BAGAKOAA; September 1, 2012 So Many Cars . . . 

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September/2012

So Many Cars Not Enough . . .

 

Usually after a couple of single malts and several 2005 Silver Oaks Cabernet, I would never consider publishing The Blog.  Tonight is different.

 

I got a call today from Linda at The Ocean Institute. The OI is a charity that raises money to be good stewards of the ocean realm.  Devin and I have been supporters for several years.  This year they are having a Laguna Beach Million Dollar home raffle.

 

Linda reminded me that they were having some early bird bids announce today.  She explained many of the fabulous gifts that were awarded today.  She then told me that Devin and I had won the first place early bird prize.  It is a brand new Toyota Prius.

 

Now regular readers will remember that about 5 weeks ago we won an Audi Q 5 SUV.  What a pleasant surprise.  Yeah, even Devin and I are a bit overwhelmed as we have won two cars in 5 weeks.  Who da thought. 

 

On top of that we got scooped for the bill at Hanna's, tonight by regular readers Dan and Linda.  It is really hard to scoop me at Hanna's, but they made it clear that they were buying and Dan had recently climbed Mt. Whitney, so I was not about to argue.

 

Dave and team (Andrea, Rachel, and Lauren) did a magnificent job as usual.  We all enjoyed the Waygu Beef.  It was a wonderful evening with great friends, great food, and great service.

 

Today I had the pleasure of having breakfast with the guys.  Tom, Tim Mike and Russ arrived and we enjoyed political banter and good stories about recent life experiences.  I was recovering from a whacky back disorder so I chose not to brave the course today, but hope to make a round tomorrow.

 

Tomorrow is Jack's 16th Birthday.  Devin went scouring the country side looking for gifts for man child.  I chose to work on making our guest room a bit more presentable for the arrival of Dorothy, my mother in law.

While I was making that happen I had time to consider other observations about being retired and life in general.  Many of you enjoy this segment so here it be:

 

Who decided that light switches need to be up if they are on and down for when they are off?  I actually stopped upon using our bathroom to consider this?

 

I did not know there were rules to retirement.  Devin came home from running all over God's good creation yesterday and was disappointed that the morning dishes were not cleaned and put away.  Now I am new at this retirement thing and these dishes were always put a way when I got home from work so I assumed we had people that came in late in the day and squared away the kitchen.  Apparently Not.

 

I have learned not to brag about anything I do during the day, because it is expected.  Upon declaring, "I cleaned up the cat barf yesterday.", I did not get the accolades I was expecting.

 

I have learned not to sit on the couch after a PBJ sandwich because your eyes get really heavy.  If you want to telepathically get a call from your wife, just close your eyes.  I swear it works every bloody time.

 

No matter what kind of change you have in your car, it will never be the correct change for the fast food cashier.  Really.  In the last two weeks, whether it be a drink or a sandwich, I NEVER have 29 cents or 58 cents, but now I have 328 dollars worth of change.

 

I have way to much Sox, that is S O X aka socks.  Ok I have 36 pair of white sox.  I did not know this until I counted them today.  We are fortunate to have Maria and her team of wonderful ladies who keep our mess manageable.  The also do all our laundry once a week.  I do not wear white socks every day.  Since starting my back deconstruction exercises I might wear six pair of socks a week.  Why do I have 36 pair here and about 19 pair in Utah?

 

Buttons.  I did not know till I was retired how many times my dry cleaner breaks buttons.  I know it happened in the past, but did not realize how common this is.  My partners at PADI probably though I wore dress shirts every day, but that was not the case.  I wore them for special meetings and Board Meetings.

 

I have about two dozen dress shirts and I enjoy wearing them in my retirement.  All the ones without buttons had made their way to designated DO NOT WEAR zone in my closet.  I have about 6 shirts that have had buttons broke off by the dry cleaners.  I know it was them because I do not loose buttons.  I will bet I have sent some of these shirts to the dry cleaners 3 or 4 times because the buttons are missing.

 

Devin now tells me I must write a note on a piece of tape that says Button so they know to replace it.  How about I write one that says "idiot".  Come on you are ironing a shirt.  How hard it to spot a missing button.  You see the little dickey thread thing and say, "Whao, I'll bet there was a button there once!"

 

It is amazing what I am learning as a retiree. 

 

Here is another one.  The trash can in the kitchen does not empty itself.  It's true! I would leave for work in the morning and it was empty and when I got home on most nights, it was empty.  I assumed there was some kind of chute that took the trash out to the back of the house and put it on the trash cans.  Apparently not.

