Friday, December 23, 2011

The Apple of my eye

Caveat, I'm a big Apple fan. They just announced a press event for October 4. The assumption is this is the new iPhone (oh please oh please oh please let it run on Sprint!). I digress.

I doubled down, buying more around the time that Steve Jobs announced he was retiring as CEO, at around $380/share.  Today it's $419.  That's over 10%. In a month. Why, because even without him, the company is very well run.  And I still think it's a good deal, Some things to consider:  It's the largest publicly held company in the world by market capitalization, and it doesn't have a monopoly in any segments. Including iPads as computers, it's only got about 12% of the market. But it has the vast bulk of the profits. Let me repeat that. Apple is making all the money. This year Apple captured two thirds of available mobile phone profits in Q2.
The analysts are putting prices like $500-$520/share on the stock. As I've said before, I don't believe in analysts for a few reasons, primarily, they are not inside the company, and don't have a real clue as to how the day to day operations are going, nor do they know what products might or might not be in the pipeline.  Morgan Stanley feels Apple should buy back some of it's shares, because it has too much money on hand. With all due respect to the probably very intelligent analysts at Morgan Stanley, that's the stupidest thing I ever heard.  We're going through a recession/depression/giant suck of an economy and they're saying someone has too much cash on hand?  Really?  Hm, I bet Circuit City, Blockbuster or Borders wished they had too much cash on hand. Sometimes people talk to keep the quiet from enveloping them. 
I've been a shareholder for over a decade. I've never gotten a dividend, and I'm cool with it. When I originally bought the stock around $4 I didn't expect one, nor do I now. I don't want one. I want them to keep that money in the bank, keep making great stuff and keep getting more valuable. My point is, this train ain't stopping no time soon....

Netflix - WTF?

On July 23, Netflix stock hit $298/share.Today it's at $130. The stock had tripled since 2010. Well, scratch that. What happened? A couple things... They had already vanquished Blockbuster, who was too stubborn to see streaming as a viable alternative to physical stores.  So they were BMOC in video.  From everyone I talk to, the biggest problem with their streaming service is lack of popular/current titles. That isn't totally their fault, the content creators don't want movies streaming too fast, it undercuts the DVD market.  So, in the middle of all this, they are in ugly negotiations with STARZ, one of their MAJOR content providers. They double down: raising the price on streaming to current customers, even though never raising their content from suck to less suck. There's a backlash, they pretty much ignore it. Then they triple down: separating the streaming and DVDs by mail into 2 separate business units, calling the DVDs by mail Quickster. Wow. Bet that took a long meeting to come up with. The price will be the same for the combined service (the new, higher price), but now you will have 2 debits on your monthly credit card bill versus one.  Anyway, the STARZ negotiations imploded, so the library will be going from suck to more suck. And as I understand it, that's the streaming and the DVD libraries.  So more suck 2012 costs more than suck 2011. Good move. The sad thing is, there's no one to take advantage of the missteps. Blockbuster, a shell of it's former self, isn't set up to do streaming or large volume DVDs by mail. But Coinstar and Amazon, not to mention that other company, Apple's iTunes are all out there

Bottom line, I don't think Netflix is going away, but they really need to get their act together. The stock is probably a buying opportunity right now because at $298 it was probably over rated, and at $130 it's probably under rated.

Wednesday, November 2, 2011

Occupy Transition: A New World Order

This is also posted today on my job transition blog...


Cue the Death Star music....


I think the NBA could not have picked a worse time to go on strike.  Those in the top 1% income bracket, arguing with those in the top .001% income bracket over how to split the money they get from the other 99%.  That is our fault. Don't get me wrong, I love the NBA, it's fantastic. But really.


