What would Steve do? (APPL)

Apple (APPL) is mind-bendingly frustrating these days. I used to LOVE the company's wares and vibe, but now I am indifferent, at best. What the hell is going on? Here are the missteps, as I see them:

- iTunes remains a mess. No drag and drop to add songs? An interface circa 1998? Why? What could possibly be standing in APPL's way of cleaning up iTunes? I. Do. Not. Get. It.

- iCloud storage prices are laughably high and for what? Seriously, it's WORSE than Google Photos and Photos is free. Sure, this is minor for APPL's revenue/profits on the surface. But deep down it pisses people off, makes them feel taken advantage of, kisses of death for loyalty.

- Nuking the Mag-Safe. What was that meeting like? Someone says, "Hey, I know, let's take the one thing we truly OWN in laptops, the one thing no one else has, and KILL IT."

- The Mac Pro, the FLAGSHIP Mac has not been refreshed since 2013, despite a design that does no one any good, especially professionals. Now, I have one and I love it, but I got mine for a great price and can live with its total lack of upgradability/expandability, as I'm only a hobbyist. If I were a pro and got saddled with this thing, I'd be pissed (which is why the cheese grater Mac Pro lives on in countless agencies and recording studios).

- A dog's breakfast of a product line/nomenclature. Quick, how many iPhone models are there? What are the differences? iPad Air vs iPad? Why is the iMac Pro so expensive? Etc.

There's more, but you get the point, APPL, in my opinion has lost its way. So, the trillion dollar question is, if Steve came back, what would he do?

- Kill 50% of the current product and name what remains in a way that makes sense. My product ideas are iPhone + # + Pro if super killer, create iPhone for the masses/developing world; Mac Pro, iMac + # + Pro if truly killer, iPad, iPad Mini, iPad Pro; services should be iCloud (if it works), Tunes (kill Music, keep paid tier, rewrite code), change TV to Video, add Netflix and Amazon, revenue be damned); Health (for all health related services. This little list is not the end all be all but I think it's better than what exists, a lot better.

- Add Mag-Safe to all laptops, but as a combo USB-C/Mag connector

- Dump Intel for own ARM-based chips, leave Intel be an option for Pro machines, if needed in near term, or better offer AMD's 7nm chips.

- Stay true to data privacy.

- Go all in on health and make the Mac integral to the strategy.

- Be willing to take a short term hit on the stock for long term growth. APPL could double from here and be the first $2 trillion corporation, but it's got to take some chances. Real chances, which means a miss hurts but a hit feels better than anything else.

That's my list. What do you think Steve would do?

Is it time to sell Sierra Wireless (SWIR)?

Back in my first decade of investing -- 1995 to 2005 -- I would have sold SWIR awhile ago.

And lost money.

Nowadays, I'm much better about making short-sighted decisions to sell; instead, when times are tough for a given stock, as they are right now for SWIR, I take a hard look at the business and ask myself if my original thesis is still intact.

In the case of SWIR, it is but barely.

I bought this stock because I believe in the Internet of Things (IoT), and I am confident that sooner or later the world will need a lot more teensy chips that connect things into networks, exactly the kind of chips SWIR makes. However -- and it's a doozy of a however -- I bought SWIR when hype around IoT was frothy. Dumb. Now in 1019, the hype has subsided quite a bit and so companies like SWIR are not given a pass when earnings reports suck, which SWIR's have of late. But I still believe in IoT and I am bullish on the likelihood that as more things get connected, especially cars, a huge play for SWIR, demand for "connector" chips will go up, up and away.

And so, let the hand wringing cease. I'm staying the course. Next stop, 2025!

Blackberry (BB) delivers a juicy quarter!

When I bought BB, I was convinced I was getting the deal of the century, seriously. I mean, here's a company with unrivaled chops in securing mobile endpoints (phones, cars, etc.) in a world where mobile endpoints are mushrooming.

BB fell.

When BB bought Cylance, a fast-growing AI cybersecurity company, I was certain, certain, I tell you, BB would soar.

BB fell.

Finally, BB announced a truly plump quarter and the stock jumped about 13%. Here are the specifics:

BlackBerry reported earnings of 11 cents per share, 5 cents ahead of analysts' expectations. Revenue of $257 million topped estimates by more than $14 million (a beat by 5.75%) and grew 7.5% year over year.

Whew. And then...

BB fell.

No idea what's going on here, but I'm not about to squish my BB shares. In fact, within 5 years, I predict -- based on nothing but gut -- BB will be trading in the $30's!

The worm that's eating Apple (APPL).

3.28.19

This week, Apple announced a video service, a news service, a gaming service and a credit card.

The exciting take on all this would be something like, APPLE SET TO DISRUPT HOLLYWOOD, THE MEDIA, NEWS, VIDEO GAMING AND BANKING IN A SINGLE BOLD MOVE.

