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Moody’s Analytics reports highest office vacancy rate in 40 years

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It’s not just your imagination. Offices are a lot emptier these days.

Moody’s Analytics, as reported by the Wall Street Journal, says 19.6% of the office space across the United States is now empty—the highest level since 1979, when Moody’s began tracking the statistic. The number is up from 18.8% a year ago.

Prior to now, the highest the vacancy rate had hit was 19.3% in both 1986 and 1991.

While much of the issue is tied to an increasing number of remote workers, overbuilding in the 1980s and ’90s is also a key factor. Moody’s says the majority of the unleased space is in older buildings from that period and earlier.

“The overall outlook for commercial real estate in 2024 is muted,” Ermengarde Jabir, senior economist with Moody’s Analytics, told Fortune earlier this month. “Across all sectors, there will be a continued recalibration of sorts [including office, multifamily, industrial, and retail properties]. … Office will continue to face the most strain in 2024.”

Texas has been particularly hard hit, with Houston, Dallas, and Austin claiming the top three spots among major cities with the highest vacancy rates.

Many companies were already in the process of downsizing their office footprint before the pandemic, shifting toward open floor space plans that fit more employees into a smaller space.

Moody’s isn’t the only company pointing to the occupancy problem. The most recent Back to Work barometer from Kastle (for the week of Jan. 1, 2024) showed an occupancy rate of just 23.9% (though that could be due to holiday vacations). That was down from 45% the week prior and an average of 51% earlier in December.

Workers have been hesitant to begin commuting back to work, despite a strong push by CEOs. Many employees say they will return to work if companies offer incentives, but most corporations have been reticent to do so.

Executives had argued that by having employees back in the office, productivity would increase. However, increasing evidence is showing that does not appear to be the case.

The outlook for the future isn’t much better for commercial real estate. Stijn Van Nieuwerburgh, a professor of real estate and finance at Columbia Business School, was particularly pessimistic about the office market late last year, saying he didn’t expect it to improve for years.

“It could easily take several years for the office market to stabilize, which is why I’ve referred to all this as a trainwreck in slow motion,” he said.

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🟠 The Countdown is on for Bitcoin ETF Approval

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Bitcoin starts the year with a boost, Michael Saylor sells stock to buy more Bitcoin and one blockchain is about to buy a memecoin?!  These stories and more, this week in crypto.

 

Strong Start for Bitcoin in 2024

Bitcoin started the new year on an impressive rise, amid optimism for anticipated ETF approvals, a higher risk appetite driven by rate cuts, and the halving quickly approaching. BTC reached a 21-month peak of just below $46000 on Tuesday, before pulling back a bit. Bitcoin closed out the year with a gain of 156% in its strongest yearly performance since 2020.

Countdown to U.S. Spot Bitcoin ETFs

U.S. investment firms, stock exchanges, and the SEC finalized applications for spot bitcoin ETFs, with the anticipation from many that they are securing regulatory approval. The SEC commissioners are expected to vote on the filings this week, as January 10 is the deadline for approval for ARK Invest and 21Shares products. However, sources emphasized the confidentiality of ongoing talks.

Goldman Sachs Bets on Bitcoin ETFs

After J.P. Morgan and Jane Street, another leading investment bank, Goldman Sachs is in talks to become an authorized participant for spot bitcoin ETFs, for institutions like BlackRock and Grayscale. Authorized participants have the right to create and redeem shares of a spot Bitcoin ETF, a product for which 14 asset managers are awaiting SEC approval.

Vitalik Buterin’s Ethereum Vision

Ethereum co-founder Vitalik Buterin unveiled Ethereum’s 2024 roadmap, highlighting six core aspects. The Merge, which integrated the proof-of-stake consensus, remains the key focus with its simplicity and durability. Additionally, Buterin wants to bring back the original idea of the cypherpunk revolution for the blockchain with more privacy solutions.

Bankrupt Lender Pivots to Bitcoin Mining

A U.S. bankruptcy judge gave a green light for Celsius Network’s move into Bitcoin mining, allowing for a shift from their previously approved bankruptcy strategy. Celsius, one of several crypto lenders going bankrupt in 2022, had to alter its plans after the SEC rejected the initial proposal. The judge ruled that the approved bankruptcy plan from November was flexible enough to accommodate for the transition to Bitcoin mining as a backup strategy.

Saylor Sells MicroSrtategy Shares for Bitcoin

MicroStrategy’s co-founder, Michael Saylor, intends to sell $216 million in company stock options, and use the proceeds to buy more Bitcoin for his personal holdings. Saylor plans to exercise and sell 5,000 shares daily from January 2nd through April 25th, aiming to address personal commitments and increase his Bitcoin holdings before his stock options expire.

Avalanche Foundation Considers Memecoins

The Avalanche Foundation is considering buying memecoins in its ‘Culture Catalyst’ initiative. Inspired by recent token surges on Solana, like BONK and Dogwifhat, the idea is to support internet culture-inspiring coins that go beyond utility assets. The move aligns with the Foundation’s commitment to diversifying its portfolio to encompass NFTs, RWAs, and various crypto assets; fostering broader engagement in the Avalanche ecosystem.

