Showing posts from 2014

Understanding the Mutual Fund Industry + their games

Ever look at Mutual Fund prospectus and all the high star funds that they have by their names? All the four and five star funds they have, some of which have outperformed the S+P 500 over the last few years by a decent margin? What a well managed company you might think to yourself, I'm giving them my money.
What you don't know is that companies regularly close underperforming funds, and eliminate all traces of them from their marketing brochures. They start five funds, only one of which will outperform the market, and then close down the others and market to you how awesomely they've performed.
This sleight of hand is not terribly different than the sports picker with a database of 800,000 who sends "FREE guaranteed picks" except he sends out one side to half, and the other side to the other half. Now he has 400,000 people he's successfully picked for, repeat the process, eliminate half, and now repeat til you're down to 100,000 potential people you, the…

Apple's IBeacon system Seems to be a Hit in early Testing

When we look for stock's to invest in you want to look at companies that continue to make incremental improvements that benefit their customers.  Though it's obviously the most followed company in the world, and the change to bottom line revenue will be tiny (especially at first) early tests show that Apple's IBeacon system is possible dynamic changer of businesses.   Try not to get caught up in the day to day movements of stocks and look for the long term. Apple is a well managed company that continues to improve.  This source of the below info is taken from a column in Forbes which I have sifted through for and am quoting the most relevant info. 

And Finally… Fries With Your Phone? Apple’s iBeacon system is slowly gaining prominence with architects and retailers. A recent trial with McDonlads shows how much of an impact the software system mixed with low-energy Bluetooth hardware can have on consumer interactions. Push an offer to them, and the conversion rate is close to…

Moral / Business Quandary For A Money Manager

I manage money for a very wealthy individual who tried my services out for a small amount, based on a friend's recommendation last January. My mission for him, and all he cared about was that I beat the S+P 500, something he hasn't found any of his investment advisors had been able to do.   When I received the funds to invest for him (Jan 15), the S+P sat at 1838, and is currently up at 2063, or a very healthy 12.24% gain. I have invested his funds semi-conservatively from my perspective, until recently keeping much of it in cash, and am up almost 21% over that time, significantly beating the market averages. Now, here is the dilemma. I can sell all, take a the proverbial knee, run out the clock, and even if the S+P continues to rise, I'll have still beat the market by the time Jan 15, 2015 rolls around, and I'll likely get a substantial amount more to invest. Unfortunately, none of the gains made would be tax long term for my client. In fact, based on rather large …

Why You should 100% purchase Google on the Dip

Buy Google on the dip. Don't listen to the bean-counters. Here is why (video)

In ten years Google's R+D projects will payoff handsomely (history and odds show)
YouTube, Android, AdMob all have been multi-baggers and Google's management has proven that they can incorporate purchased technology into the fold.

Google will l0 years from now, likely be the world's most dominant company.

Will Apple and Google Take Enterprise Market Share from Microsoft?

I recently snake the f ollowing  conversation about Whether Microsoft's enterprise market share Would be devoured by Google and Apple. While the ar
Him: Start-ups take advantage of free services, like Google mail, but your small sampling of mid-sized business email fails to show Microsoft's dominance, That exists and its not just email, but Windows and the Office suite That Google has no chance of changing. Face it, Google is an internet advertising company, That gives away open source software and services, in order to sell ads and is not even a contender in the business market.
Me: I genuinely think this will change. Adopt Google As people more and more in Their private lives, the advantage Microsoft has entrenched in enterprise will erode. Right now corporate IT heads from companies That have been around for 30 years (and I'm assuming the majority of the Fortune 50 are) know of little else. 
This will change, and one major difference is That while not perfect, Google g…

More on Microsoft and the negative associations formed by Windows 8

Just to further illustrate the logic behind my view as a consumer about Microsoft products. Posting this on as well. 
I paid $550 for the new PC. I upgraded the RAM significantly and took a smaller screen. 
I have just over 2 hours of battery life. A Macbook Air has a legit 9 hours. This is a huge difference, especially when traveling.  The Macbook Air, costs $300 more, but comes with iWorks. I would have to spend $100 for an Office license, which so far I have resisted. That combined with the additional battery life, make Apple the superior choice.  Also, despite being less than 2 months old, the computers buttons sometimes don't work, same with the mouse response. I'm not 100% sure whether this is HP's fault, or the software, a combination (as they work when I restart/hibernate the computer) but it DOES affect my association with Microsoft's product. If it was Apple, I'd know for sure whom to blame or give credit to. 
In terms of details, I have to d…

