The Walking Dead's First Season 9 Poster Contains A Massive Reveal

AMC

The Walking Dead

The Walking Dead is starting to ramp up promotion for season 9 ahead of its October release and more pressingly, SDCC, where the first trailer for season 9 will likely be revealed.

I was not expecting so much to be revealed in a new poster, but other than some snazzy new haircuts (Rick with short hair! Maggie with long hair! Daryl….the same), we are seeing not only the return the fabled helicopter from season 8, but the appearance of the ravaged Capitol building, implying a huge setting change for the show, and a potentially wild departure from the comics.

I googled a few local state capitol buildings in Virginia, West Virginia and Georgia before I realized that yes, this really is the Capitol Building in DC. In this shot it looks Fallout-level ravaged, so that does not exactly bode well for the current state of DC, but that’s not really the key point.

If The Walking Dead is heading to Washington DC in any capacity, that is a huge departure from the comics, and signifies that it’s possible that the TV is probably breaking with the source material, at least for a spell.

Washington DC only comes up very briefly in the comics where Glenn scouts it out to find that it’s just as bad as anywhere else, and it’s only mentioned as a possible location to travel after the prison falls for a bit, before the group eventually goes to the Alexandria safe zone instead. And Eugene’s original plan was to go do DC to find a cure, but that was all a part of his lie to stay alive, and we don’t really have any idea who is in DC, including what semblance of the federal government or military might be left there.

AMC

The Walking Dead

If The Walking Dead heads to DC, that would indeed be more in line with the promise that under new showrunner Angela Kang, the show would be more like seasons 4 and 5 again, the “good old days.” In those seasons we also saw big departures from the comics, though eventually the show returned to the source material for the Negan War.

This trip to DC seems like another “side quest” as it were, a detour from the source material that implies that we may be delaying the arrival of the Whisperers, the next comic villain group, if not abandoning them altogether. Given that The Walking Dead has killed off Carl, arguably the most important fixture in the Whisperer war, it stands to reason that maybe the entire plotline is being shelved in favor of something more interesting.

It’s also possible we’re about to connect some dots. If there is a group of some sort to be discovered in DC (and there has to be, it’s not just going to be zombies and nothing else), my guess is that it would connect to the Jadis/helicopter plotline of season 8. Not just because it’s a loose thread, but the helicopter also appears on the damn poster right next to the capitol, which is a fairly obvious hint.

Complicating all of this is the running rumor that Rick is most likely going to die some time in season 9. The latest leaks have his death (possible spoilers) pegged at episode 5, which would be almost immediate as the season starts. And with both Rick and Carl dead, it seems possible, if not likely, that the comics may totally abandon the rest of the source material going forward, and write their own stories for their new, non-comic leads like Daryl and Carol.

I have to say, I’m intrigued. I have been wailing on The Walking Dead for its quality decline and recent cast decisions as much as anyone, but a new, mystery season set years in the future and traveling to DC, completely removed from the comics? That definitely piques my interest. We’ll learn more soon at SDCC, so stay tuned.

Follow me on TwitterFacebook and Instagram. Pre-order my new sci-fi novel Herokiller, and read my first series, The Earthborn Trilogy, which is also on audiobook.

Anyone Employed as a Driver Today will be able to Retire as a Driver

Embark Trucks

Autonomous Truck from Embark

Mike Reid, the Chief Operating Officer at Embark Trucks, said that “Anyone employed as a driver today will be able to retire as a driver.” What makes that statement surprising is that Embark is a leading developer of autonomous trucks. One might think that the goal of an autonomous truck company is to render drivers superfluous. The American Trucking Association estimates that there are approximately 3.5 million professional truck drivers in the United States. Mr. Reid made the statement eft’s 3PL and Supply Chain Summit on June 7th.

Crunchbase reports that San Francisco headquartered Embark has received $17.2 million in venture funding. Embark does not build trucks, it builds the AI-based software that will eventually allow trucks to drive autonomously. What does eventually mean? “The technology will come to market in the next five years” according to Mr. Reid.

The Embark model involves truckers driving to a marshalling yard near an Interstate highway. Then the trucks will drive the long-haul portion of the trip autonomously. At the end of the long haul, the truck pulls off the Interstate at another marshalling yard, a driver gets in, and the truck is driven the final miles to its destination.

