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.