Tuesday, January 27, 2015

Xiaomi, the Apple killer

Apple is my only recommendation in my book Scoring Stocks published in May 2013. It has been highly profitable since then. Now, I recommend to take some profit it as the rival is coming.



Xiaomi, a Chinese phone maker, will most likely come to the USA in 2015 after conquering several emerging markets including India. Its phone is almost as good as the latest model of iPhone at about half the price. It also has a low-end version priced at about $100 that would set up a standard for entry smart phones.

Xiaomi prices the latest phone model barely above the manufacturing price and makes money in the decreasing component prices. It gains more profit by stretching the model to a longer life.

Apple’s lawyer will prevent its entry that Samsung found out the hard way. For starters, Xiaomi needs to modify the user interface to avoid some of the obvious lawsuits in the USA.

Even if Xiaomi will not enter the US market, it will steal more sales from Apple. Apple has to learn from Cisco. You do not want to make China angry. If they do, they may stop Apple from selling their phones in China. Hence, you may win the battle, but lose the war.

Xiaomi could be one of the companies that would force the mobile phone to become a commodity product.

When the phone becomes a commodity, both companies have to make money in the content. Today Apple depends on iPhone for over 50% of its sales. After mid 2015, Apple stock may face some challenges even without Xiaomi entering the US market. Eventually the smart phones will become a commodity product and they may have to face Xiaomi or other similar companies.

It is one’s opinion and I would face a lot of opposition from the Apple lovers; it is the same when I recommended Apple in May, 2013 when no one wanted to buy Apple’s stock. Buy any stock depending on the potential appreciation (via individual analysis), not on the love of its products, the company or the management.

Here is a current update from Business Insider.

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My primary book is the Art of Investing.  It has the following features:

  How to detect market plunges.
  Many strategies to find profitable stocks.
  My steps in analyzing stocks: Fundamental, Intangible, Qualitative and Technical.
  My unique findings: Pow PE and Pow EY to name a few.

The Kindle version has more than 720 pages (6*9), about the size of three average books. It includes most of my investing ideas plus many ideas from many investing books.
To reduce the price of a printed book, I have a Concise Edition of the Art of Investing. The paperback of most of my books have a free Kindle version (check the current offer), so you have the best of both worlds.

The Art of Investing is a combination of “Debunk the Myths in Investing” and its sequel “Investing Strategies: Profitable and Updated” with minor deletions.

Sunday, January 4, 2015

Market outlook on 2015



Brief outlook on 2015 market


For the last few years, most market predictors have their crystal balls broken. It is due to the excessive supply of money that leads to a non-correlation of the economy and the stock market. It cannot last forever. It will correlate again when the money supply is reduced.

2015 will be a tough year to predict. I will predict a gain of 7% if the market does not plunge. As usual, there will be two camps in opposite directions.

Good News

·         The interest rate will start rising. However, 2015 is the year before election and no politicians will risk their chances by raising the interest rate.
·         The market is slightly over-priced.
SPY’s P/E is about 18 vs. the normal 15.
·         The economy is improving slowly.
·         Energy cost is reducing (bad for the energy sector).
·         Most corporations have good profits especially in the first and second quarter.

Bad News

·         Margin debt is in the record high. The market would usually plunge the year after.
·         Interest rate will climb after the mid year of 2015. It will be slowly as mentioned before.
·         The national debts and obligations are high as a percentage of the GDP. If we legalize 4 million illegals, how many will give up their work and collect welfare?
What should we do

I would watch how the above will materialize. The weather man can predict the weather in the next few days better than the next month.

When the market is down, we need to know whether it is a correction or the start of a market plunge. For a correction, you want to buy stocks as in Oct. 15, 2014. For market plunges you want to sell everything. For me, I prefer to ignore corrections these in 2015 as it could be the start of a market plunge.

Most predictions from analysts and fund managers are rosier than they actually are. Accept their ideas that make sense.

Written 12/1/2014.

This is my personal view and I am not responsible and/or liable.
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It leads me to discuss how to detect market plunges.