Bitcoin’s 15th Anniversary

15 years ago, Satoshi Nakamoto mined Bitcoin’s genesis block, marking the start of the cryptocurrency era. Celebrated annually on January 3rd, this milestone reflects Bitcoin’s profound impact on finance. BTC’s market cap sits at nearly $900 billion, and has spawned a $1.8 trillion crypto ecosystem, reshaping digital assets and global financial markets.

That’s what’s happened this week in crypto, see you next week.

Creating a Strong Support System: A Step-by-Step Guide

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Another way to fight against the fear if failure is to build a support system for your small business. And for the entrepreneurial journey too.

Understanding the Elements of a Support System

So what makes up the elements of a support system? And how do you build a support system for your business? Here’s a basic rundown.

Family Support

Family plays a fundamental role in the entrepreneurial journey. Their emotional backing can be a pillar of strength during challenging times. Communicating openly about business challenges and victories fosters understanding, aligning personal and professional spheres for a harmonious balance. This support extends beyond emotions to practical aspects, with family members often contributing time, skills, or even financial assistance.

Friends as Allies

Friends form an invaluable part of an entrepreneur’s support system. They bring an external perspective and can serve as sounding boards for ideas. In times of stress, friends offer a network of emotional support, often understanding the challenges unique to entrepreneurship. Cultivating friendships within the industry also opens doors to networking opportunities, knowledge sharing, and potential collaborations.

Mentorship

Mentors are seasoned guides who provide valuable insights and advice based on their own experiences. Establishing mentor-mentee relationships is a strategic step in gaining access to a wealth of knowledge. A mentor can offer perspectives on business strategies, decision-making processes, and even introduce the mentee to influential networks. Their guidance contributes to personal and professional growth, helping entrepreneurs navigate challenges more effectively.

Professional Networks

Building connections within professional networks, industry associations, and chambers of commerce is essential for entrepreneurs. These networks provide a platform for collaboration, idea exchange, and staying updated on industry trends. Engaging with peers and colleagues facilitates mutual support, creating an environment where businesses can thrive collectively. The diversity within professional networks ensures exposure to varied experiences, solutions, and opportunities, enriching the entrepreneur’s perspective and strategies.

Recognizing the Different Types of Support Needed

Of course, support comes in many different flavors. But when you build a support system for your business you’ll need them all to survive in the rough and tumble world of entrepreneurship.

Emotional Support

Emotional well-being is the bedrock of an entrepreneur’s resilience. The journey is rife with challenges, and having a support system that understands the emotional toll is crucial. Emotional support involves encouragement, empathy, and a safe space to express fears and doubts. This type of support is the anchor that helps entrepreneurs weather the storms of uncertainty and setbacks, fostering mental fortitude.

Professional Guidance

Navigating the complexities of entrepreneurship requires more than intuition; it demands informed decision-making. Professional guidance comes from mentors, industry experts, and advisors who provide insights based on their experiences. This support aids in strategic planning, risk management, and overall business development. Entrepreneurs benefit from the wisdom of those who have walked similar paths, gaining a competitive edge and avoiding common pitfalls.

Financial Assistance

Finances are the lifeblood of any business, and entrepreneurs often need financial support to fuel growth. This can come in various forms, including loans, grants, or investment from stakeholders. Understanding the financial needs of the business and exploring diverse funding options ensures that entrepreneurs can secure the necessary resources to execute their plans and sustain operations.

Skill Development

In the ever-evolving business landscape, entrepreneurs must continuously enhance their skill sets. Support in skill development involves access to training, workshops, and educational resources. This type of support not only enhances individual capabilities but also contributes to the overall competence of the business. Investing in ongoing learning and skill development ensures that entrepreneurs remain adaptable and competitive in their respective industries.

Nurturing Personal Relationships

You can’t simply take energy and resources from your support base either. You need to invest in it as well. And that means investing in the people who have invested their time and energy in you.

Balancing Personal and Professional Life

Achieving a delicate balance between personal and professional life is pivotal for entrepreneurs. The demanding nature of running a business can often encroach on personal time, leading to burnout and strained relationships. Prioritizing and setting boundaries ensure that both aspects of life receive the attention they deserve. A balanced lifestyle not only promotes well-being but also enhances focus and creativity, positively impacting business outcomes.

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Preventing Burst Pipes: A Guide

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Burst pipes are a nightmare for any homeowner or business owner. Not only can they cause extensive damage, but the cleanup can also be challenging due to cold weather. Most burst pipes are caused by frozen pipes. Here’s how to prevent burst pipes during Alberta’s cold winters.

1. Ensure pipes are properly insulated.

Insulation is important for keeping the heat in your home or building. However, even with proper insulation, there can be cold spots inside cabinets or because of a faulty furnace. Ensure your home or building is properly insulated. If this has been done or it’s not possible, you can insulate the pipes themselves by using spray-foam insulation or insulation pipe wrap. Focus on exterior walls and unheated areas (and the pipes adjacent to those unheated areas).

2. Properly seal any cracks and holes.

Cracks and holes can let cold air in which can cause pipes to freeze and burst. Inspect your home or building’s exterior and interior and repair them if you spot any issues. You should also ensure the doors and windows have weather stripping in good repair.

3. Keep doors and windows closed.

The colder it is outside, the more impact an open door or window can have on the temperature of your home. If it’s too warm, turn your thermostat down a bit. If you need circulation, use a fan.

