As a sign of vulnerability in the (so far) high-flying technology sector, many of the biggest names tumbled towards earth on Friday. Among the so-called FAANG five, the declines for the day were: Facebook Inc. (FB
), 3.3%, Apple Inc. (AAPL
), 3.9%, Amazon.com Inc. (AMZN
), 3.2%, Netflix Inc. (NFLX
), 4.7%, and the parent of Google, Alphabet Inc. (GOOGL
), 3.4%, per Investopedia data. The tech-heavy Nasdaq 100 Index shed 2.4% of its value on Friday, per data from Nasdaq, while the tech stocks in the Nasdaq 100 were off by 3.6%, also per Nasdaq. As a point of comparison, the S&P 500 Index (SPX) dipped by less than 0.1%. (For more, see also: The Tech Bubble Will Burst: The Question Is When.)
Eggs in One Basket
On Thursday, Bank of America Merrill Lynch, a division of Bank of America Corp. (BAC
), released a report indicating that the tech sector offers both risks and opportunities for investors. In May, tech was both the best-performing S&P 500 sector and the one whose price-earnings (P/E) ratio increased the most, according to Merrill Lynch. At approximately 19x as of the report’s issuance, Merrill notes that this is the tech sector’s highest valuation since the financial crisis.Moreover, tech is more overweight than it ever has been, among large cap actively-managed funds surveyed by Merrill since 2008. In their May 30 Active Managers’ Holdings Update, Merrill notes that survey respondents are 24% overweight in tech, almost two standard deviations above average. Yet more striking is the fact that fund managers are 71% overweight in FANG stocks (Merrill excludes Apple), though this weight has been flat for a year. The bigger picture is that funds have made a record shift from value to growth sectors over the past 12 months, leading Merrill to prefer value to growth right now. (For more, see also: The Gold Rush into Tech Is Still on.)
Conflicting Valuation Signals
Nonetheless, Merrill says, “But although Tech’s 8% premium to the S&P 500 P/E is the biggest premium we have paid since 2010, it is still low relative to history, even excluding the Tech Bubble.” Moreover, Merrill finds that all industries within the tech sector are sporting P/E ratios that are lower than or in line with their “historical average relative P/E multiples.” Closing out the positives, Merrill says that tech screens as most attractive according to their quant models.
On the other hand, based on its enterprise value (EV) to sales ratio, tech is trading at its highest relative multiple since the tech bubble. Exclude the bubble period, and tech currently is still valued well above the average for this metric, Merrill says. Additionally, Merrill finds that inconsistent accounting treatment of stock-based compensation, which is a large expense for most tech companies, might cause tech’s P/E to be understated by as much as 10%. Bottom line: Merrill is marketweight in tech, based on these conflicting valuation signals.
INVESTINGFund managers may be taking big risks by doubling down on winning stocks and sectors
INVESTINGEquity strategists at Bank of America Merrill Lynch have identified key investment themes for 2017.
INVESTINGThe five FAANG stocks – Facebook, Apple, Amazon, Netflix, Google – may be creating a $2.4 trillion tech bubble
INVESTINGTech companies with billion dollar valuations are mushrooming and the NASDAQ index passed 5,000. Is there an app to tell us if we are in a tech bubble?
INVESTINGTech stocks’ 13% gain in the first quarter highlights the strength of the mega tech companies
INSIGHTSIn the wake of the fiduciary rule, Merrill Lynch is dropping commission-based transactions from all of its retirement accounts, with possible exceptions.
INVESTINGThe technology sector is set to receive the most capital in 15 years.
INVESTINGTech Bubble 2.0 is far off as long as companies maintain their strong growth rates
FINANCIAL ADVISORMerrill Lynch and Edward Jones have both been around for decades, but they approach business very differently. Here’s the lowdown on how they compare.
TRADINGTechnology stocks have taken a drubbing in recent days. Is it time to sell them?
Read more: Tech Stocks May Be Both Cheap—and Risky (AAPL, FB, GOOGL) | Investopedia http://www.investopedia.com/news/tech-stocks-may-be-both-cheapand-risky-aapl-fb-googl/#ixzz4jmzpnDsp
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Thousands of guests and representatives of dozens of companies from around the world are gathering this week at the Tel Aviv Port to participate in the 7th annual Israel Mobile Summit.
Splash Ventures, a new accelerator program for Israeli start-ups will operate in Los Angeles. The city has the third-largest startup ecosystem in the US, after Silicon Valley and New York according to the 2015 Global Startup Ecosystem Ranking Report.
