10 best cities for millennials to buy a home
Slow job growth and student debt have made it harder for first-time home buyers
- Published in Blog
Increased Markdowns Hits Margins at Michael Kors
Luxury Lifestyle Brand Posts Strong Results, Lifts Guidance for Year
Industry insiders have said the brand risks overexposure, and fears of discounting hit Kors stock this summer. Bloomberg News
Shoppers continued to snap-up handbags and accessories from Michael Kors Holdings Ltd., but the fashion retailer said increased markdowns were a drag on its retail margins in its fiscal first quarter.
Shares declined nearly 5{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} premarket, reversing course from a double-digit percentage gain earlier in the morning.
The fashion retailer, which has reported robust bottom-line growth recently as demand in its retail and wholesale merchandise grows, has had to fend off concerns that the brand has gone too far with its version of luxury populism.
Industry insiders have said the brand risks overexposure, and fears of discounting hit Kors stock this summer after Barclays BARC.LN +1.09{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} and Citigroup C -1.66{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} published research reports estimating Kors roughly doubled in June the square footage in its stores devoted to discounted goods from a year earlier.
Kors lifted its guidance for the year and now expects per-share earnings of $4 to $4.05 on revenue of $4.25 billion to $4.35 billion. The company had previously guided for earnings of $3.85 to $3.91 a share and revenue of $4 billion to $4.1 billion
As for the current quarter, the handbag maker and retailer said it expects per-share earnings of 85 cents to 87 cents on revenue of $950 million to $960 million. Analysts polled by Thomson Reuters had expected per-share earnings of 89 cents and $959.5 million in revenue. Kors is also assuming same-store sales growth in the high teens.
Overall, Kors reported earnings for the quarter ended June 28 of $187.7 million, or 91 cents a share, up from $125 million, or 61 cents a share, in the prior year.
Net sales jumped 44{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} to $887 million, while total revenue—which includes licensing revenue—climbed 43{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} to $919.2 million.
The company in May had forecast earnings of 78 cents a share to 80 cents, on revenue of $840 million to $850 million.
Retail net sales jumped 47{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} to $480.2 million, pushed higher by a 24{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} increase in same-store sales and 115 net new store openings since the same period a year ago. Kors had previously forecast a 20{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} increase in same-store sales.
Retail operating margin, meanwhile, narrowed to 29.7{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} from 31.7{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}, though the drop was significantly smaller than the nearly seven-point decline Kors posted in its fourth quarter.
Wholesale net sales climbed 40{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} to $406.8 million.
North American revenue rose 30{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} to $718.9 million, as same-store sales grew nearly 19{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}. Revenue in Europe more than doubled to $185.5 million as same-store sales about 54{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}.
- Published in Blog
Warning: That plunge in stocks is just the beginning
Investors brace for the return of volatility
NEW YORK (MarketWatch) — If the ups and downs of the past week have taught investors anything, it’s that there are cracks in this 5 1/2-year-old bull market.
The lesson for investors? Tread carefully.
Stocks took a tumble as a raft of economic data sparked fears the Federal Reserve could speed up its timetable for raising interest rates. The S&P 500 index SPX -0.29{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} took its biggest weekly hit in more than two years, losing 2.7{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}. The Dow Jones Industrial Average DJIA -0.42{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} , meanwhile, sliced through its 50-day moving average and erased the gains that had tenuously built up this year.
“It reminded people that the stock market can actually go down. It seems like a lot of people had forgotten,” said Mike O’Rourke, chief market strategist at JonesTrading.
This past week saw a number of economic indicators: a robust 4{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} expansion in second-quarter GDP suggested a resurgence in economic activity, while a jump in a highly-watched wage index was a sign that employee earnings, the holy grail of labor market growth, was finally picking up. Even Friday’s soft jobs report didn’t undo the worries about the Fed.
Bracing your portfolio
Indeed, investors should expect more volatility, not less, as the Fed moves closer to rate hikes, analysts say. The central bank is generally expected to begin raise its key lending rate in the middle of next year.
“Every time we see data really heat up, it will really spook investors and keep a cap on the equity market for the time being.” said O’Rourke.
That’s not to say all market participants are calling for a steep drop. “We see the mid-cycle rally as having plenty of room to run before we get a 10{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}-plus correction,” said Binky Chadha, a particularly bullish strategist at Deutsche Bank, in a Friday report .
Read more on the debate: Jonathan Burton says ignore the bears and bank a 22{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} stock market gain while Mark Hulbert sees 3 market warning signs that predict 20{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} stock tumble.
Still, the trepidation in the market may leave it open to the kind of knee-jerk reaction seen on Thursday, when the Dow skidded 317 points for its biggest one-day loss since February.
“A very small impetus can have an exaggerated effect. That may be the kind of market we are in for the rest of the year,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman Private Banking.
Given that murky outlook, strategists are advising caution. O’Rourke notes investors appear to be rotating out of riskier small-cap companies back toward stalwart large-cap stocks.
That’s represented in the relative performance of the Russell 2000 index RUT -0.46{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} , which is more heavily weighted to companies with smaller stock-market capitalizations, versus the large-cap S&P 500. The Russell 2000 is down 4.2{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} on the year, while the S&P 500 is still up 4.2{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} during that time frame.
