Young Gun

The Scary Truth

Once upon a time, many (blue) moons ago, there was this little tech company that the world was infatuated with. They had a product that many referred to as a “crackberry.” The company was leading in their industry for a few years. Investors and the masses believed they could do no wrong. Today that company teeters on the brink of extinction. I am not going to sit here and pose theoretical questions that cannot be answered. No one knows if RIM can be saved. No one knows if they can fix their faltering business model. No one knows if selling off assets will solve the problem. Those are topics for another post and answers that will surface in the months and years to come. What does have me worried was the tragic realization I came to yesterday. While I was reviewing the RIM story, listening to the blabberheads blab about it, the scary truth hit me; companies that many believe can do no wrong, can end up doing everything wrong.

I remember the days of blackberries, it was back in the days of windows 98? Whenever it was, it was “the technology” to have. That changed overnight. It may have been a time before you were as technologically savvy, before you were obsessed with the newest and next top gadget. If you havent noticed the world is consumed with the new and best piece of technology. Lucky or unluckily, depending on how you look at it, the technology sector has exponential growth.  Currently we don’t see another company poised to revolutionize the smart phone arena, but no one can say it wont happen? One can argue that the barriers to entry will put a damper on any entry into the smart phone arena. I see the huge financial rewards outweighing any potential barriers.

Many bloggers and news sources have discussed the potential effects of RIM putting all or part of it for sale. I don’t need to sit here and bore you with the details. The unavoidable truth is that RIM can be put in the hands of another powerful tech company, resulting in a potentially superior product to that of the iPhone or Android protects. Investors often look at past performance of things, which is valid, but fail to look ahead at how industries can be revolutionized. Someone could even pull a Jobs and come in an revitalize the company. However the “playbook” is executed, the face of the smart phone industry will change. RIM may or may not be a part of it, they may be the leaders of the space or go extinct, however your model plays it out, the tech space will continue to be extremely competitive.

The point I am attempting to drive home here is that the smart phone game is far from over. In comparison, look at the PC tale, it has been multiple decades and the rivals are still rivaling on. The leader can become the loser overnight, just as the loser can take the lead spot over lunch. Microsoft was thought of as the leader in the desktop space, now every small company in america operates on Macs. Dynamics change often and that is something smart investors need to be aware of. Yes, again and again Apple shines. This trend will continue until it doesn’t, but you already knew that. What you have failed to realize is that Apple can be a RIM, just as the same can be said about the Android products. With one major misstep, with one foolish gamble in the wrong place, the dynamics of the game can change, just like that.

When it comes to the technology space everything can change in a blink of an eye. Take RIM as an example. So no matter if you have all your eggs in one basket or distributed among many baskets, watch those damn baskets.

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No Stopping The Economic Ship

With all the news coverage of politics one would think that nothing else takes place in the world. I hear it day in and day out, party A will benefit the economy this way, party B will benefit the economy that way. Those of us who have some form of education know that the media blows everything out of proportion, especially when it boost ratings. These media goons are  blessed with both brainless sources for their tall tales and ignorant interpretations. No one man or one party can fix this mess. The economic ship cruises at a high speed and cannot be stopped, period.

Do you really think for a second that one man can undo major trends in the economy? Look at the big picture, manufacturing no longer exist in the United States. Our economy has been shifting service based for over 50 years. What do all the new and great startups have in common? They all serve the mass populous. Everything from Facebook to Yelp help foster our service society. All the manufacturing that you do see, well that takes place overseas. Take a look at the company we all love to love, Apple. They couldn’t afford to produce their pads and phones in the United States. We have gone from an industrial society to one focused around service.

Whatever trend you want to address, one man cannot change it. As much as we want to say either Obama or Romney will be better for the economy the truth is that it doesn’t matter. View the economy as the Titanic, this great ship that cannot be stopped. It can be turned at a slow pace. You can see a headwind up ahead but all you can do is slow your roll. Just like the Titanic, the American ship was built so that if it sprung a leak it wouldn’t go down. Sometime your safety measures do not quite work. The only real solution to the problem at hand is a realization that the current policies and agendas are not working. As much as we want the economy to trend a certain way and believe one man can better manuever the ship, the truth is the boat is moving forward with either man at the helm.

The problems we are witnessing and struggling with are structural issues. The U.S.S. America has bad riveting throughout. Changing the captain does not fix issues that need to be addressed at the hull level. The captain cannot by himself stop the leak nor can he avoid hitting the iceberg in his path. He can do continually try to patch up the hole, make the patrons feel safe, and keep moving forward. Any drastic change has to be done at the base level, at the blueprint level. Perhaps we should rethink our approach to the debt issue. Maybe we should figure out how we can move successfully from an industrial nation to that of service. Even better, let’s find alternative ways to boost our economy (alternative energy). So quit moaning and groaning about which man will better solve the economic disaster we call the United States. Come to realize that it will have to be a bipartisan group effort from the hull up, to solve our issues.

We have seen the movie play out and it doesn’t end well. For those of you who missed the masterpiece the Titanic, you can now get the showing for free all across Europe (opening in Greece).

