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  • Numbers Don't Lie - Why The Economy Is Not Good [View article]
    "What did shock me was the news that Central Banks around the world are buying stocks. That is huge news."

    Not really. Microsoft has a better credit rating than the Bank of England. Apparently selling software is like printing your own money, only better.
    Apr 27 02:59 PM | Likes Like |Link to Comment
  • Is Apple Flip Flopping Over Heat From Its Enterprise Customers? [View article]
    "VirnetX was only seeking a 1% running royalty rate. This is not egregious by any means."

    If this is 1% of the retail price of an iPhone it might be quite a lot considering that probably only a small proportion of users actually use this particular feature.

    It is estimated that AAPL pays Nokia about $10 per iPhone for use of patents, but Nokia's patents are pretty essential for the iPhone, since AAPL did nothing to develop the underlying technology that makes cellular telephony possible.

    I would think that they could make the VPN on demand an add-on paid for app for those who want it, which would cost about 1% of the price of an iPhone, or about $8. Or since these customers will be corporations, (or possibly pedophiles), they could probably pay double that, so AAPL could make it into another profit center.
    Apr 27 12:33 PM | Likes Like |Link to Comment
  • 5 Trade Ideas That Can Make 500% In An Up Market [View article]
    Roni, even if you cannot short calls, you can probably buy bull call spreads, because the long calls cover you for any losses on the short calls. Spreads are not the same as short calls.

    The spread must be entered as a spread, that is that you buy the long calls and sell the short calls simultaneously in the same transaction, (although you should be able to buy the long calls first and then sell the short calls later to convert the position into a spread.)

    For an beginners explanation of bull call spreads, try this:

    If you want to trade options TradeKing (which is my broker, is a good one with very cheap trading costs and many tools set up to help options trading) but Thinkorswim or Interactive brokers seem to be the choice of many SA authors.
    Apr 26 02:18 PM | 1 Like Like |Link to Comment
  • Apple Is Where The Value Is At [View article]
    " I am betting they can earn $20B/year on average because so many people are comfortable owning Apple products."

    Yes, but it is all a question of margins. I am very happy owning Sony products, but they don't seem to be making much money these days. And when was the last time you ever heard anyone discussing the Sony Experia smart phone on Seeking Alpha.
    Apr 22 08:24 AM | Likes Like |Link to Comment
  • Apple Is Where The Value Is At [View article]
    I would like that too. A real all-in-one device with a readable-size screen that could connect to the Internet from anywhere even without a wi-fi signal available, although I nearly always have one--ideal for trading stocks and options from the beach. Would need a screen that can be read in sunlight. It could have a little stand to use on a desk or restaurant table as a speaker phone or videophone terminal. Could also have hands free operation via Siri for legal use in a car.

    I don't have a smart phone yet, because I am still waiting for my dream mobile product.
    Apr 22 08:11 AM | Likes Like |Link to Comment
  • Apple Is Where The Value Is At [View article]
    Darwin only a puny 165 by the most common estimate. There was a study done by a woman on estimates of IQs of some historical figures and all the estimates seem to come from her work.

    As one might expect scientists, philosophers, and writers come highest, with politicians scoring rather lower--much lower in some cases.

    There's a web site that lists estimates for some of the most common figures.

    Dickens was a childhood prodigy and his father would take him to pubs where he would stand on the bar and sing and dance for pennies. He is also said to have had a "photographic" memory--pretty good for someone who lived before photography was invented. He also single-handedly invented the child abuse industry as a means of revenge for mistreatment by adults in his own childhood.

    He was innovative as a businessman. Since the USA had no copyright laws, his works were extensively pirated, a source of great aggravation to him. However he worked around this by touring and giving personal readings and performances of dramatizations from his works, which were VERY lucrative.

    This was an interesting precursor to the age of digital music, with widespread copyright breaches making it more lucrative for successors such as Paul McCartney to do concert tours decades after the Beatles had quit public performance in favor of sticking to composing and recording.