4. Drain and winterize outdoor pipes.

Disconnect and drain all exterior hoses and other fittings. Shut off the valve for exterior spigots and drain the exterior faucets by turning them on and letting the water drain out – turn them off after a few hours. You should also winterize any irrigation systems.

5. Keep your home or building adequately heated.

A furnace or heating system that has been turned off or has failed is the biggest culprit behind burst pipes. Make sure to keep your heat on and maintain a temperature of at least 14 C inside – keep in mind that exterior walls and certain areas may be colder! Some buildings may require higher temperatures.

Proper maintenance of your heating system is important. Change your filter regularly (every one to three months) and have a professional inspect it once a year.

6. Keep water moving if your heat fails.

If your heating system fails or it is struggling to keep up with the cold weather, keep water moving through your pipes by turning the interior faucets to drip or trickle. This keeps water moving through the system and helps prevent it from freezing.

7. If your business will be closed or you will be away from home, you should arrange for someone to check on it and consider turning off the water.

Insurance companies may require a responsible adult to check on your home or building every 24 to 48 hours for a claim to be covered. This is because the longer damage goes unnoticed, the worse it gets. Check with your insurance broker before you leave to find out what your insurer requires.

Turning off your water and draining the pipes (by leaving faucets open for a while before turning them off) helps prevent frozen and burst pipes.

What happens if your pipes burst?

While burst pipes are normally covered under business property or home, condo and tenant insurance, it’s always better to avoid the damage in the first place.

If you do have a burst pipe, turn off the water immediately (you may also need to shut off the power). Contact your insurer to start a claim and document the damage: take photos and video to record what happened. You should write down the details such as the date, time and exactly what happened. Don’t forget to make a list of what was damaged or destroyed.

If it is safe to do so, remove items from the water and dry them. You may also be able to start removing water and drying out your home. Your insurer can recommend a restoration company, so follow their instructions (or those from your insurer). Don’t forget to keep all receipts for cleanup costs and any replacement items.

Speak to your broker if you plan to be away over the winter months and to understand your coverage when it comes to burst pipes.

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The Uncommon Toad and Mrs Grey: A Financial Freedom Fairy Tale – Part 6

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Mrs Grey and the Uncommon Toad is one of many financial freedom fairy stories by Doug Weller. It tells the story of what happens when an average person has the chance to make uncommon returns on their gold.

Stories can be powerful for illustrating the lessons of financial freedom. In this series, in each financial freedom story, you will explore a familiar fairy tale world with remarkable characters and magic. There’s action, and drama, and love, and sometimes a happy ending. Enjoy each financial freedom story.

You can find more Financial Freedom Fairy Stories here.

Now, are you sitting comfortably? In that case, let’s begin…

Mrs Grey and the Uncommon Toad – Financial Freedom fairy stories

There once lived a woman called Mrs Grey, who was perfectly average.

Each morning she would wake in her average bed, go to the kitchen for an average breakfast, then take an average walk around the village.

She met people who were taller than her, and smaller.

She met people who were more beautiful than her, and uglier.

Some were thinner, some were fatter. Some had longer noses, some shorter.

Some were older, some were younger. Some were smarter, and some were stupider.

As usual, she stopped by the village duck pond, and watched the local ducks and geese. She found she enjoyed this as much as the average person, and when she had spent an average amount of time at the duck pond, she left.

When she arrived home, she walked into her average and house, put down her average shopping bags, and took a seat in an average chair.

She sighed, for she felt averagely good about her life.

“Good day, Madam,” said a strange, bubbling voice.

Mrs Grey looked around in surprise, but couldn’t see anybody else in the room. A voice from nowhere did not feel like an average occurrence, so she assumed she had imagined it.

“I said, good day, Madam” the gurgling voice repeated.

Mrs Grey looked down at her kitchen table. Squatting on the table was a green-skinned, warty toad. Unlike the many toads she had seen at the village duck pond, this one was wearing a top-hat and holding a cane.

The toad lifted the top hat, and bowed to her.

“Such fine weather we are having today, would you not agree?” he asked. “Allow me to introduce myself, I am an uncommon toad.”

Mrs Grey was dumb-struck. A toad finding its way on to her kitchen table was unusual enough. But a toad discussing the weather while wearing a top-hat and holding a cane, was even rarer.

“You are wondering why I am here, no doubt?” the uncommon toad asked, to which Mrs Grey nodded. “My business, Madam, is lily pads. And there is not a thing in this world I do not know about lily pads. Are you yourself an expert in lily pads?” asked the uncommon toad.

Mrs Grey shook her head.

“I thought not. I thought not. There are very few of us who truly know the ups and downs of the lily pad market.”

The uncommon toad pulled out a pocket watch and checked the time. He then looked around Mrs Grey’s average kitchen, with a frown on his face.

“I see, Madam, you are not rich.”

Mrs Grey at last found her voice.

“No, I am not rich. But neither am I poor. I am perfectly average, you see,” she confirmed.

The uncommon toad’s bulging eyes looked left and right, then took a hop towards Mrs Grey.

“In that case, Madam, I have a proposal for you. Because who, on earth, wants to be average?”

Mrs Grey’s face fell, because until that day, she had never questioned her average life.

The uncommon toad saw her distress and nodded, reassuringly.