Bank of America backed down from $5/mo debit card use fees because people started withdrawing their funds.  Banks are now raising their fees as well, and requiring minimum balances to get free checking or accumulate interest.  The funny part of this is that the banks are in effect penalizing you because you aren't giving them enough money to invest. They are still investing it, though.  And paying you one or two percent interest on that money while they invest it at much, much higher rates.  They look at your savings account as free money.  The banks can invest it, but if they mess up and lose it, the government will step in and pay you back what they lost. Want an idea what their spread is? Ask your bank what their interest rates are on auto loans. Subtract from that what they're paying you in interest on your savings. That's what they're making on your money.  And since many people keep most of their money in a checking account that gets no interest, that's an even wider spread.  This is just the tip of the iceberg.  The Occupy demonstrations have spread around the world. Why?  Because Occupy Wall Street is a venue, not a movement.  It's people giving voice to their anger. Anger? Over what?  In a nutshell, the same people who cratered the global economy, wiping out 401k's by the tonnage, walked away with nary a scratch. The US taxpayers paid to make them whole and now they're taking huge bonuses again.

But they have opened people's eyes.  We are now realizing that credit card companies and banks don't lend to people who need money, they lend to people who can repay the money.  Many people have found themselves without jobs, and need to use credit cards to pay for monthly living expenses. That's when reality hits and they find out that as their credit is slowly destroyed, so is their ability to borrow to keep a roof over their heads. Or, as their credit score drops faster than RIMs stock price, these same companies who enticed them with offers of low interest rates, no annual fees, etc., are raising these same interest rates.  Kinda like not getting water from a stone, so you raise the required amount of water you want the stone to produce.  If it's not making water now - oh, nevermind.What's in your wallet?  A bag of hurt.

The problem is that in the 80s and 90s we as a society stopped saving (correction, the other 99% of us did). We spent every dime we made "enjoying the good life" and when that wasn't enough, we got credit offers from our "friends who just wanted us to keep on enjoying."  Sure, they offered very low introductory or final rates, but as soon as we missed a few payments, or went over our credit limit, all bets are off. They sometimes even raised your rates because you were late paying someone else.  That's right, a totally unrelated, unconnected company.  Kinda like your cable gets shut off, so the utility company, who is being paid on time, shuts off your heat. I guess that's solidarity.

Why were we encouraged to spend ourselves almost into oblivion?  Welcome to capitalism. Capitalism requires people to spend money, not save. To keep a capitalist society rolling along, people have to keep buying stuff. That makes companies rich, they hire more people who can spend even more money.  After 9-11 we were encouraged to go out and spend to forget the beat down we just got. Every Black Friday we rush out like lemmings at 3 AM because we absolutely have to have that thing, whether it's a 60" plasma TV or new furniture or whatever. Every car commercial I see show the lease price. When I was growing up, the only people who leased cars were business owners and companies.  The biggest draws were 1) it wasn't their money, and 2) they could write it off as an expense on their taxes. Now leasing is the norm. Why? because it allows people to get into vehicles they probably couldn't afford paying for directly. See a trend?



The same people on Wall Street who "the other 99%" are mad at for getting multi-million dollar bonuses are the ones we happily give money to in the form of credit card interest payment and brokerage fees.  We fed this monster, we have to starve it.  We have to find a happy balance between spending and saving. But we also have to become more financially savvy in general. While it might be good for Wall Street if we constantly spend, borrow and spend, it might not be good for the Joneses. Among the many lessons learned in the crash of 2008 is that the experts on Wall Street may not be as financially intelligent as they may have led people to believe.  How else would IAG, Leman Brothers and others be wiped out? The answer is that individual greed was more important than practices that were in the interest of the firms themselves. In effect, a company with 10,000 employees had 10,001 agendas.  And we were the fodder.

If your company offers a 401k with matching, it's a great opportunity to accumulate retirement savings. But you have to consider that your money and you have to take as active a stance as possible in it.  For my own reasons, I'm against mutual funds (I can lose my own money for free, why pay someone to do so?)

