The PMF program is a good example of investing for the long run

One third if not more of us Sauder undergraduates will decide go into a finance specialisation, and for a lot of people that means a life in the stock market even if there is much more to uncover in the world of finance. After one of our recent classes, finance 2, we all got the chance to learn and further develop our understanding and interest in finance. The PMF presentation was surely very interesting for some and a program that a lot of us will surely try to be a part of next year.

During our time in university, us students are always looking for making some money, preferably easily and quickly, as it requires the least effort. And at a quick glance the stock market can, if done correctly, seem like a good place to make that kind of profit. Buying a share of a company at a low price and selling it quickly in a matter of hours or a maximum of a couple of days, should mean quick profits right?

This method of ‘investing’ is called day trading [1], and in my opinion looks a lot like gambling, which as we know is extremely risky and as students I’m not sure we can afford or should be putting ourselves in these risky situations. Nonetheless a more sensible approach to investing is to look at it in the long run. When we buy expensive clothes we think of them as investment pieces because they’ll last us a long time, so we should do the same with stocks.

Investing in the more traditional sense consists of buying shares of good companies, of which you understand the industry and believe in. Exploiting your skills, knowledge and assets to find good stock is your best bet. The next step is to learn to be patient, but more importantly to want to learn. Patience in finding the best company for you to invest in but also patience in terms of waiting for your profits to develop over time. And learning, done by reading books, articles, balance sheets, etc. [2]

In an ideal world we’d all like to have the highest return on investment (ROI) as fast as possible. But reality is that won’t be possible for most of us unless we get extremely lucky, especially when starting with a smaller budget as a university student, but when talking about money being lucky isn’t what we should be hoping for. Investing should be about making the right choices with the correct information to back it up for the long run instead of making on the cuff decisions because of an incentive to make quick money, also known as day trading.

Word Count: 445

Sources:

Nicastro, S. (2014, September 13). 5 tips for college students interested in investing. Retrieved November 12, 2017, from https://www.usatoday.com/story/money/personalfinance/2014/09/13/college-students-investing-personal-finance/15461381/

Survivor, T. W. (2017, February 15). Trading vs Investing. Retrieved November 12, 2017, from http://blog.wallstreetsurvivor.com/2017/02/15/trading-vs-investing/#

The retail market, soon to disappear?

Just like Jarrod Chang mentioned in his blog [1], for many becoming an IPO for many is a sign of success or a fancy status a firm can acquire that makes them stand out. This makes it the dreams of some smaller companies to one day be on the podium of the NYSE or Nasdaq to announce your entry into the public market.

Becoming an IPO is a milestone but one that is costly and can be detrimental if done incorrectly. There are costs associated to the first entry into the public market as well as performance pressure from investors who expect more when there is a practical way of comparing two companies. Furthermore as we saw in class 6 of COMM 101, going into the public market means being fully exposed as every single move, decision and transaction must be traceable.

Not only is it a complicated and dangerous field for companies to first enter in but the difficulty doesn’t stop there, being able to stay on top of competition in the long run and maintaining a stable growth isn’t something everyone or every industry is able to do. Currently we live in a world dominated by the Internet of things and for the retail sector this means ecommerce is now the way to go. In consequence this means a retail industry which is tanking [2] and this just proves the point that even large companies who have been in the business for ages are still subject to failing in the long run on the stock market by being an IPO. Companies like Sears [3] and Toys R Us [4], as mentioned in our tutorial, have had trouble competing with online retailers, notably Amazon who has been dominating the industry in recent times.

It’s safe to say that becoming a player on the public market is a decision that has to be carefully planned out not only in the early days but, as we’ve seen countless times, in the long run as well. I believe mall’s and physical retail stores are no longer a good investment this day and age, and that is why so many investors are now more than ever looking into the future of retail which is now online. Who knows which industry the Internet of things will heavily disrupt but the stock market might be a good place to look for that answer. This isn’t to say every one in the retail industry, or any disrupted industry is destined to fail at a point on the market, as can be seen by Wal-Mart is still seeing steady growth on the NYSE.

Word Count: 430

Sources:

The Dangers of IPOs – Jarrod Chang’s Blog. (n.d.). Retrieved October 29, 2017, from https://blogs.ubc.ca/jarrodchang/2017/10/15/the-dangers-of-ipos/

Imbert, F. (2017, May 11). Stocks close lower as retail tanks; Macy’s plunges 17%. Retrieved October 29, 2017, from https://www.cnbc.com/2017/05/11/us-markets.html

Canada, S. (n.d.). Sears Canada files for bankruptcy. Retrieved October 29, 2017, from http://money.cnn.com/2017/06/22/news/companies/sears-canada-bankruptcy/index.html

Press, T. A. (2017, September 19). Toys ‘R’ Us files for bankruptcy protection in Canada, U.S. Retrieved October 29, 2017, from http://www.cbc.ca/news/business/toys-r-us-bankruptcy-protection-1.4296274

Tapestry, the first american luxury brand conglomerate

The luxury brand world is filled with time-honoured brands and houses such as Louis Vuitton, Saint Laurent Paris, Balenciaga, etc. What most consumers might not be aware of is that these names are all under two multinational conglomerate companies, LVMH and Kering both based in Paris.

