My Concerns When Looking At The Future Of Apple

Disclaimer: For those of you ridiculously bullish on Apple (believe it can do no wrong) do not waste your time or my bandwidth reading this article.

Investors and consumers alike are truly in love with Apple. Some are new to this love affair, while others are veterans of a great run. Either way, the remaining part of 2012 lends itself to some interesting action in the stock. I will not serve to bore you with the news you already know, the items in the pipeline, rather, I will bring up a few concerns I have looking at the future of the tech giant. My first concern focuses on the release of the iTV and where it leads Apple.Concern number two revolves around the growing popularity of the iPhone and how this may serve to hinder Apple in the future.

Apple products scream cool and sophisticated. When I think about the Apple stock, all I can think about is wads of hundreds and fast cars. Apple has handily earned the previously mentioned  perception, they have done very well for consumers and investors alike. That being said, the iTV has set itself up to revolutionize the television industry. It has been set to do so by both the executives in the Apple boardroom and the masses throughout the world. Assuming that the iTV lives up to the hype, which by looking at Apples previous success, one can give the benefit of the doubt on, will Apple live up to the investors hype? Apple has blown away the investing public time and time again with its extroadinary iPhone sales numbers, but will it be able to replicate that with the iTV? One can take the side of the arguement that the iTV will simply serve as an addition to the many other successful Apple products, meaning that it is merely the icing on the cake. Though if you want to make the argument that the iTV is the next "IT" product for Apple, things are not so clear. To begin with, one must realize that the other television production companies will not go without a lot of kicking and screaming. RIMM merely handed over its market share as if we live in a socialist society, Sony and the other big players will not. Secondly one needs to be very concerned about the price point of the product. The iPhone was able to sell massive amounts of phones because the phone carriers supplemented a majority of the cost. One must ask, what will happen without supplements for the iTV? With the clout that Apple has, they will make the cable companies pick up some of the bill, all this has yet to be seen. So I sit patiently waiting to see how the iTV will play out for investors.

My next concern deals directly with the Apple flagship product, the iPhone. Don't get the wrong impression, I have one sitting beside me as I write this post. My concerns actually stem from the success of the product. What seperates a Range Rover from a Explorer, or a Porsche 911 from a Mustang? Your first thought is likely the cost difference, which is correct, but more importantly the exclusivity that comes with a higher price. Many Americans can go out and get a Mustang or Explorer tomorrow with the help of the bank, very few can do that with a Porsche or Range Rover. The iPhone for the longest time has marketed itself has the foreign car of the smart phone world, attempting to sell itself to the upper echelons of society. What happens when everyone (waitresses to grocery store attendants) from all walks of life has this prestigious product? The iPhone ceases to be exclusive. This may have some negative effects in the future, as Apple suggests as of yesterday, that it will continue to have one size screen (meaning just one new product). I had hoped that they would come out with different sizes and price points, they don't seem to want to. You can sit there and argue that the old version of the iPhone serves as the lower end price point. This may have some merit, but the fact remains the iPhone at $200 is no longer exclusive. A portion of its appeal has disappeared. If everyone can have caviar and Cristal for dinner (or lunch as I prefer), it no longer has the same allure. This may be remedied in the future through the phone carriers giving up supplementing the cost of the iPhone, increasing the price to make it out of the grasp of many. Again we will have to wait and see how this plays out, in the meantime I will go FaceTime my 14 year old niece on her iPhone.

Though I sit here, in deep thought, worrying about the future of Apple, I am still very bullish short term. Apple has held up nicely compared to the devastation that Fecesbook and other social media players have seen. Apple has continue to hold up fairly nicely in this market and I may look to get in soon.

Watch video below for a good laugh.

Photo by Tommy Klumker

Scared Money Don't Make Money

Soon a moment will come when all will capitulate and those standing with hoards of cash will look to make a killing. We have seen the story play out time and time again, when the worst slaps you in the face, those who are willing to take on risk prevail. Look back to the summer and fall of last year when every investor was running away with the fear of the indices going to zero. Those that got into the quality names around that time and held into the rally of early 2012 were handsomely rewarded. Don't misunderstand me, those that bought bad companies were left with just that, bad companies (RIMM). So make sure you trim the fat off that portfolio, companies that will likely keep weighing down as the European hangover remains for some time. It looks like this hangover could continue to resurface in the years to come and the recession may last a decade.