    Don't know who has the 212--could it be Beyonce?
    Apr 22 07:34 AM | Likes Like |Link to Comment
  • Apple Is Where The Value Is At [View article]
    The usual estimate for Dickens' IQ is 180, but he didn't have much luck investing. He is believed to have lost money in bonds of the Cairo Canal and Land Company, the developers of a town called Cairo, at the junction of the Ohio and Mississippi rivers, but on visiting the site in 1842 described it as a dismal swamp that bore no relation to the pictures in the investment prospectus.

    "For $2,950 you could buy the ATM straddle (April 26/ 390 put/call)"

    $30 per share seems like a lot to pay for the straddle, since the stock would have to move $30 either way to pay off and the market makers are not taking much of a chance. The downside seems limited to me. Can the stock really go substantially below $360 after earnings? Maybe if they suspend the dividend or announce that the iPhone is going to switch to Android.

    My observation, for what it is worth (not much) is that for every seller there is always a buyer if the price is right, and for the stock to rocket down from $420 to $390 just before earnings indicates that there may be big buyers who want to get in at $390.

    We saw something similar with Microsoft recently. The stock was up sharply for two days almost as if someone knew something about earnings (no, that could never happen, could it?), and then down very sharply the next day when a story about declining PC sales was given prominent coverage.

    My comment at the time was that evidently some big boy wanted the ticker tape to be rewound so that he could get long before earnings, and sure enough the stock did pop on earnings with better than expected results. Based on this I went longer MSFT before earnings, although not enough, in retrospect.

    Could we be seeing the same thing with AAPL? Who is buying at $390, that is the question?

    As options stand at the moment the maximum pain point for April 26th AAPL options expiration stands at $420, exactly where this proposed straddle will expire worthless. As a keen student of pain, I would not be surprised to see the stock finish up close to $420.

    I'm going to stick my head out on this one and say that there is probably more upside than downside on earnings, but the bad new is that the volatility premium on long calls will also collapse once earnings are announced, so it could all be a lose-lose proposition.
    Apr 21 04:15 PM | Likes Like |Link to Comment
  • 5 Inflation Fighters Set To Fly [View article]
    "... its kind of like the preacher giving a sermon about folks not coming to church: The ones who came don't need to hear it and the ones who are not there never will."

    The preacher's income depends on contributions from those who do show up in on Sunday. It could be a defensive tactic to put the fear of God into potential backsliders.

    Responding to negative critiques might be necessary to discourage others.

    I don't think there is anything wrong with negative critiques per se, except that since many SA posters don't provide biographical details, there is no way of knowing their investment experience, life experience, or portfolio size, which is necessary to evaluate the worth of their ideas and how much they have at stake.

    I was amused today to see a comment from someone who had opened a "small position in Apple". What was this, one option? No, two shares! Nothing wrong with starting small and growing it big, but it is probably a fair guess that the dividend from two shares is not supporting a whole family.

    However there are also many people with profound insight posting on SA, who don't necessarily display their credentials. I found one just today who has no bio, but clearly has a great deal of inside knowledge of the workings of Wall St. and am in the process of digesting a backlog of a few hundred posts.
    Apr 21 08:57 AM | 2 Likes Like |Link to Comment
  • Apple: Desperately Seeking Capitulation (Part 2) [View article]
    I don't know. My wife has a Nokia phone here in the Dominican Republic. It cost $20 per month for 18 months with 250 minutes per month included. She has just finished paying for it. It plays music, movies, connects to the Internet with wi-fi, does Facebook, works as a camera and videorecorder too and is extremely sturdy, with an excellent signal and good voice quality on calls.

    Of course she wants an iPhone now because it has touch and no keyboard and she can show it off to her friends, but really for practical, non-cosmetic purposes there is little difference.

    Now MY phone is a $10 Alcatel, with calling, messaging, and games, but I can live without the games.

    Although smart phone functionality is nice, mostly people buy them for a status symbol, and I suspect the number of people who really need all the functions for business purposes is relatively small.

    The trouble with status symbols is that they may lose their cachet very rapidly as fashions change and it is much harder for them to penetrate more cost conscious markets.
    Apr 20 11:24 AM | 5 Likes Like |Link to Comment
  • Apple $395: Time To Give Up And Abandon Ship? [View article]
    Good advice convoluted, though the new policy of Seeking Alpha as of January is that they don't want articles that are primarily about options strategies unless the options trading part is tacked onto an article about the fundamentals of the stock as a suggestion.

