rovo's Market Journal -- 2011

[rovo]

The top of the line Samsung phones use OLED displays and these are crisper, sharper, than the LCD displays used on the iPhone. The next generation of the iPhone, to be released shortly, also has an OLED display (or so the rumors state) so this should bring them back into play. Competition is good.

I don't own any Apple devices but the wife has an iPhone. The owners of Apple products are almost rabid in following Apple and buying the latest, greatest, next item. Makes no sense to me but then again I'm just investing and not trying to do a psychological profile of the typical Apple user. ;D

[rovo]

Just to be clear about this. I'm still looking for at least $425 for AAPL shares before the options expire on August 20th.

[yclept]

I just happened to see the reference to the Samsung potential of overtaking Apple phone sales so posted it for you. I don't have a dog in this fight.

I guess my biggest problem with AAPL is I just don't see the value that has driven it to the market cap it carries.

0
07/25/11
Ticker	Name	Last	MktCap	Industry	Sector	PEInclXorTTM	ProjPECurFY	PEGLT	Yield
XOM	Exxon Mobil Corporation	85.22	419801	Oil & Gas - Integrated	Energy	12.11	9.8	1.16	2.21
AAPL	Apple Inc.	393.3	364624.8	Computer Hardware	Technology	15.57	14.31	0.7	NA
PTR	PetroChina Company Limited (A	149.31	297391.2	Oil & Gas Operations	Energy	12.28	10.76	0.84	3.47
RDS.A	Royal Dutch Shell plc (ADR)	74.13	235021.5	Oil & Gas - Integrated	Energy	9.74	9.37	1.87	4.53
BBL	BHP Billiton plc (ADR)	77.31	233016.7	Metal Mining	Basic Materials	12.61	12.93	0.81	2.35
BHP	BHP Billiton Limited (ADR)	94.13	233016.7	Metal Mining	Basic Materials	15.36	15.77	0.99	1.93
MSFT	Microsoft Corporation	27.53	232154.1	Software & Programming	Technology	10.19	9.83	0.93	2.32
IBM	International Business Machin	185.18	224290	Computer Services	Technology	15.05	13.91	1.28	1.62
CVX	Chevron Corporation	108.97	219056	Oil & Gas - Integrated	Energy	10.58	8.59	1.57	2.86
PBR	Petroleo Brasileiro SA (ADR)	33.3	205207.2	Oil & Gas - Integrated	Energy	8.46	9.2	1.06	3.65

They design stuff and have it manufactured by others -- seems to me a tenuous hold on leadership that could be superseded by the next pair of guys with a garage and an idea. Having worked all my life in manufacturing, I understand and appreciate the logic of subcontracting actual manufacture (with its attendant plant and equipment costs) to outside contractors. I'm also very familiar with the logistical problems (including pirating of design features) that strategy can involve.

In the final analysis, investment in plant and equipment has to count for something in value analysis. In the list above, AAPL has the least capital investment of any of the companies above with the possible exception of the two other feather merchants (MSFT and IBM).

Just a thought on my reasons for not wanting anything to do with the likes of GOOG, AAPL, MSFT, IBM, etc.

I mean, really, what will happen when people tire of playing Angry Birds and having every store they walk by send them automatic advertisements.

[rovo]

AAPL touched $400.00 this morning but it doesn't count unless it closes above $400. ;D

Yclept, Interesting data in the above post. Funny thing .... I never look at Market Cap as I consider it irrelevant. I'm probably wrong but to me it is a none issue.

[rovo]

BRCM:
BRCM reported in after-hours today and beat the consensus expectations. BRCM closed today at $34.91 and in after-hours is trading at $37.66. I sold BRCM yesterday because I was concerned about another earnings miss. My fears were not valid and I left $4K on the table. Oh well. I turned a small profit on the swing trade.

MSFT:
I raised my sell price on this puppy today because I liked the upward movement today. It bounced downward from the upper Bollinger Band but I think it will run some more before reversing.

F
Ford continues to suck wind going into the earnings report tomorrow morning before the opening bell. Market expects $0.60. I don't know what to make of the recent downward price action other than "they" really don't expect Ford to meet consensus earnings. At least I won't have to wait long to see what happens with this large holding. I wonder if F is being affected by the budget battles in Washington?

AAPL
A bright spot in the portfolio as it continues to rise. Closed today at $398.50, +$5.20, after bouncing downward from $400 a couple of times. It really needs to close above $400 to get it moving again. Maybe tomorrow.

I suspect everyone is getting tired of me listing the options in AAPL but it shows how the options move much faster, percentage wise, than the stock does.

