Personal Finance

To-day I placed my order to purchase some Barnes & Noble stock (BKS).  Why?  Good question.

First, I do not believe the system will collapse.  Just because I am purchasing stock does not mean I do not wish for some large systemic change, I would gladly eat that lost cash for a change.  But I am a pessimist, optimisit for most of ya’ll, so shit will recover.  Consequently, what is a value?  Barnes & Noble is.  Books will persist and B&N is better positioned than any other bookseller to survive the rough times.  Maybe B&N loses out to Amazon, but that does not make B&N a loser as there will always be a need for aisles to browse.  Plus, economic contractions see a rise in school bound folks and they all need books.  Unknown to most people B&N has been secretly gobbling and installing on-campus stores for the past decade.

Second, my discretionary spending alone can float B&N from bankruptcy.  Consider the dividend from the stock ownership like a Discover card, cash back with each purchase.

Finally and definitely not least, in times of contraction and restrained consumption books gain.  Sure they see weakness compared to the balance sheets of previous years, but compared to other forms of entertainement books gain ground.  If there is no recovery people will turn more and more to books if for no other reason than the same gain in entertainment value can be had for longer and cheaper with a book as opposed to TV or movies.  If there is a prolonged contraction then this buy gets me into a burgeoning sector, as opposed to my optimism for the system where this buy moves me into a better position relative to competitors.

We are upgrading Mastercard (MA) in our portfolio even though many others will downgrade this play.  A ruling from the EU is expected soon that will depress profits as Mastercard will be forced to cut back on some fees on European transactions. The fundamentals have not changed and these fees are a redundant charge (the very reason they are expected to be ruled unfair) for what is ultimately a low risk (fees on bank to bank transfers which cover the risk of insufficient funds.)  This coming bad news will not expose Mastercard and all of these scenarios assume a ruling against Mastercard, which is not guaranteed.

Use of the above financial advice is at your own risk and should not be done without your own research.