With all the money currently be printed and the more quantitative easing down the pipeline; Is now the time to buy? This is the question of the year. Buying today suggests that one may miss a historic run in equities while waiting suggests that there will be a better buying opportunity in the future. I happen to stand in the camp that better opportunities come to those who wait. Below is the S&P over the calendar year 2011. Yes, it did go down (even more then 1%).

My market analysis is not based on the mere fact that the financial markets will be facing many headwinds in the coming months, but rather the fact that markets do go down. No matter how much money is pumped into the system markets can, do, and want to go down. Take a look at last Tuesday. The markets went down hard and fast. This was a foreshadow of how things will happen when sentiment changes. It will happen before many investors are out of bed, and will hit hard and fast. Last year has been forgotten, thrown in the basement swept under the rug, and this will cost many their shirts.

The experts are suggesting that this moment, right now, is a once in a lifetime opportunity. Retail investors are eating it up and instead should be running for the hills. Thinks are arguably better in the United States, though they are not good. That is the key point that many investors are missing; For this to be a historic moment things would need to be good, not mediocre. I am not going to run through all the coming headwinds, you read, you are informed. What has more significance is the fact that things are not perfect and the market is acting as if the world has no flaws, it does, and those flaws are bigger then meets the eye.

So make your money and do it quickly because when things collapse, which they will, it will once again not be a pretty picture. So to summarize for those that missed my point, a better buying opportunity will present itself in the future, just ask 2008, July of 2011, and sometime in 2012.

“For every action there is an equal and opposite reaction.” Isaac Newton

With all the talk of higher fuel prices and the pain it will instill on consumers, the avid investor knows to look at his (or her) portfolio and see where they will be most exposed. In the past one of the first places consumers cut back was on their daily addiction, coffee. Fads and consumer buying habits change over time. Has Starbucks become a consumer staple, that the masses cannot live without?

Years back when the consumers wallets were first hindered by increasing gas prices experts were saying coffee was the first discretionary item to go. Today coffee seems less and less of a discretionary item and more and more of a American addiction. Americans are addicted to their televisions, entertainment, and so on; Today it seems that coffee (in particular from Starbucks) falls into that category of need. We all know that Americans have a tainted line between the need category and the want category. Today more and more Americans see their Starbucks fix as a need that they can’t live without, even if it means cutting back on other items to pay their coffee bill.

This blurb about Starbucks originated from observing the line out the door at my local Starbucks this morning. Gas has recently peeked in price and may go higher in the coming months. Many of the experts want to claim that consumers won’t cut back, they will, and they have. The question that any intelligent investor needs to as; Is where will consumers cut back? As I mentioned some time ago in The Real Walmart Story, consumers are cutting back from their beloved Walmart and shopping at dollar general to save a few dollars. They do not seem to be cutting back from Starbucks and this could be due to a multitude of reasons. One may be that Americans are cutting back in many aspect of their lives and have been for some time (we are still in the midst of a recession), and consumers want to treat themselves. The easiest and cheapest daily way to treat oneself is in the form of that Venti coffee from Starbucks. Even in the worst economic times Americans will treat themselves because we are spoiled and love spoiling ourselves.

When talking Starbucks nowadays one cannot forget to mention their recent movement to take market share from Green Mountain. What investors should not forget is that Starbucks bread and butter is selling coffee at their coffee shops. In the past few years their coffee has been available in stores and in K cups, but still at the end of the day they make the most of their revenues from their Starbucks coffee shops. Until their coffee machine becomes a leg on which they company stands on, one should not be overly concerned with that aspect of the company. At the end of the day Starbucks is Americans’ coffee shop and will continued to have a line out the door, even with rising fuel prices.

“Starbucks represents something more than a cup of coffee.” – Howard Schultz

Photo by Cherrysweetdeal

With all the wonderful news in the U.S. and abroad one could expect me to eat my previously bearish sentiments. Today I thought long and hard about eating my previous sentiments and adding some whip cream and cherry to the bearish sundae. Then as I was scanning my watch list, I came across CAT.

Over the past year and over the past few months in particular CAT has had quite a run. Over the past week we saw a deep sell off in equities followed by a complete reversal and a push higher. Where was CAT in all of this? The barometer of global growth has been hanging in the background. This does not seem to add up and lends me to suggest the future worry of financial markets: shrinking of global growth. We know that Europe’s growth will likely lack or in Greece’s case contract as we look into the future; That is all backed into the cake. What strikes renewed fear in my heart is the global growth story. One that suggests that those around the globe are about to hop on the recessionary bandwagon. The one pioneered by the U.S. in 2008 and revisited recently by the European Union.

As we excel higher on renewed optimism of the better than worse data out of the United States, one must remember that in the new day in age we are linked to those around the globe. The inter connectivity that encompasses the world today will hurt your portfolio as global growth goes. We may see a possible weakening of the BRIC and China in the coming months.  With a global slowdown the U.S. will likely follow, and that is what Goldman’s suggests with its cut in GDP estimates this morning from 2.0% to 1.8%.