Splash is launching its drafting process for the first cycle for 6 chosen Israeli start-ups, which will participate in a 3-month program in LA this August. As part of its program, Splash will provide practical assistance in branding and marketing, business development, and venture capital-raising The Israeli entrepreneurs will meet with leading figures in the Los Angeles tech ecosystem, including investors, executives and innovation managers in accelerator programs and corporations, as well as entrepreneurs and professionals.
“Our vision is to be the bridge between innovation in Israel and Los Angeles, leveraging the entrepreneurial spirit and fast pace that are abundant in both places”, said Guy Katsovich, Managing Partner at Splash. “Our goal is to make Splash synonymous with connecting the Israeli and LA tech industries, becoming the go-to organization for Israeli entrepreneurs who want to connect to this dynamic city.”
The tech and venture landscape in Los Angeles is also the fastest growing in the US.
CEO ROUNDTABLE – INNOVATING OUT OF NIGERIA’S RECESSION: EXPLORING NEW PARADIGMS FOR NIGERIA’S ECONOMIC GROWTH
THE NIGERIAN STOCK EXCHANGE & BLOOMBERG EVENT
The Nigerian Stock Exchange & Bloomberg invite you to join us for the third annual NSE Bloomberg CEO Roundtable.
This edition will focus on innovating out of Nigeria’s recession and will bring together reputable economists, top government officials and CEOs spanning the Manufacturing, Financial Services, Telecommunications, Agricultural, Investment and Educational sectors.
The bane of Nigeria’s exposure to global economic headwinds is the resource dependent nature of its economy, which has seen the country derive its major income from the sale of its unrefined resources (majorly oil, minerals and cash crops) without building value across the supply chain to yield better earnings. The recent recession has shown that Nigeria’s dependence on natural resources without building value along the supply chain creates little or no buffers for the nation to withstand global economic downturns.
The 2017 edition of the NSE/Bloomberg CEO Roundtable will address this topical issue of resource dependency and the alignment of the economic recovery plan and roadmap to insulate the Nigerian economy from the shocks that come with resource dependency.
|10:00-10:10 AM||Welcome Address & Introduction|
|Oscar N. Onyema, OON|
|CEO, The Nigerian Stock Exchange|
|10:10-10:30 AM||Keynote Address|
|Honorable Minister of Finance|
|10:30-10:40 AM||Opening Address|
|Head of Market Structure Strategy, MEA, Bloomberg L.P.|
|10:40-11:00 AM||Economic Roundup|
|Dr. Doyin Salami|
|Associate Professor, Lagos Business School|
|and Principal Consultant, Edward Kingston Associates|
|11:00-12:00 PM||Panel Discussion:|
|INNOVATING OUT OF NIGERIA’S RECESSION: EXPLORING NEW PARADIGMS FOR NIGERIA’S ECONOMIC GROWTH|
|Dr Demola Sogunle – CEO, Stanbic IBTC Bank|
|Andrew Alli – CEO, African Finance Corporation|
|Ms. Ngozi Adebiyi – CEO, OutsideIn HR|
|Ms. Funke Opeke – CEO, Main One|
|Dr Graham Hefer – MD, Okomu Oil Plc|
|Mark Bohlund – Africa & Middle East Senior Economist, Bloomberg|
|Moderated by Yinka Ibukun, Bloomberg News|
|12:00-12:20 PM||Q & A|
|12:20-12:30 PM||Vote of Thanks|
|Executive Director, Capital Markets Division, The Nigerian Stock Exchange|
WHEN & WHERE
Friday 16 June 2017
09:30 AM — 12:30 PM
The Nigerian Stock Exchange
Pre Registration is Essential
ON JUNE 9, 201710:24 AMIN NEWS COMMENTS By Soni Daniel, Northern Region Editor ABUJA—
After three days of stormy deliberations over the belated 2017 budget, the Presidency and the National Assembly, NASS, have resolved all the grey areas that prevented the President from assenting to the Appropriation Bill passed into law by the legislature last month. A top Presidency source confirmed to Vanguard, last night, that the major areas of disagreement had been resolved by the two sides, paving the way for the President to assent to the bill, which is already six month late in coming and holding back major financial transactions of the government. As a result of the deal struck by both parties, there were indications that the President would assent to the bill before the end of this week, although the presidential source simply said: “We will sign it soon,” declining to specify the date and time. The meetings by the Presidency and the leadership of the NASS took place on Sunday, Monday and Tuesday before the areas of conflict were resolved, according to competent sources close to the deal. Vanguard learned that as part of the understanding between the two sides, the lawmakers would not insist on the full implementation of the “over 400 strange projects,” which the lawmakers brought into the budget and would also not accuse the executive of not complying with the full implementation of the law. “It is true that all the contentious issues that delayed the President’s assent had been resolved. Hopefully, the president will assent to the budget soon,” the official confirmed to Vanguard, yesterday. It was learnt that the lawmakers had also accepted that money taken away from major infrastructure projects by the lawmakers and added to other obscure projects, be returned to those projects as outlined by President Muhammadu Buhari in the budget sent to the NASS even though the president would sign the bill as transmitted to him by the NASS. The Presidency had frowned at the insertion of strange projects mostly roads, health centres, recreational centres, water and electricity schemes, which are under state and local governments that were never evaluated, designed or included in the federal government. The executive was also upset that while NASS slashed the votes for other vital projects and MDAS, it jerked its own votes from N115 billion to N125 billion even with the hard times. Beyond that, NASS also increased the budget by N143 billion without explaining where the additional cash would be derived from, a development that made the executive to distance itself from the fiscal document, contending that the “distortions” would adversely affect the implementation of the budget.
