Understanding Apple

When Apple started selling the first iPhone in June 2007,  you could buy Apple stock for about $100 per share. Two weeks ago, You’d pay $644 for that same share. During that same time, $100 invested in an S&P 500 mutual fund would be worth about $95.

Yet Apple naysayers abound, calling the stock overpriced; saying the iPhone is threatened by Droids, or the iPad by cheaper competitors. How does Apple answer? With last night’s earnings report, to wit:

Sales up 50%.
Profits nearly doubled.
iPhone sales up 88%.
iPad sales up more than 100%.

Investors have sent Apple stock up $50/share (9%) this morning on that news.

It took me a while to understand Apple and its products, despite buying the first iPhone and nearly every subsequent model, and becoming inseparable from them.  I really looked at iPhones as a great phone that could do some other things – and that’s where I was wrong. The iPhone and iPad are devices that provide such a range of function that it can hardly be imagined that any two people use them the same way. That coupled with high quality and reliability suggest that continued strong sales are likely for Apple.

The next wave: when iPads start to surpass big-box televisions for TV viewing. It may be coming.

GTC

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

When Kodak Listens

You can’t live in Rochester without knowing Kodak employees and retirees, and those of us who have never worked there draw a lot of our picture of what happens inside the Big Yellow Box from what we hear from family and friends.  But an image of Kodak created by secondhand accounts is a little like a portrait painted by listening to someone describe the subject instead of seeing it for yourself.  After all, like the blind men and the elephant, most Kodak employees see a small piece of the operation, and we’re getting a small story from them.

But over the last year as Kodak slid toward, then into, bankruptcy, I have heard a consistent story from a variety of smart, skilled people from different parts of Kodak’s operation: the story of the consumer inkjet business.  In February 2007, I traveled to Manhattan to attend Kodak’s investor briefing and the rollout of the new inkjet printers.  The appealing pitch: high-quality ink at very low cost, designed to broaden the market by letting consumers print as much as they wanted without worrying about cost. Attendees received sample photos and they looked great.

The only problem is that 5 years later, the consumer inkjet business is still not yet profitable, and much of Kodak’s Consumer Digital Group (CDG) is being dismantled. This is where the listening part comes in.  I can’t reasonably paint that picture from a story I hear from one or two people. But over many months I’ve pieced together an image from different parts of the company. Like the Kodak market researcher who reported that their group told management that the inkjet business had a major entrenched competitor (Hewlett-Packard), thin profit margins, and a shrinking market (people just don’t print many photos).  Like the two senior researchers in Corporate Research & Engineering who report that their group told management that the inexpensive ink was ruining the printer heads and needed more work before going to market. Like the members of the finance staff who report that Kodak has been losing money on each printer sold, with no change in sight.  In each case, current and former employees say, warnings were ignored by senior management and the printers were rushed to market. Result: overwhelming number of defective printers (one source says 100% in the first months), loss of retailer support, and a business that 5 years later loses $50 on each printer Kodak sells.

Kodak didn’t listen to its own employees: skilled, dedicated, hardworking people. So who is Kodak listening to now? Bankruptcy consultants and lawyers, at a cost of tens of millions of dollars and counting.

GTC

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Women Need Financial Planning

Time for some startling statistics…

According to research by Wells Fargo, affluent women are significantly less confident about retirement than men. The least confident of all are single women, and the most confident are married men.

About 700,000 women will lose their husbands this year.  The median age when a woman is widowed is 59.

So…women are less confident than men, they are often widowed at a young age, they live on average longer than men and they control more and more of our nation’s wealth. 