Artificial Intelligence is used to train the software how to safely navigate on the Interstate. Embark has professional drivers sitting at the wheel actively monitoring the road, supervising the system, and ready to take control whenever they think the truck is responding too slowly to an impending situation. Embark has run millions of miles “training” in this manner.

The truck uses several sensors whose data is “meshed.” The different sensors are better in different kinds of driving conditions. Some sensors, for example, work better during the day, others at night. The trucks communicate with a centralized brain in the Cloud, but trucks also have local intelligence and the in-cab computer is prepared to take over if connectivity to the Cloud is compromised. “Cyber security is a never-ending challenge,” Mr. Reid said. “But don’t forget cars (with drivers) can be hacked.” By isolating the core – the “brain” in the truck – “we are following best practice.”

A young driver with a job today, that wants to remain a driver throughout his career, will be able to keep his job for several reasons:

  1. The Embark model will continue to require local drivers. “Training” trucks to operate safely in urban areas is an exceedingly difficult AI problem.
  2. The rollout will be gradual, taking approximately 30 years. Embark is training their trucks on a few Interstates in the Southwest US where driving conditions are very favorable. But as more Interstates are added, more professional drivers will be needed for continuing training of the system. And as the rollout continues from the Southwest to other parts of the nation, where more complex conditions are present that can include snow and black ice, the training becomes much more difficult.
  3. The driver shortage is not going away. The demographics show that there are a high proportion of drivers close to retirement age. If anything, autonomous trucks can help draw more young workers into the field because there will not be a need for as many long-haul drivers. Long-haul trucking is an arduous job, and a job that is not family friendly.
  4. Finally, Mr. Reid said that “trends” show that freight will grow by about 30 percent over the decade.

In short, according to Mr. Reid the “narrative” that robots are about to eliminate large numbers of workers is not true, at least not in the trucking industry.

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What Is Adamis Worth?

On the evening of July 1st, investors in Adamis Pharmaceuticals (NASDAQ:ADMP) received the long-awaited news that the developmental biotech had secured Novartis (NYSE:NVS) as its partner to lead the US commercialization efforts for Symjepi, an FDA-approved epinephrine injector.

Some of the specifics of the deal, such as the size of upfront payments and milestones, were not included in Adamis’s original announcement. But even without the details, shares began to rise precipitously. In premarket trading on Monday, shares had climbed 65%. That rise proved somewhat short-lived, however, and shares began to retrace early in the trading session. A rally in the afternoon led to a close up 50% from the previous day, at $4.80 per share.

We published an article in reaction to the news, providing some initial thoughts on the deal. This research note delves a bit deeper into the deal, which was detailed in an 8-K filing published Monday afternoon. We also address the broader question of valuation in order to determine an appropriate price target for Adamis in light of its new partnership and the potential of its pipeline.

The Deal at Hand

The 8-K added some valuable new information to the original announcement, but it failed to dispel all the question marks. Specifically, it does not provide details of the upfront payment, nor the scale and magnitude of milestone payments. This makes a full assessment of the deal somewhat challenging, but it appears Adamis has opted for a larger piece of the profits than for upfront cash. We can, of course, guess at a figure. Analyst predictions range from $2 million to $5 million, which would be in keeping with a deal that leans heavily on profit-sharing. We will have to wait until the Q3 2018 earnings report to get the full details on this. Interestingly, in a break from its usual tendency to disclose as little information to the public and shareholders as possible, Adamis evidently wanted to announce the amount of the upfront payment. Novartis has insisted on confidentiality, and Adamis has – unsurprisingly – complied.

While we do not have a lot of information about the immediate financial boons coming Adamis’s way, we do know quite a bit more about the nature of the partnership and Adamis’s earning potential. From the recent 8-K:

Under the terms of the Agreement, the Company appointed Sandoz as the exclusive (including as to the Company) distributor of Symjepi in the United States and related territories (“Territory”), in all fields including both the retail market and other markets, and granted Sandoz an exclusive license under the Company’s patent and other intellectual property rights and know-how to market, sell, and otherwise commercialize and distribute the product in the Territory, subject to the provisions of the Agreement, in partial consideration of an upfront fee by Sandoz and potential performance-based milestone payments. There can be no assurances that any of these milestones will be met. As part of the Agreement, Sandoz has commercial rights to the Symjepi Epinephrine Injection USP 1:1000 Injection 0.3mg pre-filled single dose syringe product previously approved for marketing by the U.S Food and Drug Administration (“FDA”), as well as the Symjepi (epinephrine) Injection 0.15mg product if approved by the FDA, which is intended for use in the treatment of anaphylaxis for patients weighing 33-65 pounds and for which the Company submitted a supplemental new drug application to the FDA on November 27, 2017. The Company retains rights to the intellectual property subject to the Agreement and to commercialize both products outside of the Territory, but has granted Sandoz a right of first negotiation regarding such territories. In addition, the Company may continue to use the licensed intellectual property (excluding certain of the licensed trademarks) to develop and commercialize other products (with certain exceptions), including products that utilize the Company’s Symject syringe product platform.

