Seeking Alpha by Adding Beta

We saw the musical " The Greatest Showman " based on one of the greatest showman of 19th century P.T. Barnum . I love musicals (who won't especially folks who grew up seeing bollywood movies - 99 out of 100 movies are musicals). After seeing Hugh Jackman singing in Les Miserables , this was must watch for us. I would recommend both movies if you love musicals. Finally Hugh Jackman is done with his Wolverine claws and exploring other genres (Hugh - there is an idea "Wolverine the Musical"). Now coming to PT Barnum - he was one of the most famous personalities of 19th century. He tried his hands in many fields from entrepreneurship to politics. Along the way he got famous (and infamous) for many of his quotes like: There's a sucker born every minute Without promotion, something terrible happens... nothing!  We have got something for everyone The noblest art is that of making others happy PT Barnum is also associated with " Barnum Effect ". I...

As millions of people, I was eagerly waiting for Star Wars: The Last Jedi. I even did advance booking  for all my team members back in Oct. The movie did meet the expectations of all the hype. The story line is kept simple and even though it was a bit long, it kept audience engaged. Now the wait starts for Episode 9! 2019 is going  to be big year with Cricket World Cup, GOT final season and Star Wars Final Episode! The final details of tax bill is out. Let's take another look at some of the " Good, Bad, Ugly " aspects we discussed back in Nov.  Tax brackets went back to 7 but still simplified with lowest starting at 10% and highest at 37%. Generally its good since overall rates have come down for everyone Corporate tax rate reduced from 35% to 21%. They could have settled down with 22% and given more tax cuts to individuals. But we know who controls GOP so this was expected Expands child tax credit - thanks to Marco Rubio. Looks like he is one of the rare ones in G...

Hope you had great Thanksgiving. Lot of interesting events have happened in last two weeks so its time to look at some of these - especially on two topics we have visited in past - Taxes and Bitcoin! Unless you are on different planet, you may have heard that Trump and GOP are working on tax cut plans to reward big corporations and their rich donor friends. As college students are getting ready for their finals in next 2 weeks, GOP finally did one night-out (almost) to get something done. They passed almost 500 page (some of that is hand-written) tax reform in senate. Now house and senate need to sort out their differences and vote on final bill. President Trump is going to push his party leaders to get it done before Christmas so that Trump can claim that he had given "Greatest Christmas Gift EVER to American People" for holidays. Watch out @realdonaldtrump twitter feed for such claims! Who benefits from these tax reforms?  Check out my earlier blog regarding this. I woul...

As holiday shopping season is upon us, millions of people would be shopping for gifts for their loved ones and for themselves. One week from now, Americans would have finished their Thanksgiving dinners and shopped till drop during "Black Friday" followed by "Cyber Monday" and "Terrific Tuesday" and "Wonderful Wednesdays" and so on. Retailers can be quite creative in coining the terms as we had seen with "Singles Day (11/11)" in China and "Prime Day (7/11) by Amazon". Thanks to Expanding Amazon Jungle , retail landscape is changing dramatically. In last 12 months, Amazon stock is up by 50% while combined market cap of key retailers (Target, Macy's and others) have gone down by 40%. Market is sending clear signals who is winning retail wars. And then there is Walmart. Last week Walmart published it's quarterly results and surprised everyone with kind of progress it had made. So what does it has to do with "Rumble ...

The quote "Vision without Execution is Hallucination" has been attributed to Thomas Edison and Henry Ford. Both of these men were great visionary and made profound difference in human-kind by executing on those visions. Why is this quote so important in today's world? As earnings season is wrapping up, we see incidence of "execution" or "hallucinations" in almost every earnings report. The companies which have great vision and great execution (Apple, Microsoft, Amazon, Google, Facebook, Intel, Nvidia, Netflix and many others) did extremely well and got rewarded with stock price gains. Apple being best of them would become first trillion $ market cap company in few weeks. Steve Jobs was great visionary but what made today's Apple is Tim Cook's almost flawless and laser-sharp execution! Tim Cook had added more than $500 Billion into Apple's market cap in less than 6 years. That's double of what Steve Jobs added during nearly two decades ...