At a certain point the markets become numb to the mess. If you get punched in the face again and again, at a certain point you throw up a block. Things are bad across the pond, but we have known this for a LONG time. There is a slim chance the end of the world (European Union) will come, but we have known this for a LONG time. At a certain point the markets are going to shrug it off as they have done before (many times). Those that are prepared to buy into the fear will prevail. At a certain point, which I am waiting patiently for, one should buy and prepare for greener pastures.

Assuming Social Media And Mobile Are Dead

Right now, with all the negativity surrounding the technology sector, let us play a little game. Let us assume that the world will continue to fall apart, that death has come to technology, that social media, mobile and the cloud are finished. The social media critics have finally gotten their moment of glory, they have actually made money on their short positions. The game I hate to inform these bearish fools, has just begun. Let us attempt to create an argument that the future of both mobile and social media has collapsed, attempting to infer the worst case scenario.

In this factitious scenario, everything has obviously fallen apart. One will immediately ask, how will these horrible bubblicious tech companies make it through the next phase of technology growth? The answer comes easy, and the critics shall be dumbfounded, they will take part in the next exciting tech phase. Look at both Apple and Zynga, they have tons of cash. From my modest understanding of business, cash reigns supreme (just ask those that bought stocks in 2009). So assuming the worst has befallen many of the tech companies, mobile phones quit selling, people around the world turn off there cell phones, the 900 million Facebook users quit sharing, many tech companies will be able to profit from the next phase by merely buying into it with their hoards of cash.

Well you say, you have looked past the tech companies like Yelp, that lack cash on hand. Patron of capital overlook, critic of the social media, you sir seem to miss the big picture once again. What would a company like Yelp and those similar to it do without the potential of mobile and the foreshadowed profit from it? Innovate. Being a product of innovation and entrepreneurship, technology companies are some of the greatest innovators and entrepreneurs of our time. Mark Zuckerberg has been compared to Bill Gates and many other greats. These comparisons are not made because these young technology CEO's are stupid. The comparisons are made, because these young men and women are the leaders of their field and will continue to innovate to stay on the top of their field. What seperates them from other companies is the fact that their CEO's are often times serial entrepreneurs, so innovation comes with ease. Even if these company leaders are not serial entrepreneurs, they emanate entrepreneurship, just look at the progress in the last few years of many of their products. This may be a far stretch for some, but Apple did not get its gold star through a lack of innovation. For example, look at the story for Yelp is similar, they see a need and they fill it. If this need exists on a phone, in a tablet, or in a spaceship headed towards mars, they will innovate and profit from it.

Let us make some more rash assumptions, that these new companies have no cash and no innovation. Making the assumption that these technology companies will never be able to monetize anything and that their entrepreneurial spirit is a giant scam, where are we left? We are left with everyone in Silicone Valley being wrong, all the big money supporting the mobile and social media space being, take a guess, WRONG. In this hypothetical world we create, all these new companies that continue to get funding and grow users are not the future. We are assuming all the big and smart money has no knowledge. So again where are these companies left, without mobile and social media (and cloud)? The answer is simple they profit in the old way. They will take the massive amount of date they have collected and sell it in paper form. Yelp will publish reviews on paper and hand them out, Facebook will cease to exist and people will talk to each other in person, and Zynga will produce games for the Nintendo 64. If technology is not the future, go ahead buy stakes in the Yellow Pages and the Nintendo 64, while you are at it, invest in some rotary phones, because hell, the best investing takes place ahead of the curve.

Disclaimer: I am long some social media stocks, the social media critics are coming for me, so I'll stay strapped.

For more of my previous opinions on social media click here and here.

Looking Past The Facebook IPO At The Future Of Zynga

The negativity surrounding Zynga has led to a significant decline in the equity price, leaving many long term investors in the red. This recent price decline can be seen as a counter balance to the price increase seen in the earlier part of the year. At that time, many factors contributed to the increase. Among the most prominent were anticipation of the Facebook IPO and the possibility of a partnership with Wynn Resorts in the future. This exciting news had great benefits for Zynga shareholders as the market took notice of the companies potential. Though Zynga received a bump due to associations with big names like Facebook and Wynn Resorts, the market has failed to realize that Zynga's business model allows for the company to grow and profit heavily through its effective monetization of products.