What to do?  Women must take charge of their own financial lives.  This means-

1. Selecting a competent Financial Advisor who is willing to take the time to explain investing and insurance concepts and options to you, with patience and in terms that you can understand.  They should also be able to concisely explain to you the ways in which they are compensated by fees and / or commissions.
2. Doing a budget and understanding your spending and cash flow needs.
3. Where possible, spending less and saving more.  You really cannot save enough money for retirement.  Social Security might not be around in its current format for younger people, most of us no longer have pensions, we have to worry about historical inflation of 3-4%/year, we are living longer / being kept alive longer and the costs of college, healthcare and long term care are all skyrocketing. 
4. Defining your important financial goals, both short and long-term.
5. Gathering up your financial account statements and making folders or a binder for them, so you have records of all of your accounts and know where to find them.
6. Taking the time to work with your trusted advisor to develop a living, comprehensive financial plan that (minimally) addresses retirement, survivor and estate planning.

If you would like assistance with determining what your important financial goals are and how to achieve them, please feel free to contact me at (585) 340-2229.  Thank you.

Susie L. Light
Financial Advisor

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Bargain Hunting

Last Tuesday, the S&P 500 closed below its 50-day moving average for the first time since December, 2011. A sign of trouble, this came after the markets have pulled back recently, due to factors such as European sovereign debt fears and a sluggish jobs report last week.  Wednesday saw a nice rebound, however, as the Dow Jones Industrial Average was up about 100 points and the S&P 500 about 12 points as of 3:00pm. Excellent earnings reports from Alcoa and a positive homebuilding report have helped fuel today’s rally. 

 What does this mean to the individual investor?  While stocks are still in positive territory for the year, and many are still near their historical highs, the recent pull-back means there are some bargains to be had. 

 Remember that nothing has changed in terms of the fundamental keys of successful investing…diversification, buy and hold good dividend-paying companies, buy low and sell high and dollar cost-averaging (among others).   This is a good opportunity to dollar cost-average into quality companies that are now a little more attractively priced.  This means putting a little money at a time into the market, thus lowering your average cost.  It also is a lower risk method of getting participation in a rocky market than dumping all of your money in at once.  Companies that I like include Bristol-Myers Squibb (BMY, $32.65.sh., 4.16% dividend), Coca Cola (KO, $72.21/sh., 2.835% dividend) and Intel (INTC, $27.89/sh., 3.01% div.). 

 The use of quality mutual funds is a great way to get exposure to a large basket of great companies like these with a small sum of money.  They are very conducive to setting up an automatic periodic dollar cost-averaging program.

 If you would like a complimentary review of your portfolio or to discuss comprehensive financial planning (retirement, insurance, retirement income, long term care, disability, survivor, estate and college planning) please contact me at (585) 340-2229.  Thank you.

Susie L. Light
Financial Advisor

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

About Google’s Stock Split

There is a lot of buzz today about Google announcing a stock split. I just wanted to point out one small detail regarding this split. There isn’t one. Well, not really.

 Yes the price of your current shares will be reduced by half and you will receive an additional share for each, but not the same type of share. The additional share has one slight difference. It carries no voting rights. The new shares will likely trade at a discount due to this inferiority. But there’s good news! This discount will probably be very small. That’s good right? Well, not really when you consider why.

 There is a 3^rd share class that is not listed. This share class carries 10 votes compared to the listed stock’s 1 vote and is held by the founders and other insiders. So these new shares that carry no voting power really aren’t that much worse since neither listed share class carries much clout when it comes to voting.

 It all boils down to control. What good is owning a piece of a company if you have absolutely no say in how it is run? This means if you don’t like it all you can do is sell your shares and be careful not to let the door hit your butt on the way out. I will say however that the founders have been open about this structure being intended all along. In the co-founders’ own words:

“The main effect of this structure is likely to leave our team, especially Sergey and me, with increasingly significant control over the company’s decisions and fate, as Google shares change hands…

New investors will fully share in Google’s long term economic future but will have little ability to influence its strategic decisions through their voting rights…

Our colleagues will be able to trust that they themselves and their labors of hard work, love and creativity will be well cared for by a company focused on stability and the long term…”

Sam DiNorma

 (This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Speaking Volumes

Trading ‘volume’ is defined as the number of shares bought or sold during a given time period.  Technical analysts believe it is a powerful tool for confirming trends in prices, or rather shifts in the market’s supply and demand.  If a price trend has a lot of volume then the trend is supported and an investor can have more confidence in the trend.  If a price trend has little volume then the trend is not supported and an investor should be skeptical. 

