When asked why was she optimistic, the head of the IMF says:
There was a discussion between Rousseau and Voltaire who didn't get along.
Rousseau says:
- Life is hard.
Voltaire replies:
- Compared to what?
Monday, April 23, 2012
Sunday, April 15, 2012
Everyone and the Other
For centuries business evolved looking to standardize itself. From the creation of currency trading in Northern Europe to Holland's stock markets in the 1600s to the birth of farm future contracts in Chicago.
Non-standard contracts make news when they are profitable like selling mortgages to the Amish or micro-finance.
And nowadays, the powerful machine of marketing and branding seems to override general accepted Truths built over centuries.
Customized contracts that have left clients and whole municipalities bankrupt have been the norm. The word liquidity was deleted as consideration when packaging the sale for special clients who deserved one on one undivided attention but end up buying sure losses.
It is like a plague of unlearning has hit the world in the last 10 years. All the sudden automated trading has been a middle man in the transactions even on the trading platforms that advertised it differently.
And now, even traders are blindsided because every party believes they are the other. They believe they are outside the system. This is a belief that has been built on the moment of sale. A believe that every buyer or seller is part of the inner circle; therefore, standardization doesn't apply to them.
And...the system is believing their own pitch by allowing this sense of insider grouping. Regulation can't rewire the system.
We are again on a cycle propelled by the networks. And no government or agency can track these "specialties."
The one-hour walk out of traders in Chicago is a sign that the system is contradictory. A customized large trade bypassed the trading floor without even posting prices. Either traders and real capitalism are a sign of the past, or the system is completely forgetting why it was built.
Non-standard contracts make news when they are profitable like selling mortgages to the Amish or micro-finance.
And nowadays, the powerful machine of marketing and branding seems to override general accepted Truths built over centuries.
Customized contracts that have left clients and whole municipalities bankrupt have been the norm. The word liquidity was deleted as consideration when packaging the sale for special clients who deserved one on one undivided attention but end up buying sure losses.
It is like a plague of unlearning has hit the world in the last 10 years. All the sudden automated trading has been a middle man in the transactions even on the trading platforms that advertised it differently.
And now, even traders are blindsided because every party believes they are the other. They believe they are outside the system. This is a belief that has been built on the moment of sale. A believe that every buyer or seller is part of the inner circle; therefore, standardization doesn't apply to them.
And...the system is believing their own pitch by allowing this sense of insider grouping. Regulation can't rewire the system.
We are again on a cycle propelled by the networks. And no government or agency can track these "specialties."
The one-hour walk out of traders in Chicago is a sign that the system is contradictory. A customized large trade bypassed the trading floor without even posting prices. Either traders and real capitalism are a sign of the past, or the system is completely forgetting why it was built.
Wednesday, April 4, 2012
Quick Stat on the Lavish Life of the Black Gold
Saudi Arabia now consumes more oil than Germany which has three times the Saudi population. It is consuming a quarter of its own production. By 2040s, the Saudis will be a net importer...
Gorvachev held his ground on this point while discussing with the Iron Lady back in the 1980s: The world cannot consume at the same growth rate as developed countries; there are not enough resources. But Soviet inefficiency was as bad of a calamity as his opponents' capitalist consumption goals.
Alternative energy just stopped being "Green". It is It.
Gorvachev held his ground on this point while discussing with the Iron Lady back in the 1980s: The world cannot consume at the same growth rate as developed countries; there are not enough resources. But Soviet inefficiency was as bad of a calamity as his opponents' capitalist consumption goals.
Alternative energy just stopped being "Green". It is It.
Tuesday, April 3, 2012
The $1,000 Mark
Newspapers are all over it. Can apple get to $1,000 a share? Even when trying to bite its tail two weeks ago, it was an already expensive $540. A lesson learned is that when a stock is taking off, do not buy limit orders, just buy it. Today's price: 628 and holding in that range. With a P/E of 17.50, it is not overly expensive.
