Question of the Week

Questions of the Week

Co-founder of the Switzer Report
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Question 1: I read an article (see http://www.abc.net.au/news/2019-06-08/uber-netflix-run-at-a-loss-and-they-dont-care-/11185434?pfmredir=sm&section=business) that I found extremely alarming. It turns everything that I understood about valuing companies on its head. It's OK for companies like Netflix, Uber, Amazon to make no profit or little profits (Amazon) as long as venture capitalists continue to pour money in so they can take market share. How can we protect against an unavoidable day of reckoning? Presumably all the funds and investment banks will also be exposed. Where is the safe haven?

Answer: An interesting story. I guess the same argument could have been made about Facebook or Alphabet (Google) in their early days. You’re right to be concerned, although I’m not sure you need to be alarmed. I don’t buy the “day of reckoning” scenario. If you do however, then the best strategy is to stick to cash.

Question 2:  I have received a buy recommendation from a broker on Steadfast (SDF) and I am interested in your thoughts as to whether it is a long-term buy ?

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