Saturday, September 14, 2013


Welcome to the 'premiere' of this end-of-the-week series where I’ll do my best to narrow down the top 3 stories in finance for the past week--- or the ones that caught my attention the most. And here you have it:
  1. AAPL revealed new IPhones named ‘5S’ and ’5C’: The new phones brings zero surprises, the “C” category (which is suppose to be much more affordable--- and C doesn’t stand for cheap, by the way) is not “cheap enough” (pardon the redundancy) to entice a new niche of price-conscious consumers and increase market share.  Another reason for a cheaper model was to have better penetration in international markets such as china, but apparently that wont be as easy as expected with the current price points. 

    The result? Wall Street is not happy and the stock price tumbles a bit. APPL’s stock price failed to reach the heights it has reached during past announcements. I still remember the day AAPL reached 700 p/s sometimes towards the end of 2012 (which lasted about a second). I was a very proud owner of several shares. As the greedy investor that I used to be I did not sell but I eventually had to face the facts and gave it up collecting my profits and running for the door. I still feel AAPL is a great company but in the world of investing it is extremely important that we remain aware and informed so that we know when it may be time to give up our positions, even if temporarily.

    My two cents? Folks at apple should really consider this: innovation is paramount & privacy regarding new products should be non-negotiable—maybe they should invest a little more on privacy. Lately there has been a trend of AAPL products and ideas leaking out to the public before they are announced—not bueno. For example, everyone and their grandmother knew about the “fingerprint” technology long before any official announcements were made. With AAPL products people thrive on innovation and the anticipation of “what’s next?”—that’s where its competitive advantage comes from (at least a major part of it). If they start lacking on these factors I smell trouble. By the way—it was recently announced that Walmart (WMT) was given the OK to sell discounted versions of the new models for a percentage lower than other retailers. This is unheard of in the history of AAPL but the good thing is that AAPL is getting their asked priced regardless from WMT so that doesn’t really affect their bottom line. However, the consumer can get a little break on the price, if they wish, thanks to WMT. You can read more about it here. 

    Phones look very nice though, cannot lie. The C comes in different colors:

  1. The DOW dumps Bank of America (BOA), Alcoa (AA), and Hewitt Packard (HP)--Picks up Goldman Sachs (GS), Visa (V), and Nike (NKE): For my beginner investors—the “DOW” refers to the Dow Jones Industrial average which is a price-weighted index (mostly followed and referred to by the media) as a benchmark on “how the market is doing” (one of several). As a quick reminder: Another benchmark is the S&P500 which is more popular, more commonly used, and sometimes more accurate as is representative of the top 500 companies in the US and weighted by the market cap of each company rather than price. There are multiple speculations as of why the DOW made the change. Some say is to reduce the volatility of the index and other speculate is because they want “higher priced” stocks, or whatever the case.

    My two cents? I was pleasantly surprised to see Visa (V) as one of the chosen ones. I currently hold shares of V and whatever the reason why it was chosen, I can only conclude one of them is because it is viewed as a quality company with quality stock. I’ve also had NKE on my radar for several months but have yet to buy the shares. I held GS for nearly a year when I first started investing back in 2008. All are great stocks backed up by amazing companies and I have no doubt they’ll be valuable contributors to the DOW. By the way, the DOW composite involves a total of 30 companies. You can check out the entire list here (with the new replacements).

  1. Verizon (VZ) announces the largest bond offering & sale in history (49 billion!) and they immediately became quite popular in the bond market with yields higher than the industry average. I currently hold shares of VZ and been keeping an eye on ALL, ANY, AND EVERY type of news regarding VZ since their announcement that they were splitting from Vodafone (VOD) to take FULL control of VZ as a whole. Considering the massiveness of this deal-- VZ agreed to buy off Vodafone for 130 Billion (Yes that’s a B in front of the word –illion); they had to pursue all sorts of financing options one of which includes selling bonds. You can read the full story here. 

    My two cents? Not sure how I feel about VZ getting in to so much debt for this deal. But one thought that keeps running through my mind is that if they are willing to shell out so much money to gain full control; it can only mean that they can only see an upside to this (and are overly optimistic about VZ’s future). Gaining full control of their operations and separating from Vodafone is a deal VZ has been pursuing for a very long time, as portrayed in the media. Hence, this can only mean good things in store. Only time can tell as "vision is 20/20 on hindsight". I will continue watching as this deal develops!

And that’s all folks. Thanks for reading!
Tell me, any “major” news I may have missed? Did any of these announcements influence you in any way? 

*I am currently long on Visa (V) and Verizon (VZ).