Without even looking at financials, there are the risks of backlash from labor conditions, higher costs, dividends taking capital out, investments in negative return projects like TVs, the risk of becoming another cash hoarder, shrinking margins, and there is also the kindle fire with other competitors.
On the other hand, 30 millions iPads might be small compared to 5 billion people worldwide.
AAPL has become by itself a measure of technology in the world. It has become a predictor of supply chains, innovations, and global consumer confidence. Just with this, it is a must have in any portfolio.
Can AAPL break the 1,000 share "prize"?
AAPL will still capitalize on the residual business from its still fresh successful footprint. It has enough products to ride that wind. AAPL's consumers are happy to pay $200 for a replacement battery or phone that went bad. It is an unmatched sense of value following on the Toyota tradition where the notion of haggling is unthinkable.
What some analyst miss sometimes is that we live in a very small world. It is not so much how good a company is, but how good is it relative to the rest of the market. This will continue to attract positions from an international investor base. Without suffering a fluke or a competitor in shining armor, there is more than enough for the next couple years as it still becomes more mainstream.
Monday, April 2, 2012
The inexpensive road
Biotech stocks are loaded with high PE and the gamble of a big win.
Then there is the new phenomenon of finding new uses for already approved drugs.
With less capital requirements, they can do less testing with lower liability. Inspired by previous amazing findings from the blue pill to hair restoration, it seemed promising. But a small company hoping to find that rare accident is more of a gamble than a full FDA cycle with a known purpose.
But they are a niche for speculation having valuations swinging widely on short successes. Their almost random uptick makes them the perfect partner for a portfolio looking for short term not correlated assets in a correlated world.
Then there is the new phenomenon of finding new uses for already approved drugs.
With less capital requirements, they can do less testing with lower liability. Inspired by previous amazing findings from the blue pill to hair restoration, it seemed promising. But a small company hoping to find that rare accident is more of a gamble than a full FDA cycle with a known purpose.
But they are a niche for speculation having valuations swinging widely on short successes. Their almost random uptick makes them the perfect partner for a portfolio looking for short term not correlated assets in a correlated world.
Sunday, March 25, 2012
Libor and the Circle
The manipulation of the Libor interest exchange rate, rings of "non-insider" insider trading, rings of cell phone hacking, an established Quattrone syndrome in the Valley of Silicone, gentlemen agreements in engineering circles overriding quality controls, and just out, puerto rican tax refunds going through an organized interception on the week of the NFL draft. Poor Griffin the Third, it is hard to go against those odds.
It was noise and incoherent appearances until now, but it is a noise that is starting to become a whistle. Once unknown to the many, it is becoming a symphony with each passing year: the voice of the wisdom of the crowds in an interconnected world.
Meanwhile corporations look desperately for innovation. Motor companies are opening labs in Silicon Valley hoping to harness creativity. Dell wakes up in the middle of the night with cold sweats. Japanese companies are slowly vanishing. Sony is seeing its previous aura in Apple while institutional investors want to cash out from Apple to avoid re-investments they never intended. Panasonic refocus its business to dishwashers. The circle in the financial industry ends up overriding the core businesses and the banker's reputation.
There are no tools to categorize and easily reference* the power of the circles. It seems the only defense businesses have is the esoteric solution of corporate culture and values. It is esoteric at the present time, but it becomes very palpable with every passing year. In this new world, only the ones who managed to keep the old ways, private, and established cultures might have a true chance to last.
The other true solution is accommodating global minds. Higher management is more and more: more international. The inherent value that can bring global minds together is the business, not the circle. A person Art is the hot sale. With the new wave of people who abstained from online interactions, I wonder if the new Art has to be conceived in an old fashion, archaic, unconnected brick and mortar mind.
*Delightful X Files Reference
It was noise and incoherent appearances until now, but it is a noise that is starting to become a whistle. Once unknown to the many, it is becoming a symphony with each passing year: the voice of the wisdom of the crowds in an interconnected world.
