Inside the Oracle's Eye - What does Buffett See?

Warran just invested in a financial company. Wait, I thought the world is telling us that not the play to make. Especially a company that just got it's application to become a holding bank accepted. Don't get me wrong, I'm totally with WB on this play. I scooped up BAC back at 18 and added to my AXP position at 32. As he says time and time again, "be greedy when others are fearful..." his 5 million dollar play on Goldman Sachs should make that clear to us that the bottom is upon us. To add upon that point, don't forget he just purchased Constellation Energy Group (CEG) before he bought into GS.

So with that. Let's remind ourselves that this is where people put themselves into a position to really profit from the market. Great companies at amazing prices. Money talks and Warran's money speaks even louder. It's a calming message to the markets that "hey, we are at bottom and let's keep our heads, take a look at what's going on and start making some money.

So what have I been buying and watching?

MY MAJOR PLAYS
General Electric GE - $23ish (22.16 - 42.15) 52 week high/low
American Express AXP - $31-32ish (31.68 - 63.63)
United Health Group UNH - $23ish (21.20 - 59.46)
Apple AAPL - $120ish (115.44 - 202.96)

SPECULATIVE PLAYS
Allied Irish Banks AIB - $15ish (14.22 - 53.00)
Humbodlt Wedag KHD - $18ish (18.11 - 45.74)

BUFFETT's PLAYS
Constellation Energy Group CEG - $26.5 (13.00 - 107.97)
Goldman Sachs GS - $115 (85.88 - 250.70)
American Express AXP - He recently added to his position
Wells Fargo WFC - He recently added to his position




I'll personally will be looking for an opportunity to get into GS and CEG in the next week. Assuming Mr Market provides me with an opportunity.

T (AT$T): The iPhone Economy

The iPhone craze has begun and I'm just eating it up. As a current gen iPhone holder, I'm sitting pretty on my current phone however I have a large number of friends, co-workers and the girlfriend jumping on board. On the way back home from work yesterday, I couldn't help myself and I took a detour to the Apple Store only to find a line about 300 people long going around the corner. It was just awesome with the fanfare, talking to random folks in the crowd as well as the people who just walked out with their brand spanking new phone. It looks way nice.

Although all the subscription pricing for the iPhone has increased, the loooong lines outside the Apple Store mean that people don't care. They want and need their iPhone. Recent earnings were positive as well so the bottomline is, there are a lot of good things going for this stock.

T has been battered along with the rest of the market. With its dividend yield, expanding wireless and TV offerings, service reliability and outstanding customer service, any downturn will be temporary. What we need not to forget is that this communications are a necessity that people cannot cut out of their lives. It's not $4 coffee and it's not a new car.

I think AT&T is one of the best values among large cap stocks. Based on the June 6th, 2008 close, the company is trading at 11 times 2009 earnings, has an estimated long term growth rate of just under 10% and pays a dividend yielding just under 5%. Don't forget that it's at a 52 week low.

Good Hunting

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Update 7/14/2008: Apple sold 1 million iPhone 3Gs this weekend (The orignal iPhone took 2 and a 1/2 months to sell it's first million).



Notes:
In Portfolio: Will be
Duration: Until Apple drops AT&T
Patience: Is a virtue

The Death of the ClickWheel = iPod Rebirth

Apple is down... waaay down. Big deal. Buy More. I am.

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So listening to the investor call yesterday the main thing that stood out to me besides the outlook was the growth of iPod sales. As we all know, it's much flatter today than it was in previous years and I guess we can all point to market saturation in the US for that (They say it growing really well ouside the States) . However, one thing was said yesterday that just stuck in my head (paraphrased): "We wanted to establish a new kind of iPod (Touch) in the marketplace."

