Ed’s Daily Notes for April 2nd   23 comments

Fox News: Apple vs. Samsung: Why dispute could quash smartphone access for minorities

An interesting perspective on the current court battle between Apple and Samsung:

The surge in the popularity of inexpensive but cutting-edge smartphones is more than just another marketplace success story. It is one with profound social implications, particularly among low-income Black and Hispanic consumers who have long been on the losing end of the digital divide.

If there has been any recent development that has helped to bridge that divide in communities like my own here in Harlem, it has been the advent of low-priced smartphones.

Indeed, studies have shown that Black and Hispanics access the Internet on a cellphone, tablets or other mobile handheld devices at demonstrably higher rates than whites.

However, the days of inexpensive smart phones may be coming to an abrupt end, due in large part to an ongoing patent dispute playing out in a federal district court in California.

Read the whole article, but it is another reason to hate Apple. I have seen the margins they get on their financial statements, and they don’t need to charge what they do. In my opinion, if Apple manages to legally run off all of their competition, I hope the U.S. government hits them with an anti-trust suit. In the end, I hope Apple’s unmitigated greed will come back to haunt them.

Fox News: GM slammed at hearing for failing to address 57-cent defect linked to deaths

Members of Congress tore into GM management during a heated Capitol Hill hearing probing fatal car wrecks linked to a defective part, claiming people died because the auto giant failed to fix what amounted to a 57-cent problem.

“We know that GM made a series of terrible decisions, and we know that this tragedy has exposed significant gaps in federal law that allowed them to do so,” Rep. Diana DeGette, D-Colo., said.

Now who’s responsible for the federal law that allowed this? Oh yeah, CONGRESS! But they won’t be slamming each other any time soon. I digress…

Fueling the outrage over the malfunction, DeGette said lawmakers obtained documents showing how GM had actually looked at possible fixes for the defect in 2005, but determined it would be too expensive to address.

The “unacceptable cost increase,” she said, turned out to be 57 cents apiece.

The congresswoman held up an ignition switch for one of the cars and said a small spring inside of it failed to provide enough force, causing the car engines to turn off when they went over a bump. DeGette showed how easy it was for a light set of keys to move the ignition out of the “run” position. That can cause the engine to stall, and the driver loses power steering and power brakes.

In GM’s defense, the cost is actually more than just the 57 cent part. Those springs won’t just hop into the ignition switches by themselves. And if you’ve ever had repairs done at a dealership, you know their labor costs are sky high. Multiply that by millions of cars, and suddenly you’re talking real money.

However, this doesn’t excuse GM’s failure. 13 people died from this. While I would never own GM stock because they took an unnecessary bailout (they could have been reorganized by a bankruptcy court), this is another reason for me not to own this greedy company.

Epoch Times: Yellowstone Volcano Eruption in 2014? Are Animals Fleeing Park As ‘An Alert’?

A number of bloggers are posting videos that show bison and other animals allegedly leaving Yellowstone National Park, prompting theories that as earthquakes ramp up the seismic activity will set off the Yellowstone supervolcano.

Two of the main bloggers behind the discussion stress that there’s no way to know when the supervolcano will go off but note that the 4.8 magnitude earthquake that hit on March 30 seemed to set off a reaction from the animals, who are moving for a reason.

…A series of smaller quakes have hit the region over the past few weeks, and those quakes have been linked to the recent 5.1 magnitude quake (and aftershocks) that hit in the Los Angeles region.

Tom Lupshu, who describes himself as a “noted Ohio survivalist and search-and-rescue expert,” said on YouTube that nearly one quarter of the northern elk herd at Yellowstone National Park are missing, according to the annual winter count.

“Biologists aren’t sure if there’s been a stunning decline in the herd or if other factors have skewed the tally,” he said. “Current Helium releases at 1000 times above normal. Complete media blackout. Herds of bison running for their lives on the public roadways and they were not being chased or rounded up, the bison were running down the mountain slopes onto roadways running right past a filming crew. They detect something vast and deadly. The Yellowstone Supervolcano is the only thing there that would fit the bill.”