Sell Microsoft- Losing Whatever Mind share it has Left

While I do believe that MSFT will survive in some form over the long term, my recent experiences with my new Windows 8.1 laptop pretty much assures that my next one will be a Mac. I still haven't made the switch to the cult of Mac, hanging on partly to what is familiar, partly to more storage, and the ability to put an SD Card with photos  while traveling into my computer. 
However, I have zero affinity for Microsoft products even though I've used them my whole life. They do a poor job with the details (see Vista, Windows 8).  Apple, as we know does a tremendous job with the details (save the original fiasco of Apple Maps, and their ingenuity makes their brand incredibly popular.  Google, might not get everything right at first, but when there are changes to be made, they normally fix the bugs/ reverse course quickly.  While obviously MSFT leads in enterprise, and they have some inertia here, making it hard for businesses to escape the gravitational pull, that can change very …

Apple Crushing Android?? Not likely Amigo. Not likely at all

A pundit recently wrote the Apple was going to crush Android and cites Tim Cook's statement made at the latest WWDC (World Wide Developers Conference) that "130 million bought a new iPhone."
Incredible?? Undoubtedly awesome for Apple shareholders, but let's look a little deeper. 

 WHERE? Where were these phones purchased? Probably a good percentage were bought in China with the new carrier China Mobile and the Japanese carrier (NTT DOCMO) which recently added the iPhone to the menu. Using the 4S as an entry level phone certainly might have pulled some in India into the "halo." All this is great for me as an Apple shareholder.
But to think that Android will be destroyed is utter nonsense. The phones being designed my Motorola,  the Motorola E have gotten really reviews as "amazing" for the price. There will ALWAYS be price conscious shoppers. 
Yes, Apple will sell to people who want the best, and have an greater percentage of affluent customers, but An…

How Google got Driverless Cars on the Road + Why Google Will be World's Most Dominant Company in a Decade

Currently in Vegas working at Starbucks on Google Internet. SOOOOOOO much faster and superior to that Shitty AT+T service they still offer at the one I frequent in LA. Love how companies think they can offer crappy service and retain hearts and minds, this is why competition rocks.
I am all about Google and have been since '09. Watch what happens when the driverless car comes out. And in case you're following, here is a really good article for you about how Google managed to hurdle the normal BS legislative process to get Driverless Cars on the road.

Unless idiot lawmakers and special interests put in un-hurldlable  roadblocks, Google will be the world's most dominant company in a decade, and the American leader in robotics. Kudos to the politicians/ govt workers represented in this column.
Let's hope all this technology like drones and robots benefits mankind, and that not for evil (like Islamic extremists getting hold of easy use technology to spread their vitriolic …

Bearish on Apple Stock? - You're Looking in the Rear View Mirror

Bearish pundits of Apple stock often analyze the numbers and point to increased competition in the smart phone and tablet space. They are right in what they say, but they don't present a complete picture. They primarily look in the rear view mirror.
Rarely do these "backward thinkers" and I mean that literally, include the possibility that Apple might have already created a new and novel product that they will unleash.
Eventually most new awesome products become commoditized. Look at the HP Laser Jet which sold for thousands of dollars in 1980, and that's in 1980's dollars. A smaller, faster, much better laser printer today costs $150 or something in 2014 dollars.
Innovation is the key to growth and maintaining the brand. Steve Jobs predicted it would take 5 years for the competition to catch up to Apple after the release of the iPhone (which it has largely) so to have your bearish thesis be solely that the space is being commoditized, which it is, and cast a bli…

Will Walmart beat-up on Amazon with physical Locations?

A company that is always on the defensive, loses customers to the innovator. Do this enough, and you are a shell of the giant you once were, and your stock price follows. With Walmart and Best Buy losing sales and customers to Amazon, they have recently invested a lot of money to bolster their online divisions. (especially Walmart) 

So, who is destined to be the winner? Let's take a look at the scorecard right now. 

1. Online experience-  Amazon right now has the advantage over Walmart given the superior design of their website and much better search engine. 
However, with the amount of money Walmart has been putting into its online operations, I expect this lead to narrow pretty quickly. 
2. Shipments: Amazon Prime shipping is just fine for me, I rarely need anything outside of groceries quickly. In fact, using Prime is way better than Walmart whose orders arrive anywhere from the next day to a week after my purchase.  
3. Infrastructure: Using local distribution centers will certainl…