“Fear not, Madam, I am here to help. We are, in fact, about to enter lily pad season at the village duck pond, and I happen to be best placed to make gold from it.”

“Gold from lily pads? Is that possible?” Mrs Grey asked, because she knew only an average amount about making gold, and an average amount about lily pads.

The uncommon toad’s wide face spread into a wider grin.

“Let me explain,” he said. “Each year, lily pads grow all over the village’s duck pond. You may have seen this for yourself.”

Mrs Grey nodded, for she had seen the lily pads covering the village pond in previous years.

“What you may not fully understand is that some lily pads grow small, whilst other grow large. And the larger the lily pad, the more valuable it is.”

“Valuable to whom?” Mrs Grey asked.

The uncommon toad has a momentary look of irritation at her lack of understanding.

“To other toads, of course,” he snapped.

“I see,” Mrs Grey replied. Then, not wishing to further irritate the uncommon toad, she added. “That makes sense.”

The uncommon toad regained his professional composure.

“My proposition for you, Madam, is this: For a very small amount of gold, I will pick the lily pads which will grow largest this year. I will buy these lily pads, on your behalf, for only a small amount of gold. And when it comes time to sell, you will be rich.”

Mrs Grey thought she understood. “You mean, we buy low, and sell high?,” she asked.

The uncommon toad was astounded.

“Madam, I had no idea you were such an expert in such matters,” he said.

Mrs Grey blushed.

“Oh no, I think even the average person knows that to profit from gold at the end, you should have more of it at end, than at the beginning,” she explained.

“I see,” the uncommon toad replied. He checked his pocket watch again. “Now, I am running short of time, so may I ask, how much of your gold would you like me to invest in lily pads this year?”

Mrs Grey was not sure. After all, she normally kept her average amount of gold underneath her average mattress. But the idea that she might become rich had suddenly become very tempting.

“Your offer is generous,” Mrs Grey said. “But may I ask, how you can be sure you will pick the lily pads which will grow to become the largest? Are you just guessing?”

The uncommon toad looked deeply offended.

“Madam, I am an expert and I will follow a strategy, of course..I have been watching the lily pads since I was a tadpole. Before we met, you knew nothing of lily pads, but my family have been involved in the lily pad trade for many years.”

“I see,” said Mrs Grey.

The uncommon toad scratched at the largest wart on his face, satisfied that Mrs Grey now understood.

“Now, Madam, how much of your gold would you like me to invest in lily pads this year?”

Mrs Grey was not sure.

“Your offer is generous,” Mrs Grey said. “But may I ask, what would happen if you chose the smallest lily pads instead of the biggest ones?”

The uncommon toad scowled.

“How dare you,” he said. “It is my job to choose the largest, and I would never dream of choosing the smallest. But, since you asked so nicely, if I were to choose you the smallest lily pads, then I am afraid you would lose all your gold.”

Mrs Grey frowned. This did not sound good.

“And what about the gold I paid to you? Surely, you would at least return that gold to me.”

The uncommon toad shook his head, sorrowfully.

“No, Madam. I am afraid I would keep the gold you paid me. Because it is a very small amount of gold, and because I have a family of more than one thousand tadpoles to look after, I would keep that gold.”

Mrs Grey frowned again.

The uncommon toad hopped to the edge of the table, so he was as close to Mrs Grey as he could get.

“So, how much of your gold would you like me to invest in lily pads this year?” he asked.

“One last question,” Mrs Grey said.

At this, the uncommon toad almost fell off the table in frustration.

“One last question,” he muttered, impatiently.

“If I chose just an average lily pad, would it make me gold, or lose me gold?” Mrs Grey asked.

The uncommon toad seemed delighted with this question.

“Madam, over time, the average lily pad will alway grow bigger. It is the main reason for my confidence in the lily pad market. If you bought only average sized lily pads you would almost certain of an average sized return on your gold. But, of course, nobody know which lily pad will grow to be the average.”

Mrs Grey relaxed at the uncommon toad’s explanation.

“In that case,” she said, with an averagedly happy voice, “I know what I shall do…”

* * *

Several months passed, and Mrs Grey woke up in her average bed, went to the kitchen to eat an average breakfast, then went for her average walk around the village.

When she arrived at the village duck pond, she decided to take a look at the water. As happened every year, the duck pond was now full of lily pads. Some were tiny, and others huge.

With an average smile, she nodded at what she saw. As she turned to leave the duck pond, she heard a bubbling voice call to her.

“Madam!”

She turned to see the uncommon toad squatting on top of a fence post. He was waving his top-hat towards her.

“Is it not a marvellous sight to see so many huge lily pads?” the uncommon toad asked Mrs Grey. “I imagine you now regret your decision to not use me to pick your lily pads. If you had, you might now be rich.”

“Might I?” Mrs Grey asked.

“Of course, Madam. The average lily pad is now worth far more today that it was worth several months ago.”

“Is it?” Mrs Grey asked. “And how about your choice of lily pads? Are they also worth far more than several months ago?”

The uncommon toad swallowed, a big lump travelling down his green neck.

“Ah, yes, well. That is an interesting question. Very interesting indeed.” He pulled out his pocket watch. “But, is that the time. I really must be making haste.”

The uncommon toad turned to go, but Mrs Grey reached out her hand and grabbed him. She pulled his scaly body to her eye level.