AAPL Aug 20 2011 370.0 Call .... Cost = $8,600 .... Mkt Val = $30,300.... Gain = 252%
AAPL Aug 20 2011 400.0 Call .... Cost = $4,000 .... Mkt Val = $9,100.... Gain = 127%
AAPL Aug 20 2011 410.0 Call .... Cost = $2,450.... Mkt Val = $5,100.... Gain = 108%

[rovo]

From Post #762 above:

rovo: "Most of my port is pretty laid back stuff in my opinion. Hence my desire to play with buying options when I see the opportunity. I don't play low risk option stuff like Dan does. My plays are an all or nothing approach with risk just oozing out of them. The fun part is if you get it right the gains can be quite big and the downside is limited to everything you put into the play."

[danshirley]

re: AAPL

I am interested to see YCLEPT's analysis of the AAPL situation as it reflects my own gut reaction. I guess I formed my subliminal response to a lot of things when I served a couple of different stints as head of Information Systems at a couple of different companies.

While I had some independence there was always a higher corporate level that reviewed your actions (even if it was just the Board) and you always had to make your plans stand the scrutiny of the corporation. e.g. I once had a board member take my plans for my company to the IT director of another company where he was on the board and then present challenges to my plans at a board meeting of my company. This produced one of the worst days of my life when I was summoned to the board meeting to defend my actions.

" Mr Shirley this is Jill (the president's secretary) "they want you at the board meeting... could you come right up"

In those days I could not touch a product from a company like AAPL no matter how superior the technology or how wonderful the idea was. Company stability judged by things like company size (market cap) longevity etc. were paramount. So you had to stick to things from IBM largely. At another company (actually a government agency) I made a decision to use HP over IBM for a multi site installation which resulted in days of grilling by a special committee with hired outside 'DP experts'.

This, of course, is the ladder AAPL has had to climb and I have nothing but admiration for their success.

In real terms while AAPL IS a relatively expensive stock by stats it could be and has been a lot worse... but what is important to us is can the stock keep on going or not??? I don't see any signs of it letting up.

[rovo]

Quick blurb on Ford earnings release. These are very encouraging results because it was expected to be a slow quarter for the entire industry. Now the questions is: Will this put a little life in the stock price of Ford?


Ford profit tops expectations July 26, 2011 7:13 AM ET.

DEARBORN, Michigan (Reuters) - Ford Motor Co reported a profit that beat Wall Street expectations.

Excluding one-time items, Ford's quarterly profit fell to 65 cents per share from 68 cents a year ago.

Analysts, on average, had expected earnings of 60 cents per share excluding one-time items, according to Thomson Reuters I/B/E/S.

Revenue rose 13 percent to $35.5 billion.

Net income of $2.4 billion in the quarter, or 59 cents per share, was down $201 million from a year ago when per-share net income was 61 cents per share.

Ford has now posted eight straight quarterly net profits after recording net losses totaling $30 billion from 2006 through 2008 when it cut jobs, sold unprofitable brands and reshaped a lineup laden with large SUVs and pickup trucks.

(Reporting by Ben Klayman and Bernie Woodall; Editing by Derek Caney)

[rovo]

Ford is trading at $13.42, +$0.25, in pre-market activity. Apparently I wasn't the only one concerned about the earnings not meeting expectations. More important then the earnings actually beating expectations is the cash flow continues to allow the company to reduce the enormous debt load while still making the capital investments needed to increase and improve production.

Ford is my largest single holding at 50K shares and I expect a huge payoff in this stock within a year. Sometimes one has to be patient and wait for good things to come. A big item will be if they get the "investment grade" rating around the end of this year or in Q1 of next year. This higher rating will open up a lot of demand for the stock.

[rovo]

In pre-market activity AAPL has been trading above $400, with a current high of $401.30. It looks like we will breach the $400 level today in normal market hours. I just think we need to have a close above $400 to allow the stock to really take off.

[rovo]

OK. We have a conflict of opinions on AAPL. Najarian on CNBC says $406 is the stopping point on the stock. I, on the other hand, feel that closing above $400 will bring new buyers into the stock since it is above the psychological $400 mark.

[danshirley]

An Apple bull speaks:
seekingalpha.com/article/281742-apple-undervalued-at-400?source=yahoo

[mtntigger]

The charts look good to me right now. There is no way that $406 is the stopping point when it exceeded $404 today. I think it's going to go up at least another $10 this week.

[rovo]

Hey Dan, He may be a bull (your article) but he hedged his predictions quite a bit when it came to shares prices. All in all a very nice and well reasoned article.

