Guest Post

It’s a cruel paradox.  Social networks and crowd-funding sites now empower entrepreneurs.  Smart ideas, innovative concepts and creative inventions are more plentiful than ever.  Yet in a time of unbounded promise, capital to fund them remains elusive for most entrepreneurs.   Which means one thing: many great ideas go unfunded. According to a recent survey by the National Small Business Association, 43 percent of small business respondents said that in the last four years they needed capital, but could not find it. One in three small businesses reported that their loans or lines of credit were reduced.  One in ten had their loans or lines of credit called back by the bank. I’m in the business of helping entrepreneurs succeed. Many times throughout my career I’ve seen outstanding business ideas fail due to a lack of planning and funding. So if there’s one message I can offer, it’s this: entrepreneurs, small business owners, and CEOs must understand the options for accessing capital and plan accordingly. Here are the realities entrepreneurs must understand: No new sources of capital have emerged. How small businesses finance themselves has not changed:  They tap personal assets, friends and family, angel investors, venture capital funds, and banks. 
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For more than 100 years, unless you were an industry insider or had connections to DeBeers, the prospect of investing in diamonds was completely out of reach. However, for the first time in history, diamond prices are no longer manipulated and are now a product of true market forces, providing investors with a long awaited opportunity. Diamonds are not just a “girl’s best friend,” they’re also the next golden opportunity for millions of individual investors seeking safety and performance in this uncertain global economy. Investors can now buy, take physical delivery, track real-time prices, and liquidate their investment-grade diamond positions effortlessly. And even better – prices are expected to spike soon. So what happened over the last 100 years to make such an opportunity possible? The short answer is that natural economic forces will always prevail over any one company’s power and influence. It all started in the second half of the 20th century when DeBeers began to lose its control over the diamond market as a result of major mines being discovered in Australia, Canada and Russia. These discoveries made it difficult for DeBeers to purchase all of the rough diamonds on the market, in turn weakening their ability
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Mexican President Enrique Pena Nieto’s approach to combating Mexican drug cartels has been a much-discussed topic since well before he was elected. Indeed, in June 2011 — more than a year before the July 2012 Mexican presidential election — I wrote an analysis discussing rumors that, if elected, Pena Nieto was going to attempt to reach some sort of accommodation with Mexico’s drug cartels in order to bring down the level of violence. Such rumors were certainly understandable, given the arrangement that had existed for many years between some senior members of Pena Nieto’s Institutional Revolutionary Party and some powerful cartel figures during the Institutional Revolutionary Party’s long reign in Mexico prior to the election of Vicente Fox of the National Action Party in 2000. However, as we argued in 2011 and repeated in March 2013, much has changed in Mexico since 2000, and the new reality in Mexico means that it would be impossible for the Pena Nieto administration to reach any sort of deal with the cartels even if it made an attempt. But the rumors of the Pena Nieto government reaching an accommodation with some cartel figures such as Joaquin “El Chapo” Guzman Loera have persisted, even as the Mexican government
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Summary An amendment to a standing water treaty between the United States and Mexico has received publicity over the past six months as an example of progress in water sharing agreements. But the amendment, called Minute 319, is simply a glimpse into ongoing mismanagement of the Colorado River on the U.S. side of the border. Over-allocation of the river’s waters 90 years ago combined with increasing populations and economic growth in the river basin have created circumstances in which conservation efforts — no matter how organized — could be too little to overcome the projected water deficit that the Colorado River Basin will face in the next 20 years. Colorado River Analysis In 1922, the seven U.S. states in the Colorado River Basin established a compact to distribute the resources of the river. A border between the Upper and Lower basins was defined at Lees Ferry, Ariz. The Upper Basin (Wyoming, Colorado, Utah and New Mexico) was allocated 9.25 billion cubic meters a year, and the Lower Basin (Arizona, California and Nevada) was allotted 10.45 billion cubic meters. Mexico was allowed an unspecified amount, which in 1944 was defined as 1.85 billion cubic meters a year. The Upper and Lower basins — managed as
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Tesla Motors Inc (NYSE:TSLA) announced its first quarter earnings which smashed the market expectations. Tesla’s shares soared almost 20% following the earnings beat. Last month, Tesla’s CEO, Elon Musk, announced that the company would be profitable for the first time in its history. However, it was the magnitude of the earnings that caught the market by surprise. Shares of Tesla had already gained 40% in the month preceding the earnings as investors had geared up for a strong earnings.  Tesla Motors Inc (NYSE:TSLA)’s revenues stood at $561.8 million, up from a meager $30.2 million in the previous year quarter. The net income stood at $11.2 million, or about 10 cents a share. Adjusted for certain items, the net income was about 12 cents a share. The market was generally expecting something in the range of 4 to 5 cents a share. The company sold 4,900 Model S cars (although 4,750 cars were delivered) in the quarter, which was more than the 4500 it had forecast at the start of the year. For the full year, the company upped its forecast of selling 21,000 Model S cars in 2013, from the previous guidance of 20,000. Tesla Motors Inc (NYSE:TSLA) Margin Improvement The company’s gross margins stood at