The Agreement provides that Sandoz will pay to the Company 50% of the net profit from net sales, as each such term is defined in the Agreement, of the product in the Territory to third parties, determined on a quarterly basis. The Company will be the supplier of the product to Sandoz, and Sandoz will order and pay the Company a supply price for quantities of products ordered. Under the Agreement, net profit is determined based on the amount of net sales less the supply price that Sandoz pays the Company for quantities of the product sold in the applicable period and less certain additional amounts relating to sales, distribution and other expenses and amounts allocable to the product, and net sales is determined based on the net sales recorded by Sandoz for sales of the product and reflecting a number of customary deductions allocable to the product including, without limitation, product recalls or returns, discounts and credits, rebates, and certain other items.

The Company will be responsible for all manufacturing, component and supply costs related to manufacturing and supplying the product to Sandoz. The Company is responsible for component sourcing and regulatory compliance in the supply chain and for testing of lots of product. The Agreement includes customary provisions relating to ordering, delivering and payment for product ordered by Sandoz.

We should take a moment to unpack the details of this deal. One immediate win for Adamis is its retention of all commercialization rights outside of the United States, which could carry significant financial benefits as Symjepi eventually moves into international markets. The deal also covers the lower-dose pediatric Symjepi Jr., which is currently under FDA review.

What is most interesting is the nature of the deal itself. Adamis will receive “50% of the net profit from net sales”, which is different from many pharmaceutical partnership agreements. Most often, royalties are paid as a percentage of net sales. In the case of Symjepi, other costs will be factored in, including the supply price and cost of sales. What that will mean in practice remains to be seen, but we can conclude with relative certainty that Adamis will be getting a much larger slice of the profits than is conventional in a drug commercialization partnership arrangement.

Valuing Symjepi

All eyes will be on Symjepi’s commercial rollout in the coming quarters. If it can secure substantial market share in relatively short order, then it will be generating very substantial returns for Adamis quite quickly. Since getting insurers online can take some time, it is likely to take a number of quarters to make serious headway and to compete for market share against competitors.

That said, Symjepi appears quite well-placed to seize considerable market share. Novartis has tremendous marketing muscle and could go toe-to-toe with Mylan (NASDAQ:MYL), the maker of EpiPen. Mylan and its market-leading product have been savaged in the media and by consumers over the past year due to the company’s aggressive pricing strategy that has tipped into the range of price gouging. A generic EpiPen has not helped much, thanks to persistent manufacturing issues that have led to a nationwide EpiPen shortage. Other competitors have failed to emerge. Kaleo’s Auvi-Q has been one of the few products competing with the EpiPen, but it lacks any discernible advantage in size, ease of use, or price. Despite the lack of any meaningful advantage, Auvi-Q managed to move from 4.4% market share in January 2016 to 32.5% in August 2017. Symjepi can beat out the market leader on all those factors.

The epinephrine injector market represents over $1 billion in annual sales. Mylan’s EpiPen still dominates the market; in 2016, it recorded $1.1 billion in sales, which translated to $419 million in net profit after taxes. Obviously, that level of profitability cannot be replicated in a scenario involving a lower-cost competitor, but the downward pressure on price should be counteracted – at least in part – by a growing overall market. Indeed, the global epinephrine auto-injector market is projected to grow 15% annually to 2026 to reach $6 billion, up from $1.63 billion in 2017. The United States is by far the biggest market, accounting for about 60% of consumption.

If Auvi-Q could, over the course of 18 months, seize more than 30% of the market without significant product differentiation, then it seems reasonable to surmise that Symjepi could do likewise – and more likely better. Taking 30% market share as the base case, Symjepi could see US sales worth $250 million in very short order, and could conceivably hit global sales worth $400 million in the relative medium term.