Read more at: http://www.vanguardngr.com/2017/06/osinbajo-sign-2017-budget-presidency-nass-reach-agreement/
Katherine Miller lives a strange life. She only works six months of the year.
She’s a Process Engineer for a mining company in Australia. The cause of her unique work schedule is the mine’s location. It’s in a remote area. There aren’t enough people to hire locally, so her company has built a village there.
This means that the workforce is rotated in and out. In Miller’s case, she works for 12 hours a day for two weeks before somebody else takes her place for the two weeks that she’s off.
The lifestyle isn’t for everyone. Being away from home for a few weeks at a time isn’t easy, and the work days are challenging. The whole idea is even more daunting if you have a family.
Miller, however, enjoys her job. She’s excited about solving problems, and each day allows her to do exactly that. In spite of the compromises, she can’t imagine having it any other way.
Being in her mid-twenties, she doesn’t have a family to worry about, and she also doesn’t have a home. When she works, housing is provided, and when she’s off, she travels with the money not spent on rent and living expenses.
Her life is a version of the “work hard, play hard” cliche. She loves it.
Of course, not only is an arrangement like that not feasible for most people, but it’s also not universally appealing. Everyone has their own definition of work and play. That said, there’s an underlying formula in Miller’s life that we all can use to live an interesting and balanced life by:
• Crafting routines that add meaning and identity
• Designing for autonomy to create empowerment
• Balancing with variety to maintain appreciation
We have more flexibility to redesign our life than we think. Let’s do so.
Craft Routines That Add Meaning and Identity
Routines aren’t sexy. They rarely provide any immediate returns. There’s little short-term spice in following the same loop day in, day out. If we’re doing the same thing everyday, there’s a lot else in life we’re not doing.
In spite of their short-term unsexiness, however, routines help us meet the demands of life. They limit the decisions we have to make, and they better allocate our focus.
In a study published as a collaboration between the Columbia Business School and Ben Gurion University, researchers analyzed 1,112 rulings made by judges on parole boards. The judges began their day with a session, took a break, and then finished off another session.
They were measured for the number of favorable rulings they made throughout the day, and the researchers found that each session began with about a 65% chance of a positive ruling and went downhill after that. This was true for the sessions before and after the midday break. The longer the judges made decisions, the less consistent their judgment became.
This is a phenomenon in behavioral psychology known as decision fatigue.
Good routines allow us to bypass unnecessary decisions, so we can orient ourselves when it matters. They cut out needless choice in the short-term to reward us in the long-term.
Pretty much anything that modern society values as a great accomplishment requires a routine to fuel it. To get the most out of something, whether it be a career, hobby, or a relationship, we need to invest time, and we need to do so systematically and consistently.
It’s not always exciting for even the artists or entrepreneurs, chasing their dreams, to get up and get to work at 6 AM every day, but that’s a part of pursuing something valuable.
Without routines to automate and guide our behavior, we get pulled in far too many directions, and that stops us from making the choices that we need to craft a purposeful future.
That said, the fruits of the labor don’t just show themselves in the form of accomplishment. The process of meaningful investment, even if it isn’t always fun, keeps us grounded. It connects us to a source, and there are moments in life when that can be of critical importance.
Without the commitment of good routines, it’s far harder to forge a sense of long-term identity.
Design for Autonomy to Create Empowerment
Routines get an unfair reputation, but at times, there’s a good reason for it.
No matter what the routine, there’s a cost that comes with the discipline that it infuses. It has a degree of control over us even if we pursue it by choice because it limits what we can do beyond the enforced parameters.
