The Stock Market and Investing

ljflx

More bullish news:

http://www.thestreet.com/story/11526480/1/apple-rumor-roundup-t-mobile-expansion- .html?puc=yahoo&cm_ven=YAHOO

http://wallstcheatsheet.com/stocks/apple-invites-these-carriers-to-the-iphone-cl- ub.html/

cyclone4

AWESOME news!!

cyclone4

I detect a more positive feeling about AAPL the past couple days. It is acting better than the overall market. It was acting considerably worse than the overall market all of last week. Could Apple be a future predictor for the overall market ? If so, the overall market will bounce back in the very near future as folks will tend to downplay the European crisis.

cyclone4

Here is an interesting article from TREFIS on the E-Trade website. They do not believe Apple will be launching a smaller iPad since they are better off without one. Unfortunately, there was no way to link this from E-Trade. I know that there was a big debate about this subject several months ago between Tagman and Len. Personally, I think that TREFIS is right on with this analysis/thinking.

Apple Doesnt Need To Enter The Low-Cost Smaller Tablet MarketFont size: A | A | A
11:50 AM ET 5/10/12 | TREFIS

Amazon’s (NASDAQ:AMZN) Kindle Fire shipments slumped in the first quarter of 2012, after seeing record demand during the previous quarter’sholiday season. According to IDC, Amazon shipped only 750,000 Kindle Fire tablets during Q1, a sharp fall from the 4.8 million shipped during Q4 2011. Kindle Fire was however not the only tablet to be affected by the seasonal slowdown as overall Google’s (NASDAQ:GOOG) Android-based tablet shipments declined steeply, causing worldwide tablet shipments to come in lower thanIDC’s projections for the quarter.

What this means for Apple

Still, the below-par performance of the Kindle Fire and the overall Android tablet market in general emphatically dispels concerns that the iPad’s sales might take a beating unless Apple comes out with a smaller iPad. Apple’s iPad shipments in Q4 2011, when the Kindle Fire was launched, reached an all-time record of 15 million while only 750,000 Kindle Fires were shipped in the most recent quarter when the new iPad was released.

We however don’t think that Apple will try to go after the smaller tablet market considering the low margins on a offer, owing to the more competitive pricing landscape. The iPad’s gross margins are already on the lower-end at about 30% compared to the company-wide average of about 45%, as of Q1 2012.

Moreover, we think that a cheaper 7-inch tablet appeals to a different segment of population that includes mostly price-conscious consumers. The entry of the Kindle Fire has lowered the cost barrier and will pave the way for new consumers entering the tablet market. This will serve to whet consumer appetite for tablets and may even make customers shift to a costlier tablet such as the iPad for their future purchases.

Also, Apple has historically lowered the prices of the older versions of its mobile devices as it launches new ones. We have seen Apple do this for the iPhone as well as the iPad, and we believe this strategy meets the demand for the low-cost tablets to a good extent without having to develop a smaller tablet.

Apple has also historically avoided playing the volume game, preferring instead to have a niche market following while cornering most of the industry profits.Even in the mobile phone business, where its iPhones are selling like hotcakes, its global market share is in single digits but it takes up more than three-fourths of the industry’s profits because of its high margins.

ljflx

That comes from Forbes:

http://www.forbes.com/sites/greatspeculations/2012/05/10/apple-doesnt-need-to-en- ter-the-smaller-tablet-market/?partner=yahootix

cyclone4

Wow! That's interesting that E-Trade gets some of the articles from Forbes. E-Trade posts a lot of TREFIS articles on their websites. I had no idea that TREFIS also writes articles at Forbes.

In any case, this backs your contention from several months ago that it would be a mistake for Apple to build a smaller iPad. They don't need it.

ljflx

Charlie,

Just never saw the Kindle as a threat to Apple and Apple loves niche highly profitable markets not the mass low profit markets. On top of all this Apple is charging sales tax on a much higher product price making it all the more expensive while Amazon for the most part is not. So even the lack of sales tax is not helping Amazon, nor is the low end prices.

Here's a good story on how any increase in subsidies by the carriers actually favors Apple and Samsung longer term.

http://seekingalpha.com/article/579021-apple-immune-to-carrier-subsidies?source=- - - - yahoo

cyclone4

That article about carrier subsidies is very enlightening. I really like what the author says in the last paragraph:

Apple is down because that's what stocks do. Stock price movements don't always reflect the fundamentals. As far as subsidies are concerned the opportunities far outweigh the risks.

ljflx

This story muses a 7" iPad:

http://beta.fool.com/acardenal/2012/05/11/new-7-inch-ipad-could-be-another-right- -move-apple/4468/?source=eogyholnk0000001

circlew

Interesting counterpoint.

