Another boring money post

[Scott Campbell]

I don't agree with this. It's risky, yes, but it's a calculated risk. It's not playing blackjack. There is sound math and historical evidence behind it.

I guess you haven't heard about the MIT Blackjack team.

[Scott Campbell]

Heck, I haven't even decided to buy any myself, let alone recommend them to someone else. I'm holding a lot of cash right now until we see the direction the economy is headed.

I've been in the same boat - for a long time.

[MJZiggy]

It's the holding of cash that's saved my sanity lately. I have the liquidity if I need it. Eventually though, I do plan on needing to find a place to park some funds, but not yet.

[Partial]

You think people are going to buy Apple stock at $1K a share?

Eventually, yes. Why wouldn't they? It's only a matter of time before it gets there. There price to earnings is way out of whack (in a good way) with a company of that size. When this corrects itself, the stock will be worth a lot of money. The scary thing is, with the forecasts analysts have laid out, I foresee the stock continuing to go up rapidly without much change in PE. Apple is expected to sell 150M iPhones and iPads in 2013. Assuming they sell the average iPhone for 600 (They sell for 650 to carriers today) and the average iPad for 600 (the base model is 500, but lots of people buy the upgraded models), that is 180 billion in revenue in a year. Assuming 25% margin on their business (which is in line with todays margin), they'll make 45 billion dollars on the iPhone/iPad business alone that year. That's not counting the app stores, iTunes stores, macs, accessories, etc, which are also huge, very profitable businesses.

[MJZiggy]

There's also the possibility that when the price to earnings corrects, the stock price will crash because everyone who wants one will have one. This is not an economy in which people can toss a perfectly good iPhone to buy another iPhone. Maybe they will, but maybe not. What if everyone who wants an iPad has already bought one and the projections are wrong? Then what?

[SkinBasket]

And when the next beanie baby comes along, no one will even remember what an i-phone was.

[Upnorth]

So depending on your risk tolerance, I would invest in Canadian Banks and Real estate income trusts and Japanese construction companies. Hedge with some gold in cdn or aus $'s and looking into some calls on canola.
Or the strip club, your call

[Partial]

There's also the possibility that when the price to earnings corrects, the stock price will crash because everyone who wants one will have one. This is not an economy in which people can toss a perfectly good iPhone to buy another iPhone. Maybe they will, but maybe not. What if everyone who wants an iPad has already bought one and the projections are wrong? Then what?

The economics to upgrade your phone make sense. Education is going to be eventually be the iPads market and education will always upgrade often. iPhone economics are far more conducive to upgrades to a consumer than the iPad, I agree. American cell companies contract structure basically will guarantee the vast majority upgrade. It is a huge waste of money to NOT upgrade.

Analysts could be wrong, but their livelihood depends on them being right.

[MJZiggy]

P, do you have any understanding of how many schools in this country only have computers at all because Bill Gates and others donated them? You think inner city school districts have money to spend on iPads when they can't afford chalk and people are always trying to cut school budgets because of dwindling tax revenues? You are privileged. You just don't understand how privileged you are. Look around.

[SkinBasket]

Analysts could be wrong, but their livelihood depends on them being right.

[GrnBay007]

LOL ^

[Patler]

The economics to upgrade your phone make sense. Education is going to be eventually be the iPads market and education will always upgrade often. iPhone economics are far more conducive to upgrades to a consumer than the iPad, I agree. American cell companies contract structure basically will guarantee the vast majority upgrade. It is a huge waste of money to NOT upgrade.

Analysts could be wrong, but their livelihood depends on them being right.

I'm not sure what "economics" you are referring to, but I sure don't see it the same way that you do about upgrades.

The analysts "could be wrong"? Do you realize that good analysts and investing systems ARE wrong about 45% of the time? They make their money on the 10% differential, being right 55% of the time and wrong 45% of the time. That, and limiting the losses when they are wrong.

[Partial]

I'm not sure what "economics" you are referring to, but I sure don't see it the same way that you do about upgrades.

With cell contracts and subsidies, you're paid 400 dollars over 2 years essentially to sign a contract. You could go the prepaid route and see significant monthly savings but then you're paying full price for the handset. Seeing as prepaid is such a small fraction of the market in America, why would someone not upgrade? They're not getting the 400 dollars back into their pocket if they don't.

