Month: August 2013

Where’s the Stock Market Headed…..Update


Well, if any of you read my last take on the market, you might have recognized that the S&P already crossed my year-end target of 1,700, most recently closing at ~1,707. Sooooo, what now? Well, I still stick to my forecast that it will be a bumpy ride through the end of the year, but am raising my price target to 1,775 by end of year 2013, with the S&P still at 2,000 by the end of 2014.

The skeptics are coming out in droves as of late, with stable earnings beats, but slightly lower revenue beats. This just means that companies’ sales aren’t growing as quickly as analysts think, but are keeping costs under control.

So what are the negatives I see in the market:

– Small caps are leading (typically the sign the end of a rally is near)

– +20% gain in the market over the first seven months (also, signalling one last strong push usually seen at end of rallies)

– Fund managers are very heavily weighted in equities (bearish contrarian indicator)

– SPX EPS growth of just 1.7% for 2013, and -3.4% ex-financials. With overall fundamentals and valuation being rather negative

This would typically be a “run for the hills situation”, but this point in time in our economy isn’t like many others we’ve ever been through. And being in rather “unfamiliar” territory, you can usually throw out some of the correlations/causations we’ve seen in the market in the past.

The only story that is positive for the SPX, {besides GDP growing at 2% (sluggish, but growth is growth!!)}, and is a complete wild-card, is Europe. Albeit things are still bleak, but are showing signs of life.

So the negative  pundits are out there (some saying S&P 1,385 by the end of the year!!), but I’d expect some pullback and volatility, with the S&P rallying the last few months of the year to 1,775.

Let me know what you think!

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The Future of Personal Transportation….First the Car, Now What?


Elon Musk is a visionary that is making an impact on the way we live. Even after starting companies like Tesla (the electric car) and SpaceX (space exploration), Musk is just getting started. His next vision is rapid transportation via vacuum-like tubes/infrastructure. If you watch the quick video below, you’ll see the simple, but effective theory behind this vision…

Visions like this make you wonder, if this vacuum transportation happens: what happens to the airline industry? will this new mass transit have to be heavily subsidized, much like the airline industry? will this be available on a smaller scale, say for running around town?

That last question got me thinking, what will ever replace the personal transportation industry, aka cars and the roads that enable them? Maybe I won’t see it in my lifetime, but how soon will someone invent a vehicle that doesn’t utilize these expensive, old, and high-maintenance road infrastructures? I know my parents thought life would be like The Jetsons now, or at least own a flying car.

Innovation in the transportation industry seems to be bound by the infrastructure….what if it wasn’t? What if we had a more efficient way for all of us to get to work without the government and taxpayers having to spend endless dollars to maintain and build these roads? Is the future of personal transportation this, this, or this? Which company will lead the revolution, or will it be a startup with massive VC-backing? I feel Tesla’s road-map to success (four rounds of VC funding totalling ~$200mn), followed by low-interest loans issued by the government (in this case the Dept. of Energy), will be a viable funding model. Once commercialization is proved, then the government will be willing to step in if the technology will help push a particular political agenda.

These are all just random thoughts. Elon Musk is definitely a thought leader in the transportation space. I’m interested to see what is proposed next, and unfortunately I don’t have the answer……yet. Do you? Post a comment below if you have an idea.