The 3 Biggest Challenges Facing Apple

Regards,
OW

cyclone4

Ultimately, in my opinion, what Apple decides will be the right choice.

cyclone4

OW,

I, and many millions of others around the world, have the faith in Apple that it will continue to be one step ahead of the competition.

kyfdx

Ultimately, in my opinion, what Apple decides will be the right choice.

That sounds more like a cult, than an investment strategy..

cyclone4

That sounds more like a cult, than an investment strategy..

They have proven time and time again over the past 6-9 years that they make the correct choices. I see nothing out there than makes me think that this will change. Call it what you want, but I guess I will go by the saying that "the past is indicative of future results."

kyfdx

The actual phrase is:

"Past performance is not necessarily indicative of future results"

No joke..

cyclone4

Yes, I am very well aware of the actual phrase since I have been trading commodity futures for many years. However, in this case, I prefer to phrase it the way I did for Apple's case.

gagrice

Much of the down turn for AAPL in my opinion are Apple executives cashing in stock to take advantage of the lower CG tax this year.

http://tech.fortune.cnn.com/2012/05/02/an-apple-ceo-in-waiting-sells-95-of-his-c- ompany-shares/

Kirstie_H

But see, years ago when Apple was doing poorly, people would have said just the opposite - Apple is performing poorly and there's no reason to believe it will ever do otherwise. There are countless tales of companies that were riding sky-high, then lost the plot.

I wouldn't ever put my unconditional trust in a company's management to make the right critical decisions 100% of the time, especially if I had a chunk of change invested in them - I don't care what company it is. I'd be watching and evaluating the decisions they make, like a hawk... and YES, I would question those decisions and whether they merited my continued investment.

ljflx

Here's a real technical reason as to why Amazon trades at so much a higher multiple than Apple. These are things that make no sense in a pure financial analysis and in fact often go against all financal logic. What this is also telling me that a company like Facebook, once it's on the market may lead to a big drop in Amazon's share price. This is just a part of Wall Street that I never embrace or take into consideration on stock price because it's very difficult to know or calculate and it totally bypasses fundamentals or logic.

http://seekingalpha.com/article/588091-the-key-to-apple-s-undervaluation-and-ama- - zon-s-overvaluation?source=yahoo

Checks and balances in Apple share price have to be close at hand. The company has $122 of cash in every share traded so the pure stock price is about $437 for $35 a share in earnings on a trailing basis and $45 or more on forward earnings. That is absolutely absurdly low for such a high growth company.

ljflx

Hardly enough volume in that. Whatever is going on in Apple is purely for technical reasons IMO.

cyclone4

Len,

You will not believe this, but it's the truth. I was just reading this article on Seeking Alpha myself and I was going to post it here. You beat me to it.

This is a terrific article and provides logical reasoning as to why AMZN is SO much overvalued and AAPL is SO much undervalued. Eventually, we will be smiling all the way to the bank.

ljflx

Charlie,

The differential is even more amazing then he states in his article. He doesn't for example mention strength of Balance Sheet or that Apple has $115bln more cash than Amazon or that there have ben quarters that Amazon built cash up by not paying their vendors so cash actually grew through not paying payables. The more I look at Amazon the more it looks to me like an ultimate sham that will have a massive collapse.

cyclone4

The author of this article thinks that there is now a reduction in iPhone 4S production since Apple is getting ready to unveil the iPhone 5 in the fall. He also says that analysts should scale back on expected iPhone sales for the next couple quarters due to this scenario. This is similar to what took place ahead of the iPhone 4S release late in 2011. Maybe, this is one reason why AAPL has sold off so much in recent weeks.

http://wallstcheatsheet.com/stocks/are-apple-suppliers-preparing-for-the-next-ip- hone.html/

cyclone4

Here is a good story about an Apple iTV survey:

http://news.investors.com/article/611602/201205161207/apple-itv-intrigues-consum- - ers-but-analysts-doubtful.htm?ven=yahoocp,yahoo

Here is a good story about the iPhone 5 that will make Tagman happy:

http://finance.yahoo.com/news/apple-readies-iphone-larger-screen-130107134.html

houdini1

I am hanging tough with my aapl shares. If I don't sell, I haven't lost anything.

carnaught

I am too, but, for the life of me, I cannot understand why it has fallen more than 50 points in the last few weeks. Ordinarily this would make me consider buying more shares but the free-fall prevents me from doing do.

cyclone4

Carnaught and Houdini,

It is beyond comprehension as to why AAPL has behaved SO miserably the past several weeks. From the all time high of$644 well ahead of the last earnings report, it sold off to about $556 a few days ahead of the report. The report was one with blowout numbers and the stock rallied to $618 or so. From that point on, it has been in a free-fall to $541 or so today. I'm thinking that the stock shot up from $440 to $644 like a rocket and this dip was needed.