Predictions for AAPL's Q4 (end of Sept.) are a consensus of $6.97 per share with a range of $5.73 to $8.22. Q4 has historically been Apple's best quarter and with Q3 yielding $7.79 one has to really wonder what these people are smoking. iPhone5 is expected to be released during fiscal Q4 and here is an interesting short article about buying the next iPhone.


iPhone 5 would be bought sight unseen by 35% surveyed
July 26, 2011, 12:28 PM

There’s no iPhone 5 yet, but more than a third of consumers surveyed by Experian’s PriceGrabber shopping website said they’d buy it sight unseen.

Even better for Apple AAPL, 51% said they’d buy it within a year, as Clint Boulton writes at eWeek Europe.

Of those responding to the online survey, some 48 percent said they preferred Apple’s iOS platform. Google’s GOOG Android platform drew 19%, Microsoft’s MSFT Windows got 7% and Research in Motion’s RIMM BlackBerry drew just 6%. (Ouch! eh?)

Is it too early to ask about how many will by the iPhone 6?

-Tom Bemis


I haven't done any rigorous analysis for Q4 earnings but my preliminary (low ball) number is $9.00. For the next fiscal year they are saying $31.96 for earnings and this just makes me snort a bit. Let's start at $40 and work our way up from there.

[rovo]

Topic change. I had my sell order in for MSFT, MicroSoft, at $28.28 and I just kicked it up to $28.42. My interpretation of the charts says there is more room to run upward from the current $28.12. The 52 week high is $29.46. I really want to sell off these shares as they have been pretty much dead money since I bought them.

My concern is about this debt limit stuff and how much Washington is holding back the market. An agreement could boost stock prices but I realize an agreement is partially priced into the current prices.

Interesting times. Confusing times.

[rovo]

AAPL finished the day at $403.41, off of the day's high of $404.50. The options were up nicely today.

OPTION

BUY DATE

BUY COST

CURRENT BID

% GAIN

[/b][/tr]
[tr][td] AAPL Aug 20 2011 370.00 Call [/td][td] 15-Jul-11 [/td][td] $8.62 [/td][td] $34.65 [/td][td] 302% [/td][/tr]
[tr][td] AAPL Aug 20 2011 400.00 Call [/td][td] 18-Jul-11 [/td][td] $4.02 [/td][td] $11.65 [/td][td] 190% [/td][/tr]
[tr][td] AAPL Aug 20 2011 410.00 Call [/td][td] 18-Jul-11 [/td][td] $2.47 [/td][td] $6.95 [/td][td] 182% [/td][/tr]
[tr][td] [/td][td] [/td][td] [/td][td] [/td][td] [/td][/tr]
[tr][td] AAPL Common Stock [/td][td] Feb & Apr [/td][td] $349.35 [/td][td] $403.41 [/td][td] 15% [/td][/tr][/table]

[2kids10horses]

I agree that the debt limit stuff is holding back a roaring rally. Earnings have been terrific. If only the politicians would behave...

[IPAfan]

ENH posted 2nd quarter results today, and I've got to say I'm very impressed. Considering a terrible, terrible year in reinsurance, ENH has managed to limit its losses to -3.3% ROE for the first 6 months. ENH has managed to preserve its equity, and most likely set itself up for years of favorable loss reserves. Only time will tell how the loss reserves come out, but I'm very impressed that ENH has maintained its book value. A good company that has a ROE above 15% on avg. should not trade at a 25% discount to its equity value!

[rovo]

June durable goods orders down 2.1%
8:30a ET July 27, 2011 (MarketWatch)
WASHINGTON (MarketWatch) - Orders for U.S.-made durable goods fell 2.1% in June on weaker demand for autos and airplanes, the Commerce Department reported Wednesday. Excluding transportation, orders inched up 0.1%. The decline in orders was unexpected. Economists polled by MarketWatch expected a flat reading in June. Transportation orders had the largest decrease, falling 8.5%. Shipments rose 0.5% in June. Orders for core capital goods fell 0.4% in the month.

[rovo]

My "Watch List" screen looks like a sea of red. AAPL touching $400.00, MSFT down about 1%, F trading at $12.81 (real bargain here IMO). The only green is in inverse ETFs.

On the plus side, my 15 minute charts are showing an "over sold" condition and a reverse could / should be occurring before the opening bell.

I t will be interesting to see if AAPL holds above the $400 mark. This psychological resistance point from yesterday now becomes a support point since it was breached.

[rovo]

Before going out for breakfast morning I placed an order for some options on AAPL. AAPL Aug 20 2011 410.0 Call with a price of $4.25 but I did not expect it to fill. It did fill at $4.25 and actually the price went as low as $4.22 before reversing. Currently the bid on this option is $5.00.

[rovo]

It appears today's decline is running out of steam with the short term charts going horizontal. So now the questions is whether we will start to rise for the second half of the day or are we just resting before another decline.

