Chris B

20 Stocks with High Net Cash

Then again, all that cash isn't earning anything. Don't get me wrong, cash is certainly necessary to have a stable business, but keep in mind that as an investor, you are buying that cash when you pay for shares, then you're covering payroll for a whole corporation to sit on it for you. If the money isn't spent to produce revenue, your investment loses value.

I would ask exactly how these companies plan to use their cash to generate growth in the future. Will Apple invest in economies of scale to reduce the prices of their excellent computers? What is Google's plan to revolutionize how we retrieve INFORMATION, rather than just word matches from the Internet? Is Forest Laboratories going to raise their R&D budget?

A big cash cushion might prevent a company from going bankrupt within the next couple of years, but only a solid business plan will prevent them from burning through all that cash and making losses. How much cash was GM sitting on 5 years ago?

Will Intel's New Processor Be a Game-Changer?

donzelion, you almost stumbled upon the reason Intel will continue to underperform.

Will a faster processor make employees more productive in using spreadsheets, email, and word processors? No.

Will they make the internet suddenly faster? No. The vast majority of consumers will still be using cable and phone lines a decade from now.

Will the new processors speed up boot times? Not if the bloated Windows 7 is installed!

Companies and most consumers might as well keep their old computers and save the money. Gamers and server farms might benefit from the speed and power savings, but most businesses and consumers will have to ask what these computers do that a 5 or even a 7 year old system won't do.

What people don't realize about PC's is that they have become appliances, just like dishwashers. Intel's processors have reached market maturity. They are the new Maytag or Whirlpool, not the triple-digit growth stock they were in the 90's.

For an increase in demand for computers/appliances to materialize, existing PC's would have to become obsolete. For that to happen, the following would have to occur:

1) Fiber optic lines installed at most households make existing processors the bottleneck for video, etc.
2) PC based artificial intelligence applications or some other killer app leads the next tech-driven increase in productivity growth for business.
3) Windows continues to bloat and hog more resources, and consumers continue to just buy new computers rather than migrating to Apple or Linux.
4) Hardware failure rates increase dramatically, resulting in more new replacements being bought.

Five Predictions for This Market

I went to the store today to buy a down jacket and saw that they were on clearance - 50% off!

I'll hold off buying for now. After all, what if prices decline further?! What if next week, they're 90% off? If that happened, I would have to sell my jacket at the consignment store for less than I paid. I could lose money!

Meanwhile, the weather continues to get warmer and warmer, which in my estimation, will reduce demand for down jackets even further. You'd have to be a sucker to buy a down jacket in this market! We're nowhere near the bottom.

I might buy that down Jacket in September or October of 2009 if the down jacket market stabilizes by then. For now, price volatility makes it too risky an investment.

Running Strong Again: The Four Horsemen of Technology

Healthcare: the baby-boomer narrative is already in place, you can buy drug companies for PE's of 10, and it has underperformed for years.

But overall, I'm looking at another decade where bonds outperform stocks due to an inevitable long-term correction in consumption. For convenience I'm moving new $ into TIP, LQD, and AGG.



On Jan 24 09:17 AM ArtfulDodger wrote:

> Chris B:
>
> Good comment. I much appreciate reasoned and well-thought out comments,
> such as yours usually are.
>
> What do you think will be the next sector leaders for the coming
> years?
>
> Your answer appreciated.
>
> AD

Running Strong Again: The Four Horsemen of Technology

I swear, this is the internet site of "what we should have bought 5 years ago." Almost all the commentary is about the following:

gold
oil
dollar-shorting
technology
banking

Past performance is no indication of future performance. The world has changed, and none of these sectors is likely to be the next leader. More likely, their recent outperformance means that these sectors are likely to underperform the market for the next 10 yrs. It always works that way.

Where Has Microsoft's Growth Gone?

Mark, I would cut your losses while you can. The failures of the Xbox, Vista, Zune, MSN, - you name it, anything they touch - indicates a systematic flaw in something the company is doing. This flaw has been going on for years. Bad luck doesn't strike with almost every product. I mean, have you ever heard of an MP3 player besides the Zune crashing? Literally - everything - they - touch. Don't expect the next set of products to be better without a defensable argument.