I will begin with pointing out the obvious; The new iPad is not a new version but merely an S. S in this case  as we all know stands for suckers.  Over the past 48 hours I have read countless articles pointing out all the new-found benefits of the New iPad.  Most of the advocates are just hardcore Apple bulls supporting their position.  The tech analysis and demand story they have presented is nothing short of laughable.

Let’s break down the new iPad:

• Oh boy a 8 mp’s camera allows me to become a professional photographer.
  • By far the biggest “scamming” point of the new product. If quality of photography mattered to anyone who was looking at the product, they would go buy a $60 camera from best buy.  Why? Because it has twice the mp’s (16 mp’s).
• It is completely not redesigned and has no new curb appeal.
  • The new iPad is not thinner or sleeker; It has all the same characteristics and is actually larger and heavier.
• 4G LTE will allow me to not access data through walls.
  • Not only is the 4G LTE world a fractured and confusing one. Those who are somewhat intelligent are telling me that it won’t work in Europe. I know things are bad over there, but so bad no one can afford Apple products? (F.Y.I. LTE stands for Long Term Evolution)
• The new features will be an incentive to buy the new product.
  • That was just in here for laughs and giggles. The point which I will make below and you should already be familiar with being a half intelligent human being, is that this product does not capture new consumers. This instead pushes consumers to the lower tiered iPad 2.

“Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving them” – Steve Jobs

Ahh Facebook, the much anticipated IPO of 2012,  the social networking product of Mark Zuckerberg that we all know and love.  When Facebook filed their S1 recently, the financial news world went into hysteria over what was to come.  What should have more relevance to investors is what is not to come.

Last weekend, I came across an article about Shutting Down Facebook Stores. First off, I did not even know that these stores existed; which makes me wonder did the rest of the Facebook world know about this one of a kind retail opportunity?  If you didn’t catch the sarcasm, my point is this: Facebook failed to offer a different retail experience then was already on the web.  If someone wanted to go to Gamestop and buy a product, they would do just that, go to the Gamestop website or in the store.  Facebook attempted to monetize their website and their system of Likes (a fundamental element of the Facebook experience that allows a user to expressly like a post of another user or a product), and failed to do so completely.  This failure should strike fear into the hearts of social media investors.  Once again, Facebook, the giant of social media has shown that people may like their product, but monetizing it successfully is a different ball game.

We do know that Facebook has made money and a decent sum of money through their ad sources.  I will break Facebook’s numbers down in a second; but first off, let’s look at the problem intuitively.  Facebook claims to give advertisers a different and new advertisement experience.  It allows businesses to connect right to customers that find their products interesting.  What all those touting Facebook have failed to realize about the social giant is just that; Facebook serves a social service.  Facebook allows users to share photos, comments, likes, and so on.  Investors fail to realize that consumers are so caught up in the social interactions they do not have time for advertisers.  When someone is on Facebook they are either chatting or surfing the web of social information.  {Yes they may come across an advertisement or two, but they are more interested in seeing what Sally is saying to Bobby and what George is Facebook chatting them about.}

The most interesting part of the Facebook story is the pricing of the company.  Facebook made about $4 billion in revenue last year.  The company is set to be valued at $100 billion.  Those reading this blog likely know Apple well.  Apple made about $108 billion last year and their market capitalization was around $500 billion on Friday.  For the rough mathematics let’s say the market cap of Apple is 5 times its revenue last year.  Applying these same metrics to Facebook we get Facebook, we get Facebook valued at $20 billion.  Well, you may argue Facebook is a growth company. Okay, then let’s double the metrics, you get $40 billion.  Doubling isn’t sufficient for you? Let’s triple to represent the growth potential of Facebook and their one product, and we get $60 billion.  Even with a $60 billion market cap, the growth is handily priced in, and with $100 billion is just ridiculous.

Many compare Facebook to Google or Apple.  When making this comparison, those individuals fail to realize the almost perfect game that Google and Apple have played.  As stated earlier, Facebook has failed to monetize itself as a retail and is already off to a bad start.  What should raise more concern is the Facebook supporters suggesting Facebook will becomes its own platform.  Has anyone witnessed the trouble the android platform has had catching on?  If a company like Google, with their multiple successful products, has trouble becoming a platform and breaking into the computer and cellular space, think about the potential problems a company like Facebook, who has one successful product, will have.  To compare Facebook to giants like Google and Apple, at this point in time borders on ridiculous,  Google and Apple have proven themselves time and time again.  Facebook has proven itself kinda once.

Dont get me wrong. There may be money to be made on a trade in Facebook.  Above are merely the reasons why long term investing isn’t just questionable, but truly ignorant.  As I mentioned last week in my article And They Say Tech Isn’t A Bubble, tech is going to come crashing down, and Facebook looks like it may be the catalyst.

“Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” – Bill Gates

Photo by Sean MacEntee