Cash Flow Advice From Hong Kong’s Richest Man – Li Ka-shing

Advice from an 80 year old billionaire with businesses that span across many different industries, from old line manufacturing to high tech.  One of the pearls of wisdom he cites is an important factor in sizing up investments and operating businesses, cash flow is king.

“I’m always very careful with my cash flow.  That will ensure I have extra capital to get into another industry whenever I want to.”

Forget gross merchandise volume, return on equity or debt-to-equity ratios. The most important metric in business is cash flow, according to Li. The tycoon says he’s been keeping an eye out on cash flow since he became an entrepreneur more than six decades ago. One needs to generate good cash flow before expanding into other industries and to store up some insurance for a rainy day, he said.

Source: Five Pieces of Advice From Hong Kong’s Richest Man – Bloomberg

Robo-Advisor Platform Halts Trading Following Brexit Vote

Aren’t the robo-advisors selling their services as passive investors?   In this case, they’ve decided that being a passive investor means no access to the markets.  Sounds like human biases and active management is an issue even in the robo platforms.

 

Betterment, the leading independent robo-adviser, pulled a Wizard of Oz moment on Friday when it decided to delay trading for two and a half hours to protect investors from market volatility following the shocking Brexit vote.

Source: Betterment’s move to halt trading following Brexit vote sparks controversy

Tesla Buying Solar City is “Ludicrous”

We all know Tesla (TSLA) CEO Elon Musk is a genius, but the strategy of combining two money losing, cash burning businesses together to get scale and synergy is ludicrous.

Last year Tesla burned through $2.1 billion in losses and capital expenditures.  Adding Solar City’s (SCTY) cash burn rate of $2.4 billion to the company, which Musk is proposing to do, just makes Tesla a bigger money losing business with profitability pushed even further into the future.  Warren Buffet has said that it is better to buy a good business at a fair price than to buy a bad business at a good price, with the purchase of Solar City, Tesla is getting neither a good business or a fair price.

Tesla and Elon Musk are truly operating in “Ludicrous” mode.

Musk Fails to Assure Investors Rattled About SolarCity Takeover

Successful Investing Takes Investigating Like Sherlock Holmes

Investing isn’t the study of finance. Or that’s only part of it. Investing is really the study of human behavior, which incorporates everything from psychology, to sociology, to statistics, to history and math. There is so much to learn about investing from fields and people who, at first glance, have nothing to do with investing.

Source: Sherlock Holmes On How to Be a Better Investor — The Motley Fool

Hedge Funds Buckling Under Fee Pressure, LP Apathy

A greater portion of hedge funds (78%) say they’re open to cutting fees than investors report even asking for better terms (63%), according to a major BNY Mellon survey.

Source: Chief Investment Officer – Hedge Funds Buckling Under Fee Pressure, LP Apathy

German Bunds Reach New Milestone as Yield Declines Below Zero – Bloomberg

The yield on Germany’s 10-year government bund, Europe’s benchmark security, fell below zero for the first time on record, as investors’ seemingly insatiable demand for haven assets created another bond-market milestone.The nation joined Japan and Switzerland in having 10-year bond yields of less than zero. The plunge in yields, which has been driven by European Central Bank’s policy of negative interest rates and asset purchases, has accelerated amid a weakening global economic outlook and as polls indicate the “Leave” campaign in Britain’s European Union referendum is gaining momentum.

Source: German Bunds Reach New Milestone as Yield Declines Below Zero – Bloomberg