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  • Apple: Where Do We Go From Here? [View article]
    There's that ex cash thing again. The trouble is, if you want that great ex-cash PE, you must put up a bunch of idle cash at infinite PE along with it.

    The reverse leverage reduces that great ex-cash PE to -- let me think a minute -- oh yeah, the PE you see on the stock quote.
    Oct 28, 2014. 09:09 PM | Likes Like |Link to Comment
  • The iPhone Channel: Stay Tuned [View article]
    Hi Michael,

    I understand Cook to be specifically saying they hope to be able to build channel inventory. So I think we have to judge management on how closely they hit the 5 to 7 week target. This is to increase customer satisfaction and reduce sales opportunity losses. They seem to be pretty good at getting this stuff right.

    You are right that a company caught with inventory up and declining sales has been caught with its pants down, but I figure we are 2 or 3 quarters from such a concern.

    Always good yo hear your perspective.
    Oct 27, 2014. 08:35 PM | 2 Likes Like |Link to Comment
  • Why Do Banks Want Our Deposits? Hint: It's Not To Make Loans [View article]
    It's called the "fractional reserve" banking method because banks do not have to maintain cash-equivalents equal to their liability for deposits. The exact amount of reserve requirement makes a big difference.

    Deposits give the bank room to expand the money supply. If the reserve requirement were 5% a deposit of 100K would allow the bank to lend 95K. That deposit would allow the extension of another 90,250 or something like that (trying to do the math in my head). At a 5% reserve the explosion is huge. We are totally addicted to it, and this multiplicative effect is the real root of "fiat" currency problem.

    The inverse exponential effect is the reason that the Reserve can have a large effect on money supply with relatively small changes.

    I can hardly believe this discussion barely mentions it. It needs to be higher than it is -- much higher. Bank failure should be nearly impossible or it's not really a "bank," is it?

    It's a form of multi-level finance. Even a modest increase in the fractional reserve requirement could vastly reduce the cascade of collapse when categories of loans turn sour. And, seemingly obviously but apparently not, some banks need to be allowed to fail.

    But just try suggesting banks even need to hold 10% of what they take in deposits and listen to the wailing. And that, folks, in my truly humble opinion, is exactly the crux of the problem.
    Oct 27, 2014. 07:52 PM | 3 Likes Like |Link to Comment
  • It's True, Apple Is About To Crush Microsoft With Business Customers [View article]
    Cook is going to have to change the culture. For three decades Apple has had open hostility to enterprise users who failed to bow down to the superiority of the kids who started it. Glitches in VPN, backing off on OD to replace AD, a great server admin GUI that manages to retain a fatal flaw in each dimension, a paucity of scripting, lack of robust features in Pages and Numbers, and general wavering with constant changes in level of commitment must all be overcome.

    Otherwise MS will still get its hundreds per seat for AD and file sharing, and its 14 grand a pop for SQL Server, and Macs will continue to be the ones that need to be compatible with a corporate MS infrastructure rather than the other way around.

    Fifteen years ago I ran a financial institution with 300MM in assets entirely on Apple products. I am not able to do this in the retail chain I support these days. Once you get past the pocket, carrying bag, and desktop, Apple fades. Increasingly.

    We are doing the part of the cycle where we centralize and use our devices as "terminals" which is a trend we seem to have to repeatedly learn is an administrative nightmare. Apple will sell tons of devices out at the leaves of the forest and I am waaayy long, but the culture appears to remain ingorant of the nature of the inner forest.
    Oct 23, 2014. 01:21 PM | 1 Like Like |Link to Comment
  • Update: Apple Q4 '14 Earnings [View article]
    On the other hand, maybe AAPL investors aren't surprised at all. That's what I hear the market saying. I think the writers are out of step with both investors and reality.

    And the Apple is Doomed crowd certainly isn't going to buy the stock just because of a little beat on just a couple categories (their view, not mine) when they believe this is simply another glitch in the runup to the ultimate collapse of the whole company.

    So if Mr. Blair would like to jawbone the price down so the company can retire more shares and make me a larger owner of this steam roller, I'm fine with that.
    Oct 20, 2014. 08:39 PM | 3 Likes Like |Link to Comment
  • Confused, Bothered And Bewildered [View article]
    I'm inclined to expect a retest, but note there was a sharp reversal on high volume intra-day Wednesday. Volume was higher on SPY the rest of the week -- higher than recent down days.

    I've got an order queued for Monday to edge longer on SP500 index account. Barring another Ebola case I expect to let it execute.

