Ill-Advised Business Press Photo - Pt. 2

WE TOLD YOU

How Selling A Car Works

I later found out that the first pencil is arrived at by the dealership in a very unscientific way. For every $10,000 that is financed, the down payment they try to get is $3,000 and the monthly payment they try for is $250. In this way, a $20,000 family sedan would require about $6,000 down and a $500 a month payment. (These payments are based on very high interest rates calculated on five-year loans. These numbers are so inflated that a manager I later worked with laughingly called them, "stupid high numbers.")

Confessions Of A Car Salesman

Advice To A Friend Getting Started

As anyone in finance will tell you giving advice to friends and family is a double-edged sword. 

After the jump is an excerpt from a conversation I had with a friend in December. The advice is being posted here because the product explanations and basic portfolio allocation thoughts are relevant to almost anyone who is doing some investing for the first time. 

Some bullet points:

- ETF's are the way to go for the lion share of the novice investors portfolio. The concept can be difficult to grasp/explain for first-timers but is important. 

- "Buy low and sell high" is wrong. Companies making new highs present some of the best investment opportunities. 

- Invest in what you know. Your specialty, line of work, and personal experiences are an edge you bring to the market.


The indiviudal stock picks discussed since:

It's Got More To Do With Not Losing, Than Winning

Someone close to me had a windfall last year and correctly realized they need to do something to try and make it last. In my advice/allocation I gave a large weighting to Pimco Income Opportunity (PKO) and feel it's a good opportunity for almost all portfolios. Pimco is one of best active managers out there, having access to them with intraday liquity available is under publicized. I like the pretty broad exposure to higher return debt markets, the 9% yield that is paid out monthly, and it's price appreciation looks to be roughly half of the downside of equity market and equal on the upside

The title of this post is learned from the school of experience and is one the most important epiphanies to have success in the money game. To further paint this picture an example: counting linear to thirty (1..2...3... etc.) takes thirty turns whereas counting in an exponential fashion (2....4.....8....etc.) thirty turns you get to a billion. Shocking indeed. Now think of a modest loss on an investment, say 10% of $10,000, to return to your original amount you need earn 11%. No sweat am I rite? To contrast if the loss was 50%, a 100% return is needed to make it back to break-even. "The most powerful force in the universe is compound growth". You know who said that? Einsten, bro (emphasis mine).

Circling back to the PIMCO product. It's yeilding 9%. On a monthly basis. What is the effect of more payout periods? It increases the rate of compounding. In a down market (2008) it out-performed the stock market by 16%. In an up market it returned 41% well over the 28% return of the average. To reiterate for effect - What would Einsten do if he was a market wizard in his day? He would tell you it's got more to do with not losing, than winning.

In my niche of this industry that's upside and downside capture that can warm hearts and win minds. And fill wallets. (yours) Seriously a great product.

disclosure/legal: i own shares. if loss of money, blame the physics professor (pictured)

Still Love The Guy

Even with that Chile 'experiment' taken into account. This is pretty rich.

Market is selling off today. I could see another 4-6% of downside.

Previously mentioned picks NFLX and GMCR:

Give A Sane Person An Audience - And They Will Talk Their Book

There is nothing I hate more than reading analysis and see people making calls without doing the work necessary to show any track record. Without accountability there is no As a up and coming financal 'blogger', 'resource', 'brand', 'talking head', 'raving lunatic' or 'pundit' in this game there are couple of datas I would like to state/make clear. I want all who read me to understand I take my recommendations/analysis on this corner of the web seriously. I am not just churning out empty fodder. Although my attempts at humor to keep the site enjoyable my give that impression. Below is a review of my calls since I have been actively updating my blog/twitter.

12/9/09 - I made two recommendations being LG Display (LPL) and Disney (DIS): LINK

*Disney gapped higher in the five days following my initial recommendation  has since leveled off. It is more of long-term / allocation / conservative play as I mentioned.  LPL has returned over 20% in a month.

11/24 - I noticed the gap higher in Medtronic (MDT) and stated quite plainly "In my fucking sleep I can tell you it goes to 45." LINK
Lo and behold:

MDT/S&P Chart: Relative Performance To Overall Market - 10% out-performance in just over a month

11/20/09 - I made bullish pitches based on combination of factors for Green Mountain Coffee Roasters (GMCR) and the Coal industry (KOL) - LINK

Ill-Advised Business Press Photo - Pt. 1

If you are a public enough figure in business to garner some pub don't listen to the photographer/art directors "concept" or "vision".

