I enjoy reading The Brooklyn Investor so much now
that I endorse him by adding him to the blogger list on the right.
Pzena’s Deep Value Cycle thing is interesting. All
the theory sounds neat until you try imagining yourself in Pzena’s shoes. Some HNWI may be puzzled what kind of woodoo thing one is trying to sell. That’s the difference between what can you
come up with being a manager of a few billion and a fistful of dollars.
Such macro and cycle things are useful and it is
not about timing the market but knowing in what type of environment you are gyrating.
However, this type of discussion reminds me the following misjudgment:
Rationalizing. Tendency to rationalize leads to explain by an apparently
rational story: a) whatever action, even irrelevant; b) whatever event, even of
unclear origin; c) whatever possible sources of responsibility (external –
negatives, self attribution – positives). Everyday media finds good
explanations of why market went down or up. Truth is that nobody knows the
truth – we can just guess.
Investment management is a tough job if you have to come up
with such things. What is more interesting if the whole Apple vs. rest of the
world story has taken too far. The Apple part of it is probably right (market
cap - $625b) but the ROW is probably too much discounted.
I put it on a napkin (I know I probably left out something important
and rounded a bit):
HPQ $33b + DELL $17b + MSFT $250b + NOK $10b + Samsung $55b +
GOOG $250b + RIM $5b = $620b < $625b AAPL.
Intel is an important piece of the puzzle and has ~$110b
market cap. In the former world 2 monopolies Intel and Microsoft made everyone
happy, the entire ecosystem of leaders had an important piece of action/profit.
Now this former ecosystem cannot come up with the right business model and
Apple with its switching, network, whatever effects took it all almost as a
single winner.
I cannot fathom that ROW would not come up with cheaper and
very good tablets and phones in the nearest future (Nexus 7 is the first canary)
while Apple’s winning gap may start narrowing (note a pace of a difference
between iPhone 4 and 5). Sheer size and all the forces preserving status quo at
all ROW is slowing the thing down but this will not happen forever. Almost all
ROW is swimming in cash. For heavens sake, fire all R&D departments, start
anew, reverse engineer, adopt one open, robust and cheap OS and boom, off you
go.
By the way, all this rant was somewhat provoked by my
research for a hardware upgrade. I want to stay in Windows for spreadsheets /
word (xIRR is the most complicated function I use in Excel, track changes in
Word, and sometimes I get meticulous on formatting, copy/paste between the
programs, things like that), improve my reading experience (iPhone 3 > iPhone
5 and add Nexus 7 with LTE). I am scratching my head if I need 3 devices but
really it’s just 2 – I will have an ultra-book on my desk and will be taking
Nexus when I go out and iPhone will be serving anywhere/anytime time niche.
I just read what I have written and see how bizarre I sound:
Windows, Android, and OS. It’s a complicated world and the battle has not
finished, yet.
Disclosure: long DELL, RSH.
