Archive for July, 2012

Does Google’s ($GOOG) Experiment Mean Anything?

By: ispeculatornew | Date posted: 07.31.2012 (5:00 am)

You might have heard about this. Google, the search giant, has been complaining for years about the slow internet connections offered by ISP’s and how it ended up slowing users, charging them excessive fees, etc. Part of it is easy to believe because there isn’t as much competition in that sector as we’d like to, especially in Canada. Another reason is that companies such as AT&T are not known to be the most innovative and flexible so the fact that they are offering internet on their decade old networks can certainly explain part of why they have so much trouble offering very high speed connections at decent prices.

Google’s Experiment

A few years ago, Google set a mission for itself. It was going to show users and ISP providers that it could offer what they say they can’t. It ended up running a contest to choose one location and Kansas City, Missouri won! The project moved forward and with only a few months away before the launch of Google Fibre, they released the deltails of what they are offering last week.

For a $300 installation fee, users can get access to:

-7 years (minimum) of free 5 mbs internet

-Or they can pay $70 per month and get access to a 1GB connection, more than 100 times faster than the average high speed internet connection. For $50/month more, users get access to Google’s TV offering which remains a bit unknown.

It’s An Amazing Deal… Can Google Make This Happen?

No doubt about it, this is an amazing opportunity for anyone who lives in Kansas City! The costs are reasonable and the offering, along wih bonuses such as 1TB of free cloud space are years ahead of anything else available. This is clearly a threat to established players like AT&T who did already get caught trying to get info about the service.

The Big Question

The big question of course is what this means for Google? Is this just an attempt to show what it can do? Or is it part of a next step? Google has already went from a software based company to actually acquiring Motorola. The one missing link here for Google to be able to make a complete offering would be to offer an internet connection. This would make it possible to start getting users to switch to products such as Google Voice but also having consumers go for a Google TV setup, etc. If you think about it, it could make sense for Google to try to make a run for it. Don’t laugh just yet.. Google did bid on some airwaves a few years ago that could have made it possible for the company to start offering wireless connections. We never quite found out how serious Google was about it but this new project in Kansas City certainly makes us think there might have been something to it.

Tons Of Hurdles

It’s far from a done deal though as the infrastructure required to expand on such a project would be massive. Google could also certainly expect to face pressure regarding its intentions and how this could affect Google’s already dominant position in other products…

I’m not sure how this changes my perception of Google’s stock. It probably has very little impact in the same way that programs such as auto-driven cars do not hold much value for now. But they are certainly opportunities for the company to move quickly into new segments if that was ever proven necessary or profitable so as long as the company isn’t losing too much out of it or losing too much focus, I can’t blame them really.

Will Google be making money with Google Fibre? I’m sure they won’t. Their price point is probably quite simply what they would need to charge if this was done on a larger scale. That being said, I think the experiment is probably a solid idea that could lead to a lot more… what are your thoughts?

New Trade: Long Apple ($AAPL) & Short Adobe ($ADBE)

By: ispeculatornew | Date posted: 07.30.2012 (5:00 am)

Another week filled with ups and downs last week but I did have a very difficult time on the trade where I was long Apple vs AOL which ended up being closed. AOL has clearly been the surprise of the year so far in the tech/web space as it continues to outperform all rivals. I’m not convinced it can keep up but shorting it right now seems a bit risky.

Let’s get right to it and look at the numbers:

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Long Apple ($AAPL)

No doubt about it, I’m a big believer in Apple. The numbers did come out a bit lower than I and others expected but I think it’s crazy to say that the stock is now on its way down. The value is incredible, its the best buying opportunity of the year and the fact that revenues were a bit lower means nothing. It’s the same story every year. Why would consumers jump on a year old version of the iPhone when everyone knows that the iPhone 5 will likely be released in September? I would expect Q4 numbers to be record ones. The fact that Apple trades at a forward P/E that is almost identical to Adobe’s makes no sense to me. I think Apple, despite its size, remains in fairly high growth mode.

Short Adobe ($ADBE)

It’s a bit ironic to trade Apple against Adobe isn’t it? Despite Steve Jobs no longer being in this world, there remains little love between these two companies and in many ways, Apple continues to make life more difficult for Adobe. I do think the company is decent but its growth doesn’t justify trading at a P/E so close to Apple’s.

Disclosure: No positions on Apple ($AAPL) or Adobe ($ADBE), this trade will be opened on Monday morning

Weekend Readings

By: ispeculatornew | Date posted: 07.28.2012 (7:10 am)

Not much to say today, was battling a cold (yeah in the middle of the summer) but I’m just thrilled that the Olympics have now started, it’s going be incredibly interesting:) Here are a few readings for the week:

General Readings

What’s your ideal income and amount of work per day? @ FinancialSamourai
US treasuries fall to record (low) yields @ CuriousCat
Rent or own a vacation property @ BalanceJunkie
The Plight of small business in America @  HopetoProsper
For Italy, is it game over? @ ZeroHedge
ECB is ready to do whatever it takes @ TheBigPicture

