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-- Posted Sunday, 8 July 2007 | Digg This Article | Source: GoldSeek.com
Rick’s Picks Monday, July 9, 2007 “Phenomenally accurate forecasts” Searching billions of web pages, we were unable to find even a single stock chart showing the spectacular ascent of RCA prior to the 1929 Crash. Our hunch, however, is that the final, manic leap of “Radio,” as it was popularly known, would bear a striking resemblance to the world-beating parabola shown in the Apple Inc. chart immediately below. Like RCA before it, Apple Inc. has come to be perceived as an innovator with nearly limitless potential in the consumer electronics market. Perhaps this will prove to be no exaggeration. Even so, we remain unpersuaded that the company’s latest sensation, iPhone, is destined to dominate its product category as iPod did, nor do we share the apparent belief of many investors that Apple stock will turn out to have been a fabulous bargain at these levels.
Having said that, we must acknowledge that the prospect of Apple eventually overtaking Microsoft is hardly unthinkable. To the contrary, we see it as inevitable – not so much because of Apple’s genius, but because of Microsoft’s bottomless stupidity, arrogance and ineptitude. Microsoft, after all, is the company that most recently brought us Vista, yet another overhyped Windows operating system that’s about as “new and improved” as a dish detergent to which lemon scent has been added. At least the detergent doesn’t take two-and-a-half minutes to “activate” when you squirt it onto a sponge. Vista has been selling briskly, of course, but only because it being rammed down our throats by the likes of Dell, Hewlett Packard and Gateway. But would anyone dispute that each successive Windows operating system is finding buyers increasingly resistant and resentful?
Microsoft is also about to take a billion-dollar-plus hit for a wiring defect in the X-box that causes it to overheat and fail. And, the company has been playing catch-up in the Internet advertising business, recently paying five times what competitor Google had paid earlier to acquire a going concern. To be sure, Microsoft has many more billions of dollars to speculate with foolishly. But just give them time. The handwriting is already on the wall for their cash cow, the Windows operating system, especially with Google breathing down their neck.
Currently, Apple has an approximately 6% share of the desktop computer market, up from a pre-iPod low of around 4%. Like tens of millions of PC-users, we avidly await the day that Apple, or some other innovator, drives a stake through Microsoft’s heart, freeing us forever from Windows-based frustration and mediocrity. But that will take many years to occur even under the best of circumstances, assuming it occurs at all. Remember, it took RCA two generations to die quietly.
In the meantime, and notwithstanding our long-term optimism toward Apple, we see the company’s shares as an especially appealing short in a bull market that has completely decoupled from reality. For this reason, we recommended shorting AAPL on Friday at 133.43. We have already taken sufficient profits on the position to allow us to exit without a loss if the stock should get second wind and push above Friday’s record high. This it may do; however, we will continue to re-short AAPL, as well as the shares of some financial-sector bellwethers, as long as we can do so without risking more than relative nickels and dimes.
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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2007, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Sunday, 8 July 2007 | Digg This Article | Source: GoldSeek.com
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