To live an existence of more than just limitations, we need to design parts of life for autonomy to create empowerment. Autonomy is closer to living in the moment. It welcomes some of the instant gratification and pleasure that we need to enjoy life on a more consistent basis.
In 1997, Richard Ryan and Christina Frederick conducted an extensive meta-analysis of six different studies to measure the effect of subjective vitality (a positive feeling of energy and aliveness) on general well-being across a multitude of factors.
Interestingly enough, not only did they find a correlation between the two, but they also drew on established theories of human motivation and found that autonomy, in particular, played a large role in energy levels of the subjects across the studies. When people had a degree of control, they showed higher levels of vitality, which subsequently influenced their well-being.
Too many choices might be exhausting, but reasonable empowerment is exciting. It adds a sense of possibility beyond what we know, and that’s liberating. There really is more to life.
There are far too many people simply going through the motions, while not being content with how they’re living. They live their life for an indeterminate future. It’s a suboptimal strategy.
If that’s you, then maybe it’s time to prioritize more autonomy in your life. If you feel stuck, then maybe you need more control than the illusion provided by what appears as free time.
Naturally, for many of us, certain commitments aren’t too flexible. Bills need to be paid, and relationships need attention. That said, there are still more options than we intuitively think.
We all get 168 hours a week. If you do an honest audit of how you spend them, you’d be surprised at how much wasted time can be carved out for activities that create autonomy.
Balance With Variety to Maintain Appreciation
Routines add meaning, but autonomy adds the flavor.
That said, there is such a thing as too much autonomy, too. In small doses, it’s invaluable, but we can also easily become desensitized to its appeal. By nature, autonomy pushes us towards instant gratification.
The more we get, the more we want, and the game of relativity warps our perception quickly and unsuspectingly. It cheapens the good but still has us craving more. On the surface, it can open up an ocean of possibilities, but in reality, that only leads to disorientation.
Over short periods, there will be a misbalance here and there. As the months and years add up, however, we should have a healthy divide between the two. To maintain appreciation, we need to balance the pleasure invited by autonomy with the meaning inspired by routines.
Let’s recount the story of Katherine Miller.
Over the course of the year, half of her time is spent doing something she really enjoys at work. Sure, it’s hard stuff, and it has its ups and downs, but for the most part, that’s her source of usefulness and identity.
The other half of the year, she spends traveling. It’s a lifestyle in which she practically chooses do whatever she wants in windows of two week periods. It allows her to get away from some of the more mundane aspects of living a life of consistency, and that’s empowering.
Taken to the extreme, in a different world, if she did one exclusively without the other, she might find herself engorged and excited for a while, but in most scenarios, either extreme would leave her dissatisfied in the long run.
Knowing the balance needed to appreciate the many layers of life is a personal undertaking. It makes sense to develop an understanding of where on the spectrum you stand.
As famed researcher Daniel Gilbert points out in Stumbling on Happiness,“The secret of happiness is variety, but the secret of variety, like the secret of all spices, is knowing when to use it.”
All You Need to Know
In truth, it’s virtually impossible to dissect what it is that makes us happy. There’s no comprehensive package out there that’s broad enough to enlighten everyone. We’re born with different genes, we live in different environments, and we entertain different perspectives.
In some ways, we can reason that there’s a way there with a healthy mixture of meaning and pleasure. If we settle with that, by focusing on optimally incorporating the two, we can at least live a balanced and interesting life.
That’s the focus here, and there are three parts to it.
I. Craft routines that add meaning. They might not always be sexy in the short-term, but they’re invaluable in any quest to accomplish something over time. They allow us to bypass needless choice, and they ground to us to an identity. Without them, we would be paralyzed into making decisions that misalign with future prosperity.
II. Design for autonomy to create empowerment. Routines, whether good or bad, often have a degree of control over us. They confine what we can do, and that’s not always ideal. To live beyond just limitations, we need autonomy, too. We need the option to indulge in the easy pleasures of life, and we need to feel liberated and in charge.
III. Balance the two with variety to maintain an appreciation of both. Excess of one or the other is unhealthy. It’s about stabilizing the meaning and structure of routines with the empowerment of autonomy. If you feel trapped by your routines, you need a dose of autonomy. If you feel desensitized by the autonomy, you need to mix in a few routines.
That’s it. It’s by no means a blueprint, but it can serve as a useful mental model. Different people will extract their own nuggets of value from it. The only point is to inspire thinking about how to live deliberately.
Balance doesn’t always mean an even divide. It’s just about what works.
This was originally published at Design Luck.