Tuesday, August 30, 2011

In charts: Apple (AAPL) vs. Microsoft (MSFT)

Here's a look at some charts shared recently on Chart.ly and StockTwits. Think of it as a quick follow up to our Steve Jobs and Bill Gates post from last Friday, looking back on 30 years of technology innovation.

The long view of Apple: monthly chart of AAPL stock price dating back to 1984. That's shortly after the Mac was introduced (click to enlarge chart).



The following chart shows a comparison of Apple and Microsoft's share performance from 1986 (the year MSFT went public) to 2011. 



On this timeframe, MSFT trounces AAPL from the early 1990s on to the dot.com bubble peak. 

Still, Apple shares gain momentum in the 2000s, finishing the 25 year period with a more than 15,000% gain. Microsoft achieved a 25,000% gain in its stock price for the same period (down from its 1999 peak near the 50,000% mark). 

Finally, we see the same two stocks measured from 1997, the year of Steve Jobs' return to the company he co-founded. The second act of Jobs at Apple was a wildly successful period for the company and its shares, as you can see from the chart below. 



While MSFT's share price barely managed to keep its head above water in the post-dot.com bubble period, AAPL went on to slay the competition and innovated its way to a 7,000% return over 14 years. 

For more on what both companies and their famous founders have accomplished over the last 30-odd years, check out our related posts below.

Related posts

1. Interview: Steve Jobs and Bill Gates discuss careers, tech - Finance Trends.

2. MSFT and AAPL: a tale of two tickers - Finance Trends.

Friday, August 26, 2011

Interview: Steve Jobs and Bill Gates at D5

So this week's resignation announcement from Steve Jobs has many of us looking back through the archives, compiling old interviews and articles, and summarizing the accomplishments of Apple and its iconic co-founder. 

It's prompted me to look back not only at what Steve and Apple have done in the past 30-plus years, but what the tech industry as a whole has created in that time. We're all familiar with the stories of famous rivalries and stolen (or "borrowed"/cheaply purchased) technologies in the PC and software industries. It hasn't always been pretty.

It's quite interesting then, to find two of the tech industry's most famous sparring partners (and sometimes, business venture partners), Steve Jobs and Bill Gates, sharing a stage and chatting about their careers in this D5 (All Things Digital, 2007) conference panel interview. 



The panel discussion begins when the two great entrepreneurs are asked to describe the other's impact on technology and our daily lives. Quite an interesting opportunity to hear these two gentlemen speak. This is something our grandkids will probably watch someday. 

Enjoy the video, and check our related links section for more.

Related articles and posts

1. Steve Jobs resignation: reactions from Wozniak, et al. - Bloomberg via YouTube.

2. How Steve Jobs Made Business Cool Again - Bloomberg. 

3. Discussion with Steve Jobs & John Lasseter - Charlie Rose. 

4. The ultimate Steve Jobs resignation linkfest - Abnormal Returns.

Tuesday, August 23, 2011

J.J. Butler - Successful Stock Speculation (Scribd)

New to the Scribd trading books collection, John James Butler's, Successful Stock Speculation (1922). 

I was introduced to this short handbook on investing and speculation through Michael Bigger, who created an appended version of Butler's book with his own summary notes called, In Praise of Speculation

I'm just starting Butler's book, but I find his introductory notes quite useful in clearly defining the meaning and purpose of that now mistreated term (and misunderstood activity), "speculation". 

Butler defines the act of speculating as follows: 

"To speculate is to theorize about something that is uncertain. We can speculate about anything that is uncertain, but we use the word "speculation" in this book with particular reference to the buying and selling of stocks and bonds for the purpose of making a profit. 

When people buy stocks and bonds for the income they get from them and the amount of that income is fixed, they are said to invest and not to speculate. In nearly all investments there is also an element of speculation, because the market price of investments is subject to change. "Investment" also conveys the idea of holding for some time whatever you have purchased, while speculation conveys the idea of selling for a quick profit rather than holding for income.

To the minds of most people, the word "speculation" conveys the thought of risk, and many people think it means great risk. The dictionary gives for one of the meanings of speculation, "a risky investment for large profit," but speculation need not necessarily be risky at all. The author of this book once used the expression, "stock speculating with safety," and he was severely criticized by a certain financial magazine. Evidently the editor of that magazine thought that "speculating" and "safety" were contradictory terms, but the expression is perfectly correct. Stock speculating with safety is possible. " 

Enjoy the book and its classic insights.Successful Stock Speculation, By J. J. Butler The Project Gutenberg eBook

Tuesday, August 16, 2011

Mark Cuban interview: "Buy and hold is a crock"



Entrepreneur and Dallas Mavericks owner, Mark Cuban recently chatted with Alan Murray at the Wall St. Journal about investing, entrepreneurship, job creation and innovation, patent trolls, and the NBA. 

Mark kicks things off on a frank and "controversial" note by stating up front his belief that, "buy and hold is a crock of shit", and the idea that one should be almost fully invested in the markets at all times is similarly bunk.

As Cuban puts it: "Unless you really have a commitment to something, just keep your money in cash - knowing that at some point in time there's going to be a week or two like we've had [recent volatility and stock market plunge]."

Mark explicitly states that these are his times to look for opportunity in the market, and implicit in his statements are a belief in the value of market timing and his own ability to find relative bargains in the capital markets. He likes to find things that are cheap, but is not seeing the bargains he needs in leading shares yet. You'll hear more about what he's doing and his philosophy on the current realities of trading and investing in the interview.