 

Also, these cans do not tell me they need to be emptied.  They do tell Devin, and apparently they are not very polite about it because since I have been home more, when they tell Devin they need to be emptied, she does not handle it very well.

 

I don't know what they say to her but she can get really upset and grab the bags and slam doors all they way out to the back of the house to the garbage cans and then she returns to the kitchen and calls them "Absolutley Worthless."

 

These are just few more of the observations I have made since being retired.

 

While not emptying trash cans and replacing buttons, I had time to do homework on another stock.  One we all know and love, AAPL Apple.

 

 

 2012 9 1 AAPL 

Current $665.00

Cost Basis $599.00

First Purchased (this go around) March 2012.

 

Apple Inc., together with subsidiaries, designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players; and sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Its products and services include iPhone, iPad, Mac, iPod, Apple TV, the iOS and Mac OS X operating systems, iCloud, and various accessory and support offerings, as well as a range of consumer and professional software applications. The company sells its products and services to consumers, small and mid-sized business, education, enterprise, and government customers through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers. In addition, it offers various third-party iPhone, iPad, Mac, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and other accessories and peripherals, through its online and retail stores; and digital content and applications through the iTunes Store, App Store, iBookstore, and Mac App Store. As of September 24, 2011, the company had 357 retail stores, including 245 stores in the United States and 112 stores internationally. Apple Inc. was founded in 1976 and is headquartered in Cupertino, California.

 

Apple is not only a stock, it is a market.  It weighs so heavily on the NASDAQ that you cannot find a day when Apple is up and the NASDAQ is down.  (Ok there were three this year.) 

 

As compared to industry averages, it's price to sales, price to book and PE are a little rich, but on every other relevant metric, the stock is outstanding.  No debt, ROE is respectable, net margin is obscene and so is the operating margin, the last three years earnings and revenue growth are extremely healthy.  They put the "cash" in "cash cow".  2011 Free Cash flow exceeded 30 billion.  The last twelve months they are tracking above 40 billion. 

 

Last quarter's earing call report an unexpected drop in iPhone sales.  Well not really a drop, they just failed to blow away expectations.  The iPhone and iPad account for almost three questers of their total revenue, and those products are just starting to see the light of day in certain emerging markets.  iPhone sales are softening and it will be interesting to see how the next iteration of the iPhone is adapted by key markets.  Apple has a lot of room to buy market because their margins are extremely high. 

 

Tim Cook is under extreme pressure to oversee the last 12 months of the Jobs product factory while meeting time lines and then staging his own debut with new products.  The good news is he has a ton of cash, he secured some nice IP with the recent win against Samsung, and most (not all) of the competitive entries into the iPhone iPad market have not met with huge success.

 

The operating system on the iPhone iPad is very sticky.  Users like it and will not easily migrate away unless something really cool gets their attention.  In other words, only the bleeding edge early adopters are likely to try Brand Y, and they have a tendency to come back quickly. 

 

Most analysts say the stock is fairly valued in the 650-670 range with 12 month pricing (mentioned earlier this week in this blog) in the 725-750 range. 

 

At $665 a share, this may be a bit hard to swallow for some folk.  Another way to play it would be to buy some longer term OOTM (Out of the money call options.)  For example, you could consider some April 2013 700 dollar call options for 50.00 a contract.  For each contract you are controlling 100 shares of AAPL.  It gives you the right but not the obligation to buy 100 shares of AAPL at 700 a share next April.  If AAPL approaches say 690 by the end of the year these calls could easily be worth $60.00.  That is a 20% return with out having to tie up $66,500.  Food for thought.  OPTIONS ARE NOT FOR EVERYONE.  UNDERSTAND HOW THEY WORK.

 

This analysis was done using the following sources.  FINVIZ.com, AAII, Barron's, Charles Schwab, UBS, IBD Publications, Morningstar, Yahoo Finance, The company's website, Value Line publications, WSJ, The Financial Times, and Bloomberg.   We encourage readers to access these sources when doing your own homework.     

 

 

 

Salve Lucrum

 

 

 

 

 

 

 

 

 

 

Brian Ireland
 
 
Since 7/26/2012
BAGAKOAA;

I am not a professional investment advisor. Anybody reading my blog and investing accordingly must be out of their minds. I have made more money than I have lost. There are many more qualified people than I to actually tell you how to invest your money.

BAGAKOAA=Boys And Girls And Kids Of All Ages

Salve Lucrum=Latin for Hurrah for Profit.

2012 Year Ending

Dow 13,073

S&P 500 1,358

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