Money Monday

MONEY MONDAY 1/29/18

KIBBLE

Today is the first day you can officially start filing your taxes. The big reason to file as soon as you possibly can: it could help prevent tax ID theft. Theives will use stolen personal information to file your taxes to steal your refund… but if you can file quickly, you'll hopefully beat them to the punch and they won't be able to file a fraudulent return using your info. And given the country is still trying to recover from that Equifax data breach, filing early is more imperative than ever!

Another reason why you shouldn't get a refund - you don't want to be banking on something that could get stolen

Topic A

Reports say that Kroger may be teaming up with Alibaba to take on Amazon

So, what is Alibaba? Alibaba is basically the Chinese version of Amazon. It's an e-commerce and tech company that was founded in 1999.

Amazon's market cap = $659 billion… Alibaba's market cap = $505 billion. Alibaba's "Singles Day" in 2017 set a record of $25.3 billion in sales (in one day!). By comparison, Thanksgiving, Black Friday, and Cyber Monday TOTAL sales in the US were a combined $14.5 billion.

These reported "discussions" between Kroger and Alibaba come as Amazon has expanded aggressively into groceries with its acquisition of Whole Foods Market.

So, to combat Amazon's aggressive expansion into groceries, Kroger is exploring an alliance with Alibaba

Alibaba is similar to Amazon in that it operates supermarkets that use Amazon Go-like technology that allows cashier-less stores. And THAT'S what Kroger is really interested in - the technology. Alibaba's Alipay could enable Kroger shoppers like you to skip grocery lines and pay for food with an app.  Plus, a deal like this would give Kroger exposure in China

As for why Alibaba would want to do this: with 2,800 stores across the U.S., Kroger could provide Alibaba a massive American platform to compete against Amazon.

Kroger potentially working with Alibaba makes much more sense for shareholders than Kroger acquiring Boxed or Overstock (the rumors over the past couple of weeks). Boxed does a lot with bulk shipping. That’s not too helpful for shipping groceries to be people’s homes. Overstock’s revenue in 2018 is expected to be about what it was in 2016. That’s not good for a company in the booming online retailing industry.

Alibaba would be a much better choice as a partner because it has the technology and global presence to rival Amazon. And after all, THAT'S what so many companies are try to fight these day: how do we compete against a company that's "distrupting" every industry?

If you think Amazon is an "online shopping" company, you're wrong. It's a TECH company. Did you realize that Amazon's Web Services alone made $12 billion in 2016? In the cloud storage market, Amazon has more than 40% of the market share - that's bigger than Microsoft, Google and IBM COMBINED!

However, the one thing we're wondering at Simply Money Advisors is if Alibaba is thinking of this potential deal less as a partnership and more as a possible acquisition. After all, while Kroger's sales are about 5x more and revenue is 4x more than Alibaba's, Alibaba has about 5x more profit than Kroger.

While a deal like this could mean Kroger stock would go up… if you're someone "in the middle," you're in trouble. It's a trend we keep seeing.

The good news when it comes to Amazon: they've made an investment here in the Tri-State

HERE'S THE SIMPLY MONEY POINT

As companies scramble to keep up with Amazon, don't be surprised if you start seeing changes. Make sure the company you work for is on the "right side" of those changes.

#2: Enquirer

Every Sunday, Simply Money is answering your money questions in the Cincinnati Enquirer.

Michael in Delhi Township: My wife and I are hoping to retire in a few years. We’re wondering how to create a retirement budget?

#3: Grow / protect

If you've taken a look at your investment accounts at any point over the last year, you're probably pretty happy with what you're seeing. You may even be thinking, "Wow, this is pretty easy!" But here's the Simply Money caution: you shouldn't confuse a bull market for brains.

It's easy to look at investments full of big returns and think you've got Wall Street all figured out. But the reality is that almost everyone who bought stocks in the past year is looking at the same thing.

The danger comes in concluding that you're an investing genius who doesn't need to follow the investing rules that help protect everyone else.

And worst of all, many of you might feel the urge to abandon protective strategies at the worst possible time - like deciding to own more stock even though your risk tolerance says you shouldn't, or trying to chase a "hot" investment like Bitcoin.

This bull market is about 9 years old. And we're not saying it's going to end tomorrow. In fact, considering we think the economy looks pretty strong at the moment and the risk of recession is very low over the next 6 to 9 months, that bodes well for stocks.

But the market will "correct" at some time. This means it will drop by at least 10%. It could be more. It could be less. But it's going to happen - it's just that no one knows when (and if someone tells you they DO know when it's going to happen, they're blowing smoke). And once stocks start falling, your current feeling of "invincibility" will probably disappear as well.

So what's this mean? It means that NOW is the time you should be looking ahead and trying to plan for "what might happen." This means having a strategy to PROTECT your money, even as it's growing.

And if you're working with an advisor, this is something he/she should be doing as well. That's why we call ourselves "financial PLANNERS" at Simply Money Advisors - because we're constantly helping our clients plan for the "what ifs."

HERE'S THE SIMPLY MONEY POINT

You should not only have a strategy in place to help your money GROW… but to PROTECT it as well.