Finally long-awaited GOP and Trump Tax Act was published last week after last minute delay of 24 hours. What started as "biggest tax reforms this country had seen ever" campaign promise turned out to be just another GOP "give-away" to its benefactors! This is what happens when you try to govern one-sided which limits tax cuts to fit within $1.5 trillion deficit increase over decade. If only discussions included all sides the way President Reagan did with 1986 Tax Reforms, we would have seen much different proposal. I am sure you must have read many articles to try to understand your personal tax situation. So I am not going to repeat them here. You can refer to Tax Act details in article by Tax foundation.   Being a movie buff, I wanted to look at Tax Act in light of one of all time favorite movie " The Good, the Bad and the Ugly ". Similar to the movie plot, the actors of this Tax Act are trying to find "fortune" in buried cache of over $20 Tri...

On Friday last week, 4 tech darlings (Amazon, Microsoft, Alphabet and Intel) added market cap equivalent of IBM's market cap (close to $150 Billion) in one DAY! It reminded go-go days of dot com era. Almost exact same happened on Flashback Friday back in Apr 2015 . So is it different this time compared to 2000? Are these astronomical gains sustainable? One common factor which makes it different this time is: Network Effects. Network Effects:   The network effect is a phenomenon whereby a good or service becomes more valuable when more people use it. We see it in many services or goods we use. For example: land-line phones (more people used these when more people had phone connections), Internet, Social networks, Streaming networks, Costco membership and so on. The virtuous  positive cycle which gets triggered due to network effects is what is in play for many of these technology companies. Let's look at some of them. Amazon: Back in July I wrote about Amazon...

The Four Horsemen of the Apocalypse is a metaphor depicting the end of times in the New Testament. They describe conquest, war, hunger, and death respectively. While this analogy may not exactly map to economy and markets, it's one way to look at how good times could end. Markets are on a roll with indexes hitting all-time highs every week (DOW has reached this milestone 53 tines in 2017). At current pace, my predictions for indexes by end of year are: DOW: 24K, S&P: 2625 and Nasdaq: 6800 (about 2-3% upside from current levels). No one would have predicted that we would see these levels 12 months back. So with this backdrop, let's look at analogy of Four Horsemen which could propel or end the good times! Federal Reserve (FED): For world economy and markets, this institution is most powerful in world (even powerful than US Government itself). FED came to rescue during 2008 financial crisis and still helping the economy with its policy of gradual interest rate hikes...

During my MBA at Haas School of Business, UC Berkeley, my most favourite subjects were economics (macro, micro) and finance. I really enjoyed topics on how policy impacts countries' economic growth, currencies, interest rates as well as formation and success of businesses. Around that time I also developed interest in "behavior finance". Since then I have always wondered - Is Economics a science of pure math (Equations) or human behavior (Emotions) or mix of both? In most of the academic history of Economics, it is considered a mathematically precise discipline. There have been few exceptions along the way when in 30's Maynard Keynes suggested that we should also consider Animal Spirits which was taken up as book topic by Yale professor and Nobel Laureate Richard Shiller. This years Economics Nobel was awarded to another practitioner of human side of economics - Dr. Richard Thaler (his book Nudge is my reading list). In my opinion, Economics as science is best un...

My family and friends know that I like to take small bets almost on any topic. They also know that I win most of them. I did lose  big one with one of my colleague on Hillary vs Trump (no one would have imagined Trump would win except may be few folks like my colleague Arun). I ended up buying lunch for my colleagues for losing the bet. Investing is somewhat like betting. Depending on analysis and confidence, one is really making bets on companies doing well (or not) and investing (aka making bets) on stock prices going up (or down). Markets being at all time high, one must be wondering: Are there any sectors which are still worth making bets? Based on my analysis there are still opportunities in three of my favorite sectors - Biotech, Energy and Technology. In today's world of acronyms like FANG, I decided to call these as "BET". Let's look at why these three sectors? Biotech: Two years back our family went thru experience on cancer. Since then, I have been doing q...

