Where You Live Correlates to a 20% Investment Bias

June 27, 2015

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If you live on the West Coast, near the technology hubs of Silicon Valley, you are very likely to be overweighted in technology by 9.5 percent or so. Live in the Northeast, and you are overexposed to finance by 9 percent. Investors in the industrial Midwest are likely to have 11.8 percent more industrial companies in their portfolio than the rest of the country. The greatest overexposure is in the South, where energy holdings are 13.7 percent above the average.

Some of this overweight might be due to employee stock option plans. After all, Google’s founders, and most of its employees, live in or around Mountain View, California. Their portfolios are likely to be filled with Google shares and/or options. The same is true for JPMorgan and Goldman Sachs in New York and Boston, Exxon Mobil in Texas, and 3M in Minnesota.

Read More: Your Local Investing Bias Could Cost You –bv

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The Digital Media Age is Upon US

January 9, 2009

The United States has entered the digital age of information and media. You can reach all sorts of media legally now on the internet. The Apple (AAPL) iTunes store now sells music without digital rights management. Before you were restricted on how you could use your music since they restricted it to your iPod and the number of copies you could make. Now you actually own the digital copy to do whatever you please with it. If you wanted to watch TV shows on the internet, you were in shaky territory unless the show’s website happened to put up their episodes. Now there’s Hulu where you can watch old episodes, new episodes from NBC, FOX, Comedy Central and other networks. For a while you could stream sports games with paid online subscriptions. The rest of television has caught up. The US also has access to international television too with crunchyroll for Japanese animation and dramafever for Korean dramas. Of course these are subtitled in English soon after they are aired in their respective countries. These were available illegally and in the gray area of the law before, but now they will be completely legal with these new services. Right now, you can get all sorts of media all at your fingertips legally.

The digital TV switchover in February is only a month away with Obama calling for an extension after the switchover has already been delayed many times already. My take on it is that those people who aren’t ready now will never be ready until their TV goes out. When it goes out they will ask other people who can help them.

In the near future, I foresee you being able to tell your Sony (SNE) Playstation 3 to record TV and play it back anywhere with your Playstation Portable anywhere you have internet access. There are already computer programs that let you record TV and watch it anywhere, but having this on the Playstation 3 will make it accessible to the mainstream market. Right, now you can stream Netflix videos with the Microsoft (MSFT) Xbox360. The Nintendo (NTDOY.PK) Wii in Japan also has video streaming.

In the not too distance future, I see people going back to televisions or display devices after they become internet enabled. It will be like having cable television on-demand service for everything. Maybe buying stuff on the home shopping network from your television or researching more about something mention on the news.

Disclosure: I have current ownership in Nintendo.


Recession Durability: Video Games

December 8, 2008

I follow the video game industry intently from the small independent developers who make casual games to the AAA titles that make billions of dollars. This industry has surpassed the movie industry in terms of sheer revenue recently and continues to grows as the Nintendo generation ages and continues to buy games for themselves and their children. Finally, video games are considered mainstream entertainment. Games are everywhere from your mobile phone to your home entertainment system.

In this recession, people are turning to industries, which might weather the current storm. Walmart (WMT) has done rather well since the middle-class is cutting back and saving more money. Video games have been brought up as something that is resilient to a recession. Video games are very cheap on a per hour cost of entertainment. Some can be played over and over again. In the Great Depression people turned to cinema to escape their woes. Video games are the modern day cinema.

Video Game Tidbits

The major gaming console players are the Nintendo (NTDOY.PK) Wii with ~50% market share and the rest of the market split between the Sony (SNE) Playstation 3 and the Microsoft (MSFT) Xbox 360.

After many years of consolidation, Activision Blizzard (ATVI) and Electronic Arts (ERTS) are the two major publishers left. Take-Two (TTWO) is a smaller player, who dodged a hostile takeover from Electronic Arts.

Square-Enix (SQNXF.PK) and Konami (KNM) are a prominent Japanese publishers.

Korea’s NCSoft (036570.KS) specializes in online mulitplayer games.

Gamestop (GME) retailer wants to expand.

