Week of January 21, 2008
Friday, January 25th, 2008Hey everyone, here we go. . . . . .
IN OUR WORLD
Spent some time in
Next week is the Challenger Professional Tennis Tournament and I am both a sponsor and consultant to the host club. Talk about a dream job! I will be out of the office most of the week, but will be accessible via iPhone and email.
THINGS YOU SHOULD KNOW
With the stock market retreating faster than the arctic tundra, it might be easy to let the doom and gloom embrace your entire thinking about American business. Yep, we are paying the price for greed filled approaches to the sub-prime mortgage market (we have yet to see the depth of its bottom), but hell, that’s what free markets do, they reap the benefit of wise investment and get the bumps, bruises and broken bones from the bad ones. Despite the creeping recession and the world wide fear reaction, the bottom line is that most sectors of the economy show strong earnings and good projections (though maybe not as strong as the Street would like). Which brings me to, yep you guessed it, my darling – Apple. Just a few notes as to the record year they had in 2007:
- They sold approximately 8 million Mac computers. It’s not all about iPods and iPhones, the Mac computer is making a strong penetration in the world of PC’s.
- The new operating system Leopard (so cool it is almost unbelievable) sold 2 million copies in the 1st weekend. It took the previous operating system over a month to hit those kid of numbers.
- With 2 new iPod models, sales increased 17%. According to Wall Street 17% is leveling off! There is not doubt that it would be impossible to keep up the unheard of growth in the digital music players domain, but 17% aint bad.
- iTunes hit the 2 billion mark for digital songs sold. That does not take into account all the free podcast’s uploaded. There is more value in iTunes than just songs!
- The iPhone has been a hit and an instant conversation starter. They ended up selling +/- 5 million of the phones and yes, they did reduce the cost. Last week the new system upgrade went out and the new features are fantastic.
Despite the fantastic results, Wall Street is not convinced that Apple can maintain this kind of momentum. They want bigger and better from everyone. This creates a classic problem for companies at the beckon call of analysts that sit upon high thrones. Most of those guys have never run a company, have never had to push innovation and predict fickle market trends. They are like the film critic who has never written a line of dialog, or the architectural critic who can’t draw a straight line.
Companies that do well set the bar high and if they can not re-create their magic year after year and push revenue, same store sales and shareholder return they are considered failures.
Put your bet on the company that defines its field, that has a history of innovation and performance. Heck, you might even put a buy order in on Apple!
ENTERTAINMENT
MOVIES: Cloverdale was my choice this past weekend and it was a revolutionary experience. What a creative milestone. The bad part is that if you suffer from motion sickness, you better sit at the back of the theater. Scary and frenetic. To get a feel for the way JJ Abrams approaches a movie, check out this 20 minute presentation: http://www.ted.com/index.php/talks/view/id/205
NetFlix Fans: Once is a little movie I have written about before. It was made for $150,000 and is a charming little story with music as its foundation. A fantastic way to spend a winter evening.
TV: I have been up early to watch the great drama of the Australian Open (the 1st tennis Grand Slam of the year). That being said, I am sticking with Discovery, The History Channel and other such educational TV until the damn writers strike is over. A new episode of the greatest thinking show ever, HOUSE MD will be on Tuesday night!
BOOKS: The Go-Giver by Burg and Mann a great read! It deals with the power and value found in giving.
MUSIC: Enjoy the greatness of Pierce Pettis!
http://www.youtube.com/watch?v=I0rkAW451bM&feature=related
WEB SITES: One of the most written about blogs – ever!
www.gawker.com
SOUTH OF
I have read a ton of stuff on the economy from some very learned minds and have visited with successful investor friends who all have a sense of panic in their tone. Boy, do I understand that. Laura and I restructured our investments at the end of last year. In all that I have read I searched for someone who thought like I did, someone a hell of a lot smarter about things financial. Here is one from one of my favorite financial writers, Peter Nulty. It today’s unstable economic world, Peter’s opinion is clearly, South of Normal.
The stock market is in a bumpy patch, but I’m going to
About the only way Kathy and I could lose our savings is if the economy goes away, and I don’t see how that could happen. It’s a $3.2 trillion economy. Where would it go? Americans love to work and work hard. We make stuff or we provide services and then we take our compensation and spend it. That’s the economy in a nutshell. And it’s not going to stop. In fact, with the population growing and our productivity increasing, the economy will get bigger in the future. So we’ve bet on the long-term growth of the American economy and nothing that has happened in recent months suggests our bet is misplaced.
That’s not to say we never do anything with our investments. We rebalance when growth of one sector or another alters our intended allocation. And if we thought there was a massive readjustment ahead, we might change our allocation. We moved some money out of stocks and into bonds in January 2000 just before the tech bubble burst and that move preserved some value for us. But we don’t see any distortions like the tech bubble in our portfolio today. And while the recent downturn has been marked by dramatic losses to some firms and a lot of psychological angst, otherwise it’s a pretty ordinary correction so far. So, as I was saying, long-term investors
My function in life was to
Render clear, what was already
Blindly conspicuous.
Quentin Crisp
Drop me a note with your comments at creativeventures@nova1.com.
Thanks for stopping by and until next time, Adios and Aloha.