Nvidia has been hottest tech company (and stock) for last 3 years with his stock more than triple in just 18 months. Most of the excitement is justified due to Nvidia's unique position in cloud players (Amazon, Google etc) as well as emergence of Artificial Intelligence in self-driving cars (Tesla and so on). So while Nvidia stock may not repeat last 3 years feat, there are other companies which could offer similar excitement. Micron (MU) has been on similar trend with its stock already tripling from under 12 to 39 in 18 months. Last week Micron announced record quarter with revenues growing at 91% compared to last year. Let's look at factors which are causing "commodity" players like Micron shine. Micron makes DRAM and NAND memories. In technology world, ASP (average selling prices) go down every year. Due to demand and supply imbalance, ASP for DRAM and NAND   have gone UP by 6-8%. That's rare! On demand side: Memory markets used to be driven mainly by PC...

I am not expert on retirement planning and have many years to go before readers of this blog would need to worry about "withdrawal" rate. However it's never too early to plan. Thanks to one of the friend, I came across few articles on "withdrawal" rate and how much one needs to save to maintain decent living standards. Here are few assumptions to make: "Safe or risk-free" rate of return is about 3% (equivalent of coupon on 30 year US treasury) Protect "principal" as many years as possible Mortgage is paid off College expenses are over (and kids have settled down) No major health care expenses With these assumptions, one could assume that $100K per year income is sufficient to live in areas like Bay Area (which is one of the costliest but most cosmopolitan areas to live in USA).  Assuming about $25K in social security benefits, one would need to create $75K per year in additional income from retirement savings. That would mean one ...

As of last count there are more than 800 crypto-currencies and more are coming every few days. And unless you are hiding on another planet, you must have heard about BitCoin. Since then there are other "credible" (if you can call any of these) alternatives like Ethereum, LightCoin, Dash have come. Most of these are based on underlying technology called blockchain  While the blockchain technology has tremendous potential and could at some point match buzz created by cloud, AI, VR, BigData, currently it is "(in)famous" for it's main application of digital currencies . So let's discuss if these crypto-currencies are Fad (aka bubble), Fraud (like Ponzi scheme) or New Frontier of Investing (like dot-com companies including Amazon in late 90s). Let's understand basics of "money" or " currency ". Why do humans need "currency"? Currencies serve multiple purposes like: Medium of exchange (makes bartering much easier and frictio...

One would wonder why am I writing about taxes right now when there are more than 3 months left for year-end and another 7 months before tax-filing deadline. But that's the whole point. There is still some time left in 2017 to take advantage of some interesting tools available. In my previous blog  After-tax 401K to Roth IRA  I had written about how one could maximize savings in 401K by making after-tax contributions and how these after-tax contributions could be converted into ROTH IRA. Many folks call this as "back-door" mechanism to contribute to ROTH IRA (even though it is completely legal unless tax-reforms in discussions closes this backdoor). Good news is that overall limit has been increasing over last couple of years as evident from following table. This means one could contribute upto $54K (or $60K if you are over 50) to 401K. After full contributions of $18K and your employer's match, it would still give you an opportunity to contribute 25K or so for after...

First half of 2017 is over and earnings season would get full-steam in next 2-3 weeks. Given lack of major pre-announcements, there should not be any major surprises coming out of this season. With Fed taking dovish view on interest rates, markets seem to be loving "Goldilocks" scenario "not too hot not too cold". We already know that some sectors are getting hot like technology especially FANG stocks. At same time, it's worth exploring are there any sectors which are "cold" or "out of favor"? And of course one major sector which keeps on coming on radar is "Energy" sector. It started year on high hopes that OPEC deal in Nov would bring back oil markets in equilibrium and with Trump promises economy would grow closer to 3%. Both of these did not pan out in first half. US shell producers and Nigeria/Libya nullified whatever smaller effect OPEC deal had on supply side and due to lack of any concrete steps from Trump and Congress on t...

