Archive for August, 2014

Everyone is asking when the market will crash.

They’re pointing to overvaluation… interest rates… the bull running way too long… P/E ratios… unemployment… wages… Europe and International melting down… etc., etc. *

Long-time readers know that I care most about one single, solitary metric:  The price of oil.

When oil spikes — like it did in 2008 — it affects the price of everything… and I mean absolutely, positively every item & service in the global economy.

That, of course, affects consumer purchases, which account for about 70% of all purchases and are truly the engine of the aforementioned global economy.

That, of course, affects corporate earnings, which affect stock price.

So, while everyone comes up with ever-increasing and complex ways to predict the market, I just keep my eye on oil… as I do every single day.

While the price of oil is subject to change at a moment’s notice… it’s been behaving for a while now.  That’s my signal that it’s safe to stay in the water.


*  P.S.  They’re also talking about global military actions and terrorism… which absolutely do have the ability to derail the market in the short run… those are — depending on whether you are short or not — unfortunately or fortunately constant wildcards in this connected, modern world we live in.


There’s a great maxim in investing:  Buy the rumor and sell the news.

It means that things go up in anticipation… but when the news is released, reality usually puts the hype in perspective.

It will be interesting to see “if it’s different this time” (so to speak)… that is, if AAPL keeps rising after the expected September 9th iPhone 6 introduction.

I think it will.

Because Apple isn’t making just one introduction this year… they have more queued up… the iWatch… a payment system… and — hopefully before it’s too late — iOS TV.

Even the iPhone 6 could be a multiple shot… since everyone in the world will be speculating how many zillions they sold in the first 30 seconds of introduction… over the first weekend… by the end of the year… etc.

Guess we’ll know the answer soon enough.

From ZeroHedge (the “On a long enough timeline the survival rate for everyone drops to zero” folks):

It all just goes to show how futile any sort of crystal-ball reading effort is in the politically fractured world of 1914 … ummm, sorry, I meant to write 2014. My bad.

Happy birthday, IBM PC… born on 12 August 1981.  I had just finished my undergraduate degree in engineering.  Seemed pretty apparent that computers would change the world, eh? <smile>

The sad news is that Robin Williams has passed.

If I’ve said this once, I’ve said it a hundred times:  He was the funniest person in the world.  Mrs. Doubtfire, Good Will Hunting, and Good Morning View Nam remain among the very best movies ever made… because of him.

Thank you, Robin Williams, for making each and every one of our lives brighter.  May you find the peace you so richly deserve.  

Make God laugh.

GT Advanced, the supplier of “sapphire” — the revolutionarily tough new glass front that supposedly will be on the new iPhone — just up’ed the low end of their EPS range… from 8-18 cents to 12-18 cents.

Quizzicall, analyst Jonathan Dorsheimer from Canaccord Genuity just cut his price target on the company, stating he doesn’t see how GT Advanced can get there.

He could take this position for any number of good reasons.

But, what struck me is maybe he (and other analysts) are thinking different volumes than Apple and its suppliers are?

Certainly knowing whether revenue was adjusted upwards would give us a better tell in this situation… since that’s a better indication of Apple orders and not necessarily what happens operationally as GT Advanced tries to satisfy those orders.

Still, maybe Apple’s suppliers know something the analysts don’t right now?


I finally figured out what bugs me about the GM vs. Telsa stock comparisons…

… you know the ones that say it’s insane that Tesla shouldn’t be valued anywhere near GM because GM sells millions of cars and Telsa only tens of thousands?

Maybe Telsa isn’t valued so high… maybe GM is just valued as the broken company it is?

GM should have gone bankrupt a few years ago.  It makes relatively unexciting cars… and has for decades.  (Oh, to be able to buy a Cadillac worthy of attention again!)  Worse, it carries around the bloated vestiges of an old and out-dated infrastructure created by old and out-dated management.  Too bad the free market system wasn’t allowed to clean this up.

In contrast, TSLA makes exciting cars… and, with the gigafactory, possibly a lot more.

So, while GM may be a more powerful car company right now, it’s not a more power investment… which is clearly reflected in the market.