In contrast to the traditional pattern of businesses that operate in the domestic market for many years and gradually evolve into international trade, born-global firms begin with a relatively “borderless” view of their markets and develop the strategies needed to achieve international marketing goals at or near the firm’s founding.
Toyota overtook Ford Motor Company in 2003 to become the second largest maker of motor vehicles, behind General Motors. Toyota is widely regarded as having aspirations to overtake General Motors as the global leader in motor vehicles within the next 10 years. Let’s analyze these two companies.
The analyst reports which are issued by the big brokerage firms tell us to buy, hold, and sell. What the heck does that mean? Should you trust it? The common belief is that analyst is supposed to have access to wealth of data that you and I as individual investor don't. Therefore, such reports should be trustworthy, right? If you're buying or selling base on these analyst's report, you probably shouldn’t be investing your hard earn money. It would be much more fun to loose your money in Las Vegas.
The weekend is usually a time to relax with the family, take care of yard work, maybe watch some TV and it is also when folks visit Costco and stock up on everything from milk to Plasma TV. Over the weekend, we visited the local Costco with the goal of buying some milk and eggs and ended spending a lot more. This happens every time! We arrived at 11 AM, the parking lot was full, the shopping carts were all in use and the stores were filled with people. The lines at the food court were starting to form. The Tire Center was busy selling and installing new tires. This place was busy. It occurred to me I should be looking deeper into this company to see if it is a worthy investment.
As the world move towards globalization, there comes a time when companies needs to explore expanding abroad. The right global expansion strategy can bring about many opportunities for Multi-National Corporations (MNC). As market barrier comes down, more companies are expected to take advantage of these opportunities. As with every opportunity, there are obstacles to overcome.
The week of August 21 – 25 was quite a boring week in terms of market activity. There were no real market catalysts. Next week should be interesting as slew of economic reports are scheduled to be release. On Tuesday, investors will be going through the FOMC minutes and attempt to gauge their next move. Friday should also be interesting as the August’s employment report is due. The Market is expecting 125K jobs. If the economy created at least 125K, the market will not move. However, if it created close to 125K, I believed there will be enough of a catalyst to move the market upward. The lower than expected employment number will pretty much guarantee the Feds will leave the federal funds rate alone at their next meeting.
Today, we received further evidence of a real estate downturn. Headlines such as “Existing Home Sales Off 4.1 Pct. in July” have been all over the news. This is hardly news though; one does not have to be a real estate investor to notice the changing market environment. The slow down has been going on for several months now. First, it was the new homes having hard time; we are now starting to see the rippling effects in existing homes.
In a slowing economy, drug stocks are often one of the many favorites for investors looking to play it safe. My favorite play is Pfizer (PFE). In the last year, this stock has been beaten down by bad news within the sector, specially the lawsuit against Merck for the highly publicize case of heart attack caused by Vioxx.
This morning the government released the CPI number; the market likes what it sees. It sees an environment of tame inflation and steady and sustainable growth. This data will provide additional reason to keep interest rate at the current rate. This is welcome news to the stock market as uncertainty regarding future interest rates policy is becoming clear.
Ever since the Fed decided to hold the federal funds rate at 5.25% last Tuesday, the stock market appears to be stabilizing. We had a few days of sharp sell off followed by a few more days of rally. However, on an average day, we did not see the same behavior we saw in May. The fact the market now has a much clearer picture of inflation, interest rate directions and improving macroeconomic situation has helped.
I woke up this morning with the intention of buying shares of Dell (DELL). Given the bad press concerning their battery recall, I was hoping this would be an opportunity to buy. However, the PPI report resulted in an overall market rally, which pushed DELL stock up. If this were any normal day, I believed Dell would be in the red. Let’s look at Dell a little closer as to why I believed there are still hope in this company.
Important Economic Reports
There are several important economic reports due out next week which all investors should be aware of. On Tuesday, August 15, 2006, the government will release the core Produce Price Index (PPI). The PPI basically measures prices at the wholesale level. There are three broad subcategories within PPI: crude, intermediate, and finished. The PPI data is important since the FOMC closely watch these numbers to gauge inflation. My prediction is the PPI will be tame, except for the energy sector. The rise in energy price should be of no surprise given the recent events in the Middle East and overall concern over oil supplies. It is my opinion this is already built into the market.
Weely Review: August 7-12, 2006
I am sure most will agree this has been a volatile week for the financial market and the world. Let us reflect on some of the important events that occurred during the week as these events influences our investment decisions.
The FOMC finally decided to hold the federal funds rate at 5.25%. This marks a turning point in the FOMC’s view towards monetary policy. After 17 straight increases, the Fed finally decided that enough is enough. As I have previously mentioned in my post, the signs of a slowing economy are all there, especially in the housing market.
There are more homes on sale today than in previous past 5 years. Inventory is up and buyers are hard to find. Homes are now remaining much longer on the market. The mortgage rate has been increasing steadily over the past 17 months. A typical 30 year mortgage rate now stands around 6.75%. Prices of existing homes continue to increase, but at their slowest pace in 5 years. It would appear the Fed’s mission of slowing down the housing market has been achieved.
One of Warren Buffet’s strategies towards investing has been to view stock ownership as if it were a business. Asking oneself, is this a business you understand and want to own? If the answer is yes, one should initiate the process of investigating the company’s financial situation and growth potential. This fundamental principle of investing is often overlooked by investors hoping to make a quick profit. If after visiting the company’s web site, you still do not understand how the company generates revenue, it is best to stay clear of the stock.
McDonald's (MCD) – Is it a good investment?
McDonald's is one of the most recognizable brands in the world. The golden arch is presented in every corners of the world. This brand is so powerful that the name is synonymous with fast food. As a result, McDonald's has a "consumer monopoly".
Starbucks (SBUX), to buy or not to buy? That is the question of the day. I was a long time holder of SBUX. I got nervous before the earnings call last week and sold all of my positions. In retrospect, I made the right call. Since then, the stock has been trading between $29 and $31 per share. I have not yet bought any back.
The ultimate goal of many privately held companies is to “go public”. When a company reaches this milestone, the process of taking a company public is quite complex and time consuming. Corporations choose to “go public” for several reasons. The most common is to raise capital. Although an initial public offering (IPO) essentially means selling part of the corporation to the public and complying with rigorous rules and regulation established by the Securities and Exchange Commission (SEC), it remains one of the most popular means for corporations to raise capital.
On Tuesday, August 8, 2006 at 2:15 PM ET, the FOMC will announce their decision whether to raise the federal funds rate. The current rate currently stands at 5.25%. If the FOMC decides to continue tightening, it is widely expected they will raise it by another1/4 point, which would be 5.5%. If so, this would mark the 18th straight increase.
In 1899, Spering Kresge opened a five-and-dime store in Detroit, Michigan targeting the low and middle income families. Today Kmart, a discount retailer, known for its deliverance of quality products at low prices is number three discount retailer behind Wal-Mart and Target. Despite valiant efforts, Kmart has had difficulties staying abreast of its competitors. In 2002, faced with declining sales and mounting debt, the company reached its breaking point by entering into Chapter 11 bankruptcy protections. The company decided to close over 350 stores as part of the restructuring plan (Kmart.com, 2006).