Considering the large sums of cash on hand and the potential for future profit growth, it would be an insult to associate the terms "unprofitable" and "tech bubble" with this enterprise. Zynga stands poised to make money for itself and investors through delivery of quality mobile gaming applications that are easily monetized. In the recent years, we have seen an increasing number of consumers turn to smart phones and mobile devices to fulfill their computing needs. In the gaming world, there has been a stark increase in the number of games played on mobile devices. In general this shift towards handheld devices and mobile computing will merge resulting in huge profits for Zynga. Apple, a prime example of the growth in the smartphone space, has given a great return to investors through their exposure to the unprecedented growth in the smartphone market. Because of the increase in the quality and availability of mobile gaming platforms, Zynga stands at the epicenter of this revolution to mobile gaming. The mobile games Zynga produces have the ability to be played on all platforms, be it that of Google, Apple, or any other smartphone leader that emerges in the coming years. Even if hype of Facebook and Wynn fails Zynga, Zynga stands ready receive unprecedented profits through the mobile gaming revolution.

With big names like Morgan Stanley and Barclays holding shares of Zynga, the current animosity towards this stock seems excessive. Additionally, many major analyst showed huge support during their latest conference call. The Q/A suggested strong support of Zynga's business model and potential for growth. Skeptics point to the decline in Zynga's DAU in many of its popular titles as catalyst for lower stock prices. These skeptics fail to realize that is part of the natural life cycle of gaming products. Avid console users trade games to GameStop on a regular basis to pick up different title. With current technology, exchanging a game is as easy as deleting it and adding another title. Switching to another game can be equated to changing channels on one's television. With Zynga's varied portfolio of games they are set to profit whenever a smartphone user changes his or her mind, for instance, retiring "Words With Friends" for "Draw Something." Skeptics also insinuate that Zynga has failed to monetize their DAU. That point is valid, but given the context of the situation, remains immaterial. This merely suggests that in the coming months and years that Zynga will be able to better monetize their content, returning profits to shareholders. A prime example of this can be seen in the recent integration of Nike product placement in the "Draw Something" application. This novel method of product monetization highlights Zynga's ingenuity and conjures hopes of furthered creativity in monetization. Mobile monetization, as mentioned recently in the financial news of Facebook, still sits in its infancy. Itis reminiscent of the early days of Google AdWords. The monetization of content by both Zynga and Facebook has ceased to be a choice. With the ingenuity these companies have shown in the past, in the creation of their unique enterprises, they are surely to profit handsomely from their millions of users in the future.

The potential Zynga has as it's own company surpasses the scope of next week, well past the Facebook IPO. Zynga has positioned themselves in a market with massive growth potential, both domestically and abroad. They will be able to profit from all mobile carriers and will not be constrained to one product manufacture. The Electronic Arts CEO John Riccitiello recently spoke out against Zynga, suggesting that they and other companies in the social gaming market were purchasing startups at exaggerated price. With the responding negative price action in Zynga, one can be left wondering about the OMGPOP purchase. An appropriate rebuttal to Mr. Riccitiello's comments would be that he lacks understanding of the mobile gaming market and furthermore that he is blind to the potential in this sector. Zynga, however, is poised to take advantage of this potential, all while taking in massive profits.

Today Will Go Down In History

You have heard enough advise suggesting what tomorrow will bring, only the tape will tell the true story of Facebook. Whichever way tomorrow trades, up or down, the movie below will get you excited about the day that will go down in history.

Playing Chicken

The market has turned into a giant game of chicken. I sit and watch the stream of news and ticker prices, wondering who will buck first, the bulls or the bears. On the bull side, I see a group that has the support of the recovering economy of the United States. On the bear side, they sit hoping that Greece falls apart bringing the European Union down with it. Let us take a deeper look into both sides of the argument to see who will prevail in the heated game of chicken.

Looking at the bull side of the argument, we see a lot that was not here a year ago. Economic news has gotten substantially better. One still sits and questions the employment data, knowing that the numbers are not as good as the 8.1% suggests, at the same time, the number is far from the teens. Whichever barometer one looks at the y/y numbers, the data has improved substantially, enough to look past a double dip. The good data has slightly fallen off in the last few months, don't get me wrong, but that is par for the course. One can look at the U.S. economic picture, the company earnings, and look towards the end of the year and see that a double dip is nowhere near part of the game plan. The bull case, or the case in which the world does not end, seems to hold some merit into the last half of the year.