What's really interesting to me, beyond the investing discussion, are Mark's comments on patents and the current business environment. Cuban says patent laws and patent litigation are having a "huge", negative effect on the economy and job creation, particularly with technology companies. In fact, he flat out says, "You don't need patents...ideas are easy", citing his own experience with Broadcast.com and its technology patents in the dot com boom environment.

Note that Cuban's remarks on defensive purchases of patent troves came just ahead of the Google - Motorola Mobility deal (driven largely by patent protection needs for the Android OS in the litigious mobile phone industry) announced this week.

There are a few things that I may not agree with in this interview (mostly Mark's ideas about government grants for job creation), but I really like the fact that Mark speaks his mind and is just so off the cuff and straight up with his remarks. Really refreshing at a time when you see so many mealy-mouthed individuals hemming and hawing with their measured, pre-planned responses in interviews. Great stuff, watch and enjoy.

Related posts: 

1. Howard Lindzon interviews Mark Cuban on StockTwits TV - Finance Trends.

2. Billionaires are different than the rest of us - Abnormal Returns.

Friday, August 12, 2011

Market plunge and relative strength: Caribou Coffee (CBOU)

In the week that's passed since our last post, the stock market decline deepened, Standard & Poor's downgraded the US' debt from AAA to AA+, several European countries enacted a short-selling ban, and many stocks were taken to the cleaners. 

Of course, after declining 16 percent in 3 weeks (from 1,340 to 1,120 on the S&P 500), the US market has seen a bit of a relief rally the past few days. 

Still, it's been very tough to find names that didn't get hit hard in this market. Which is why the relative strength in a stock like Caribou Coffee (CBOU), which not only held up but is making new highs, is impressive. 

Here's a view of CBOU vs. the Nasdaq Composite index. You can see how the stock has held up during the index's recent decline. 


While the action in CBOU looks good and it's earned a place on the watch list, I'm still proceeding with caution here. Anything can happen in a volatile news-driven market like this, and we've seen industry-leader, Starbucks (SBUX) and recent favorite, SodaStream (SODA) slump or get knocked down hard after recent earnings reports. 

Build your watchlists, view developments from the sidelines, and keep a close eye on your risk management process if you choose to speculate here on the long or short side.

Thursday, August 04, 2011

Sitting on the sidelines, reading

"The worst thing you can do when you're having a hard time is flail. In trading, when there is nothing to do, the best thing to do is nothing." - Scott Bessent (Bessent Capital). 

Well, the damage is already done for those who were heavily long heading into this week's market decline. 

I look at the S&P 500 component data on freestockcharts.com and see that only 3 stocks in that index were up today. We saw a -4.78% decline in the S&P to go along with that. Here's an updated chart that shows the recent breakdown below the 1312 line we've fluctuated around in recent months.


There's been a lot of whipsaw in this news driven market of late, and it doesn't seem like the recent deficit/debt ceiling deal reached by Congress has quieted things much. Even gold and silver got whacked today. But just look at all that money piling into Treasury bonds.


At a time like this, perhaps it's best to step aside and watch the action from the sidelines. That may not be the proper stance for a short-term trader making hay from all this volatility, or a professional money manager tasked with managing positions on the long and short side, but for now it suits me fine. 

In July, I closed out a couple of losing stock trades and haven't put on any new trades since. I've mostly been pruning watchlists, reviewing my trading journals and trading mistakes, running through charts, and reading. A break from trading was needed, and this was the time to do it.

Today, while reading Steven Drobny's Inside the House of Money, I came across our intro quote in an interview with "stock operator" and hedge fund manager, Scott Bessent. On a day like today, you can really appreciate the time honored truths that: 1) being in cash is a position, and, 2) activity (trading) for the sake of activity can be a real hazard to your trading account and your emotional capital. 

By the way, the interview with Bessent is a great chapter from Drobny's book. Here is a guy who, amazingly, has worked for or trained under George Soros, Stan Druckenmiller, Nick Roditi, Jim Rogers, and Jim Chanos. It's quite something to not only read Bessent's thoughts on trading, but to hear what he's learned from some true all-stars of the hedge fund world. Check out this book if you're taking a late-summer break and keeping your powder dry as well.       

Monday, August 01, 2011

Charlie Rose interviews Barton Biggs (March 9, 2009)



Charlie Rose interviews hedge fund manager, Barton Biggs (Traxis Partners) for an episode which aired on March 9, 2009. 

Yes, that was also the exact day the S&P 500 put in its bottom at the 666 mark, amidst more economic gloom than some of us had ever seen. 

Thought it would be interesting to revisit this interview, and while I still don't agree with much of what Barton and Charlie said about the "need" for certain bailout measures and monetary stimulus, it is quite instructive to hear the discussion that took place at this particular moment in time (some might say this is real market and economic history you're watching). 

Note that Biggs is rather bullish on stocks in the interview, which, in hindsight, was the right thing to be up to this point. Of course, the two year bull move in shares we've witnessed has been helped along by holding interest rates at historically low levels and employing "quantitative easing" programs designed to keep asset prices aloft

Still, Biggs makes the sound point that the sharp declines of '08 had occurred in a short timeframe, thereby providing the necessary fuel for a sharp rally (even if only within the context of a bear market). He also compares the "scary" mood of the time with the terrible period surrounding the 1974 market bottom. In fact, he goes on to say that "[negative] sentiment is more extreme than in 1974". 

These points are quite similar to those made around the same time by Jim Rogers and Marc Faber, who argued that a forced asset liquidation period and extreme negative sentiment were signs of a potential share rally to come, as well as an entry point for long-term share investors in commodities and certain segments of global share markets.

If you enjoyed this interview, you may also want to check out Biggs' follow up appearances at Rose's table.