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New Writing Website Launched

Hey Bizzy Lifers –

As you may have noticed posts to the blog have been a bit sparse – but I have been concentrating on my fiction writing career for the last eighteen months, and just launched my updated site. Please visit for free and low cost stories – and a few funny pictures of Dick Cheney. You can find it here. Hope you enjoy!

The Writing Site

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Posted in Livin' Large

Going Electric

Two months ago my wife and I decided to make the leap to an electric car.  Neither of us drive very much, and we were looking for a compact but spacious city car that would be easy to park.  I’d been very interested in electric cars for some time (so much so that we had ordered the new Tesla SUV to be delivered in the fall of this year which will become our big commuting vehicle) – but while shopping we came across the new BMWi3.  We loved it so much from the minute we saw it that we purchased one that day, and recently logged the 600th mile on the car.

Unlike many electrics that are modified from gas engine vehicles, the i3 was engineered as a full plug-in electric.  We were still nervous about the potential of being stranded with dead batteries, so we ordered ours with a range extender – a small gasoline motor with a 1.5 gallon tank that turns on to produce electricity if you run out of battery. Theoretically, this gives the car a range of around 120 miles, plus you could continue to stop for fuel to keep going. Fortunately, I think our fears of running dead were overblown.  We have never had to use the motor, as the car averages 40 to 60 miles per charge, which is more than we ever go without plugging in.

Image result for bmw electric car i3

The i3 can be a bit of an acquired taste style-wise – but we love it, as do many people we encounter.  It is available in a few wild color combinations, but we chose a more subtle gray, black, with blue trim combo that is unique and elegant.  The interior is simple, but incredible.  It is dominated by a large screen that tells you everything you want to know about the car, and its entertainment system.  BMW wanted to make a totally green car, so most of the materials are recycled.  Since there is no transmission or engine, the vehicle is incredibly spacious for its small footprint.

With a downloadable App on your smartphone, you can check many of the car’s functions, and set a departure time that will pre-heat the batteries for better performance if it is cold outside.  The key fob memorizes the driver’s preferences, so when I get into the car the mirrors, radio station, and other functions are customized to me.  It also has a parallel parking feature that allows the vehicle to literally park itself.

Image result for bmw electric car i3

Driving the i3 was the biggest pleasant surprise.  My wife calls it “the golf cart”, because it is so maneuverable and fast to accelerate.  You can shoot in and out of traffic, and it fits in the tiniest of spots – though it has plenty of room inside.  In fact, we can easily carry several bags of groceries and our yellow lab.

You can purchase a special 220 charger that will charge the batteries in a few hours, but we just use the overnight charger that comes with the car, which has worked great for us. You can also download an app that shows all available charging stations, and we were surprised to see how many there are – literally hundreds in Portland, including many at grocery stores and malls – so you can shop and get a quick charge, usually for free.  In fact, the other day while looking for parking in a busy neighborhood we found  a free spot in on the main street reserved for electrics, with a free fast charging station.

Since purchasing the car we have spent less than two dollars on fuel (topping off the small tank), with no negligible increase in our electricity costs.

This is an ideal city car – not well suited for long commutes – but if you live less than ten miles from work it could be ideal.  I broke my normal rule about avoiding any kind of car financing – and leased the BMW – primarily because I believe the technology will radically improve over the next few years.  Also, I think BMW anticipates this concern, and to move cars they have a very good $399 a month lease for a car with a list price of over $50,000.

All this just points to the inevitability of more electric cars (see Ray Link’s Tesla article below). The Tesla SUV we look forward to receiving this fall will have a range of over 200 miles per charge, and literally maps out a route with charging stations if you want to take a long trip.

To read more about electrics, consult the blog  www.theroadelectric.com.

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Posted in Livin' Large

High Flyers – Part 2

On February 7th I recommended three high-flying tech stocks that had taken a nosedive. So two months later, how’d they do?