Future Value Drivers

Looking forward, Adamis has two principal value drivers: Symjepi and Naloxone. Symjepi will retain center stage for the foreseeable future, but it is important also to realize that the company’s pipeline has considerable potential. Mark Flather, the head of investor relations at Adamis, has frequently lamented that the market has paid little attention to the pipeline and other avenues for value creation. Now that the dark cloud of interminable commercial partnership negotiations has been dispelled, the market may be willing to give more credence to other pieces of the Adamis story.

The company submitted its investigational new drug application for its naloxone injection in December 2017. The naloxone market has been growing rapidly in recent years due to the opioid crisis. With prices rising rapidly for existing products, a lower-cost and easier-to-use alternative could seize considerable market share. Adamis may have the opportunity to disrupt yet another market with its naloxone offering – even if it is smaller and not quite as inefficient as the epinephrine injector market currently is.

Overall, there a number of catalysts inbound that should see significant value addition. Approval of Symjepi Jr. is expected, and the Symject naloxone treatment remains a high-potential opportunity slightly further down the line.

Cash is Still Concerning

Whether the upfront cash payment from Novartis is $2 million, $5 million, something in between, or something better entirely does not matter all that much to the Adamis story over the long term. However, it may matter in the short run. Given Adamis’s near-term cash constraints, the upfront payment could potentially mean the difference between the company opting to do a stock offering or not.

Adamis reported a net loss of $7.6 million for Q1 2018, with net cash used in operating activities of $7.9 million, leaving $10.1 million in cash and equivalents. That left the company with 1.5-2 quarters of runway left. With Q2 2018 now at an end, Adamis may have a couple months’ worth of cash. $5 million in upfront payment would likely allow the company to stretch out a little farther and to pay the upfront portion of the $2 million owed the investment bank that helped broker the deal, but it may prove difficult to keep the lights on without going to the market.

If Adamis intends to go to the market, it will likely do so after submitting its Q2 earnings report. That report will also give an updated read on cash burn. Shareholders should be especially mindful of the company’s actions over the next couple months.

Investor’s Eye View

So, where does this leave us?

On the positive side, Adamis is poised to rake in considerable earnings from sales of Symjepi. On the downside, it may take a little while for sales to ramp sufficiently to cover operating needs. The challenge for shareholders is finding the correct balance between these factors.

Currently, Adamis has a market cap of a little under $170 million. Even factoring in a 10% dilutive offering, that valuation is extremely low. With a well-differentiated product, a hated incumbent, and a strong backer, Symjepi should do very well. Novartis plans to move with haste to get a piece of the back-to-school action. That compresses the timeline somewhat, meaning Adamis may not need to raise funds. But if it does, it will do little to upset the underlying value proposition.

Setting a price target is challenging, given the multitude of moving parts and question marks. A couple analysts have already come out with revised targets in the wake of the partnership announcement. H.C. Wainwright has set a price target of $10, up from $7, while B. Riley FBR has raised its price target from $6.25 to $7.50 and Raymond James increased its target from $6.40 to $8.50. The Maxim Group has set the most ambitious price target, projecting a share price of $13.

Reworking some of our previous modeling, we currently see $9.25 as an appropriate 6-month price target, factoring in a potential 10% dilutive offering. With rapid and effective execution on the part of Novartis, there could be considerable further upside. Evidence of not needing to access funding from capital markets would also increase our target.

With many variables and scenarios to game out, we will work to refine our projections in the days and weeks ahead. But no matter which way we slice it, Adamis looks like a worthy stock to own.

Disclosure: I am/we are long ADMP.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The Myths Of Stocks For The Long Run – Part V

Written by Lance Roberts, Michael Lebowitz, CFA and John Coumarianos, M.S. of Real Investment Advice

Choosing The Right Portfolio Benchmark

Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.” -Ben Graham

Benchmarks serve an important role in growing one’s wealth. Most importantly they provide a yardstick to see how we are doing in meeting our future retirement goals. For those that rely on professionals to manage their money, a benchmark allows the client to gauge how the manager is performing versus what the market is providing.

We do not disparage the use of benchmarks. However, the purpose of this article is to help you understand the differences between an equity index and your portfolio. As we discussed in Part 2 of this series, the proper benchmark for any portfolio is the rate of inflation plus a rate of growth that achieves the specific level of inflation-adjusted dollars required at retirement. Meeting such a benchmark guarantees you meet your goal. No other index can claim that. Benchmarking to the S&P 500, or any other equity index, requires investors to take on excess investment risk which is not correlated to the financial goals or duration of the portfolio.