Meanwhile corporations look desperately for innovation. Motor companies are opening labs in Silicon Valley hoping to harness creativity. Dell wakes up in the middle of the night with cold sweats. Japanese companies are slowly vanishing. Sony is seeing its previous aura in Apple while institutional investors want to cash out from Apple to avoid re-investments they never intended. Panasonic refocus its business to dishwashers. The circle in the financial industry ends up overriding the core businesses and the banker's reputation.
There are no tools to categorize and easily reference* the power of the circles. It seems the only defense businesses have is the esoteric solution of corporate culture and values. It is esoteric at the present time, but it becomes very palpable with every passing year. In this new world, only the ones who managed to keep the old ways, private, and established cultures might have a true chance to last.
The other true solution is accommodating global minds. Higher management is more and more: more international. The inherent value that can bring global minds together is the business, not the circle. A person Art is the hot sale. With the new wave of people who abstained from online interactions, I wonder if the new Art has to be conceived in an old fashion, archaic, unconnected brick and mortar mind.
*Delightful X Files Reference
Monday, March 19, 2012
Cash in the bank: 98 billion
OAAPL to pay dividend and to do a buyback. 100% return on the investment in the last 52 weeks is just not enough. The 52 week low was 300. Today's trading price: 600.
Microsoft found itself in the same junction back in 2004. With 50 billion in cash in the bank but a stale stock price, investors were screaming for some sort of return. Microsoft paid a one time dividend of 32 billion. This was probably the beginning of the split between Bill Gates and Microsoft. Bill Gates donated all his dividend to charity, and it probably led him to discover the impact he could have with charity instead of with Microsoft products.
AAPL has already been singled out as a tremendous anomaly requiring fund manager to exclude the stock from market analysis. With a growing stock price, a large dividend, increasing sales, and a buyback, it is hard to tell where it is going.
It is always the question of whether its product pipeline can continue propelling the momentum. The newest iPad seems to suffer from overheating. And even though the WSJ reports 55% of iPad users look to buy a second one to avoid sharing it within the family, it might be too soon for most users to replace their older model.
Then there are the other revenue streams which are too long to list. There is even 238 million from the profit sharing (18%) in the AppStore.
On the other hand, a curious fact surfaced this week. Sharp was delayed in the delivery of components bringing light to the fact that Apple is forced to rely solely on Samsung which is a direct competitor. While Apple rearranges the marketplace, there is a stream of suppliers and competitors who are not standing still and are reshaping themselves at the same speed.
When we add all this, we get 98 billions in cash, and a string of future market changers to follow.
Microsoft found itself in the same junction back in 2004. With 50 billion in cash in the bank but a stale stock price, investors were screaming for some sort of return. Microsoft paid a one time dividend of 32 billion. This was probably the beginning of the split between Bill Gates and Microsoft. Bill Gates donated all his dividend to charity, and it probably led him to discover the impact he could have with charity instead of with Microsoft products.
AAPL has already been singled out as a tremendous anomaly requiring fund manager to exclude the stock from market analysis. With a growing stock price, a large dividend, increasing sales, and a buyback, it is hard to tell where it is going.
It is always the question of whether its product pipeline can continue propelling the momentum. The newest iPad seems to suffer from overheating. And even though the WSJ reports 55% of iPad users look to buy a second one to avoid sharing it within the family, it might be too soon for most users to replace their older model.
Then there are the other revenue streams which are too long to list. There is even 238 million from the profit sharing (18%) in the AppStore.
On the other hand, a curious fact surfaced this week. Sharp was delayed in the delivery of components bringing light to the fact that Apple is forced to rely solely on Samsung which is a direct competitor. While Apple rearranges the marketplace, there is a stream of suppliers and competitors who are not standing still and are reshaping themselves at the same speed.
When we add all this, we get 98 billions in cash, and a string of future market changers to follow.
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