Taking a long hard look at the bear side, a group that I have been part of for a majority of the rally into the first half of 2012, one can be left wondering. Wondering what exactly the consequences are of the Euro mess, what exactly can go wrong in China, and how low the market can go? The Europe mess has legs, no question. If things fall apart across the pond, it will likely not be a good year for anyone. Though, what are the real chances of things falling apart? If the European Union wanted Greece out, wouldn't they have pulled the plug some time ago? The truth seems apparent, the European Union will attempt to stick together, whatever it takes. They may end up kicking Greece out at some point, whatever the E.U. chooses, it will be to preserve a strong European Union. China and the BRIC countries have seen slowing growth as of late, but the hard landing suggested some time ago, has recently lost merit. The bear has had some good support as of late, but U.S. growth, earnings, and balance sheets suggest a healthy business environment for U.S. equity markets.

Obviously there are many more facts that I failed to cover in the short post. One thing remains true no matter what facts are presented, the bull side looks strong. It may take some magic to make new highs, but the end of the world is far from here. The markets have been fooled before, and they may not be the sharpest around, but they won't get fooled this time. I sat hoping and praying for the European mess to fall apart at the beginning of the year, it didn't happen. It didn't happen this year, last year, and the times before that. I suggest one quits hoping and praying for the end and looks at the facts. With or without Greece the E.U. will come back stronger, the recession in Europe will linger, but the recovery will not double dip here in the states.

Some People Just Don't Get Technology

I was sitting at having coffee with my old man yesterday morning, talking shop. We were talking technology companies, and he said something that baffled me, "It feels like the tech bubble all over again." Initially I was quite baffled. What he said was contrary to all my beliefs and current stock holdings, then it hit me, he didn't get it. It was that simple, he merely did not understand the current market situation for technology companies. I wont go as far to say my fathers a dinosaur or lacks investing intelligence, he just doesn't think about tech companies the way I do, the way investors should in the current market.

It hit me, like a ton of bricks, and made perfect sense. A majority of investors are so worried about their past mistakes they can't see the future right in front of them. So many long term investors are fearful of the chaos the tech bubble of the 90's wreaked on their portfolios, how they were fooled into thinking that companies had potential when they did not. Today, many of those investors are still around, and they watch the market with blinders on. These individuals fail to realize the growth potential of a technology company compared to the ig box store, the growth potential in mobile, the future of the worlds technology needs. No longer are companies coming to market that don't offer services, revenues, or users. The technology companies of today are part of our daily life. The younger generations no longer check the paper for the news, rather log into their twitter from their smartphone. The dinosaurs of the investing world will be missing the growth potential and great returns in the coming months.

I constantly hear that the first day of Facebook will likely be huge, but after that the day of reckoning will come. Why is Facebook destined to trade down? I am not suggesting that the stock will trade in one direction, it's a market, stocks trade both directions. To suggest that the peak of Facebook's stock price and return to investors will be the first day is just ridiculous. This could be the year of tech, or the decade of tech for that matter. The growth potential is huge, the monetization will come, and the returns for investors will be obvious.

Repetition Breeds Familiarity

Well to get to the point, everything has fallen apart once again. This time around, in year 2012, the market doesn't really care. Yeah we are down a little off the highs, but if the market had really cared it would not have rallied the bears away for the first 4 months of the year. Had Greece really and the Euro really been an issue, it would have never left us at the beginning of the year. The world has far from fallen apart, the VIX has barely moved. The masses, rightly so, are convinced that the United States economy is better. Things are better than they were and we are likely not going to have a double dip recession. The irony of the whole situation lays in the fact that we, the big ole United States, will be able to stand on our own. We are just a giant nation of consumers, our service economy will prevail, because we merely make money off of serving one another. The restaurants will continue to make food, nail places will continue to paint nails and so on. Technology will continue to service the masses and be the place to make monies. If liquidity freezes up again, does it really matter? It's obvious that people aren't buying homes anyways. So the point of my ramblings are simple: we have seen the Greece mess many times before and at this stage in the recovery Uncle Sam will stand fine alone. Even if Greece falls apart Americans will keep doing what they have done for years and likely spend more money. Yes the rest of the world falling apart will slightly hinder our bright future, but it will far from destroy it.