“Come now, tell me how big your choice of lily pads.” Mrs Grey gently squeezed the uncommon toad’s bulging belly.

“I followed my strategy, “ the uncommon toad said. “My idea was to choose all the lily pads around the edges of the duck pond. Last year, that is where the smallest lily pads grew, so I reasoned that this year those lily pads would grow biggest. It was a brilliant idea.”

“And did your strategy succeed?” Mrs Grey asked.

The uncommon toad swallowed.

“A little bad luck. This year, once again, the lily pads on the outer edges were the smallest.”

“I am sorry,” Mrs Grey said. “You must have lost a great deal of gold.”

The uncommon toad’s eyes narrowed, guiltily.

“Not at all, Mrs Grey. You see, I did not personally invest any of my gold in lily pads. No, no, no. Instead, I have kept all the payments made to me by others. I had a very successful year,” the uncommon toad explained.

“So you make gold no matter what happens to any of your investors?” Mrs Grey asked, astonished.

“Precisely,” the uncommon toad replied.

“It sounds to me, that your real strategy is simply to make yourself gold, no matter what happens.”

The uncommon toad eyes widened in offence.

“How dare you, Madam. I am an expert in choosing lily pads. And, at least, I had a strategy, even if it was a bad strategy. Eventually, my investors will earn gold. They simply need to pay me more next year.”

“How are you so certain they will make gold?” Mrs Grey asked.

“Because the average lily pad continues to sell for a great deal of gold. As it has done throughout my life. If you lose gold one year, you have a good chance to make gold in the following year.”

Mrs Grey smiled.

“That is exactly what I thought,” she said. “And that is why I did not choose any particular lily pad. After all, I only know the average amount about lily pads.”

“So you made no gold this year either,” said the uncommon toad, triumphantly.

Mrs Grey continued.

“Rather than pick certain lily pads, I bought a small amount of every single lily pad on the duck pond.”

“A small amount of every lily pad?” the uncommon toad exclaimed. “But then, if a lily pad grew large, you would only make a small gain.”

“But if a lily pad grew small, I also only make a small loss,” Mrs Grey replied.

The uncommon toad scratched at his mole.

“With a small slice of each lily pad, you would make the average gain,” he spluttered.

“Each year, every year, I will make the average gain from my share of all the lily pads. And, I won’t be paying you any gold for guessing the size of lily pads,” Mrs Grey confirmed.

“Guessing!” the uncommon toad’s voice boomed out. “Guessing!!!” His eyes looked like they were about to pop out of their sockets. “But Madam, I beat the average every five years. How could that be described as guessing?”

“You are right,” Mrs Grey said. “It is worse than guessing. Your strategies are, on average, bad decisions, and you take gold from good people in the process. Most people would be far better taking the average return from the lily pads.”

The uncommon toad was incredulous.

“But who in the world would only want to be average?” he demanded to know.

“I do,” Mrs Grey said, proudly. “Averagely rich, that is.”

She placed the uncommon toad down by the duck-pond, and watched as he swam through the lily pads towards his vast family of tadpoles.

Then, Mrs Grey took a perfectly average walk home.

THE END

Mrs Grey and the Uncommon Toad – Financial Freedom fairy stories – Coda

What’s so wrong with average? The financial moral of this story is that getting an average return can be much better than trying to achieve outsized gains when you are investing.

There are a couple of key reasons for this:

First, there are far lower fees if you simply buy the whole market from a low cost index tracker fund, rather than pay the fees that stock-pickers will charge.

Second, the stock pickers are generally no better than the market, and often worse. In fact, a previous study suggested stock pickers miss the average performance of an index four times out of five, just like our Uncommon Toad.

The Uncommon Toad doesn’t think he is doing anything wrong, and he believes his strategies will beat the market, whether for lily pads or stocks, share, and bonds.

Mrs Grey was proud to be average, if it meant doing just as well or better than the Un

Enduring Sources of Business Success

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One of the biggest advantages that individual investors have is their ability to maintain a long-term time horizon. Professional investors can take advantage of this edge as well, but few do. I’ve long believed that the modern day advantage in markets is not informational advantage or even analytical skills, but rather behavioral. Being a great business analyst is table stakes of course, but that’s a necessary, not sufficient condition for success in investing. What separates the great investors from the average is all about behavior.

Being patient and thinking long-term is widely discussed as a positive attribute. It’s not debatable. I’ve never heard an investor say that they are impatient and short-term focused. But the fact that this is widely talked about does not mean it is widely practiced. Much like the principle of “hard work”, it’s easier said than done. The vast majority of people in business would say they are a hard worker, but the reality is only 10% of those people are in the top 10% on the spectrum of work ethic. The same goes for behavioral advantages in investing. The vast majority of people say they have this edge, but the facts suggest that few actually implement it.

I recently read through the letters of Nick Sleep, who ran a very successful investment fund in the United Kingdom before closing it last decade. Sleep is a great thinker and I highly recommend his work. One thing Sleep wrote a lot about is how the average holding time period for many of the stocks he owned was around 50 days, whereas he planned to hold these stocks for more than 250 weeks (5 years). I think his key observation is important: The marginal buyer who is holding a stock for 2 months is not placing much emphasis on that company’s competitive advantage because that advantage won’t matter much at all over the next few months; what matters over that period of time are things like market perception, news flow, sentiment, and perhaps short-term business momentum.

