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The stock market isn’t priced for recession – what you need to consider now:
Bottom Line: I wish I didn’t feel compelled to share this thought with you… but I do because I don’t want you or your family to be hurt. In November I shared my view that fair value for equities (stocks) would necessarily decrease if taxes on investment were to be raised. Why? Lower return on investment and a risk/reward ratio that isn’t as favorable.
I put a number of 11,700 on the Dow to demonstrate the negative impact of the higher taxes proposed by the President (raising taxes on dividends to ordinary income levels and capital gains rates to at least 20%). Of course we don’t know what the outcome of any policy will be & that’s the point of this story.
The stock market has held up as well as it has to this point (though well off of pre-election levels) by default. There are so few good options for places to put your money so many are just leaving it in equities. Many money managers don’t know what else to do. Here’s the result…
The market isn’t priced for a recession or to go over the fiscal cliff. In my opinion one equals the other (though based on policy we may go into recession anyway). My message to you is this… If you have money that you have in risk assets (mainly the stock market) that you’re going to need in the short term (under two years), you need to take action to protect that money. I wouldn’t, for example, want you to be planning to purchase a home next year but lose the opportunity because of a potential severe sell off in the market.
I’m not guaranteeing severe downside in the market because we don’t know what will happen with all of these major policy changes. I’m suggesting that if we do see negative policy outcomes for the economy there is far more downside risk in the market than upside if we do have satisfactory policy resolution. The time to consider this issue and what is right for you and your family quickly running out.
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Bottom Line: Thanks to you and others like you – The Cheat Sheet has become quite successful over the years. Everyday I receive feedback and email regarding topics discussed and often times follow-up questions that serve as thought starters for me to work on future Cheat Sheet material. I’ve found that many of you have great ideas and questions for me to answer or explore. I now want to formalize the process as we prepare for 2013.
A new daily feature of the Cheat Sheet will be a story that’s derived from you. If there is a story idea or question that you’d like me to answer / report – email me: email@example.com .
The impact of
Bottom Line: According to the
November usually has an abnormally high improvement in employment due to seasonal hiring.
Additionally hiring plans by companies is at a four year low and we’ve seen a significant uptick in announced layoffs.
We’re not going to have a more clear understanding of the economy and jobs market until January but whether it’s
The cliff who stole Christmas:
Bottom Line: Well before the holiday shopping season was officially underway, we were being given blue sky projections from the National Retail Federation. 4+% year over year sales growth during the holiday shopping season. With consumer spending accounting for about 70% of all US economic growth (or decline) that would project to a US economy growing at a greater pace than the 3+% level we saw in the 4th quarter last year. Naturally I was skeptical.
Yesterday we received the latest consumer data on the average amount we intend on spending for the holidays this year. The number: $742. So how does that compare with last year? Is the grand sum of… $2 more – or to put it another way, 2 tenths of one percent more than last year. It’s all together possible that what we are saying we’re doing and what we actually spend will be different but… It’s highly unlikely we’re going to get close to a 4% + increase in retail sales during the 4th quarter this year. Moreover, the threat of the fiscal cliff (which was the top reason cited for people spending only $2 more on average) on the
Want to raise money for a business idea – crowd funding gaining momentum:
Bottom Line: Kickstarter is the most successful Crowd Funding Company to date raising nearly $400 million for business ideas, concepts & creations. The concept has started to take off.
Crowd funding is the act of opening your concept for anyone to fund. If you’ve had an idea you can’t get funded through traditional business loan methods – this could be the answer. Open your concept for others and if enough people are into the idea perhaps they’ll donate to the cause. Crowd funding has become a super creative enterprise. There are medical advancements, video games, technological concepts and even music groups that are being funded through this open concept. If you’re interested in learning more click the link below as Mashable breaks down some of the more successful hubs for crowd funding.
Bottom Line: 2013 has been a turbulent year for Apple. Tim Cook,
2013 has been full of positives for Apple. They became the most valuable company in the world. They set record sales numbers for iPads and iPhones and expanded their market share. 2013 also has seen its share of negativity for them…
Apple has come under fire for kinks in its iOS 6 product. It’s come under intense fire for its Maps app (the iOS developer and Maps manger have both been let go). Apple has also received a great deal of negative attention as a result of their production arrangement with the Chinese company – Foxconn.
Virtually all big name American tech companies use Foxconn (Microsoft, Intel, Oracle,etc) but with Apple becoming the largest company in the world they received a large share of the negative stories regarding the work environment at Foxconn. It’s impossible to know what impact, if any, the Foxconn attention had on Apple’s business but Apple is looking to change the conversation and news cycle.
Apple is planning to spend $100 million next year to bring back some Mac manufacturing to the
T-Mobile to get the iPhone in 2013:
Bottom Line: Despite the cute skinny girl in the T-Mobile commercials, the company has been losing hundreds of thousands of customers over the past few years as they haven’t had access to the best selling phones & tablets (iPhones & iPads). That will change in 2013.
While it still hasn’t been officially confirmed, the deal is done that will enable the Apple products on the T-mobile platform, though it’s unlikely that it take effect until the next gen products.