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Is Your Start Up Idea Already Taken?

There’s an ongoing joke in the startup world about how aspiring founders pitch their new ventures. Every startup idea is reduced to an “Uber for _____” or a “Tinder for _______”, where some niche untapped market is inserted in the blank space.

Much to the chagrin of many venture capitalists, this formulaic phraseology is so pervasive that it actually may hinder the creation of any actual original ideas. That’s because entrepreneurs are expected to be able to communicate their brilliant startup idea in just a few words, and it’s easier to go this route than to try and explain something complex and unique.

That said, if you do want to venture down this path, there are a few semi-successful companies on the following list. You may have even heard of some of them, such as Dollar Beard Club, TaskRabbit, or The League.

There’s also a few available slots, if you don’t mind running with an idea like the “Tinder for Boats” or the “Airbnb for Pizza”.…

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The Global Economy: April 2016

The global economy has regained some composure, according to asset management firm Schroders. In their view, markets have regained a risk appetite following action by central banks, the normalization of commodity prices, and a lack of materialization for tail risks such as a U.S. recession or a Chinese hard-landing:

While volatility is indeed near its YTD low with the benchmark VIX down 32% since the start of the year, we would point out that this is potentially some calm before the storm.

Here are some upcoming waves, and we’ll see how they break:

Earnings and Buybacks: The blended earnings decline for the S&P 500 so far in 2016 Q1 is -8.9%, according to…

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Understanding Market Structure

While there's been so much 'worrying' over the slowdown in China, the Fed possibly raising rates and energy defaults with the weight on banks, it's still a good idea to remember a stock markets structure; or the steps it takes before a bear market takes place.  The basic strategy is to pay close attention during the accumulation and distribution phases as the market shifts from buyers to sellers, or vice versa. Then, by recognizing the markup and decline phases, an investor can be appropriately long or short to make solid returns.  Click image to enlarge.

Courtesy of the good folks…

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The Bloomberg US Financial Conditions Index and the S&P 500 tend to move in pretty close unison. In March, however, they started to move apart in a manner similar to late last year, before the market took a nosedive. Once again, either financial conditions improve or the stock market corrects.

bloomberg financial conditions spx
Source: Bloomberg

Shown below we see a similar wide divergence when looking at credit spreads (inverted in red) compared to the S&P 500 (in black). When financial conditions are healthy, credit spreads narrow since investors require less compensation for the risk of holding non-government securities. As financial conditions deteriorate and default risks increase, credit spreads widen. The credit markets were confirming the message of the stock market…

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Another one that says what could cause a collapse; of course they never say "when" it will happen.  Another reason to remain cautious and take winners where you can.

According to CNBC, the S&P 500 is close to its record high as earnings season heats up, but one of the major drivers of the market's advance - stock buybacks - looks to be sagging.

U.S. companies announced about $182 billion in buybacks in the first quarter, according to Birinyi Associates research, putting buybacks on pace for their weakest year since 2012. Strategists link this, in part, to falling cash flow, a trend that is…

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Buybacks As Spreads Narrow. The Greatest Fools Of All

Of course, no where does it say how long this can continue but it's important to be aware. No, it can't go on forever.

We are now entering earnings season once again. Pre-announcements have been the second-worst seen over the past decade.

This has analysts lowering estimates. In fact, they’ve been lowered so far quarterly earnings now look to fall all the way back to 2009 levels.

For the…

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On a Letter from an Expatriate

A friend I haven’t heard from in many years since he left the USA wrote me. He closed the letter in an unusual way, saying:

PS — USA has gone completely bonkers these days? or what the heck is going on over there? would love to pick your mind over a glass of wine. someday!

I’m not intending on writing on politics as a regular habit at Aleph Blog, and most of what I am going to say is economics-related, so please bear with me.  Hopefully this will get it out of my system.

To my friend,

There are a lot of frustrated people in the US.  Though you’ve been gone a long time, you used to know me pretty well; after all, I trained you on economic matters.

Let me give a list of reasons why I think people are frustrated, then explain how that affects their…

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Upgrading Your Kitchen on a Budget

When updating your home, you should always start in the kitchen.  The kitchen is arguably where most of a homeowner’s time is spent, and therefore should be able to cater to all the needs of the homeowner, while keeping up with the latest décor styles.  Perhaps the most difficult part of updating a kitchen is the cost behind most necessary kitchen upgrades.  The expense is definitely enough to cause homeowners to give up on the project, but before throwing in the towel, there are several ways you can upgrade your kitchen without the hefty cost.  All it takes is a little time and effort.  Here are a few affordable kitchen upgrades that you should consider.  

Counters and appliances

Countertops and appliances are the most expensive upgrades to make in a kitchen, but they are a worthwhile investment.  If you can afford stainless steel appliances, or granite countertops, these upgrades with substantially increase the value of your home as well as keep…

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Admin

Debt Doesn't Go On Forever

NYSE margin debt fell again during the month of February. After the selloff in stocks that kicked off 2016, this should come as no surprise. Investors are usually forced to reduce leveraged bets during these sorts of episodes in the stock market. In fact, this forced selling can actually exacerbate the volatility. And because margin debt is only now beginning to come down from record highs, surpassing those seen at the 2000 and 2007 peak, this should be of concern to most equity investors.

To fully appreciate this risk, I prefer to look at margin debt relative to overall economic activity. When leveraged financial speculation becomes large relative to the economy, it’s usually a sign investors have become far too greedy. As Warren Buffett would say, this is usually a good time to become…

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