This may be something, or it may be nothing.

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Posted April 2, 2014 by edmcgon in News, Politics, Stocks, Technology

23 responses to “Ed’s Daily Notes for April 2nd

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  1. Ed – are you serious about GM? You would never own them because they took an unnecessary bailout? What does that have to do with whether they are a good investment today?

    • Marshall,
      A basic rule of investing is to never buy stock in a company that you don’t like, regardless of how cheap they are. If you don’t like the company, then you will be more likely to sell the stock at the first dip, rather than just riding it out.

      • Ed – I have never heard of that rule. I just look for companies that are under priced.

      • Marshall,
        If you are 100% capable of being objective about your investments, then you wouldn’t need to worry about that rule. Most people aren’t that objective.

        But are you sure there isn’t some company out there you’d never buy, no matter how cheap it becomes?

  2. Ed, now that you have declared Apple’s margins are too high are there any other companies with too high margins that we should avoid?

    Being a pharm. investors are you in agreement these companies should immediately give up any rights to new drugs because this will drive the price down on the drugs.

    I am guessing you must be lobbying for the government to create a margin/profit czar for U.S. businesses.

    • Latetom,
      You’re comparing “apples” to oranges (pun intended). 😉

      Seriously, if Apple could make and sell a cheaper product, they could easily compete for the low-end smartphone business, and literally have a monopoly. Instead, they just sue the competitors who are eating their lunch in the low-end. Basically, Apple’s message to the world is, “If you want one of our products, we hope you have plenty of cash!”

      Pharma is a terrible comparison to Apple, because pharma companies can easily spend over a billion in research before they get approved, let alone see their first penny of profit. Apple doesn’t have to jump through government regulatory hoops in order to build a smartphone.

      I have nothing against companies with large profit margins. But at some point, I expect them to go after a larger market share, even if it means reducing those margins. Apple CAN do it, but they choose not to. Why? Greed? Arrogance?

  3. And the AAPL article. Don’t they have a right to defend intellectual property? And the authors assertion that if AAPL won it could “decimate competition in smartphone market”. Really? Do you believe that? Have the authors been to a verizon store lately? There is tons of competition. I am going to predict right now that even if AAPL wins that suit against Samsung, competition in smartphone and tablet space will not be decimated.

    I am interested in why you call a company greedy for trying to maximize profits. Isn’t that part of capitalism and free markets?

    • Marshall,
      I agree with you. The floodgates are already open to competition. Apple can’t put that genie back in the bottle, no matter how many lawsuits they file. So what do they gain from it? Just more money. Will they start making cheaper smartphones then so that even the poor can afford them? Since they don’t do it now, I doubt it.

      Let’s face the truth here: Apple is an elitist business for elitist people. People don’t buy Apple products because they are “superior”, they buy them for the same reason they would buy a BMW or Mercedes: status.

      • That isn’t true at all Ed. I do not buy an iPhone for status. I buy it because it works well. My wife bought a Motorola droid and she is just counting down the days to ditch it. My son had a Samsung s3 that died and my daughter had an LG she hated. Of the four of us, I was the only one happy with his phone. Actually, I find your comment kind of offensive.

      • Damn, I am an elitist! My wife and I own 11 Apple products (and a five year old GMC). Why — I am sure it has nothing to do with the simplicity of use, not having to download or debug our computers every month, liking to take our music with us, etc., etc., etc.

        Neither of us is a computer geek or anywhere close to it. But with our Apple products we don’t have to be computer experts; just push the buttons and they work.

        And I am sure the investment Apple made in R&D must have amounted to more than a couple of dollars or everyone else would have invented and beat them to the market in all their products.

        I also wonder why when Apple protects its intellectual property it is greed but when Google, Verizon, AT&T, Samsung and others protect theirs (and long before Apple went to the courts for relief) it is OK.

