Tuesday, August 25, 2015

You're crazy if you bought Apple stock today on this guy's advice!

Jeff Reeves from Marketwatch offered this tender nugget to all investors, regardless of their financial condition, wealth, age, gender, or religious affiliation:

If you don’t buy Apple’s stock today, you’re crazy

Well, if you took that advice at the open when there was monster rally, you would have bought it at $111.07 a share. A huge discount and once-in-a-lifetime opportunity to pick up Apple shares on the cheap. After all, since the Monday stock meltdown, Apple stock could only go up. If you thought otherwise, Jeff claimed you were crazy.

It closed at $103.74 and was down further in after hours trading. If I had taken Jeff's advice and sunk my life savings into Apple stock, because you be crazy not to, I would be down $7.33 a share, or 6.5% of my life savings. OUCH!!

Update: Well, all MarketWatch writers aren't drinking the same KoolAid.

No, Apple isn't a slam dunk

Monday, August 24, 2015

Timeless investing advice from finance web sites

With drama in the air over recent stock market drops, financial web sites are quick to help out those in distress with timeless advice. The market is not even in correction territory, much less a bear market, but investors need some salve for their 401Ks. Yahoo Finance chimes in with:
Here's how smart investors will react to today's market drama

Who doesn't want to be a smart investor? Their advice is to "just hang in there". That certainly is good advice for money managers who get their cut no matter what stocks do. So, if you lost money on stocks, you still get to pay management fees. That's smart.

Marketwatch offers:
Most top market timers are bullish on stocks

"...on average, the timers in the top quartile are recommending an equity exposure level that is 84 percentage points higher than among the bottom timers — who themselves, on average, are completely out of stocks."

See, the top quartile timers recommend an 84 percent higher equity exposure. What more do you need to know. Equity exposure for the win!

The Wall Street Journal notes:
Trading in Stocks, ETFs Was Halted More Than 1,200 Times Early Monday

Clearly a great sign for stock owners because if trading gets halted, no one else can sell a stock you own and make the price go down. There is a lot of safety built in to the very fabric of the market. What if you want to sell? Why would you ever want to sell? You would just force a stock to be halted. It's really better if no one ever sells.

Since I don't own any stocks, I was not really comforted by this priceless advice. However, if your nest egg is in stocks, you can sleep like a baby tonight.

Tuesday, July 28, 2015

Twitter Fritter v.7

Ah, another quarter rolls by and Twitter burns another $136,000,000 using generally accepted accounting principles.

Are you a Twitter shareholder, hanging on to those shares "worth" $36.54 each? The company issued a fresh $175,000,000 worth of shares this quarter to pay employees and executives. Who slurped up all those new electronic shares of a company that has never earned one penny in profit? Lucky Twitter shareholders. Smart move!!

If you want to hitch your wagon to a hot Dot Com 3.0 company, I have a digital start up called projectile-vomit-shares.com. Here's the idea. Anyone can login to my server and post some text (limited to 160 characters), then everyone else can see their post. Meanwhile, the company will digitally projectile vomit roughly five million shares a quarter that lucky investors can buy. I only plan to issue $100,000,000 in shares each quarter to pay for my living and operating expenses and I promise I will lose less than $136,000,000 each quarter using GAAP. Note: This is not investment advice. Management makes no claims on forward looking vomit or projectile vomit.

See also: Twitter spends 35% of revenue on stock-based compensation

Monday, July 13, 2015

July 13, 2015 - Greek total surrender

After all the bluster and referendum, Greece gave in to total and utter surrender to their creditors. The details of the deal are horrific for Greece, supposedly mortgaging airplanes, airports, islands, and other assets to secure the third bailout. They will also be forced to pass specific legislation on a tight timeline. All humiliating, much like the loser of a bloody war.

The punchline is that the math of the deal will not work for long. The Greek debt will head up toward 400 billion euros, nearly double their GDP. Good luck squeezing more taxes out of an economy where the banks remain closed. The pain for the Greek people will be extreme and it would have been had they left the euro. The difference is that this crisis will be back again until and unless there is a large write down of the debt. There is no hope and no future in Greece. Only the grinding Euro boot on their face. Oh my.

Saturday, July 11, 2015

July 10, 2015 - Greek capitulation day

Less than a week after the Greek people voted against the latest EU bailout ultimatum, the Greek government caved completely and approved what amounts to the very same harsh bailout terms. Tspiras and the "radical left" were too afraid to actually listen to their own people and act to take their monetary future back into their own hands. They are good at talking but not doing.

With cooing noises from the IMF and some Euro leaders, markets thought this meant a new Greek deal was as good as done for this weekend. Some in the Eurozone see the need for a serious debt haircut for Greece to recover, Germany, Finland, the Netherlands, and a few others don't see it the same way. Germany has now floated a 5 year suspension of Greece from the Eurozone to "get their shit together", while allowing it to stay in the EU.

Their were all kinds of uncertainties after Greece voted No on the referendum. These continue to unfold over the weekend and I am sure will continue throughout the next week. This situation can still spin out of control in many different directions. Each kick of the can for Greece gets more expensive and this next one, priced at around $80 billion, may have reached a threshold where it overwhelms the political desire to keep the Eurozone dream alive. Fascinating, isn't it? Everyone knows that a new deal only makes the problem worse -- unless there is giant haircut which causes other kinds of big problems right now. There is no way out.

My friend Mr. T has one prediction...Pain!

Sunday, July 5, 2015

July 5, 2015 - Greek independence day

The news coverage is thick on the Greek referendum where the population rejected the Troika ultimatum. This was a big game of chicken and the Greeks just won not only the game but potentially their independence from the death grip of the horribly flawed Euro monetary union design. I've been expecting this since 2010, it only took 5 more years for the Euro system to break.

Still, there are mostly unknowns ahead for the EU, IMF, ECB, and Greece. A lot of different scenarios can unfold, including Greece staying in the euro while defaulting on the debt. They could end up out of the euro eventually. What they can't do is repay their outrageous debt in euros. This also sets a precedent for other members to turn their backs on the smart people running the EU experiment. It is going to be difficult and painful for the Greek people in the short run, but I hope they make the adjustments they need to right their economy. A big step forward is to dump their debt or at least give it a big fat haircut.

Monday, June 15, 2015

Twitter Fritter v.6

I have been heckling Twitter (the stock) since November 7, 2013. It looks like investors are finally getting the fact that Twitter only knows how to lose money, then make it up with stock diarrhea. They fired their CEO and are searching for a new one. After the IPO, Twitter had a market cap of $24.93 billion. Today, it is $23.51 billion. Still an amazing number considering they haven't made their first dollar of profit.

Twitter is seen as a valuable news source by millions of people, but as a company that can make profits, I concluded long ago it was not in their DNA. To make profits, they would probably need to tweet ads at people in about a 3:1 ratio to real tweets. The last time I tried to use it, I got mostly ads tweeted at me from news sources like the New York Times instead of news. I lasted one day before I quit. Good luck growing that user base if it turns into an ad spamming service.

Unlike Facebook, which has the richest set of user demographic data in the history of man, Twitter doesn't know very much about its users and I think will have a harder time with targeted ads. They also have to compete with Google for ads. Finally, there is evidence that millions of accounts are fake and that followers can be bought rather cheaply.

I think it is possible that Twitter could be scaled back and run profitably if they were made lean, focused on their core service, and stopped with the stock diarrhea. Maybe a new CEO will figure out how to do that, but the current culture is live large and poop stock certificates. A very dotcom bubble version 1 attitude that might be impossible to fix.