Topley’s Top Ten – December 23, 2019

Author

Matt Topley
December 23, 2019

1.Short-Term Greed at Excessive Levels.

2.The S&P Price/Sales Ratio in 100th Percentile for Valuation

The S&P500’s price/earnings ratio, based on both five-year normalizedearnings and five-year trailing peak earnings under Generally AcceptedAccounting Principles, stands near its 90th percentile for the period. Dittofor the MSCI USA Index’s price-to-cash flow ratio. On a price-to-sales basis,the S&P is at the 100th percentile.

Stocks Hit New Highs Just One YearAfter Bleak Lows. But a Yellow Light Is Flashing.

3.10% of S&P Assets are Goodwill…Break Out Your Accounting Books.

The Great& The GoodwillOne of the great complaints about the post-crisis equity market is that it is“propped up” via buybacks.  However, buybacks are just one form of capitalreturn (with dividends the other option).  Firms with operating cash flowhave limited options around what to do with it: hold the cash (which almostalways has poor returns), reduce debt (which isn’t a very good strategy formost companies when real rates are low), invest in new production (again, a poorstrategy in a world of relatively weak final demand growth), return capital(via dividends or buybacks) or, finally, purchase other businesses via M&A.Given the buyback narrative, it may surprise investors to discover that 10% ofS&P 500 assets are goodwill (that is, the asset recorded when a company ispurchased above book value). The growth of goodwill represents a relativelyaggressive acquisition strategy from major corporate CEOs, and frankly, itmakes us somewhat nervous that 10% of all US equity assets (which themselves inaggregate are already being valued at 3.3x book value) are the remainder ofacquisitions above and beyond the book value of assets.Are companies really better-served continuing to accumulate these sorts ofassets via acquisitions instead of returning capital to shareholders?  Asthings currently stand, the 10% number is probably manageable, but we encourageinvestors to think critically when considering some of the alternatives impliedby market memes similar to the complaints about buybacks.  Sign up forBespoke’s “2020” special and get our Bespoke Report2020 Market Outlook and Investor Toolkit.https://www.bespokepremium.com/interactive/posts/think-big-blog/the-great-the-goodwill

4.Netflix Numbers Breakdown

From BarryRitholtz Blog

5.Profit Margins by Market Cap.

The Daily Shot-WSJ

6.Another Look at Low Inflation….25 Years of Core Inflation Being Under Fed Target

backto topJared Franz

7.Student Loan Statistics

Great Readon Student Loans–Student Loan Debt Statistics In 2019: A $1.5 Trillion Crisis-Zack FriedmanSeniorContributor 

8.World Bank Rate of Extreme Poverty Drops More than Half in 10 Years  18.2% to 8.6%..

50 Year Drop in Extreme Poverty

9.Size of Cruise Ships Hit Another Record.

2019Biggest Year for New Cruise Ships Ever

January09, 2019

 MontyMathisen

Newship deliveries in 2019 will make it the biggest year in the history of thecruise industry for ship and berth introductions.

Twenty-fourocean-going ships are to debut this year, marking a new record, according tothe 2019 Cruise Industry News Annual Report.

Theclass of 2019 represents just under $10 billion in new ships, with an averagesize of 67,694 tons and passenger capacity of 1,770.

Those24 ships also make up 42,488 new berths, easily eclipsing 2018’s record ofapproximately 34,000 new berths.

Priorto 2018, the record year for berth introductions was 2010, when 28,076 berthswere introduced. In terms of vessel introductions, the previous record prior to2018 was for 17 new vessels in 2001.

Thebiggest vessel to enter service this year will be the Costa Smeralda withcapacity for 5,224 guests.

TheSmeralda will enter service in the Western Mediterranean in the fall and willbe powered by LNG. Being built at Meyer Turku in Finland, the Smeralda is partof Carnival’s next generation XL class of vessels.

MSC’sGrandiosa, a Meraviglia-plus class ship, is also large, and will debut inNovember with capacity for just under 5,000 guests.

Othernotable introductions include the Carnival Panorama, which will be positionedon the West Coast and sailing to the Mexican Riviera.

Inaddition is the new 4,200 guest Norwegian Encore, which debuts in Miami in thefourth quarter.

Twelveof the 24 ships on order are expedition newbuilds, and 14 of the 24 new vesselsare under 1,000 guests. 

Hurtigruten’s530-guest Roald Amundsen will debut the industry’s first hybrid platform, withthe ability to run on battery power. 

Of theshipyards, Fincantieri will have the biggest year, with four ships beingdelivered, in addition to five more from its subsidiary, VARD.

MeyerWerft will deliver a trio of newbuilds, while sister yard Meyer-Turku willdeliver two ships.

Inaddition is the American Harmony, a next generation riverboat from AmericanCruise Lines with capacity for 195 guests. 

10.Ten People To Be Thankful For In Your Career

  • Giving thanks to the supportive people in your careerWhilegiving thanks this holiday season, don’t forget all the things to be gratefulfor in your career, especially the people who enable your career to flourish.People hire people. People decide who to retain, promote and advance. Even ifyou’re self-employed, your clients hire you, and you benefit from word-of-mouthand other people-powered promotion.

