Apple, Foxconn, Wisconsin

After reading Janesville, I couldn’t help but be interested in this perfectly titled piece in The Atlantic.

Numbers to ponder:

“It has up to $3 billion in tax breaks, to be passed and provided by the state government. Those kinds of tax incentives can get a manufacturer to plant a factory in a given location—but generally at a significant cost to the state budget, and without doing much to help the economy overall.”

What does $3b mean?

“The Washington Postestimates that the breaks could cost the state as much as $230,700 per job created. Tim Culpan at Bloomberg Businessweek puts it at $1 million per job, enough to buy every man, woman, and child in Wisconsin a new iPhone.”

So the margin of error is only $770k/per job created. I recommend the rest of the succinct piece.

Advice for New Investors

Or old. My previous reference and link to Amazon’s historic stock run up was a disservice to all of the esteemed readers of the humble blog. Same with my occasional references to Apple. Please strike all my references to individual stocks from the record.

Jeff Sommer restores order with “How Stocks Can Make You Rich. But They Probably Won’t“.

Heart of the matter:

How can those two sets of facts — the underperformance of the typical stock and the outperformance of the overall stock market — both be correct?

It is because a relative handful of stocks tend to outperform all others by tremendous amounts.

The conclusion:

“. . . most people picking stocks are unlikely to do well for very long.”

In related news, during the evening commute I enjoy listening to Seattle radio’s “Ron and Don”. They care about their community, they’re funny, and they have a beautiful rapport. However, their good work is seriously undermined by their pimping of an on-line trading school. They’re smart enough to know that 99% of day traders get their asses handed to them, despite that, they promote the shit out it.

I wrote them and asked why. No reply. Yet.

Apple Watch and iPhones: iNitial Reaction

The Apple Watch. My favorite Apple watcher, John Gruber, said this Benjamin Clymer review of the Apple watch is the best one yet. If Gruber says it, it’s true.

Henry Blodget is smart, that’s why his ignorant comments that the Apple Watch is completely irrelevant shocked me. He’s forgotten history, in particular how unenthused nearly everyone was when the iPhone and iPad were first released.

Having said that, I will not be keeping my word because I will not be buying it this go round. I’ll wait a few iterations. I bought a new watch a year ago. My Garmin Forerunner 10 is one of my favorite possessions. It’s a brilliant watch because it only has the most essential functions I need. Meaning it’s simple to use. And it’s waterproof. And, unless I’m using the GPS feature a lot, the charge lasts several days.

The Apple watch isn’t waterproof. Deal breaker. I do not want to take my watch off every time I hit the pool or bathtub. And allegedly, you have to charge it overnight meaning I wouldn’t be able to use it to wake up. My one-third the cost Forerunner 10 has the perfect alarm—not too grating, but loud enough to always do the trick. No doubt Garmin knows what Blodget seemingly doesn’t, the Watch will get much better pretty quickly and prove brutallly tough competition. I may end up being their last customer. Maybe I should buy an extra “10” or two in case they die a sudden death.

Also, most of the Watch apps will require iPhone tethering. Really, I have to carry a new larger iPhone in order to see fitness data on my Watch? A two-part problem. 1) Getting a comfortable enough, water/sweat proof carrying case so that the phone “disappears” while running. Cyclists will most likely use a case and then just toss it in their back-middle jersey pocket. 2) The additional weight. When you pretend you’re an elite athlete, every gram or ounce counts. :)

I had a great run this morning. It was 52 degrees out and it was pitch black when I left, and 10k later, I was bathed in beautiful morning light. I took three things—shoes, socks, shorts.

The only reason to buy the first Watch is to subject acquaintances, friends, and family to status envy. That is always sufficient motivation for lots of people.

The phones. All previous sales records will be shattered. Sleepless nights for Samsung. Their worst fears are being realized as evidenced by this. I’m holding my AAPL shares and should probably use my Watch savings to buy three and a half more.

I THINK I want one. The pretend elite cyclist in me is thinking 4.7″, but the aging reader is thinking 5.5″. Maybe I’ll take a year to decide.

That collective sigh was my friends who have grown weary of my annoying quirk.

2013 iPad Air

While it’s impossible to top John Gruber’s written review, or Walt Mossberg’s video review, or Farhad Manjoo’s written/video review, I’m adding my initial impressions into the all-star tech punditry mix.

