FAANGs out: Feisty Facebook and the Apple Apathy
Apple: Destroyer of Headphone Jacks … and Privacy Savior?
It’s a savage garden out there, my friend. A savage garden.
Oh great, this birthday must really be getting to Mr. Great Stuff…
No, no midlife crises here … though I did start to buy much more vinyl recently, now that you mention it… Is this how it starts? Is a Corvette next?
Pen palling aside, I just caught up on the latest episode of Antitrust Issues — the now longtime tech soap opera, filled with tit for tat exclusivity attacks and the App Store’s steep developer tax.
This time, reader, we’re checking out what’s rotten in Apple Inc. (Nasdaq: AAPL) … and the savagery found in its walled garden.
No, this isn’t about the debate with Epic Games over whether or not Apple’s App Store is competitive enough. Though there’s some meat on that bone still, with Epic having to split its Fortnite game right in two — the same old, same old version for Apple users and a new content-packed version for well, every non-Apple user.
But even a battle of Epic proportions is on the back burner right now compared to a new spat with an old adversary: Facebook Inc. (Nasdaq: FB).
With Apple taking more heat than I get when I mention sports ball … today’s episode of Antitrust Issues is called “FAANGs Out.”
Yes, both Facebook and Apple played nice together when grilled by Congress earlier in the soap opera. But Apple’s latest iteration of iOS could be business-destroying for advertisers, so Facebook claimed.
From CNBC: “The Facebook Audience Network allows mobile software developers to provide in-app advertisements targeted to users based on Facebook’s data … advertisers can use a unique device ID number called the IDFA to better target ads and estimate their effectiveness.”
But, starting with iOS 14, users will have to opt in manually to be tracked … and you know how well that’ll play out with many privacy-concerned folks.
In early tests without using personalized data, Facebook noted a revenue drop of more than 50% on these networks.
Facebook’s reason for living … its deeper meaning … is your sweet, sweet data. And the Zuck and co. crave their lifeblood. How else can they try to sell you on the exact same bathroom scale you just bought off Amazon?
I personally don’t think Facebook exaggerated about the impact iOS 14 would have. Facebook is advertising, and advertising is Facebook now. And chopping revenue in half leaves Facebook where?
We all know that almost all of Facebook’s ad revenue comes from hoarding user data like it’s Smaug’s gold. I don’t expect Facebook to just take the hit … or second guess how data dependent its business really is.
Better get moving on that Oculus virtual reality side project, Zuckerberg.
Before We Dive Into Reader Feedback…
Quite a few of you have already used Mike Carr’s research to flip a finger at 2020 and Wall Street’s excessive volatility. But now, everybody’s favorite rocket surgeon is back in a new research adventure: Mike Carr’s “Strike Zone!”
The Strike Zone reviews are in, and readers are already writing in to say they made a 416% gain in four days, a 145% in just two days and a 375% gain in four days! There have been over 100 winning gains such as these in the past five years with many more on the way.
All right you rabble rousers, it’s your time to shine.
It’s my favorite day of the week (don’t tell the others) … Reader Feedback day!
We’re talking up Canadian stocks, truck stops and a labor exodus out of China. You know, your typical Thursday roundtable discussion. Dig in!
Cycles and Convalescence
Loved your August 24 piece! Brilliant opening picture!
If convalescent plasma is a breakthrough, it’s a breakthrough that’s so old it’s got whiskers! It was discovered about 140 years ago, and was used during the Great Flu Pandemic of 1918!
In your searching (as many others of us are) for a top to this insane market, all I can contribute is the fact that I read a piece about three months ago, in which someone reported his research showing that the market tends to reach a peak about six months after the Fed begins an easing cycle.
E.g., the Fed began easing in July, 2019 and the market peaked in Feb., 2020. Since the Fed eased in late March of 2020, that would predict that this market will peak in late Sept., 2020 (give or take). We’ll see!
— Frank H.
Thanks for your email!
It’s interesting … with putting the correction in September, I’m not sure I see a driver for that just yet. Remember, whatever stops this train has to be big enough to distract from the Fed’s unlimited stimulus. It’s like Newton’s unheard-of Law of Market Inertia … or something like that. And if it doesn’t exist, it does now.
On the other hand, the timing is right for increased volatility if not a correction — not only for this data that you mention, but also for the typical preelection jitters that the market typically gets.
We shall find out together, Frank!
Everywhere Man? Nowhere, Man
Interesting article on Travel Centers. Although it is trading around its recent high and up from a low this year of 5.51, it appears to have a P/E ratio of 6.36. Seems cheap. What are your thoughts?
— Stephen K.
I appreciate you writing in, Stephen. As you mentioned, TravelCenters of America Inc. (Nasdaq: TA) has had some rally — up about 280% since its March lows. So if you’re getting in now, be wary.
To me, the biggest unknown with TA is one we pointed out in Tuesday’s article: TravelCenters is still in the midst of a huge turnaround, and I’d like to see it clamp down on its growing operating costs before we look closer at getting in (pandemic notwithstanding).
With that in mind … TA looks cheap, but what’s even cheap anymore? Tesla Inc. (Nasdaq: TSLA) muddies the waters on using price-to-earnings (P/E) ratios in today’s market climes anyway.