Sunday Funday: Mother's Day

I usually like to use Sunday Funday as a way to highlight a stock that may not be on every investors radar. This Sunday I am going to switch it up, and rather, make a suggestion for the time you would spend researching said stock. I suggest taking that time you would spend slaving away in front of the computer and use it towards family time. We all work very hard to achieve financial success. On Sundays like this, one must step back and realize why we desire that financial success. We desire this financial success so that we can support those around us, so that we can spend less time working and more time with our family. It may sound cliche, but take a moment to spend some time with family today. I am taking a break from my research to do the same, because at the end of the day family is all you have.

What is Sunday Funday?

The Game Isn't Over Until It's Over

With all the chaos of the market over the past few days I decided to take a step back for a moment. Sometimes it is best to not get caught up in the news and realize that the positions you hold will work out in the future. Had the end of the world really came I would have likely been in hot water, but that is the case for everyone, so at least I wouldn't have been the only one on the sinking ship. All that I can take from the past few days and the market action, is things aren't over until they are over. That may sound extremely cliche, but just look at the markets over the past few days. Yeah see what I am saying now. The greatest thing about my previous statement is that when it comes to the financial markets, the game is never over. We all will live to fight another day (as long as we take steps to maintain our capital) and hopefully that new day will be better than the next. Just remember last year with the Greece mess, everyone thought the double dip was back, and look at the first quarter 2012, extraordinary. I thought the video from last weekends Kentucky Derby would be a good morning inspiration. Take a watch below and remember that it is not over till it is over.

Extrapolating The New Tech IPO's Through Zillow

One of the virtues of youth is having a memory that does not falter. Luckily for me, I am young, and pay attention handsomely. I do recall a time, in the distant past, when Zillow was a DOG. This prime candidate for internet success was scorned upon far and wide, and we look at it today, in a new light. Today Zillow is adorned and cherished, while not months ago it was the scum of the earth. Congrats to those who succeeded in the trade, I am not only jealous, but wish I had not been bucked by the negative price move. Now that being said, lets take a look at this new king of the internet space to see whats next for the new internet based tech companies.

The story of Zillow was one shrouded in implausibility. Many asked, how could a company with just an internet site make money? How would they drive users to their site in the depressed housing market? Well it seems that all the critics were put in there place. What one should really take from this is that a few months ago Zillow was not making any money. They were looked at as a joke of a company, with a horrible algorithm for calculating home prices. No one believed in the story, and those who did have just recently profited handsomely.


Yelp and Zynga(to name a few), many are currently questioning there potential. Laughably some are suggesting that these companies are worth half what they are trading at now. The truth on the other hand is obvious. Zillow, the dog of last year, turned their user growth into earnings, just as these companies will do. Last year Zillow was losing money and they turned it around. Just like many of these other technology companies will do. How you must know, how will these new technology companies turn the story around? Simple, traffic equals earnings. The tech bubble of lore is gone. Technology companies can monetize users today, very handsomely at that. The new tech companies will do that, making there shareholders a killing in the process.

Sunday Funday: Smith & Wesson Holding Corporation

One of the oldest traditions of southerners in America, is the one of shooting firearms. I like to take advantage of this right on my weekends, so I see it fitting to take a look at Smith & Wesson for this installment of Sunday Funday. It seems in this time of uncertainty more and more Americans are taking advantage of their right to bear arms. From the looks of it Smith & Wesson will likely benefit. What separates S&W from the competition is not just the quality of there merchandise, but one specific line of handguns. For those not familiar with the handgun market there is a large demand for small, accurate, and easy to use conceal carry class of handguns. S&W has found the perfect mix of firearm essentials in its line of Bodyguard handguns. The Bodyguard 360 has been sold out in many a retail locations and the demand remains high.

I am not uneducated enough to suggest that one product will change the game for a company. What the above bodyguard example lends itself to suggest is that S&W is doing something right, very right. The demand for firearms is high and the choices are various, which in turn means creating a product that sells off the shelves is quite difficult. S&W has created a product that appeases the masses and it will continue to make one of kind products. Looking below at their share price, they are obviously doing something right. So in the spirit of Sunday Funday, let's go shooting.