Now Coach Inc. is joining the luxury fashion groups with its recent deals with Stuart Weitzman and Kate Spade being their first two acquisitions. But that now means the Coach brand known for making quality leather goods isn’t the same as the Coach company. For this reason the group has recently decided to change its parent name to Tapestry Inc., “It’s a wonderful metaphor for what we believe in, which is individual threads of different colours all working together to create a picture,” said Victor Luis, the chief executive. [1]

This unexpected change was met with some backlash by loyal fans of Coach, as well as some bigger names in the industry expressing their frustrations with the change made on social media platforms, “This is bizarre & a strategy departure. Dying to know the logic,” Andrea Wasserman, a former Nordstrom and Hudson’s Bay executive, wrote on Twitter [2]. A 3.2% drop in the company’s stock also marked this change on the NYSE, “the biggest intraday drop in two months”. [3]

But is the general public reacting in this manner? And is it justified? I think these reactions are mostly based off of a misunderstanding on what is actually happening with the name changes. Most people believe that the Coach brand making the bags is changing its name to ‘Tapestry’ but that is just a misconception, the brand will be keeping its famous name after all. A more interesting question would be to know if this is a good change by executives at former Coach Inc. in the long run when everything settles down. Starting with the bright yellow logo and more relaxed font of the brand makes it more inviting compared to the very exclusive and luxurious looking logos of Kering and LVMH, this could possible intrigue relatively smaller brands to join the new parent. Furthermore Tapestry is now the first luxury brand conglomerate based in the United States and with only 3 brands under its name it’s willing to partner with intercontinental brands. With some hard work and dedication the controversial change might allow the company to compete with French giants.

If Tapestry is truly willing to develop itself and create a sizeable conglomerate by following the French footsteps, this could be an excellent idea, by developing on their strengths. With time Tapestry is more than likely to become a respectable name.

Word Count: 440 words

Sources:

Friedman, V. (2017, October 11). Coach Inc. Is Dead. Long Live Tapestry. Retrieved October 13, 2017, from https://www.nytimes.com/2017/10/11/fashion/coach-inc-rebrands-tapestry-american-fashion-group.html?rref=collection%2Fsectioncollection%2Fbusiness&_r=0

Wong, S. H. (2017, October 11). Coach Is Changing Its Name to Tapestry. Retrieved October 13, 2017, from https://www.bloomberg.com/news/articles/2017-10-11/coach-changes-name-to-tapestry-in-bid-to-become-house-of-brands

Cavale, S. (2017, October 11). Loyalists unhappy as Coach becomes Tapestry Inc. Retrieved October 13, 2017, from https://www.reuters.com/article/us-coach-strategy/loyalists-unhappy-as-coach-becomes-tapestry-inc-idUSKBN1CG1RT

(n.d.). Retrieved October 13, 2017, from http://www.kering.com/en

(n.d.). Retrieved October 13, 2017, https://www.lvmh.com/

(n.d.). Retrieved October 13, 2017, http://www.tapestry.com/

http://fistfuloftalent.com/wp-content/uploads/2017/03/Header_Image_20160322_HAA.jpg

We currently live in a world filled with technology wherever we are and it’s becoming more and more integrated in our daily lives, safe to say technology companies are looking for more ways to be a part of our everyday routines. This year the top 7 most valuable global brands are technology companies or closely related to the sector [1]. Like many, I believe the tech sector is most likely to be the most valuable and profitable sector out there at the current state; this then directly applies to the stock market.

Even most of the top worldwide retailers mainly have an online presence like the Chinese brand Alibaba and the more widely known Amazon. Jeff Bezos’ company is now ranked the 7^th most valuable company on earth, it’s even being compared to the likes of Apple to see which of the two giants will soon be the first ever company to hit the $1 trillion market capital [2][3]. From just being an online bookseller to the retailer that it is now, Amazon has been on a steady ascent on the stock market. It’s also making competitors like Wal-Mart look a lot less profitable with a return of over 8000% to investor in the past 15 years [4].

Nonetheless Apple with its mere $785 billion market capital is still being called undervalued by one of the most successful investors of this century, Warren Buffet. Just like Amazon, the inventor of Macintosh has been one of the best investments anyone could’ve made years ago. It’s actually the most profitable American company to investors ever since the markets of 1926 [5]. Once again it just shows how much space the tech sector has taken up compared to other businesses considering Apple was only founded in 1976.