But you can't stop there. Learn how to invest. Newsflash: It's not rocket science. If the brainiacs on Wall Street showed us anything, it's that it doesn't take a genius to wreck an economy, so it sure won't take one to invest your $20.  That's a joke, but don't miss the seriousness of it. It's your money, learn to invest it.  As for your credit cards, pay them off and cut them up. Not as some symbolic gesture. Remember, when you needed them, they weren't there. Be selfish. Instead of saving 5%, shoot for 30%. Sure, you may not get there in a month, but keep striving for it.
Don't live within your means, live under them. Well under them.  You might think I'm being extreme, but know that if Ebenezer Scrooge got laid off, dude probably didn't miss any meals.  Be selfish. It's not your job to keep the economy going. It will run over you if you falter.

I have a theory. When they retired, the people who survived the Great Depression (#1) were probably well off. They saw what happens when you don't look out for yourself financially. When they got back to work, they probably saved every penny they could.  They never forgot what it was like. Fast forward 80 years and we have forgotten. This giant suck of an economy is the wake up call. Wake up.

Thursday, September 22, 2011

The Apple of my eye & Netflix - Huh?


Caveat, I'm a big Apple fan. They just announced a press event for October 4.

The assumption is this is the new iPhone (oh please oh please oh please let it run on Sprint!). I digress.
I doubled down, buying more around the time that Steve Jobs announced he was retiring as
CEO, at around $380/share.  Today it's $419.  That's over 10%. In a month. Why, because even
without him, the company is very well run.  And I still think it's a good deal, Some things to consider:  It's the largest publicly held company in the world by market capitalization, and it doesn't have a monopoly in any segments. Including iPads as computers, it's only got about 12% of the market. But it has the vast bulk of the profits. Let me repeat that. Apple is making all the money. This year
Apple captured two thirds of available mobile phone profits in Q2.The analysts are putting prices like $500-$520/share on the stock. As I've said before, I don't believe in analysts for a few reasons, primarily, they are not inside the company, and don't have a real clue as to how the day to day operations are going, nor do they know what products might or might not be in the pipeline.  Morgan Stanley feels Apple should buy back some of it's shares, because it has too much money on hand. With all due respect to the probably very intelligent analysts at Morgan
Stanley, that's the stupidest thing I ever heard.  We're going through a recession/depression/giant suck of an economy and they're saying someone has too much cash on hand?  Really?  Hm, I bet Circuit City, Blockbuster or Borders wished they had too much cash on hand. Sometimes people talk to keep the quiet from enveloping them. I've been a shareholder for over a decade. I've never gotten a dividend, and I'm cool with it. When I originally bought the stock around $4 I didn't expect one, nor do I now. I don't want one. I want them to keep that money in the bank, keep making great stuff and keep getting more valuable. My point is, this train ain't stopping no time soon....

Netflix - Huh?

On July 23, 2011 Netflix stock hit $298/share.Today it's at $130. The stock had tripled since 2010. Well, scratch that. What happened? A couple things... They had already vanquished Blockbuster, who was too stubborn to see streaming as a viable alternative to physical stores.  So they were BMOC in video.  From everyone I talk to, the biggest problem with their streaming service is lack of popular/current titles. That isn't totally their fault, the content creators don't want movies streaming too fast, it undercuts the DVD market.  So, in the middle of all this, they are in ugly negotiations with STARZ, one of their MAJOR content providers. They double down: raising the price on streaming to current customers, even though never raising their content from suck to less suck. There's a backlash, they pretty much ignore it. Then they triple down: separating the streaming and DVDs by mail into 2 separate business units, calling the DVDs by mail Quickster. Wow. Bet that took a long meeting to come up with. The price will be the same for the combined service (the new, higher price), but now you will have 2 debits on your monthly credit card bill versus one.  Anyway, the STARZ negotiations imploded, so the library will be going from suck to more suck. And as I understand it, that's the streaming and the DVD libraries.  So more suck 2012 costs more than suck 2011. Good move. The sad thing is, there's no one to take advantage of the missteps. Blockbuster, a shell of it's former self, isn't set up to do streaming or large volume DVDs by mail. But Coinstar and Amazon, not to mention that other company, Apple's iTunes are all out there

Bottom line, I don't think Netflix is going away, but they really need to get off their act together. The stock is probably a buying opportunity right now because at $298 it was probably over rated, and at $130 it's probably under rated.





