Home Book editor Forget the obligations and respect the actions. Barron’s Letters to the Editor.

Forget the obligations and respect the actions. Barron’s Letters to the Editor.

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For the editor:
If you invested $100 in the S&P 500 in 1928, just before the worst crash ever, and held it until 2021, you would have $761,710.83 (“Best Income Investments,” Cover Story, July 1). Equities have largely outperformed all other asset classes for those with a long-term horizon. I’m going to ditch bonds and stick to stocks.

Chris Bentsen, On Barrons.com

For the editor:
Wait for him, wait for him, wait for him. Anything that looks cheap in a bear market can, in the end, become much cheaper and fetch more.

Gregory McCulley, On Barrons.com

AutoZone and O’Reilly

For the editor:
The auto parts retailer story was both interesting and timely (“Everyone Needs Auto Parts, Even in a Recession. These Stocks Are Good Buys,” June 30).

This year’s best performer, AutoZone, has an unusual and remarkable financial profile: well over 100% of the funds used in the business are provided by sellers, lenders and owners. The shareholders own the company, but their investment is negative; that is, the company has an equity shortfall. In addition, net inventories are negative, as accounts payable regularly exceed inventories. I assume that AutoZone sellers get paid some time after their products are released from the point of sale. The company also benefits from negative working capital, as current liabilities exceed current assets.

These two factors, combined with excellent profit margins, allow AutoZone to post a return on invested capital that has exceeded 50%. AutoZone consistently generates operating cash flow well in excess of its needs or desire to reinvest in the business. It uses most of this cash, along with some borrowing, to reduce its stock count through share buybacks. This allows earnings per share to grow at a much higher rate than gross profit. Its competitor O’Reilly Automotive follows the same financial playbook. Both AutoZone and O’Reilly are fabulous, shareholder-friendly companies.

John R. Rich, Greensboro, North Carolina

Bavarian Nordic

For the editor:
In Rupert Steiner’s article, “This Danish vaccine manufacturer is a leader in the field of monkeypox. The stock could take off. (European Trader, June 30), he says Bavarian Nordic is the only one to have its monkeypox vaccine approved in the United States and Canada, giving the company a “virtual monopoly.”

While this is true, several other pharmaceutical companies are actively working on developing drugs to fight monkeypox. The European Medical Agency has authorized the use of TPOXX and Tecovimat, manufactured by the American company SIGA Technologies, to treat smallpox, monkeypox and cowpox. Since 2018, the Food and Drug Administration has approved the use of TPOXX to treat smallpox in the United States

Other pharmaceutical companies that investors might consider are Emergent Biosolutions and Chimerix. While the current public health threats posed by the monkeypox virus are low, governments appear to be increasing their stockpiles of drugs to combat potential outbreaks of smallpox and monkeypox. Investors may want to research the various pharmaceutical companies actively involved in this space.

Michael Gigante, Wellesley, Mass.

Face-to-face on crypto

For the editor:
The growing contingent of cryptocurrency traders turning flip-flop is beginning to recognize Bitcoin’s ugly underpinnings: no tangible benefit to the lay consumer and purely speculative growth (“Crypto took Wall Street on a wild ride. Now it’s ending in tears,” July 1). The Securities and Exchange Commission still cannot say exactly whether the cryptocurrency is a security or a commodity. Until the destructive nature of the crypto rise can be lassoed with regulatory action, Benjamin Graham’s “smart investors” will continue to watch from the sidelines. Thanks for highlighting the pros and cons of crypto with an unbiased background, Joe Light!

Blake Kvamme, Scottsdale, Arizona.

For the editor:
Highlighting the lack of regulatory oversight of crypto as the primary cause of its extreme volatility puts far too much faith in the government’s ability to monitor markets, especially new ones. One only has to go back to 2008 to remember how the government not only watched the crisis unfold, but also paved the way for it by turning a blind eye to many too high-risk practices.

Why would the story be different with crypto?

Carson Levit, San Francisco

beautiful bear

For the editor:
“Analysts are in la-la-land,” says Vincent Deluard, director of global macro strategy at StoneX Group. No kidding! (“Wall Street earnings forecasts are in ‘La-La’ country. Stocks need to adjust,” The Economy, July 1).

Many experts in most professions often are. However, the classic long-term investor (the fundamentalist) knows better and shouldn’t really care. Indices in bearish territory – well, that’s a nice thing, despite “more pain” (sobriety is healthy).

I have been investing in fundamentally sound companies for over four decades. Iconic investor Peter Lynch said it best many years ago: it’s not the brain, it’s the stomach.

“Do you have the stomach for that?”

Tom Verdi, Providence, RI

Send letters to: [email protected] To be considered for publication, correspondence must bear the name, address and telephone number of the author. Letters are subject to review.