It may seem like the tech sector is still on the rise and it surely is, and many investors are becoming more and more curious as well as the general public who is interested in dabbling with the stock exchange; the tech market is very attractive. But history tells us that every decade a new ‘bubble’ appears, and in this day the ‘bubble’ is definitely around the tech market, the question is when will, if ever, this bubble pop? With Amazon and Apple soaring on the market charts, are they actually being overvalued? Is this bull market nearing the end of its life expectancy? [6]

I personally believe the current tech bubble we live in won’t be subject to crash in the near future as the margin for innovation is still out of our imagination and technological advancements are being developed left and right. There are just too many people with bright ideas and resources to have a market where innovation is no longer in our reach.

Sources:

Warren Buffett on Investments and Income Inequality (Full Interview). (2017, August 30). Retrieved September 26, 2017, from https://www.youtube.com/watch?v=8eu9oFvbJ1w&feature=youtu.be&t=6m27s

Sommer, J. (2017, September 22). The Best Investment Since 1926? Apple. Retrieved September 26, 2017, from https://www.nytimes.com/2017/09/22/business/apple-investment.html?rref=collection%2Fsectioncollection%2Fbusiness&_r=0

Cyran, R. (2017, February 27). Buffett’s $1 Trillion Target for Apple Is in Sight. Retrieved September 26, 2017, from https://www.nytimes.com/2017/02/27/business/dealbook/buffett-apple-trillion-dollar-valuation.html?mcubz=1&_r=0

Sharma, R. (2017, August 05). When Will the Tech Bubble Burst? Retrieved September 26, 2017, from https://www.nytimes.com/2017/08/05/opinion/sunday/when-will-the-tech-bubble-burst.html?mcubz=1&_r=0

Sommer, J. (2017, July 28). The Mind-Boggling Ascent of Amazon and Jeff Bezos. Retrieved September 26, 2017, from https://www.nytimes.com/2017/07/28/your-money/amazon-jeff-bezos.html?mcubz=1&_r=0

Pressman, A. (2017, August 09). How Apple Could Become the First $1 Trillion Company. Retrieved September 26, 2017, from http://fortune.com/2017/08/09/apple-first-trillion-dollar/

BrandZ top 100 most valuable brands 2012. (2017). [ebook] Available at: http://www.millwardbrown.com/docs/default-source/global-brandz-downloads/global/2012_BrandZ_Top100_Chart.pdf [Accessed 26 Sep. 2017].

http://ampthemag.com/wp-content/uploads/2017/08/AMAZON-1200×537.png

Competition is a vital part of business and creating an equal playing field for companies to put their products on the market. It creates an environment where the consumer has the possibility to choose between several brands carrying the same product. By getting rid of competition a monopoly can be established: in turn this ruins the will to conceive better products, the want to innovate in the field and spawns complacency.

Amazon is now by far the biggest online retailer and for good cause, it caries the widest array of products of any other website. The internet company does online retail but also groceries, cloud computing, voice activated speakers, streaming video, production studios, large scale delivery, mobile devices and many more to name [1]. And its latest deal, Whole Foods, an upscale grocery chain, has agreed to be bought out by Amazon for $13.4 billion [2]. This agreement makes Amazon even more present in our daily lives than it already was; it’s no longer just an online retailer.

Clearly Amazon has an interest in being a part of almost every sector it could sell another of its own product to consumers; and it’s even transitioning into the real world retail side of things, which could be a threat in the long run to other retailers. This brings up the issue of monopolies; the internet company could become the one and only place that buyers would go to for almost any good or service. This monopoly would mean a lack of choice for buyers as there would only be one place to get any products or services needed and would put the buyer in a losing situation as Amazon would have full control on its pricing and will to put in effort to improve products.

Hypothetically I think the only way this monopoly would ever occur is if Amazon were able to build such a strong brand loyalty mindset for its consumers that other companies would eventually go out of business.

In my opinion we should be appreciating Amazon’s efforts. It’s known that being so diverse creates a difficulty of being able to be the best in every single area as it is easier to be the best at something if it becomes your one and only focus. In my eyes Amazon is giving consumers more choices, as well adding a stronger aspect of competition to each sector they decide to integrate. This then pushes other companies to better their own products to avoid Amazon from taking over. In the end I believe what Amazon is doing is for the best of the consumer and the products being created by each and every brand it competes with, as this monopoly is unrealistic.

Sources:

• https://www.nytimes.com/interactive/2017/06/16/technology/all-things-amazon-does.html
• https://www.nytimes.com/2017/06/16/business/dealbook/amazon-whole-foods.html