A light bulb went off in my head and I realized that this is where the growth will be coming from in the future. Let's get serious, if you have a click-wheel iPod, you really don't need another. It would make you think twice about getting one. But I realized just like iPhone (I know this is obvious to all) this is a product that will evolve as time passes. Once the developer kit is released, there will hundreds of applications/games/features that people can download for their iPod touch. Pretty much it'll do waaaay more than what a clickwheel iPod does today. It pretty much does already with web browsing, youTube and email.

The competition pretty much has caught up with Apple in terms of click-wheel clone mp3 players. But they don't hold a candle to the touch in terms of applications and the fact that it will only get better as more apps are created for it by 3rd parties.

Although the click-wheel has been the heart and soul of the iPod empire, leave it to Apple to get rid of convention and come up with something better.

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And if you need additional reasons:

1) mac sales are soaring. We're a little above 5% but is it really
that hard to believe that it could hit 10% marketshare or even 20%?

Fun stat for everyone: Over 60% of college freshman went to school
with a mac.

2) macbook air is actually selling. I saw it yesterday at #2 but it's
at #4... behind 3 other macs on Amazon.

3) the iPhone story is still in it's infancy.

4) Apple is spreading internationally, You gotta love the weak dollar in this situation.



Notes:
In Portfolio: Just bought more!
Duration: Until Steve Jobs dies
Can't Wait: DEEEETROIT Auto Show this weekend!

AAPL (Apple): A Picture is Worth Two Words

I had to go to the Apple Store to buy a backup charger. So the one in my area closes at 9 and I got to the mall at 8:45 PM. All the stores were closing up and there was like 2 or 3 people per store as I was walking to the Apple Store. So I get there and here is what I saw.



Two Words: Strong Buy



Notes:
In Portfolio: Yes
Duration: Until Steve Jobs dies
Did I buy anything else: iPhone Accessories and the uber thin wireless keyboard that I'm typing on now.

ETFC (E*trade): Wow... Emo Overload

What an emo overload. So rumors have it that the company is going bankrupt. Well, only if you all don't shut up. Let's not make this a self fulfilling prophecy.

So the big question is whether or not we buy in after such a massive drop in price. It's a tough one but if you're bold. The answer is yes. I have personally recorded 2 other times I have seen such an over reaction. First time it was with Nuvelo (NUVO) when the market shot it up 60 percent on news that it was to be fast tracked. It was the first time I've ever seen such a reaction so I held on until it started crashing and then bailed with a 30 percent gain. Turns out a lot of potential drugs are fast tracked. The very next day, it came right back down. Yahoo! (YHOO) shot up from 24 to 33 in one day when rumors that Microsoft would buy them out. Not so, the stock shot right back down to 22 once all the hot air escaped. I sold what I did have and shorted immediately. It was a nice double swing.

So once again we find ourselves in a similar position. This time around, after a massive drop. So what to do

I'm going to hold off on this one personally since the times are bad. Every day, more negative news is coming out of the financial sector and it's really scary. Also, with the other two stocks, it was a better time. A more stable time. So for now. I'll pass. Besides... AAPL is relatively low and the stores are elbow to elbow.



Notes:
In Portfolio: Nope
Duration: n/a
Post Mortem: It actually shot back up 5 bucks and then back down to the high 3s / low 4's.

AAPL (Apple): A Lesson in Holding & Have We Missed the Train?

Man, a while back, I had a nice stake in Apple at $35 and I sold when it doubled. Not a bad trade but back then, I knew that Apple was doing something special. Really special. I knew that even tho it only had 2% of the market, 5% or even 10% was not out of reach. So why did I sell? Well, history. Apple had a reputation for doing well and self destructing and it did it time and time again in the past. Now it's at $180 and although I don't feel bad, there are two lessons to remember that I hold dearly to now.

1) If you really believe in a stock... show some faith.
2) If you have to make a trade... set shares aside for the long term.

So the big burning question is... Apple is at $180 and is it too late to get in? Well, I have to ask when Google was $300 a share, was it too late to get in? Golly, it's $650 now. Me personally, I think it's not too late. It's still only 2-3% of the total computer market and the iPhone story is just beginning and it's going to be exciting to watch it grow in the coming generations. So ya, I personally think it's still a good time to get in.