Casual gaming sites like BigFishGames and China’s 9you are getting large investments.

Apple’s (AAPL) iPod Touch and iPhone are growing gaming platforms, which might represent the future of gaming.

But not all gaming companies are prospering. Midway (MWY) is close to bankruptcy.

There are a few ways gamers can save money on their games.


Apple iPhone 2.0

June 6, 2008

We all know the next Apple (AAPL) iPhone 2.0 is coming out soon. Everyone is writing about it and speculating what is the next big thing. Apple’s brand is so strong that people lined up in front of Apple’s flagship store for no apparent reason. It doesn’t matter what the product is, since Apple has not released any details. One can bet that iPhone platform information will be released at the Apple Worldwide Developer Conference in San Francisco on June 9, 2008. I’ll add to the speculation and say that the GPS capabilities of the iPhone will eat into the sales of Garmin (GRMN) and Tom Tom (TOM2.AS). GPS units have dropped in price dramatically, almost to commodity prices, so shorting them might be attractive. One may argue that these GPS companies have superior software, but the platform is open to developers, so I forsee excellent GPS software in the works. The internet and GPS will be at your finger tips very soon.

The iPhone will have the same effect on the smartphone market as the iPod had on the mp3 players. The first smartphone was created by Palm (PALM), which still makes them. Palm has had a bumpy ride these past few years, competing with Handspring and eventually buying Handspring back again. Their Treo PDA/phone was popular, but I’ve seen those first adopters switch over to the iPhone. These same first adopters are going to dump their iPhone 1.0s for the iPhone 2.0. The future is mobile internet. Move evidence is the popularity of Asus’ EEE laptop computer and Intel’s development of the Atom processor. Components and devices designed to suit the needs of people on the go. Small, efficient internet-enabled devices are the future. In the past people had simple terminals connected to a mainframe computer. This gave way to personal computers and workstations. Soon it’ll be portable devices connected to the internet.


Cashing in on the Digital TV switchover

April 6, 2008

For more information visit www.dtv.gov.

If you haven’t been watching TV, you may not know about the digital TV switchover. If you have been watching TV, you may still not know what the digital switch over is or why it is important. On February 19, 2009 TV stations will longer broadcast analog TV, which people have been using these last decades. All the TV stations will switch to digital broadcasting.

The previous standard NTSC is capable of 1525 lines at 29.97 frames per second, while the new standard, ATSC is capable of up to 1080 lines at 60 frames per second. This means the pictures are more detailed with more fluid motion. Also, the information is digitally encoded, so you’re either going to see a clear picture or no picture at all if you can’t get a signal. Fortunately this means that most of us will get a clear picture. I have personally bought a TV converter box and it is definitely an improvement. You may also ask why 29.97 frames per second. The answer is because they didn’t know about color when they made the standard. Television has been long overdue for an update.

Where do I get a digital converter box?

You can get a digital converter box for your old TV at any electronics store, but you should take advantage of a government program that provides $40 vouchers for converter boxes. I was surprised when the BestBuy (BBY) employee there asked me where I got my coupon. She asked for the website, but I did not know it off hand. My receipt however had the website printed on it. You can get up to 2 coupons per household at www.dtv2009.gov. The converter box I purchased was $60, so it was $20 + tax out of pocket expense.

What is spectrum?

Electromagnetic waves come in many frequencies ranging from gamma rays to radio waves with visible light (red, orange, yellow, green, blue, indigo, violet aka ROYGBIV) sitting in the middle. The government regulates and licenses certain ranges of frequencies, so you don’t have different people interfering with each other. Since the analog television frequency band is no longer in use, the government auctioned it off with Verizon Wireless (VZ) and AT&T (T) among the winning bidders. One use of the extra bandwidth is to provide more wireless data services, which has also garnered the interest of Google (GOOG). This will advance the trend of mobile devices using more data services like the iPhone from Apple (AAPL).

How do I invest in the digital TV switchover?