        Apple doesn’t make an inexpensive phone but they should reduce their margins and start making cheap knock offs. I guess the same goes for BMW and other high end goods. Lets see: we could demand the Palm Restaurant to set aside 33% of its table for the poor, every 10th Corvette be discounted by 80% for a poor person, the new diabetic pill which costs $1,000/day — every other pill produced to be sold at $1 and the list goes on.

        Ed, you have never written a positive sentence on Apple. I accept you don’t like their products or company and the elitist people who buy their products. But is it your idea to change the market place only for Apple or are there other companies which fall into the above criteria of you don’t like product, company and the purchaser of the products and company stocks?

      • Marshall,
        And I have an LG phone I love. What does this mean? Every phone is not meant for every person. However, I’d be willing to bet that every person who owns an iPhone could find a cheaper alternative that would be just as good, possibly better. All they have to do is shop for it.

        Latetom,
        What I dislike about Apple is people’s blind devotion to the company/product, when there are plenty of good alternatives out there for less money, that would be just as suitable to what most people are using it for. It’s like buying a new Mercedes when you only drive to church every Sunday.

        You guys are right though. I do have it in for Apple. I just can’t find it in my heart, or wallet, to like a company that massively overcharges for it’s products. Sure, they make a quality product, but no moreso than Samsung, LG, or nearly any of their other competitors.

      • I am surprised you all haven’t figured out that money is only bad when Apple is making it from all those brain dead elitists out there that are too lazy to find an alternative/knock-off product that is just as good as their mac, ipod, iphone, ipad, Apple TV, etc.

        Robb

      • See? Robb gets it. 🙂

    • I would agree with Marshall on two points. I have owned a Samsung phone with Android software…horrible. I also know many of my co-workers who have those phones and all seem to like them at first but after about a year the hardware breaks and they have lots of software glitches. I know some people who still are using there Iphone 3 or 4 because it works! As far as buying it as a status symbol..that can be anyone buying anything I guess. I own a iPhone but drive a 2004 Pontiac…I am am not into status symbols…just like stuff that works and I can use for a long time.

      As far as not investing in a stock that cheap because you don’t like the company is something I guess I have heard of “social investing” but I don’t think if I owned a stock where I didn’t like the company or CEO would make me sell it quicker. I have owned PM, I have never smoked, made me lots of money. I have also owned stocks were the CEO was politically opposite of what I believe but I still but the stock and made money in it.

      • Bobb,
        Even though I hate Apple, I would still buy the stock if I thought it was undervalued, and I have. I wouldn’t rate it as a “social investing” situation.

        Now SeaWorld (SEAS) is a different story. I am firmly against what they do with killer whales, and I would never own the stock for that reason.

      • Ed, you just violated your basic rule of investing. 🙂

      • Zosa,
        I did it last year when I held Apple for a short period of time. The first rule of rules: All rules are meant to be broken. 😉

  4. I read Bill Bryson’s book “a Short History of Nearly Everything” and if a Super volcano blows in Yellowstone, nothing else is going to matter. The last super volcanic eruption (74,000 years ago) caused a volcanic winter of six years.

    • Time to invest in a couple hundred of those Costco Survival packs, eh?

    • Is there a company to invest in that is trying to colonize the moon or mars 🙂

    • Exactly what I was going to say Marshall. People don’t seem to grasp the fact that we live is very short period of time that the Earth has been nice to us.
      And frankly I doubt the usefulness of a “Costco Survival pack”. You are talking about living like someone would thousands of years ago, at best for many many generations. If Yellowstone/Super volcano goes off you can kiss all commerce in the US to halt, and most likely all the other modern civilizations around to the world to collapse shortly after that either by the direct result of the ash in the air or just the simple lack of the US not providing them with food.

      I have never got the idea of the survivalist. If I was force to us a gun to kill others to survive as a cave man, I wouldn’t want to live.
      And you would be forced to do that if you have food, because a starving person isn’t going to say “you are right, I should have prepared for this”.

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