Just remember, the big story is... people are actually buying the computers now.

Cheers, Bagger John.



Notes:
In Portfolio: Yes
Duration: Forever
Yum: Steak and Egg Chipotle Burrito for Jack in the Box

AAPL (Apple Computers): Is It Too Late To Get In?

Golly this is a toughie, Apple just released monsterous earnings and golly, you have to ask yourself what to do in a situation like this. I mean, you have a stock that is pounding 100+ and the memory of it being a 50 dollar stock is still super fresh. If you held it since then, you'd have yourself a single bagger by now. I mean seriously... It's been a beast. Well, before I go on about whether you should get in or not, let's take a look at the lastest results:

"For the first three months of the year, the Cupertino-based company said Wednesday it earned $770 million, or 87 cents per share, up from $410 million, or 47 cents per share, in the year-ago period. Sales were $5.26 billion, up 21 percent from $4.36 billion last year. Analysts, on average, were looking for earnings of 64 cents per share on sales of $5.17 billion, according to a poll by Thomson Financial. Apple said it shipped 1.5 million Macintosh computers and more than 10.5 million iPods during the quarter, representing a 36 percent growth in Macs and 24 percent growth in the music players. Sales from its market-leading iPods and other music-related products accounted for 44 percent of the quarter's total revenue."

So the biggest thing I see is not the profit, the record quarter or how analysts estimates were crushed. What I see is the iPod/iTunes Halo working it's magic to the other thing that Apple does: Computers. I know! ... they make computers? Why yes they do, expensive ass computers that come with really awesome software that allows you to do some pretty awesome stuff. And people are buying them because they now realize that PC's that come with nothing become just as expensive (if not more so) once you buy all the software. Let's face it, as a package, Macs are just superior products with mac only programs that work seamlessly between each other. It amazing when you see iPhoto work with Garage Band and iTunes.

Now onto the big question. Is it too late to get in? My answer is no. It definitely isn't. Apple is still just 2-3% of the market and it's not hard to see them with 10% of the computer market eventually. Apple is finally turning the corner when it comes to iPods making people think twice about getting a Mac instead of a PC.

Will I be getting in? That's a really good question. I think Apple's trek to 10% of the market will be a long but steady one. I think for any patient investor, it's a golden choice once the price settles down a little. Apple just keeps on hitting them out of the park and it's one of the few large CAPs that have Googlesque growth. But that's the thing, It's a large CAP with a high price of entry and it's hard to put money into this. The first thing we have to remind ourselves is that Apple isn't the only company out there with stellar potential and growth. Ya, we might have missed this train or got off too early (Sigh*** what I did) but hey, there is always another train coming right behind it. The second thing we should remember is that although Macs are great products, there are a lot of other machines out there that are very capable as well for much, much less. The third is that unfortunately for Apple, Macs aren't as sticky like iPod/iTunes. There isn't very much personal investment wise that is keeping you from moving to a PC. With iTunes, you need an iPod and after $250 dollars into buying music and movies, you really don't want to go anywhere else. Fortunately for PC users, your iPod will still work on a PC.

So ya, if you are patient, I think Apple will continue to grow as it has for the last 3 years. It's not Google but hey, who is? For me personally, I think I'm going to hold off and not feel sorry for myself for selling early. I see the market a lot more clearly now (without the emotional glasses) and what I see is a ton of opportunity, so long as we are willing to take a bigger risk (oh but there are bigger rewards) and have the insight to see the potential in things.



Notes:
In Portfolio: I already got off this train. Won't be getting back on. Large CAPs can be frustrating at times.
Random Thoughts: Cats aren't clean, they're covered in spit.
Move of the night: Kobe's Triple Pump against the Suns in Game 3 of the first round. Wow.