What will be the next step from Apple?

The only Apple's product that I own is an a i-Pod but it doesn't stop me from guessing what might Apple do next. Could it be that it reduce the dimensions (form factor) of the i-Pad and package a cellular phone capability (i-Padone = iPad + iPhone). Still, it wouldn't be the most convenient device to carry around as your phone. 

What if  you were to buy i-Padone and iPhone-lite (or a basic feature iPhone) and have the option to seamless use either of these devices but tagged to the same phone number. Oh when I meant seamlessly, I meant not having to take the switch the sim cards. You will have the option to leave your phone at home and just carry this i-Padone (Pad + Phone) or just carry the iPhone-lite. If they could work the wireless providers such that I as a subscriber could chose to activate either this i-Padone or say my i-Phone/my mobile phone. 

Rationale - Most of the time you are using your i-Pad, you would like to have a phone (work, coffee shop, using it as a GPS for car etc). But there are instances such as movies, friends home, parties when you want just your phone and not the i-Pad. So by the above proposed scenario, you will have the option to carry your phone or i-Padhone without having to use two different numbers.

Red is the color of new media delivery

Not too long ago, people wondered if Netflix could survive. Should I say that Blockbuster and Hollywood Video must have shrugged at such a thought. Later Blockbuster adopted similar model. The rest was history.

Whats next? Redbox vs Netflix.... And whats with the color choice - Red?

The fine prints

May be it is the ibanker in me that makes look more into the footnotes than ever. Just as I was catching up on financial news I noticed this promotion from fool.com (Motley Fool).



Take a closer look of the advertisement for the subscription of fool.com's "Hidden Gems". I saw this advertisement today (Nov 25, 2008). The footnote says the results are based on 4/21/08 from the date of recommendation (Whatever that is??) (and how convenient).

Now don't get me wrong:
I like Fool.com's tangential thinking and arguments in their articles related to investment opportunities. Although I may not use their information as a tool for personal investments, I do use it as a means to discover new segments/companies in a given segment and market information. Over these years, I have passively observed some of their recommendations and felt in general their stock picks did well.



However, I wish they were more candid in marketing their product. I would rather see fool.com post their Hidden Gems return adjusted for post-October 2008 market crash. S&P500 is down nearly 40% YTD. What is Hidden Gems' return? Do you want to pay $199 for this subscription when you don't how well it performed?

Fool.com - one suggestion. You would be better of showing your Hidden Gems performance vs S&P500 on month to month basis... even better you can lead us to a real-time link to the chart. Even if you have underperformed the S&P500 in the last two months, you could highlight
two things a) you outperformed S&P more than 50% of the time (if it is true) and b) you will come across a trust worthy source and build credibility.

3x ETFs - Direxion

For those who want the extra leverage

Leveraged ETFs (2x, 3x) - House always wins

As I mentioned in my previous post I am attaching my analysis of the 2x leveraged ETFs. I took the real-time data of the Dow Jones and analyzed the performance of the 2x long (Ticker: DDM) and 2x short (Ticker: DXD) ETFs. I chose a period in which the Dow starts with particular level, drops down and few days later ends up slightly lower than the starting level.

In this period the Dow index is down ~15%. You would see the DDM (2x long) is down ~32% (As you would expect). BUT look at the DXD (2x short) is only up ~15%!!! You would think you would be up ~32%

No matter what the management get its fees. The house always wins!

All that glitters is not gold - Understanding Leveraged ETFs

Leveraged ETF are ETF funds that amplify (by a factor of the levered ratio) the daily returns of a specific index. For example: (Ticker SSO) is 2x levered ETF that tracks S&P500. If S&P500 index moves +1% in a day, SSO will return +2% and likewise a -1% move in S&P500 will be -2% in SSO's value.

At first glance, leveraged ETFs looks good:
What is not obvious is the fact that leveraged ETFs are not 2x the annual return of the index. To be clear, suppose

Assume:

no management fees for the following example

Today: S&P500 is 1000 and the SSO is $50

1 year from now: S&P500 is 1100 (10% up from today). You cannot expect SSO to be $60 (2 x 10% = 20% growth)

The reason is the markets must have moved up and down before gradually growing to 1100 points from 1000. Each day the daily return or the move in the index in % is amplified by 2. This will affect the total return you would expect in leveraged ETF.

I will try to post a real analysis of leveraged ETF and it correlation to the markets

In search of good investments

Despite my personal investments losing 35% YTD and my 401k vapouring 42% YTD, I am determined to invest my cash back in the market. I am probably not going to catch the bottom of the market just as I have not sold anything in its peak!, but I do hope to put my time and effort in what I invest.

I was personally bitten by the tech bubble (was an engineer) and now I was bitten by the Wall Street meltdown (as an investment banker). May be third time is a charm. Since the tech bubble, I have made conscious effort to become more disciplined towards personal investments and moving forward I expect to become more discplined investor.

I will chronicle my learnings and my todo list in this blog. Stay tuned!