I am also staying with it for the long term. I honestly feel that the tide will turn in the no too distant future and we will all be smiling again when the stock reaches $700 on the next earnings report. Btw, I bet that Len has not sold any of his shares either.

ljflx

Most likely reason IMO is that Apple is very widely held by European institutions and given the banking crisis over there I am sure there are liquidations going on all over the place. Buyers are holding off knowing these people have to lower price to sell. Now if the Gernam banks do something meaningful to support Europe then you are going to have a huge short squeeze and a large bump back in any stock hurt by liquidation sales. Our market is getting dragged down day by day because of the inaction of Germany. Apple is hurt a lot more than most stocks because it was so heavily accumulated by European instittutions, and hedge funds here, who are under-invested in Apple, are taking full advantage of the need for European institutions to sell Apple and other widely held stocks.

cyclone4

Well, here is an article by a guy that has been right on the money about AAPL for several years. He issued a buy recommendations for his followers today. I am in total agreement. I am personally going to add some shares in my accounts.

http://tech.fortune.cnn.com/2012/05/18/andy-zaky-apple-has-hit-bottom-and-is-abo- ut-to-bounce/?source=yahoo_quote

cyclone4

Well, I did buy some additional shares at about $534 this morning. I have a good feeling about this now. But that good feeling could change to a bad dream in seconds, if you know what I mean.

I honestly think that we are either very close to the bottom or we hit the bottom already this morning on AAPL. Hopefully, come Monday, I will be proven right.

ljflx

Watching CNBC this morning it seemed like the first public trade of FB was the most important transaction in the history of business. Talk about overplayed dramaticism - this was it. Now at the end of the day it hardly matters as the stock seems to have been priced about right or a little too high. For my blood it's way too highly priced so my comment is really in reference to the market on day one.

cyclone4

I had CNBC on, but I had it on mute. I couldn't stand listening to all the garbage. I suppose some people dumped AAPL to buy FB, but I think they will be proven wrong over the next couple weeks if not sooner.

ljflx

Amazing how the underwriters supported the stock late in the day at the 38-38.20 price point. The stock had to be a major disappointment as it would easily have fallen under the IPO price without that support. In the end FB was priced too high or simply had too many shares offered. In this market I have to wonder how long companies like AMZN and FB can hold their very high multiples and LT FB has to be put into the same sector as Google and justify it's multiple premium (now about 5x Google's). I just don't see FB holding its current valuation over time. In the ST momentum may carry it though.

anthonyp

I think greed will get the best of FB.....Looked to me like the large investors were exiting in a big but controlled way.....In fact a very smart exit strategy, and the new buyers---full of hope---may have been duped...

I sure hope one day I will be able to get a smart phone, apple, and be able to carry it with me and have good service everywhere I go.....On the regular land based line I continue to get so many solicitations it is ridiculous ....I`m trying an experiment in one location, just not having a phone, but still the wifi.....I have found it not to be missed, and can go to the car and make a call when I have to....The computer takes care of the important stuff....

This week I took a small position in jpm, and then promptly was proven wrong, so I lost the money I had made in my aapl trade........If jpm continues to decline and then just wallows around, it might prove to be a fine longer term investment......Of course I say that after loosing my aapl profit but still there is a possible low risk opportunity for the `merry band of brothers` Tony

carnaught

Your intuition regarding this stock has, for the most part, been right on. Hopefully, it will continue to be the case and it does make me feel better about the stock.

cyclone4

Hi Tony! Obviously, by the end of trading one has to conclude that FB had a rather disappointing intro.

We also get deluged with telemarketing calls at home. The good thing is that we have handsets that tell us by audio who is calling. Whenever it says out of area, toll free, or a call from some state, we do not answer them. Of course they never leave a voice mail. These people are disgusting.

