Another boring money post

[MJZiggy]

I worry about that too. Data plans today are absolutely ridiculous. This is why I don't own an iPhone. Don't want to pay big bucks for the wireless when I'm surrounded by wifi all day. I don't understand how these carriers aren't hauling in ridiculous profits.

Having said that, I have to imagine that someone will disrupt this market. In the next few years, someone will introduce shared data across multiple lines that will bring the price down. After that, companies will be able to buy large data blocks. As LTE and the future gens of wireless progress, the cost to provide the data will become cheaper and cheaper. Hopefully that helps.

Wait a fucking second here!!!! All this shit you're doling out and you don't even own an iPhone? HAHAHAHAHAHAHAHHAHAHAHAHHAHAHAHHHAHAHHAHAHAHAHAHAH AHAAAA!!!!!!!!! You have to be absolutely shitting me! So then this begs the question: when a ringing sound comes from your pocket, exactly what device is it that you put against your ear?????

[MJZiggy]

?????

Yes, actually you can. Not nice homes that you want to raise your family in, but homes you could fix up and sell or rent.

Not where I live you can't. Studio condos around here go for more than $100K. The ones in the "rebuilding" neighborhoods usually come with a contract requirement that you live in the thing. In DC proper, gentrification is absolutely killing any kind of housing opportunity for those who aren't "gentrified."

[Patler]

Incredible indicator?

Well, not from my perpective. It "can" be a good tool, but like anything else it can be abused.

Let's talk about it. My biggest issue with it is that it is a "predictor" of future events and none of those are exceptionally reliable. No one (except Jesus) can predict the future and he ain't into stocks so he doesn't weigh in.

The P/E ratio is a critical component of the calculation of the PEG. The PEG can only begin to be accurate if the P/E is accurate. Plenty of things can make it inaccurate. Some are perfectly honest, some are NOT. Just like the rest of the market (and life too).

So why can the P/E be unreliable?

(redacted for brevity)

I agree completely, and the sad part is that as unreliable as P/E is for the reasons you gave, it is the most reliable component of PEG. The "G" part is predicted growth (either over 3 or 5 years) and historically the estimates aren't close.

A study was done by the Penn State business school covering all published estimates from Wall Street analysts over a 20 year period. Their average annual growth from their 5 year estimates was 14.9% growth. Actual growth for those companies was 9.1% That was based on a 20 year comprehensive study. They weren't much more accurate on the shorter term one year estimates. Their average annual growth from 1 year predictions was 13.8% and the actual growth was 9.8%

Their estimates miss by 50%.

PEG is like any other predictive tool, it should be used in conjunction with other factors and tools to look for consistency or inconsistency in the results. It shouldn't be relied on too heavily in and of itself.

[SkinBasket]

more later. Skin I will PM you.

Thanks. If nothing else, I'll probably need some help in how to find reliable help.

[mraynrand]

Not where I live you can't. Studio condos around here go for more than $100K. The ones in the "rebuilding" neighborhoods usually come with a contract requirement that you live in the thing. In DC proper, gentrification is absolutely killing any kind of housing opportunity for those who aren't "gentrified."

That's also because of the boom in gubmint jobs. You should see it out in the manufacturing wasteland.

[Little Whiskey]

That's also because of the boom in gubmint jobs. You should see it out in the manufacturing wasteland.

no shit! for 60k you can own the east side of Michigan.

[Partial]

Wait a fucking second here!!!! All this shit you're doling out and you don't even own an iPhone? HAHAHAHAHAHAHAHHAHAHAHAHHAHAHAHHHAHAHHAHAHAHAHAHAH AHAAAA!!!!!!!!! You have to be absolutely shitting me! So then this begs the question: when a ringing sound comes from your pocket, exactly what device is it that you put against your ear?????

? I don't see the relevance to the discussion. I also don't see what's funny. My opinions on the stock, the products, etc are looking at it from a completely unbiased fair perspective. They're looking at it from an interested 3rd party looking to invest in the best product in an expanding field.

IThousands upon thousands of investors lost everything in these companies. Don't be stupid enough to be the next one. Blindly following PEG, or any other ratio for that matter, will lead you down a dark alley so fast you won't know what hit you, other than your money is now gone forever.

Agreed. I don't do anything blindly. Some of the best advice I've gotten was from you where you said don't invest in something you don't understand. Apple has tons of cash, crazy good PE and PEG. They have the best product on the market by far. PEG is followed by something like 94% of stocks. That's a pretty good indication.

Well, the TV market is a lot more mature than the smartphone/wireless internet market.

Do we have choice there? Are there a bunch of companies out there offering cheap TV service? No? Why not?

