EXTRA CREDIT V: Sizzler Rhetorical Analysis

The advertisement utilized by Sizzler in 1991 is interesting to say the least.  The ad as a whole consists of around four minutes of actual footage utilizing various forms of rhetoric in order to persuade the viewer to eat at sizzlers.  The three main ways that the ad utilizes rhetoric is through the creation of ethos within the customers established through their perceived wealth, the establishment of pathos in the viewer through references to American Values, and the exaggerated appeal of the food creating a light sense of logos in the viewer.

Through utilizing various forms of jewelry and clothing, the author of the ad presents the idea that only the wealthy eat at Sizzler’s.  Throughout the advertisement virtually every adult is dressed in some form of luxury clothing.  Multiple men are presented in suits, all women possess some form of jewelry, and any men not in suits are in business casual clothing.  While there is no over dramatic creation of viewable wealth, the advertisement creates the perception that only those of the upper class dine at Sizzler’s.  Through the creation of this dynamic, it makes the consumer subconsciously believe that if they eat at Sizzler’s, they are a part of this upper class.

The add then parallel’s this sense of wealth by appealing to the overall values that America possesses.  Through the proper utilization of the sailor and his girlfriend, a reference is made to any time that the viewer has felt that same love.  This love is then escalated to a family scale, as constant couples and children are portrayed throughout the advertisement.  Through doing this, the viewer feels not only the sense of love and family so dear to the American citizen, but also that those who eat at sizzlers are ultimately successful.  The American dream is to have a home, family, and control of one’s own destiny.  The add, through making every customer appear this way, appeals to this dream in all Americans.

Finally and most basically, the add appeals to human logic by putting forth the notion that people should dine at Sizzler’s because they have good food.  Throughout the ad a multitude of delicacies, from steak to lobster, are seen alongside all of the happy people, as discussed earlier.  Through over exaggerating the grandeur of the food and drink as a whole, while simultaneously showing that the restaurant serves alcohol in the form of wine, many would-be customers are persuaded to dine at Sizzler’s.

Despite the overall obnoxious, cheery demeanor that the Sizzler’s add possesses, it is a very poignant rhetorical device.  The add manages to create the depiction of wealth and luxury, while simultaneously appealing to the average American’s major values.  This tends to be a very narrow, difficult line to tread, but the add does it seamlessly.  Then, through the strategic placement and exaggeration of the restaurants delicacies throughout the ad, it finalizes the idea in the eye of the consumer that the restaurant possesses good food, good people, and has the same values as the average American.  While the add was effective however, I do believe that a similar message, with greater impact, could have been delivered if the add had been more concise.

EXTRA CREDIT IV: Paying College Athletes Deliberation

I have to say of all the deliberations I attended, this one was by far my favorite.  In terms of how the deliberation was structured, it was poorly worded in the three approaches.  The first approach was treating players as students first, the second one was as employees, and the third approach was treating them at some middle ground.  In general, it was believe that there was a combination of being an athlete and an employee that was required, so in that respect I feel that there was a quite a bit of polarization in the three separate approaches.

However, what really made me love this deliberation was all the different opinions present.  Personally, I am of the opinion that athletes should get paid, at least at top tier sporting schools.  Students going to Alabama for football aren’t going there for the education, and the physical and mental stress placed on them by the program is much greater than if they were playing for a very small school.  As such, the pay would be somewhat justified, as long as it wasn’t a significant, multi-million sum of money.

I must say that my opinion was in the minority however.  The prevailing decision was that by giving scholarships like they currently are, the schools are de facto paying the athletes.  Through expanding this program to provide a monthly stipend for food, books, etc., paying athletes is basically already here in that respect.

One point of view that I did find interesting however, was signing players in the same way the NFL creates contracts for their athletes.  In this case the prevailing opinion was that scholarships should be removed in this case, and it is upon the player’s fiscal responsibility to ensure the costs of school was covered.  I wholeheartedly supported this opinion, however I feel that most coaches would disagree, not trusting their players with that kind of money and then putting it on them to remember to pay for their tuition.

However, another point people continued to harp on was that playing sports in college was a 40 hour a week job, and that students should be compensated for it.  The major comparison was to people who were attending the university on academic scholarship not being forced to work this massive 40 hour work week.  One major point I brought up against this was that (generally) students attending a school on academic scholarship are taking much harder major and classes than students attending the school on athletic scholarships.  While I do understand that this statement is incredibly general, I do feel that it is somewhat accurate.

