Category: Economics & Business

When Apple’s Keynote Bounce Is a Thump

NewMexiKen treats much investing like I used to treat running — I like reading about it.

Anyway, I thought this from an article at Business Week was interesting.

Apple’s stock has been a huge wealth-generation machine over the last few years. If you had bought it five years ago when shares were worth about 7.50 on a split-adjusted basis, and held it until now, you’d be staring at a gain of more than 2,000% over five years. But that’s called investing. By contrast, betting on a short-term gain from a Steve Jobs keynote at Macworld has always been fraught with peril.

Yes, on the surface it might seem a good bet. Going back to 1999, Apple’s stock price has gained an average of 4.7% on the day of a Jobs keynote at the January edition of Macworld. But of those 10 occasions, only half have seen the stock rise, the biggest gain coming with last year’s unveiling of the iPhone. Developed in the strictest secrecy, the phone was widely expected to make its public debut that day. But with so little known about the device before it was revealed, iPhone mania pushed the stock up more than 8% that day.

But a one-day pop like that can create unreasonable expectations. In fact, if you exclude the iPhone spike from consideration, Apple’s stock price has dropped an average of 3.6% on keynote day since 1999.

For the record, Apple stock was down about 10% Tuesday and Wednesday to $159.64. It’s high late in December was around $200.

Buy some stuff, will ‘ya?

This recession talk is killing my 401K.

Strong evidence is emerging that consumer spending, a bulwark against recession over the last year even as energy prices surged and the housing market sputtered, has begun to slow sharply at every level of the American economy, from the working class to the wealthy.

The abrupt pullback raises the possibility that the country may be experiencing a rare decline in personal consumption, not just a slower rate of growth. Such a decline would be the first since 1991, and it would almost certainly push the entire economy into a recession in the middle of an election year.

The New York Times

Meanwhile, in Monday’s column Paul Krugman takes a look at the presidential candidates reaction to the pending economic doom and gloom — and doesn’t say “a word about their hairstyles.”

The music industry

IN 2006 EMI, the world’s fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there.

The Economist

By the way, Amazon.com sells DRM-free 256kbps MP3 files for 89 or 99 cents. It’s a good alternative to iTunes. The files are watermarked to show that they were bought from Amazon.

Ssssssssssssssss

That’s the air continuing to escape the bubble.

November home sales in Los Angeles, Orange, Riverside, San Bernardino, Ventura and San Diego counties have averaged 22,749 units for the last 20 years. Last month, 13,173 houses and condominiums were sold in the region.

The Southern California median home price of $435,000 is on par with what prices were in early 2005, or off 14% from a peak of $505,000 earlier this year.

Los Angeles Times

Google Gets Ready to Rumble With Microsoft

There’s an interesting and lengthy article about the future of computing in today’s New York Times.

The growing confrontation between Google and Microsoft promises to be an epic business battle. It is likely to shape the prosperity and progress of both companies, and also inform how consumers and corporations work, shop, communicate and go about their digital lives. Google sees all of this happening on remote servers in faraway data centers, accessible over the Web by an array of wired and wireless devices — a setup known as cloud computing. Microsoft sees a Web future as well, but one whose center of gravity remains firmly tethered to its desktop PC software. Therein lies the conflict.

Homeowners With Negative Equity

51 million U.S. households have mortgages. By the end of this year, 11% of them (5.6 million) will have no or negative equity. By the end of next year, if housing prices decline another 10%, the number of mortgages with no or negative equity could exceed 20% (10.7 million).

A basic underpinning of the middle class way of life may crumble before our eyes in coming months.

Source for numbers: Calculated Risk

Why Baseball Players Might Be Underpaid

The baseball season is over and its season of free agency has begun. With Alex Rodriguez seeking at least $350 million over 10 years — which would be the richest deal ever, by far — and mediocre 39-year-old closer Todd Jones getting a $7 million, one-year deal, you might expect to hear outcries about this apparent greed in the sports pages. But two factors make these numbers, when placed in context, much less than they seem.

