https://blogs.ubc.ca/tabraham/

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As I was reading some of my classmate’
sblogs, Trent’s
post about Alibaba’s IPO was an article that instantly appealed to me. Trent effectively summarizes an article from Forbes written about why Warren Buffet would not invest in Alibaba. A quick fundamental analysis has led me to the conclusion that at this point in time, Alibaba is not a very strong value investment. While I agree that Alibaba fails across the board as a Graham or Buffet stock right now, I also believe that there is money to be made following the record-setting IPO. As soon as the buzz surrounding the stock dies, taking on short positions in Alibaba could become a very profitable endeavour as the inflated valuation falls to a more realistic level. Alibaba’s IPO also presents a very lucrative opportunity to short other stocks in the technology sector. Chief investment officer of Huntington Asset Advisors, Randy Bateman has said that Alibaba could create additional volatility in the tech sector since some investors may be selling positions in other tech stocks in order to buy Alibaba. This opens up an opportunity for bears to profit off of the temporarily decline in value of these other stocks. Trent concluded his blog post by asserting that guaranteed returns on investments are a myth in today’s economy. I would disagree with this argument and rebut that even though certain stocks may decline in value, understanding the interactions within the stock market can enable intelligent investors to profit off of both increases and decreases in price.

http://www.edmontonjournal.com/business/Costco+stop+accepting+American+Express+cards+Canada+switches+Capital/10215453/story.html

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The article above caught my eye last week, having just obtained a credit card for myself. It discusses how Costco will switch from only accepting American Express in Canadian stores, to having an exclusive deal with Capital One and MasterCard. Negotiations between Costco Canada and American Express fell through, ultimately ending a 15 year relationship between the two companies. In 2013 Costco’s Canadian operations resulted in $17.2 billion in revenue. Costco is arguably the largest wholesale mega-market in the world and as a credit card company, having exclusive access to their customers can be tremendously beneficial. After studying business models in class this past week, a key component of any company’s model is going to be customer relationships. Costco members tend to be very loyal; this enables credit card companies to have prime access to a large target market. If a customer switches to a Capital One credit card, they are very unlikely to have isolated use of this card within Costco locations. Chances are that the customer will end up using their new card for other purchases as well. This deal has tremendous implications for Capital One and MasterCard, considering that it allows them to grow their Canad
ian customer segment, thus improving overall revenue and profit.

http://fortune.com/2014/09/08/u-s-legislators-are-stepping-into-the-tax-inversion-fray-as-companies-continue-to-pursue-the-tax-advantaged-deals/

It has been said that there are only two certainties in life: death and taxes. Accepting this, it is still important to acknowledge that no one likes paying taxes; corporations are no different. One of the newer mechanisms they employ is a strategy called tax inversion. This involves American businesses buying land subsidiaries overseas, which then becomes their corporate headquarters, enabling said company to classify itself as a foreign company. The result is lower corporate taxes. The question then becomes: should tax inversion be classified as fraud? By forgoing certain taxes, these companies are essentially robbing both the people and the government of the United States, even if it is through legal actions. It is important to distinguish legality from ethics in this example. If a company wants to continue to call themselves “American” and receive the benefits associated with this (tax credits and direct business with government) they must accept their necessary responsibilities. Taxes are not subjected to personal tastes. If corporate personhood is truly evident in our society, then bias cannot be shown towards corporations. Businesses cannot pick and choose the components of this construct that they wish to indulge in. Their actions have and will continue to be unjust, unless proper government legislation is implemented, as alluded to in the article.