About Google’s Stock Split

There is a lot of buzz today about Google announcing a stock split. I just wanted to point out one small detail regarding this split. There isn’t one. Well, not really.

 Yes the price of your current shares will be reduced by half and you will receive an additional share for each, but not the same type of share. The additional share has one slight difference. It carries no voting rights. The new shares will likely trade at a discount due to this inferiority. But there’s good news! This discount will probably be very small. That’s good right? Well, not really when you consider why.

 There is a 3^rd share class that is not listed. This share class carries 10 votes compared to the listed stock’s 1 vote and is held by the founders and other insiders. So these new shares that carry no voting power really aren’t that much worse since neither listed share class carries much clout when it comes to voting.

 It all boils down to control. What good is owning a piece of a company if you have absolutely no say in how it is run? This means if you don’t like it all you can do is sell your shares and be careful not to let the door hit your butt on the way out. I will say however that the founders have been open about this structure being intended all along. In the co-founders’ own words:

“The main effect of this structure is likely to leave our team, especially Sergey and me, with increasingly significant control over the company’s decisions and fate, as Google shares change hands…

New investors will fully share in Google’s long term economic future but will have little ability to influence its strategic decisions through their voting rights…

Our colleagues will be able to trust that they themselves and their labors of hard work, love and creativity will be well cared for by a company focused on stability and the long term…”

Sam DiNorma

 (This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Cycles

Recently, my colleague Brennan published a post relating our current economic climate to that of the 1970’s.  This concept of a cyclical economy is something that has been studied in great detail for many years.  As Brennan posed, history never repeats itself exactly, but there are often many measurable similarities. I will refrain from discussing the statistics, historical and mathematical studies on cycles (believe me, there are thousands).

What I believe to be more important are the emotional effects on investors.  No matter how many economic crises we have, or periods of time where it is near almost impossible to lose money in the markets, we seldom consider anything but the present.  This is why it’s so important to have an evenhanded, unbiased plan for reaching your financial goals. When you’re down on your luck it seems as if things will never get better and when you’re flush you convince yourself that this will go on forever.  The same is true with investing, where mother market will always find a way to surprise you.

Sam DiNorma

 (This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

The Super Bowl Indicator

Did you know that the direction of the stock market in any given year is determined by the outcome of the Super Bowl? Well, not really, but there is a fun statistic that has been dubbed The Super Bowl Indicator (SBI).

According to the Super Bowl Indicator, if the winning team is from the old American Football League (now the American Football Conference, AFC) the market will have a down year. Conversely, if the winning team is from the old NFL (now the National Football Conference, NFC) the market will rally this year.

The SBI boasts a high accuracy rate, coming in at about 80%.  For the 30 years between 1967 and 1997 the indicator correctly forecasted the subsequent year’s direction with about 90% accuracy – the last 14 years must have been harder to forecast.

Of course this correlation is nothing more than a fun anomaly (like the predictive octopus or politically-sensitive Spider Monkeys or everyone’s favorite meteorological rodent), but I always enjoy watching every year to see if the SBI can pull it off once again. In any case, I hope everyone has a fun weekend and stays safe.

Sam DiNorma

 (This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Short Squeeze

There has been a lot of buzz about the recent news of Kodak preparing for bankruptcy. A few of my friends and colleagues have asked me if I thought it might pop back up as the result of an overreaction to its recent fall. As far as Kodak is concerned, I have no idea and I’m not willing to bet on it. This does however bring up an interesting concept that was one of my favorite “plays” when I actively day-traded. It’s called the Short Squeeze. When a stock is heavily shorted and a large portion of its outstanding shares are being borrowed by short-sellers, often there is no one left to sell. Typically you will see price consolidate or “base” around a certain level. As no one is left to sell, price will rise to a point where many have set protective stop orders. These orders will trigger en masse as short-sellers rush to cover their positions. The resulting price action can often be very explosive to the upside. Below I show a stock price chart of Netflix, which was up nearly 13% yesterday as short-sellers scrambled to cover their positions. Netflix has been in a downward spiral since it topped out at $305 in July of last year, and is now trading at around $80, ouch. The overall health of a company might not matter in the short-term however, as speculators are forced to take action and cover losses/lock in gains.

