Success: Plan B.

7-7   Market Highlights, (April 30 – May 6, 2017)

House just passed the healthcare bill in attempt to repeal the Obamacare. It wasn’t the first time. First one failed miserably shaking the foundation of the Republican party and newly elected President who ran on the promise of repealing Obamacare. Peril still remains as it goes to much more difficult to manipulate Senate. What plan B will emerge?  Indeed, Linda McMahon WWE billionair, and now Head of Small Business Administration for Trump, touts her success in planning and preparing for Plan B before you achieve success. Her bankruptcy has also taught the importance of Plan B. Plan A is what we want, but often "A" might not be feasible at the time you want it. So, have your plan B ready at all the time but push for "A".

Chinese jet C919 made maiden flight looking ahead to take on Airbus and Boeing. China expects to be the largest aviation market by 2024 overtaking USA. Perhaps Chinese jet industry and airlines are strategically postured and, if they are quick enough, to benefit the law oil prices.

Apple has more than $775 billion in market capitalization, and cash pile swelled to $256.8 billion, much more than many countries around the world. Apple also announced the largest dividend pay out plan in the world. There were some signs of missteps but should you consider taking position before iPhone 8 launch? Or should you be taking strategic position in Bitcoin, the digital gold, as it hits record highs. You analyze them and you decide. In any case we can all learn the money making lessons from Jacob Fugger, the riches man in history to invest in challenging times and knowing the numbers and facts of the investments... Why not.

Market closed on 5/5/2017 : DOW: 21,006.46; S&P: 2,399.29; NASDAQ: 6,100.76;  Gold: $1,229.90; Oil: $46.34

Here are the highlights of the 18th week of 2017:     

1.  Plan B: Planning for Success.          "Something I think I've learned is that… while you always have to protect the downside, Plan B has to be planning for success, be ready to move and take that next step," says McMahon, WWE billionaire, now head of the Small Business Administration. McMahon: This is the most important thing people are never prepared for.  Plan B. Her experience during those hard times she learned an important business lesson: Prepare for opportunity and success. It's hard to believe, but there was a time when $12 was a big deal to co-founder of World Wrestling Entertainment, who has an estimated net worth of over $1 billion with husband Vincent. Long before WWE was called that, they had to carefully consider whether to rent a typewriter for $12 a month or to invest and buy one outright. "With any small business, you are really running on your cash, it's about cash flow and you have to manage that cash flow…" And, they would invest money made from promoting wrestling in one regional television market to expand into a new market.  "Early on at wrestling events, there wasn't any merchandise sold."   "But at rock concerts they sold t-shirts, so we decided to have t-shirts."  They sold out completely at the first arena, and next thing the mail-order business was born for t-shirts and hats. "It's something we did not recognize," she said. WWE couldn't keep up with the sales and they couldn't get the business together fast enough. Plan B was the thrust for WWE's success. So what's your plan B?

2.    House Passes GOP Health Bill.            A step toward Obamacare repeal?  The Republican replacement plan for Obamacare just narrowly cleared the House, but the bill will almost certainly face more skepticism in the Senate.  The House GOP passed its bill by a 217-to-213 margin on Thursday, sending it to the Senate after a swift process. All voting Democrats and a group of mostly moderate Republican holdouts voted no. Beaten but unbowed, Democrats insisted Republicans will pay at election time for repealing major provisions of the law. But GOP leaders seemed to win over a raft of wavering lawmakers after adding $8 billion over five years for state high-risk pools, aimed at helping seriously ill people pay expensive premiums. That was on top of $130 billion already in the bill for states to help customers, though critics said those amounts were insufficient.

3.   Chinese Jet C919 Maiden Flight.           Boeing and Airbus be warned?  The C919 has more than 150 seats and a range of 4,075 kilometers (2,532 miles), and is meant to compete with the Airbus A320 and Boeing 737, among the most popular commercial planes flying in the skies. The maiden test flight of the C919 airliner made a successful takeoff, and landing, after a 90-minute flight from Shanghai Pudong International Airport on Friday, according to Xinhua. Commercial Aircraft Corp. of China, the state-owned company behind the plane, said 21 customers had placed orders for more than 500 planes by the end of 2016, and it expected sales to exceed 2,000. China is making a big push to become a global aviation player, looking to compete with the likes of Airbus and Boeing. Still, it will still be a while before travelers can board the plane, the C919 still needs to undergo other safety and certification checks. China is expected to beat the US as the world's largest aviation market by 2024. Boeing has estimated that China will need to buy up $1 trillion worth of planes, about 6,810 sets of wings, over the next two decades in order to meet demand.