In theory, MSFT could be a turn around case, but it's priced like a "cash cow" not a company that will be bleeding market share for years to come as management sits around in General Motors like denial. Listen to Sentinel - almost all tech guys think MSFT products are junk. MSFT would have to start from the ground up - with a UNIX-like basis - in order to rebuild its product portfolio. I don't think they'll do it.

Is the Microsoft Empire Cracking?

I'm not a fanboy of anything, I'm an investor. Apple is much too expensive, particularly for the international market and Linux is admittedly less user-friendly than Windows at the moment, although that situation improves every few months. If you are considering investing in MSFT or any company, I suggest you monitor the competition too.

Windows costs somewhere between these two alternatives, yet is far worse on security, stability, system requirements, and efficiency. Its main advantage is the ease with which software can be installed. This is also the disadvantage that allows hackers, viruses, worms, etc. to install themselves. Conclusion: Fail.

Billions on the balance sheet mean nothing if a company's products are inferior or will become obsolete. A lot of people bought into GM or Ford in the 80's & 90's based on their billions in cash. They also thought the product didn't matter (concerns dismissed as fanboy rants) and pointed to billions in sales over the course of decades as proof. Who could have known market share would soon plummet? People who studied product quality, that's who.

The millions of complaining Apple/Linux fanboys are themselves an early indicator something is wrong. World class products don't inspire such opposition.


On Dec 10 01:28 PM jackdee wrote:

>
>
> No reasonable investor would use net apps metrics, and then
> extrapolate to MSFT crumbling. Well not unless your just a fanboy,
> using an investment site as a cover for your silly anti-MSFT rants.
>
>
> The fanboys have spent millions of man hours online crying about
> MSFT and telling us how it will all end soon because of XYZ.
>
>
>
>
>
>
>

Is the Microsoft Empire Cracking?

MSFT is doomed unless, like you say, they roll out a totally different UNIX based product that can compete with Apple and Linux. The underlying 1980's architecture of their system is too low-security to be truly safe, and adding patches and antivirus bloats the software to the point that even today's faster computers can barely slog along with Vista.

I have an investing rule: Never invest in a company with an inferior or obsolete product. Windows' inherent unreliability and insecurity compared to Linux/Unix fits the bill. Furthermore, every product in recent years, from the meltdown-prone XBox to Windows Vista, indicates that they continue to disappoint customers.

In summary, MSFT 2008 = GM 1998.

Fast Money Recap - Goodbye to the Goldman Standard? (12/2/08)

ESEA is using the surpluses of cash they built up earlier in the year to buy ships at distressed prices. Check out today's announcement.

'The Market and the Internet Don't Care if You Make Money'

I might add that Microsoft's monopoly model is about to be ended by disruptive and superior technology that comes off the web - Google and/or Linux.

This changeover will occur within two computer generations, or about 10 years figuring each computer has a lifetime of 5 years. It will be over when you see the Windows logo on those retro T-shirts they sell at Target!

Bargain Buys For Patient Investors - Barron's

Brewer,

I agree 100% about MSFT. What can I say, the company consitently makes inferior products. That buggy, insecure resource-hog Windows is going the way of the typewriter, XBox = FAIL, and there is no strategy for them to change with the times. GOOG, APPL, and open source are going to clean their clocks in the next couple years, and today's prices won't look cheap at all.

AOL was in the same boat in the late 90's. Run, don't walk, away.

Deflation Changes the Rules

"Will inflation or deflation win? All of the dollars pumping would say inflation; people quit buying things, losing their jobs and no credit for anything would say deflation. "

Good point YR Dog. Judging by the whipsawing in currencies and commodities, it looks like the market is unsure as well. Perhaps if the mega-bailouts work (or if they don't and the economy recovers in '09 or '10 anyway) we will see inflation. Perhaps if consumer spending finally slows and job losses increase, we will see Japanese-style deflation or a depression. Perhaps it is more likely we will have 70's style stagflation. For some reason, all the articles talking about stagflation have disappeared and been replaced by either inflationary or deflationary arguments.

Note that if we weren't running massive deficits paying for the underwater mortgage investments of foreign sovereign wealth funds, we would be talking about a run-of-the-mill recession with no significant currency effects. That's how stupid we are to have become so dependent on debt to finance our government and lifestyles.