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Michael Blair
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I recently retired as CEO of an Automotive Parts supplier, and manage an investment portfolio for myself and family. I have a BA in History from Royal Military College of Canada and an MBA from the University of Western Ontario. My first career was as a fighter pilot in the RCAF, and, following... More
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  • There Are Cheaper Alternatives To The Cheapest iPhone.

    The iPhone 5C and the Moto G. About the same performance but a substantial difference in price. Both prices are without subsidy.

    Moto G

    iPhone 5C

    My daughter loves her Moto G. She liked her iPhone 5C as well. she reports a preference for the iPhone but after it was stolen and she replaced it with the Moto G she is totally satisfied with the Moto G and will not pay up for another iPhone.

    Disclosure: I am short AAPL.

    Apr 14 10:29 PM | Link | 6 Comments
  • Q1 Is Over And It Is Time To Review The Bidding

    The first quarter is over and it is time to review the bidding. Of my eleven bearish calls three did not work out all that well but in total the short names returned 3.9% for the quarter. In a bull market I normally expect to take a bath on my shorts.

    The bullish calls also missed on four of thirteen names but even with those misses the long names were up 14.1% for the quarter.

    (click to enlarge)

    My view is that the market is near a top and will roll over some time in the next several quarters with a fair degree of volatility in the meantime. In that environment I stay liquid, keep a reasonably large short book and concentrate my long holdings in companies where my confidence level is high and their valuations appear low in relation to the market.

    Today, I am short CP (CP), Salesforce.com (CRM), Whirlpool (WHR), Qualcomm (QCOM), and Apple (AAPL) while I am long Micron (MU), Intel (INTC), Pengrowth (PGH), Penn West (PWE) and Bonterra (OTC:BNEFF) from the list above. I do have other investments not mentioned in this article both public and private.

    I urge readers to stay conservative, stay diversified and seek professional advice when putting their money at risk. Stock markets do not always provide pleasant outcomes.

    Disclosure: I am long INTC, MU, PGH, PWE, BNEFF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: I am short CRM, WHR, AAPL, QCOM and CP

    Apr 02 12:20 PM | Link | 8 Comments
  • Bitcoins: There Is A Sucker Born Every Nanosecond

    Central Banks exist to manage the supply of money so as to ensure price a reasonable level of price stability. The fact that they "manage the supply of money" has been pointed to as the reason why the World needs a virtual currency like Bitcoin - a currency out of the control of central banks.

    Bitcoin is a peer-to-peer payment system often referred to as a virtual currency. In a nutshell the Bitcoin system uses computer processing to create "Bitcoins" based on a mathematical algorithm which limits the number of Bitcoins that can be created providing an inherent inflation control. The algorithm is thus the creator's (Note: the creator's identity is unknown) method of ensuring price stability.

    How has that worked out?

    Not well, I am afraid. The price of Bitcoins on Mt. Gox, the largest Bitcoin exchange, has been anything but stable.

    (click to enlarge)

    Source: Zerohedge.com

    Mt. Gox recently filed for bankruptcy after "losing" hundreds of millions of dollars of Bitcoins. I wonder if the lost Bitcoins are accounted for by the founder's algorithm? What if all the Bitcoins ever created were "lost"?

    The people who owned the Bitcoins stored on Mt. Gox don't have a Federal Deposit Insurance Corporation insuring their "deposits". Oops! The money is gone. Where? That is something the world is anxiously awaiting to hear about.

    Unregulated and uninsured, Bitcoin has grown to become a payment system larger than Western Union and almost as large as PayPal, with transaction volumes reach $289 million a day.

    (click to enlarge)

    When I think of Bitcoin as "money" I am reminded of early civilizations that believed that trees and rocks were deities and worshipped them. I guess you have to put your faith somewhere.

    Faith in Bitcoin is nonetheless misplaced. Economist John Quiggen has said that Bitcoins will eventually reach their true value of zero, or words to that effect. For many people, "eventually" is today.

    The Mt. Gox bankrupty was the first Bitcoin exchange failure with losses of several hundred million which Mt. Gox CEO variously attributed to "system weaknesses" and then to the ever popular excuse "hackers". I love the "hackers" explanation because it really points to one of the major risks in Bitcoins - they exist only as bits of data and bits of data can be deleted, corrupted or in the case of Mt. Gox possibly stolen.

    The failure of Mt. Gox was immediately followed by losses approaching $600 million arising from "hackers" stealing Bitcoins from another exchange, Flexcoin, which promptly shut down. I wonder how depositors would react if there was a headline that BankAmerica had shut down after a robbery and depositors would get nothing. It would probably create quite a stir.

    Now that "hackers" have discovered just how easy it is to steal Bitcoins there is likely to be a spate of these. Of course the "hackers" may be disappointed if they hack all the exchanges since there will no longer be a way to convert those Bitcoins into, well, money.

    It is not the theft of the Bitcoins that is worrisome. The real question is what happened to the hard assets or cold cash that changed hands when the Bitcoin owners acquired their Bitcoins. That may have a been a bit harder to hack and a bit harder for the exchange operators to explain away.

    The value of modern fiat currencies like the U.S. dollar is that they are backed by the full faith and credit of the United States government; that "deposits" may be not much more than data on the bank's computer system but the loss of those data does not compel the loss of any depositor's monies; and, that deposits to some level are insured against loss. Moreover, in addition to the currency being accepted pretty well everywhere on earth as a medium of exchange it is also accepted for the important purpose of paying one's income taxes. Try doing that with your Bitcoins.

    The concept of entropy implies that any organized system evolves into chaos, or that is the way I liked to interpret it when studying thermodynamics. It seems particularly apropos to Bitcoins.

    The famous line attributed to P.T. Barnum but actually uttered by David Hannum "There's a sucker born every minute" seems to apply to users of Bitcoins. Only in the modern world, it seems the suckers are born every nanosecond.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Mar 05 10:55 AM | Link | 3 Comments
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