Instead of buying a converter box, a significant amount of people will finally make the switch by buying a new HDTV. Television manufacturers are sure to sell many new televisions in the near future. A quick look at BestBuy and you’ll see television sets from Sony (SNE), Samsung (005930.KS, 005935.KS), Sharp (SHCAY.PK), LG (LPL), Insignia and others. All of these different HDTVs share some common components such as the digital TV tuner and decoder chips from Microtune (TUNE), Texas Instruments (TXN), Maxim Integrated (MXIM.PK) and Analog (ADI). Looking at a technological standpoint, Texas Instruments also provides its DLP technology in affordable rear projection screens and high end digital projectors.

There are many ways to invest in the digital television switchover, but it is hard to see who will come out ahead since there are so many players in the game


Stock Picking Basics (1)

October 1, 2007

With the advent of “systems” for investing and a new wealth of information about companies, it can be hard to figure out which stocks you want to invest in. While many commentators will tell you about a lot of different companies from a variety of industries, sometimes it helps to just simplify. One of the most basic stock picking adages is to buy what you know. There is also the corollary to buy what you buy. Now how do you put these sayings into practice.

If you are just starting out in the world of investing and have your strategy and comfort with risk evaluated, the next step is to start looking into companies you wish to invest in. Before looking for exotic companies with high returns, you really don’t even have to go to far to find successful companies that have had great returns already. For the poor college student/new college graduate that’s too lazy to cook, there are plenty of fast food restaurants that have been returning greater than 10% over the past few years. Companies like McDonalds (MCD), Wendy’s (WEN), Jack in the Box (JBX), and YUM Brands (YUM) which owns KFC, Taco Bell, and Pizza Hut are all strong companies with a lot of growth potential in the near term. When you go to these places for lunch or dinner then you’ll just be putting your money back into your investments. Plus, if you goes to these restaurants and watch how brisk business is at times, then you already have a bellweather into the health of the company’s performance. If you find you’re the only one in there, then perhaps it’s time to pull out of fast food restaurants.

Not one to partake in fast food, how about consumer electronics? Still seeing lots of iPods or hearing about all the new TV’s people are buying? Companies like Apple (AAPL), Research in Motion (RIMM) the maker of the Blackberry, Sony (SNE), or Philips Electronics (PHG) are all good places to start if you also plan on upgrading a few of your electronic toys in the near future.

So what are you spending your money on every week? Why not invest in the companies that are going to be getting your money anyways. The gas companies are not a bad idea if you have a favorite gas station to fill up your car. Ask yourself some of these questions when brainstorming about which companies to invest your money. Where are you getting your food from or what kind of drinks are your favorite? What about the clothes you buy or even the bathroom products you use? This is why the adage of investing in what you know and what you buy is such an easily understood idea that can be oft overlooked. Plus, you get the advantage of seeing how the company is actually performing without having to wait for its financial reports every quarter.

As of this writing, I currently own shares of YUM Brands (YUM).


Don’t know what to buy? Now might be the time for tech stocks

July 28, 2007

For those of you that don’t have a position in the Technology sector in your portfolio, now is the time to buy. Big institutions (i.e. mutual funds and hedge funds) all obey an investment cycle. These big institutional investors are the ones that move the market and whose investments are the ones that counts. According to Jim Cramer (A former hedge fund manager, who has his own show Jim Cramer’s Mad Money on CNBC, which I highly recommend for people to watch) now is the time in the investment cycle to buy tech stocks because the big institutions are now buying tech stocks. The two stocks that he recommends now are Dell (DELL) and Hewlett-Packard (HPQ). However whatever tech stock you ultimately buy into, you should sell the stock by no later than January 31, because as you can guess that is when the big institutions begin to sell their holdings in the technology stocks. The only exception to this (according to Cramer) is Apple (AAPL), this is the only stock that historically does well year-round and doesn’t move with the investment cycle. So, for any of you looking for something to buy during this down time in the market, definitely rid yourself of Financial’s (because they are definitely taking a beating) and get yourself into the Technology sector. At the very least definitely take some time to look at Dell and Hewlett-Packard, for they come highly recommended by Jim Cramer. Remember it is almost back to school time for a lot of students, and students will be in the market for technology products, which will definitely bode well for the growth and earnings of companies like Dell and HP.