Time! I had that 1960's slice of funk-adelia running through my head this morning, and am embarrassed to admit that I had to Google the song I used in the lede to my Real Money column. Time Has Come Today by the Chambers Brothers. Check it out, it is tasty stuff... unless you are an investor.
As the market meanders today and basically ignores Friday's non-farm payrolls report, the time value of money is also running through my head, as it always does.
This is such a basic concept and one which the bobbleheads on financial networks never cover. But investors, as opposed to speculators, innately know this concept. It's just as relevant to real estate as it is to stocks, but there is a twist in the way my firm, Excelsior Capital Partners does it. We get paid over time. Every day that one of my clients is encrusted in a HOAX portfolio or whatever type of bespoke setup I have created to match her needs, we are getting paid.
Common stock dividends, preferred stock dividends, bond interest payments... I don't care about the flavor, but if we are going to sink our hard-earned capital into a name, we are damn well going to get paid for the privilege. HOAX, my firm's flagship fund, for example is currently yielding 6.9%, a figure that is bound to increase as I added Equinor (EQNR) to the fund last week with proceeds from its first six months' worth of dividends form the existing 10 names. Behold the magic of compounding.
The opposite of that, of course, is Big Tech, which has been a Big Wreck in 2022. Why? Because, although Apple (AAPL) and Microsoft (MSFT) pay dividends, companies like Amazon (AMZN) , Alphabet (GOOGL) , Netflix (NFLX) and Tesla (TSLA) never have, and it seems unlikely that they ever will.
Once you move away from the Big Boys, the degradation from holding non-yielding stocks becomes more obvious. How's Peloton (PTON) treating you these days? Not well, and it is still a short.
But the ultimate waste of time is in fact, Twitter (TWTR) . Twitter finished trading on its IPO date of November 8th, 2013. At $41.65. TWTR is now quoted at $37.30. So, 8.5 years, nary a dividend payment, a negative return for long-term investors, and, really, what has this company accomplished? Bupkes. It is a cesspool of lies, selective censorship and general idiocy, and if you needed the Bezos-owned Washington Post to tell you - as the newspaper did last night - that Musk's deal to purchase TWTR is effectively "on hold," well, you just have not been reading my columns.
Elon is a smart dude, a polymath. In addition to repopulating the planet, he obviously does many other things with his time. After Tesla's brutal shortfall in 2Q delivery figures, he obviously is maintaining his now infamous "super bad feeling" about the U.S. economy. Europe is even worse, although China, the source of most all of Tesla's profits, is still hanging in.
Running a car company takes time and constant capital injections, but a third-rate social network only serves to waste people's time. Elon will walk away from TWTR, as he understands the value of his time. Do you? Have you drilled down deep into your portfolio and separated the hangers-on and time-waters from the cash generators, like Exxon (XOM) and Chevron (CVX) , which pull an incredibly useful commodity out of the ground and then process it into many, many uses other than gasoline, although that is obviously number one.
Time. Every day that we own XOM, I know that we are getting closer to another $0.88 quarterly payout, which triple-digit crude oil prices have made ridiculously safe. Share repurchases are nice, too.
You can see the results at my firm's website www.excelsiorcapitalpartners.com. For the past six months, I have been engaged in a constant process of calling time on time- and capital- wasting investments in my new clients' portfolios. If that makes me the Garbage Man of individual asset management, then so be it.
The time has come to pay attention to time. Elon is realizing that with the flea-ridden dog that is TWTR, and make sure you are scouring your portfolio for similar canines, and replacing them with sweet-smellers, like Antero Midstream (AM) , which still sports a safe 9.6% dividend yield.
If you like to do other things with your time... it's never too late.