This article specifically addresses the difficulty of trying to track an equity benchmark index (i.e. the S&P 500.)

The continual efforts to “beat the benchmark” leads individuals to make emotional decisions to buy and sell at the wrong times; jump from one investment strategy to another, or from one advisor to the next. But why wouldn’t they? This mantra has been drilled into us by Wall Street over the last 30 years. While the chase to “beat the index” is great for Wall Street, as money in motion creates fees, most individuals have done far worse.

The annual studies from Dalbar show the dismal truth, individuals consistently underperform the benchmark index over EVERY time frame.

The reason this underperformance consistently occurs is due to emotional and behavioral tendencies and the many differences between a “market capitalization weighted index” versus a “dollar invested portfolio.”

Let’s set aside the emotional and behavioral mistakes for today, and focus on the differences between a benchmark index and your portfolio which make beating an index difficult.

Building The Sample Index

To best understand why tracking the S&P 500 index is hard we must first understand how the S&P 500 index is constructed. The following explanation is from Investopedia:

The S&P 500 is a U.S. market index that is computed by a weighted average market capitalization. The first step in this methodology is to compute the market capitalization of each component in the index.

This is done by taking the number of outstanding shares of each company and multiplying that number by the company’s current share price, or market value. For example, if Apple Computer has roughly 830 million shares outstanding and its current market price is $53.55, the market capitalization for the company is $44.45 billion (830 million x $53.55).

Next, the market capitalizations for all 500 component stocks are summed to obtain the total market capitalization of the S&P 500, as illustrated in the table below. This market capitalization number will fluctuate as the underlying share prices and outstanding share numbers change.

In order to understand how the underlying stocks affect the index, the market weight (index weight) needs to be calculated. This is done by dividing the market capitalization of a company on the index by the total market capitalization of the index.

For example, if Exxon Mobil’s market cap is $367.05 billion and the S&P 500 market cap is $10.64 trillion, this gives Exxon a market weight of roughly 3.45% ($367.05 billion / $10.64 trillion). The larger the market weight of a company, the more impact each 1% change will have on the index.

For example, if Exxon Mobil were to rise by 20% while all other companies remained unchanged, the S&P 500 would increase in value by 0.6899% (3.45% x 20%). If a similar situation were to happen to The New York Times, it would cause a much smaller, 0.0076% change to the index because of the company’s smaller market weight.”

Okay, with that baseline understanding of the construction of the S&P 500, let’s create a most basic index called the Sample Index which is comprised of 5 fictional companies. For simplicity purposes, each company has 1000 shares of stock outstanding and all trade at $10 per share. The table shows the index versus “Your Portfolio” which is a $50,000 investment weighted identically.

We will take both the Sample Index and Your Portfolio through various events and price changes that cause differences to occur between the two. The events, and passage of time, are labeled at the top of each table. At the end of the exercise, we provide you a performance chart covering the entire period.

In Year 1, our starting point, we divide “your portfolio’s” $50,000 investment into exactly the same weights and stocks as the Sample Index as follows:

There are a couple of caveats here. The first is that by using so few stocks the percentage changes to the index, and subsequently the portfolio, are amplified versus that of the must broader indexes. However, this only for informational and learning purposes – it is the concept we are after.

Secondly, there are many other factors, outside of the examples that we will cover today, that have major impacts on performance. Corporate events such as mergers, buyouts, and acquisitions affect the index. Your portfolio is also impacted by withdrawals, contributions, and your dividend reinvestment policy.

Lastly, and most importantly, none of the examples today include the significant impacts to portfolio performance over time which comes from taxes, fees, commissions and other expenses. These factors alone typically account for a bulk of the underperformance over the long term but are often ignored by investors trying to chase some random benchmark index.

The Status Quo

In year two, we assume that nothing exceptional, other than typical price appreciation or depreciation occurred. The table below shows the impact of price changes on both the Sample Index and Your Portfolio.

As you can see the Sample Index and Your Portfolio had the same price return and remain exactly the same.

Share Buybacks & Bankruptcy

Over the last ten years, corporations have become major buyers of their own stock, pushing such actions to record levels. Stock buybacks are typically viewed as a good thing by Wall Street analysts supposedly because it is a sign that the “company believes” in itself; however, nothing could be further from the truth.

