May 29, 2008 Healthcare Perspectives
I recently attended a small gathering of analysts for a presentation by McKesson's CFO, Jeff Campbell. A few key takeaways: 1) Healthcare is the slowest industry to adopt new technology. The company that can facilitate this rate of adoption will be the biggest winner. It is less about the technology itself and more about making the process easier to adopt. 2) Total healthcare spending in the US is currently 14% of GDP. That number is expected to reach +19% in 2013. WOW! 3) The golden egg is DATA, when, how and what we do with it will depend on HIPAA and our attitudes toward privacy. However, Google is encouraging users to manage and track all financial data on-line and eventually, someone will be the largest owner of third party data for personal medical records. 4) Auction rate securities - these are not a big issue for those companies that have volatile cash requirements and therefore did not invest in them, but the best course of action from a treasury management point of view, is to move them to long term and wait out the auction process. - I am not sure this will work for companies that have a significant amount of ARS on the balance sheet.
May 20, 2008 Notes from the Omaha Oracle
A long time and trusted friend of Quist, Mike Sargent, attends the Berkshire Hathaway Annual Meeting each year with great anticipation. I have made the trip with Mike myself and his annual synopsis is always a refreshing break from the media version. Please take a moment to enjoy Mike's notes. Thanks Mike!
March 04, 2008 Quist Profiled by Apple
As many of you have heard us preach, Quist Valuation has always stood out in the market place by being on the cutting edge of technology. However, you no longer have to take out word for it. Quist has been recognized by Apple as a leader in integrating new technologies into the work place. Please be sure to check out our profile and all the exciting tools we are utilizing at Apple.com.
February 27, 2008 Wait and See
As the woes of the subprime mortgage debacle continue to trickle into other market segments and threaten to send the economy into a recession, everyone is looking for an answer. More specifically many people expect it to come from the Federal Reserve. However, as the eyes of the nation turn to the Fed, it seems the Federal Reserve has run out of options. The substantial rate cuts previously made by the Fed were meant to stave off recession and ease the stranglehold on credit. However, these rate cuts are also resulting in a weakening dollar and increasing commodity prices. Perhaps the biggest inflation concern is high oil prices, which soared in 2007 and are still hovering around $100 a barrel. While most analysts don't anticipate oil prices will increase dramatically in 2008, if oil prices remain near all time highs it could pose a serious problem for the US economy. So what is the Fed to do?
February 06, 2008 Jingle Mail
Recently while reading yet another article discussing the troubled mortgage market, I discovered the issue has even coined a new phrase, "Jingle Mail". The term refers to the idea of borrowers simply walking away from a mortgage due to adjusting interest rates and lower property values. The lender receives the borrower's house keys in the mail, hence, "jingle mail." Evidently, the subsequent problems caused by the lack of foresight and seemingly lack of any common sense whatsoever by both borrowers and lenders has brought this concept to life. As this alternative to making the higher payments for a property, which is worth less than the day it was purchased, gains ground within the US housing market I can't help but wonder how we ended up in this position to begin with.
January 28, 2008 Out of Ammunition
With the possibility of a recession looming on the horizon and the panic that appears to have stricken Wall Street, the Federal Reserve has determined the best way to battle the trouble is with a series of aggressive rate cuts, including an emergency rate cut of 75 basis points. While there are indications the economy is on the edge of a possible recession, it is after all, only mid-January and we won't really be able to tell if we are in a recession until the summer. So, was the Fed thinking about he long-term health of the economy or simply attempting to calm the current unrest within the markets. If the motivation of the Fed was to reinvigorate the US economy was it really necessary to make such an aggressive emergency cut one-week before they were scheduled to meet? Another issue with such a substantial rate cut is the fact that the Fed can't continually keep cutting rates every time the markets panic. The Fed only has so much ammunition to fight economic pressures and with the emergency cut and the expectations of further rate cuts following the next meeting, it seems the Fed could be running out of ammunition long before the battle really begins.
January 28, 2008 Deja Vu
Recently, the prospect of a recession has put into motion events causing the Federal Reserve to slash interest rates and the government to begin talk of an economic stimulus package centered on tax refunds. But with both the Fed and the federal government desperately trying to boost the economy and stabilize a shaky market you cant help but get a sense of déjà vu.