The more realistic take is, "Apple announces some stuff."

What is going on at the once mighty Apple? Don't get me wrong, things aren't that bad, Apple still makes gobs of money, is still growing, has an Everest of cash, but it's missing its once mightiest attribute: buzz. There is just nothing exciting happening anymore and that is heartbreaking.

In the past, whenever Apple held a gathering like the one this week, I used to wait with anticipation, dying to see what they would announce, what "damn, that's insanely great" idea they would bestow upon the world. My reaction, this week, as in recent years, was a disappointed yawn.

I think what's missing at Apple these days is an obsessive desire to do something insanely great, to not settle, to push and push and break through and then do it again. Tim Cook seems like a nice guy but he's not driven to put a "dent in the universe" the way Jobs was. Jobs was an asshole, no question, but at least he was an asshole with a purpose. What's Tim Cook's purpose for being nice? What is he hoping to achieve? I have no clue.

I am holding out hope that the upcoming Mac Pro will be insanely great. In fact, I'm hoping it's so insanely great that I do the insane thing and buy one. But my expectations are crushingly low. Look at the "new" Macbook Pro. When it was released, it was insultingly bad. In fact, the one insanely great feature that Apple still has, a unique feature in fact (so rare these days), is the Mag-Safe connector and what happened to it? CUT. Why? What possible reason for this could there be? Fine, Apple, you want to simplify to the Nth with USB-C being all you need? Totally good with that. But there was no need, no possible benefit, to cutting Mag-Safe. Almost as bad, the processors for Apple's flagship laptop were old. I remember when Jobs vowed never to be last to get Intel's good stuff. Hell, he even pushed Intel to make a special processor for the Air. Nowadays, it's like Apple just doesn't care. And that's the most heartbreaking thing of all. Once among the world's most passion-fueled companies, Apple appears to be apathetic, releasing tired products, half-baked services, buggier and buggier software. It's tragic.

The Klarman Letter, Davos and my concern that I'm participating in an economic doomsday machine.

Seth Klarman is one of the world's most renowned investors and one of the few praised by Warren Buffet. So like E. F. Hutton of those infamous ads from the 70s, when Klarman talks, people listen.

Or in this case, writes.

Klarman's most recent letter to shareholders of his Baupost Group investment partnership is messing with the mood in Davos, the global economic conference in Davos, Switzerland, where political and business leaders gather to discuss the global economic situation and what might be done to make it better. However, the double whammy of Klarman's letter and the fact that many of the world's top dogs are not attending (Trump, Macron, Xi Jinping of China, Theresa May, etc.) is setting a bit of a gloom and doom tone, I would imagine, that Champagne and caviar probably won't cure. Among
the reasons to worry about the global economy that Klarman highlights are social unrest, an isolationist America, a slowing China, capitalism's fading rep among the young...

But the one thing Klarman harps on that I think is objectively true and basically inarguable is the fact that most public companies' maniacally focus on "maximizing shareholder value". He points out -- rightly, I think -- that by worrying so much about shareholders, companies are screwing their employees and customers, as well as the planet -- and maybe even their own prospects (no worries for the top brass, they win no regardless). After all, no matter what anyone says, focusing on your share price is a short term game, possibly even a scorched earth policy. Think about it: if you give your company's profits to shareholders, that's money that could have gone to the people who earned it, your employees and customers, or acquisitions that could strengthen your competitive position. Or let's say you decide to maximize shareholder value by hiring a math whiz who uses a max/min equation to figure out how to pay people the minimum for the max amount of work? Yeah, that will work great for maybe a year or two, but over time? Forget it. Or you could opt to be "saved" by a leveraged buyout firm that saddles you with so much debt you're fucked. Remember Toys R Us? Right. 

Klarman's answer to this "sharemax" problem is to implore CEOs to behave like decent people. Never going to happen, at least not for the majority of C-Suiters. The reason is down to the human lifespan and how many productive years you have in you. Most people maybe have maybe 20 years of being able to earn a solid salary, hardly enough to get filthy rich, unless you factor in equity in the form of shares and options. So if you're a leader of some big company, you are going to get yours while the getting's good and enjoy your riches while you're still young enough to do so. There are exceptions, to be sure, quite a few I believe, but they're exceptions. It's just human nature.

How to fix this mess? Here's my idea.

If there is one law I think .gov should enact it would be to eliminate all classes of stock in public companies save for common, go back to the way it was in the beginning. No more preferred shares, no more super voting rights, none of that bullshit, just common shares. If this were to happen, then everyone in America could participate in the country's bounty, with the only limitation being the amount of money they can spend on stocks. Private companies could play by different rules, but not public ones. However, once a private company employed, say, 1000 people or had revenues greater than $1B, they would have to go public and issue enough common shares so that the public owned the majority of shares (this would apply to all companies), just a simple majority. That's it, a few easy to understand laws and suddenly all the insane hoops companies jump through to goose their shares by choking the golden goose would go out the window, same with ludicrous salaries and signing bonuses and severance packages, because the company owners, the shareholders, would have a say!


