Despite my previous post warning to the contrary, I can't help but constantly watch and update my experimental portfolio.
Overall, the crap stocks aren't doing too badly, but that is mostly thanks to Nokia. Intel is up about 3.5%, but I think that's just noise. Until we see results from their mobile play, it's hard to tell. Also, there's still a lot of questions around the future of 'WinTel." I regret not pulling the trigger on Research in Motion, but with Nokia already in the mix, it seemed like too much piled into one sector. Besides, I think Nokia has better long term upside. I also started tracking Lexmark, but I'll talk about that another time.
Onto the ideas.
SHOULD GOLD REALLY COST MORE THAN PLATINUM?
I've been following gold for a while, especially since its price grew above platinum earlier this year. That is a very strange thing which lead me to understand platinum a bit better.
Platinum and Gold are about equal in rarity and quantity, but their purposes are very different. Also, Platinum is harder to find and refine. Platinum is primarily used in industry (in the manufacture of catalytic converters among other things). Gold is mostly "useless" beyond investment and adornment purposes. People use gold as a way to hedge against currency risk... among other things. Of course, most people do this by buying GLD which seems a bit silly, since a massive collapse will make selling those shares quite challenging... having 1 oz. bars might be a better bet for "Prepper" type zombie-apocalypse activities.If I thought gold was a bargain, that's probably what I would do... but I don't think it is...
There's just way too many "We Buy Your Gold" stores around... it has to be overpriced, just based on the lemming heuristic :). Everyone and their mother is sure that gold is the safe bet for the coming inflation storm (which I believe is real). However, if there is a liquidity crisis, and I don't mean a macro bank-collapse crisis, I mean when people who have GLD shares need money to pay taxes, mortgages, or twinkies or whatever, they will all have to sell AT THE SAME TIME; and that is going to be ugly - if it happens. So I think Gold might be heading for a tumble at some point in the "near" future (i.e. 1-5 years). Just look at the above drop in platinum back in 2008... people underestimate how fast and brutal that stuff can be.
Anyway, I did a bit of research and I think that buying GLL (ProShares Ultra Short Gold) might be the way to go. It's a bit more risky in that it attempts to offset changes in gold prices by a factor of 2, but the other shorting vehicles are less appealing. Here's a quick graph of Platinum (PPLT), Gold(GLD) and Gold Ultra Short(GLL) over the past few years:
Gold is just killing everything, and I'm sorry I missed that ride. Oh well. Since I have no idea when (or if) gold will drop... Gold may very well go to 2,000 or 3,000 or who knows what... I'm planning on spreading out purchases over a few months or even years.
To be clear I think there is a fair bet that currencies will continue to have problems and gold will rise to even more dizzying heights... but I'm also willing to bet that my belief here is wrong and the upside to being wrong is too much to ignore... so I am investing directly against what I think may happen.
I'm willing to bet that when something unexpected happens (Solving fiscal cliff, Europe sorts itself out, Middle East calms down) or some combination, Gold will drop pretty fast. Conversely, something like a sudden rise in interest rates might attract the greedy away from the safety (but crappy dividends) of gold and back to "other things" which could also generate a fairly quick drop. I don't really care or know what those other things are, but I see potential upside to investments like GLL. What can I say... I like to bet against things, even myself :).
GO MICROSOFT, GO
I am loving Microsoft right now.
I bought a Surface to see if it could replace my laptop and live up to its promises of being a sort of business iPad and it completely fails that test. There's no way my Surface replaces my laptop. It's too slow, the keyboard is weird, Windows 8 just isn't quite there. Apple hardware and software just crushes it in every way. I also love all the articles that are hyping up how awesome the iPad Mini is, how it's THE product everyone wants, while there is equal press deriding how businesses don't want Windows 8 and the Windows Phones are not setting the world on fire. In the mean time Google is putting the squeeze on as Droids continue to increase their market share and Google keeps trying to take the Office software market from Microsoft.
So why am I loving Microsoft? Because I believe that opportunities are made when expectations are either way too high, or way too low. I believe that Microsoft is a well run company that has A LOT of cash and will hopefully enter the "way too low" end of that expectation curve. They can take many swings before they are done, but I think after the next quarter of earnings (the ones that show Windows 8 "failed") they will get hammered. It's possible that this is built into their current price (which is too high for me) but I'm hoping that it's not and we could see a nice big drop after a whirlwind of bad news and downgrades from professional investors.
Microsoft is making a big push into Cloud and Mobile, neither of which has been realized on their balance sheet. Of their 16 Billion in revenue, about 9 is spread evenly between "Windows and Windows Live" and "Server and Tools" with another 5.6 from their "Business Division" and about 2 from "Entertainment and Devices." I just don't see businesses running away from MS Word, Excel, etc. just yet. I also don't see businesses running from the "Server and Tools" just because Apple makes good phones and tablets. Server software choices are expensive to change and people are lazy. Just too easy for IT managers to keep doing the same thing. Also, I think that XBOX is great and has a bright and growing future.
Thus, I suspect in a few years, Microsoft will figure out the Windows 8 thing, will figure out where computers are going and also make good inroads into both cloud computing and mobile. Of course, that might take many years... 3, 5, 7, whatever. I was around when they were johnny-come-lately to the browser war and crushed Netscape (unfairly, I might add). I'm hoping that the next 3-9 months drive a lot of irrational MSFT selling which may create a corresponding buying opportunity. Of course, having MSFT and INTC at the same time might be too many eggs in one basket, but I also think they are somewhat different bets. That being said, I think they are both well run companies that have a good future ahead of them, once their through this brutal transition period.
Anyway, those are my guesses for now.