Will Microsoft Die Altogether? # Out of Business

Some pundits point to the following study by Softwatch as evidence that Microsoft will die altogether:
"Analyzing real usage of Microsoft (MS) Office in dozens of enterprises comprising over 150,000 total users. The benchmark shows that on average an employee only spends 48 minutes a day on MS Office applications, most of it on Outlook for email. It also reveals high numbers of inactive users in the organizations; in particular PowerPoint was not being used at all by half of the employees. In addition, most of the users of the other applications used them primarily for viewing and light editing purposes, with only a small number of heavy users: 2% in PowerPoint, 9% in Word and 19% in Excel.These results are in line with what industry analysts have stated that companies overspend on licenses that are not being used ... by transitioning light users from MS Office to Google Apps, companies can save up to 90% on their Microsoft licensing fees."
as someone who has been saying that…

Does Amazon Ever Have to Earn a Profit?? How to Value Shares

Amazon is branching out at such a rapid rate it's amazing. Everything from developing robotics on the floor to speed shipping, fulfillment centers for same day delivery, drones, HBO shows for Amazon Prime, the list goes on and on and on ... 
Meanwhile, investors are frightened of the high Price to Earnings ratio, which is one the more worthwhile metrics to value a company by, especially for a mature company as it indicates if profits maintain their current pace and all earnings were paid out to investors, how long it would take before you recouped your original investment. 
So,when you see a PE of 150 or whatever Amazon's happens to be on the day you read this column. 

According to Amazon Bulls, the theory is that  as Amazon's growth opportunity slows, CEO Jeff Bezos will cut spending, and the savings will go directly into the bottom line, meanwhile Amazon would have cultivated a Giant base of loyal customers that enable revenues to stay stable. It's why Amazon puts such …

Netflix/ Amazon Prime or HBO-- Who’s Winning the Streaming Video Battle?

HBO and Amazon recently announced a deal where Amazon will receive rights to air old HBO content like the Sopranos, The Wire, and several other shows. The deal includes content aired 3 years after its original air-date, but excludes Game of Thrones, True Detective, and Sex In The City. Let’s break down the streaming video competitors and see who wins and loses.
The Big Winner- HBO HBO wins on a number of levels details were not released, there is no doubt they’ll be receiving a pretty penny for the content they are licensing out. 2.Viewers seeing the high quality of the shows will ancillary sales of HBO content unavailable on Prime, most likely via Amazon.3.Seeing the high quality shows makes it more likely they’ll subscribe to HBO.

Amazon Amazon just made their Prime membership much more attractive. They’ll also generate additional commissions from sales HBO’s other content I described above. The only question in my mind is how much they paid for the licensing fees, but i…

Charlie Munger Witty Quotes From Berkshire 2014 Annual Meeting

Charlie Munger is one my favorite investors/ comedians. His wry humor is full of not only wit but wisdom. To that end, as an investor, I think it's worth learning from him, and I have posted here some of my favorite quotes of his from the Berkshire Annual meeting 2014. 

On pay for corporate directors:
"You start paying directors of corporations two or three hundred thousand dollars a year, it creates a daisy chain of reciprocity where they keep raising the CEO and he keeps recommending more pay for the directors." 

Munger, who's net worth is about 1 billion dollars as a result of his stake in Berkshire, and both himself and Buffett get a salary of $100,000 from Berkshire Hathaway, a payrate which has remained the same for the last 25 years ...
On pay for CEO's and work habits:
Does the Supreme Court work less hard because they don't get paid like corporate executives? We have some corporate directors who draw more pay than members of the Supreme Court. That's …

The iWatch and Wearables- the first steps Towards Human Immortality

The first wearable computers, the Nike Fuel Band, Jawbone, and the Samsung Gear have largely been duds, with Nike announcing it would stop producing the Fuel Band altogether.
Meanwhile, Apple die-hards and the investment community eagerly await Apple Inc’s first foray into the wearable marketplace.
Round 1 of Wearable Computing The first round of the wearable marketplace battle appears to won be Pebble’s watch, according to Forbes for simple reasons such as long lasting battery life, which Samsung lacked, and the ability to be useful for multiple applications, unlike the Nike fuel band.The release of iWatch, or whatever Apple has under-wraps, might fare no better.  Eventually however, the right combination of useful applications (not just heartbeat rate) will be unearthed, and have a similar effect as the revolutionary iPhone did in the world of smartphones, spurring massive numbers of sales and intrigue into the wearable space.  There will undoubtedly be a tremendous amount of money …

Are EBay Executives Stupid? Ebay’s Tax Bill High + Makes NO Sense Why

Ebay recently announced a decision to repatriate (ie- bring back 9 billion dollars worth of cash back to the US) and pay an obscenely high tax bill of 3 billion dollars. Billion. Why? Here must be a reason that I am not considering. Let’s say that Ebay wants to use that cash to make a US based purchase of a company, and here my suspicion is it will be mobile payment player Square, repatriating the money and paying such a high tax rate simply makes no sense.
The Apple Way You see, now you are giving away 3 bills to Uncle Sam (remember when 3 bills used to be $300, talk about inflation) of shareholder value, and for what? Why not borrow the 9 billion you need at what are still historically low interest rates, and use that to fund your activity. This is what Tim Cook and Apple have done. Borrowing money to fund share repurchases, and avoiding bringing over the massive cash-horde they have overseas, and giving away money to the US Treasury.
There’s Always a Chance Furthermore, much of t…

Is There Any Chance Apple Might Drop Pandora from iOS?