Photo by Marxchivist

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Apple Follow Up

Last weekend I wrote about my concerns looking at the upcoming iPhone release. Two days ago Apple launched their next generation iPhone, which will be their premium product for the next 18 months. Are you satisfied with their new product? Personally, I was not that impressed. Though my personal feelings are insignificant as we look ahead at the huge demand for this Apple product. Just take a look at the clip below, it should tell you everything about the market for the new Apple iPhone.

Besides the fact that American’s are utterly stupid and uneducated, the above clip shows us quite a bit about the Apple consumer. Apple products are no longer just products, rather, Apple has transformed itself into a lifestyle brand. They are the Rolls Royce of smart phones that every middle to upper class American can easily afford. They embody similar ideas as a “Life is Good” or a “Salt Life” shirt, or at least attempt to sell an overall lifestyle. If you are unfamiliar with lifestyle brands, do some quick research… yeah now you get the connection.

We often speak about the global financial situation and how America is the best of the worst. Well at this point, I am a firm believer in that Apple is the best of the worst. Looking around the smartphone arena over the past few years, we haven’t seen any real profound innovation. We have seen more powerful devices with better graphics and screens. We have not seen a revolution that will blow consumers away. We have not seen any major redesigns that make our life easier. Isn’t that the point of technology? Isn’t technology supposed to continually add ease and productivity to our lives?

Yes the iPhone will sell. Likely the iPhone will move big numbers. Will it blow the market estimates away? That has yet to be seen. It is always an interesting ride when it comes to technology companies, in particular those on the cutting edge. Perhaps I am just impossible to please. One thing remains certain, my high expectations were not reached. I look back at the tattered tale of technology companies and see many that have fallen off due to lack of innovation. Someone will come along and make a better widget if you will not. The tech space remains extremely competitive and if Apple isn’t on their toes, someone will cut those toes off by selling a better widget at a better price.

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Cook Has Me Worried

Last night while perusing the world financial news I came across a post on my favorite financial blog.

It featured this video:

For some time now I have been bearish on Apple. I mentioned a few of my concerns in a post earlier this month.  When I have discussed or contemplated the next version of the iPhone, I question the future of the product. Maybe it’s the individuals that tell me they dislike the product and prefer that of an Android. Maybe it’s the people who are bothered by the data usage of their iPhone, which limits the internet multitasking activities you can do. Maybe it’s the awesome capabilities of the competing products. Whatever it may be that had people concerned about the upcoming product launch and their current iPhone, after viewing the above video, I myself am now questioning the next iPhone.

Apple undoubtedly makes a great product. Though when many look back at the history of Apple they fail to remember the its missteps. I vividly remember the poor reception the iPhone 4s received. Shortly thereafter I went and purchased the product, as many of my fellow americans did. They proceeded to sell a record number of phones. This time around may be different. The expectations are huge and must be surpassed this go around. We are talking about the iPhone 5, the next big thing, the future of the smartphone industry. A lot rides on this product and if the above video link is any sign of what’s coming down the pipe, many may be sorely disappointed. Last year when the 4s was launched, it was still the best phone on the market. Ask the people at Google or anyone with a Android product, the competition has come leaps and bounds. Staying on the cutting edge has always been a challenging and winding road, just ask all the people who no longer work at RIM.

If the “new” iPhone has been created using the same formula as the “new” iPad, the results will differ greatly. In the phone space the competition is not merely heating up as seen in tablet arena, the phone space it hot, creating a scorching competitive environment. From the above video I do not see an outstanding product, that will be a leader in the smartphone arena for the next 18 months. Perhaps the larger size screen will allow for better app and movie experiences, but do the pros outweigh the cons? How many people really want a bigger phone? I expected the new generation to resemble the iPad in design and once again revolutionize the smart phone culture. Hopefully, I and the millions of potential iPhone buyers will not be disappointed in the coming week. Hopefully, we will be blown away. After the product release, we then can make a more educated analysis. If that above clip is a testament of what is to come Tim Cook has me more than worried.


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The Yellow Cat Turns An Ominous Black

In the simplest form, CAT tells us a lot about the global economy. You can manipulate the macro data how you like. You can talk about how the elections will change face of our economic environment. Hell, you can even go as far as to believe what you tell yourself. At the end of the day we are sitting in the 21st century and facing an interesting path with lots of economic uncertainty. The fork in the road has been set some time ago, with the impending fiscal cliff, the mess in Europe, the questions about China, and so on. When the market is in its current elated state and macro news means nothing, paying attention to fundamentals airs on the side of stupidity. Though at one point, what goes up must come down, and when that day of reckoning comes one better not have forgotten about the black CAT suggesting grim things in the dark alley of our financial future.

Now obviously when someone states that one item stands as the barometer for global growth, that statement lends itself to be ridiculous. Though when putting the CAT story beside the tale of woe that encompasses the rest of the global economics, we have a bit of a problem. I have learned the hard way about fighting a uptrending market, just ask my buddy VXX how he’s feeling.  As much as we have seen the market push higher, like a fat kid towards cake, one cannot forget about the items we consider barometers of global growth. A market bull can blame the recent CAT downtrend (like last few days) on the news out of China, but this CAT did not fall from above $115 just because of China. There is always more to the story and in particular this story. We have seen CAT slip multiple times this year, usually followed by the markets themselves. As we await the jobs numbers at the end of the week, it may benefit the smart trader to observe the transformation of this yellow cat to shades of black.

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