Great White North Prognostications

To start with the Royal Bank is now worth, roughly, more than Citi. How can this be? Well I can understand a few issues that might make Citi weak but my key question is: How have Canadian banks been so smart as to not either buy a bunch of CDOs or sell a bunch of CDSs? Are our bankers so much smarter than the rest of the world?

There is an interesting story from Chernobyl. The first sign that the reactor blew up was from Sweden when their nuclear reactors thought they were having a leak as the radiation wafted their way. For the next many weeks the wind blew this radiation back and fourth across Europe, but it spared France. Daily maps showed the radioactive wind in European newspapers. After a while though it turned out that France’s nuclear system, then considered to be the best in the world, had been lying about all problems for years. Thus by reflex they lied about the radiation levels from a disaster that wasn’t even theirs. Due to this lack of openness, and thus public oversight, it turned out that France actually had the worst nuclear safety record in the western world.

I think that this now applies to Canadian banks. I believe that the world does not yet have a clear picture of the health of Canadian banks. So the result is the same, the financial fallout is wafting all over the world but somehow avoiding Canadian banks. Their stocks have been falling but not to the degree that they should if they had jumped onto the toxic waste bandwagon.

So my second last question is: When the party was ending in places like Lehman Brothers, did the Lehman people realize that their Canadian cousins had bags of cash and could buy their toxic waste for one last quarter, and do you think a bunch of podunk Toronto bankers could resist personallized seminars at the four seasons that would then be given to them about the huge returns available to their investment divisions if they were to jump into these vats of toxic waste?

So my last quesion is: Would the cozy government regulators jump all over the banks and expose their weaknesses or would they agree to let them play their cards close to their chests and try to bluff their way through this economic disaster?

Now from an investment point of view if and when will this shoe drop? People talk so never is not a possible option. The sure sign that they are strong is if they start buying things. But if they start talking merger again then they are weak.

I suspect that out of my usual stocks that some will recover along with the rest of the market but that others will be huge underperformers.

Apple will probably have a bad quarter this time around as will Google. But not terrible. Then when people have money they will flock to them.

Microsoft will also have a slightly dissapointing quarter but their customers won’t flock back but they will do sort of OK.

RIM will bomb this quarter and basically never recover drifting along with people saying that they are a buyout target. They will never be a buyout target as I think their brand will be a hasbeen in less than a decade and they will have nothing to offer but outdated infrastructure.

SUN will have a slightly bad quarter but this will be more do to their generalized rot as opposed to anything else. They too are not much of a buyout target for the same reasons that RIM won’t be a buyout target.

Canadian banks will eventually get some bonus or kick from the government so in the long term they will do well as usual, but for the short term I smell pain pain pain.

Back to Google. I believe that the ad world will discover that in the recovery quite a few of their customers tasted the Google koolaid and won’t ever be coming back. So all old media will be be wailing and gnashing their teeth come the recovery. A few old media outlets will reinvent themselves into either extremist media or actually focus on what people in their areas want and thrive. So most old media will suffer the death of a thousand cuts from bozos like this blog. Again, some will hope to be taken over but who the hell wants a 100 ton printing press going into the age of electronic ink?

A year ago I had such great hope for SUN(JAVA). But it looks like they lost another key founder of the MySQL product they recently bought. So it looks like SUN is just incompatible with success.

I have generally found that with most successful software projects there are just a few people who really drive the product along. When they leave or lose control the product typically gets driven from marketing meetings and thus driven into the ground. Often this is usually not instataneous as the Marketing people initially do sell more of the given product but the product, being rudderless, drifts onto the rough shores of the land of Suck and breaks apart.

So I expect Sun to release some charts that show how great they are doing with MySQL over the next few quarters but I also expect to see my geeky compatriots start to drift to the next great database. I wonder what that is?

Apple looks good. But is it time to buy? They kicked Blackberry’s butt but could that be because blackberry sales sucked? Are they reaching market saturation? One thing about Apple machines is that for the average person an older machine is enough. I will watch to see if average users around me upgrade. Also a bit of a driver of PC upgrades is their capacity to play games. New game often requires a new PC. Apples generally suck at playing games, so this is less of a driver. But the latest Apples are getting OK video cards. So maybe games will start coming out in ernest for the Apple line and thus drive some sales.

I wonder now about Canadian banks & The Dutch effect. It is my belief that the Canadian banks are being allowed to hide their sub prime toxic waste cards close to their chests. Plus Alberta is turning out to be a huge sucking sound that the entire country has had to listen to. The rush of wealth to Alberta has trashed the remainder of the Canadian economy as witnessed by the huge drop in value of the Canadian dollar in rough lockstep with the drop in Oil prices. Now while this benefits exporters like myself, I don’t think it will last long. Exporters cannot build businesses worrying that the Candadian dollar will skyrocket next week. So while various indicators from the government show strength(relative to say… everyone else) in our economy those numbers due come from the government.

