Welcome to the end of the week! Just sit back, relax, and enjoy this weeks roundup in another edition of Happy Hour.
Net Neutrality
Obama came forward this week recommending net neutrality be enforced by making internet providers utilities. The Republican response was an emphatic disagreement per usual. Really, it was Ted Cruz making a fool of himself.
We’ve also devolved to a point where reverse psychology might work in D.C.
If you don’t know what net neutrality is, that link above does a good job explaining it, as does this video and this article. The short version is that all internet traffic should be treated the same.
What the President and many other people before him have proposed over the past decade is to reclassify internet access as a telecommunication service. Any halfway intelligent person knows that is not regulation of the internet. But it is regulation of how telecom companies, like Comcast, Verizon, AT&T, and others, interact with each other and the content providers.
Of course, the FCC made this mess back in 2002 by reclassifying internet access as an information service. The hope back then was this would increase competition.
We all know that failed. About 75% of homes only have one choice of providers. The companies outsmarted the FCC by avoiding each other and creating regional monopolies for most of the country. Now, they want more power. And they’ve spread enough money around to make it happen.
The FCC’s current proposal is just as bad. It want’s to allow for a tiered internet where content providers can pay up for a better connection. We already pay for bandwidth at given speeds. Why should providers get to decide how fast or slow that content arrives to us regardless of what we signed up for? How does that prevent them from playing favorites with their own content, like Comcast owned NBC and CNBC?
It doesn’t address the real issue we now have either. The lack of competition prevented internet innovation, improvement, and growth in this country while it flourished globally. We pay higher prices than other countries for slower speeds. And the current system offers no incentive for anything to change.
Take the time to educate yourself on the issue before believing a blanket statement from some Washington shill. I would hate to see Ted Cruz’s tweets get stuck in the internet slow lane because of a misunderstanding.
Duracell
Warren Buffett bought Duracell this week from Procter & Gamble. Duracell is the exact type of company Buffett wants to own – a strong, best of breed brand with pricing power. It’s the perfect example of how Buffett looks at businesses, views P&G stock, and deals with taxes.
First, he got Duracell for a song. I doubt he would have done the P&G stock exchange if he thought the stock was undervalued. In other words, he sees P&G stock as fairly to overpriced. I’ll bet on the over. And he avoided capital gains tax on about $4.3 billion. He bought a great business at a great price thanks to overpriced stock and smart tax planning. Brilliant.
Last Call
- Saving Investors From Themselves – J. Zweig
- Saving Ourselves From Not Saving – C. Richards
- If Other Industries Were Like Wall Street – M. Housel
- There Are Things That Matter – M. Batnick
- Why the US has the Most Powerful Currency on the Planet – Quartz
- When Stock Buybacks Are Not a Waste of Money – HBR
- Swedroe: Gold Is A Hedge—If You Have Time – ETF.com
