Toyota Recall: The Stock Maintains, but are Investors Scared?

by Dave Paps on March 8, 2012 · 5 comments

in Stocks

Thursday March 8th, 2012
Japanese Car manufacturer, Toyota Motor Corporation, announced today that they will be recalling 681,500 vehicles in the United States because of safety concerns. According to The Guardian, Toyota has now recalled more than 10 million vehicles in the past three years. The stock experienced a firm drop in late November in addition to the losses experienced during the Japanese Nuclear Crisis (almost 1 year ago). This is met by a firm 2 month rally in the Japanese Yen.

2012 started off with a significant rally for Toyota which certainly influenced the strength of the Yen. The company appeared to be rebounding to it’s 52-week highs(which were experienced last March prior to the Japanese Nuclear Crisis). The stock experienced a minor pullback although, it is nice to see the stock up slightly over 2% in today’s trading. Investor confidence however, does not seem to be doing as well. With volume at just below 500K today, it is easy to sense investor speculation.

Image Taken From: finviz.com

The company predicted (in December) that projected 2011 profits would be less than they were in the 2010 fiscal year. In all fairness, the U.S. Debt ceiling crisis (which unfolded during the summer), was probably an indicator that the automotive sales sector would be impacted coming into 2012.

The strength of the Yen was certainly influenced by the rally in the United States economy in early 2012. The DJIA was just shy of 13,000 and the S&P 500 rallied over the 1,350 levels. This would certainly drive the production of goods in the manufacturing and the automotive sector which many thought would be heavily impacted going into 2012.

Image Taken From: finviz.com

To me, Toyota just seems to be experiencing a string of bad luck. The market still has a fair valuation for the company given the circumstances they have been faced with. The rising Yen is actually going to increase the cost of imports which may transcend to the consumer. This, partnered with the recall spells a messy situation. Fortunately, the market has relatively sustained the company’s valuation. 

I think a major reason is because this stock is regarded as being “blue chip” and the big funds continue to hold onto them.  The real danger is if the funds decide to dump their positions.  The stock would then experience nasty sell offs which could test the November lows.  The strong Yen signifies a strengthening in the Japanese economy which is reassuring during these times.  The manufacturer has long been considered among the very best in automobile sales.  Like many other companies in the past year, they just seem to be faced with some hiccups they will likely work through in the coming fiscal year.

Source: http://www.guardian.co.uk/business/2012/mar/08/toyota-recalls-tacoma-camry-venza?newsfeed=true

Disclaimer: Investing in stocks/futures can be highly risky and you should seek professional advice before making any investment decisions.   Also, I am neutral on stocks mentioned above and am not professionally qualified to give investment recommendations.  I do not recommend to buy nor sell the stocks/futures.  This is simply my personal opinion and should be taken as nothing more.

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This HAS to be the WORST Financial Analogy Ever!

by Dave Paps on March 7, 2012 · 0 comments

in Economics

Wednesday March 7th, 2012

“Money Comes and Goes”

I’m sure we’ve all heard this analogy being made at least one time in our lives. Perhaps, it’s a justification for a bad investment or trade. Or, perhaps it is used to console an unnecessary purchase. Either way, it is probably the worst financial analogy I have ever heard. “Why,” might you ask?

Well…how do you define money? Historically, people would work and barter in order to obtain goods. I could pick apples and trade those apples for some oranges or bananas (for example). Alternatively, many would barter for gold. This is because gold represented wealth but more importantly, it was a representation of labor.

Certainly, this is no longer efficient in contemporary commerce as many people do not have an adequate use for gold. However, the principle continues to exist with currency (money).

The transition took place in 1971. President Nixon removed the United States currency from the historic “Gold Standard.” This essentially made the U.S. dollar the global currency.  Up until this point, global currencies were measured in relation to the relevant trading price of gold. However, this was replaced with a “trust” in the strength of the American dollar. Thus, money is the contemporary replacement for gold (which once represented labor). But what if we dig a little deeper. What is labor?

I would define labor as the exchange of time for compensation (formerly gold and now, money). Ever heard the old saying: “Time is the most precious commodity?” From an economic standpoint, it frustrates me how little is regarded for money in relation to the labor it takes to obtain it. If money is exchanged for time (which is your most precious commodity), you would think that money would assume equal regard.  If you work in sales, you would not provide inadequate service and justify it with a statement, “customers come and go.” Ironically, this ideology only applies to money. But if money = time, then theoretically, it should apply to both.

As far as I see it, the saying: “Money Comes and Goes,” is somewhat like saying: “Time comes and goes.” I think that this is merely a justification for one’s financial hiccups and should not be regarded as a financial principle. If one can learn the principles of money management early, they can essentially buy some time later on in life (in the form of early retirement or family vacations).

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#Kony2012 – The Online Movement Has Officially Gone Viral!

by Dave Paps on March 6, 2012 · 0 comments

in Politics

Tuesday March 6th, 2012
It is a project that has been 10 years in the making. The goal is to familiarize the world with the name Joseph Kony.

“Why,” might you ask?

Well…if you don’t already know, Joseph Kony(who is the leader of the Rebels in Uganda), has been kidnapping children for the past 26 years. Literally thousands among thousands of children have been kidnapped under his control.  Kony and the Rebels would turn the young girls into sex slaves and the young boys were given guns. The boys were then forced to mutilate people’s faces and even kill their own parents. This is all outlined in Jason Russell’s short documentary, “Kony 2012,” (which was released yesterday).

Kony is considered one of the largest living war lords. The name of his Rebel group is LRA (which stands for Lord’s Resistance Army). Kony is not fighting for any particular cause but rather, to simply maintain his power.

Normally viral videos are aimed at popularizing funny or relevant things that make you smile or laugh. Yesterday, the internet used all forms of social media outlets not to celebrate Kony, “but to raise support for his arrest and set a precedent for international justice.”  This is what is written below the viral documentary that was posted on Youtube yesterday.  Needless to say, it instantly went viral. The documentary is created and narrated by Jason Russell who describes the video as “an experiment.”

The experiment is to promote Joseph Kony. 98% of the world has no idea who Kony is. This saddens me deeply as I am willing to bet that a much larger percentage know who Snookie is.

It is rare for me to write and comment about specific current events as their is simply too much happening in the world daily. This one had me so enraged that i HAD to comment on it. I am disappointed in the fact that it took so long for this to surface, or that I simply did not come across it earlier. I’ve heard the name Joseph Kony before although, I did not know this is what he is responsible for. To my recollection (and as the documentary alludes), Kony has made various peace talks in the past. In my opinion, their is no formulation of words which can forgive what he has done.

Please watch the documentary entirely!  In the past 2 days, millions worldwide have tweeted #Kony2012 or shared the documentary in support of the movement.  Feel free to share it, or post it to anywhere and to everyone you know. As Russell comments during his guest lectures, “Who are you to end a war? I’m here to tell you…Who are you NOT to?”


“Where you live should not determine whether you live” – Jason Russell

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