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Sandy Lighthouse
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Self employed for 35 years in construction. PHD from school of hard knocks. Tend to have a macro macro perspective.
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  • Iwatch: You've Got To Be Kidding Me

    The Iwatch has gotten a lot of media attention and is hyped as Apple's (NASDAQ:AAPL) latest great product innovation. I think not so much.

    The Iwatch is "safe" design, both in concept and execution. Instead of defining a clear and compelling function for the IW and designing to that, Apple went the "Swiss army knife" design route by trying to include every conceivable function in one device. Jack of all trades, master of none. Most of the time when I pull out a pocket knife, all I want is a good sharp knife to cut something. And a thin light locking blade knife is a lot easier to carry than a Swiss army knife. Plus smart phones are already the Swiss army knife from hell. Seriously Apple, viewing color photos on your wrist- WTF?

    The obviously compelling function of a bluetooth digital watch (Iwrist?) is to effortlessly convey desired information contained within the smart phone it's linked to. Tack on only a few health tracking sensors and there's your product. And it should serve those functions effortlessly. This points out the "killer flaw" of the IW design: one more expensive piece of hardware to keep track of, charge, learn, and think about. The Iwatch complicates one's life instead of simplifying it.

    So here's the design for the Iwrist free of charge for anyone who wants it. The display should be a long and narrow black and white LED (same tech as Amazon Paper White Kindle) for super long battery life. The display should have two surfaces for viewing. The wider surface would be curved to fit the wrist and be about 5/8" wide and display three long lines of text. The second display surface should be about 5/16" wide, run along one edge of the main display at a 45 degree angle (making it viewable without raising your forearm), have one line of text, and be seamlessly manufactured into the main display like the Samsung Edge. The main display would be blank except when motion activated. The smaller display would always be on and would show the time by default until some text is pushed to it by the smart phone.

    There would be only a minimum of input methods available on the Iwrist. The band would be a woven fabric that dirt and oils could not attach to on a molecular level. Pricing would be under $100, eventually dropping to $25. The overall appearance would be stone cold utilitarianism with a flash of style only in the color of the band. How hard is that, Jonie Ivie?

    Tags: AAPL, Iwatch
    Apr 28 10:19 AM | Link | 3 Comments
  • A Macro View Of Apple

    Something like 70% of Apple's (NASDAQ:AAPL) revenue comes from Iphone sales. China sales of Iphones accounted for a lot of the increase in quarterly sales, with pent up demand for larger screen Iphones accounting for the rest. The smart phone market is getting to be a crowded space. Even the superior closed ecosystem of the Iphone may not be immune to pricing pressures. So where is "The Iphone Company" headed from here?

    The Iwatch is Apple's latest product release. It's basically just another build out of the Iphone ecosystem. And that's the biggest innovation Apple has brought to market of late, incremental improvements to the Iphone ecosystem. Which is becoming less and less price competitive. Are there any massively disruptive products in the Apple pipeline?

    The thing that set Steve Jobs apart as a true genius was his ability to synthesize smaller technological trends into "insanely great" products that were years ahead of the competition. To "Skate to where the puck is going to be, not where it has been.", as Jobs liked to quote Wayne Gretzky. In about 2004, Jobs recognized that cell phones were about to integrate MP3 players into their functions, and the market for the Ipod would be decimated. Jobs also recognized the potential for a new cell phone that synthesized five major tech trends into one product:

    1. The decreasing power usage per computing unit of ARM micro-processors.

    2. The increasing bandwidth and lowering costs of cellular networks.

    3. The increasing power to weight ratio of lithium ion batteries.

    4. The improvements in reliability and performance of touch screen technology.

    5. The miniaturization of electrical sensors and components: GPS, motion, proximity, etc.

    That product was the 2007 Iphone, which set off the smart phone revolution and destroyed major competitors like Nokia and Blackberry.

    Apple no longer has the genius of Steve Jobs at it's disposal. Tim Cook is super competent, but he is no product visionary like Jobs.

