To improve is to change; to be perfect is to change often.” – Winston Churchill

In modern society, especially in the business world, data analysis and artificial intelligence are accepted as being critical factors in how to both operate more efficiently and position an enterprise for future growth. The data centric approach adopted and perfected by massive companies like Amazon, Facebook, Google, Netflix, Alibaba, TenCent, and Microsoft has transformed industries and put significant competitive pressure on businesses across the globe. The future, by most prognisticators, guarantees even more emphasis on entities being able to use customer and social posts effectively. In that light, it makes perfect sense that the current data dominant bigwigs will grow even more powerful in the future. One would think, right? Yet, this week brings some interesting information to make one stop and question this premise.

First, as we are all paying attention to the annual new highs in the stock market, Apple declared it is reptatriating its overseas cash and paying the government 38 billion big ones, and then investing 30 billion more over the next 5 years. If you recall, not 15 years ago, Apple needed a cash infusion by its long time enemy Microsoft. Microsoft still is a dominant company, but not close to what Apple has become. Next, both Goldman Sachs and Morgan Stanley reported earnings this week and in terms of market value, Morgan Stanley has overtaken Lloyd Blankfein’s crew. If one recalls ten years ago or so, Morgan Stanley needed an investment from a foreign competitor to help them survive the financial thunderstorm in 2008. Again, fortunes have reversed over time.

Finally, the only company left standing from the original Dow Jones Industrial Average, General Electric, announced this week it was taking a charge of $6.2 billion dollars due to the liabilities in its insurance business, with a total charge of $15 billion over the next seven years. GE slumped to a decade low stock price with questions arising about needing a capital raise to help stem the tide. Jack Welch, the ex-CEO who might have been considered the best corporate leader of his generation, is reportedly extremely upset at what has transpired, blaming successor Jeff Immelt, who is pointing fingers right back at his ex mentor. When Welch left Immelt the job, GE was in the pole position as far as industrial giants were concerned. Now, having made plenty of mistakes to help speed it’s demise, GE faces a long road back and some analysts believe it would be better to break the company up. Again, just because a company is big does not guarantee success. Business environments change, as do specific company prospects. Data analysis and artificial intelligence may be very important to the next twenty years of business success, but the ability to make good strategic decisions and think about building long term competitive advantages remains equally as critical, and probably more so. Yes, the internet platform giants seem poised to dominate the future, but rest assured, competitive dynamics dictate the next ten years will not evolve the same way the last ten did.

Next week will bring an avalanche of earnings report from nearly every industry in business. Meanwhile, our fine, upstanding, hard working, money seeking, camera and publicity shy public representatives again have left their constituency, that being the general citizenry, without an agreement to fund the operations of the federal government. Naturally, the finger pointing has begun with Democrats blaming the Republican leadership (or lack thereof), and Republicans staring right back and casting a long gaze at Senate Minority leader Chuck Schumer. The shutdown speaks to the general mood in the country of extremes, and splits within each party of how to go about solving problems like military funding, immigration and border issues, entitlement funding, and to a lesser extent, foreign policy. It cements the long held idea to take care of yourself and family with your own actions and ideas, because the politicians only change for the worse over time, in direct contrast to Winston’s telling quote.

Thank you for reading the blog this week, and if you have any questions about investing, please email me at information@y-hc.com

Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the potential loss of ones principal.  Past performance is no guarantee of future results.  All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one's overall financial situation.  The fact that Yale Bock has earned the right to use the Chartered Financial Analyst in no way means or guarantees financial returns which exceed those of a market index.