Yes we do. Broadcast television. Hulu. Etc. Having said that, I see your point and it does suck.

One reason is that the barriers to entry are huge. Not very many folks can launch satellites into space. Cable companies are a regulated market. Cities and towns only allow ONE, in rare instances, TWO. Now there are occasional options for a second provider using telephone lines, but largely there isn't choice because of barriers of entry.

Costs are high, and rising.

Why will the smartphone industry be different? Cities and towns already regulate the number of towers and location of them. Barriers to entry are large, and competition is low to the point of 4 major providers. All "sub tier" providers have to use tower space from the big 4. The big 4 controls the leases, and the terms of those leases.

So, you, or me are just gonna waltz into the big 4 and demand a contract so we can "knock off" the subscriber base with cheap internet? Yeah. That's not likely to happen anytime soon. It'll take a technological shift that probably isn't even in the making, especially since clear wireless teamed up with Sprint. That was probably the best hope.

You're already seeing change agents, though. Small, regional companies like Cricket are coming in, leasing the same towers the big boys use, and going with the pre-paid model that is used in the vast majority of the rest of the world. They're able to offer much lower prices, though handsets are ridiculously expensive (since they're unsubsidized). It'll be great once everyone uses the sim and unlocks handsets become the norm. Then the carriers will really have to compete on price and that will be a great thing. With Verizon going to LTE and Spring soon making the change, this will get us one step closer to this.

Having said that, phone data isn't like cable TV. There isn't one carrier. There are 7 carriers in my area that people use. Once these guys ditch the ridiculous CDMA/wimax standard and get on a unified standard such as LTE, costs will come down over time as these guys are forced to compete for customers. Open market will solve that problem. Let's hope it remains open.

[mraynrand]

Partial, what cell phone do you have?

[Partial]

On an unrelated note, ARM is gonna continue with explosive growth. They understand the principals that Intel seemingly does not with power consumption. I do like the companies growth potential but the stock looks overvalued right now.

Windows 8 Metro UI looks incredible. I'm in love. This is by far the most user friendly product microsoft has ever come out with. I haven't seen anything this innovative out of Redmond in years!

I'm gonna have to do some research and figure out who's the exec responsible for driving this product and obviously getting the attention of Ballmer and saying "Hey, our product sucks, we need to make a big time radical shift and fix it".

http://www.bgr.com/2011/09/13/sorry-apple-windows-8-ushers-in-the-post-post-pc-era/

I really, really, really hope most apps can run in the shell and not have to go to the Windows UI we all know and loathe. The shell is so beautiful and user friendly! It abstracts all of the nastiness of computing!

[Little Whiskey]

Partial, what cell phone do you have?

the zack morris phone

[retailguy]

Wait a fucking second here!!!! All this shit you're doling out and you don't even own an iPhone? HAHAHAHAHAHAHAHHAHAHAHAHHAHAHAHHHAHAHHAHAHAHAHAHAH AHAAAA!!!!!!!!! You have to be absolutely shitting me! So then this begs the question: when a ringing sound comes from your pocket, exactly what device is it that you put against your ear?????

Partial, what cell phone do you have?

Of course he won't answer. It probably isn't "relevant" to the discussion....

He's said what he has in the past, it seems to me it was an old palm or similar. Maybe a 1st generation pre or something?

A few months back when I was struggling with a decision to get my wife an iphone, he actually argued with me that it was not "too expensive", now, for him, it's "too expensive". He just couldn't wrap his head around the fact that I didn't want to spend $100+ on one cell phone for my wife, but it's "too expensive" for him to do that.

Priceless.

We wound up with an epic, and that's a decision we don't regret. I'm not paying "full rack" with sprint either.

[Partial]

It is an old Palm Pre. I don't see the relevance to the discussion of a stock, though. There isn't any. It's an attempt to shift the argument and that's it.

RG, I didn't say it wasn't too expensive, I said the prices you quoted were wrong and overstated. Huge difference.

It is too expensive for what I use a phone for. Now that iPhone 5 is going to all carriers, I'll get one on my Spring SERO account.

[mraynrand]

O A few months back when I was struggling with a decision to get my wife an iphone, he actually argued with me that it was not "too expensive", now, for him, it's "too expensive". He just couldn't wrap his head around the fact that I didn't want to spend $100+ on one cell phone for my wife, but it's "too expensive" for him to do that.

My daughter got one and now she's stuck with all her allowance and some of her job money going to pay for it. Like I said before, the taxes and surcharges are absolute gouging. But she likes it

[retailguy]

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.