 

Tesla

On February 8 Tesla was trading at $148. Today it’s a bit over $250 for a gain of about 70%, likely related to new products. First, the new “Model X” SUV is getting rave reviews and Tesla announced increased production capacity. Second is a major order from Hawaii for the Tesla Power-Pack, a new elegant battery providing electric storage for homes and businesses. Third, and most importantly, they introduced the “Model 3”, a mid-priced car (about $35,000 before any tax credits). It’s so hot customers camped in front of dealerships and in the first week alone Tesla received 325,000 reservations backed by $1,000 deposits, all without a dime spent on advertising. While undoubtedly some of these customers will back out, this is the most successful new car launch since the 1965 Mustang which had 418,000 orders over the course of a year. Tesla’s orders for the Model 3 have a potential value of well over $12 billion.

Tesla is quickly becoming the new Apple with a cult-like following and enthusiasm for its products not seen since the iPhone. Pundits claim Telsa’s brand value now exceeds BMW which should lead to repeat purchases and pricing power.

So why should you consider this stock now? While the stock is up 70% since my blog, it’s still below its 52-week high and now there is significant data to support the current valuation.

At some point over the next 10-20 years I believe electric sales will surpass gasoline cars and no one will benefit more than Telsa. They have the best design engineers and are miles ahead on battery technology and packaging and those are the keys to success. No one is even close to where Tesla is today. They will face challenges to ramp up capacity while still posting losses but they are a lot like Amazon which needed time to reach its potential.

While Tesla may still trade lower over the next year, this is one to watch and consider as a long-term investment.

Twitter

Popular with social media users, Twitter has struggled to gain advertising revenue similar to Facebook and Google, largely due to its limited 140 character “tweet” format. It has traded as high as $53 in 2015, on February 8 was just under $15, and today around $17.40 for a gain of 16%. Pretty good compared to the S&P 500 which is up only 1%.

My analysis is that Twitter will continue to be challenged with high costs, huge losses and slow growth in advertising revenue resulting in volatility in its share value. My opinion on the company is unchanged which is to hold off until they figure out a viable business model.

GoPro

GoPro is famous for inventing rugged compact cameras used by adventure seekers.  The cameras enjoyed immediate success and hit a high of $87 and last year traded as high as $65. On February 8th it was $10.50 and today $13.90 for a gain of about 32%. They recently hired an executive from Apple to improve its designs.

GoPro’s current valuation is compelling and in my opinion still worth a look even with the run-up. They have been profitable and do still own the segment. They have ample cash on hand, no debt and should be able to weather the storm.

I personally own both Tesla and GoPro but not Twitter. With any investment decision I encourage you to discuss this with your investment advisor and CPA to see what’s suitable for you.

 

Ray Link is a CPA and holds an MBA from the Wharton School. He recently retired from FEI Company (NASDAQ: FEIC) where he was the CFO for 10 years. He is on the on the Board of Directors of Cascade Microtech (NASDAQ: CSCD), Electro Scientific Industries (NASDAQ: ESIO) and nLight Photonics.

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Posted in Investing

Fallen Angels

In the recent steep decline of the stock market, many high fliers got hit the worst. Here’s an analysis of three and if now is a good time to invest in them.

 

Tesla

Tesla is attempting to be the first successful US automotive company since Chrysler’s founding in 1925. Tesla’s differentiation is that they are at the forefront of electric car innovation and are selling direct without dealers. They have a very loyal following and are targeting the high-end where all the money is made. However, this all takes a huge upfront investment that has not yet paid out. To date Tesla has raised nearly $5 billion and spent the bulk of that. They continue to bleed cash and post large losses with a stock price declining from $286 last year to under $160 now. Bob Lutz, a former executive at Ford and GM, believes they are doomed as they will not be able to finance the huge investment needed to sell cars without dealers, build-out charging stations across the country, and complete the $5 billion “giga” factory to make their own batteries.
So why should you consider this stock now?
Tesla is a game changer and it takes huge amounts of capital to win. Witness Amazon that invested tens of billions and finally enjoyed a 122% return last year. Jeff Bezos ignored the naysayers and now has the 6th most valuable company in the world. I believe Tesla will be the 800-pound gorilla over the next 20 years. Elon Musk is a patient visionary believing that technological advances, much of it software, will change how we think about cars. While others are coming out with electric cars, I believe this race has already been won since Tesla has the best designers and no one is even close to where Tesla is today. Plus, I believe Americans would prefer to buy American cars, everything being equal (which hasn’t been the case for decades).
While Tesla may still trade lower over the next year, this is one to watch and consider as a long-term investment.