SWHC 1 year

What is Sunday Funday?

Who Will Survive In America?

With the gut wrenching trading of Friday, one must wonder what is next for our lovely stock market. As those that were somewhat awake last year remember, the picture of Americas debt situation is far from being a classic, written off to ancient times. If American was a homeowner it would have had its house repossessed many times over. As the sky seems to fall out from under us (which may be overstated, next week will clarify), one must look to the next storm on the horizon. Being that it is a election year, things can get dirty, real muddy. My post this Saturday is short, succinct, and hopefully gut wrenching. Americas debt situation is more than horrendous, and this ball is the next one to drop, by no means in a celebratory manner. So hopefully those that hold the power will realize that if we don't start paying our debts now, our children and there children will have to. The debt problem is a crisis that will result in no one being able to survive america.

"The time repair the roof is when the sun is shining." - John F. Kennedy

For your listening pleasure:

For clarification purposes:

Sailing The Storm To Reach Capital Tranquility

Yeah today is bad, not end of the world bad, but bad. In particular for us who love tech, more specifically those companies with high p/e ratios and not much on the earnings front. The end of the world is not here and another day will come, another day will come to trade. Yes the bears are prevailing today, and those holding their VXX bull gun are laughing as they sip the finest wines on this spring afternoon. Though I have been a holder of the VXX and things can turn on a dime. I sit here to suggest, rather, to clarify, that all is not lost. Everything from Zynga to Apple to General Electric are not having a good day. As a holder of technology companies, when I see Apple get murdered, it makes me sleep easy. As I have suggested in the past, the best companies will prevail into the future. I can sit here with a smile as I lose money knowing that the storm will cease.

The end of the world has not come yet. I am a Macrohead and yes things are not great. Though was this not to be expected? The numbers are out and we will now have to live with them. That is all beside the point, what matter now, is owning the best. The best companies with the brightest futures will survive. Trim that fat. Even as bad as 2011 was at its point of craziness, the best of breed still prevailed. Last year as the market was getting obliterated Apple hung in there strong. This is no cry to buy Apple. This is rather a suggestion that if the fundamentals exist, over the long haul one shall prevail. This storm of the market will pass. For there to be good days there must also be bad, so as a trader or investor you must take both and manipulate the market to your advantage.

Investing A.K.A Watching Consumer Trends

With Green Mountain coffee, Yelp, and man other big consumer companies being the focus of the news today, it got my little brain churning. Many of us think about investing as finding a quality company, with good earnings and growth potential. Though the key to investing, after looking at the news today, is merely the tracking of consumer trends. Since the society we live in today focuses on consumers, selling goods, selling goods on websites, selling directions to those goods, and on and on; it is fair to assume that our society is based around consumer trends. To make the most out of investing we must delve into those consumer trends.

Green Mountain is a perfect example and very fresh in everyone's minds. Why do people by Green Mountain products? Well gosh Young Gun, that's an easy one, everyone in America likes have a single serve coffee machine at home. Evaluating that answer, the average investors answer, we already see it in the terms of consumer trends. Green Mountain has pioneered the consumer trend of single serve coffee, they have not made one of a kind product that can stand the test of time. It is quite easy for someone like Starbucks or Walmart to come in and sweep away consumers. The market for Green mountain is there merely due to this consumer trend, not brand loyalty.

Let's contrast this to a giant, to get the best understanding of my point. Ask yourself, why do people love Apple products? Again this answer should be easy, everyone in America loves iPhones. Now notice the contrast here from my previous paragraph, did I saw smartphone? Now you get the drift. Apple is pioneering the consumer trend and extrapolating brand loyalty through the consumer trend. No one can or will make a iPhone like Apple and no one has been able to make a smartphone quite like it. That is why so many consumers and phone companies are willing to pay a premium for the product.

My point is obvious, without brand loyalty that captures a consumer trend, you as a company have nothing. Just ask Netflix. If the consumer trend is single serve coffee and I can get the same coffee and maker at Walmart, Green Mountain isn't much of a mountain anymore.

