Peace Love Profits

I love Annie’s macaroni and cheese, and apparently Wall Street does too.

Annie’s, makers of organic macaroni and cheese and other things like organic crackers shaped liked bunnies (the organic version of Pepperidge Farm goldfish) had it’s IPO on  Wednesday. (Remember: that’s when a company starts selling it’s shares to the public on the stock exchange, please see earlier blog FACEBOOK’s New Friends).  Annie’s stock went public at $19 per share, and closed Thursday at $37 per share.

Talk about a bunny hop!

My research (googling news stories, talking to my dad) says the big attraction here is Annie’s organic label. People love to buy organic. They feel good about feeding their family things that are good for them.

I eat Annie’s and love it (I like the purple box the best). But, I can tell you that my family is anything but organic. My mom buys Annie’s, makes it with “normal”  milk and butter (butter makes it extra good), and then serves it to me with an Oscar Mayer hot dog. That is so not organic! In fact, Annie’s macaroni and cheese is the only thing in our house that is organic, until we open the box.

I am aware of the fascination with organic food. People want what they think is the best for the family. I saw it in the cafeteria last year when we had to bring our lunch to school. Kids would open a little carton of organic milk that their parents packed for them. Then, they would use it to quench their thirst after eating a big bag of cheetos. I don’t think their moms would approve of this.

Moms might not care so much if they read my book. Chapter 8, August 2010: The $40 Ostrich Egg, discusses organic food and it’s benefits. There aren’t any. You should read the entire chapter to get the whole story, but I will tell you, quoting from the book,  that “the American Journal of Clinical Nutrition reviewed more than 160 papers published over the last fifty years and found that organic food offers no nutritional value over conventionally grown food.”. Uh oh.

Don’t misunderstand me, Annie’s macaroni and cheese is great. I just hope when it come to Wall Street, investors have done their research on these rabbits.

Peace Love Profits,

Blake

I want to say a big thank you to everybody for reading all my posts, watching my interviews, and sending me all those messages. It’s been a crazy and inspirational two days!  

You’ve probably heard me and my dad mention the term free markets a few times recently.  If you’ve read Your Teacher Said WHAT?!, you’ve heard free market many more than just a few times. That’s because free markets have been the most important key to our economic success in the past, now, and will be in the future. 

The term free market is defined as a market where prices are determined by supply and demand. In our book, we take it a step further and define it as a belief thing: “that the best economic decisions are made by the largest number of individuals acting in what they believe to be their own interests.”  

This means, as a free market society, people don’t need the government telling them what to make, buy, or sell, or how much to make buy, or sell, or even how much money to make. Millions of people acting in their own self-interest will guide the economy to the most profitable place possible. 

I’m not saying we don’t need government and laws to protect people, of course we do. But, the U.S. economy will do just fine without big government dictating every move; it a has for a couple hundred years already. 

Famed Scottish philosopher Adam Smith said this back in the 1700s. He also said a lot virtues come out of a free market society, like trust, diligence, and hard work. Here’s one more: hope. 

A free market promotes hope in the future. Without hope, no new business would ever be started (there’d be no incentive!). America is a free market society, the free-est free market society in the world, let’s hope it stays that way.

I have hope, but also homework…..

Peace Love Profits,

Blake

I’m a huge Hunger Games fan. I’m almost done with the third book, and I loved the movie this weekend.

My dad would have loved it too. He would have enjoyed seeing a movie where the “villain” is not a corrupt corporate CEO, but rather an extreme autocratic government.

Hunger Games is a box office blockbuster. Ticket sales this weekend totalled $155 million, more money than anybody had expected.

A company called Lionsgate is responsible for the movie. It’s stock trades on the New York Stock Exchange, and investors have been buying it recently. Shares are trading near a 12-month high.

Look for Part 2, Catching Fire, on November 22, 2013. Oh, and “may the odds be ever in your favor.”

The Occupy Wall Street protestors need to find a more appropriate place to party. The movement just marked it’s six-month milestone by gathering in Zuccotti Park, again. 

The Occupy Wall Street movement is protesting “economic inequality.” The protestors believe that 1% of the U.S. population has all the money; and it’s made up of greedy, corrupt Wall Street businessmen and bankers.

Well, isn’t that ironic? Zuccotti Park was named in honor of John Zuccotti, one of the 1%.  He’s a multi-millionaire businessman, a Princeton and Yale graduate. It’s not only his hard work that got him where he is today. His Italian immigrant father, Angelo, came to America at the age of 15. He started as a waiter at El Morocco restaurant in Manhattan. Here, he found economic freedom for him and his family, and lived his own American Dream. 

Next time I’m in New York, I’m going to Zuccotti Park. Not to protest, but to praise John Zuccotti, that one percenter who helped 100% of the people.

India isn’t going for the gold right now, and this is impacting gold prices worldwide.

Gold is a commodity, like silver, wheat, coffee, sugar and crude oil (please see my earlier Pumped Up Prices blog). People all over the world buy it for jewelry, but it’s also bought and sold as an investment. And, it’s considered a pretty safe one; gold can be sold at any time for money.

