RFG Advisory - Latest News & Updates

From RFG Advisor, Tommy Williams | Where Do You Get Your Razor Blades?

by: Tommy Williams
published: November, 29th 2017


Where Do You Get Your Razor Blades?

By: Tommy Williams, President and Founder, Williams Financial Advisors, LLC

Are investors more like tigers or African wild dogs? It appears investors – retail and institutional – have become rather like predators. They patiently stalk shares, waiting for a dip, and then they strike – buying stocks when prices fall.

Consider last week. Barron’s described it like this: “The Dow traded down nearly 80 points on Monday, 170 points on Tuesday, and 170 points on Wednesday, but each time the blue-chip benchmark finished off its lows. That was followed by the Dow’s 187-point rally on Thursday, as everyone bought the dips.”

Investors’ remarkable behavior led the publication to speculate, “What if higher volatility, instead of scaring investors away from the stock market, brings them in? In that case, this bull market could still have a long way to go.”

Buying low and selling high is a foundational principle of investing. However, it remains to be seen how successful buying dips will prove to be in a market that some believe is too highly valued.

One measure of valuation is the 12-month trailing price-to-earnings (P/E) ratio, which tracks a company’s current share price against its earnings during the previous 12 months. Last week, FactSet reported the trailing P/E ratio for the Standard & Poor’s 500 Index was 22. The five-year average is 18.2, and the 10-year average is 16.9. Some prefer to look at forward P/E ratios, which compare share price to expected future earnings. The forward P/E ratio for the Standard & Poor’s 500 Index was 18, while the five-year average is 15.7, and the 10-year average is 14.1.

Only time will tell whether investors’ dip buying will more closely resemble the hunts of tigers or those of African wild dogs. When hunting prey, tigers are successful 5 to 10 percent of the time. African wild dogs take down prey 85 percent of the time, according to BBC’s Discover Wildlife.

On another intriguing topic, have you bought your vitamin supplements from “The Big Hurt,” Frank Thomas? Online sales aren’t the only threat to traditional brick-and-mortar retailers. Direct-to-consumer (DTC – also abbreviated as D2C) companies have been implementing a brand new business model. They’re skipping retailers and selling direct to consumers. Early entries in the DTC space targeted product areas dominated by big, established companies that have been enjoying high profit margins. DTC firms often are offering better price points and far superior customer service, reports Forbes.

In the future, some may remember the emergence of DTC as the onset of the razor wars. In 2010, the world’s largest razor blade company had 70 percent market share in the United States. Its gross margins (sales minus the cost of the product) were as high as 60 percent, reported The Economist. Soon after, the company found itself competing with two subscription razor blade services offering no cost trials and money-back guarantees. The DTC business model proved to be attractive and the market share of the world’s largest maker of razor blades has fallen to 54 percent.

Will DTC have staying power? The Economist wrote:

“…a growing number of startups are reimagining everyday household items – from pants and socks to toothbrushes and cookware. These [DTC] companies bypass conventional retailers and bring their products straight to customers via their online stores. They began several years ago to catch the attention of venture-capital (VC) firms, which have poured in more than $3 billion since 2012. But the success of some [DTC] firms has attracted a lot of wannabes, making this a crowded market and leaving some wondering whether the boom has reached its limits.” And thus, the beat of free enterprise and capitalism marches on.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. This material was prepared in part by Peak Advisor Alliance. 

Visit us at www.williamsfa.com. Tommy Williams is a CERTIFIED FINANCIAL PLANNER™ Professional with Williams Financial Advisors, LLC. Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through RFG Advisory Group, a registered investment advisor.  RFG Advisory Group, Williams Financial Advisors, LLC, and Peak Advisor Alliance are separate entities from LPL Financial. Branch office is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.

 


Williams Financial Advisor's 20th Annual Christmas Party

Market Commentary December 20, 2018

Video Market Update 12/14/18 Featuring CIO, Rick Wedell

RFG Advisory Adds Ryan Conley to its growing platform of Independent Financial Advisors.

Market Commentary December 6, 2018

Dany L. Martin of Williams Financial Advisors and RFG Advisory was named a "318 Forum Magazine's" top 40 under 40 recipient for 2018

Community Renewal International - Tommy Williams

RFG Advisory CIO, Rick Wedell chimes in on market timing, bond markets, and portfolio re-balancing.

Market Commentary October 31, 2018

Birmingham Business Journal features San Francisco Advisor, Lee Crocker following his move to join RFG Advisory.

RFG Advisory Welcomes San Francisco Advisor, Lee Crocker of Landscape Wealth Advisors to its growing platform of Independent Financial Advisors.

Market Commentary October 25, 2018

How to write a college essay

RFG Advisory President, Shannon Spotswood, had the honor of being a guest speaker of GirlSpring’s “Wonder Women” series where she inspired our future female leaders.

Rick Wedell, CIO of RFG Advisory, returns to TD Ameritrade Network to chat with host Oliver Renick about market outlook and economic growth.

Earlier this month, Shannon Spotswood, president of RFG Advisory, was one of the 66 financial professionals featured in the Birmingham Business Journal’s “Who’s Who in Birmingham Banking and Finance” roundup.

A fresh prospective, RFG Advisory updates the company logo to reflect changes and growth

Weekly Economic Update - July 23, 2018

Rick Wedell, CIO of RFG Advisory, joins the market panel on CNBC "Closing Bell" to chat about economic headlines and why the financials sector might be lagging.

Weekly Economic Update - July 16, 2018

Reporter Debbie Carlson of ETF.com quotes Rick Wedell, CIO of RFG Advisory, in an article about emerging market exchange traded funds, and strategies that financial advisors can use to offset asset allocation surrounding China. "The downside of using equa

Rick Wedell, CIO of RFG Advisory, appears on Cheddar TV to discuss market performance for the day and provide his performance outlook for the third quarter.

Bobby White, Founder and CEO of RFG Advisory discusses what holds us back from change

Garrett Keyes of Financial Advisor IQ features Bobby White, CEO and founder of RFG Advisory in an article detailing the firm's latest business decision to change broker-dealers.

Toby Salinger from Financial Planning interviews Bobby White, chairman and CEO of RFG Advisory, about the firm's broker-dealer change that is aligned with their level of growth and embraces the hybrid model. "We feel that our potential is unlimited at thi