    The reasons given for this are

    1. When some readers see an options category, they expect short-term, technically oriented trade ideas. As we are an investing, not a trading site, this sets those readers up for disappointment.

    2. Options move so quickly that it is virtually impossible to avoid the risk of stale information reaching our readers.

    3. Readers have indicated that options aren't core to their needs.

    Probably you and I would disagree with this view, especially with respect to #3, and argue that readers don't necessarily know what is best for them.

    Congratulations on your Apple trades. I have not done quite as well as my main position in AAPL consists of holding a January 2015 $350 strike LEAP and selling premium against it. During the time I have held this option it has lost just over $2000 in value, during which time I have recouped about $1300 by selling at the money options of various durations against it. If AAPL stays under $410 I will pick up another $2000 in July.

    One advantage of selling premium against a long option rather than the actual stock is often disregarded. This is that as the price of the stock falls the delta of the long option also falls. To explain, when I bought this $350 strike option the stock price was higher and the delta was about .85 meaning that if the stock fell $1, the option would lose 85 cents of value.

    After the recent decline the delta has shrunk to .66, meaning that for every dollar the stock goes down, the option only loses 66 cents of value. By this means short term options, whether weekly, monthly, or longer can be sold so that a decline in the value of the stock shows a profit, and should the stock move upwards beyond the price of the option strike, it can be rolled forward to a higher strike at a later expiration date.

    So to summarize, the more a stock falls, the more the losses on a long LEAP option will slow down, and when it goes up, the gains will accelerate.

    The implications of this are profound. If a stock loses 50% of its value, you need to make a gain of 100% to get back to as you were, but if one can just break even when the stock is going down, then a recovery of only a few percent can turn a nice profit.

    Of course options are a bit more complex than this and I have taken no account of "theta" here or of implied volatility, and yes convoluted's strategy is superior, though not without risk, and must be managed with stop loss orders.

    However I agree 100% with convoluted and disagree with many SA readers that an understanding of option strategies is not key to safeguarding your capital.
    Apr 20 10:33 AM | 4 Likes Like |Link to Comment
  • Ignore The Spin - Steve Jobs' Death Really Matters [View article]
    "If they try to make an all in one TV that runs ios for $2000, I'm sure it too will fail."

    One wonders how much demand there would be for something that sounds like a niche product.

    One would have thought that the combo TV and VCR or DVD player would have been a hit, but apparently not so because the problem is that players need to be repaired a lot more frequently than the TVs, so people usually stuck with two different devices, even though it was not very convenient to have to plug in two devices, connect cables, etc. and have a nest of wiring collecting dirt, making it difficult to clean, and so on.

    With modern flat screens it is just too flexible and convenient to keep the computer, cable, or Internet functions in a different enclosure from the screen.

    Another problem with integration is pricing. I once received a marketing call from my local cable company offering me integrated cable TV, Internet and phone calls, but even once we had got past the "introductory offer" nonsense, it was impossible to work out what the true cost would be to deliver the particular TV channels that I specified that I wanted which was a basic package of Spanish TV channels plus BBC America, plus a few other news channels. (Al Jazeera News, although available on the Internet, was not available as cable TV channel at any price.)

    In the end I didn't take the package deal as it just seemed too complex to bother with.
    Apr 20 08:52 AM | Likes Like |Link to Comment
  • Apple's Dirty Little Secret [View article]
    "Can you explain why the act of simply adding a larger display on a device is "innovative"? It's not!! At least by anyone who appreciates and make the distinction of 'true' innovation."

    I think it is just that the iPhone captured people's imagination.

    When it first came out it seemed totally mysterious--a telephone with no keypad for dialing numbers and gathering dirt, but just an inscrutable shiny black screen and a single button, and then when switched on rows of brightly colored icons that promised music, e-mail, movies, travel, the Internet, and other things.

    Right from the start it sold like hot cakes, presumably mostly to people who already had iPods. Interestingly the iPhone was released in June 2007 and the iPod Touch (an iPhone without GSM SIM card calling) three months later in September. Presumably for many initial purchasers of the iPhone, it was an upgrade to an existing iPod Classic or Nano. For those who could not afford the iPhone or didn't want an expensive contract, the slightly crippled version--the iPod Touch--came along soon after.