Overall, as I said, I loved this deliberation and found it much more interesting and engaging than the vast majority of the other deliberations that I attended over the semester in RCL.  In general, the deliberation processes this semester taught me a lot about having constructive discussion without argument, and this is going to be one of the major points I take away from the class moving forward.

Summer Is Almost Here, and Once Again Oil

Summer is almost here, and that means a relative lull in the financial world.  Following earnings season over the next few weeks, we are going to be faced with a relatively stable market with no massive fundamental shifts being undertaken by companies.  That being said, as always, there is a massive move we saw taken by OPEC and oil producers over the past week.

As I discussed in earlier blogs, Saudi Arabia, the leader of OPEC, basically started a game of chicken with the United States to see who would cut production first.  The pressure was induced through the lowered oil prices created by both player’s refusal to cut production.  We finally started to see that relent a bit this past month when the US began halting drilling and exploration activities for expansion, however the two most important developments in this story took place this prior week.

This week, Saudi Arabia raised prices on exports to Asia for the second straight month.  As a result of this, oil saw anew 10% gain over the last month and a half.  Due to the massive amount of oil that Saudi Arabi shoots into the market, this increase in prices for them will have a somewhat trickle down affect to the entire industry. Moving forward, if this is the only affect on oil for a while, I expect it to make oil stabilize around 55.

However, I do not feel that it will stabilize due to the economic struggles countries in OPEC not within the Middle East are currently facing.  Members of OPEC who don’t enjoy the same super cheap production cost oil as Saudi Arabia have been virtually driven to recession.  Venezuela, a major contributor to OPEC’s production, stated that their profits were down almost 60% versus last year; being a major portion of the country’s economy, this decrease in revenue has had obvious detrimental effects on their society.  A major indication of this was the movement of wealthy individuals in these countries moving out of “Oil asset purchases”.  Due to the ridiculous amount of money oil entrepreneurs in these countries have made in the past, they traditionally invest in obscure investments, like US stadiums and similar random items in order to utilize their money.  However, recently they have began selling these assets while simultaneously decreasing purchases of standardized securities in the current secondary market.  This is a major sign that these countries have lost the game of Chicken that I discussed earlier, and as a result I feel that this past week was a major turning point in the world’s oil industry.

Moving forward, I expect oil to end the year around $60 from it’s current position at around $53.  This is a somewhat bold prediction, however I feel that this growth will occur, assuming a massive market shock doesn’t occur over the next few months.  In the end though, the market will be the market, and while I feel confident in my prediction, no one really knows; however, I am excited to ride the commodity industry for the next few months and see where this crazy year will take us in the future.


It’s Getting Windy

This week my plan is to blow you away with the economic practicability of wind energy (ok I’m done with the puns).  In my personal opinion I feel that wind is a very solid alternative energy source for the future.  The one major point that the energy source has against it is the massive vendetta citizens have about having “eye sores” scattering their backyards.  However, this problem is becoming less and less of a problem as overall urbanization takes over the countryside where these turbines are normally placed.  This being said, public sentiment is shifting, and I feel that now is the time we will see a massive spike in wind energy.

If we look at the price of wind energy from a cost perspective, it clocks in at around 8.2 cents per kilowatt-hour.  In comparison, nuclear and coal costs around 11.3 cents, and natural gas comes in at about 6.2 (https://www.google.com/search?q=cost+of+wind+power+vs+solar&ie=utf-8&oe=utf-8#q=cost+of+wind+power+vs+coal).  While this cost of wind energy isn’t outdoing the best performing sources on the market, it is very competitive and due to this I see a massive shift in the future to wind energy.

In addition to this, the relative cost of capital equipment required in order to facilitate a “wind farm” is relatively small on a corporate scale.  The cost of a single wind turbine is $3.5 million, which in the grand scheme is chump change for what allows for a constant return on investment (http://ansnuclearcafe.org/2011/01/27/the-economics-of-wind-power/).  However, to build a massive facilitate, estimates state that the cost rivals that of a nuclear plant, however due to the economies of scale in place within the wind energy business, increased spending will ultimately result in increased profits.