In summary, it would be pretty dumb to not upgrade. At the very least, take the 650$ phone for 200 bucks and sell it for 500 and pocket the money. It's essentially wasting money and padding the lines of wallet. American carriers don't do reverse subsidization now that TMobile got rid of it.

P, do you have any understanding of how many schools in this country only have computers at all because Bill Gates and others donated them? You think inner city school districts have money to spend on iPads when they can't afford chalk and people are always trying to cut school budgets because of dwindling tax revenues? You are privileged. You just don't understand how privileged you are. Look around.

You're passing judgement. I have no idea if that's true or not about the computers. Don't care. Suburban schools will have iPads. Soon. This is what curriculum will be taught on. The paper book is a thing of the past. There isn't a better device for a toddler than an iPad. What parent would rather have their child corrupting their brain watching cable television when they could be playing fun education oriented games?? Interactive learning is the next big thing.

[Patler]

With cell contracts and subsidies, you're paid 400 dollars over 2 years essentially to sign a contract. You could go the prepaid route and see significant monthly savings but then you're paying full price for the handset. Seeing as prepaid is such a small fraction of the market in America, why would someone not upgrade? They're not getting the 400 dollars back into their pocket if they don't.

In summary, it would be pretty dumb to not upgrade. At the very least, take the 650$ phone for 200 bucks and sell it for 500 and pocket the money. It's essentially wasting money and padding the lines of wallet. American carriers don't do reverse subsidization now that TMobile got rid of it.



You're passing judgement. I have no idea if that's true or not about the computers. Don't care. Suburban schools will have iPads. Soon. This is what curriculum will be taught on. The paper book is a thing of the past. There isn't a better device for a toddler than an iPad. What parent would rather have their child corrupting their brain watching cable television when they could be playing fun education oriented games?? Interactive learning is the next big thing.

In bad times, "economics" will dictate keeping an old (dumb) phone instead of upgrading to the higher cost of a plan for a smart phone (even if the phone itself is free), or dumping a smart phone and its higher plan costs in favor of simple, basic cell phone service. For the vast majority of people, a smart phone is a luxury, anyway you look at it.

Years ago Apple became popular among kids because they gave computers to the schools. It was a good marketing approach for them. When parents starting buying, they bought what the kids were familiar with. Then, pc's became popular in business settings, and parents started buying what they were familiar with. Apple still has a very active program to donate computers to schools, both in the US and Canada.

[Little Whiskey]

Suburban schools will have iPads. Soon.

thats right. screw the Urban schools! NO IPAD FOR YOU!!!

[MJZiggy]

In bad times, "economics" will dictate keeping an old (dumb) phone instead of upgrading to the higher cost of a plan for a smart phone (even if the phone itself is free), or dumping a smart phone and its higher plan costs in favor of simple, basic cell phone service. For the vast majority of people, a smart phone is a luxury, anyway you look at it.

Years ago Apple became popular among kids because they gave computers to the schools. It was a good marketing approach for them. When parents starting buying, they bought what the kids were familiar with. Then, pc's became popular in business settings, and parents started buying what they were familiar with. Apple still has a very active program to donate computers to schools, both in the US and Canada.

It's not even upgrading to a smartphone. I just got a phone that I like. Does anyone think that in two years, I'm going to pay $200 to ditch a perfectly good phone to get another one that does the same thing? That is not a smart economic choice for me. My boss still uses his old Droid because it's in good shape. He likely will not upgrade until the next time he wants to leave the country (provided I don't just loan him an old, global-ready non-smart phone). If my old Droid didn't blow up in the earthquake, there's no way I'd have a new phone right now. P is looking at the world from the perspective of the privileged assuming that everyone will "have" to have it. Problem is 14 million people are out of work and buying power of most Americans is decreasing. You're right. An iPhone is a luxury as are most Mac products as they cost significantly more than comparable PC products. Luxuries are the first things to go.

