The investing community has watched the once great Research In Motion fall from grace in recent years. Why you ask, has such a once great product ceased to be admired? It could be attributed to a lack of a uniform vision, or a faltering product. To be honest it does not matter what exactly happened to put RIM in the position they are in today. Simply they are in a dire straight. What holds more importance in my eyes is rather the potential they have in the coming years.
One product can change everything for a company, as Apple has shown us over the years. The iPhone has changed the landscape of the Apple company. Today many companies only produce one product still are able to give investors great returns. RIM has the potential to turn its horror story around. Consumers are fickle and are always interested in the newest and greatest thing. One day it was RIM, then one day it was Apple, tomorrow may be Google’s day. As investors we never truly know what the next greatest gadget will be, we can only speculate. Below is an example of an innovative way that the Android company has set up your phone to go silent at work.
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No I am not saying that they will sell them 40 million RAZRs. What I am saying is that companies, in particular technology companies, can take an innovative spin on a product and easily sell a vast quantity. One creative spin can result in huge demand. The smartphone race will be a long and tough one, and sometimes the tortoise does win the race. I am not suggesting in any shape or form to go out and by the faltering company, but rather to keep an eye on them in the future. RIM can definitely turn their smartphone story around and there is definitely enough room for three big smartphone players in the smartphone market.
Photo by The GameWay
Below is what will happen if you do not routinely check Capital Overlook
The sentiment as of late suggests that many investors have lost their grasp on reality. For some reason the mindset is that bad things cannot happen to the financial markets during an election year. The ignorance behind this is truly blissful, so keep buying up your hot stocks, while the smart money waits for a better opportunity down the road.
Above is a reminder of 2008, yes the long forgotten 2008. The year that rocked the financial markets and changed the financial world. The repercussions of that year can still be felt and in some instances seen throughout the United States. Whats the most entertaining about the above image are the dates located on the upper right. During an election year, the market went down, very far down. I am not claiming that a financial collapse will occur once again, I am only suggesting the obvious, markets do trend down.
There is all this talk on the news and blogs about things being better, that one should throw all their money into the market. What I find most compelling about the proposed arguments is that people are buying into the hype. Of course everyone wants to make money, no one can doubt an investor for wanting to do that. Though the issue lies with the fact that we have been here before, last year. The arguments proposed for why we should keep trading higher have been heard before. History has a tendency to repeat itself. The headwinds exist and I do not need to spell them out for you. No the collapse of 2008 probably won’t happen again this year, but during an election year the market can and will go down. During 2012 the market can and will go down, so buy that downside protection while it’s cheap, because making money is always better then losing it.
No the company itself does not strike fear in my heart, rather the potential extreme volatility of the stock in the near future. As we have seen with these recent IPOs of tech companies, they initially release a small float, only later to release more shares. This just so happens to flood the market of shares, creating a bit of discomfort for those who believe in the long term potential of said firm. To put things in perspective take a look below when Fusion-io realized shares in mid December.
As the large black arrow indicates, this was a point in which more shares were made available. What is significant is not only the fact that the company began trending down before the second offering, but the downtrend that continued throughout the proceeding month. No matter how bullish an investor is on a company , to take an almost 30% haircut is uncomfortable. Fusion has recently trended back to the level it has fallen from, though it has taken about three months.
Those who are bullish on Zynga, social media, Facebook and so on know that Zynga has a lot of upside potential. With their continued success in the app world and on Facebook one does not need to question their future dominance. Rather as an informed investor, one must consider the detrimental effects that an oversupply of shares will have on the market. As a recently IPOed company, Fusion supports the case that one should stay away until the shares have comfortably made themselves into the market. Knowing that Facebook’s public offering will create a buzz in social media stocks, and the price of those related to it will skyrocket; Why buy Zynga at $13 when you can get it at $9.
“Not having a clear goal leads to death by a thousand compromises.” – Mark Pincus (Co-founder of Zynga)
Greece has slipped its way out of the headlines in the recent days. the indices touch new highs and everything seems just fine. Investors are convinced that things are substantially better in the United States. I have lost quite a bit of capital fighting the trend and will wait for a better moment to strike a bearish stance once again. For the meantime though, with all the talk of a better economy and a “fixed” Greece, are their not lessons to take from their trials and tribulations?
No matter which political party you root for, their is an obvious spending problem throughout our government. These spending issues have plagued politics since the great depression and the New Deal. In the past we muddled through, but it seems now our debt burdens will way down on us. the fact of the matter is, it is just to large. Many invest in America because it is merely the best of the worst. Is the way we have it today, the way in which we should leave it for generations to come? The government obviously needs to get its balance sheet in order, just as have many Americans over the past few years.
This leads me to my point, and a very important one at that. With the United States government continually adding more debt to its balance sheet what should hinder Americans from doing the same? We have seen the Greeks wipe away debt and we have seen our neighbors do the same. The precedent set by everyone from the governments to your neighbor have implied that their is no responsibly for your debt. When will this catch up with us and in what shape and form? One can make an argument that student debt is the next bubble, but that is just a theory to be tackled another day. The fact of the matter is buying things on credit, that you can not afford is not good in any shape or form. Americans still have not learned to hinder their spending to realistic terms and will refuse to do so until their government does the same. So dear mother American, get your fiscal house in order.
If you do not understand our current debt predicament please refer to: U.S. National Debt A Bigger And Bigger Concern
Photo by Images_of_Money