Dividend Readings

Best dividend stock 2012 Q2 Update @ TheDividendGuyBlog
7 companies with 10 straight years of growth @ DividendMonk
Dividend stocks paying for retirement @ DividendGrowthInvestor

Technology Readings

Facebook reports earnings @ MarketingPilgrim
Value guys give up on Microsoft @ TheReformedBroker
So is Zynga (ZNGA) a buy at $3? @ BusinessInsider

Are Some Trades Immoral? Colorado Shooting

By: ispeculatornew | Date posted: 07.27.2012 (5:00 am)

You have probably heard about what happened last Friday morning, in the Denver suburbs, when a lone and deranged gunman ended up shooting tens of people that were watching the just released “Dark Knight” Batman movie. He ended up killing 12 with dozens more injured. We’ve heard more about some of the victims such as Jessica Ghawi (on the right here, see the foundation setup in her honor here), who had just escaped a shooting in Toronto a few weeks earlier… To say that such events are sad is a major understatement. It’s difficult to understand how such evil could exist in our world…

My question for today is a bit related. What are your thoughts on investors or traders that woke up on Friday and smelled an opportunity to make money? Some decided to short movie theatre stocks in a similar way to those that ended up shorting airline stocks following the tragic September 11 2001 events in New York City.

Is it moral or acceptable to try making money off of such events? I know that to many this is a black or white issue but I think it’s a lot more complicated than that.

Here is what I can say: I can’t imagine doing it. I didn’t cross my mind to think about opportunities when reading about it

That being said, I don’t blame those who did. Those stocks were going to lose value so it’s just a matter of who would be selling them first.. I guess it makes no difference, someone will end up doing it….Business is business

What are your thoughts?

Top International Dividend Stocks – July 2012 – Time To Stay Away From A Few Countries (Spain?!)

By: ispeculatornew | Date posted: 07.26.2012 (4:41 am)

In my last post about international dividend stocks, I made a point of being very cautious about picking some of the European stocks. Why? They do add diversification which is critical to any portfolio but some of these names are in a very bad environment these days, especially any company that would be operating out of countries that are in big financial trouble such as Greece, Ireland, Portugal, Spain or Italy. Some good companies exist over there but it seems a bit too risky for me. Again, those only looking at yield risk being burned big time.

Yields Can Collapse Quickly

Yesterday, Telefonica, a Spanish telecoms company I had reviewed a few months ago announced it was suspending its dividend. A big part of the reason why is that like all Spanish companies, its cost of debt is rising and expected to rise even more in the next few months. Because of that, this and many other companies are opting to keep their cash. If you look at my post from May, I was talking about European telecoms in particular as a sector at risk.

In the end, it’s still all about finding top high quality sustainable stock picks such as the ones in my Ultimate Sustainable Dividend Portfolio.

Back At It

Today I’m posting a ranking of the top names that I follow, companies that are based elsewhere but traded on US markets (not as pink sheets), making it easy and cheap.

As you can see, a few stocks look amazing on the surface but I will be looking deeper into them shortly. TEF is also part of the list but it will be gone by next time since its dividend has just been discontinued. See the full list  here:

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Closing Trade

By: ispeculatornew | Date posted: 07.26.2012 (4:37 am)

After closing a few good trades, I will unfortunately be closing a trade this morning where I was long Apple and short Aol! As you can imagine, that trade did not go too well yesterday after disappointing results from Apple and solid ones from AOL. Apple has remained a great pick of mine so I can’t complain too much about it!!

Giving Credit Where Credit Is Due…Thank You Daniel Loeb

By: ispeculatornew | Date posted: 07.25.2012 (5:00 am)

There are a few things that I feel many people get wrong. One of them that I discuss here is the idea that simply taxing the rich is a solution to every money problem. Another one that I wanted to discuss briefly is the idea that hedge funds, activist investors and other large funds are the root of all evil and bad for the markets in general. The actual example occurred last week when Yahoo named its new CEO, Marissa Mayer, an incredible hire.

The fact is that like so many others, I have been extremely critical of Yahoo over the years. Its leadership, coming from the very top was terrible, leading a company that once was a jewel into the ground slowly but surely. Worst of all was the board. You can blame Carol Bartz all day long but when CEO after CEO that not only performs poorly but reflects poorly on the company, led to massive talent losses, etc…

Something Had To Be Done

In a situation like this, everyone was losing. Shareholders, employees, users, etc. But what could be done? It’s difficult and sometimes even possible for small investors to get together and fire a board…

In Comes Dan Loeb

Daniel Loeb, CEO of Third Point LLC bought a big stake in Yahoo and decided to start working on the board. He asked for board seats, for influence on who would lead, etc. It proved to be very difficult as the board had no interest and was able to fight back successfully most of his attacks.. Then he had investigators digg up the past of Scott Thompson, Yahoo’s CEO at the time and found some lies in the resume he had presented which caused huge drama. In the end, he got what he wanted as Thompson was dismissed and he got some seats on the board…

The Big Catch

Of course, what good would that be if he couldn’t pull off a great leader. He ended up doing just that as reports are that he had a major role in getting newly named CEO Marissa Mayer to move to Yahoo. This marks a huge shift for Yahoo which at least has a shot of turning things around, of retaining and attracting top talent, etc. It won’t be easy but Mayer is the right person for the job according to almost anyone you can find to ask.