    (Incidentally I have an iPod Touch which is a pretty handy little device if you are in a hospital or hotel that has wi-fi, and to use as a music player, though I find it a bit too small for most purposes that include reading and writing.)

    When the iPhone first came out in 2007 my then girlfriend, absolutely not a technology person, said she wanted one. I asked her why, and she said "because it is beautiful". No doubt the desire to impress friends was also a factor. For women it was like a piece of jewelry or a kind of charm bracelet and therefore easily worth several hundred dollars if they bothered to look at the price at all. The first iPhone I ever saw belonged to a woman at my work. I asked her how much the monthly payments were, and she said she could not remember!
    Apr 20 07:23 AM | Likes Like |Link to Comment
  • Apple's Dirty Little Secret [View article]
    Really the wrist watch has already undergone its own digital revolution a long time ago. Originally the top end watches were those that kept the best time and had the most functions because they had the most sophisticated mechanisms. It was common for people to be presented with an inscribed gold (plated) pocket watch on retirement although the advent of Roskopf mass-produced watches already made the cheap watch a possibility in 1860 and $1 watches were soon available in the US.

    But the advent of miniaturization and mass production techniques put the pocket watch on the wrist after World War I, and then quartz crystal watches (1969) eliminated the need for high quality mechanisms containing jewels, and expensive watches then became cheap mechanisms placed inside fancy costume jewelry cases and bracelets with an incredibly high markup (somewhat like the iPhone).

    I guess a wrist watch that included some extra features such as a laser welding torch, bomb detection, a bugging device, the ability to detect the need for and deliver atrial defibrillation, and giving invisibility to the wearer would probably sell well, but I doubt whether Apple could deliver.

    So probably all we are talking about is a very small touch screen computing device that would be even more limited than the iPhone. For example maybe it could play music, but it might not be very convenient to have a headphone cable running from your wrist to your ears and having wireless headphones would not be much of an advance.

    Incidentally why are we all using the word "technology" as a substitute for "computing" or "telephony"? Inventing a better baby's bottle or diaper or a toilet that recycles waste and does not use water is just as much a matter of technology as something that uses radio signals and computer chips.

    The thing that people have overlooked again and again is that AAPL's immense profitability has depended almost entirely on the system of carrier subsidies for $700 cell phones that has effectively hidden the real price of the devices from many consumers.

    I am writing this on an excellent $450 Toshiba laptop that I have had for a couple of years, and would not dream of paying $700 just for a phone for my personal use since I can get one for $10. Of course if I needed that device for tax-deductible business purposes, I would think nothing of paying the $700 knowing that it would pay for itself one way or another.
    Apr 20 06:31 AM | 1 Like Like |Link to Comment
  • Apple's Dirty Little Secret [View article]
    There is a kind of point here.

    Apple is condemned for not innovating, but I am always wondering why someone doesn't produce a really robust tablet computer with a stand and USB external keyboard slot that can completely replace the bookbag and all those incredibly expensive and heavy textbooks that students use all the way from middle school to post-graduate level, not to mention being used for test taking, entertainment, language learning, etc. This device would have pretty much all the current knowledge in the world preloaded, plus Internet access to digital libraries, plus built-in blocks to pornography, etc.

    The answer of course is cost. Especially once you allow for breakages, parents and the education system in almost every country on earth cannot afford to equip every child with this learning device, nor can schools afford the incredible amount of wi-fi bandwidth that would be necessary to run them.
    Apr 19 04:36 PM | 1 Like Like |Link to Comment
  • Microsoft: The Bears Are Wrong [View article]
    Looks like MSFT is up in the premarket this morning. Last week when the stock surged for 2 days and then pulled back sharply, I commented that it looked like someone needed to get in cheaper before (good) earnings were announced. Looks like that is what happened and it will be interesting to see how the stock trades today. Probably best to take some profits at the open as MSFT has surged on earnings beforer and pulled back again within a day or two.
    Apr 19 07:24 AM | Likes Like |Link to Comment