Hereare 10 people to be thankful for in your career:

1 –Role models to inspire you

Youneed role models at every career stage. At the very least, seeing other careersgives you ideas for your own – if you know you want to be Head of Marketingsomeday, look up profiles of Chief Marketing Officers and other seniormarketing executives and see the roles they’ve held along the way. Moreimportantly, you get inspiration for what could be. Almost 30 years into my owncareer, I find new role models regularly. I’m looking to increase myinternational travel and work 100% remotely and recently read about an expat toFrance hosting bespoke wine-tasting parties outof her home! I’m grateful for each and every role model in my life – even ifI’m just reading about them.

2 –Cheerleaders to encourage you

Whenyou’re looking to make a change or put yourself up for a stretch role, you needencouragement. If you have an upcoming presentation or job interview, you wantto have someone who can give you that pep talk or confidence boost the nightbefore. It’s easy to take the cheerleaders in your life for granted becausethey’re often in a good mood and seem perfectly able to take care ofthemselves. However, use the holiday to return the favor and make their daywith a thank you for [insert personalized story of how they boosted yourspirits].

3 –Truth-tellers to stretch you

Thephrase, “Feedback is a gift,”exists for a reason. There is incredible value in honest, helpful feedback.However, it is difficult to say something that could be taken negatively in aconstructive way, so too many people, even managers, avoid giving feedback. Ifyou have people around you who take the hard path and give it to you straight,thank them. Hearing a difficult truth can stretch you to improve or help youavoid a costly mistake. I once had a client who was very resistant to myfeedback so, while she improved on the job and the company who brought me inwas satisfied, I thought the coaching was only partly successful because theperson I actually coached didn’t seem satisfied. However, several years afterthe assignment ended, she got back in touch with me to tell me how she had ana-ha moment with what I had tried to tell her before. She applied my earlierfeedback to her next job and continues to incorporate the things we had workedon years ago. I was surprised, but very moved and so happy she got back intouch.

4 –Mentors to advise you

Likerole models, you need mentors at every stage of your career. As your needs arenumerous and vary over time, your mentors should be numerous and change overtime. You can get some advice from business and professional development books(here are my favorites from 2019),but live, customized advice is ideal. For anyone who has given you advice thisyear, send them a note of thanks and tell them what you did with theirsuggestions.

5 –Insiders to inform you

Valuablecareer support can be as simple as a well-timed piece of information. You’relooking for a job and need to know who does what at a company you’re targeting.You’re pitching a project and need to know what the decision-makers at thesales meeting will be like. You’re considering a lateral move to anotherdepartment and want to know more about your prospective new boos. To get thatmuch-needed information, you probably leaned on friends and colleagues forhelp. Thank them!

6 –Connectors to introduce you

Somefriends and colleagues are in a position to go a further step and introduce youto the company you’re targeting or the manager at the department you want tomove into. If you’re lucky enough to have people who made those connections foryou, thank them.

7 –Supporters to recommend you

Aneven further step than an introduction or information is a recommendation.Perhaps a former colleague started an email thread, introducing you to someoneat your dream company with a nice testimonial about your work together. Perhapsa current colleague organized a group lunch with you and the manager of thedepartment you want to transfer to, and your colleague casually brings up howvaluable you are to the team. Even if things didn’t work out, even if you thankthem at the time, acknowledge them again.

8 –Sponsors to go to bat for you

Ifthat colleague who introduces you and recommends you is a senior executive,that support could catapult your career to a new level. As a senior executive,their support of you is a reflection of them and therefore an investment inyou. That going to bat for you and putting their credibility on the lineis sponsorship, and it’ssignificant. The best way to thank them is by doing an excellent job andexceeding their high standards.

9 –Accountability partners to keep you on track

Youdon’t need to have made a big move (e.g., new job, new promotion) to haveneeded career support. Managing your ongoing career also requires effort, andyou may have benefited from that friend who reminds you about the monthlyprofessional association meeting or Lunch & Learn on a useful topic. Youmight have a formal accountability arrangement where you call each other regularlyto report on what each of you is working on. Or you might just call when youneed that someone to get you productive again. That motivated and motivatingfriend is a special career advantage – thank them!

10 –Recruiters to mark you to market

Hopefullyyou have recruiters calling you withinteresting opportunities, or you have existing relationships where you cancall to get the latest information about your market. Staying on top of yourmarket is critical. You should know what roles are in demand and what companiesare paying for your level of skills and experience. Sure, you can also researchjob postings, salary sites and trade newsletters to understand your market, butif you have recruiters in your market that you can tap, be grateful for thenuanced and insider information they have.

Usethis list to design next year’s networking priorities

Doyou have people in your active network that you could tap for each of theseroles? If not, consider spending your networking time to fill in any gaps. Asyou think about what lunch, coffee and LinkedIninvitations to accept, remember that you need a diverse andsupportive network based on your specific career goals. Be grateful for thepeople already in your life. Think about who you still need to meet!