Stock Market Crash! Blog

Is Mac Making a Comeback?

Life just got harder for Dell: Apple just released its new economically priced Mac, the Mac mini. Price? $499. Size? Lets just say it fits in your hand at a mere 6.5 inches wide and 2 inches tall.

According to Apple, "the Mac mini houses a 1.25 or 1.42GHz G4 processor, 40 or 80GB hard drive, a slot-loading CD-R/DVD-ROM optical drive, 256MB DDR SDRAM and ATI Radeon 9200 graphics chip with 32MB dedicated DDR SDRAM — all whisper-quiet." Leave it to Apple to fit these components into an elegent little box weighing in at a mere 2.9 pounds.

Macs have always had an image as expensive computers, usually favored by creative professionals. In contrast, Dell gained their reputation by creating the most inexpensive computer packages, often with whole systems costing less than $700. Dell gained customers from people who probably wouldn't purchase a computer system if it weren't for the bargain price.

Well, now Apple is poised to steal the inexpensive computer market from Dell. I think they will be successful. The Mac mini comes loaded with Mac OS X Panther, based on the Unix operating system favored by governments, Fortune 500 corporations and universities for its stability and security. While over 65,000 viruses and countless other spyware programs infect 90% Windows PC's, Mac OS X is much more immune to such attacks. OS X is also less prone to freezing compared to Windows.

Moreover, Apple expects the massive popularity of the Ipod will help channel curious new customers to the Apple brand. Apple's profits have quadrupled due to Ipod sales. Apple's stock has risen from $12 in May 2003 to $65 this January. I'd say Mac is definately making a comeback.

Housing Bubble Profitable for Homebuilders

As the housing bubble of 2001 to present continues to inflate, homebuilders have reaped windfall profits. These good times are reflected in the steep uptrend of the Dow Jones US Homebuilders Index (see chart below), consisting of companies like Beazer Homes, Hovanian Inc., Lennar Corp, and Toll Brothers Inc. These companies thrive in low interest rate environments such as the last four years.

Conversely, the housing markets cool when rates rise. In this bubble environment, however, housing won't merely cool- it will implode. And according to the Federal Reserve this Tuesday, interest rates are too low to curb inflation. You know what that means right? Interest rates will keep going higher and higher, pressuring overindebted consumers.

There is a bright side: You can very easily short sell companies like Beazer (BZH), Toll Brothers (TOL) and Lennar (LEN). Just use a stop loss order a few points above your sell point. This will improve your risk vs. reward ratio. I don't recommend shorting just yet, however. Wait until the index breaks below the well established uptrend line.

 

Investing in the Hydrogen Economy

It is only a matter of time before use of oil energy comes to a screeching halt and we are forced to use an alternative energy source. Hydrogen fuel cells are the most likely future energy source.In time, our whole economy will become a "hydrogen economy". Of course this is a few years away, but it is never too early to look for investment opportunities. To learn more about the hydrogen economy, read How the Hydrogen Economy Works, at Howstuffworks.com

Now is time to look for the "Microsoft of the Hydrogen Economy". If you had invested in Microsoft in the early 1990's, you would have made over ten thousand times your original investment. The same opportunity exists from the hydrogen energy industry. This industry, now, is like computers were in the 1970's.

For up to date news on hydrogen developments, check: Fuel Cell Today.

Chinese-Made Cars to Be Sold in U.S.

Automotive entrepreneur Malcolm Bricklin is on a mission to be the first mass importer of low cost Chinese cars. Bricklin has had a long illustrious career of importing automobiles. He started by importing Subarus in 1968 and later founded Yugo America Inc. which imported Yugo cars from the former Yugoslavia.

Malcolm Bricklin's company, Visionary Vehicles LLC, plans on selling 250,000 vehicles in five models in their first year, 2007. Visionary Vehicles' key selling point will be its bargain basement pricing. According to its
chief of staff, Paul Lambert:

"America doesn't need another car company unless we can do it at 30 percent below market with quality and styling" "We've got to have a Toyota-Lexus-like quality."

In my opinion, Visionary could become successful in a similar manner to the Japanese automakers were, starting in the 1970's oil crisis. As more and more American families are struggling to pay their bills and gasoline costs are higher than ever, a drastically inexpensive economy car may have appeal. Most SUV-buying middle class Baby Boomers may shun this type of car, but retirees, young families and lower income households could become Visionary's prime customers.

In the 1970's oil crisis, Japanese "econoboxes" made their first debut. Japanese auto companies thrived on price competition, but since the 1990's have become similar to their American counterparts. With the advent of luxury brands like Lexus and Infiniti, Japanese automakers have shifted from their roots (not that its a bad thing). With these companies catering less and less to the economy car market, Chinese cars may be able fill the niche that Japanese cars used to hold.

It should be interesting to watch and the competition will be beneficial for the consumer.