Apple has the program to donate to schools, but so does Microsoft. And from this morning's paper: Analysts expect Amazon will be releasing a tablet, possibly by year end, as a lower-cost alternative to the iPad. And an interesting story on Samsung that it's probably best to pay attention to before counting your dollar signs. http://www.washingtonpost.com/busine...WJK_story.html

[Patler]

Years ago Apple became popular among kids because they gave computers to the schools. It was a good marketing approach for them. When parents starting buying, they bought what the kids were familiar with. Then, pc's became popular in business settings, and parents started buying what they were familiar with. Apple still has a very active program to donate computers to schools, both in the US and Canada.

Apple has the program to donate to schools, but so does Microsoft. And from this morning's paper: Analysts expect Amazon will be releasing a tablet, possibly by year end, as a lower-cost alternative to the iPad. And an interesting story on Samsung that it's probably best to pay attention to before counting your dollar signs. http://www.washingtonpost.com/busine...WJK_story.html

Ya, I didn't mean to exclude Microsoft, if that's what it sounded like. They all realize now that the gifts to schools can be their most effective advertizing. The goodwill and PR generated are nice, but secondary to getting their products in the hands of people who influence buying decisions and will eventually become buyers themselves.

That was one of the first things that start-up APPL did, give computers to schools. It probably prevented them from being squashed like a bug by their established, well-funded competition.

[Partial]

It's not even upgrading to a smartphone. I just got a phone that I like. Does anyone think that in two years, I'm going to pay $200 to ditch a perfectly good phone to get another one that does the same thing? That is not a smart economic choice for me.

Yes it is. Unless Verizon knocks 400 off the cost of your contract for the following two years. It is a bad decision. You're paying a price that factors in a subsidy that you're not using. That is flushing 400 dollars down the toilet, essentially.

If you're happy with the phone you have, the smart move economically is to buy and sell the new phone. Buy the phone the 650 dollar phone for 200, sell on craigslist for 500, keep the 300. Otherwise, you're flushing money down the toilet by paying a monthly rate that factors this in without pocketing the money.

My boss still uses his old Droid because it's in good shape. He likely will not upgrade until the next time he wants to leave the country (provided I don't just loan him an old, global-ready non-smart phone). If my old Droid didn't blow up in the earthquake, there's no way I'd have a new phone right now. P is looking at the world from the perspective of the privileged assuming that everyone will "have" to have it. Problem is 14 million people are out of work and buying power of most Americans is decreasing. You're right. An iPhone is a luxury as are most Mac products as they cost significantly more than comparable PC products. Luxuries are the first things to go.

Mac products are cheaper than comparable products from other merchants. There are countless quality articles about how other vendors cannot match their low prices in tablets, sub-notebooks, etc. In notebooks and desktops, Apple products are competitively priced with similarly spec'd machines. You're misinformed.

Smart phones are a luxury to you, perhaps, but to the average consumer they're looked at as an essential part of life, which is why sales are blowing up. Right or wrong, it is what it is.

Apple has the program to donate to schools, but so does Microsoft. And from this morning's paper: Analysts expect Amazon will be releasing a tablet, possibly by year end, as a lower-cost alternative to the iPad. And an interesting story on Samsung that it's probably best to pay attention to before counting your dollar signs. http://www.washingtonpost.com/busine...WJK_story.html

Microsoft doesn't make hardware. I'm not at all worried about Samsung. There is space for competition. They make okay products because they blatantly rip off Apple software. They have to be able to sell their products in America to make money in America. Amazon will be the chief competitor long term to Apple due to the infrastructure they have of delivering content, but at this point they're way behind the game and would take a lot to catch up.

Apple will dominate the tablet space. There is no doubt about it. Amazon can sell non-useable tablets for 300 a pop and try to make the money in content, but schools are not their market.

[Patler]

Smart phones are a luxury to you, perhaps, but to the average consumer they're looked at as an essential part of life, which is why sales are blowing up. Right or wrong, it is what it is.

An essential part of life? For someone without a job, or with reduced income? For someone who has to take a lower paying job while putting food on the table for a family?

To be honest, I can't think of anyone for whom a smartphone really is essential.

[3irty1]

Don't less than half of cell phone users have smartphones? How are they essential to the average consumer? This Apple lovefest is predictably disconnected with the realities of the company, the economy, and the fundamentals of the stock market.