4.    Bitcoin Surges Above $1,500 to Record.       Investors bet on 'digital gold'. Bitcoin rose more than 4% to hit a record price of $1,553.18, according to CoinDesk. Gold futures traded more than 1% lower to near $1,232 an ounce and haven't been above $1,500 for about four years. Speculation of a bitcoin ETF in the U.S. and increased interest from Japanese investors also supported bitcoin prices. Bitcoin surged further into all-time high territory Thursday as investors bet the digital currency will gain even greater acceptance globally as a store of value and an investment vehicle.  New interest in the currency out of Japan was the cause of the latest short-term upward move, traders said. "Bitcoin can be thought of as digital gold," said Brian Kelly, founder of BKCM LLC and manager of a digital assets hedge fund.  "The upside for bitcoin is so much higher than upside for gold, in my view."  Since the April 24 filing, the digital, currency has only once traded lower on the day, according to CoinDesk.

5.   US Crude Plunges 4.8% to $45.52.          Oil posting worst close in more than five months. Oil prices collapsed on Thursday to their lowest since late November as investor worries about the world's stubbornly persistent glut of crude erased most of the gains that followed last year's OPEC's output cut. The slide worsened after OPEC delegates downplayed the chance that their group and other producing countries would deepen their output cuts when they meet on May 25. They did say current output cuts were likely to be extended.  Low oil prices... watch trucking industries and airlines' bottom and top lines.

6.   Apple Pays Biggest Dividend in the World.    Cook says, “Use your position to benefit others in need and be humble" as Apple announced after the bell a 10.5% increase in its dividend to $13.22 billion annually, surpassing Exxon Mobil's $12.77 billion payout.  This is the fifth annual dividend hike since Apple initiated its first payout in 2012. Apple announced after the bell Tuesday a 10.5% increase in its dividend to $13.22 billion annually, surpassing Exxon Mobil's $12.77 billion payout and making it the biggest-paying dividend stock in the world. Apple's enormous cash pile swelled to $256.8 billion in the fiscal second quarter, and Apple hits record $775 billion in market cap before disappointing earnings. Apple briefly hit a market capitalization of more than $776.59 billion on Tuesday. However, it reported $52.9 billion in revenue versus the $53.02 billion estimate. The stock dropped about 1.5% after hours. Regardless, it's the biggest annual dividends in the S&P 500. This is the fifth annual dividend hike since Apple initiated its first payout in 2012. This increase is bigger than last year's 9.6% hike, but short of the 15% increase back in 2013, according to S&P Dow Jones. 

7.   Money-Making Lessons from the Richest Man Who Ever Lived.     Jacob Fugger was a German banker who financed kings, explorers, bishops and popes, and along the way made the biggest fortune ever amassed by a business person. The grandson of a peasant, he persuaded Leo X to legalize for-profit lending. Theses and kick off the Reformation. He played kingmaker in the 1519 election for Holy Roman Emperor. Fugger and his money gave the vote to Charles V of Spain and put Charles atop an empire as big as Napoleon’s. Fugger was worth about $400 billion in current dollars at the time of his death in 1525, or 2% of Europe’s GDP at the time. Here are some of his secrets: 1) Invest when others fear.    Fugger made two massive bets that secured his fortune. The first was to bankroll Archduke Sigmund of Tyrol when it looked like Venice was going to take over the duchy… Fugger also invested in Hungarian copper mines when others feared a Turkish invasion. The Turks eventually arrived but only well after Fugger’s death. 2) Be indispensable.  Too big to fail isn’t a modern invention. The ability to conjure up huge sums in an instant. Borrowers liked neither Fugger nor his terms. But they couldn’t live without him. 3) Know the facts.  Fugger understood the value of good information. He created the world’s first news service and used it find out about market-moving events before others. 4) Know the numbers.  The Italians invented double-entry bookkeeping, and he was among the first north of the Alps to use it, the consolidated balance sheet for his many businesses. He was also the first to send auditors into the field to check on branch activities. 5) Get a good education. Fugger gained knowledge, experience and connections that served him the rest of his life. 6) Keep cool.  During liquidity crisis, he spent lavishly to make it seem he was never more liquid. This gave him time to quietly negotiate the deal that saved him. 7) Give something back.  Fugger is best known as the creator of the Fuggerei, the world’s first affordable housing project. He thought anyone who worked deserved to have a roof over their head. Rent came to one quarter the market rate.  

Again, these are my researched and analytical thoughts on the highlights of the week. Perhaps  you should take a closer look at them, do additional research and analysis, if these are interest to you. This “7–7 Market Highlights” is presented for your general knowledge, resource for management, and perhaps as a tool for career development, and building wealth. As always you decide with your own final analysis and position. 

Mahalo. I welcome your thoughtful comments, “like” notes, and share.

~ S. Vincent Shin

  www.dhirubhai.net/in/vshin

Image credits to:  vShin, Bloomberg News, Getty image, AP Photo, Reuters, CNBC, and special thanks to Image & Visual Consultant @U.Y.