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  1. Phil

    Good morning!

    I wish the market were open today – so many fun things going on…

    AAPL/Dawn – When something is drastically undervalued, it's pretty much a little jack in the box and the little crank just keeps turning and turning until some special note pops it.  I don't mean like Friday, that's just a wriggle in the low range – I mean a $50-$100 run over a couple of days kind of thing – some event when people say "hey, those guys make a LOT of money!"  As I noted to someone the other day, with AAPL, it could be one of about 10 things – that's what makes it such a good long.  

    They've already had the kitchen sink thrown at them as far as negatives go.  And, don't forget, those negatives are being thrown at AAPL by a media that's controlled by 6 companies – all of whom hate AAPL because they have taken control of the music business and are taking control of the publishing business and trying to take control of the TV business.  There are, annually, tens of Billions on the line here and these 6 companies will do whatever it takes to keep AAPL from succeeding:

    Keep in mind that Newsweek stopped publishing it's paper edition this year – these guys are terrified about losing control of the future – especially to someone who's not even in the club.  Jobs tried to build bridges with Disney, who are the least evil of the 6, but they just wanted to get Pixar and had no real interest in giving AAPL content, which went to Hulu and NFLX as soon as Jobs died.  

    AAPL is a disruptive force and there will be all-out content wars in the future.  So the studios and the TV stations and the news media look for any way they can to keep AAPL down – the same way they work very hard to keep Americans from seeing Al Jazeera as a viable entity – even though they are Walter Kronkite compared to Fox.  Overall, it's a long game that's being played and I wouldn't want to guess WHEN something will happen and, frankly, I don't care – because I'm much more patient than that.  

    If you buy a company for a long-term hold, you should buy it BECAUSE you want to hold it long-term, like a house.  And that means you buy it once and then, 10-20 years later, maybe you have occasion to sell it.  In between, you don't obsess over the PRICE because it doesn't matter.   People know and accept this about homes but can't accept it about stocks – even though most of us in the top 1% have a lot more money in stocks than we do in homes.  

    I put up notes last week about how just keeping money in the SPX beats almost every other ETF or hedge fund over the long-haul.  Buffett is notable for beating the S&P over 50 years but what does Buffett do – buys and holds.  This is the hardest thing I try to teach because there's no substitute for experience over time here.  Only by going through the cycles – USING a buy and hold strategy (modified with our scaling and selling premium strategies, of course) does it become clear to you what nonsense all these other "systems" are.  

    Sure it's fun to make short-term trades and I love them as you need something to do while you wait for your trees to grow large and bear fruit but it's also important to keep in mind that short-term trading is just gambling – and should never be taken too seriously.  

    A guy with an apple orchid can afford to give some away but the guy who's juggling 10 apples to survive can't afford to drop even one or two but the guy with the orchard started with 10 apples worth of seeds – and a different philosophy. 

    AAPL should buy a studio:  VIA is $32Bn, NWS is $72Bn, TWX is $53Bn, DIS is $104Bn, Vivendi $22Bn (Bertelsmann is private but around Fox's size).  They haven't because, if they bought one, the others would go insane.  Jobs took Disney stock for Pixar ($7.4Bn) and I think he intended to push for a greater alliance but Disney knew all they had to do was wait and the stock would end up getting redistributed among Steve's heirs, so there was no danger giving him 10% of the company (largest shareholder at the time).  

    The problem at the moment is Steve Jobs had a Tim Cook to run the company for him so he could run around making deals and, of course, his fanatical personality allowed him to ram deals down the throats of record companies at a time when their sales were weak and they were looking for an answer anyway.  Books are more or less a done deal as well but not magazines and newspapers nor TV or Film and that's where the real money is.  

    Tim Cook doesn't need a Tim Cook to run AAPL, Tim Cook needs a Steve Jobs to get out there and make those deals but that's very hard to replicate as part of what made Steve Jobs Steve Jobs was the fact that he came into a room with his reputation glowing around his head like a halo and every word he said carried the full weight of the AAPL Corporation – because the board learned (since they fired him and wrecked the company) never to say no to Steve.  

    You can't replicate that by hiring some guy, no matter how good he is.  

    Of course, Steve Jobs has only been dead for a year and 4 months – so maybe we should give Tim a chance! 

    By the way, Cook donated $100M of his own money last year (mostly to Stanford Hospital and Project Red to fight AIDS and such) and AAPL matched employee charity donations up to $10,000 a year.  AAPL is also spending $100M to move some of it's Mac production back to the US – starting this year.  

    This is not a company (or a CEO) playing a short game and, as we are well-aware, not many investors play the long game.  That makes companies like AAPL fantastic buy opportunities for me, Buffet and the 4 other guys left who actually like to own great companies for the long-term.  



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