[yclept]

I'm guessing the market has digested enough and is ready to start the next sharp downward run -- to be followed tomorrow morning by a big gap down and brutal selling the rest of the day.

Today is Wednesday. Even if those meat-heads in congress (small letter "c" since that useless institution no longer deserves the respect of capitalization) decide on some parameters, they can't get it drafted into legalese fast enough to get votes in both houses. They may play kick-the-can, but that will be as useless as a default at this point. No one will be fooled by that. We are about to enter another recession and I think this one will make 2008 look like a cake walk. The Fed is out of ammo. Banks are more concentrated than they were before, and have not written any of their bad loans to market prices. FDIC is pretty much out of money -- all the government can do is print more to cover the depositor's losses, but that will cause inflation so the depositors will be getting money that is much less valuable than the deposits they had were supposed to represent. The ultra-rich will again go about the battlefield and bayonet the wounded.

Batten the hatches, shorten all sail. Katie, bar the door. Of course there's always the ever-so-slight chance that I'm wrong! I've been whipsawed a lot lately.

Also sprach Zarathustra: Untergang Angekommen.

[yclept]

1:26 PM Russian newspapers report the government is considering banning the iPad (AAPL) inside state agencies due to security concerns, possibly opting for Blackberry (RIMM) or Android (GOOG) devices.

Seeking Alpha; Market Currents.

[rovo]

Just as the options rise much faster in % when the underlying stock rises, the reverse happens when the stock falls.

OPTION

BUY DATE

BUY COST

CURRENT BID

% GAIN

[/b][/tr]
[tr][td] AAPL Aug 20 2011 370.00 Call [/td][td] 15-Jul-11 [/td][td] $8.62 [/td][td] $26.00 [/td][td] 202% [/td][/tr]
[tr][td] AAPL Aug 20 2011 400.00 Call [/td][td] 18-Jul-11 [/td][td] $4.02 [/td][td] $7.50 [/td][td] 87% [/td][/tr]
[tr][td] AAPL Aug 20 2011 410.00 Call [/td][td] 18-Jul-11 [/td][td] $2.47 [/td][td] $4.20 [/td][td] 70% [/td][/tr]
[tr][td] AAPL Aug 20 2011 410.00 Call [/td][td] 27-Jul-11 [/td][td] $4.27 [/td][td] $4.20 [/td][td] -2% [/td][/tr]
[tr][td] AAPL Common Stock [/td][td] Feb & Apr [/td][td] $349.35 [/td][td] $392.59 [/td][td] 12% [/td][/tr][/table]

The port was smacked hard today to the tune of about $75K. I hate these days. You work so hard to eke out small gains and then, wham, you get knocked on your butt. Looks like morre damage coming so I had better get used to it.

[rovo]

Jul 27, 2011 13:43:14 GMT -5 @yclept said:

1:26 PM Russian newspapers report the government is considering banning the iPad (AAPL) inside state agencies due to security concerns, possibly opting for Blackberry (RIMM) or Android (GOOG) devices.

Seeking Alpha; Market Currents.

Most likely translation .... AAPL refused to pay a bribe to the appropriate person. I saw so much of this crap when I was doing business in Europe. It was the way of life over there but we were not allowed to so by law and ethics. It makes it very difficult to operate over there at times. I had no contact with the former USSR states but I can imagine they are much worse than the Europeans were.

[rovo]

We had some pretty good volume today and on a down day this spells trouble going forward. But futures are currently green across the board (S&P500, DJIA, NAS COMP) and this is encouraging. I also heard somewhere, probably CNBC, that there was quite a bit of computer selling today based upon short term trends. Right now I think everyone is looking at the short term. If we could get some sort of deal out of DC, especially considering today's substantial decline, I think we could see a very significant rally.

[rovo]

A small recovery in the port this morning as Ford is up a bit but needs to go a lot higher to make up for yesterday's decline. Pretty much the same thing for AAPL after a big dip this morning it is now in the green for today. I tried to buy some APPL related stuff this morning but it did not hit my buy price.

What the heck is going on with MSFT? I can't find any news items to account for the +2.09% gain this morning. My sell order is back at $28.28 for MSFT against the current price of $27.91.

[2kids10horses]

MSFT is going up because I THOUGHT about selling some shares to pay for my daughter's tuition. It does this so I won't sell and miss the rally.

Naturally, what will happen is I will sell something else to pay the tuition, and MSFT will drop to CSCO levels. Meanwhile, the Pfiser that I DID sell will announce the cure of all forms of cancer and skyrocket to the moon!

Ah! The joys of investing!

[Bluerobin]

I have been waiting for PFE to announce SOMETHING! It may be time to sell, cause nothing is happening.