The year 2013 is not in the books, but Stocktoberfest has me thinking about 2014. So does this kid:
In 2010 I was in Paris, sitting at the Four Seasons and I ordered a club sandwich. It was $50 (insert French joke here). I tweeted at the time that we were headed for a world of $50 Smartphones and $50 Sandwiches. I don’t know how to look that up, but I remember getting the ‘Quote of the Day’ from Michael Parekh.
At Stocktoberfest, we were treated to an awesome presentation by Andy Kessler entitled ‘Investing in the Fog’. Andy believes I was way off on the $50 Smartphone…he feels it is more like $35! I think Andy is right.
As for sandwiches…as we speak, the Chinese and the Arabs are sprinkling gold dust on them for shits and giggles. The Stocktwits50 is full of food and beverage companies right now including Whole Foods, Chipotles, Starbucks, BoulderBrands ($BDBD – gluten-free foods) and United Foods ($UNFI). All premium priced brands.
Chinese women who hate the taste of coffee are holding their ‘green tea’ noses to be seen in the windows of their local Starbucks. Paying $50 for a Chipotle’s Burrito can’t be far off.
The inevitabilty of the $35 Smartphone will set the stage for super conglomerate global web and technology companies. Eventually we will be able to measure the ‘social leverage’ in these new networks that we have been building. In the meantime, it is a game of chicken as the public markets bid up prices in this low interest rate environment. As Fred points out, the Genie has gotten out of the bottle with companies like AirBNB and I would say the mobile and social web has put the ‘Genie AND The Bottle’ in more hands than ever.
The cash rich Nasdaq and Global Technology companies will continue to invest in talent and acquisitions. I just believe the deal size will get way bigger. I also believe that interest rates, save spikes, will stay low. A disappearing United States middle class has been underway and that should keep a lid on interest rates. Don’t shoot the messenger.
Apple will eventually get bored with sub $1 billion acquisitions. Google is not afraid of the big acquisition.
If Apple paid $25 billion for Netflix, it would be insane by all financial metrics of valuation, but cost just two quarters of Apple’s cash flow. Even if Apple is not interested, Google might think they are…
Exciting times to invest, trade and speculate.
exciting times indeed.
jeezus Howard – isn’t there something wrong when we’re arguing for acquisitions that only make sense because, hey, we’ve got cash burning a hole in our pocket, and hey – the other guy might want to be an even greater fool than I am even though I know the price I would be paying is absurd? (I’m talking about your final paragraphs on AAPL/NFLX/GOOG, of course)
just some speculation. I think the better way to read this is that there is a bid under this market in 20-30 percent range that is more important than the froth we are seeing now…buy the dips for now, dont chase.
this thinking helped me step up on Zillow last year when it looked broken. category leaders will be bought in broken times both by potential acquirers and people like me who understand the value in the age of the social web has some new netrics that wall street cant value
uggh – now it seems like you’re talking about combining mean reversion into momo plays – which is a disaster when the momo finally comes to an end (ie, NFLX 2011…)
in other words, “don’t chase” isn’t really the right way to trade momentum names – in MOMO names you’re *always* chasing….
“don’t get caught catching the falling knife” is what you need to do – but it sounds like that’s what you’re suggesting (of course, hoping the knife doesn’t fall though!)
not at all…i am discussing what I think the hedgies and cash will flow into…much like there is a bid in enterprise stocks in every drop because beuffett is in ther long IBM. ut may not be right, but it is whats happening until it is not. I am not condoning knife catching just trying to read the tea leaves as they are today.
ok. gotcha.
As well, Social Data/Market Analytics as a business will continue to boom as was many a topic at your awesome Stocktoberfest gathering. Lots of smart people are rolling up their sleeves in that space.
$35 smartphones is great, but when 70% (and growing) of the usage is offloaded to wifi and mobility and consumption are constrained by very high service provider pricing we might be setting up for a correction. Similar to the narrowband dial-up brick wall web 1.0 ran into in 2000. We need to get mobile access down to the $1/gigabyte range for a lot of current valuations to be justified.