Truly Understanding the Source of Enduring Business Success

So what Sleep did is he decided to compete in a different game. Instead of attempting to determine how the crowd will react this quarter or how the trajectory of the business will fare this year, he wanted to focus on the factors that contributed to a business’s ultimate potential. What attributes give this company an advantage? What will lead this company to success through both good times and bad times (because if you’re a long-term shareholder, all companies face headwinds at some point).

Walmart’s Cost Advantage — An Enduring Advantage

Sleep used the example of Walmart’s cost advantage. Walmart’s business model was to offer the lowest prices on everyday merchandise, and steadily gain scale advantages through larger and larger bulk purchases from suppliers at lower and lower unit prices, which meant further savings to customers, which led to more growth and more scale advantages. Sleep coined a term for this business model: “scaled economies shared”, meaning the business gained scale, but instead of keeping the excess profits for itself, it gave these scale advantages to the customer in the form of lower prices. This sacrificed near term profits but led to far greater future profits, which of course is where value comes from.

Walmart, Costco, and Amazon all exhibit this basic business model, and all have achieved great success. But what Sleep noticed is that investors — even when they understood this business model — still undervalued all of these companies because they placed too much emphasis on shorter term factors such as seasonal same-store sales trends, quarterly margins, or the business cycle. All of this focus came at the expense of what really mattered, which was the cost advantage that was so hard for competitors to replicate.

NVR’s Enduring Advantage

I started on a project of going through my own watchlist to spend time thinking about each “source of enduring business success” for the companies I follow.

NVR is a homebuilder that restructured its business in 1993 after facing one of the inevitable downturns in an industry defined by booms and busts. I believe NVR has three distinct “sources of enduring business success”:

  • Land light business model — unlike most builders, NVR doesn’t develop or hold its own land on its balance sheet. Instead, it partners with 3rd party land developers who take a portion of the gross profits in exchange for removing NVR’s risk of holding too much land during a downturn. NVR essentially pays developers to take on the capital intensity (and the debt and the risk) that is naturally part of the home building business. The result is much faster inventory turns, 40% returns on capital, and excess free cash flow in good times and bad.
  • Efficient operations — like the great retailers mentioned above, NVR’s cost efficiencies are a very under appreciated advantage in their business. They operate factories near the communities which act like distribution centers. This drives efficiencies and economies of scale. NVR’s operating costs are just 5% of sales — about half the costs of their peers.
  • Incentives and Culture — most of the NVR executive pay comes from options that are granted based on economic profit and returns on capital, not simply growth. Most other builder execs get bonuses based on EBITDA or revenue growth. This makes it very hard for these builders to give up the profits (and the risk) that come from land development because it means willingly accepting less profit (even if that means much higher returns on capital, more free cash flow, and ultimately better value creation). As Buffett says, the best way to make a savings account grow is add more money to it, but this doesn’t increase the rate of return the account holder receives. Builders can easily juice revenue and profit by taking on more debt to buy land, but this doesn’t always (in fact rarely) leads to great value creation or stock price performance in the long run. (Last note on culture: NVR has never “repriced” its options lower, which is the habit of many companies who pay their employees in stock.)

The result of these attributes have led to one of the great stocks of the last 30 years. NVR has gone from $9 when they restructured in 1993 to over $4,700 today, and it has repurchased 78% of its shares over that stretch.

It is my opinion that the three of these advantages working together have created a business model at NVR that is very hard to copy. It’s not just the land light model on its own; it’s the culture of efficiency, the focus on ROIC, and the long-term thinking. NVR’s CEO just announced his retirement after 40 years at the helm (he’ll move to Chairman). The proxy statement reads like a family history. Multiple executives have been with the company for decades, and this longevity can sometimes create a special “way of doing business” that can’t simply be cloned overnight.

In short, NVR has multiple sources of enduring business success. Will they sell fewer homes this year if the supply chain remains constricted? Most likely. Are they subject to the same economic or interest rate pressures that other builders are? Yes. But will they be a company still earning world-class returns on capital a decade from now? I think the latter question matters more to long-term investors, and the answer to that question has to be found through analyzing the strength of those more permanent attributes that don’t change with the cyclical economic tides.

“Weighting the Information”

Last summer, investors sold Amazon after its Q2 earnings report because the next few quarters would face tough comps from the gangbuster 2020; but Amazon’s value in 2032 has little to do with the comps it faces in 2022. It has a lot to do with the durability of its network, the economies of scale, the distribution advantages, the culture of operational excellence; none of that will likely drive the stock this quarter, but it’s what matters most to the stock over the next decade.

A mismatch of time horizons lead some investors to more heavily weight the short-term and deemphasize these sources of “enduring business success”.

Investors who hope to buy a stock that will rise this year are much less apt to fully value these types of sustainable long-term competitive advantages. And fortunately for investors with 5-10 year time horizons, this creates a lot of opportunity. I’ve always felt that durable growth (not necessarily fast growth, but long-lasting durable growth) often gets undervalued by the market. I think Nick’s point about time horizon goes a long way to explaining why.

Summary – Focus on the Advantages that will Matter in a Decade

The key variable for these companies was not what the comparable sales will look like next quarter or what the business might earn next year. The key variable was the durability of the cost advantage. This advantage didn’t change much from year to year. In fact it likely increased over time, which is a unique business model where growth actually perpetuates more growth.