A columnist I generally enjoy, Rocco Pendola of the TheStreet today suggested that there is an outside chance Apple might drop Pandora from the app store to bolster iTunes Radio. Would they ever do so? Aside of the fact that Apple generates income from Pandora when someone becomes a premium subscriber, which is no doubt a drop in overall Apple revenues, the notion is absolutely ludicrous. People would migrate to Android out of protest, Apple would lose much of the goodwill they've built and built and built for years. The ability to drop a company you decided to go to competition with from your platform would very likely attract government anti-trust. The media would paint Apple as evil and ruthless. This idea is a complete non-starter.
It’s always good to think differently, try to predict various possible outcomes, but the negative ramifications of this idea so far outweigh the positives it is a joke.

Amazon gets HBO Content from Prime- what it means for Netflix

Amazon now has a content deal with HBO that Netflix and Reed Hasting's must be envious of. 

Amazon's content is getting better and better ... Pricing wise- Amazon Prime costs the same per yearas Netflix ($99 vs $96 I suppose) but includes two day shipping for all orders placed, and if you own a Kindle, a free book rental a month. 
It's a content war at this point, and although Netflix does have the hit House of Cards, Amazon's library is gaining rapidly and offers superior value I described above. 

To all you dreamers who are pricing Netflix at 175 current earnings let this be a rude wake-up call for you. There is such a thing as competition, and while one must admire Netflix and their first mover status and their ability to risk a ton on original content, paying 100 million for House of Cards, etc. when you start to succeed you gain imitators. Consider it flattery. 

Netflix owns none of its content, and content creators can raise rices because there is demand from other c…

Microsoft Brings Office Suite to iPad- Apple= Big Winner

Look, let's be frank. The price of software is falling for two reasons.

1. The operational base which one has to build makes it far easier to build and create.
2. With the global reach and distribution ease the internet offers (no more CD installation baby) the associated production costs and barriers to new software have been diminished or vaporized.

With Google making money on the back end (from data mining, advertising) they are giving away software for free. Apple makes money on the hardware, and is now giving away it's productivity suite, iWorks to Apple users.

WHY in the world will people then continue to shell out a ton of money to Microsoft in the future for Windows/ Office, which account for 90% of the operating profits that Microsoft generates?

Facing such pressures, Mr. Softy has already cut prices on Windows licenses on low priced machines ($250 or less) ... as well as dropping Windows Mobile licenses to FREE (not that there was much demand for them to begin with) …

How Google's Driverless Car Technology Will Affect Real Estate Prices in Los Angeles

Why are people willing to pay ever increasing prices for real estate? Well supply and demand obviously, but what is one of the major factors in demand? Why does a small plot of land in Los Angeles sell for 20 times the price of a square kilometer in say, Mali? Because of the perceived quality of life to living in the geographical location. Such things include amenities (restaurants, entertainment etc.) weather, vistas, air quality, and ease of getting around. In Los Angeles with the lack of good public transport there is a potential cap I see on real estate prices right because the traffic here severely diminishes the quality of life. It simply takes too long to get anywhere. The more people that arrive here, the more cars that are put on the road, the greater the negative multiplier for this variable in determining demand. Now, the Google Driverless Car model envisions a world where few individuals will own automobiles, instead there would be a HUGE fleet of computerized taxis zip…

Why Apple MUST Enter The Wearable Computing Marketplace- but can take it's time

The Google head of tech predicted that given the rate which computing power rises as the space needed to house it diminishes, 30 years from now we will have robots the size of red blood cells running around our system debugging and fixing cells that are out of whack, potentially giving us close to eternal life. That is, perhaps, the ultimate vision of the wearable market.
Between now and then there is soooo much room. Today wearable computing are akin to the cell phones from the 1980's (the type you saw Gordon Gecko using at the beach in Wall Street.) Pieces of hardware with few functions. Fast forward and contrast this with today's smart phones and their immense capabilities.

Think of all the $$ made and wealth they have created for society in the meantime.
There will be many bad products, numerous companies that fall by the way side, but in the end, wearable computing will transform the world as we know it.
I guarantee you Apple is putting a lot of R+D into wearables, as are …