Monday, September 19, 2011

Inside Info On Why Walmart Will Eventually Fail

Before you call the authorities because I have "insider" info, I got mine the old fashioned way: I went inside a Walmart.  Let me back up. The first time I went into a Walmart was maybe 10 years ago. I was blown away.  It started with the "greeter" as you walked in, and went uphill from there.  In the last decade, I've seen the place decline.  The greeters and stores aren't as inviting, they seem to be employing some screwed up version of Just In Time Staffing, maybe based on dollars per hour wrung up or some such. Whatever they're using, it's an epic fail in my book. We have an unemployment rate around 8%, Walmart's making money, yet 99% of the time I'm at my local Walmart. no more than 4-6 of the 24 cash registers are open.  And the lines are crazy sometimes.  If it's after 11 PM or in the wee hours of the morning,  then we're talking 1 register is open.  If you go to Walmart after 11, be prepared to stand in line for 30-45 minutes.  They close the self serve lines whenever the person watching them has to go home.  My point is, and this is not just my opinion, people tolerate Walmart because they usually have the best prices. But there is going to come a point when we are going to stop tolerating it for the sake of saving a few dollars.  And yes, it is a bad omen when your customers "tolerate" you.

To be fair, I looked at Walmart's stock performance.  It hit $69/share in December 1999, and is now finally getting back to that point.  Walmart is famous for squeezing  pushing their supplies to cut costs so they can pass the savings on, but if you make enemies, you should also make friends. Walmart has annoyed it's suppliers and its customers. I'm going to keep my eye on it. If I do buy some, I'm not planning to hold it forever. I still feel like it's going to go down eventually.

Thursday, August 4, 2011

Run for the hills

A month ago, I was considering getting out of the market totally because I just had the feeling this debt ceiling mess was going to clean some clocks. Stupid me. I stayed in, and got spanked the last week. I think I'm getting out tomorrow morning. Why? Because I think the markets are at the beginning of a very slow and  a very long beat down.  I don't have any evidence, any insider info, but I think tomorrow is going to make today's 500+ point drop in the Dow look like foreplay. And if not tomorrow, next week, next month, the next 6 months are going to be ugly. I'm sitting this one out again. And when the dust settles, I'm jumping back in. Stay tuned....

Good luck....

Friday, May 6, 2011

Where did all the money go?

It's been a moment or 3 since I've written. My bad.   Anyway, I was listening to a podcast and someone asked a question, where did all the "value" go that disappeared in the stock market crash of 2008?  The truth is, it wasn't real in the first place. Let me give you an example, if you have a car you want to sell, a rare, vintage 1937 whatever. There are only 4 known in existence. It might be worth a tidy sum, say $100,000. It's worth that because that's what someone is willing to pay you for it.  You haven't sold it, that's just the going rate. That money doesn't exist in your pocket until you actually sell the car. (it's kinda like saying Mark Zuckerberg is worth x billion dollars because someone says that Facebook, a privately held company, is worth y billion dollars.)

Say one day someone finds a stash of 14 more of the exact same 1937 vintage vehicles, in a warehouse in East Bubblebutt, NJ.  Suddenly yours isn't so rare anymore. Suddenly the market of people willing to give you $100,000 for yours starts to shrink, as does the "value" of yours. Within 2-3 months, the "going price" for yours is only $60,000, because the original value was based on the rarity of it.  You lost $40,000. Or did you?  Did you physically have $40,000 4 months ago that you don't have now? No. So how did you lose it? That's what happened in the stock market. And happens everyday. The value of a stock is based on what you can get someone to give you to own it. All the daily market fluctuations are the changes in what people are willing to pay to own stock X. When they decide they don't want to own it that bad, the value decreases. It's like being the only girl at an all-boy school. Then 300 new girls enroll. Yeah, exactly.