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Studies have shown that just 24 percent of mutual fund managers that are active have outperformed the market index, which is a shockingly low number to see over the last 10 years. This isn’t the only data that has gone through as surprising over the recent study—let’s look at some of the other numbers that matter most to you.  Active Versus Passive Management Managers that are currently active are earning 0.12% more in returns before fees compared to index investors. However, these managers have been charging an average of a 1.07% fee, while the index fee has been sitting at 0.15%. This means that active investors are making 0.80% less than index investors. That’s a very large disparity that has raised some eyebrows, and even more questions.     U.S. Mutual Fund Realized Returns & Risk, 2002-2012 Return Risk Risk-Adjusted Return Active Index Active Index Active Index U.S. EQUITY: SIZE & STYLE Large Value 5.97% 6.64% 16.52% 18.04% 0.36 0.37 Large Blend 6.89% 7.16% 17.28% 17.22% 0.40 0.42 Large Growth 7.87% 7.38% 17.93% 16.97% 0.44 0.43 Mid-Cap Value 8.08% 7.40% 19.43% 20.38% 0.42 0.36 Mid-Cap Blend 7.64% 9.89% 21.93% 20.52% 0.35 0.48 Mid-Cap Growth 8.55% 7.34% 20.72% 19.38% 0.41 0.38
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One feels sympathy for U.S. President Barack Obama. Whatever he does in Syria, he is doomed. Had he intervened a year ago, as many pundits demanded, he might presently be in the midst of a quagmire with even more pundits angry athim, and with his approval ratings far lower than they are. If he intervenes now, the results might be even worse. Journalists often demand action for action’s sake, seemingly unaware that many international problems have no solution, given the limits of U.S. power. The United States can topple regimes; it cannot even modestly remake societies unless, perhaps, it commits itself to the level of time and expense it did in post-war Germany and Japan. Indeed, Obama has onerous calculations: If I intervene, which group do I arm? Am I assured the weapons won’t fall into the wrong hands? Am I assured the group or groups I choose to help really are acceptable to the West, and even if they are, will they matter in Damascus in the long run? And, by the way, what if toppling Syrian leader Bashar al Assad through the establishment of a no-fly zone leads to even more chaos, and therefore results in an even
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Several years ago, I wrote a series of articles on a journey in Europe. It was intended both to be personal and to go beyond recent events or the abstract considerations of geopolitics. This week I begin another journey that will take me from Portugal to Singapore, and I thought that I would try my hand again at reflecting on the significance of my travels. As I prepare for my journey, I am drawn to a central question regarding the U.S.-European relationship, or what remains of it. Having been in Europe at a time when that relationship meant everything to both sides, and to the world, this trip forces me to think about NATO. I have been asked to make several speeches about U.S.-European relations during my upcoming trip. It is hard to know where to start. The past was built around NATO, so thinking about NATO’s past might help me put things in perspective.   On a personal level, my relationship with Europe always passes through the prism of NATO. Born in Hungary, I recall my parents sitting in the kitchen in 1956, when the Soviets came in to crush the revolution. On the same night as my sister’s wedding in New York, we listened
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Apple Inc. (NASDAQ:AAPL) raised $17 billion in debt from a wildly popular bond sale that saw demand outstripping supply by a ratio of 3:1, merely days after announcing a $100 billion capital return program for investors. The demand was so high that despite being rated a rung below companies such as Microsoft (NASDAQ:MSFT), which has the highest triple-A credit rating, the yield on   Apple Inc. (NASDAQ:AAPL)’s debt fell to among the lowest in corporate America.   Apple Inc. (NASDAQ:AAPL)’s bond offerings included a mix of six fixed-rate and floating-rate securities with maturities ranging from three to thirty years. The biggest of the lot, a $5.5 billion 10-year offering, was sold at an annual yield of about 2.4%, at about exactly the same risk premium as the higher-rated Microsoft’s which was sold a few days back. Overall, the effective interest rates applicable on   Apple Inc. (NASDAQ:AAPL)’s debt in the first few years will be about 1.85%, a little over 150 basis points higher than the government-backed 10-year Treasury bills. Apple seems to have done really well in tapping the debt markets at a time when credit has become really cheap with Treasury securities hitting their lowest yields this year. The cheap debt has helped lower the cost of capital for
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Howard Marks at the Value Investor Conference, Omaha.  Nebraska. Notes by Ryan DeVitt First up…. Jeff Matthews- price is what you pay, value is what you get Ram Partners LP Secrets in Plain Sight, Business and Investing Secrets of Warren Buffett The Warren Buffett CEO – Miles – unique insights No. 1 Secret – ignored everyday by most investors Learned in Omaha – 45B BNSF acquisition – Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) stock did not react at all – Quality shareholders is key Learned personally during crisis – didn’t take institutional money, wanted individual investors Hedge funds went under because shareholders were scared and withdrew – Matthews was fortunate because his investors were friends – “Hey are you okay- how are the kids?” Think about who your investor is- what and why you are doing what you’re doing – free to fail or succeed on your own merit “How I spent My Summer Vacation” Soft drink- Waco TX 1885 – dr pepper Public co. 1979 – started on wall st. – Shah of Iran was disposed – oil prices tripled – hostage – interest rate – economic crisis Buying General Foods while everyone was buying oil stocks- Brands=shelf space – cheap price- bought
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The civil war in Syria, one of the few lasting legacies of the Arab Spring, has been under way for more than two years. There has been substantial outside intervention in the war. The Iranians in particular, and the Russians to a lesser extent, have supported the Alawites under Bashar al Assad. The Saudis and some of the Gulf States have supported the Sunni insurgents in various ways. The Americans, Europeans and Israelis, however, have for the most part avoided involvement. Last week the possibility of intervention increased. The Americans and Europeans have had no appetite for intervention after their experiences in Afghanistan, Iraq and Libya. At the same time, they have not wanted to be in a position where intervention was simply ruled out. Therefore, they identified a redline that, if crossed, would force them to reconsider intervention: the use of chemical weapons. There were two reasons for this particular boundary. The first was that the United States and European states have a systemic aversion to the possession and usage of weapons of mass destruction in other countries. They see this ultimately as a threat to them, particularly if such weapons are in the hands of non-state users. But there was a more particular reason in
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