One of the lead articles on CNBC.com recently was about trading volume in stocks.  It asks a rather poignant question:  “How can stocks be in their fourth year of a bull market and trading activity be so low?”  It is a question that ought to make investors nervous.  The low volume of this bull market has left many wondering who’s buying and if there is any conviction in the rally.  Furthermore, today’s market is characterized by heavy “program trading” that is done in micro-seconds by computers.  These programmed trades are not actual positions based on future expectations.  Rather they are just trying to take advantage of ultra-short term prices disparities.  This is important because oftentimes volumes are what separates bull market rallies from bear market rallies.  The bottom line for the bull market is that this emperor has no clothes.

Brennan R. Redmond, CFA
Vice President
Brighton Securities

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities)

Gift of Time

Have you ever thought about time as an investment?  Recently I came across an article where the author wrote about the best financial advice he had ever received: “invest your time, don’t spend it.”

This led me to a similar article which also discussed the idea of spending vs. investing time.

In the end, both articles provide examples of activities where we “spend time” and examples where we “invest our time.”  I often say “it’s not how much you make, it’s how much you save” that will determine how successful you’ll be in accumulating wealth, and the same could be true for time.  Replace the word Money with the word Time and see how interchangeable they are!

This got me thinking about how many of my clients rely on me to oversee their investments because they don’t have the time; or prefer investing their time with their family, their faith, or friends.  Think of someone that you think is “very successful.”  Ask them what they do with their time and see if they’re “spending” it or “investing” it.

Call or stop by our office anytime, to meet with me personally, and give yourself the “gift of time.”

 

Joe Boyd
Financial Advisor
Brighton Securities

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities)

Bear Stearns & Greece, Lehman Bros & Spain

It was the Summer season of 2007
And all through the land
There were rumblings of subprime mortgages
Grown too fat by many hands

The storm clouds and the thunder
Surrounding our Summer’s sun
Threatened to take us under
And spoil all of our fun

That first bolt of lightning found Bear Stearns
It was a shot across our ship’s bow
What, if anything, might come next?
And when would it happen and how?

The storm clouds continued to gather
Right up until that September
Then the next bolt hit Lehman Brothers
And that was the one to remember

Move forward to the summer of 2013
Where Greece has shown us the way
And ask ourselves a new question
Will it be Spain that takes us away?

By Brennan R. Redmond, who is a CFA charterholder which does not, in fact, stand for “Creative Financial Author.”

Brennan R. Redmond, CFA
Vice President
Brighton Securities

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities)

Spain

Today the news is eerily reporting that the costs of financing Spanish debt and deficits are rising.  It’s early yet to be sure but it seems that the Faustian bargain of debt and spending that ensnared Greece has a strong chance of roping Spain in too.  The reason why Spain is in danger, like Greece before, is that even though they are implementing strict austerity measures their debt load continues to pile up as deficits are shrunk but not eliminated.  Then you add a in a steep recession.  The toll that recessions take on economic activity ensures that the decline in Gross Domestic Product (GDP) far outpaces any decline in public debt.  So even though Spain has been implementing austerity measures their debt-to-GDP ratio is anticipated to climb from 68.5% in 2011 to 79.8% in 2012.  After all the tough decisions and budget cuts they will still end up in a worse position.  Once this downward spiral begins, when does it end?  Nobody knows the answer to that but it must surely end.  We have yet to see the end for Greece as they are still locked out of the bond market.  And Spain is just beginning.

Brennan R. Redmond, CFA
Vice President
Brighton Securities

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities)