Theme: Short AAPL

Wrote this on 10/20, same points apply, will update it soon (to include grmn, rimm, palm, vz, etc) :


Short AAPL


AT&T's earnings this morning point to a dominance of the iPhone that
is both amazing and possibly priced in. Apple seems to be firing on
all cylinders, computers, ipods, phones, media, margins. Not a cheap
stock, in p/e/g, p/b, p/c, so possibly priced in.

The only competitor that has a comparably loyal following and
amazingly well designed products is Google. At some point, Android
will be a winner, even if by a little and that will crush Apple's
valuation metrics for that business and put a chink in otherwise
spotless armor.


Interestingly, Apple provides both quinessential examples of either
outcome: the iPhone may be the 'iPod' of the cell phone market and
dominate market share in a very competitive world with many argueably
better mousetraps.

Or Android will be like the iMac, a superior product with tiny market
share but that still makes a dent in the leader's dominance.



Flys In the Ointment:

Leaders tend to stay leaders for a long time. Network effects may
have taken enough hold to perpetuate.
Their mac acceptance may continue to go through the roof.
Earnings growth and stability may demand a growing premium in a world
increasingly barren of both.


Technicals:

Stock is still on a tear, making new highs. Extended, though not safe
to short yet simply because of action. Idealy the market would turn
lower, Apple would break it's 10ma, but by then alot of money has been
made.
Can short a little here, wait for confirmation or market crack.
Basically a high beta play on the SPX.

The Droid is A Game Changer

Just got mine yesterday. Love it! I NEVER buy anything when it first comes out, and take much pride in being tech savvy enough to not be an early adopter. But I went out and got this the day my plan ran out, because its that big a leap forward.

The phone is sold out at many stores. Demand is stronger than I would've imagined. The operating system is not polished but is powerful.

Google will move to voice command on everything, and operating system will constantly be improving.

This is basically Google OS on a tiny laptop. They decided to not bother with yester-year's platform, the PC and are moving straight for the jugular - domination of the mobile communications platform.

Open to the world for development and customization.

This changes everything and I'm going to get on this bandwagon.

Expecting A Bounce

Of the mildly wounded, possibly dying cat variety!

If any rally today manages to exceed yesterday's high, at 1053, we're looking at ~1070 as the next stop. Support at 1033 is substantial, with more important support at 1014 and very strong support at 1005.

Clearly, the risk reward for a short trade at this point is not very strong, on a day to day basis. We'd short into rallies since in the mid term (3 months), being short makes the best sense it has in a long while.

We Have Arrived

You know us Indians have really become part of the fabric of America when this type of thing gets in the Journal:

But word around Silicon Valley was that Galleon had insiders at many tech companies, a so-called Indian mafia of assistant treasurers and comptrollers (though Raj is Sri Lankan). Many assumed that's how Galleon beat the market, eventually growing to $7 billion in assets.


Sigh. Between that and the obligatory Indian role in every TV show, it's clear we're just one of the crowd now!