The reality is that stock buybacks are often a tool used to artificially inflate bottom-line earnings per share which, temporarily, drives share prices higher. The biggest beneficiary of buybacks are the executives whose compensation is heavily tied to stock options. The losers are the long-term shareholders. Not only must the debt and interest expense, frequently incurred to conduct buybacks, be paid for with future earnings, but the buyback, in many cases, took precedence over investment in the company’s future. The long-term implications for the company and the economy are troubling.

The importance of buybacks cannot be overlooked. The dollar amount of sales, or top-line revenue, is extremely difficult to fudge or manipulate. However, bottom-line earnings are regularly manipulated by accounting gimmickry, cost-cutting, and share buybacks to enhance “per share” results in order to boost share prices and meet “Wall Street Expectations.”

Stock buybacks do not show faith in the company by the executives but rather a lack of better ideas for which to use the capital.

Importantly, for our overall example, the reduction in outstanding shares reduces market capitalization.

Let’s go back to our original index and portfolio example.

In year 3, Company DEF buys back 100 shares and each company experiences a change in its share price.

The table below shows the impact of these three events on the index and the portfolio.

Notice that the DEF share buyback caused the market capitalization of the index to fall and the weighting of DEF to decline versus the other stocks. Your Portfolio was unchanged and accordingly, the weightings of the index and your portfolio are different. As we will see, the returns will begin to diverge at this point because of the slight change in weighting.

Substitution Effect

In year four we introduce the “substitution effect.”

When company’s such as GM, AIG, Enron, Worldcom, and a host of others in history, goes bankrupt or have shrunken considerably, they are swapped out of the index for another company. The index is naturally reweighted for the “substitution.” The table below shows the impact of the substitution on the index and your portfolio.

The substitution not only adds a new stock to the index, but a stock with a much higher weighting than the one removed. Not only does Your Portfolio not hold the new stock but whatever value is left on the removed stock is still affecting your portfolio. Additionally, the change in weightings cause further misalignment between the index and your portfolio.

In order for you to get your portfolio back into alignment with the Sample Index, the stock of MNO Company must be sold and replaced with PQR. The problems with doing this are shown in the next table.

The Replacement Effect

The replacement of a stock in your actual portfolio is confronted by a problem. Since there is no cash in the portfolio, other than what was raised by the sale of MNO – only 100 shares of PQR can be purchased as shown in the table below.

As with each year previously we also included changes in price for each individual company other than PQR so that the substitution and replacement were done at the same price for example purposes.

Note: Yes, I could have rebalanced the portfolio to raise cash to purchase more shares of PQR, however, we have NOT rebalanced the index. Therefore, using just available cash is the appropriate measure.

Comparison Is The Problem

The point of this exercise is to show how different types of index and corporate events change the composition of the Index. Unless one is consistently rebalancing their portfolio they will not be able to match the index. Even if one is constantly trading to mimic the index, the commissions, taxes, and fees will weigh heavily on results over time and will lead to underperformance of the benchmark index.

The chart below once again returns us to our $100,000 invested into the nominal index versus a $100,000 portfolio adjusted for “reality.” A $100,000 investment in 1998 has had a compounded annual growth rate of 6.72% on a nominal basis as compared to just a 4.39% rate when adjusted for reality. The numbers are far worse if you started in 2000 or 2008.

Furthermore, both numbers also fall far short of the promised 8% annualized rates of return often promised by the mainstream analysts promising riches if you just buy their investment product, or service, and hang on long enough.

The reality, as shown previously, is that such an outcome will likely prove to be extremely disappointing. However, the financial media continually pushes the idea that we must “beat the index.”

However, comparison is the cause of more unhappiness than anything else. Perhaps it is inevitable that human beings as social animals have an urge to compare themselves with one another. Maybe it is just because we are all terminally insecure in some cosmic sense. Social comparison comes in many different guises. “Keeping up with the Joneses,” is one well-known way.

Comparison is why individuals have trouble patiently sitting on their hands, letting whatever process they are comfortable with work for them. They get waylaid by some comparison along the way and lose their focus. If an individual makes 12% on their investments, they are very pleased. That is, until they learn “everyone else” made 14%. Now they are upset.

The whole financial services industry, as it is constructed now, is predicated on making people upset so they will move their money around in a frenzy. Money in motion creates fees and commissions. The creation of more benchmarks, indices and style boxes is nothing more than the creation of more things to compare to which keeps individuals in a perpetual state of outrage creating more revenue for Wall Street.

Comparison of your performance to an index is potentially dangerous to your investing objectives.