First, a dollar just isn’t what it used to be. When Mr. Rodriguez signed his previous 10-year, $252 million contract in December 2000, the Federal Reserve’s index of the dollar’s value relative to other currencies was over 105. Now it’s barely over 71. In terms of imported goods, his minimum desired contract is less than his prior deal. (He opted out of the last three years to seek a new one.) As Tim Marchman writes in the New York Sun, “Imported goods and gasoline are more expensive; a dollar buys less than it once did, and so people want more of them in exchange for services.”

The Numbers Guy

He has more on value in major league baseball.

As Pink Floyd would say

“Money, it’s a gas. Grab that cash with both hands and make a stash.”

In the early 1990s NewMexiKen traveled extensively overseas. Along the way I saved numerous small denomination bills and coins and put them away.

Little did I know that with the devaluation of the American dollar these foreign savings might be my retirement nest egg.

Here is my particular favorite — from Yugoslavia, 500 billion dinara.

500 Billion Dinara

Click image for larger version.

“Money, so they say, is the root of all evil today.”

Yet another cost of college

College towns bring together academic minds, alumni, students and sports enthusiasts, especially in the fall when football fans flock to reconnect with the nostalgia of happy college years.  The reasons they come – pageantry, culture, tradition and idyllic settings – are also the reason many want to stay and become homeowners in their college town.  According to the third annual Coldwell Banker® College Home Price Comparison Index (HPCI), while Ohio State may be leading the nation in the football polls, it is the Ball State Cardinals and Stanford Cardinal and their athletic conferences that hold the distinction of being located in the nation’s most affordable and expensive college towns, respectively.

Coldwell Banker-HPCI

The link above has all the details. Pointer via The Quad, which had this convenient summary. Price is for “a 2,220-foot, 4 bedroom 2 ½ bath home with a family room and two car garage.”

10 MOST EXPENSIVE
1. Stanford University, Palo Alto, Calif. $1,677,000
2. Boston College, Chestnut Hill, Mass., $1,381,250
3. University of Southern California, Los Angeles, Calif., $1,306,333
3. U.C.L.A., Los Angeles, Calif., $1,306,333
5. University of California, Berkeley, Berkeley, Calif., $1,287,500
6. San Jose State University, San Jose, Calif., $1,145,000
7. University of Hawaii, Honolulu, Hawaii, $843,750
8. Northwestern University, Evanston, Ill., $708,000
9. Florida International University, Miami, Fla., $638,333
9. University of Miami, Miami, Fla. $638,333

10 LEAST EXPENSIVE
1. Ball State University, Muncie, Ind. $150,000
2. Texas Christian University, Fort Worth, Texas, $151,250
3. University of Tulsa, Tulsa, Okla., $153,750
4. Oklahoma State University, Stillwater, Okla., $162,000
5. Texas Tech University, Lubbock, Texas, $163,250
6. University of Toledo, Toledo, Ohio, $163, 278
7. University of Louisiana Monroe, Monroe, La., $164,499
8. University of Houston, Houston, Texas, $169,736
8. Rice University, Houston, Texas, $169,736
10. Utah State University, Logan, Utah $172,978

The University of New Mexico is tagged at $317,319. My alma mater, The University of Arizona, at $286,667.

Eisner blames Jobs, and Radiohead cleans up

In an interview former Disney CEO Michael Eisner blamed Apple’s Steve Jobs (and iTunes) for writers’ low pay on digital distribution.

Strange then, that this same day, we also get a story about how Radiohead is doing with their online distribution deal. You’ll remember that they passed on iTunes to distribute their music themselves, and now we’re hearing that, after all is said and done, Radiohead earned an average of $2.26 per album by asking listeners to download the album for free and pay them whatever they thought it was worth. “$2.26 per album?” you say. “They got screwed! iTunes charges $10!”

Ah yes, but apparently Radiohead would have made about $1 per album if they’d gone through traditional channels. So actually, the creators doubled their income per sale. Eisner’s crazy– Jobs isn’t to blame for this strike, it’s content distributors who don’t pay content creators enough for digital distribution. But given that Radiohead is cashing in (and gaining public goodwill to boot), maybe the Writers Guild have a lesson to learn here as well.

The Unofficial Apple Weblog (TUAW)

Update: See The WGA strike — what it’s about.