    Monday may be muted with AAPL earnings pending, but see very little risk of negative surprise. I expect recovery the rest of the week.
    Oct 18, 2014. 09:09 PM | 1 Like Like |Link to Comment
  • Why The 'Buffett Put' Provides Berkshire With Perpetual Positive Asymmetry Hidden In Plain Sight [View article]
    It seems to me the trouble with a GTC buy on a strong stock with a limit well below the current price is that it will only execute if the price drops precipitously. Prices of strong stocks can do this for a number of reasons, and quite a few of those are harbingers of continued drops.

    A dirty nuke on Atlanta, a thousand dead in a rail accident, the unearthing of a long running internal fraud, a freak hurricane hitting LA dead on.

    None of these should happen and I have been seriously long BRK.B since the 90s, but a buy limit well "out of the money" almost selects for odds of executing only if something pretty bad happens.

    In my young years I learned this the hard way a time or two.
    Oct 8, 2014. 01:44 AM | 2 Likes Like |Link to Comment
  • Amazon: The Financial Picture Worsens [View article]
    PT you got me wondering. How much debt does BoA hold on AMZN. When a large debtor gets in trouble, a bank will try to bail it out at first if there seems to be any chance. BoA has detailed inside knowledge. Is this a clue?
    Sep 13, 2014. 08:12 PM | Likes Like |Link to Comment
  • Amazon: The Financial Picture Worsens [View article]
    PS has written about the tendency of analysts to decay their estimates significantly as earnings dates come in closer. It seems to me like a transparent hope-over-reality based behavior that even they are unable to recognize. I take that in itself to be a bearish sign.
    Sep 13, 2014. 08:01 PM | Likes Like |Link to Comment
  • Amazon: The Financial Picture Worsens [View article]
    Gary, it is variable, based on the London InterBank Offering Rate. Gets set daily in the afternoon GMT I think. Find it in interest rate section of quotes.

    One year rate was recently .56. Phase out of QE could push it up, tho European easing is not in lock step with US.

    With rates so low, the risk is that cost to Amazon could rapidly rise, even double. Tho that is far from largest risk for AMZN IMHO.

    I held my AAPL too long after the top a couple years ago. You may learn from my mistake. I jumped back in big near the bottom, but I could have done even better.

    If I had only one thing to change in my decades of investing, it would be not to rely on the conventional wisdom to buy and hold and to manage my investments more closely. One can hold thru ups and downs but an 8% pullback should raise a high alert.
    Sep 13, 2014. 07:51 PM | 1 Like Like |Link to Comment
  • Apple Pay will contribute little to profit, Nomura analyst says [View news story]
    Security in payment processing only requires ordinary current technology. The problem is that it is not as available from processors as it ought to be, much less mandated by the self-regulated credit card companies.

    Meanwhile PCI has tried to require every merchant to separately implement one of each complex IT security trick anyone has for sale, but they are all inside a boat leaking from the outside.

    EMV will use a proper protocol and fraud will go way down.

    ApplePay is not only state of the art, but with tokenization taken up a notch, it is world class. It tokenizes the account, not merely the transaction, and adds in biometric authentication to boot.
    Sep 13, 2014. 06:59 PM | 1 Like Like |Link to Comment
  • Amazon: An Excellent Short Candidate (Fundamentally, That Is) [View article]
    I was looking for a book I once had on shorting. It must have gone out in one of my attempts to find the shelves behind my stack of books.

    Anyway, it went thru case after case of stock collapses, and the charts sure look like Amazon's. Then I picked up Jon D Markman Swing Trading and in the chapter on Terry Bedford, AMZN is used as an example of a one day reversal in 1999. A third of the value was lost in five days.

    We've seen three gaps down on earnings this year. We have three lower highs so far.

    It looks to me like the decline is already well under way. Only a swing trader would have made money in this bull year on AMZN long. I suspect the institutions are selling into strength.

    It might be time for this bystander to get short a bit.
    Sep 13, 2014. 06:34 PM | 4 Likes Like |Link to Comment
  • Home Depot: Why This Retail Stock Is For You [View article]
    I am very pleased to be leaving gasoline tools behind. I was worried that the battery tools would seem "light duty" but they do just fine on my place. A pleasant surprise is how smooth and torquey they are.

    A cordless mower must be in my near future. They had them on the floor a year or two ago but I guess they didn't move. They'll be back I'm sure.
    Sep 13, 2014. 10:08 AM | 1 Like Like |Link to Comment
  • Apple Pay's Advantages Over Google Wallet And PayPal [View article]
    Most retailers are locked in for three years on their processing contracts, with no exit possible.
    Sep 11, 2014. 12:55 PM | Likes Like |Link to Comment
  • Apple Pay Has One Huge Setback [View instapost]
    Thank you for the reply. As you can tell, I did in fact misunderstand your views. I agree that it will probably have an impact, and I completely agree that the consumer is not knowledgeable nor particularly discriminating.
    Sep 10, 2014. 12:32 AM | 1 Like Like |Link to Comment