I wanted to share a clip from my notes on this section of Nick’s letters:




This post got me thinking about making a list of companies that have sources of enduring business success. I’m currently going through Saber’s database of companies I’ve studied to build a list of what I believe are the top 50 companies in the world, along with a contenders list of companies I think will be the next generation’s top 50. A key part of this exercise is spending a lot of time thinking about these “sources of enduring business success”.


John Huber is the founder of Saber Capital Management, LLC. Saber is the general partner and manager of an investment fund modeled after the original Buffett partnerships. Saber’s strategy is to make very carefully selected investments in undervalued stocks of great businesses.

John can be reached at john@sabercapitalmgt.com.

Union minister Piyush Goyal says the world is interested in engaging with India on FTAs

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Union Minister Piyush Goyal on Sunday said the world today wants to engage with India for free trade agreements (FTA), and to expand trade and diplomatic relations with India.

Speaking at the inaugural of the maiden Global Investors Meet of the DMK government, the Commerce and Textiles Minister said India’s young population has given demographic dividend which has become the envy of the world.

Batting for women joining the formal workforce in the country, he said, when women go to work, it will not only add to the GDP but will also add twice to the country’s GDP as the work they are now doing will be replaced by technology.

Elaborating, he said, … as more and more women come into formal workforce, the work what they are now doing, which is unfortunately not reflecting in our GDP will be replaced by technology as India will become the largest market for washing machines, dishwashers.. India will become the largest market for goods and services, he said.

Underscoring that women led development will take India to newer heights, Union Minister said, “While India is outperforming all our peer economies, the world today wants to come and engage with India, to do free trade agreements with India, to expand trade and diplomatic relations with India.

He noted that the development taking place across sectors, was based on the strength of the young population as the average age stood at 28.4 years.

This young population’s basic needs have been met with several welfare initiatives like food, clothing, shelter, healthcare, education, water, digital connectivity, air, road, ports, rail which will take the country grow on a fast track. We have prepared the nation to aspire big, to think big and to work collectively as a nation with a sense of duty and to make the nation a developed nation by 2047.”

Referring to Prime Minister Narendra Modi’s comment that India would aspire to become a developed nation by 2047 and to shed the colonial mindset, Goyal said, these things rest on two important fundamental needs — women led development. Strengthening the Nari Shakti and second is to make India corruption free.

Goyal said India was looked as 5th weakest economy before 2014 and in the last 10 years, it has grown to become the world’s fifth largest economy.

India was looked as one of the weakest five economies in the world. The journey in the last 10 years has been from fragile economy to the world’s fifth largest economy. The journey has taken India to have a very strong macro-economic fundamentals. The journey has given us a GDP growth of 7.7 per cent in the last two quarters. he said.

Complimenting the Tamil Nadu government for setting a target to raise the state’s economy by USD 1 trillion by 2030, Goyal said this aspiration would drive for industrialisation, creation of new jobs in the state.

this (vision to reach USD 1 trillion economy) will help the young girls and boys to aspire for big goals in life and it is only when we have big goals, this country will move forward.

Stalin, who released semiconductor and advanced electronics policy on the occasion, said the Global Investors Meet would act as a catalyst for economic and industrial growth.

With the aim that Tamil Nadu should play an important role in shaping India’s economic growth, I have set an ambitious target of transforming Tamil Nadu’s economy into a USD 1 trillion economy by 2030. To achieve this, we are pursuing a twin-pronged approach of attracting both capital and employment intensive investments, Stalin, who was clad in a black colour suit said.

We have been inviting investors with a red-carpet. We want to be the trendsetter amid other states. TNGIM has witnessed encouraging response and is expected to bring pride and investment to Tamil Nadu. Multiple policies have been announced by the state. Our focus is to ensure development for all, he added.

The CM also released the USD 1 trillion report and the first copy was received by Goyal on the occasion.

Later in a social media post, Stalin said, “Honoured to share the dais with Union Minister of Commerce and Industry Thiru Piyush Goyal and esteemed industry leaders. TVS Chairman Venu Srinivasan, JSW MD Sajjan Jindal, Ashok Leyland MD Shenu Agarwal at TNGIM2024 inauguration.

”Positive vibes and global acclaim for Tamil Nadu’s one trillion dollar dreams are fuelling our journey to success. Let’s aim high, attract game-changing investments, and position Tamil Nadu as the economic powerhouse of India,” he said.

Anticipating a tremendously successful event and eagerly awaiting the investment numbers that will shape the state’s thriving future, he added.

In his welcome address, Minister for Industries TRB Rajaa said, this summit is a pedestal for the state to showcase the sectoral expertise, enhance and strengthen skilling diversity and expand the investment opportunities both nationally and internationally.

Tamil Nadu’s skilling prowess exceeds the national benchmark by contributing 43 per cent of the total women workforce in India, he noted.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Jan 07 2024 | 7:56 PM IST

Bets on Bitcoin ETF Approval Reach $1.5M on Polymarket

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Key Takeaways

  • Crypto traders have placed approximately $1.5 million in bets on Polymarket regarding the SEC’s decision on Bitcoin ETF applications.
  • The majority of bets favor the approval of the Bitcoin ETF, with ‘Yes’ shares currently priced higher than ‘No’ shares.
  • The betting has elicited varied reactions in the crypto community, ranging from criticism to humorous comments on personal stakes.

