Tag Archives: stocks

I Did No Better Than the Market

The years 2014 and 2015 were quite a time in the stock market. I cranked some numbers recently to review my market performance over the past two years and came to a certain realization about it, upon which I based the title of this post.

Prior to 2014 my portfolio mainly consisted of 401k mutual funds and I didn’t pay much attention. It would have been a good idea to do so as the market has had a great run beginning circa 2009, and I was a little more than fashionably late to the market as an active investor.

Appreciation vs. Total Return

To be clear, there are multiple ways that market numbers are often bandied about. Sometimes it’s the value of the stocks (or more accurately the price of the stocks). Other times it’s the value of stocks plus dividends received, and which are then reinvested. This is known as total return.

Those figures are theoretically possible to emulate if one is running a large portfolio such that transaction costs are so small a proportion of each trade as to be negligible. Certainly the latter case of total return sets a higher bar. It also reflects a more complete picture. Continue reading “I Did No Better Than the Market” »

Betting On A Red Horse

Ferrari 458 Speciale

Courtesy Ferrari N.A.

I’m not one to bet on horses. I never play the lotto (even with the record 10 figure jackpot currently in the headlines), and I have never even made it to a blackjack table in Vegas despite a few attempts. I didn’t even pay much attention to Williams Grand Prix, another stalwart of the Formula One (F1) circuit, when the company went public. But this time, it’s a little different. Ferrari is now a public company following a spin off from Fiat Chrysler (FCAU), and I have some shares of stock in the Prancing Horse.

The Legend

You might say I’m long on the legend of the Prancing Horse, which began with Enzo Ferrari (1898-1988) as a racing driver for Alfa Romeo in the early days of the automobile. Upon the birth of his son Alfredino (“Dino”), he retired from driving to concentrate on running Alfa’s F1 team, and then eventually setting up shop on his own.

In that bygone era of racing cars painted in national racing colors rather than adorned with sponsorship livery, road going Ferraris were sold to fund operations of the racing team. Ferrari has always been a company that sold cars to go racing, which is quite the opposite of most every manufacturer that has been involved with the sport before or since. It is also the one with the most wins and championships in F1, and the only one that has been part of the sport all through the post-WWII era, starting with the 1950 season.

Unsurprisingly in such a competitive business, the company’s fortunes ebbed and flowed over the years. Dino Ferrari, whom Enzo had likely been grooming to eventually takeover, tragically died of muscular dystrophy in 1956 at the age of 24. Then in the 1960s Ferrari almost sold the business to Ford but backed out. “The Deuce” (aka Henry Ford II) was incensed and commissioned the creation of the Ford GT40, which eventually ended Ferrari’s dominance of the famed 24 Hours of Le Mans endurance race, by winning four times straight beginning in 1966.

Fiat, under the leadership of Gianni Agnelli, bought a stake in the company in 1969 and later became the controlling shareholder. The company went on to some of its greatest successes after Enzo’s death in 1988, launching a slew of critically acclaimed and commercially successful models beginning in the 1990s and returning to its winning ways on the F1 circuit with a combined 14 driver and constructor titles between 1999 and 2008.

Green Pastures

Ferrari is a solid, if expensive investment. It is a trophy property after all. In the short term the share price is subject to fall due to the initial hype surrounding its IPO and the high Price/Earnings (P/E) ratio. However, over the long term I can’t think of many more solid investments in the “automotive” sector. Here’s why.
Continue reading “Betting On A Red Horse” »