Roger Knights

Amazon-Sized Craziness

The speed, robustness, friendliness, and features of Amazon's web site cost a nine-figure sum and are unmatched anywhere. (Although I have a half-dozen gripes about it.) That's a tremendous moat. Walmart's online store is no threat.

Plus, Amazon has credit card info for half the US populace. Plus, Bezos gets the big picture and is willing to sacrifice the company's short-term and parochial interests for the long-term. Plus, the company is pioneering in cloud computing and e-book readers and who-knows-what-else.

(The iPhone is useful for short-term reading. For hours-long reading, it's harder on the eyes and exhausts its battery ten times faster. And it's harder to read in sunlight.)

How Apple's Market Share Will Propel Stock to $500, Part 2

PS: The conventional wisdom a year ago was that AAPL would underperform in a recessionary environment, given its premium prices, onrushing smartphone competition from Palm's Pre and BB's Storm (etc.), and the uncertainty about SJ's health. Only uncertified bloggers got it right.

How Apple's Market Share Will Propel Stock to $500, Part 2

"Jason, an idiot could have predicted the climb in Apple shares over the last year if one could simply read or listen to the news."

Nonsense--all the "normal" analysts were not predicting any large upside from AAPL, with the exception of Munster. (Remember Huberty's two-digit year-ahead call?)

Apple has refreshed the Mac line with its technically difficult and forward looking Snow Leopard OS revision. Despite competition from Android, the iPhone will continue to grow share rapidly, and the iTablet could be a huge winner too. (I hope the company offers a foldable version, so I can pocket it.)

AAPL is vulnerable to a decline in equities, but not much else. Buy on dips for sure.

Stocks to Watch as Market Leadership Changes Hands

"Healthy as a horse"?

What, this old gray mare?

Amazon Launches Relational Database Service

Amazon is executing well, as usual.

Short Amazon: Risky Investment at Current Price

I doubt that Walmart will be much of a threat to Amazon on the web, anymore than Barnes & Noble has been. And consumers haven't moved to Internet shopping as fast as they've acquired Internet access. There's a lag of several years.

And Amazon isn't just a retailer; it has a footprint and early lead in cloud computing and e-books. Both of these are the wave of a tremendous future. And Amazon has an A++ leader in Bezos--he's tops.

Amazon has always attracted a great deal of skepticism and many shorts. Eventually they'll be proved right. Certainly if the market goes down 10% by year-end, as I expect, Amazon, with its high beta, will go down more. But other sectors are more dependent on an economic recovery and more highly leveraged on the downside, like banks and REITs. Those would be both safer and more profitable to short. Amazon is a treacherous short, because the company still has a lot of better-than-expected upside potential, and because it's so well run. Its high P/E is a short-trap.

Railroaded by Burlington Northern Santa Fe

The dollar bounced upward on Friday, which may have caused most of the drop in the Dow.

Report from Europe: Traders are Buying the Earnings Story

"Even if we are heading for a rerun of early 1980, the other lesson is how quickly gold prices fell back again."

Part of that was due to the implementation in the 80s of the heap-leaching technique, which brought new supplies of gold onto the market. And European central banks began a long-lasting selling project.

"But assuming at least a partial recovery in the dollar in the coming months, I continue to expect gold prices to fall back below $1000/oz by the end of this year, and as low as $800 during 2010."

You may be right that the dollar will bounce. See Karl Denninger's article today here: seekingalpha.com/artic... But things are different at the macro level in the gold market. Central banks in Asia will be looking to buy on dips. CBs in Europe are tailing off their sales. And it's becoming conventional wisdom among funds and advisors that portfolios should have a bit of gold in them, as a diversifier. So there's not as much downside as there was a year ago.

Also, gold doesn't need inflation to rise. Systemic uncertainty will do--and the foundations today are wobbly (uncertain), not just the shingles, as in the past. Today's economic bounce is artificial; the pump-priming hasn't caught and become self-sustaining. Many rich people understand that; so gold will find support just under $1000, even if the dollar rises for awhile.

Is the Digital Magazine Coming of Age?

"Don’t overestimate the importance of the right device."

Didn't he mean (or say), "Don't underestimate ..."?

Apple vs. Microsoft: Who Will Bring the Ideal Mobile Productivity Device?

I like the idea of something foldable, so it can be pocketable. Maybe Apple will offer a version with this feature eventually.

e-Books Are an Interim Technology on the Way to e-Tablets

I hope they make a version of this tablet that is foldable, and hence pocketable. I could put up with a seam across the screen in exchange for that handiness.

E-Reader Wars Heating Up: Apple May Have Edge with Younger Generations

"You notice Amazon never says how much they sell; usually if they sell a lot of something, you want to tell everybody."

That's after the competitors are already in the market. The pioneer doesn't want to say, in effect, "Come on in, the water's fine."

Friday Roundup: A Really Boring Quadwitch

"Let's see, the [S&P] index was up but SPY was down. This must be quadwitching related."

But isn't it too late in the day for that? Isn't it more likely some large Somebody thinks he "knows something urgent"? Why else exit a position (or enter a short) so suddenly, which prevents him from getting a good fill?

Why Christmas Will Kill Retail

Swine flu to hit 50% of us?
By Rob Stein
The Washington Post, August 25

"Swine flu could infect half the U.S. population this fall and winter, hospitalizing up to 1.8 million people and causing as many as 90,000 deaths — more than double the number that occur in an average flu season, according to an estimate from a presidential panel released Monday.

"The virus, clinically called H1N1, could cause symptoms in 60 million to 120 million people, more than half of whom might seek medical attention, and could peak before a vaccine is widely available, the President's Council of Advisors on Science and Technology estimated in an 86-page report assessing the government's response to the first influenza pandemic in 41 years."

Dow Target 6,617, October 25, 2009: Here Is Why

"How do you explain existing home sales on the rise, ISM index approaching 50, etc. "

Overhanging debt, deflationary real estate prices and declining tax revenues, among other things, will prevent efforts at recovery from gaining traction. This is not an ordinary business recession.