Sorry you took a hit on JPM. Personally, I can't stand this bank. In addition to the recent revelations about the bad trading costing several $billions, they very likely have in their coffers hundreds of $millions of stolen moneys from former MF Global customers like myself and my family members. Why hasn't the media, and, or government press this issue as much, or more than they have the Jaimie Dymon fiasco? A lot of Federal Reserve members are bankers and it seems like they are trying to protect eac other. This smells VERY rotten, doesn't it? This type of corruption drives me nuts.

robr2

We also get deluged with telemarketing calls at home.

Have you ever registered at donotcall.gov? That will eliminate most calls from businesses you don't have a relationship with.

cyclone4

Yes we have registered.

anthonyp

As have I ...Do you or Charlie get solicitations on the cell or smart phone? Tony

cyclone4

I'm trying to remember. If I have had any telemarketers on the iPhone at all, it cannot be any more than perhaps one since I bought the phone just prior to Christmas.

gagrice

My wife has gotten a couple solicitations on her AT&T Wireless phone. She usually leaves it turned off so she does not get messages. She rarely checks call history. It is there for her to call when she feels like it. No texting used or allowed. I only carry mine on vacations for emergency. At home we mostly get political calls. They do not seem to be blocked by the No call thing.

If I ever sell my "C" group stock I don't think I will get sucked into any bank stocks.

Facebook to me smells of the Dot.com bubble. I don't trust anything built on vaporware or in cyberspace.

robr2

If you have done the donotcall.gov thing - do it again. When you add your number to the list, it's valid for only 5 years.

Political and charitable calls are exempt from the do not call list. Also, any company you do business with is still allowed to call you. Don't want them to? Stop doing business with them.

As for Facebook, their value lies in the 900 million people - including me - that willingly give them information that can mined, sliced, diced and packaged nicely for advertisers. IMHO, Facebook should be a data play. Like Cadillac's page and your demo matches BMW criteria? You get information from Mercedes Benz and Lexus. Get tagged in a photo at a local Italian restaurant? You get information from all the Italian restaurants in a 30 mile radius. Post on your wall "I got so drunk at that frat party last night". You get invites to local bars.

fintail

All of my wannabe-investor co-workers were chatty about it today. I just threw in my cynical 2 cents and said "nobody gets rich off an IPO but employees of the company". I don't think any of them bought in.

Now the pressure will be on to see if Zuckerberg can find the talent to move the site on to something new and lucrative, or if he was just in right place at the right time with the right idea, and most importantly, the right connections. Could be the next myspace...

fintail

I've been getting spam text messages more often lately, mostly the "you've won a $xx gift card" variety.

robr2

Could be the next myspace...

Except that myspace never made it to an IPO - Murdoch gobbled it up for only $500m. According to wiki, it was valued at one point at $12 Billion in 2007 when Fox wanted to merge it with Yahoo. The same article points out the reasons for it's fall from dominance most interest being that it developed all it's apps in-house - the complete opposite of Facebook and of course Apple.

Ironic that Justin Timberlake was in The Social Network playing a Facebook investor and he now owns Myspace.

fintail

Yeah, I was using a little hyperbole, but you know what I mean. FB will have to really have some cards up its sleeve to keep up the momentum. Will the selling ads strategy really be worth this much in the longterm? But maybe so...and it shows FB for what it is, a brilliant marketing tool far above all other functions. It gets people to voluntarily reveal their most important personal and demographic information to a central database, all in hopes of being liked by people they didn't really care for in high school.

gagrice

I'm on FB because of my kids and a couple friends. I don't like the open concept. I never know who is reading my comments to others. Kind of disconcerting. I have thought about wiping myself off of it and just use email, which is hardly secure.

imidazol97

I keep hearing more and more about how FaceBook sells the demographics data from your page and your friends' info to target you. They make money on your information. It's sort of like the spam email that is started by a cookie for Amazon and I start getting all kinds of targeted ads on my browsing along with ads that oddly match things I've searched for on the net.

The page on the FaceBook fake name account I use occasionally is filled with ads.

I found that when my wife deleted her account, they don't really delete your account. There's something about if you come back within a certain length of time, all the information is right there. It's sort of like the AARP who counts anyone who ever had an AARP membership (or is it anyone they mailed one of those teaser membership cards to) as a lifetime member so they can say they lobby on your behalf!!!

ljflx

Now that FB has been dumped on the public at the absurd price of $100-110bln you start reading professional comments that the company is lucky if it's worth 25% - 65% of its market cap in stories in the Times and other places.

fintail

Kind of makes sense, as the codeword for spammer today is "internet entrepreneur"...

I have a fake FB page I use for work research, nothing real...when I see that my mother spends an hour a day there and my sister made a page for her dog, I knew that it wasn't for me.