The major learning points regarding benchmarking are:

1) The index contains no cash

2) It has no life expectancy requirements – but you do.

3) It does not have to compensate for distributions to meet living requirements – but you do.

4) It requires you to take on excess risk (potential for loss) in order to obtain equivalent performance – this is fine on the way up, but not on the way down.

5) It has no taxes, costs or other expenses associated with it – but you do.

6) It has the ability to substitute at no penalty – but you don’t.

7) It benefits from share buybacks – but you don’t.

In order to win the long-term investing game, your portfolio should be built around the things that matter most to you.

Capital preservation

A rate of return sufficient to keep pace with the rate of inflation.

Expectations based on realistic objectives. (The market does not compound at 8%, 6% or 4%)

Higher rates of return require an exponential increase in the underlying risk profile. This tends to not work out well.

You can replace lost capital – but you can’t replace lost time. Time is a precious commodity that cannot be regained.

Portfolios are time-frame specific. If you have 5 years to retirement but build a portfolio with a 20-year time horizon (taking on additional risk) the results will likely be disastrous.

We want to reiterate an important thought from the start of this article. Stock indexes have little to do with your goals. Later in this series, we will discuss a benchmark that is extremely relevant to every investor but used by a precious few – inflation. Simply, if your portfolio is growing faster than inflation your wealth is growing. However, just because your portfolio beat the S&P 500, it does not mean your wealth is actually growing.

As Ben Graham suggests, investing is not a competition and there are horrid consequences for treating it as such.

France's Bollore Group strikes partnership deal with Alibaba

PARIS (Reuters) – Bollore Group, the French conglomerate run by billionaire businessman Vincent Bollore, said it had signed a global partnership with E-commerce company Alibaba.

A man stands near the logo of Alibaba Group at the company’s newly-launched office in Kuala Lumpur, Malaysia June 18, 2018. REUTERS/Lai Seng Sin

The two companies said the partnership would cover cloud computing services, clean energy, logistics and other areas such as new digital technologies and innovation.

Bollore Group, which runs a large logistics business in former French colonies in Africa, also has a stake of around 20 percent in French media giant Vivendi.

Alibaba has been expanding its logistics network at home and abroad as it works to diversify its customer base.

Reporting by Gilles Guillaume; Editing by Sudip Kar-Gupta

This Is How Your Startup Should Emerge From Stealth, With A Bang

At least 4 Israeli startups emerged from stealth mode in June by announcing significant funding rounds.  At Start-Up Nation Central, we define stealth mode companies as business entities officially registered at the Israel Corporations Authority but lack a website with any  information publicly visible. Sometimes the stealth mode company’s founders won’t list the company on their LinkedIn profile –they prefer to stay “under the radar”. This usually happens because the technology they’re working on may need more testing and development, the founders may want to raise more money, their potential consumer base needs to be adequately understood and marketed –what’s called a product-market fit– or the company may be preparing for a big launch event to capture the public’s attention –emerging out of anonymity with a bang.

In June, some very serious tech companies unveiled their products to the market.

Panorays, a cyber security automation company, emerged from the stealth and announced a $5M Seed round led by Aleph VC. With Panorays, companies can shorten their third-party security evaluation process from 6 months to just 72 hours, while gaining continuous visibility and compliance to regulations such as GDPR. Panorays was co-founded by experienced technology industry executives from companies such as Imperva, AVG, ironSource, Windward, WalkMe and enSilo. Some were also former members elite Israeli Air Force technology units.

Panorays.

Meir Antar, Matan Or-El, Demi Ben-Ari.

Developer of deep learning chips for the car industry, autotech company Hailo Technologies emerged from the stealth and announced $12M in a Round A. The round was led by Maniv Mobility with participation from OurCrowd, Next Gear Ventures, and a number of angel investors, including Hailo’s own chairman Zohar Zisapel and Chief Executive Officer at Delek Motors, Gil Agmon. Hailo Technologies was founded by by two grads from the Israel Defense Forces secretive military intelligence Unit 81 (supplies the newest technology to Israeli combat soldiers). 

Ride Vision, which makes computer vision technology for motorcycles, emerged from stealth and raised a $2.5M Seed round led by YL Ventures. Ride Vision develops an automated driver assistance system (ADAS) for motorbikes.

Fintech startup Obligo, a developer of billing authorization software allowing landlords to bill tenants for damages, emerged from stealth mode and announced the completion of a $5M Seed financing round. The round was led by Israel-based venture capital firm 83 North, with participation by Entrée Capital, HFZ Capital, and Viola Credit.

Start-Up Nation Finder, the innovation discovery platform for the Israeli tech ecosystem, is tracking some 450 stealth mode companies, so keep an eye on Start-Up Nation Central’s channel on Forbes for more regular news on exciting Israeli startups.

Big Airlines Just Filed a Legal Document to End Ridiculous Emotional Support Animals. It's Absurdly Brilliant

When it comes to emotional support animals on airplanes, truth is stranger than fiction. You’ve seen the headlines–from Southwest, Delta, and United and others:

Now the biggest U.S. airlines have banded together to try to do something about the situation. The result is a 39-page legal document that starts out earnestly, and ultimately makes clear just how crazy it’s all become.

Officially entitled, “Comments of Airlines for America and the International Air Transport Association,” the airlines filed it earlier this month with the U.S. Department of Transportation. It reads like a legal brief, but it’s more like a position paper, and it starts out dryly enough.

By the time we get to the end, however, it’s clear that emotional support animals have gotten way out of hand. The absurdity of the descriptions in this lobbying document might just be enough to finally get the government to do something.

“Barking, biting, urinating and defecating…”

Airlines for America includes most big carriers, such as Alaska, American, JetBlue, Southwest, United, and others. Its filing starts by laying out some of the raw numbers:

  • A 56 percent increase in one year, in the number passengers traveling with emotional support animals. One member airline reports an 8x increase since 2012.
  • An almost uncontrollable surge in passengers trying to travel with “wild and/or untrainable species” that they claim as emotional support animals.
  • A “surge in the number of incidents involving animals manifesting aggressive behavior (including barking, biting, nipping, growling, and fighting) and uncontrolled urinating and defecating…)”
  • Finally, “the cheap and easy availability of fraudulent credentials … via unscrupulous vendors,” that let people with untrained and unsuitable animals claim they’re medically necessary support animals.

​But wait, the unsuspecting reader might think, reading this for the first time: Aren’t there laws that cover all of this? That’s where the absurdity really kicks in.

The big, obvious problem

There are a lot of different laws that seem cover emotional support animals, and they sometimes conflict. But Problem #1, according to the big airlines, is that the DOT requires them to let a wide variety of service animals fly, but then never actually defines what a service animal is, or what training or qualifications it needs to have.

Ironically, Other federal agencies do define service animals–for example the Justice Department says “dogs only,” but those definitions don’t apply to airlines. As a result, you can’t bring an emotional support peacock or iguana on a train or a bus or into a retail store, but airlines are on much shakier ground to stop you.

“It strikes most people as absurd that, under DOT’s current rules, airlines must consider allowing, for example, pigs and birds to travel in cabin on a case-by-case basis,” the airlines wrote.

Instead, they want DOT to copy the Justice Department, and also limit the definition of service animals to include only dogs.

Can we at least agree on endangered species?

You can almost feel the frustration behind the authorship of this document. It starts raising some ridiculous scenarios that appear to be authorized technically under current DOT rules, and asks for guidance or at least an assurance that airlines won’t be prosecuted.

For example, the current federal rules seems to allow an individual passenger to travel with as many as three different support animals at once. How is that supposed to work?

“For example, can the passenger control up to three animals simultaneously throughout the journey?” the document asks. “Are the animals trained to behave, including within the confines of an aircraft cabin?”

And, the airlines list some restrictions its members want to start using unilaterally, for example barring passengers from claiming animals like goats, hedgehogs, insects, birds, and any animal on the endangered species list, among others.

Would DOT at least consider exercising its “prosecutorial discretion” not to enforce laws against airlines that “refus[e] to transport animals other than dogs, cats, and miniature horses?” (We don’t yet know.)

Emotional support spiders and armadillos

There are some other requests as well–things that I think will seem almost overly reasonable in comparison to the current situation.

The airlines want to be able to require people traveling with support animals to actually check in with a person, rather than simply showing up with an online boarding pass.

And they want the right to ask passengers more questions about the animals, and require them to provide documentation of “vaccination, training and behavior.”

But eventually we get to the point that it seems as if the airlines are arguing with an invisible person. 

Because there can’t really be anyone at the DOT who thinks that the laws are truly set up to protect a passenger who wants to fly with an emotional support spider, for example, or an armadillo. 

That would be patently absurd, wouldn’t it? I think that’s exactly what the airlines want the public to know.