 2022 time period. The hardest
Read more

Take Your 2023 RMDs

Image
  Take Your 2023 RMDs If someone in your family has turned 73 in 2023, it may be time to start taking the required minimum distributions (RMDs) from an old 401(k) or a traditional IRA. These distributions are required so that the IRS can collect tax revenues on these “before tax” contributions. The laws for these RMDs recently changed and HERE is a quick guide designed to help you estimate how much you need to take out before April 1, 2024. The good news is that the penalty for missing your RMD has gone down from 50% to 25%. Happy Holidays! Convert To A Roth IRA One way to minimize your lifetime tax burden may be to convert your old 401(k) to a Roth IRA. Two of my financial planning clients recently toyed with the idea of converting their before tax money to after tax money through the Roth conversion process. For one of them (a single female, aged 69), a Roth conversion could allow her to generate $55,413 in additional wealth over her expected lifetime. For the other planning client
Read more

The Four Most Dangerous Words

Image
The Four Most Dangerous Words... The late great Sir John Marks Templeton - of Templeton Growth Fund fame - once quipped that the four most dangerous words to an investor were: "this time is different." Many market strategists warn that the sky is falling or that the investing principles that worked in the past no longer hold true in this new world of artificial intelligence and political unrest. The truth is that the facts and situations are (slightly) different from anything in the near or distant past. The rest of the story is that the human reaction, however, is the same and reasonably predictable. Read MORE ! Mean Reversion Works In my blog post two weeks ago, I used the analogy of a spring traveling through time while being exposed to compression and extension forces. This spring never gets smushed into a pancake - just the way it never snaps in half. When the forces are briefly taken away, the spring reverts back to the normal (unforced) state. This same principle can b
Read more