Measuring success is relative

David MoonBlog

If Tennessee’s football team wins eight games this season any reasonable observer would describe it as massive improvement. When the Volunteers won eight games in 2000, fans were generally disappointed. When measuring change, the beginning point matters. The Butch Jones era began in the athletic equivalent of a horrible bear market. Last week I saw an old friend who complimented me on my weight loss. I’ve actually gained a few pounds in the past month, so he caught me off guard. That is, until we realized that our last face-to-face visit was more than 20 years ago—when I was about … Read More

The harsh truth about the NCAA

David MoonBlog

I love college football. I love the pageantry, tradition and passion surrounding the game. But I do not love the game’s governing body. The National Collegiate Athletic Association (NCAA) is among the most morally corrupt organizations in the free world. Society willingly accepts the situation because of tradition, ignorance or outright self-interest. The NCAA’s practically religious mantra is “amateur athletics.” The supporters of the quaint, idyllic notion of “amateur athletics” are quick to defend the cost of a scholarship as fair compensation to college athletes. Once a person accepts that it is morally permissible to exchange tuition, food and a … Read More

Emotional investing is a bad idea

David MoonBlog

Shares of Apple Computer topped $100 a share this past week, eclipsing their previous high of $100.72 in September 2012. Demonstrating an uncanny ability to forecast short-term price movements, I sold my Apple shares in May this year for $85 per share. In the interest of both full disclosure and self-defense, I should also note that I had purchased the Apple shares only 12 months earlier, for $64 share, producing a tidy 33 percent profit in only a year. Some people would argue, however, that by selling in May rather than August, I lost $15 a share. They are badly … Read More

This new pill provides a moral puzzle

David MoonBlog

The Centers for Disease Control estimates there are 3.2 million Americans with chronic Hepatitis C, 17,000 of whom will die this year as a result of the infection—a number that exceeds the annual deaths from HIV/AIDS in the US. Fortunately, Gilead Sciences produces a new breakthrough drug, Sovaldi, which has proven to cure 90 percent of all Hepatitis C patients. The drug costs $1,000 a pill, or $90,000 for the typical three-month treatment. The cost of 90 days of Sovaldi treatment for the estimated 12,000 infected TennCare enrollees would be one billion dollars a year. Combined with the $300 million … Read More

Lower price isn’t always cheaper

David MoonBlog

This past week Dollar Tree announced it was acquiring rival Family Dollar in a deal worth $8.5 billion. Selling stuff for a buck is obviously profitable. The transaction is a perfect example of the Moon Affordable Small Packages Fallacy and Moon Paradox of Poverty, both of which I created this week. The Affordable Small Packages Fallacy describes the inverse relationship between the size of a product’s package and the gross margins it provides a retailer. That is, pizza is more expensive by the slice. And a one-dollar, 24-ounce bottle of ketchup is more expensive than a four-dollar, 114-ounce tub. For … Read More

Hawaii bills, green ink, and other money facts

David MoonBlog

How much do you really know about money? The word “money” derives from the Romans. They made their coins in the temple of Juno Moneta, their goddess of marriage and women. The earliest banks were ancient religious temples where people stored grain or precious metals they used as money. The dime is smaller than the cent and nickel because, at one time, each coin contained an amount of metal approximately equal to the face value of the coin. The dime was originally spelled “disme,” based on the Latin word “decimus,” meaning one-tenth. The five-cent piece is the only US coin … Read More

For richer or poorer, mergers are like marriages

David MoonBlog

This past week, Rupert Murdoch’s 21st Century Fox offered to acquire Time Warner, theoretically posing the prospect of the same entity controlling both CNN and Fox News. Time Warner was previously the target in what is routinely described as one of the worst corporate marriages in history. When AOL purchased venerable Time Warner Communications in 2001, it seemed a bit like Derek Dooley taking control of a storied SEC football program—and with similar results. AOL effectively paid $165 billion for Time Warner, using soon-to-be almost worthless stock as currency. Today AOL is little more than a very expensive footnote in … Read More

Ignore the old guys; markets tough to predict

David MoonBlog

From 1,700 to 17,000. That’s where the Dow Jones Industrial Average (DJIA) has travelled during my seemingly brief investment career. During this 1,000 percent gain in stock prices, we’ve experienced three major price cycles, each commonly defined by the price collapse that preceded or followed it. And each of those price declines is commonly mischaracterized in some way. In 1987 we had The Crash. From August to October that year the DJIA dropped 1,000 points. On the October 19 afternoon of Black Monday, I sat with a group of really old stockbrokers (probably about 45 or 50 years old) and … Read More

Minimum wage debate only as good as the data

David MoonBlog

I spent the late summers and early falls of 1977 and 1978 walking through seemingly millions of acres of cotton fields, using a hoe to remove a specific weed that crop duster herbicide couldn’t kill. My compensation included the $2.65 an hour minimum wage and the motivation to do almost anything other than chop cotton as an adult. Measured by the consumer price index, my 1978 earnings lost a third of its purchasing power in the ensuing 35 years. Since 1968 the federal minimum hourly wage has increased 353 percent, compared to a 583 percent increase in the CPI. Numbers … Read More

Dear lottery winner: Make a plan, work the plan

David MoonBlog

Some advice for the winner of last week’s $259 million jackpot: You, Inc. is now a quarter-of-a-billion-dollar business, so act like it. Make a plan. Then work the plan. Decide where you want to be 20 years from now. Work backwards from there. If you were at that place today, what would you have been doing ten years ago? Then look back another ten years. What would you have been doing then? That’s what you should be doing now. When you identify your long-term goals, set aside specific buckets of money and other assets to fund each goal. Take a … Read More