India is the world’s biggest buyer of gold. It accounts for about a quarter of the world’s gold demand. The precious metal carries a deep cultural meaning in India. Parents use it for their daughter’s weddings, and it’s given as religious gifts. 

Recently, the Indian government decided they were going to put a higher tax on gold, and charge more money to import gold into India. Indian buyers backed off and gold shops shut their doors in protest.

This sudden decrease in demand took the worldwide price of gold down with it. It’s a basic rule of economics, supply and demand: If demand goes down, and the supply remains unchanged, the price goes down too. 

Will this have a lasting impact on gold prices worldwide? That’s up for debate. What’s not up for debate is the 10 million Indian brides every year who want to glimmer in gold.

Peace Love Profits,

Blake

If you’re an Apple investor, it’s payback time. Apple announced it will pay stockholders a dividend for the first time in 17 years. It’s probably good news because Apple’s stock price closed above $600 per share for the first time ever after the company announced the dividend. But, I needed to do a little digging to get the dirt on dividends before knowing for sure.

When a company makes a profit, it can do two things with the money. The company can keep the money and re-invest it in it’s business (maybe build factories, do research, improve operations). Option two, would be to share the profit with stockholders. One way to do this is to distribute the money in the form of a dividend. 

How much money you get depends on a couple of things: how much money the company plans to distribute, and how many shares of stock you own

Apple’s annual dividend payment is $9.9 billion dollars. That means for every share of Apple you own, you will get $10.60 per year ($2.65 per quarter). Ten dollars per year may not seem like a lot, but just think if you owned $100 shares, that’s more than $1,000 to you just for being s stockholder.

Dividends seem like a great idea to me, but there are some people who don’t agree with me on this. Some people believe that profits should be re-invested in the company to help it grow, and if a  company decides to distribute the profits, maybe it has run out of good growth ideas.

Wall Street approved of Apple’s payback plan by pushing it’s stock price to a new high. Many analysts have been asking for an Apple dividend because it would allow some stock funds, which only invest in dividend paying stocks, to finally be able to buy Apple shares. 

Maybe someday I’ll be an Apple investor, for now I’m just enjoying it’s products.

Peace, Love, Profits

Blake

I recently read in the newspaper that the S&P 500 is doing much better than anybody expected. Not me. I wasn’t expecting anything because I don’t know what the S&P 500 even is. I decided I need to know.

The S&P 500 is a stock market index made up of 500 large-cap U.S. Companies. A company called Standard and Poor’s maintains the index; it figures out which companies should be in it and calculates it. All the companies that are in the index trade on the New York Stock Exchange or the Nasdaq. The S&P 500 and the Dow Jones Industrial Average (please see my earlier Keeping up with the Dow Joneses blog for more on the Dow) are the most widely watched large cap stock market indexes. Why? Because they reflect how good or bad business is for large companies in the US and from this we can get a read on how the economy is doing as a whole.

So, if we look at the S&P 500 right now, the economy is doing a bit better than a lot of people anticipated. The S&P 500 closed above 1400 for the first time since June 5, 2008. According to a recent report in USA Today, 10 out of 13 stock strategists that were asked to give predictions at the beginning of the year didn’t expect the S&P would even hit 1400 by the end of 2012.

Analysts say that good economic reports (jobs number, retail sales for example) and less worries about financial disasters in Europe have helped to boost U.S. Stock markets.

Who knows if the indexes will continue to move higher, but what I do know now is what the S&P 500 is and why it’s important.

Peace Love Profits,

Blake 

Wendy’s is winning the beef battle. The company is now the second biggest hamburger chain, stealing the spot from Burger King. Wendy’s had sales of $8.5 billion in 2011, compared with Burger King’s $8.4 billion. This is the first time since Wendy’s was founded in 1969 that it has beaten Burger King. The number one spot still goes to McDonald’s, with a whopping $34.2 billion in annual sales.

Coffee giant Starbucks is now banking on juice to sweeten it’s profits. The company recently purchased the Evolution Fresh brand of juices, and just opened it’s first Evolution Fresh retail store. There you can buy all-natural wraps, smoothies, salads, and juices from juice partners,  the Starbucks barrista’s alter-ego. Look for the first Evolution Fresh store in Bellevue, Washington with plans for West and East coast stores in the next year.

Kermit the Frog is getting connected to keep competitive. His Oscar-winning movie The Muppets is coming out on DVD today, so Kermit is talking it up on Twitter, Facebook and other social media hangouts. Kermit is so cute,  I hope he’s not on match.com, Miss Piggy would be so upset:) BTW, I saw The Muppets and loved it.

Bonds can be a confusing bunch. There are many different kinds and different investment grades.  To better understand bonds, let’s get the basics.

People invest in bonds, a lot.  Bonds are a form of debt. When you buy a bond, you are loaning money to the bond issuer, and they are giving you an IOU, agreeing to pay back your original investment, plus any interest that is due, by a certain date.