Traders Without Borders
A weakening dollar would be a good reason, Bill, but you’d want to do that before the dollar got too weak, or you’d be paying too much for overseas investments.
Now, I will admit here that I’m not too well-versed in overseas trading … but I’m well-versed in finding you the right info. I recently checked in with Ted Bauman, editor of The Bauman Letter (surprising name, I know).
He just put out a piece this week that dove into a situation overseas that has everything you could ask for in a trade: hunting down the three emerging markets that say “nay nay” to China’s economic dominance.
I won’t spoil the ending for you on how you can get in on the trend. But here’s Ted with the big picture:
Japan, India and Australia are developing a ‘supply chain resilience initiative’ to counter China’s dominance.
That should make Xi Jinping nervous … and cause savvy investors to take notice.
The three countries are among China’s biggest trade partners. Japan has a significant industrial investment in their huge neighbor. Chinese firms have big investments in India and rely on Australian raw materials…
In the case of India, it has a substantial low-wage labor force that could compete with China’s. Chinese labor is no longer as cheap as it was…
But cheap labor is only part of the attraction. The main goal for each of the countries is supply chain stability. Stronger economic ties will lead to stronger political alliances, which will help to counter Beijing’s bullying in the region…
And another reason I’m confident these initiatives represent a big change … and a big investment opportunity … is that I’ve seen these economies up close.
Now, Ted’s the man with the investing plan — stateside or otherwise. And he’s been helping his readers stay calm amid the market storm ever since this mess began with The Bauman Letter.
In it, there’s the Base Hits portfolio for long-term gain opportunities in solid, financially stable companies. Then you have the Home Run portfolio for impressive shorter-term opportunities — those quick stock rallies that most investors will miss in a blink.
Plus, there’s the Endless Income portfolio for opportunities to generate income in the meantime. Trust me when I tell you that Ted is the man to have in your corner when volatility hits the market!
We’re not done with our globe-trotting romp just yet. Here’s Keith with a question that I see many new investors ask about Canadian stocks, so listen up!
In the Land of Milk and Honey … and Syrup
I have a quick question for you. If I buy a stock from a Canadian company and it gains value over the course of a year, do I have to claim it as income both on U.S. taxes and for Canadian taxes also??
— Keith S.
Thanks for writing in! I’ll answer this assuming you’re investing on American soil.
There are two issues here: dividends and capital gains. Compared to the U.S. reporting you’ll have to do; Canada is easy peasy. First, if the stock you own pays dividends, Canada already withholds 15% tax on quarterly dividends. It should appear on any quarterly statement from your broker detailing dividend payouts. That’s it.
Second, as a nonresident of Canada, capital gains on publicly-traded securities are not taxable in Canada. Your stock could go from $1 to $100, and it wouldn’t matter. You owe no tax on that capital gain in Canada.
One important thing to note, however, is that since you have already paid taxes to Canada on your quarterly dividend (assuming there is one), you are eligible for a foreign tax credit on your U.S. taxes to avoid double taxation.
I would also like to stress that laws can change, and I am neither a Canadian citizen, law expert or tax professional. Please contact your broker or tax expert to verify this info to make sure.
And you know whom else you should hear from on taxes? You already know — Ted Bauman!
Next up in the give-and-take game of reader feedback, it’s time for a mea culpa…
We “Oops,” We Correct
The article says S&P performance for 12 months after an all-time high was reached has been 11.8%. Yet when I look at the chart that is superimposed onto your article, I see it says the S&P increased its performance by 8.3% during the 12 months after an all-time high. So whose math are you looking at, anyway?
— Robert R.
Doh! You caught us flip-flopped in a case of mistaken identity, Robert. Thank you for catching this!
For reference, the quote that Robert quoted is a quote we misquoted, or at least incorrectly sourced. Last Friday, we talked about whether stonks continue to go up after new highs … with historical data to boot.
So, it’s actually UBS Chief Investment Officer Mark Haefele who said this: “Since 1960, one-year returns after the S&P 500 has hit a high have been 11.8%, slightly greater than the 11.3% when the market is below an all-time high.”
It’s LPL Financials’ Ryan Detrick who went in with further study on S&P 500 returns, with his research forming that day’s chart.
Detrick’s chart has the same findings as Haefele, but with slightly different returns. The one caveat was that Detrick also looked into the “performance after more than five months without new all-time highs” as part of his reasoning as well.
Ending on a High Note!
Hey Joseph (and/or staff of hardworking email respondent readers!) You’ve asked readers to write: so here is a response… I now actually look forward to your e-zine presentations daily. There are many (unlimited?) financial oriented newsletters and etc. to which I attempt to remain informed to some degree by reading … however yours is informative and fun — thanks for that!
Very best regards. Blessings!
Hey thanks! We appreciate every bit of feedback we get — from your email, Wayne, to the flub-finding fixers such as Robert above. Thank you all!
Also, the hardworking email respondent readers give you their best regards in return. Have a good weekend — wait, we’re not there yet? Dang.
Great Stuff: Boundless Email Bounties
Thank you to everyone who wrote in! If you didn’t join us for this week’s Reader Feedback, I hope you’ll write to us for next week’s. GreatStuffToday@banyanhill.com is your place for rants, raves, complaints, compliments and everything in between.
Let us know what’s on your mind!
Until next time, stay Great!
Editor, Great Stuff