If my Father-in-law, who I had great respect for, had read one or more of those reviews he wouldn’t have ruined his life with his Google/Nexus tablet purchase. He was always so rational and all for a few “C-notes”. Father-in-law’s grade, F.

My 32GB wireless/cellular Air was pricey, especially since the GalPal wanted my old one. I already had an inquiry from a Craigslist reader for it when I said to LALOA, the Latest Adapting Luddite Of All, “You don’t want my old iPad do you?” When she said “yes,” I thought I was hearing things. Add in the smart cover for $39 and the WaterField iPad Smart Case for $69 and I may be going back to full time work next academic year.

The best word for it is sleek. So damn light and thin. A sensuous wafer of electronic goodness. The rock skipper in me wants to just grab it by the corner with my thumb and index finger and fling it across Ward Lake, just to see how many times I could get it to skip. But then I remember what I paid for it. Note to Jonathan Ive, make the next gen waterproof.

I have mixed feelings about the Apple smart cover. When using it as a stand, the pad is a wee bit vertical for my taste. Also light and sleek, it’s definitely in keeping with my minimalist design preferences, but my old wooden stand (carved by a Canadian entrepreneur) had two settings both which provided more tilt. Also, it could be user error, but when folded for typing purposes, meaning nearly flat, I have to reverse the Pad altogether and toggle it to get the top and bottom oriented correctly. On the plus side, I discovered the flannel-like back of the smart cover adheres to my blue jeans. So when I’m sitting on the floor against our couch with my knees up, I can set it on my rippling quads and it stays there, in perfect reading position. Apple smart cover grade, B+.

Granted, maybe the Waterfield Smart Case is overkill, but given the investment, it will earn its keep when I take it on the road. Note that I didn’t coordinate the colors. Another reason why, if you’re of the male persuasion, it’s dangerous to cybershop alone. Waterfield smart cover grade, A. My personal color faux pas adjusted final grade, B.

The retina screen resolution is stupendous as is the speed, the camera, the video camera, and the battery life. My life is way better now. And remember, just because I’m an AAPL shareholder, it doesn’t mean I’m biased. Go buy one. Or two. iPad Air grade, A.

I went white because one of my nicknames is Wonderbread

I went white because one of my nicknames is Wonderbread

Color coordination fail

Color coordination fail

I keep a dust cloth handy for when my editor gets a little overzealous and licks my screen

I keep a dust cloth handy for when my editor gets a little overzealous and licks my screen

A few more angles of tilt por favor

A few more angles of tilt por favor

Too cool for school

Too cool for school

My editor watching intently

My editor

Why I’m Not Selling Apple

A friend, who has made it a point to resist Apple’s takeover of the personal tech world, emailed yesterday. The subject heading was “Time to Sell”. There was a link to an “Apple’s in decline” article and a follow up with an ominous excerpt. Full disclosure: this post doesn’t relate closely enough to the blog’s stated purpose, but I have to do something to stem the tide of anti-Apple email gloating.

Apple investors have to expect blowback when the stock slides. It just comes with the territory. Anti-Apples get more and more annoyed with every $100 rise in its share price. There’s probably just a touch of envy involved.

Late summer Apple hit $705, today it closed at $450. So the haters are slapping themselves on their backs in glee.

My email “friend” got his Masters in Business Administration at the University of Washington, not the Anderson School, so some remediation is in order.

Principle 1) Buy low and sell high. Apple’s on sale. Compared to the recent high, $255 off per share. In the next year or two, is it more likely to fall another $250 to $200 or rise $250 to $700? I’m betting on the later.

Principle 2) Never invest more than 5% of your total portfolio in a single stock. Apple’s sell-off hasn’t bothered me as much as UCLA’s inability to rebound the basketball because it’s 1/20th of the pie. Imagine having 20 children, one who goes off the rails. By the time you notice, she’d be halfway back to the straight and narrow (especially if she produced a less expensive iPhone for China).

