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Marc Gerstein  

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  • Google Android: A Market Share Vacuum Cleaner [View article]
    Earlier today, I received a replacement Blackberry (the speaker on my other phone failed and it wouldn't ring). OK. Stuff happens.

    Then, it took me 2 1/2 hours to get it fully functional, including nearly an hour with a Blackberry technician. This was actually my second such afternoon with Blackberry recently (it was a nightmare to try to synch it with Outlook 10, even though all my Blackberry software, including desktop manager, ere the latest versions) and I eventually wound up spending $70 on a third-party app to get it done.

    Ugh. I'm done. When my contract is up and I can get a new discounted phone, I'm probably switching to a Driod.

    The Blackberry problems I've been seeing appear to be more than just bad luck. (I know others have been having them, based on my researching the various Blackberry bulletin boards.) I think Blackberry has too many versions of too many models with too many different things going on with its software to the point where even Balackberry developer and support staff are losing the battle to keep up.

    I don't know that my fat fingers can handle an iPhone and I don't want to leave Verizon. At least Driod lets me stay with Verizon, and get a keyboard if I want one. And as far as I can see, the star of the Droid world is the operating system, not a specific piece of hardware. I suppose Apple can say that (it puts one piece of hardware and one operating system front and center). Blackberry seems to be making the hardware the star and i think it's driving their developers and technicians crazy and it's definitely hard on the user.

    Anyway, my Verizon contract has about a year to go, so I can watch how Driod evolves and, hopefully, addresses some kinks I'm sure are there.
    Sep 15, 2010. 07:29 PM | 5 Likes Like |Link to Comment
  • Railroads: Where Buffett Went Right [View article]
    This is really quite simple.

    Railroads are and have for many years been a play on (1) the business cycle, (2) demand for coal (partly cyclical and partly a utility fuel choice vs oil or gas), and (3) oil prices (as the author points out, rail is fuel efficient).

    We really don't need to futuristic rhetoric (which I'm having trouble applying since rails began in the 1800s and became entrenched as a mainstream market segment in the early 1900s).
    Sep 13, 2010. 08:55 AM | Likes Like |Link to Comment
  • Does Vanguard Know Something That the Rest of Us Don't? [View article]
    I agree with your assessment of the bond market. That said, I think you're making a mountain out of a molehill when it comes to Vanguard's new S&P 500 offerings.

    They already have a pretty solid collection of fixed income funds. They don't have every possible base covered, but they can live nicely for a heck of a long time with what they have.

    As to their equity roster, it's OK (a standard collection of market-cap sizes, styles, regions and sectors) but not special except for the expense ratios. I think it's simply a matter of their marketers believing they'll gather a lot more assets if they can slap the S&P 500 name onto a collection of funds.

    There are a lot of investors, including asset managers, who don't want to get exotic when it comes to ETFs but simply want to have or slice-and-dice the S&P 500. I think Vanguard reasons that there's a lot of money here and that they ought to compete for some of it, especially since they can trumpet low expense ratios. For Vanguard to stay out of the S&P 500 grouping makes as much sense as Colgate staying out of toothpaste.
    Sep 10, 2010. 01:21 PM | 3 Likes Like |Link to Comment
  • Best Buy: Get Used to Slower U.S. Growth [View article]
    I think we need a lot more elaboration on the claim that "Best Buy’s (BBY) stock is highly dependent on the future number of US stores that Best Buy has." The article cites a 44% gain in store count from 2005 through 2010, but we certainly have not seen a 44% jump in the stock.

    In fact, there are many other important variables. For one, there's the market itself. Others include sales per square foot, same store sales growth, margins, in-store experience, branding, and some serious competitors beyond WMT and COST, including Amazon and a Radio Shack chain that looks to be showing signs of slowly climbing up out of its swamp, and, of course, a host of regional rivals.
    Aug 31, 2010. 12:30 AM | 3 Likes Like |Link to Comment
  • ETF Ideas for Trading the Pause [View article]
    Actually, you should check the Aug. 19 follow-up. These are one-week trades and as it turned out CUT and SEA worked out great during the time I had them. I don't care what happened to them after I sold.
    Aug 23, 2010. 01:41 PM | Likes Like |Link to Comment
  • ETF Pullback Choices: 8/19/10 [View article]
    eriksonaz and I discussed via private SA messaging; for the benefit of SA readers following public comments, here's the resolution:

    The difference is in the slippage assumption used in backtesting. I chose to use zero and the explanation I gave is below.

    As to funds, I never trade up to 100% of my available funds so waiting for settlement is not an issue.

    my comments re: slippage:

    Slippage is an intriguing topic.

    For a holding period of one day, there's no question one needs to assume something, perhaps 0.5% or so.

    But as we stretch the holding period, slippage becomes less relevant. Most of my models assume four week holding periods. I believe there's no doubt that zero is the proper slippage assumption. There are so many security-specific and market-based influences on the stock/etf over the course of four weeks, the sort of bid-ask spread that prevailed on day one get overwhelmed many times over. I find that an assumption that all trades take place at a price equal to to the average of the high and low for the day is about as valid an assumption as any other.

    For a one-week holding period, the answer is probably more debatable. I believe that absent a set of exceptionally illiquid securities and/or a period of unusual market stability, I think even over the course of a week market forces more than overwhelm the impact of the bid-ask spread and again make zero a reasonable slippage assumption.

    I am now running two real-money weekly re-balancing models (the ETF one and one 10-stock equity model, that although not specifically designed with a small-cap orientation seems to be playing out that way), and in both cases, the results I'm seeing with real-money trades as pretty much matching the portfolio123 zero-slippage expectations. And interestingly, I'm not even trading all that carefully, For both models, I just execute via the FolioFN 11 AM trading window.

    I know slippage is a big topic in trading literature. I believe in prudence in testing. But there's a big difference between being prudent and going so far overboard that one winds up needlessly dismissing perfectly sound strategies. Another danger to "excess conservatism" is a tendency to push so hard and so desperately for something that tests well even in the face of slippage that one inadvertently slips into the optimization data-mining trap.

    Ultimately, the only real way to accurately gauge how, if at all, slippage impacts your results is to put a little bit of real money to work. Pardon the upcoming analogy, but I've been catching up on Food Network shows this rainy day in NY: testing is like seasoning a dish; you can debate the exact quantities of seasonings just so far, sooner or later, you have to get a spoon and taste it
    Aug 22, 2010. 06:26 PM | 1 Like Like |Link to Comment
  • Treasury Bubble or Economic Trouble? [View article]
    Interesting chart analysis. But there's a problem, a big problem.

    The techniques and indicators shown here are relevant only when the thing whose price is being charted has the potential to rise infinitely high. Those indicators and techniques, along with many others, help us assess whether or not they'll continue to do what they could, in theory, do.

    Bonds are different. There is an absolute ceiling on bond prices, as established by the fact that the yield can't drop below zero.

    Price momentum indicators are all well and good, but when they become divorced from common sense, they become dangerous.
    Aug 18, 2010. 08:31 AM | Likes Like |Link to Comment
  • ETF Ideas for Trading the Pause [View article]
    Yes, your understanding of the approach is correct. I will be curious to see how CUT and SEA play out this week.
    Aug 16, 2010. 02:00 PM | Likes Like |Link to Comment
  • Just One ETF: Turning Crude Prices Into Profits With Oil Services [View article]
    Two issues/questions:

    1. You imply OIH is a recommendation for smaller retail accounts. (You talk in terms of what small retail accounts should do and then spend the rest of the piece discussing OIL, so even though there is compliance wiggle room, a recommendation is definitely implied.) OIH is a HOLDR meaning it can only be traded in multiples of 100 shares and the per-share price is a bit above $100. Assuming that hasn't changed (Has it?), I'm not sure how practical that is for smaller retail accounts. Even if the OIH portfolio is the best exposure you can find, isn't there something else, ETF or "benchmark-type" stock that may offset a less-than-perfect business mix with an improvement in practicality for small retail accounts?

    2. It appears your overall investment case is tied to higher oil prices. Why, then, an oil service company, which is leveraged to volume (the quantity of drilling) rather than the price? Even if E&P ETFs are too tied to domestics, can't you find an integrated that will suffice, if not an ETF, then a stock?
    Jul 22, 2010. 11:27 AM | Likes Like |Link to Comment
  • NAHB Homebuilder Survey Drops to 52-Week Lows [View article]
    This reminds me of how giddy with optimism homebuilders were back in 2006. Perhaps today's pessimism means we're poised to turn upward.
    Jul 20, 2010. 01:54 PM | Likes Like |Link to Comment
  • Apple's iPhone Antenna Issue: Overblown, Hubris or Simple Testing Mistake? [View article]
    Microsoft can have a public relations problem involving a product usability glitch. HP can have a public relations problem involving a product usability glitch. Sony can have a public relations problem involving a product usability glitch. Etc., etc. etc.

    Apple CANNOT have a product usability glitch. It's not a PR issue. It's a brand issue. Simplicity, functionality, elegance, a joy to use, etc.... that's why Apple launches become big news, why people wait in huge lines to buy new product, why Apple has so manty dedicated fans, etc.

    It takes time for an image to change, and for the moment, emotional inertia is working to Apple's benefit; hence the reason why it can still sell iPhone4s. Ditto iPad (check Apple's letter to users re: iPad wireless problems and its recommendations to upgrade router firmware and re-set security protocols . . . not sure why the media missed this, but it;s in the Apple.com support area). Do fans wait on huge line to buy Apple product so they can run home and upgrade router firmware and re-do security protocols?

    The recent glitches aren't just glitches. They stand right at the core of the Apple brand.

    This is a dangerous time for Apple. If the company winds up going into a pattern of deterioration, business writers 15-20 years hence will probably analyze 2010 as the point where it all began. If Apple is to continue to flourish, it needs to understand this, embrace this, and make darn sure further new products go out the door in perfect working order come hell or high water.
    Jul 14, 2010. 12:37 PM | 11 Likes Like |Link to Comment
  • Apple's Strategy: New Insights [View article]
    Interesting perspective, and quite different from what you see in the Apple.com iPad and iPhone4 forums, where, it seems, Apple has conceded they messed up the iPad wireless and need to come up with a fix: until then, users who can't connect . . . even though iPhones connect fine, are told to upgrade router firmware and change security settings . . . just the sort of stylish out-of-the-box easy functionality Apple users have come to cherish! And need we even discuss the iPhone 4 antenna mess, except to say that I took my Blackberry out of its skin and held it in every position imaginable and couldn't make any signal bars disappear . . . ditto with my kid's Sanyo Rouge.

    I'm amazed at how many consultants get onto Seeking Alpha and how none of them discuss the life cycle of a business and the inevitable phases they all go through.

    Looks to me like Apple, maxing out on hubris both on its own and vicariously from its fans, is starting to show some cracks in the hull.

    GM, US Steel, Pan American Air, many railroads, Kodak, Xerox, Microsoft, etc. etc. etc. . . . who can count the number of once-great and seemingly invincible corporations that reached the peak only to make the long march down, some being further along than others.

    Makes you wonder about the likes of Apple and Toyota. It's not just that they've had some hiccups. The problem is that the hiccups they've had go directly to the heart of the brand.

    When it comes to reading about Apple, I think this is a time when we'd all benefit from a bit more analysis and a heck of a lot less worship.

    Can't wait to count up the number of red thumbs-down votes I pick up for this. :-)
    Jul 10, 2010. 07:09 PM | 5 Likes Like |Link to Comment
  • The Zweig Strategy: Befriend The Trend [View article]
    We are considering working more closely with FolioFN, but as to front end integration, I'm not sure how necessary it is nowadays. Do you use the folio loader feature which they introduced in January? It's as easy as any formal integration could possibly be.
    Jun 7, 2010. 01:32 PM | Likes Like |Link to Comment
  • Posner's 'Stalking the Black Swan' Advises Investors to Pick Up New Skills [View article]
    marketace:

    "Company specific fundamentals mean nothing anymore. ETF's have changed the markets to make investing in companies obsolete and only industries and various investment classes are relevant, but unfortunately this dummies down investments as good companies in each field are merged with the bad in ETF portfolios.

    "Charts and stats (that are mostly false) are somewhat more helpful, but when gov't and Wall Street intervention alter real market patterns on a consistent basis this info also becomes difficult to use and no longer very relevant. This may have worked well in rational markets, but becomes less meaningful in totally irrational (if not manipulated) markets"

    An interesting collection of assertions the boldness of which is matched only by the lack of substantiation. (Sorry, the bit about four banks doesn't even come close to supporting the above pronouncements.)

    I don't even know where to begin when it comes to responding. But, marketace, perhaps I and others might get a head start if you wold drop your anonymity and tell us who the heck you are.

    Your profile, with its references to your status as a former CEO and CFO of various unnamed telcomm, internet and energy companies definitely raises eyebrows. Many of us know full well that internet and telecomm companies have often had uneasy relationships with fundamentals and much the same can be said for a lot of small energy firms.

    Naturally, I'm curious as to what in your background leads you to such sweepingly nihilistic positions. Did your companies have reasonable fundamentals and were you frustrated by the Street's unwillingness to appreciate them? Did your companies have no fundamentals at all and are you perplexed at the willingness of the Street to invest anyway? Are you just blowing off steam because you're frustrated with the market and anonymity gives you the freedom to say things you wouldn't dare say to people who know you? What? What? What? What? What?

    So I encourage you to come out from behind the curtain and let's talk.
    Jun 6, 2010. 07:08 PM | Likes Like |Link to Comment
  • Why Apple Stock Makes Me Nervous [View article]
    "You hold zero AAPL which qualifies you as a looser."

    Wow! That is an absurd and frightening (for you whether you realize it or not) statement.

    No matter how great anyone might think Apple is, or how great it might actually be, nobody can ever be called a loser for failing to own a particular issue. There are thousands of other stocks to choose form many of which are just as great as what even bulls expect of Apple. The only thing relevant is the performance of your portfolio. There are no brownies points based on which stocks contribute to your returns.
    Jun 3, 2010. 11:33 AM | 3 Likes Like |Link to Comment
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