 

Sam DiNorma

 (This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Benchmarking

In this industry, benchmarking is the standard measurement for performance. A portfolio manager’s success is gauged on how his or her fund faired compared to an appropriate index. A stock fund might be measured against the S&P 500 for instance. This is a mechanism that demonstrates how much value a manager adds for the fund’s clients. In my line of work however, it’s not that simple. I don’t manage a pool of money with absolute returns as my only concern. At Brighton Securities, we pride ourselves on the excellence in service that we provide our clients. We do so by tailoring an investment plan to the individual needs of our clients. Instead of measuring our success against a market index, we track our investment plan’s ability to achieve the unique personal goals of our clients. We can help you save for your child’s college expenses, buy that boat you’ve always wanted or meet legacy planning goals. Using our Envision financial planning process we can compile these goals and benchmark our progress towards reaching them. That’s real value.

Have a happy New Year.

Sam DiNorma

 

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Some Perspective

On a daily basis, we are bombarded with headlines from the mainstream media. Whether its problems in the Euro-Zone, the collapse of MF Global, persistent unemployment, “stagflation” or the nation’s enormous amount of debt, there is plenty of negative sentiment out there.

 What does the market say about all of this? Price pays after all, not opinion. Below is a chart of the SPY’s. It is the most popular ETF (exchange-traded fund) that tracks the S&P 500. As you can see, the market suffered a sharp sell-off in July-August of this year. Since then, however, we have been making higher lows and lower highs. Volatility has been contracting slowly over the last few months, and you can see price squeezing tighter within the trend-lines I have added to the chart.

 What does this mean? It means that soon the market must make up its mind and pick a direction. Do we head back towards 52-week highs or off the edge of a cliff? I lean towards a market rally into the New Year, but I’m not betting the farm on it. As always, patience will be a virtue heading into 2012.

 

Sam DiNorma

 

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

 

 

 

 

Celebrating Our Acheivements

Last Saturday our firm came together for our annual holiday party. This year, we enjoyed dinner and jazz at The Inn on Broadway and, as always, celebrated career milestones and presented awards and promotions. Below is a summary of all the good news we have to share!

 First of all, congratulations to our newest colleagues:

Chris Cromwell

Sam DiNorma

Sal Fasciano

Laura Geyer

 

And to those celebrating 5 years with Brighton Securities:

Cathy Carnegie

Mike Francis

Rob Lohwater

 

 And finally, Tim Fenity celebrated 20 years with Brighton Securities – here’s to a great two decades!

 

Robert Kravetz was honored with his second year as a member of the President’s Circle. The President’s Circle recognizes exemplary advisors who achieve annual production goals while demonstrating a commitment to Brighton Securities’ professional standards and core values. For two years running, Bob has proven himself a cut above, epitomizing our firm’s values and standards while performing at a very high level. We congratulate him on his success.

 We also introduced a new award to recognize the efforts of our staff and management team. The Brighton Securities Excellence Award honors a team member who has made remarkable contributions to Brighton Securities while demonstrating a commitment to firm goals and exemplifying our core values. Over the past year, our 2011winner, Danielle Wilkins, has stepped up at every opportunity. She’s taken on new responsibilities without a second thought and has been a powerful agent for positive change. Danielle was described by colleagues as a superlative collaborator, never hesitating to team with other members of staff or management to achieve a consensus whenever possible. She seeks guidance and counsel from her peers, ensuring that her decisions will benefit both the firm and its employees to the best of her ability. We congratulate her on her achievement this year.

 

Finally, we are pleased to announce the promotion of 6 of our financial advisors to new executive titles. These titles reflect the level of annual production achieved by our advisors.  Receiving the title of Vice President:

George Arnold

Doug Hendee

Mike Francis

Brennan Redmond

 

Receiving the title of Senior Vice President:

Robert Kravetz

Caroline Korn

 

We’re so proud of all our colleagues! Thank you to all who joined us to celebrate on Saturday – here’s to a great 2011 and an even better 2012!

 

 Alexandra Conboy

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Bigger and Better: Growth at Brighton Securities

Brighton Securities has been focused on growth; we’re renovating our Brighton office to add 30% more space and even added jobs throughout the recession.

 Part of that strategy has been to recruit professionals in other industries and coach them to be great advisors.

 Yesterday, The Brighton Pittsford Post profiled our program and gave mention to our newest trainee, Sam DiNorma. Sam’s been a stellar addition to the team (and we wish him luck on his 66 exam next week)!

 

Alexandra Conboy

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).