Here is a link to it.
  http://tonyp4idea.blogspot.com/2013/10/how-to-detect-market-plunges.html


My primary book is the Art of Investing.  It has the following features:

  How to detect market plunges.
  Many strategies to find profitable stocks.
  My steps in analyzing stocks: Fundamental, Intangible, Qualitative and Technical.
  My unique findings: Pow PE and Pow EY to name a few.

The Kindle version has more than 720 pages (6*9), about the size of three average books. It includes most of my investing ideas plus many ideas from many investing books.

To reduce the price of a printed book, I have a Concise Edition of the Art of Investing. The paperback of most of my books have a free Kindle version (check the current offer), so you have the best of both worlds.

The Art of Investing is a combination of “Debunk the Myths in Investing” and its sequel “Investing Strategies: Profitable and Updated” with minor deletions.

Saturday, January 3, 2015

Jack Ma

# If Jack can succeed, everyone can #

Jack Ma is a smart man who can control and change his destiny despite all the setbacks and how little he inherited (I'm not talking about his look). A good piece on him was seen on 60 Minutes. The following is a follow-up.



http://cbsn.ws/YBjL4h

China

* I do not know whether they have built the pipeline from Russia to China. It is not that far away. Even with the gas from Russia and all the new nuclear generators on-line, about 70% of electricity in China will still depend on coal in the next 15 years or so.

We have a stupid concept of buying carbon credit. China buys the credit from undeveloped countries such as many in Africa for manufacturing their products.

* Volvo is a safe and a good car that lasts for longer time than most American cars. Most of us buy cars do not consider long-term benefits and safety. My friend after surviving from a head to concrete plunge, he only drives a Volvo for life. Chinese bought Volvo for the only car technologies they have not mastered: the engine and the transmission.

When you open the hood of most cars, you would find many Chinese parts. The myth of "Made in America" is busted

Today's news in SeekingAlpha.com

* The Hong Kong - Shanghai link allows citizens of these cities (or Chinese) to buy stocks in the other exchange. It has been planned for over half a year ironing out many details such as the tax, regulation, currency conversion limit (now no limit)... It will give the Chinese more choices in investing (vs. dumping cash to ghost cities). Eventually all these restrictions should be taken out.

I may have a site to check the difference in price of the same stock in different exchanges if I have time (most likely my time is better spent in sleeping).

* Why we have tariffs, protection...among countries. Let us trade freely and buy from the best of the products produced from any country at the least cost. This is call Free Trade, honey. When we have tariffs for some countries and not for other countries, it is not free trade.

* Non-news. I predict if Obama allows the millions of illegals to be legal, our political system will be a one-party system. Why? We cannot afford millions of new welfare recipients in order to buy votes. If you're having a $10 job and you can get $10 free by not working (including all the medical goodies), are you stupid enough to work? Politicians are short sighted and they think they can fool us all the time.

* My new article on airlines receives a lot of good reviews. It also shows you how I find, evaluate and sell stocks.

http://bit.ly/1zvHYGg

Dear Abby,

It has not been working for the last 20 years, why Abe thinks it will work again?

Random Rant

* My suggestion to punish France: Have a tax on vacation days (after 3 weeks).

* How to use the penalties? Bonus to the bank managements? Without them, we do not have penalties on the first place.

* Jack Ma learns from Napoleon: Conquer your country first with foreign aid (Yahoo!) and then conquer the world and kill your white knight (Yahoo!) and the likes.

* Matching prices is a fool's game. I will set up a company with lower prices (but outrageous shipping cost) and then ask those fools to give me merchandises at these prices.

One reason why Circuit City is no longer with us besides the return with no question asked. I have to find another sucker for the 70" inch TV for the Super Bowl.

* Apple overpays Beat and the management of Beat is on high beat and dance around the fools in Apple (Jobs, please wake up).

Too many news today. I'm tired so will not finish comments on all the news.

* Non-SA news. Obama's immigration 'reform'. Will the new legals collect welfare instead of continuing with the low-wage jobs? Will all the Mexicans flood to the US? Wait and see.