If the phone sells for $400 more than I'm "paying" for it, then SOMEONE is paying for it. The only person that "pays" for anything is the CONSUMER. ME. If a business "pays" for it, and doesn't pass on the cost, THEY LOSE MONEY. They aren't losing money.

Your assertion that I'm "losing" money if I don't upgrade misses a very important point. The other options. I have freedom to move if I don't renew my contract. I don't have freedom to move if I sign another contract. I lose flexibility once I sign my name. I take on risk once I sign my name. If I have to get out on early termination, I lose any "pocketed money" of gaming the system.

Right now, on boost I can get a Samsung Prevail (which is 80% of an epic) for $179, or a curve for the same price. All inclusive price? $50. With shrinkage that drops by $5 each six months until I settle at $35 a month.

If I just want a smartphone without all the hassle and add on fees, OR a contract, why would I not consider this?

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.

I don't know of very many phones that sell for $650. Let's use $400 from your previous example. Day 1 - you go to the sprint store and buy an Epic. I go to the Boost store and buy a Prevail. Here's how the math breaks down for the 1st two years.

Sprint - You get a subsidized Epic. Your plan costs are $79.99 plus $10 for the epic data pack add on. $89.99 monthly or $1,079.88 per year plus $200 initially for the phone. Total cost - 1st two years - $2,359.76

Boost - I pay full retail for my Prevail $179.99. My contract is $50 per month for unlimited service. I also sign up for shrinkage. My bill decreases by $5 each 6 months that I make an on time payment. My plan costs $300 for 1st 6 months, and $270 for the second six months for a total of $570 for the first year. The second year my costs are $240 & $210 making the total for the 1st two years $1,199.99 including purchase of the phone.

It's important to note that I have excluded taxes from the analysis because I was too lazy to look it up. Boost fees include taxes, Sprint fees do not.

End of two years, I have spent $1,159.77 less than you have. Now, it's time to test your hypothesis.

Beginning of year three - you get your new Smartphone. It's the new super duper epic on steroids. You're happy with your epic and decide to sell the super duper new one. You get the FULL $650 for your new phone, less your $200 upgrade fee. Prices haven't even risen and you lock in for another 2 year contract. End of the two year period, you have spent the same $2,359.76 less the $650 you realized from the sale of your phone - $1,709.76.

I decide to stay with Boost, but I want a new phone. The Epic you're using is now offered on Boost, and I decide I want a fancy phone like you. My cost is $249. I'm still on shrinkage, and like you, my rates have not increased. 24 months of service at $35 per month is $840 plus my $249 phone leave total outlay - 1,089. (I also sold my prevail on ebay - $50 for parts, but I blew it on wine, women and song so I didn't include it).

At the end of 4 years, you have a 4 year old epic, and I have a 2 year old epic. You have spent $4,069.52, and I have spent $2,288.99, or $1,780.53 less than you have for the same phone service.

I fail to follow your math and your upgrade plan. Sounds like a great deal for Sprint and a crappy deal for me.

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.

I was just at my daughters new high school in suburban America last night. I was in 7 classrooms, all AP classes. NOT ONE Apple machine in the place. I did see a bunch of Dell's running Windows XP.

This is a nationally ranked high school with one of the top academic and football programs in the US. Graduates commonly are accepted to Ivy League schools. I pay $4,500 a year in school related property taxes, and the money is fully spent on the schools. Well run district from what I can see.

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.

Me neither. Well said.

[retailguy]

It is an old Palm Pre. I don't see the relevance to the discussion of a stock, though. There isn't any. It's an attempt to shift the argument and that's it.

I disagree. The relevance is that you're preaching to all of us that it is "a great deal" and "everyone" has it, but you don't because it's too expensive. It's "don't do as I do, do as I tell you".

You're probably out of contract on that old phone, and haven't "cashed in" either, most likely. Yet we're all "fools" for not upgrading phones.

More preaching from the peanut gallery.

RG, I didn't say it wasn't too expensive, I said the prices you quoted were wrong and overstated. Huge difference.

I told you that an iphone for her would be $105 a month, estimated including taxes. You said it could be cheaper. I said she would use more than 400 minutes a month and therefore it wouldn 't be cheaper.

Please be specific on how I overstated anything? She uses her phone about 700 minutes a month. She uses text messaging as we have two teenagers, so please show me where it would be less than $105 including taxes? I priced it about 10 times on the AT&T website while we were exploring what to do.

It is too expensive for what I use a phone for. Now that iPhone 5 is going to all carriers, I'll get one on my Spring SERO account.

Good for you. See my analysis above. Those SERO plans are a really good deal. Probably knocks the math down to an additional $1,200 over 4 years instead of $1,800.

You're a genius Partial. Underappreciated and misunderstood too.