When The Negativity Surrounds You

This morning I woke up to a Zynga stream suggesting the end of the world was near, very near. That the stock was headed towards $0 and tech bubble 2.0 was coming crashing down. I really don't have the energy anymore to qualm the unrest, but you can refer you to I Was Wrong About Suggesting A Tech Bubble and Looking At Zynga's Potential to show you that the masses sentiment is wildly untrue. Rather, what I want to hit on right this second is rather a larger concern of my in this new age of technology, when the stream goes negative on you.

The bandwagon, my favorite analogy. Why you say, Young Gun, do love this analogy so much? The response is oh so simple, the bandwagon, it can be used to your great advantage. In the case of trading, it is sometimes best to work in the shadow of others, more knowledgeable than yourself. Hey that's why we read blogs and talk to strangers about investing. In this case, referring to my mornings example, sometimes the bandwagon is wrong, very wrong. The stream this morning was quite wrong about Zynga, with outrageuos suggestions of $0 and $3. When you know that the bandwagon is heading in the direction far from the truth, you can sit back, laugh, have a cold one, because in due time the profits will come.

This obvoiusly doesn't hold true to every company that trades down. It accounts for companies that have growth potential, make money, so on and so forth. You are smart enough to know what I am talking about. My favorite example would be LULU in the midst of winter. I believed in the story, the growth, the desire for every woman in america to own their lovely pants (ahh yoga pants). I capitulated, I did so because I listened to intently to the voice of my peers and not my own. We all know that lululemon sits on its high and mighty stead currently, and I sit nowhere near it due to my misfortunes. So when the negativity surrounds you, sometimes that gut of yours knows the story better than any stream.

Yelp Yourself

Over the past few weeks, my friend has been telling me about this great company that is quickly making itself known in the Internet space. Up until today, I had never attempted to access it. I took time today to go this companies website, yelp.com. Within a few seconds, I had found several Mexican restaurants within walking distance, and after reading a few reviews, I was headed for Chipotle. After enjoying my 3000-calorie afternoon snack, I ventured to the Android Market and downloaded the Yelp app.  With that, I will begin my dissection of this promising specimen.

The first browse through the app was pleasant, search results were returned quickly and large images and text made for an easy read. I was not prepared, however, for The Monocle. Moments after clicking this enigmatic icon, I was amazed to see that my 3.5 inch high resolution, capacitive touch screen was transformed into a “heads up display.” In this interface, each restaurant was tagged through GPS with its direction and distance. After picking my jaw up off of the floor, I turned my attention to the meat of the application, the reviews. This app balances its flashy features with helpful information about any given restaurant. This is a lifesaver for me. Now I will be able to read reviews and make prudent choices, instead of going with my gut feeling, bad pun intended.

Though I am one, you don’t have to be a rocket scientist to see the potential in Yelp. Synthesis with Facebook would be inevitable, provided that the social media consumer uses this company to have a dialogue about any given restaurant or hang out spot. The information that Yelp provides could also be integrated with Google Maps to give the user suggestions, reviews, and directions all on one platform. This would be mutually beneficial to both Google and Yelp because Yelp would be showing its big, beautiful face on every Google search, and Google would be able to have reliable reviews to replace the atrocities that it currently provides.

Looking at the numbers, we’ve seen a lot of volatility with this stock over the past few months. Yelp will release its first earnings report since its IPO on Wednesday after the closing bell. In 2010, Yelp users added 6 million reviews to the website. By the end of 2011, there were over 25 million reviews available. If this growth continues at anywhere close to that scale, then I want my money to be in this stock. Whether it trades up or down, there is plenty of investment opportunity. If the numbers miss but the user growth is still impressive, this would foreshadow future earnings potential. This might be a great chance to get on-board with this company and make money as it matures. In the long term, growth will be seen as more people discover and use the practical information that Yelp offers. There is also a very real possibility that this company could start providing reviews of hotels, travel destinations, and other services. This would allows them to become competitors with sites like TripAdvisor and Angie’s List. The real game-changer with this company, however, involves Mr. Zuckerberg and his big, bad, billion dollar billfold (That probably has “Bad Motherzucker” stitched in the leather).  Undoubtedly, Yelp’s integration with Facebook would drive the stock price through the roof. As many investors have painfully learned over the last few years, ignoring the growth of tech companies is just plain stupid.