The crypto community is abuzz with the suspense surrounding the United States Securities and Exchange Commission’s (SEC) decision on the much-anticipated spot Bitcoin (BTC) exchange-traded fund (ETF) applications. Amid this high-stakes wait, a significant number of traders have turned to Polymarket, a Polygon-based betting platform, to place their bets on the outcome.

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Currently, bets amounting to around $1.5 million have been recorded, indicating the intensity of speculation in the crypto world. At Polymarket, participants are divided between those who believe the Bitcoin ETF will be approved (‘Yes’ bets) and those who don’t (‘No’ bets). Interestingly, most traders have shown confidence in a positive outcome, with ‘Yes’ shares outnumbering ‘No’.

The value of each share fluctuates in a manner akin to the crypto market, with the current price of a ‘Yes’ share at $0.80 and a ‘No’ share at $0.21. Notably, a top bettor under the pseudonym “Kiwi” has invested approximately $421,000 in ‘Yes’ shares, while the highest stake in ‘No’ shares stands at about $15,000.

If any spot Bitcoin ETF receives the SEC’s nod by January 15, 2024, at 11:59:59 pm Eastern Time, the market will resolve to ‘Yes’. Conversely, if no approval is granted by then, it will resolve to ‘No’. This means that by the deadline, bet holders will either reap profits or face losses based on the outcome.

Polymarket has stated that its primary source for resolving the market will be official information from the SEC. However, it also mentioned that the consensus of credible reporting might be considered in specific scenarios to determine the market’s resolution.

The betting activity has sparked mixed reactions in the cryptocurrency community, especially on platforms like Reddit. Some users have criticized the betting, with one Redditor labeling it as “putting up dollars to win dimes.”

Meanwhile, others have taken a lighter approach, humorously commenting on their personal stakes. One user joked about risking their child’s college fund, while another playfully apologized to their “crypto grandkids” for their speculative actions.

The betting frenzy on Polymarket over the SEC’s decision on Bitcoin ETFs reflects the high stakes and varied sentiments within the crypto community, with millions wagered and diverse reactions ranging from criticism to humor.

Gile is a Market Sentiment Analyst who understands what public events may form what emotions. Her experience researching Web3 news and public market messages – including cryptocurrency news reports, PRs, and social network streams – is critical to her role in helping lead the Crypto News Editorial Team.
As an intelligent professional in public relations, together with the team, she aims to determine real VS fake news patterns, and bring her findings to anyone searching for unbiased news and events happening in the FinTech markets. Her expertise is uncovering the latest trustworthy & informative Web3 announcements to the masses.
When she’s not researching the trustworthiness of mainstream stories, she spends time enjoying her terrace view and taking meticulous care of her outdoor environment.


Five Strategies for Boosting Workplace Productivity

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No business can function without its employees and there is nothing more important to a business than its employees. When the employees are happy, you will notice a rise in productivity and this is exactly what you need to help the business grow. By making small but effective changes in your daily habits, you can improve the level of productivity amongst the employees. Here are top tips on how to get the most out of your employees and ensure that their productivity remains at an all-time high. 

Utilize the Right Software

Embracing technological tools, specifically the right software, can significantly enhance productivity in your workplace. Software solutions such as Google Workspace offer a comprehensive suite of collaboration and productivity tools that streamline workflow and foster effective communication. Google Workspace integrates a variety of applications like Gmail, Docs, Drive, Calendar, Meet, and more, enabling employees to collaborate in real time, and reducing time spent on emailing and meetings.

Be efficient  

You need to consider how the business is operating currently and be open to the potential of changing the way you work. You need to remember that it is important to make short term and long term goals to prioritize tasks. If there is any better manner in which the staff could structure their day, you need to adopt that manner. Provide every member with a plan and encourage him/her to make a list to ensure that the given task is completed on time.  

 

Delegate

 There is no denying the fact that delegation carries a risk but increased responsibility is essential for the improvement of the morale of your staff. Companies are more likely to thrive if they encourage employees to voice their ideas and opinions. You need to give responsibilities to the employees that have a proven track record with success and trust that they will perform well. If the employees are given a voice to share their opinions, it will benefit your company.  

 

Cut down on distractions  

Social media is the biggest productivity killer but it is not practical to have a no-phone policy in the office. Hence, you need to try to keep the employees focus while allowing them room to breath. You need to encourage the employees to turn off their phones but take breaks during which they can check the phones.  

 

Improve workplace conditions  

When there is a comfortable working temperature and there are right tools and equipment, employee productivity is enhanced. Ensure that the environment is not too hot or too cold. Ensure that the heating and cooling system is working in order for the relevant seasons.  

 

Set realistic goals  

A big problem for managers is having no clear sense of whether the employees are performing well or not. You need to identify if the employees need an incentive to stay on track. You need to help them by offering goals that are practical and achievable. Give them a clear direction and clarify expectations. Do not be unrealistic because they are humans and not machines. You need to look at different ways to increase productivity and have a clear focus on the goals.  

 

Every employer wants to ensure that the employees perform efficiently and this can only be achieved with the support of the entire team. Do not expect overnight results and be realistic in the goals you set.   


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