So, where did all the money go?  Poof....

Tuesday, February 22, 2011

Like I been saying....

This article takes a lot of space to say what I've been saying for a while: The stock market is not logical. Therefore, don't try to apply logic.

Friday, February 4, 2011

Fannie & Freddie

About 2 weeks late, but I finally bought Fannie Mae and Freddie Mac. As I've mentioned, they were both on my watch list when they were in the $.30/share range. I bought at $.86/share and $.90/share because I still feel like they are going to hit $30-50/share.  To repeat, the reason I'm interested in them is because they were $30/share 2 years ago before the meltdown, and backed by the government. They are STILL BACKED BY THE GOVERNMENT. 'nuff said.

Monday, January 31, 2011

Missed Opportunity

Friday sucked. I got my butt kicked good by the market, and I realized that Freddie Mac and Fannie Mae both had doubled from about $.30/share to $.60/share over the last few weeks. Unfortunately, I don't have free cash flow to take advantage of them. I covered investing for non-investors in my podcast over the weekend.  Felt good to talk about something positive.

Anyway, tasting the can of whup @$$ that was Friday and not panicking made me feel good. Today the market was up a bit, not nearly as bad as it was down Friday, but up is still up.  I feel like I just need to sit tight and I should be back where I was within a few weeks. Maybe even days. There's some serious upheaval in Egypt right now, and as is the norm, flatulence anywhere in the world is enough reason for all the investment pundits to predict that there will be a massive stink in the US market. Weeee....

Monday, January 17, 2011

Flush the old rules down the toilet...

Remember the old days, when conventional wisdom said put away 6 months of expenses for a rainy day? Yeah, I know, it seems so quaint now. I know people who have been out of work longer than six months. Much longer. Like the 6 month mark flew by so fast their heads are spinning.  Here's the new conventional wisdom for those who are temporarily in job transition:

1. Save. Don't stop at 5% of your salary, save as much as you can. I'm not saying you should live as a miser or a hermit in a cave, although that's not the worst idea in the world. Don't listen to the economists tell you that you must spend to get the economy moving again. Screw the economy, it screwed you.  Get your financial house in order. Don't listen to the commercials tell you "It's time to move about the country." It's time to look after you and your family. Don't try to put 6 months of expenses away, shoot for 6 years.

2. Learn to invest your savings in investments that you feel comfortable with. Not savings, investments. Why? Because banks are giving you 1-2% return on your savings account while making 10 to 20 times that on your money.  My investment of choice is the stock market. But that's me. You choose whatever you want, but take the time to understand it. Don't invest in willy or nilly. Again, understand it, but only invest what you can feel comfortable losing.  Read this blog, go to the library, Google the heck out of your browser, but learn what you need to learn. It's not rocket science. Only rocket science is rocket science.

3.  Coupons. Use them. They are free money and the publishers of them count on you not using them. It's like if Superbowl tickets were going $3,000 each, but some agent was selling them for $2,000 because he knows no one is going to take advantage of it, he can continue to offer them at that price.  And brag about it.  The manufacturers know that probably >95% of people will ignore them, so they can offer really great deals. Take them up on it.

4. Wants vs needs. That 42" LCD looks awesome when they cut off your Comcast NFL package, doesn't it? My point is, as you go through life, look at those things that you need, versus those things that you want.  Stop keeping up with the Joneses. They probably lost their jobs too. And their LCDs. And their furniture. And their cars. Want to keep up with the Joneses? Go down to the unemployment office, they're probably their in line.