06/30/2009 - As a child of the 80's, the death of Michael Jackson left me saddened for a lot of people; sad for his family who have lost their son or brother, sad for his children who have lost their father, sad for his fans who have lost their idol, even sad for the hangers on who have lost their meal ticket. I'm mostly sad for Michael, who seems to have suffered constant torment of some form or another for the last 47 years. It's a lot to ask of someone to be normal (whatever that is), having the life he did.

It also occurred to me that we will not see his kind again. There will be talented performers, but none will achieve the unilateral success the King of Pop did. Technology has seen to that. To some degree, technology has delivered on the promise to level the playing field in the music industry. Music marketing bears little resemblance to what it was when 'Thriller' was released.

Perhaps technology's greatest impact on the music industry is in recording. In the 80's, artists needed to book time in a recording studio costing hundreds of dollars a day, plus fees for producers and engineers. Today, one can record as much music as they want on a laptop with ProTools for $1,500, with quality rivaling most professional studios.

Innovation has also impacted music distribution. Twenty years ago, recording artists had to beg, plead, and otherwise make a bargain with the devil to get signed to a record deal with a major label. This was the only way to get a record into record stores. Today, both record labels and record stores have seen their influence greatly diminished. Laptop musicians can upload the music to iTunes to sell directly to the consumer. While most of these "artists" should not be clearing space on their mantle for Grammys anytime soon, many independent musicians have found a measure of success from the web. As recording and distribution costs come down, more product enters the marketplace, competing for the consumers' attention and money, making it difficult for any single artist to dominate.

Opportunities for promotion have also changed. Growing up in the Reagan era, I remember having 7 channels: the "big 3" networks, 3 independents, plus public television, and that was in New York City. I suspect residents of rural areas had even fewer choices. Beside the record store, consumers relied largely on radio for their music, limited to whatever they could tune in on the AM or FM bands. The "Darpanet" was still a government project in its infancy. As Jackson and his music became a sensation, media naturally moved to cover it. Jackson's image dominated television, just as his music dominated radio, to the exclusion of nearly every other artist trying to get their name or product out.

Contrast this to the new milenium, which has brought us 500 channels on TV, satelite radio and the Internet. The music market has become dizzyingly segmented, with outlets catering to nearly any niche one can imagine, producing near limitless opportunites for promotion. Smaller artists have the most to gain. New artists can make a video and upload it to YouTube and reach a worldwide audience, for free. Today's musicians blog, vlog, tweet and meetup. With so many channels of communication, it would be nearly impossible for any artist today to dominate the media like Michael did in the 80's.

The music business, like music itself, bears little resemblance to what it was 25 years ago. Technology has increased exponentially the opportunities to make, distribute, promote and experience music. Today's music marketplace is infinately more fragmented, complex and dynamic. So raise a glass of Pepsi to the memory and art of Michael Jackson. As the music industry slides toward anarchy, I'm going to miss the King.

06/21/2009 - The election protests in Iran are an excellent example of how technology can effect social and political change. Information, like water, has a way of seeping through the tiniest of cracks, even through the thickest of walls. Twitter, Youtube, Facebook, all are being used by the citizens of Iran to give the world an unfiltered (if not unbiased) look at the situation on the ground. If one picture is worth a thousand words, is one tweet worth a thousand official government press releases? It remains to be seen if these protests will result in permanent change in Iran, or if the government will start cracking down harder to restore the status quo. There are still a lot of questions.

As the media discuss the unrest in Iran, the topic invariably goes to oil. Iran is the 5th largest producer of oil. Many are asking if the unrest will affect oil production. Unless some protesters get wildly out of control and carry out some kind of a terrorist attack on an oil facility, I'm predicting that the oil will continue to flow out of Iran next week just as smoothly as it had the month before.

This is not to say that the price of oil won't rise first thing Monday morning. Speculators may very well be spooked by what is going on. Those shorting oil may want to cover themselves and start buying as well. While any spike we see in oil will probably be short lived, I'm glad I still have half my position left to play with!