Big Funds Like Third Point Have A Critical Role

Such funds or activist shareholders are able to have influence, to change things that you and I cannot do. I personally am happy both as a user and as a potential shareholder to see Yahoo being turned around in a way that I was starting to believe would never happen… Hedge funds and other large funds are the main players that have enough capacity to rectify the market like this…I think we should credit them when they do

Why Is It So Hard To Do The Right Thing?

By: ispeculatornew | Date posted: 07.24.2012 (5:00 am)

I don’t get it. Guys like Dez Bryant, Marshawn Lynch, Adrian Peterson, Michael Vick. These guys are NFL superstars, they have contracts worth millions of dollars every year. They need to do 3 very simple things in order to be paid those millions, live a good life and end up with their dream life:

#1-Take their job seriously (practice, respect their team, league, coach, teammates, etc)
#2-Take care of their body (this means eating well, exercising, staying away from sports or activities that could end up leading to injuries, etc
#3-Stay out of any legal trouble

Simple right? I mean, if I offered you $10 million/year to do those 3 simple things, I’d like to think that you could get it done. It’s not like I’m asking you to do this for your entire life either. Most careers last a few years, with a few exceptions going strong for a decade or more. By then, you already have enough of a career and money in the bank to be as much at risk.

I’d like to think all of you could get it done. I know I could! Or could I?

Things We Know We Should Do But Yet Don’t Do…

As obvious as it is that NFL players and athletes in general should be able to do those 3 things. There are many others that we should be doing ourselves yet we either procrastinate or simply ignore them. Let’s stay away from the non-financial items here for today (eating well, sleep, etc) and focus on things that all of us should be doing:

-Paying ourselves first (it’s by far the most proven way to save money)
-Keeping a budget or at least track of our expenses
-Manage and limit the amount of debt and interest paid on it
-Having a clear investment plan that will make it possible to retire on time
-Reviewing on a regular basis our investments, the fees paid on them, and adjusting if necessary

These are all things that we all know we should do, that are fairly easy to put in place but yet a majority of us can’t get done. Why is that? Are you taking care of your finances and investments? If not, what’s keeping you from doing so? You obviously know that you should right?

New Trade: Long Priceline ($PCLN) & Short XO Group ($XOXO)

By: ispeculatornew | Date posted: 07.23.2012 (5:00 am)

Good Monday morning! After closing 3 trades last week, I will be closing another one today. I had initiated a long position on eBay on May 7th and that paid off big last week after eBay announced more solid earnings powered by its Paypal and its mobile business once more.  eBay had a big day which helped take the trade past my “stop win”, it will be closed this morning but currently stands at +21,57%:

Making my picks turned out to be a challenge this week as there were a few different opportunities but also several stocks that will be reporting earnings this week (including Facebook-FB). I was also tempted to take a long position in Yahoo but I’ll need a bit more time before doing so to decide if Miss Mayer’s presence is enough to justify jumping back on the ship. Today, I am opening a new position on two stocks that I traded quite a bit in 2011 but not so much this year. Let’s get right to it and look at the numbers:

[table “421” not found /]

Long Priceline ($PCLN)

Priceline has been a remarkable story for about 10 years now. The company as an amazingly strong brand which has helped it fend off competitors such as TripAdvisor, Kayak, etc. The fact that it offers a slightly different offering and has a lot of power with hotels and other travel related companies has obviously helped a lot in making Priceline come up with such strong growth over and over and over. I remain a believer and think the stock remains priced on the low end of what it could/should be.

 

 

 

Short XO Group ($XOXO)

The company formerly known as The Knot is still all about weddings and very much a company that depends on advertising so it’s no surprise that this weak economy has made things more difficult for XOXO. Growth has been reasonable but not anywhere near what would justify a forward P/E above 20 in my opinion, especially when I consider Priceline’s valuation.

 

 

 

Disclosure: No positions on Priceline (PCLN) or XO Group (XOXO), this trade will be opened on Monday morning

Denver RIP Edition

By: ispeculatornew | Date posted: 07.21.2012 (6:14 am)

Hi everyone, I hope you’re all doing well. I can’t think of a good way to say this except to say that I hope everyone affected by the tragic events in Denver knows that they are in our thoughts, it was a truly tragic event that makes everything else seem so unimportant. My best wishes to the victims, the injured and all of their families, and may the rest of us try to live by one of the victims words #RIPJessica in her June 5th blog post after almost being aught in a Toronto shooting:

I was shown how fragile life was on Saturday. I saw the terror on bystanders’ faces. I saw the victims of a senseless crime. I saw lives change. I was reminded that we don’t know when or where our time on Earth will end. When or where we will breathe our last breath

So no…there are no readings today, I encourage you to tell those around you that you love them and enjoy every second of your weekend with your friends and family:)