 
Twitter
Popular with social media users, Twitter has struggled to gain advertising revenue similar to Facebook and Google, largely due to its limited 140 character “tweet” format. Unlike these companies, it posts massive losses and burns cash. It went public in 2013, quickly hit $80, traded as high as $53 in 2015, but now trades around $15. Twitter’s CEO is Jack Dorsey who is also the CEO of Square, another technology company losing lots of money. His management skills have been questioned and Twitter recently experienced an exodus of executives.
My analysis is that Twitter will continue to be challenged with high costs and slow growth in advertising revenue. Mr. Dorsey has shown to be incapable of running one yet alone two public companies. Enjoy using the product but stay away from the stock until they figure out a viable business model and hire a CEO interested in running one profitable company.

 
GoPro

GoPro is famous for inventing rugged compact cameras used by adventure seekers. The cameras enjoyed immediate success and the stock hit a high of $87, last year traded as high as $65 but now is under $10 after posting disappointing growth. To bolster demand, the company slashed prices and went into a deep cost cutting mode. Competitors are looming and the “cool factor” may have waned.

GoPro’s current valuation is compelling and in my opinion worth a look. They are profitable and do still own the segment. They have ample cash on hand, no debt and should be able to weather the storm.
With any investment decision I encourage you to discuss this with your investment advisor and CPA to see if this is suitable for you. Of the above, I recently bought GoPro and am looking pretty hard at Tesla with its new low price.

 

Ray Link is a CPA and holds an MBA from the Wharton School. He recently retired from FEI Company (NASDAQ: FEIC) where he was the CFO for 10 years. He is on the on the Board of Directors of Cascade Microtech (NASDAQ: CSCD), Electro Scientific Industries (NASDAQ: ESIO) and nLight Photonics.

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Posted in Investing

A Bakers Dozen for a Deflated Stock Market

Many of you are likely shocked by the sharp decline (about 7%) in equity values since the first of the year. Instead of a mass retreat however savvy investors resist panicking and buy newly discounted stocks and not sell.

Rather than investing in mutual funds, I prefer a diversified portfolio of individual stocks as you can decide when to buy and sell each company and you only pay fees once instead of a fund that charges you annually.

But I don’t buy just any stock, I prefer high-quality, dividend paying stocks. If you hold for the long term, they are generating a nice income stream taking the sting out of inevitable fluctuations in price over time. I focus on companies that are leaders in their fields with a long track record of profits that not only pay dividends but have a history of increasing them over time. Another nice benefit of dividends compared to interest income is that they are taxed at a lower rate (up to 19.6% lower for high-income taxpayers).

Below is a list of 13 stocks I own that meet my criteria of steady profits, leaders in their field, have a track record of increasing dividends, and a price to earnings ratio based on forward projections of around 20 or less. There is an absence of oil stocks despite their huge current dividend yields as I am concerned many will cut their dividends as profits disappear with the current low oil prices.

Ray

 

 

 

 

 

With any investment decision I encourage you to discuss this with your investment advisor and CPA to see if this is suitable for you.

Happy investing and remember – hold for the long-term!

Ray Link is a CPA and holds an MBA from the Wharton School. He recently retired from FEI Company (NASDAQ: FEIC) where he was the CFO for 10 years. He is on the on the Board of Directors of Cascade Microtech (NASDAQ: CSCD), Electro Scientific Industries (NASDAQ: ESIO) and nLight Photonics.

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Posted in Investing