    Apple appears to be getting into the self-driving electric car business. I believe it will do so through a smart phone accessed transportation service like Uber, rather than retail sales of vehicles. This is a massively disruptive business of the future that synthesizes many tech trends into one product:

    1. Smartphones, GPS, and mapping software.

    2. Social networking software.

    3. Improvements in battery cost per KWH, which moves the source of power generation pollution from the streets of cities to remote locations or eliminates it because of:

    4. The rapidly declining cost of solar photo-voltaic electricity.

    5. The improvements in sensors and software that make self-driving vehicles possible.

    The fly in the ointment for Apple's entry into this business is that it's entering the business late, behind some tough competitors: Google, Uber, Mercedes, and other legacy auto makers. Apple does have some major advantages:

    1. Huge capital reserves.

    2. Deep experience in integrating software and manufacturing into global scale closed ecosystems.

    3. Experience in implementing large scale solar farms. (as does Google)

    I think Apple will succeed in the transportation as a service business. The questions are how profitable it will be and how soon it will be up and running.

    This is not investment advice. You would be crazy to base investment decisions on the opinions of a nobody like me.

    Tags: AAPL
    Apr 05 4:11 PM | Link | Comment!
  • Where Are The Economy And Markets Headed 3-19-15?

    Where is the US economy at? Things will never be like the good old days of '95 - '05 because of a massive debt overhang, demographics, and the last "low hanging fruit" stage of the industrial revolution (the info tech revolution) being at a mature stage.

    But, with that in mind, things are going to be OK for the next five years. Low oil and commodity prices and the economic sweet spot of the commodity super-cycle set the stage for the US economy to hit top gear. Granted, the new top gear won't be even close to what it once was, but it's as good as things will get.

    Where are markets at? Stocks and junk bonds are at bubble tops, driven by the Fed's policies of low interest rates and quantitative easing. Market players have leveraged up and taken irrational risks to increase returns. If and when the Fed starts increasing rates, watch out!

    Even if the Fed doesn't increase interest rates, watch out! Because things are already spinning out of control and breaking apart. FX rates are rapidly resetting, undermining the assumptions that form the foundation of a huge number of bonds worldwide. The drop in commodity prices (particularly oil) has put everything associated with them, from sovereign debt to venture capital, into extreme risk territory. My personal opinion is that this process is hitting critical mass as I write this.

    So what are the investment implications if I am correct? Identify market bubbles, and look for ways to short them. Tech has been my primary area of investment for 25 years, and IMHO, is in a classic bubble right now. Private equity is throwing money at anything digital and hoping it sticks. IPO's are priced past perfection, then get a first day bump of 60%. Public companies that have consistently lost money and may always lose money (anything "cloud" or "social" for instance) have valuations as if they will start printing money tomorrow. Also, I'm not strong on my understanding of biotech, but it sure has gone up a lot.

    But shorting may not be the real opportunity here. Shorting is problematic at best, mainly due to the necessity of perfect timing. If I'm right, and critical mass is reached, and high leverage investments unwind, the real opportunity will be to then pick up assets on the cheap. Because over-leveraged investors will be selling like the world is ending, as the headlines will probably be proclaiming. But as I noted at the beginning, the US economy may still be just fine, as it was in 2002 after the tech wreck. This will be a judgment to be made at the time, but the pieces are in place right now for this to be a possibility. If all this transpires and we replay 2002, then the next leg up might set up a 2007 replay down the road.

    Maybe critical mass for a market decline will not be reached. There could be a rolling sector correction as an ongoing process: precious metals and other commodities, 3-D printing stocks, oil, then other bubbles. The opportunity would not be as large, but the underlying soundness of the U.S. economy would be the basis of support for going long.

    This article is not investment advice. It is highly speculative in nature, and based on the opinions of a nobody. You would have to be crazy to invest on the basis of the opinions I have expressed.

    Mar 19 2:39 PM | Link | Comment!
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