At what point does an advisor who is wrong nearly 100% of the time lose credibility? Well, the National Association of Realtors has been consistently wrong since the very tippy top of the real estate bubble 4 years ago, yet they get ample air time in the media to continuously spout their methodically erroneous viewpoints and data. Finally, someone in the mainstream has called them on this perpetual farce that has costed those that followed them substantial wealth in exchange for a 2.5% commission split!
Residential real estate is a downright mess, and its getting worse despite multiple proclamations from Treasury Secretaries past and present that the worst is behind us. We have already qualified, by any metric imaginable, as a real estate depression. Is anyone curious as to how we got here? Well, I have some keen observations...
I warned, in detail, that Research in Motion was a strong short due to waning market share and margin compression in January. RIM warns of the EXACT SAME risks as it lowers guidance earlier today. For all of those optimists in the stock, this is just the beginning - for RIM and its competitors as well. Mobile computing will soon be a commodity business like desktop computers.
With all due respect to that Nassim Taleb dude who popularized the term “Black Swasn”, Black Swan events are both overrated and the term is sloppily bandied about by those who may not be putting the requisite thought into just how utilitarian the knowledge of Black Swans actually are. Since you can’t accurately predict, nor back test against, nor adequately hedge against such events, exactly what good is a Black Swan discussion. Well, I can answer that question.
Remain cognizant that what you are witnessing here is the compression of annual refresh cycles into a MATTER OF WEEKS!!! It was only two weeks ago that Samsung stated it was unhappy with its offering in relation to Apple’s iPad 2 and had to go back to the drawing board. Well, they are to the drawing board and back – 2 weeks later.
The threat of margin compression should now be visible to even the most ardent Apple zealots as prices of the most popular products hit the "Free" mark on one of the most well known platforms. Lawsuits ensue, as is par for the course. One day about two years from now, people are going to look back and say, "...but it was so obvious!"
Judging from the relative volatility and the extremely wide holdings of this find company with a near cult like following, if price action breaks it will break very hard - and this time there may be fundamental justification for it.
The innovative onslaught and creative destruction of margins in the tablet wars continues. The smart money should wait a few months as these companies slaughter each other to get a tablet. You will probably get more technology than you thought your $190 could ever buy.
I said it! Bill Gross said it (and put his money where his mouth was by selling off all US treasuries)! Common sense says it... Central Bank manipulated interest rates are too low. They will rise. What happens when they rise during a supply glut of real estate, foreclosure issues and a slow economy??? Put it this way... What made the markets crash in 2008: unemployment, slow economy, snow... Or real estate prices getting in touch with reality?
If one would have looked at the actual numbers versus what is consistently reported in the media, one could very well have grounded oneself profitably and firmly in the fastest growing and largest mobile market in the world. Then again, if Grandma had balls, she'd be Grandpa. Wouldn't she???
You know, timing is everything. If you hit brakes after you pass the red light... Bang! If you pucker up after you press your face against that of your sweetheart's.... You bonk her/him on the forehead. If you downgrade a nation after obvious signs of insolvency...
As the markets slowly wake up to the risks I've been outlining over the last two years, reality will reassert itself in a most assertive fashion. The (re)adherence to fundamentals will feel like the reinvention of gravity.
Microsoft effectively purchases Nokia's entire hardware platform from an economic perspective for just over a billion dollars, while Nokia solves the sinkhole that was OS R&D and the quandary over how to compete with the free OS that has taken over the world - Android. Now, the big question is, "Will it work?"