Way to ham it up though Bill. Sure the all-nighters and 18 hours of screens didn't help his cause either.

Trends, Thoughts, & Links For A New Decade In Tech

Interesting spotlight by mainstream media on cloud computing in this week’s Barron’s. Cloud computing is the inevitable and rapidly increasing use of the web in place of firmware and IT infrastructure. (Ex: Use web-based trading platform or database at work? Then a portion of your day is spent on ‘the cloud’.) It will be a long-term development with many small wins along the way with a handful of potential jackpots. Or for the Magellan/Lynch fans out there lots of two-baggers but ten-baggers will be few and far between from this play.

For those not swinging for the fences there will be many companies that help solve the security issue that is initial and important concern that I would look into. Anyone who, like myself, makes use of a ‘token’ to access/manipulate sensitive info knows the players in this market. And I imagine it to be sticky business, an easy sell to customers, and have high margins with somewhat light R&D expenditure for technology firms. All things that an investor that knows what separates also-rans from rockstars should like.

I think the elephant in the room of this trend is the long-term goals and aspirations of Google. What helps makes the connection in my head is web browsers.When initially loading up a PC which, of course, will be running on Windows the pre-installed, default web browser is Microsoft Internet Explorer. The function of which is only one non-differentiated task. Load and navigate websites. Rotten.com has the same content no matter what browser (Trust me). Unsurprisingly, taking this information under consideration, MSFT had 90% web browser market share four years ago. Recent data puts them in the 60% range currently.

In four short years they have lost 25% share (Firefox’s current %) to a company that is run non-profit; had little resources, R&D, infrastructure, or management that a 200 billion dollar company has. Also worth pointing out is the average tech savvy and overall intellectual curiosity of the majority of computer users is not geared towards exploring/finding other options for a program that already does the same exact thing. “Another web browser? Why? I already get the internet.”
Ever watch someone sit down on a computer with no IE icon and see the expression on their face? The uneasiness they feel? The only logical conclusion based on this info is that Internet Explorer was such an appallingly bad product (IE 6, yep) and that Microsoft’s attitude towards in-house development/closed-source coding (an extension of the firm being behind the code that was/is the cashcow of the computer era, the gift that keeps on giving, the operating system, Windows) forced the marketplace to shift away from a free program that does exactly the same thing. Pretty amazing.

Connecting the dots now. Google is pushing Chrome in a real, somewhat mainstream fashion. And they have the
resources, R&D, infrastructure, and management of a 200 billion dollar company. And I know for a fact that advertising works very well on a good portion of the “Another web browser? Why? I already get the internet.” crowd. In fact they butter advertisers bread by finding products in the media by recognizable names as instantly more credible. Proof: GOOG already has climbed to the market share it took Firefox three years to achieve.

Now what would stop Google from, I don’t know, completely undercutting MSFT on PC cost (they could pretty much just give then away), loaded with a Google OS that completely ran on ‘the cloud’ and the entire thing would be paid for through additional advertising (on the OS and as sole advertiser on websites). Or some other company. Or combination. Maybe MSFT will kick into gear.


Link - Barrons: Cloud computing, which shifts tech tasks into cyberspace, will be as revolutionary as the Internet itself

Following Venture Capital for Signs of Tech to Come (NYT)

CNN: Companies Google should buy (note: Currently they have 22 billion cash on their balance sheet, which is absurd. To give you idea they could buy out Garmin, Sun Microsystems, and AOL today and still hold seven billion for the next rainy day)

You Can't Spell Gold Without...

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Beck - Not So Mellow Gold
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

Think For Yourself

Market is going higher. Healthy consilidation and built a strong base. Should breakout to new yearly highs from here into new year. Top picks EPD, Ez Corp. (EZPW), LG Display (LPL). And short higher edu school stocks, specifically Grand Canyon Education (LOPE), and basically anyone in the business of giving online diplomas in communication/business areas of study. Implementation of thesis Friday at the close and have been rewarded thus far. However with the exception of LG Display, these have 1-3 month time frame in my mind.

"These days investors have relearned that the investments everyone is talking about are usually ones you don't want to buy. The risks of chasing a highflier generally outweigh the rewards. It takes a 100% profit to recover from a 50% loss.

The best investments are usually the ones nobody is talking about. Ten years ago, everybody was talking about which technology stocks to buy. Almost nobody was talking about gold. The Bank of England could barely give the stuff away at $260 an ounce."  Don't Chase Highflying Stocks - (WSJ)

Higher Edu Is Ponz

"The sticker price of colleges has gone up well over the rate of inflation, for decades," he said.
Indeed, if the price of gas had grown as much as the cost of a bachelor's degree since 1980, drivers would be filling up today for about $7.50 per gallon."