- Published in Blog
Want to invest like Buffett and Soros? Try this
Warren Buffett (L) and George Soros
The iBillionaire Index ETF: brilliant or gimmick?
The easiest way to “invest like a billionaire” would be to start with a billion dollars.
Since you don’t have that, your latest way to invest like the super-rich involves a new exchange-traded fund with an appealing methodology.
The question is whether it’s a gimmick or if it actually works.
The Direxion iBillionaire Index ETF IBLN -0.37{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} debuted Friday, tracking an index made of 30 large-cap stocks that — when viewed through the lens of filings made with the Securities and Exchange Commission — appear to be the favorites of guys like Warren Buffett, Carl Icahn, David Einhorn and George Soros.
You could make a case that having rich successful guys “select” stocks — even if the iBillionaire index is a reflection of their public trading activity rather than any actual purchase recommendation — is a better idea than having three guys (one of them a newspaper editor) picking the stocks that make up the Dow Jones Industrial Average DJIA -0.42{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} . In fact, iBillionaire president Raul Moreno makes just that case.
If you buy that argument, then you might believe that the folks at Direxion have found the proverbial “better mousetrap,” and that money will flock to the iBillionaire fund.
Red wine for a summer’s night
Red wine for a summer’s night? It’s not as much of a stretch as it may seem.
A few years back, however, Andrew Hargadon, an entrepreneurship expert who teaches at the University of California-Davis, noted that the U.S. patent and trademark office had issued over 4,400 new mousetrap patents since it opened in 1828, but that only two dozen of those ideas “have made any money, and only two designs have ever dominated the market.”
In short, even if you have designed a better mousetrap, the world may not agree and rush to your door.
And in the case of the iBillionaire ETF, there’s a good chance that investors will come away feeling like this is more marketing ploy than something to buy.
Moreno, however, disagrees. In an interview that will air next week on MoneyLife with Chuck Jaffe , Moreno notes that investors are already trying to follow investment geniuses, but that “this makes it much easier to do,” and it doesn’t force the investor to rely on any one particular expert.
The fund equal-weights the stocks, meaning each of the 30 holdings accounts for 3.33{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} of the overall portfolio. That means it’s making high-conviction bets not only on Micron Technology MU +0.74{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} — which amounts to 0.17{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} of the Standard & Poor’s 500 SPX -0.29{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} — but on big names like Apple Inc. AAPL +0.39{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} , which represents 3.14{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} of the S&P.
But with names like Apple, eBay EBAY -0.57{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} , Mastercard MA +1.43{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} , Dow Chemical DOW +0.43{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} , Halliburton HAL +0.12{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} and Google GOOG +0.34{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} , it’s hardly like the billionaires’ secret sauce is delivering unique ideas.
In fact, the iBillionaire holdings seemed pretty similar to me to the issues in the latest myMom index. You won’t find that one online or anybody making an ETF about it soon, but it would be the index of 30 names that my own mother either owns or is most interested in chatting about every time we get together.
If you called the iBillionaire benchmark what it is, it would be known as the “30 stocks that rich guys like” index.
That may or may not be better than the process that’s behind the Dow Jones Industrial Average, though it will take years to know.
Moreno pointed out that the index itself has been a solid performer since it was launched last November, comfortably beating the S&P, and that he expects that to continue because “if you look individually at billionaires’ portfolios – like Warren Buffett, Carl Icahn, George Soros – they have outperformed the S&P over a long period of time, and that’s why people follow them and why we created the index.”
One place to look for a quick comparison is similar funds, and IBLN is a variation on a theme started by the Global X Guru Index ETF GURU -0.16{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} , which opened in 2012 and now has about a half-billion dollars in assets. The Guru fund tracks an equal-weighted index that attempts to mimic concentrated equity positions taken by large hedge funds, as reported in SEC filings; that’s the same basic concept as iBillionaire, but with 75 experts instead of 20 billionaires.
In 2013, the Guru fund was the top issue in its category, according to Morningstar Inc.
This year, it ranks dead last.
It hasn’t lost money — and it is still outperforming the S&P sharply since inception — but it’s pretty much in line with the average large-cap fund since it opened, despite one year of superior results.
In other words, thus far, it has mostly proven to be a “different” mousetrap.
Whether the iBillionaire fund can escape that label and prove to be superior to the competition is a long way off.
First it must attract enough assets to survive, which in the world of ETFs means luring in excess of $50 million in short order; there, the success of GURU would be a strong positive.
Then, it must deliver performance that inspires confidence, that makes the public feel that “invest like a billionaire” is an actual strategy, rather than a slogan, the kind of numbers that show that when you put these colorful big names together — and none of the billionaires is actually affiliated with the index or the fund in any way — you get the best of their insights rather than a puddle of mud.
Given enough time, the strategy indeed may prove itself to be better than the Dow Jones and/or S&P, but right now it feels like an idea for people who don’t want to do research or homework themselves, but who want to invest like that guy they know with a lot of money.
If that feels like a schtick instead of a strategy — and it does to me — then avoid the fund until it’s proven. If you love the idea, however, you can take a chance and dive in; just remember that the experience pool is shallow and that nifty ideas may make for good marketing hype but they don’t always turn into good funds.
By Chuck Jaffe, MarketWatch
- Published in Business