Given that more and more of our government are really rich people who made their money in the current system -- or who come from money -- a reversion to the true spirit of common shares will never, ever happen. But I can dream. 

So here's the question for me: if "sharemax" is siphoning money from everyday workers and handing that money to shareholders, a process that over time would hollow out the non-shareholding middle class and start to cause people to lose faith in the system, which seems to be happening, am I just making things worse by trading stocks? I suppose I am, which makes me feel a bit low, but how else am I going to avoid having to live out my golden years in a trailer park outside of Phoenix?

Hmmm.

https://www.nytimes.com/2019/01/22/business/dealbook/world-economic-forum-klarman.html

Bending it like Buffett and benchmarking for the first time ever + a breakdown of my current holdings.

Happy New Year to all my bazillions of readers!

To kick off 2019, I'm doing something Warren Buffett says is essential, yet I've never done before: benchmarking. Schwab does it, sort of, but I think the act of writing out the value of each stock I own and why I own it at the beginning of every year, plus updating holdings as the year unfolds, will keep me honest with myself about how well -- or how poorly -- I really did.

I will create a page on this bog to update through out the year. You'll see it as Performance over on the right.

Here is what is in my portfolio right now. The prices are all from December 31, 2018, at close of markets.

---- STOCKS ----

AMD (AMD): $17.82
Long Intel's punching bag, AMD is hitting back for the first time since it launched the Opteron processors way back in 2003. Opteron woke Intel from a monopoly stupor and Intel then made sure AMD's moment of glory was just that, a moment. But now AMD is back with EPYC processors, which will soon be available using TSMC's 7nm process, which will put AMD ahead of Intel, who is still struggling with 10 nm and won't have anything ready until 2020. I would NEVER count Intel out, but in the near term, AMD has a massive upper hand.

Activision (ATVI): $46.80
I feel like I'm missing something here. ATVI muffed a mobile game launch (Diablo Immortal) and since then stock has fallen nearly 50%? Yes, the earnings weren't the best, Fortnite looms, and there have been some high profile departures, but ATVI is a marquee name in the red hot gaming space and I doubt you can count these guys out. So I bought in the high $40's.

Arista Networks: (ANET) $205.76
I was tempted to by this at nearly $300 a share, finally bit around $250, then sold around $260, then bought back in around $245, not looking super smart at the moment. But I believe in ANET's strategy of software defined networking in the cloud, and their revenue and profit growth, while slowing, has been impressive. I imagine the coming shift to 100GB ethernet will juice ANET's performance.

BlackBerry: (BB) $7.16
I thought I was so smart buying BB at around $10, then more around $9 and now look at me, I've got a dunce hat on. Or do I? I think BB's recent acquisition of Cylance, an AI-based cybersecurity company, was super smart and I trust that BB did not overpay. One to three years from now, I imagine Blackberry's stock price will make today's price look mighty sweet.

Cognex (CGNX): $37.71
I bought into these guys awhile ago at an average price of $30.28 and even though CGNX has been battered and bruised of late, I'm a huge believer in the core business of computer vision. I see good times ahead.

Etsy (ETSY): $47.29
ETSY is another stock I've owned for a bit (since 10.21.16) with an average price $9.75, but even with the big gain, ETSY can gain a lot more. I love their brand, handcraft in a world of mass-produced tech, that rocks!

Ionis Pharmaceutical (IONS): @ $51.36
I bought this after reading a click-bait article from Motley Fool, but I'm glad I did. Biotech is really just getting going and IONS seems well positioned to benefit, potentially in a big bang kind of way with the release of a blockbuster drug. Fingers crossed.

iRobot (IRBT): $81.32
I think what people miss about IRBT is that their robot vacuums suck up more than dust, they also suck up DATA, and that data is worth a lot more than dirt. With it, IRBT can make smarter vacuums and other types of robots faster than probably anyone else for the simple reason that effective AI needs a lot of data and no one else has nearly as much, at least not in the realm of home layouts. IRBT also has a patent portfolio that does not suck.

Lam Research (LRCX): $138.06
According to Yahoo Finance, LRCX "designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits worldwide." In other words, LRCX makes stuff that makes chips, which I think is a good business given, in my opinion, the likelihood that the world's appetite for silicon will just keep going up and up and up. Ordinarily, I would not buy shares in a company like this one because I really doubt it offers any sort of 10x upside, but Simply Wall Street, which I had just signed up for when I bought LRCX, painted LRCX as a good bet. At the very least, I'm hoping it pays for my SWS subscription!

