Comment by phil

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phil
April 21st, 2013 at 12:49 pm

Good morning!

Pretty slow news weekend so far.  Yen 100 seems to be the goal:

 

Japan's Aso: Recovery 'Few Years' Away

Japan's finance minister said it may take longer to cure Japan of deflation than the two-year goal that the Bank of Japan has set and a self-sustaining economic recovery is at least "a few years" away.

• G-20 Backs Japan on Yen Policies

China/8800 – As you can see, now that they've had their little dip Hang Seng stocks recovered very quickly and it's been ages since we touched FXP, even with the recent 10% drop.  China's economy is not the same as America's or Europe's – I should have made that distinction, I suppose.  China is more like America in the 30s-50s – as people left the farms to go work in factories in the big cities only they haven't had a massive war to suck up excess employees or give them a focus for Government spending (and war spending is great as you literally spend money on things and then destroy them so there's no oversupply after the fact).  Anyway, so the gist of the commentary was re. our situation here – China is so much smaller with so many other dynamics – you can't apply the same model but we did realize that higher labor costs would lower corporate profits and spook investors and they had a 30% correction but it came back so quickly early last year that I lost my taste for messing around with China and, anyway, our markets looked so good I saw no reason to stray. 

UPS/Turning – I think, on the whole, they're a good bet on that premise but does inflation help or hurt them?  Generally, the transports don't do better with inflation as they are all wages, fuel and equipment costs and, since the volume of items shipped doesn't increase – only the price – and since the manufacturers they have to pass increased costs on to are themselves having trouble passing on price increases fast enough to maintain margins – I don't think it would qualify as a hedge against inflation.  

AAPL/Wombat – My house and my neighbor's house are almost identical.  They were at the same time by my neighbor and his parents, who wanted to live next door to each other.  When I bought my house it was $400,000 and, at the top of the housing market, someone offered us $950,000 for it.  At the bottom of the housing market, we would have been lucky to get $500,000 and now, I would imagine around $650,000 or so is fair.  It's the same house – it hasn't moved, it hasn't grown or done anything special and my neighborhood hasn't changed since 1998 and, had the house not shot up to $950,000 at some point, I'd feel like a real genius for being up $250,000 now.  

Meanwhile, when "THEY" took the PRICE of our houses down to $500,000 at the bottom of the market – had my neighbor decided to sell his house, I would have been THRILLED to buy it because I KNOW it's worth more than that.  Maybe not at that time but, eventually, I KNOW it's worth more so I make an INVESTMENT.  My current investment in my home is up 60% in 15 years, had I gotten my neighbor's home for $500K in 2008, I'd be up 30% in 5 years – even better.  

Even if I had bought my home for $950,000 and then bought my neighbor's home for $500,000 (doubling down), I'd now have two homes for an average of $725,000 and I'd be down but not too unhappy – especially compared to being down $300,000 on the one home.  Since my main intention is to own my home "forever", none of this stuff even bothers me but I damned well know a bargain when I see one and, if I find myself with more homes than I actually intend to use – THEN I can take advantage of an offer for $950,000 next time it comes around and lighten up.  

AAPL is the same thing, you say you have $350s at $42 so you OWN AAPL at net $392 and now it's $390.  Do you think this calls for drastic action?  Can you comfortably afford to put more into the position and wait a very, very long time if things go against you?  As you note, we're still holding the short $400s because we don't have any reason to panic out of them at this point.  If earnings really suck and guidance sucks and we don't see that we have enough time to recover – THEN we will worry but, otherwise, we have about as much AAPL as we'd like to have and we'll be THRILLED at this point just to see it back over $450.  Before earnings (before getting better information) is not a good time to press our bets – but you'd damned well better be ready, willing and able to press your bet AFTER earnings – otherwise you have no business taking that chance in the first place.  

AAPL/Jabob – Oh no – it's HORRIBLE – Abandon ship!!! 



Look at this disaster, sales up about 70% and earnings didn't even double – what could people be thinking?  Cash only went up 50% last year after climbing 50% the year before that and less in prior years – what kind of madness is this?  Who would stick with a company that is gathering so much cash at only the same rate (but, of course, the total amount of cash is up 100%).  Imagine this year if AAPL only drops $40Bn into cash – that would be just 33% of the $120Bn they already have and more than any other corporations ENTIRE NET INCOME!   Yes – abandon ship!!!  



I liked the gold article too:



iWatch/1020 – Yes but it's only one of the proposed designs.  I liked the first set I saw better (more like regular watches) but I don't think the technology can support such a small form factor yet.  The wrist-band idea lets them spread the electronics and batteries over a good amount of area so it can be more functional.  Long-term, I just want a little pin on my chest like in Star-Trek and, when you want to know something, you hit the button and ask and the computer tells you – end of story. 

ABX/Bdon – Yes, that big upside is what I love.  Gold doesn't even have to bounce – they can just get Chile back on track and the stock will take off.  That's what I do like about them.  

By the way, is anyone watching Matt Harvey (Mets) this year?  Holy cow – this is everything I used to love about baseball back when Nolan Ryan, Tom Seaver, John Matlack and Dwight Gooden used to make it a party to go the Shea Stadium and watch a game.  I haven't cared about baseball in years but this kid's 4-0 with 32 strike-outs in 29 innings and an ERA of 0.93!  That's fun!  Unfortunately, like so many Mets teams in the past – they just have the one great guy and then you have to endure the next 3 games until it's his turn again…

Weeklies/Yodi – Sounds like fun.  

Drudge/Terra – I haven't seen anything legitimate to support that on this side of the ocean.  It's a rumor that started in The Mirror, which is like using the Start as your primary news source.