Tesla is one of the most exciting company around and almost all of the credit goes to its visionary CEO Elon Musk. Over last few years, I have written two blogs dedicated to Tesla Seeking Alpha by Adding Beta: Tesla = Apple of Cars? Seeking Alpha by Adding Beta: Should Apple buy Tesla? And give the action happening with first production Model 3 coming out this week and bear attack on Tesla stock bringing it down by over 10% in one week, promoted me to consider 3rd blog on same company! A ride in my friend's red Tesla (I call it as his mid-life crisis car) and seeing it in action also played a role! Tesla - is it car company or tech company. This would decide if stock would eventually touch $1000 (from around $300 today) or touch maybe $500. Let's evaluate both sides: Tesla as car company: Tesla's major product is CAR and everyone love the product and willing to pay $1000 and wait for 2 years before they can get their hand on Model 3 (I am one of those). Which car co...

Normally I don't blog about my work and company I work at (Cisco). However this time I will make small exception. This week Cisco launched one of the biggest launches in company's history with Catalyst 9000, DNA/SDA and ETA. I am proud to mention that my team (along with some other teams) have been working on these intuitive products and solutions for last two years (Network.Intuitive). Congrats to all my team members! Environmentalists would be very happy if real Amazon jungle stops shrinking (due to human activity) and expands in the way Amazon company is expanding its reaches. Amazon is one company which has proven everyone wrong. I am sure there is not a single person in the world (other than Jeff Bezos) who had belief in this company when it went IPO in 1997 and it's journey as public company over 20 years. If there is such person who had invested $10000 would be worth close to $5 Million today (assuming he/she has lived thru all ups and downs). No wonder Jeff Bezo...

For last few weeks I was developing an hypothesis of recovery "kid" stocks and their likelihood of getting into "Adult" valuations. So before I get too far, let me define the terminology: Recovery: Stocks which were once high-flying crashed with stock prices below 15 "Kid" stock price: Stock price in range of 5-15 Adult stock price: Stock price generally greater than 20 With is criteria, during this earnings season which is just wrapping up, I was monitoring stocks in technology sector and after some research, shortlisted 4 stocks which have high chance of reaching "Adult" valuations. FireEye (FEYE: $15) - this stock crashed from over 90 to close to 10 in 2 years. After changing CEO and business model from selling security appliances to recurring software revenues, this stock is on mend and could see 20+ price in next 12 months. This also happens to be in hot security area and with hacks like "WannaCry", companies are ready to ...

As the tradition goes, I must write blog on afternoon of Oscar night. Given my love for movies (a good movie in any language would do - that's why I have been Netflix member for more than a decade) and penchant for predictions, how can I resist making predictions on who would win Oscars. So I have picked six categories for predictions. Here are these: Best Supporting Actress:  Viola Davis  (Fences) Best Supporting Actor:  Mahershala Ali  (Moonlight) Best Actress:  Emma Stone  (La La Land) Best Actor:  Denzel Washington  (Fences) Best Director:  Damian Chazelle  (La La Land) Best Movie:  La La Land We saw La La Land in a nostalgic theatre in Santa Barbara during Christmas vacation. We all moved the movie (and songs). It is one of the highest nominated movie with 14 nominations. However it's Oscar haul would not match that of Titanic and others which won 11 Oscars. Most likely La La Land would by high-single digi...

President Obama, Thank for your being our President for last 8 years. It started with an inspiring speech in 2004 during democratic convention leading to that historic fall night of Nov 2008. On that night I felt so proud of my adopted country and Americans who elected first African American President. In 2012 and I along with my son volunteered for your campaign. Historians and authors would write many books on your achievements and your presidency. One could not do justice to your presidency just by listing few. But I could not resist listing few here. You saved American economy (and by extension world economy) from 1930's style depression by working with Fed and congress.  Presided over economy which did not had a single recession once it recovered from depths of 2009 recession Created over 15 million jobs during 8 years and brought down employment from over 10% to 4.5% Stock markets nearly tripled (as measured by DOW index of 6600 to nearly 19800) Enacted first major ...