Now, wind energy farms do provide a bit of risk to hopeful entrepreneurs.  According to reason scientific studies, wind energy turbines only end up spinning and average of 30% of the time (http://ansnuclearcafe.org/2011/01/27/the-economics-of-wind-power/).  This means that plants that utilize this form of energy could face downturn in times of relatively weak winds in the vicinity of the turbines.  While this is a relatively mild risk, it is still something that and investor must think of.  In addition to this, margins on the turbines are relatively low, coming in at around 10% (http://www.renewableenergyfocus.com/view/21108/siemens-aims-for-10-wind-business-profit-margin/).  If we look at similar businesses, oil and even solar energy blows this profit margin out of the water, so moving forward maintenance cost elimination will be a major goal of corporations utilizing this equipment and hoping to create a steady stream of future profits.

Don’t let that detract from investment however, as one key statistic I would like to point out is the weighted average cost of capital (WACC) that wind energy faces relative to similar energy groups.  WACC represents the amount the company must use as a portion of profits to pay off debt, shareholders, etc, and is typically in the 8-10% range.  However this graph states that wind energy comes in around 7% on the WACC scale (http://www.greenrhinoenergy.com/renewable/context/economics.php).


While lower WACC’s do exist, one would expect the WACC of wind energy to be higher seeing as the company will take out a lot of debt and utilize cash mostly for wind turbine purchases, but this graph illustrates that this is not the case.  This is a major boon for the wind energy industry as a whole.

Despite all of this however, wind energy is currently not the major focus on everyone’s mind.  Due to the massively decreased oil prices currently flooding the energy market, the cost of energy and electricity in general has been artificially low. In the present climate of low oil prices, this form of renewable energy is not the main focus of energy companies; the majority of these energy companies are being decimated by the currently low cost of energy driving down revenue growth and profits.  However, oil has start to increase, seeing a 10% increase over the past three weeks.  This being said, moving forward one should expect increased emphasis placed on these wind energy programs and corporations as oil begins to creep back to the levels we saw years ago at around $4.00 a gallon.

Overall, the future is very bright for this energy source; low capital costs mixed with steady streams of cash offset the relatively low risk present while simultaneously creating a business environment where profits can only go up due to the currently low margins.


EXTRA CREDIT III: Lincoln Speech

Recently I decided to attend the 23rd Annual Kenneth Burke Lecture in Rhetoric.  Having no idea what to expect, I went in with an open mind.  After a few awards were given out we got to the meat of the program, which was a speech by Northwestern’s esteemed Dr. David Zarefsky.  He came to give a speech on the rhetoric that Lincoln utilized.

When I saw Lincoln’s name on the brochure, I immediately expected it to be a rhetorical analysis of the Gettysburg Address.  This seems like it would be the most obvious topic of rhetoric utilization within speeches.  However, I was pleasantly surprised to find out that the presentation was no on this speech, but on his second inaugural speech.  The main topic of discussion was the the utilization of “somehow”, “may”, and “if” within the speech.  I was actually incredibly impressed with how much thought actually went into Lincoln’s decision to utilize these three words.

The major reason for using somehow was to reconcile everyone’s differing thoughts for the cause of the war.  A major point he made in his speech was how “interest”, a major point utilized within many of Lincoln’s speeches, was representative of that way in which slavery was in the economic interest of the South.  He stated that this economic interest was, somehow, the cause of the war.  By utilizing somehow, everyone’s reason for the war in their own mind becomes justified.   Through vagueness, everyone’s belief regarding the cause of the war is justified, and people feel a personal connection to the war.

He then later goes on to place the word “may” within the speech.  By doing this it gives Lincoln the sense of uncertainty moving forward, but also of not being certain.  It makes the idea of slavery seem to have a chance to be supported by God, and not definitively say that it was the cause of the war.  As a result, it isn’t gloating over the North’s win, nor is it justifying the South’s actions.  By staying ambiguous Lincoln is able to keep calm within the community without alienating a single side.

Finally, the speaker than goes on to justify the use of “if”.  This makes him seem not all knowing in the way that politicians today typically are (He cited Georg Bush and another man misquoting Lincoln), and as a result makes his speech more personable.  Through the utilization of the term if, it creates the idea that the people of the period must put their faith in God and hope that their actions were just.

In general, I thought that the speech was great. I had never considered how much thought could go into using three simple words like somehow, may, and if.  It really opened my eyes up to how difficult crafting speeches can be.  In addition, it showed how much power could be had in a short speech.  This speech turned into Lincoln’s living will I believe the speaker stated, and it really does seem to embody his belief for moving forward with reconstruction at the time.  I feel that despite the negative attention this speech received at the time of publishing, it was almost as great as his Gettysburg Address.