November 19, 2007 Failing to Deliver
As the nations workforce gets older and the baby-boomer generation begins to settle into retirement, the economy is beginning to look to the younger generations to carry the load. The most recent generation to enter the workforce is known as Generation Y, which is comprised of people born after 1981. They are the generation raised on technology, from high-speed Internet and cell phones to PDA's and iPods. The generation that believes a college education ensures stepping into a position that may have taken years for the generation before to obtain. But before I get ahead of myself, I must admit that I myself am only a couple short years ahead of Generation Y. So, that being said, how is this newest generation of workers fairing in the real world? According to UPS, in terms of work performance thus far, Generation Y fails to deliver.
November 13, 2007 Changing of the Guard?
Over past decades, countries around the world became increasingly reliant, through rising exports, on US consumers. As a result, when the US economy ran into trouble the result was a ripple effect felt throughout the world economy. Therefore, in the past when global demand diminished, raw-material costs also decreased. As a result, the dollar was better able to withstand such declines, because with growth slowing around the world and the Fed acting in response, markets and interest rates outside of the US usually were moving in the same direction. This effectively aided the US in times of economic downturn, essentially keeping commodity prices in check. So why are commodity prices currently increasing despite the Fed actively reducing interest rates and the falling value of the dollar? After so many years of prosperity could the US economy be falling behind?
November 02, 2007 Organic Growth
Recently, a friend tried to convince me of the health and environmental benefits of eating organic food rather than the conventional food items found in the majority of the nation's supermarkets. As I listened to the seemingly rehearsed argument, as though it was an issue discussed many times before, I couldn't help but think of how the consumers' recent shift toward organic products will undoubtedly have an impact on the economy and America's farmers. For example, many consumers buy organic foods in a belief that they are better for their health and free of any chemicals, hormones or insecticides. However, some consumers purchase organic food to aid small local farms and are conscious of the fossil fuels needed to ship food long distances for large supermarket chains, suggesting organic food has a lighter environmental footprint. While this concept seems beneficial to all parties involved, the demand for organic foods is creating a vast market for organic farmers and organic supermarkets, prompting the nations largest supermarket chains to take notice.
August 29, 2007 iPhone Envy
As I landed at LAX today and got off the plane, I was forced to bob and weave between several security guards. It seems that there was quite a bit of fanfare for the inaugural Virgin America flight from LA to NY. Caught up in the celebratory atmosphere, I grabbed a free cookie and soaked up the excitement. Then, to my surprise and nestled in between several security guards, I saw the Big Cheese himself, Richard Branson. Being only a couple feet away from him, I fumbled for my iPhone like a thirteen year old teenager. Then, out of the blue, I was interrupted by the man himself, "Hey! Is that an iPhone?" "Yes!" I replied. "How do you like it?" "It's great!" I responded. Trying to extend the conversation, I awkwardly followed up with a compliment on his persistence in opening the US aviation market to competition. This was obviously "not so smooth," as he smirked, took one more jealous glance at the phone and then moved on in preparation for the flight.
I got you figured out Richard; today it's our airlines, tomorrow our airwaves. He totally wants to be an American.... (and yes, I did manage to snap a quick (blurry) pic).
May 15, 2007 Has blogging been compromised?
In today's Wall Street Journal - yes the old fashioned paper version - there is an interesting article about `Blogola'. Basically, the television studios are courting the so-called "mommy bloggers" to have them write about a new Warner Bros. sitcom and create a "buzz". They lavish them with a `day on the set', meet the cast, free stuff...in hopes that they will go back and spread the word through their blogs. It seems to me that this is further evidence that either blogging has arrived or the end is near. The more commercialized the blogging world becomes the less effective a resource it is for opening up discussions on topics, especially technical topics like valuation. How do you know that the blogger isn't being paid, selling advertisements or being asked to be a marketing tool for others? At Quist we write about topics that we believe are interesting to our clients and sometimes just to us. Recording our thoughts in this way helps our industry, reflects at times our understanding and most importantly is meant to assist our clients in staying on top of interesting issues. Will/is blogging failing due to "The New Adventures of Christine"?