MSM common sense on higher edu bubble- Debt Filled (ABC News)

Nice directory/tutorial on algorithms (LINK)

New street high price target for Amazon issued by Shittygroup - $170 (AMZN) No denying that they are bellwether and one of the most important/innovative in tech space. Along with AMZN my best of breed large cap tech names remain Apple (AAPL), and Google (GOOG).

If you have even a toe dipped in the stock market some exposure in these names is a no brainer. Look to (QTEC) for a diversified vehicle to take advantage of all three. (It's the Nasdaq 100, which includes pretty big weights in all three). The estimates got jacked much higher and quite a few shorts have gotten comfortable in the name. They will shit themselves and cover their bets like they have before.

Twitter Updated

Twitter feed updated with the latest names coming out of my screens. I will post parameters/backtesting results at later date.

Links

Great look at genetics/environment and the contribution they make on your personality - The Science of Success (The Atlantic)

Levels to watch on the indexes - Reference Levels (Afraid To Trade)

Food for thought pertaining to the hyper inflation thesis. My thought is that it won't pan out in the doom and gloom scenario many are predicting but inflation will have to come in much higher than expected. Gold Isn't The Best Hedge For Inflation (Bloomberg) You can't just turn on the printing press like we have without the pendulum swinging the other direction.

Man I really nailed that Disney call yesterday.

You're welcome.

Will Be Out 'Til 12/16

Going To:



And:

Book Summary - How To Win Friends and Influence People (Part 3 of 4)

C.   Closing the Deal

• Get the other person saying "yes, yes" as soon as possible.



• Emphasize things all parties already agree on.


• As Socrates suggested, win one concession after another until, without realizing it, your opponent is forced to agree to a position that would have otherwise been fiercely rejected.


• In today’s information dense environment, we actively seek to reject proposals and information. Getting others to say yes immediately drives momentum in the direction of acceptance.

• Dramatize your ideas.



• It helps to make a visual, visceral demonstration of your ideas:



• When presenting a competitive assessment of MP3 players, bring the competitors’ products to your meeting.


• When selling an anti-theft devices for cars, a dramatic video demonstrating the experience of getting one's car stolen will help sales.

• Let the other person feel that the idea is his or hers.



• People are more committed to their own ideas. 


• Make suggestions and let others come to the desired conclusions.


• It may be in your best interest not to claim any credit.

• Appeal to the nobler motives.



• People often have multuple reasons for doing something. At least one will sound good as an external justification. The real reasons may often be hidden. Appeal to the one that sounds good.


• Example: As a tenant gives notice that he is preparing to break his lease, his landlord praises the tenant’s good character. The landlord insists the tenant is a man of his word and will live up to the terms of the lease he signed.


• Example 2: A celebrity wanted to avoid having an unflattering photo published. He asked the paper who owned the photo not to publish it, as his mother disliked the picture.

• Throw down a challenge.



• Stimulate competition among co-workers.


• Challenge someone’s capabilities/self-perceptions.



• To a body builder: “Is he strong enough to get the job done?”


• To help persuade a job applicant to take the job “This job will require someone really motivated to succeed, it isn’t a position for everyone.”

Market Going

Disney & LPL - Part Of The 'Kick The Baby' Theme Introduced Yesterday

I like Disney here too. Despite being in an awful sector in transition they are a group of consumers who are historically suckers and slow to move. All one needs to do is look at record sales for High School Musical or whatever else parents are being talked into buying to realize these are not informed purchases necessarily. These are let go of my arm and be quiet and I will buy you that Miley coloring book or that Jonas poster. They own ABC, ESPN (which should be spun off IMHO), ABC Family, the parks (where business will continue to suck), Pixar, etc.

More academically, yes I have inspected the state of physical formats (CDs, DVDs). It is in flux (sucks dick)  and will continue to. This is a bet not on the entertainment industry but on the Disney star-making machine. Disney just purchased the Marvel catalog which includes 5000 characters. Say it with me 'cross-platform revenue synergies'.

All of the investment dollars that are allocated within this sector have to go somewhere and while I can not get stoked an 11% 5-year income growth rate some people might have to. Technically it looks favorable to quite favorable, you get a 1% yield for your trouble and this is low volatility play (safe, use next years ComEd budget).

And I like LPL. (pin action from GLW and a great chart, k?)

As always do your own research.