Extra! Extra! Virtual Currency Hit By Fake News!

LINK: Fake Car Crash = Virtual Currency Crash

Earlier this week, the price of the virtual currency Ethereum was hit by a bout of fake news. Take a breath, and read that sentence again. If it seems the least bit ludicrous, then you are absolutely right. If not, then you are also right. All things are worth whatever someone else is willing to pay for them. Virtual or not.

Today it is recovering nicely…

Should you buy Ethereum? Go ahead. Or don’t. I suppose it depends how rich your imagination is.

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The Best Part About Amazon Buying Whole Foods Is That It Turned Out To Be FREE!!!

LINK: Amazon the Everything-Everything

Last week Amazon (AMZN US) announced that it would be buying Whole Foods (WFM US).

What most people don’t realize, it that it basically bought it for free.

How?

Well, Amazon’s buying price for Whole Foods is approximately $13.583 billion.

Before the announcement, Amazon’s shares were trading at $964.17. Yesterday they closed at $992.59. Amazon has 478 million shares outstanding. Therefore, the change in share price was worth…

$13.585 BILLION – which is MORE than what they paid for Whole Foods!!!

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Millennials Are Saving!

At times it seems that the general impression of “millennials” is that they work for start-ups, live with at least four roommates (which might include their parents and siblings), drink overpriced coffee from beans sourced from a single bush, value experiences over ‘stuff’ and are broke – all the while posting blissful nonsense on Snapchat.

However, this survey points provides some interesting evidence that “millennials” might be considerably more fiscally responsible than older generations:
LINK: Millennials Are Helping America Save More Money

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Ostapenko Wins The French Open!!!

http://edition.cnn.com/2017/06/13/sport/jelena-ostapenko-french-open-latvia-raimonds-vjonis-kristaps-porzingis-baiba-brae/index.html

Jelena Ostapenko’s French Open victory @ Roland Garros is the greatest ever individual achievement by a Latvian athlete.

Jelena’s talent is undeniable, but talent must be nurtured and harnessed for it to reach its full potential.

After her daughter’s victory, Jelena’s mother mentioned in an interview, that it had cost the family about 500,000 EUR to train their champion daughter:
LINK: Ostapenko (in Latvian)
“Now Aļona earns on her own, but in her childhood there were people that helped. Everyone helped as best they could. It takes a lot of money to raise an athlete. To get Aļona into the WTA top 100 ranking, we needed about half a million” said Jeļena Jakoļeva
(«Tagad Aļona pati pelna, bet bērnībā bija cilvēki, kuri palīdzēja. Visi pēc savas iespējas palīdzēja. Nepieciešama liela summa, lai izaudzinātu sportistu. Lai ievestu Aļonu WTA ranga pirmajā simtniekā, mums kopā vajadzēja ap pusmiljonu,» atklāja Jeļena Jakovļeva.)

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OUR MAY 2017 RESULTS

Our weighted average return in May was +0.76%, bringing our year-to-date return to +8.2%.

May marks our 16th consecutive month without an average monthly drawdown of over 1.3%. Moreover, during this timeframe, we have only had two months of negative performance (-0.10% in September 2016 and -1.29% in November 2016). This consistency of performance is not attributable to hedging strategies or active volatility management, but to successful asset allocation and choosing good investments.

For quite some time, we have profited greatly from our overweight in technology stocks such as Amazon, Google, Facebook and Netflix. In May, we took profits on many of these positions. As we were in the process of selling, we were quite aware of the fact that we might be selling too early (see our blog). However, there are times that you simply have to say ‘thank you’ and walk away for a while. For many of these stocks nothing has really changed since we were buying them heavily in December, yet all of a sudden, they are now worth 30% more. Recognizing how sentiment can change and to what degree it can propel a stock is a very important component of active investing. Not letting your imagination get away from itself is just as important. It is nice when everyone agrees with you – but it is times like these that you must apply the highest degree of self-critique and suspicion.

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We Have Been Busy

This has been a fairly active month in terms of portfolio changes.

As mentioned previously, we have been busy selling off technology stocks and positioning ourselves in new companies and sectors that we believe will come to warrant the market’s attention.

We have already acknowledged that our sale of tech stocks might have been too early. However, we were heavily overweight the sector. The rise in tech equity prices, coupled with underperformance in other sectors, has resulted in a reevaluation of opportunity cost, and as such, we have acted accordingly.

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Facebook – A Bargain In The Rearview Mirror

Here’s a link to an article from ABglobal.com that shows how exceeding expectations can actually make ‘expensive’ stocks seem very cheap in retrospect:

LINK: Growth Stars

This chart that illustrates the differential between Facebook’s earnings expectations and actual earnings is quite enlightening and goes to show the degree to which analysts can underestimate new business models:

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