Oil has been just up, up, and away in the recent weeks.  With major concerns of Iran and the possible threatening of supply, oil traders are worried and running up the prices.  The indices are still threatening the bear by attempting to break through the resistance levels.  With such great performance from the restaurants over the past few months, one should wonder: Will they be the leg that drags us down?  Take a look at Buffalo Wild Wings and Chipotle.

Go out to dinner.  Go to your local park.  Go to any suburb in America. What do all these places have in common?  They have young children playing on the iPad.  That is right. Those of you who don’t have children may have missed the trend.  The new toy of choice has a huge price tag and it isn’t matchbox cars.  Many parents build their lives around their children; that also remains true when dealing with their purchasing habits.  The iPad is not just for business or Facetiming your family.  The iPad has many uses, and as announced recently will have its future place on college campuses.  The existence of the world of apps with many children oriented games have truly captured the spirit of the youth.

That being said, now my concerns must be raised.  What has got me nervous is the fact that neither the failure of a dividend or the lack of a stock split.  My fears find merit in the recent faltering of Apple.  Steve Jobs was meticulous in standard and the preciseness of his product and its creation. This allowed him to revolutionize Apple.  Now that Apple has become the giant that it is, we need to see Tim Cook revolutionize with the times.  As mentioned earlier, the iPad has a huge pull with children and the youth.  Apple may have realized this to a certain extent, though they fail to revolutionize the style or amenities of the iPad.  Wouldn’t it revolutionize the tablet market if they changed the size or made the product waterproof?

As a bull on Apple, my only fear is not that they fail to keep up with the times, but rather fail to stay ahead of the trend.  Steve Jobs made his name by creating the trend,  if Tim Cook doesn’t do the same in the coming years, we will be speaking of Apple as we speak of Research In Motion today. If you support the bull theory on Apple, remember what made Apple a giant (creating new markets, the smartphone and tablet) and make sure that they still are actively doing what makes them great.

Steve Jobs was set in his ways, and by being so he made Apple an economic force to be reckoned with.  Though as anyone who has studied the history of the American icon Henry Ford, he was similarly set in his ways, and this led to the near end of the great motor company.  Ford motor company was eventually saved by Henry’s heir, when the company eventually stepped outside its comfort zone.  Tim Cook must show the world that he is not only capable of leading Apple down new avenues, but that he can succeed in doing so.
Many die hard apple supporters may think the above analogy has no merit to it.  If Apple was to reorient its strategies, thus changing the size of the iPad, or to implement another device some other company will capture that market.


“You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.” – Steve Jobs

With home prices at the lowest point in 10 years, one cannot claim the a recovery will be built on the back of the housing industry.  Many key economist believe that the recovery of the  United States will be based on the housing aspect of our economy.  These experts fail to realize the effects that the housing bubble had on the consumer side of the market, the bubble has popped and even those able Americans that can afford a home won’t buy one.  For the U.S. recovery to be fueled by housing, prices need to increase, not decrease.  Putting the housing bubbles in different terms that are much easier to understand, lets consider Netflix.  After seeing Netflix rise to its high over $300 and fall to $70, would anyone buy today thinking it will once again go back to $300 tomorrow?  No, after a bubble pops a consolidation period is needed and prices will reestablish in a more realistic area, and those prices may be closer to the bottom then the top.  With prices at these levels for housing, a full fledged housing recovery is out of the question.  Yes profits can be made, but the expectations for this sector are outlandish.


Looking at the recovery from a less intuitive aspect and more of a numbers standpoint, things are not much better.  Existing home sales were revised down last month.  This speaks volumes,  the existing home sales is not a straight increase and is not as rosy as was first perceived.  We have also been at these levels before, and also gone back the other way.  Investors should be leery of what is yet to come.  Not only that but MBA purchase applications were down as well.  The markets once again shrugged off this negative news, though in fact things are not looking so picturesque.

Now that the true picture of the housing industry has been established, it must be explained why the recovery cannot be build on the back of the housing industry.   The key point mentioned this morning was that home prices were at a 10 year low.  This means that if any contractor wanted to build a new home his margins would compressed dramatically.  The only way he could combat that problem being that all his cost are fixed (land, lumber, etc.) would be to decrease his labor cost.  Though he may be able to squeeze cost elsewhere the contractor would see the best results via employing less people or cutting wages. Those looking for the housing industry as the source of the american recovery will have to look elsewhere.  The idea that the housing industry will fuel the recovery comes based on the idea that it will help put america back to work, but with home prices at the levels they are, it may put your neighbor back to work, but you are still on unemployment.


“Sometimes your best investments are the ones you don’t make.” – Donald Trump

Looking at the disappointing numbers out of Walmart, one tries to piece the story together.  The economy may well be recovering, but is the improvement substantial enough to see Walmart shopper move up to premium retailers?  Obviously the answer is a no, the economy may be looking better from an investor standpoint, but with increasing fuel cost Walmart customers are still pinching pennies.  The information provided this morning by the company gives insight into what may be happening.  Looking at the numbers Walmart 4th quarter profits took a beating and the company warned investors that they should expect margin declines in the future.  this leads one to wonder, why is Walmart not excelling in current market conditions? The two word answer, is Dollar General.

Above is a graph depicting the stock performance between Dollar General and Walmart over the past year.  The chart makes obvious the story this article is attempting to make a point of.  Dollar general due to its limited square footage and fewer employees can offer lower prices.  This by no means suggests that the Walmart business plan is failing, it is merely bringing light to the fact that consumers are truly pinching pennies.  As gas prices continue to speed higher, consumers will continue to look for way to save money.  Dollar General gives shoppers the benefit of not only better prices, but allows the to avoid the headaches of the Walmart superstores.  The graph above tells it all and today not only continues to reaffirm the struggling consumer but suggest that they are being even more frugal than was expected.

“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” – Sam Walton

Facebook recently filed its S1 for its IPO sometime in the coming year.  The enthusiasm about Facebook could be seen throughout the financial markets, particularly with money pouring into Zynga.  Facebook has been and will be the most anticipated IPO of 2012.  Similarly, Zynga was the most anticipated in 2011 and we all know how that traded on its first day.  Facebook will likely be a different story, with retail and institution investors battling to get shares.  Price action on Facebook will be very exciting on the first day of trading, and will likely bring back the movements not seen since the tech bubble.  The point that investors should pay attention to is the recent price action in Zynga.  Zynga’s recent fluctuations can be used as a signal what is in the future for Facebook.  Below is a graph of Zynga since its IPO with a few highlighted points to be discussed.

“Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected. Simply put: we don’t build services to make money; we make money to build better services.” – Mark Zuckerberg