06/15/2009 - Stocks are down today at least 2% across the board. New manufacturing data released this morning has renewed concerns about the economy's health. Maybe those "green shoots" I keep hearing about are not so green, or maybe the economy is shooting blanks? In any case, oil is down $2 a barrel. I'm taking this opportunity to take some profits (as are most others, I'd wager). I'm keeping my position in silver. Even though the dollar is rallying today, long term, I'm looking for the dollar to weaken as all the stimulus money works its way through the economy. That could mean good news for KO and PEP, who do a lot of business overseas. It may even be good news for YUM, who are also continuing their global expansion.

On another topic, I don't understand why WMT is not faring better. With the economy in the tank, WMT should be cleaning up. Is Wal-Mart losing as many customers to Dollar Stores as they are gaining from the former Nordstrom crowd? What are your thoughts? Drop me a line and let me know!

06/11/2009 - Earlier this week, Apple introduced the latest model iPhone, the 3GS (S is for speed), boasting twice the speed of its predecessor, additional included apps, and a longer battery life. Apple is also having a fire sale on its old model, lowering the price to $99 (with a 2 year contract from AT&T). The stock got beat up a little after the announcement. Most explained the fall over concerns about the new price point's impact on margins.

While a $99 iPhone will impact margins for sure, it is important to keep a few things in mind:

1) The $99 price is only for the leftover inventory of the old model. Apple won't be making any more, and there is no point in keeping old inventory on the shelves when Apple would rather promote, sell and support the new model. The margins of the new model are presumably a healthy 30% - 50%, and Apple is sure to sell a boatload of those. Impact of the fire sale company wide should be limited.

2) The $99 price could be a great way to capture market share. While the iPhone gets most if not all of the buzz, they are a distant third to RIM and Nokia in market share. Everyone wants an iPhone, but many are put off by Apple's trademark high price, particulary in a down economy and the abundance of free phones. The $99 price point may lure in customers who otherwise would not consider an iPhone. Once the customer experiences the sleek design and near limitless downloadable apps for themselves, they'll be hooked. After the two year agreement is up and it's time to renew, the customer will be much more likely to purchase a newer iPhone, at a healthier margin for Apple.

Yes, margins may get dinged in the short term, but Apple's price reduction in Great Depression 2.0 may ultimately increase profits over the long term.

06/04/2009 - The Dow has had a very good runup of about 30% in a matter of weeks. Talking heads are going on and on about the "green shoots" that are appearing on the economic horizon. Indeed, if you had invested in a good index fund at the March bottom, you would be sitting on a very nice return by now. That said, we need to ask ourselves "does this rally actually signal a bottom?"

Keep in mind that this recovery was a few weeks long. Even in a bear market, individual equities and even whole markets can get ahead of themselves. When a market is oversold, one can expect at least a small rally. 

To know if this rally is for real, let's look at the fundamentals. Unemployment is predicted to rise to 9.2%, and is expected to top out at over 10%. What are the ramifications of this? High unemployment leads to reduced consumer spending, more mortgage delinquencies and credit card defaults. Those still lucky enough to have a job may have their taxes raised to pay for all the entitlements.

Yes, more homes are being bought as of late; but once the speculators have eaten up all the inventory of dirt cheap forclosures, housing numbers could head back down.

What effect will the stimulus money have? It is reasonable to assume that printing over $1 trillion in such short order and releasing it into the wild could contribute to inflation. Many folks are gun shy over the markets, and are heavy in cash. Unfortunately, with the high probability of inflation, even cash can lose value.

Many say that the economy is improving. Unfortunately, "improving" now appears to be defined as "deteriorating at a slower rate".

So what is a person to do? All I can say is what is working for me. I'm invested in commodities these last few weeks, specifically, USO and SLV (oil and silver, respectively). Both are up big over the last few weeks.

There also appears to be a tech rally going on. No telling how long this will last, but Apple (AAPL) is looking pretty good. The stock got beat up a little, but is on the rebound. Moreover, rumor has it Apple will debut an iPhone at a coveted $99 price point. I'm also hearing that Apple may introduce a super sized iTouch to grab a piece of the netbook market, the fastest growing computer segment. While this appears to go against Apple's product positioning as an upscale consumer electronics company, the market appears to like Apple's waking up to the economic reality.

As always, keep your eyes peeled for opportunities.