Paycom (PYCM): $121.24
The world is going cloud, that's just a fact. And like Salesforce took CRM to the cloud and Amazon took infrastructure, Paycom is taking the creepily called process of human capital management to the cloud. I see very cloudy skies ahead, and that's a good thing.

PayPal (PYPL): $83.26
PYPL was the original alternative to VISA and Mastercard and other major payment networks, and featured a lower cost business model for good-as-cash payments. When PYPL started, VISA and Mastercard were enemies but today, PYPL is playing nice with the establishment. Regardless, I still think PYPL has a big advantage in that it retains the option to facilitate payments at lower cost, while not standing in the way of the status quo. Smart.

Sierra Wireless (SWIR): @ $13.60
The Internet of Things (IoT) cometh, really any day now, honestly, should be here before you know it. But seriously, despite delays IoT will rise and the number of connected things will mushroom well into the 10s of billions. Many will be connected to the net via wireless technology and that's where SWIR comes in. They make chips that connect things wirelessly. Not the most glamorous business but it is already pretty good and will get better. 

Sociedad Química y Minera de Chile S.A. (SQM): $38.16
Lithium ion batteries rule the roost for countless gizmos because they offer great energy density, light weight and rechargeability. And electric cars, which seem pretty imminent, will need a lot of lithium ion to power their motors. SQM is the world's largest producer of lithium right now so I figure it's a decent bet. Pays a dividend, too. 

Spotify (SPOT): $112.16
I was not interested in SPOT until I heard an interview with Troy Carter, who SPOT has hired and who used to manage Lady Gaga and many others. His thoughts on streaming and on the still untapped marketing opportunities for SPOT changed my mind. A quick check of the share price, which was near an all time low, sealed the deal.

Talend (TLND): $36.01
If you know anything about AI and deep learning, you know that more data is good and more good data is great. TLND makes it easier for companies to bring together huge and varied data sets so they can be force fed to accelerated computers. If AI turns out to be only half as big as people expect, TLND should do really well. The share price has been pummeled of late (another reason I bought!) because TLND is having to shift from selling boxes loaded with software to selling software as a service. This is hurting revenues in the short term, but long term it should be a better business model (just look at CRM, ADBE and AWS).

---- INDEX FUNDS ----

Vanguard 2018 = 100

---- 401k ----

I'm not going to track my 401k, because I am still contributing to it.

Munching on "squid marinated in its own guts" and mulling whether to buy AMD.

Last Thursday, I was out for dinner with some work folks (the best folks, I am so fortunate to work with such fantastic people) and by pure happenstance, I was seated across from the dude I work with whose brain is packed with Big Data on emerging technology (he also happens to play guitar so... doubleplusgood). As I nibbled on my last bite of squid marinated in its own guts (scrumptious), the subject of artificial intelligence (AI) came up and in we dove. I confess, I was struggling to keep up but, damn, did I learn a lot, or at least I thought I did, and, based on some things we talked about, I left the restaurant totally resolved to buy AMD.

My fervor for the poster child of "also-ran companies" (AMD) was based on my perceived notion that AMD had serious artificial intelligence (AI) chops, enough to cause the AI champ, NVIDIA (NVDA), a graphic wound. Truth be told, I'm not really sure why I left the restaurant convinced of AMD's potential bounty, but... when I checked the market today for the first time at my customary time of

8:30.0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000001,

 I noticed that AMD was up. A lot. Over 6%. I almost bought but decided to do my best to validate my seemingly crystal clear memory of AMD's AI acumen and I found... nothing. Nada. Zip. Zilch. Null. Zero. Every article I read put NVIDIA at the top of the AI market, with a bullet.

What was it I had heard while chewing on squid guts that made me so gung ho on AMD?

Meanwhile, now the price is closing on a 7% gain. 7... waitaminute... 7 nanometer, that was it!

A bit more reading and the case was clear: AMD was using a 7nm manufacturing process while mighty Intel (INTC) was struggling with 10nm. There was other confusing stuff about AMD's architecture, but the 7nm thing was enough for me. INTC has always depended on being ahead in the miniaturization game and now they're behind. This tidbit decomplexified the whole equation for me and I bought AMD because 7nm is a Big Deal in the ever smaller world of chips. Further, AMD is offering its cutting edge chips for prices that undercut what INTC wants for its dino tech.

Will INTC get to 7nm? Sure, eventually. Will INTC retain its data center dominance? No question. But until INTC gets its act together on manufacturing, AMD will make a lot of money. And who knows, maybe AMD will sustain its advantage this time. I mean, INTC never figured out mobile, only the biggest market opportunity for chips since PCs, so I'm not totally convinced they're going to squish AMD yet again.