Saturday, December 14, 2019

Top Stories Of The Week -- The Narrative -- December 14, 2019

The top stories for week 50 of 2019 have been posted; it still needs a little work but for the most part it is done.

Wow, what a week.

For investors: tectonic changes. I apologize for beating a dead horse, but this was huge: the Schwab-Ameritrade story. The story broke two weeks ago but seismic after-shocks continue. I may do a stand-alone post. It's that big a deal.

Politics: at the other end of the spectrum, politicians have "cheapened" the concept of "impeachment."

Texas: more and more "stuff" moving to Texas. Big names to keep in mind: Apple, Ford, Chevron, Schwab, McKesson, European Wax Centers.


Saudi Arabia: The Saudi Aramco story is a non-story. A year from now it will be long forgotten. Remember: most investors around the world were not even allowed to participate. Valuations on this new company range from $1.2 trillion to $2.0 trillion. That's a pretty big spread.

Mexico; AMLO setting the stage for "president for life." Mexico will take the "road to Venezuela." US sanctuary cities will be overrun with immigrants. Story won't be reported.

Canada: really, really closed for business. When Chevron announced it was pulling out of Canada that pretty much said all there was to be said.


Buffett/Berkshire Hathaway -- sitting on $130 billion. Apparently no FOMO. Buffett likes:
  • highly capitalized industries, like railroads; huge tax benefits; write-offs;
  • banks; examples, BofA and Wells Fargo; stuck with Wells Fargo when morally/ethically should have sold;
  • energy companies, especially natural gas production, gathering, and transmission
He has said he is sitting on a huge cash hoard because everything is so overvalued. Looking at the entrails of the Schwab-Ameritrade story, it really, really looks like he missed  a whale:
  • TD-Ameritrade: everybody forgets about "TD" -- one of the biggest banks in the US; unique; innovative; really, really raises the bar that will now be part of Schwab
  • discount brokers were already cheap (under-valued) and then when Schwab announced commission-free trading, Ameritrade shares plummeted and Buffett failed to pounce; even Schwab/Ameritrade employees caught off guard; tells me that Buffett couldn't pivot fast enough; 
Quick: match column A with column B

Total Assets Under Management (AUM): the figures are not correctly aligned. Hint: Merrill Lynch is not #1.

Column A                           Column B
Merrill Lynch                   $1.3 trillion
Schwab                             $1.4 trillion
Ameritrade                       $3.25 trillion

Number of brokerage accounts (active): the figures are not correctly aligned. Hint: Merrill Lynch is not #1.

Column A                           Column B
Merrill Lynch                   $12.1 million
Schwab                             $12.0 million
Ameritrade                       $1.8 million

Asset growth y/y for Merrill Lynch, 2019 data: a negative 2 percent. That really, really surprised me.


Completion of another huge natural gas liquids pipeline was a huge story.

It will be interesting to see if ND regulators approve the DAPL expansion.  Nothing surprises me any more.


  1. When it cost nothing, to nearly nothing to invest capital into the stock market that has to have a daily positive effect on markets. Certainly more investors will say why not. Huge deal.

    1. It is a huge deal. I talked again with the Southlake, TX, Schwab folks yesterday morning, dropping off toys for charity, and participating in their Christmas toys breakfast -- mimosas, pastry, and fruit.