Principle 3) When it comes to equities, be sure to take a medium or long-term perspective. If, for any reason, you might need to cash in your stock investments in a few months or years, avoid stocks, especially those of individual companies. I’m not selling because I don’t need to. I can wait on that 5% of my portfolio. Indefinitely really. That’s why I rolled a portion of my AAPL investment into a family charitable fund mid-summer. When it comes to our equity investments, VTI is the apple pie, VEU is the scoop of vanilla ice cream, and AAPL is the whip cream.

Principle 4) Have realistic expectations. In other words, don’t be ahistorical. Understand the “law of large numbers” and don’t get overly excited on run-ups. What did a lot of investors do in Las Vegas, California, and Florida when real estate prices exploded in the early 2000’s? They extrapolated. “Oh, I can easily earn 20% next year too.” After yesterday’s sell-off of $63, Apple is up 8.13% over twelve months. That’s only disappointing if you assumed it would return 30% annually. Maybe it’s turning into a single’s hitter. Which is fine for me because I’m a Mariners fan.

 

 

Apple Inc. and the Betrayal of the American Dream

Big week for Apple fanboys and girls. New iPhone. You better keep up with all the cool people and buy one. It will change your life. Well, maybe not, but you’ll be the envy of all those iPhone 4 losers. “Wow dude,” you can say to them, “that’s one short, thick, throwback phone.”

A recent book by two Pulitzer Prize winning investigative reporters titled, “The Betrayal of the American Dream,” criticizes Apple for outsourcing too many of its jobs. Here’s a National Public Radio story on the authors and their book.

Even though I’m an Apple fanboy and investor, I believe the bigger the company and the greater its influence in the world, the more we should hold it accountable for being transparent, honoring workers’ rights, and protecting the environment. Apple’s marketing, products, and momentum can bedazzle at the expense of critical inquiry.

I’ve been swapping emails with my friend—Dan, Dan, the Transportation Man—about driverless cars. The last one I sent him linked to an article that suggested, initially at least, driverless cars will cost around $300k. “Just do what Apple does” he wrote back sarcastically, “and outsource it (the manufacturing of the driverless car) to China.”

In the United States, especially during election season, knee-jerk criticism of outsourcing is legion. Few of the critics take any time to consider how much more they’d have to pay for their toothbrushes, clothes, iPads, bicycles, and cars if they were all completely manufactured in the United States. Heaven for bid if we connected a few dots.

In their critique of Apple, I wonder whether the “Betrayal” authors factor in the daily benefits of its products to users around the world. I made light of the newest iPhone, but you’d have to pry my MacBook Pro from my cold dead fingers.

Also, outsourcing is an abomination only when economic nationalism prevails. It’s possible, theoretically at least, to think more globally without sacrificing love of country, and therefore, to cheer job growth irrespective of political borders. Especially given global economic interconnectedness and the fact that most of Apple’s foreign-based employees buy some U.S. imports.

The authors would chuckle at my naivete. They’d point out we continue to run a tremendous trade deficit with China because international trade is conducted on a grossly uneven playing field. China has far fewer labor and environmental regulations, pays workers far less (even when adjusted for cost of living), and places protective tariffs on our imports. The uneven nature of the international trade playing field is a pressing problem.

But I wonder what the authors would say about the charitable giving the GalPal and I will be doing the next few years as a result of recently selling some Apple shares that had quadrupled over the last four years.

For me, the jury is still out on what kind of corporate citizen Apple is. I value critical analyses, but at present, I will continue to use its products and invest in it. I am not a model to follow. Apple’s fate will be determined by the individual and collective decision-making of technology users around the world.

For cutting edgers like me, there’s just one decision left. A black or white iPhone 5?

The Disciplined Pursuit of Less

I wish I had written this insightful post on decluttering not just our closets and garages, but our lives.

Here’s an example of the ideas in action via John Gruber and Kottke:

I like this as a basic theory for understanding Apple’s exceptional success. Steve Jobs was famous for his pride in saying “no”. At All Things D in 2004, asked about an Apple PDA: “I’m as proud of the products that we have not done as I am of the products we have done.” (Other examples here and here.)

Tim Cook, at the 2010 Goldman Sachs technology conference:

We can put all of our products on the table you’re sitting at. Those products together sell $40 billion per year. No other company can make that claim except perhaps an oil company. We are the most focused company that I know of, or have read of, or have any knowledge of.

We say no to good ideas every day; we say no to great ideas; to keep the number of things we focus on small in number.