EXTRA CREDIT II: University Health Deliberation

A second deliberation that I attended was on the role of University Health in Penn State’s.  This deliberation turned out to be the prime one which I thought was funny seeing as it was a very mild topic. However, being the last listed, non-rescheduled deliberation, that was to be expected.  Almost 40 of us ended up being crammed into a small room on the lowest floor of the library (The room was impossible to find; I spent a good 30 minutes looking for it).

Now with such a big audience, one wouldn’t expect them to disappoint.  But they did.  The approaches they chose were very strange across the board in my opinion, and they did a very poor job of contextualizing the actual role of University Health within the Penn state community.

The first approach that the group introduced was basically socialized medicine on a university wide scale.  This basically amounted to a tuition hike for everyone in order to pay for those who couldn’t afford it.  The main problem that I had with this approach was that it would end up increasing the price of tuition for everyone, including those who can’t afford medicine to begin with, which seems counter intuitive.  In addition, the services University Health provides are very mild, which I will touch on later.

The second approach that the group introduced was focused on the student being the only one responsible for their health, which was for the most part in no way related to the first approach.  A big idea here that we discussed was that it’s the student’s responsibility to keep themselves healthy and it wasn’t on the school to keep the students healthy in terms of diet and exercise, an idea which is blatantly obvious in my opinion.

The final approach focused on problems within University Health itself.  The major problem that came up was the wait time, which seemed simple enough.  I had never experienced this, so to hear that people had horror stories was a surprise.  However, at the end I asked a student complaining if they made appointments or just walked in, and they said they just went in and asked for help.  Honestly I had no idea how they expected not to wait a long time when they didn’t schedule an appointment.  This had me a little confused.

The biggest problem with the deliberation as a whole that I had a problem with was the way the deliberation group didn’t contextualize University Health.  Everyone across the board was acting like University Health was a hospital and that they should be able to receive treatment there and not be sent to a hospital.  The group really needed to put forth the fact that the center was for simple problems, not emergency care.  One person said they broke their foot and were angry that University Health made them take a hospital to the ER; they just wanted treatment at University Health.  No one really seemed to understand that University Health was not capable nor able to provide higher care treatment from a liability perspective.  I tried to bring this up, but no one really paid attention to this point when I said it.  This was a major point in my opinion that needed to be emphasized and it was something sorely lacking about the deliberation.  Overall, I found the deliberation to be somewhat bland, and while it did facilitate constructive ideas, the ideas made were either out of context or incredibly obvious.

EXTRA CREDIT I: Serial Talk With Sarah Koenig

This even turned out to quite the fiasco, we arrived to Schwab auditorium and the doors were locked.  Luckily someone conveniently opened the doors and we slipped in.  Apparently the even pulled much more interest than was expected.  Once inside, greeters were blocking the doors to the auditorium, and they basically were telling everyone the auditorium was full and we either had to stand in the waiting area and listen or leave.  Despite this, a few passionate fans of Sarah tried to barge through, ultimately being kicked out by the aggressive greeters, but luckily we were able to stay in the waiting area and hear the presentation over the loudspeaker.

Overall, I felt that this event was very enjoyable and provided a unique perspective on police reports.  The story she told involved a police investigation of a man that started as a missing person’s report who was eventually found dead.  A repair man stumbled upon his body in a park when he was using the bathroom in the woods, and immediately reported it to the cops.  As to be expected, this immediately drew a lot of interest to him, and he was questioned.  He told officers that he was driving home and had to pee, but they were skeptical due to the fact that the body was almost 200 feet from the place he stopped his car, and hidden under a log opposite the road, therefore there was a high probability he knew what he was looking for.

They then questioned him about bottles found near the scene of the crime.  The repairman was really into drinking beer, but upon pressuring admitted that he drank whiskey and rum when he was in the car.  Ironically, this made him seem more innocent, as the bottle was brandy.  The main reason he was being so aggressively questioned however was due to his criminal history.  He had been caught multiple times for streaking, the most recent of witch involved flashing a women who turned out to be an officer and then running off.  The officer however proceeded to take clothing from the mans car, and the man was caught when he reported the clothing missing.

However, in the end this man end up being found innocent.  An initial polygraph revealed that he was lying, but after a second polygraph, when he didn’t seem nervous, he was found to be innocent.  In the end the man wouldn’t talk to Serial and the case is still open I believe.

The most interesting part I found about this presentation was the way in which the speaker described gathering the information.  She said she went through stacks of reports and was able to recreate the story in an entertaining way by noticing very small details within the reports.  I was amazed about how much skill it took to reconstruct a small story like this.  I believe the speaker said she went through almost a thousand pages of police reports to craft the 30 minute podcast.  I also thought it was funny how serious she said her fact checker took reports.  She said basically every one of her reports was corrected even more so than when she worked for a science journal I believe she said.  Overall, the experience was enjoyable however.

Iran, nukes, and oil

In this week’s post I’m going to talk about the implications of the framework Iran nuclear deal.  For those of you who haven’t been following the news, last Iran and world leaders agreed to a framework of a finalized compromise on Iran’s nuclear program.  The deadline for this final deal is currently June 30th, but reaching the framework is incredibly significant on the world’s oil supply and hence the price.

Iran currently has been under heavy UN sanctions due to continuing to develop their nuclear program despite resistance from most of the world.  As a result of this a major sanction was to severely limit the countries crude exports.  This resulted in 1 million barrels of oil a day being removed from the world economy.  As we know from econ, decrease in supply means increase in prices.  However, these sanctions have been on the country for quite some time, therefore this decrease has been priced in since before oil even began to drop last year.

This moves us to the present.  Due to the framework of the deal being reached, it’s generally expected that a full deal will be reached at some point around the deadline (Most likely a month later, because Iran get’s a weird twisted joy out of standoff negotiations).  This means that the sanctions will be lifted, and there are two major ways that these sanctions will be removed.

SCENARIO 1: Sanctions are removed in a short time-span

The first scenario for the removal of these sanctions would be that the sanctions are lifted in a relatively short time span, virtually all at once.  This means that after about a one month ramp up of production by Iran, they would be producing at virtually full capacity again.  The impact of Iran’s production is around 1 million barrels of oil a day at full production capabilities.  That seems relatively insignificant until you realize that OPEC as a whole produces 30 million barrels of oil a day.  This means that Iran’s entrance to the market would increase the overall supply by >1%.  This would be a massive market shock, and we would see the price of oil drop like a rock in response.  To put the impact of the actual re-entry into perspective, oil dropped 6% when the deal, with zero specifics, was SIMPLY ANNOUNCED.  Imagine the reaction on a release of full removal of sanctions/reentry into the market.

SCENARIO 2: Sanctions are removed gradually over a year+

This second scenario basically have the sanctions being removed in phases over a relatively long period.  In this situation the market shock would be relatively minute, but it would ultimately result in the price of oil stabilizing around 50, where it is now, despite economic growth around the globe.  In this scenario, oil would once again be projected to stay low for even longer than it already is.  Most growth in demand increasing price across world economies over the next year would pretty much be canceled out by this development.

The real question is which one is to be expected?  Thankfully Iran informed us that the sanctions would be lifted IMMEDIATELY… Until the US then came out the next day and said the sanctions would be lifted IN PHASES.  Who doesn’t love global politics?


Wave Power

A recent development over the past few years in the alternative energy field has been the idea of wave power.  That is, energy generated through waves in the ocean.  I would have rather had them call it moon power, but that’s besides the point.  The basic premise of this idea is that turbines are placed in the ocean off the shore, but close enough to feel the effect of waves, and the waves create energy through turning the turbines.  To describe it in a picture:


That link also has a lot of mathematical implementations for all my fellow math majors out there!  In general this seems like a great idea; the waves always are happening and the generation is constant unlike wind energy, which requires wind, and solar energy, which requires no clouds.  However, as always, this is something that sounds too good to be true.

The first major setback of the application of wave energy from an economic perspective is that the capital cost of implementing the technology is unimaginably high.  This isn’t surprising though, because it basically requires the company to build the ridiculous platform pictured above that goes relatively deeply underwater in order to even think about getting energy from the ocean.  The cost of a single turbine system is $26.9 million (http://www.surfpower.ca/systemcost.html).  In reality, the amount of energy that a single system generates is negligible.  Furthermore, considering the destructive, unrelenting force of waves hitting the shell of the turbine system, there is a high risk of failure, destruction, or similar catastrophic meltdowns of the energy generating system.  The day to day costs would, I imagine, be absurd.  Furthermore, a single hurricane system would most likely destroy the entire turbine, considering how proximity to an ocean amplifies the effects of natural disasters.

Another major current problem facing wave energy is the incredible difficulty that electric companies have to go through in order to convert the energy into useable sources (http://www.economist.com/node/11482565).  Wave energy as it is cannot be simply channeled into electricity like solar and wind.  It has to go through additional processes in order to reach consumer households and markets.  To put this in perspective, the cost of wave energy is estimated to be on average $1 per kilowatt hour.  That’s more than nuclear energy, the current most expensive form of energy from a relative capital investment perspective.

In addition to this, the limited locations that exist and are viable for these types of systems are severely limited.  The ideal area would face little to no major storms, have enough waves to generate power but not damage the system, and then finally the area would have to approve the production of that property.  Furthermore, the relative land costs of a long stretch of beach would be absurd.  Beach-side property is among the most expensive in the world.  While those attempting to develop a wave energy system would most likely choose somewhere that doesn’t have high property costs, the input costs for land (not even thinking about the capital costs of equipment that I mentioned earlier) would still be much higher than purchasing a field for solar/wind production.

Now, while there a massive amounts of con’s that I listed throughout this post, wave energy definitely has a future.  For example, if technology was created that placed the overall systems underwater, and solved the current issues of being an eyesore and facing damage risks, the investing opportunity would be tremendous.  The biggest issue currently is the amount of risk associated with the wave energy systems; the chance that the entire system washes away because of a storm after millions in input capital costs unsettles the stomachs of even the most risk adverse.  One interesting idea I do have for the pursuit of this energy would be to utilize waves created in non-ocean systems.  For example, waves created in the great lakes would provide a much safer investment opportunity for aspiring entrepreneurs attempting to enter the energy industry.  If these waves in lakes could be utilized cheaply to their full potential in the future, a massive amount of the world’s energy focus would most definitely shift to wave energy, and we would ride the wave to a new energy future free of fossil fuels.

Consumer Discretionary Sector investing

Welcome back to this week’s edition of the stock pick of the week.  This week’s choice is basically any stock in the consumer discretionary sector of the US economy.  What is the consumer discretionary sector you may ask?  It’s basically any consumer good that isn’t required to live.  That is, these stocks are marketed to the US consumer and see ups when there’s free cash lying around, and drops when consumers are keeping tight wallets.

The first major point behind this investment thesis is, like always, oil.  With lower gas prices, consumers are willing to spend much more on pointless things that they honestly don’t need.  This makes any consumer discretionary company fill with joy.  However, these increases in sales are typically not noticed for a while and there is a delay in the spike in sales.  With earning season coming up, many companies are filing their 10Q earning report (The report that releases how much money/profit the company made during the first quarter of 2015).  I expect the vast majority of consumer discretionary stocks to exceed expectations and analyst projections, assuming there is nothing that fundamentally has gone wrong with the company during this past quarter.

Another major driver behind this investment is the continued decrease in unemployment and overall health of the US economy.  Within the United States we have seen unemployment final reach the Fed’s target of “Full Employment” (The rate at which the economy starts to become hurt by further decreases in unemployment).  We know this because the Fed, as I discussed last week, is finally attempting to pull back in the economy by increasing rates over the next few months.  However, at the current time these rates are not dragging the economy back, therefore the consumer is still able to spend freely.

One note I do have to say about this investment thesis however, is that if one does invest in this sector, it is key that the stock for the most part or completely has sales in the United States.  Due to the relative strength of the US economy compared to the rest of the world, the US dollar is currently worth a fortune in other countries’ currencies, but that makes our exports extremely expensive in other countries.  Hence, a company that is receiving payment in Euro due to having operations in Europe is actually seeing minimal increases in revenue due to the fact that the euros that they pay in that country are worth much less to US centered companies who operate mainly in the US with divisions in Europe.  To put it in perspective, months ago the exchange rate was 1.2 dollars per euro.  The current rate is closer to 1, but overall costs of goods in euros have not changes.  This means US company’s European earnings basically dropped by 16% as a result of simple changes in the currency exchange rate.

The final piece of advise I have for the risk prone, is now would also be the time to invest in a consumer discretionary low market cap, high growth stock.  High growth stocks thrive in a booming economy like we are currently in, and a consumer discretionary focus would amplify this even further.  Therefore a consumer discretionary high growth stock would have the most upside potential at this point in time, but logically also the most downside.

Hopefully this made sense to you guys!  Let me know in the comments if there was anything that I didn’t explain adequately!

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