Why do people buy bonds? Why don’t they just stick with stocks? Certain bonds are considered very safe investments. It’s important for investors to have a relatively risk-free place to put their money, especially if the stock market is acting unstable. The money that you make by investing in bonds may not be very big, slightly more than the interest on a savings account, the risk isn’t big either. Basically, you know you’re not going to go bust by investing in certain investment grade bonds.

The biggest seller of bonds is the U.S. government.  These government issued bonds, called Treasuries, are the safest debt investment around. That’s because Treasuries are backed by the U.S. government; these bonds help finance the country’s debt and keep Washington working.

Other investment grade bonds (bonds that have a good credit rating) can include municipal bonds, issued by cities to pay for projects like bridges and tunnels, and corporate bonds issued by corporations to fund operation costs.   

But don’t bank on all bonds for a safe risk-free investment. “High-yield” or “Junk bonds” are considered risky investments. They are issued by companies that may not be able to pay back their debts when the bond matures. People who invest in “junk bonds” take on a big risk hoping for a big return.

Peace, Love & Profits

Blake “The New Bond Girl”

We’re waiting for Friday. That’s when we get the ‘Big Kahuna’ of economic reports: The Unemployment Report, also known as the Jobs Report. It’s s a big deal for Wall Street and Washington.

That’s because the Jobs Report will tell us what’s happening on Main Street.  Are people in America working or not? If they’re working, they’re making money and spending it. Therefore, businesses are growing and taking the economy along for the ride.

Here’s how the U.S. Labor Department sums it up: they take the number of jobless people plus the number of people actively looking for a job, add it together and that gets the unemployment rate.

If the unemployment rate is down compared to the previous month, it means more people are working, which is good news for the economy. If the unemployment rate increased for the month, it means more people are now out of work and actively looking for a job.

The January unemployment rate in the U.S. was 8.3% (that’s about 12.8 million people). January was the fifth straight month that the unemployment rate declined. But you may need to read between the lines a little: one reason the rate has declined recently is because many people have simply stopped looking for a job. The government, which reports the numbers, only counts people as unemployed if they are out of work and actively looking for a job.

Other facts and figures are also key in the report:  which sectors had the biggest increase or decrease in jobs, the average hourly earnings, and how many nonfarm payroll jobs were added.

Washington is watching too.  With the Presidential election looming, President Obama is hoping a decreasing unemployment rate will boost his chances for reelection.

Economists are expecting the unemployment rate to stay at 8.3% and about 210,000 nonfarm payroll jobs added in February.

It’s a date, don’t be late: 8:30 am ET.

Peace, Love & Profits

Blake

Registers are ringing.

Every month, retailers report same-store sales. This is the amount of sales a company has made in a given month. It is called same-store sales because the number is compared with the same month a year ago and for the same number of stores. So, if a retailer in February 2011 only had 25 stores, and in Feb 2012 it has 45 stores, the number is adjusted to reflect this.

Wall Street watches these reports closely. Here’s why: the reports can offer clues about how healthy the consumer and economy are. If people are spending money, it may mean they feel confident about their current and future financial situation. Investors are keeping a close eye on the reports also. If a retailer has strong sales figures, investors may want to buy some of that company’s stock. On the flipside, a bad same-store sales report could mean trouble ahead.

For February, Gap, the nation’s largest clothing company, said sales rose 4% . Analysts who follow Gap expected sales to fall 1.4%, so this was a huge, positive surprise. There is a similar story at Target where same-store sales rose 7%, compared with a 5% forecasted increase.

Retail analysts (people whose job it is to keep an eye on everything in the retail sector) say that warmer weather helped boost sales. Shoppers wanted to get a jump on spring shopping, and stores helped by stocking shelves with new products.

Are retail stocks in fashion on Wall Street? Ooh la la….

Peace, Love & Profits

Blake

Let’s face the facts:
Facebook plans to raise more than $5 billion from the initial public offering. This would value the company at more than $100 billion.  Facebook would be the biggest high-tech IPO in history, surpassing Google’s $1.9 billion offering in 2004.  Facebook’s CEO Mark Zuckerberg, who famously started the company in his dorm at Harvard, will make about $25 billion dollars in the deal.

What does all this mean for Facebook users? Probably not much right away. However, once a company is publicly traded, it has to impress its investors. . What most investors want to see is a healthy profit.  This means more advertising and other money-making ideas are probably in Facebook’s future.  

How does a company decide what its worth? It’s really the job of underwriters, or the bankers handling the IPO, to set the price. Facebook is using investment bank Goldman Sachs. They’ve looked at Facebook’s finances and came up with a price based on its business prospects down the road. 

Many times, the bankers also decide who gets to buy some of the stock in the IPO. Shares usually ends up with the bank’s good clients, or big-time investors.  Smaller investors may have to wait a while before they can ‘like’ shares of Facebook too.  

Peace, Love & Profits

Blake