So I think that it might now be time to dump my Canadian banks.

In summary Google will win and Blackberry will lose. A quick summary of the three products from a simplified technical point of view.

iPhone is cool and plays music. It surfs the web very well unlike almost any other web capable phone. It will show you the web in miniature as well as your desktop will show you. Except for pages using flash technology. The biggest inherent obstacle for business users is the lack of a keyboard. This means the iPhone user is mostly limited to consuming information. Cool is a major feature here. Everything about this phone is quite cool. It has quite a few applications being developed but Apple seems to want to battle with developers. Microsoft lost a whole generation of developers by doing this “our way or the highway” thing.

The blackberry line is as everyone knows is very good at email. But that is about it. Its web capability is squirlly and nobody that I have ever met uses any of the other applications. Technically it is possible for developers to make things for the blackberry but I don’t see much of this. In my opinion all RIM products are ugly and aimed at 50 year olds who think they are cool but truely truely aren’t. RIM does not seem to have much of an idea that phones are jewelry for some people.

The android is pretty ugly but cooler than anything RIM makes. It has the RIM keyboard and the iPhone web capability. But Google is doing a good job of wooing developers to make apps for the android. This will probably allow the android to be all things to all people. Quite simply it will have all the best features in both the iPhone and the various RIM products. Some coolness, a keyboard for email and stuff, and great web browsing.

The various reviews of the new Android phone compare it mostly to the iPhone and a few compare it to the Blackberry. Most of these reviews either call it a tie or they give the Android a close second place. A very few call it a winner. None of this is relevant until you consider that this is google’s first phone. What will their second phone be like?

The people who I see running around with blackberries are government people, finance people, and real-estate people. The last two groups are taking a huge hit both in jobs and budgets. Thus I foresee a general drop in all smart phone use but mostly blackberries. This will hurt the android somewhat in that it won’t be the raving success that might have come its way with a boom economy but overall this might benefit Google. From a technical point of view it looks like the Android might be cheaper to run than blackberries and iPhones and due to what google is providing to geeks it will soon have applications that will cover any software feature found on the other phones. So if you like some software feature on your favorite phone it will be matched and bettered by the android.

So I see a market that will be looking to cut back hurting blackberry and iPhone but not Android as they have doubtfully built up much dependancy on their tiny market share where as RIM basically has a single product and will be seriously hurt by any drop in revenues. iPhone will be less affected by this but it will give their many competitors such as samsung to catch up with cheaper units. This will hurt things like RIM’s R&D and general moral.

Then I see some companies adopting some Androids to cut cost. This won’t amount to much but it will get people exploring non RIM options. Then when the market rebounds people will not all return to the RIM family. Many will go to Android for both capabilities and cost.

So the timing of this bust will only put nails in RIMs coffin and open a door to Google. I don’t see this as being a huge revenue generator for Google but I do see this as being a massive revenue eraser for RIM.

So in summary Google will do OK; RIM will die a slow death; and Apple will just continue along.

PS My prediction is the RIM will fade in spurts. Basically look at the history of companies like Novell and Sun. They just sort of faded from relevance. Once in a while they would make headlines with a sizable layoff but due to a lack of any crushing debt they just sort of faded from the scene. One customer base that probably won’t switch and will keep RIM plodding along will be governments. Due to the lack of real impact by the economy they won’t cut way back and since they generally are very old school people who are very uncool they will keep on and on with their blackberries. That should fit in well with their various Novell and Sun systems.

Here is a great reason for dumping sun. In response to a rumor that MySQL co-founder Micheal “Monty” Widenius may quit Sun Microsystems one of the SUN people said, “Second, Monty’s resignation has been a possible outcome already since years before the Sun acquisition. Perhaps his resignation at some point is inevitable, given that the type of skills and qualities needed to make MySQL great are different from those needed for working productively in a larger organisation (and I am referring to the size of the MySQL team, not Sun).”

This quote has two wonderfully revealing parts. First; wouldn’t everyone who works have resignation as a possible outcome? Short of slaves all workers might resign at some point. The real question is when? So right here we have a large company trying to spin this. Why. Either he leaves or he doesn’t. If he doesn’t you have the guy say that he isn’t or he does and you deal with it. What would spinning this do for a company when if he just pops out and resigns anyway. The only thing that I would learn from this if his resignation was important to me would be that Sun can not be trusted to be forthcoming with the truth. If he isn’t resigning then the PR flacs should parade him out and have him tell it.

The second sentance kills all hope I have for sun in the future. “the type of skills and qualities needed to make MySQL great are different from those needed for working productively” Great products were the only thing that could bring sun back. But this flac seems to think that working productively is better than making MySQL great. What is this productive work that somehow results in not great MySQL? Could it be endless reams of meaningless reports and meaningless meetings?

I am just guessing this but looking at the history of MySQL (created one of the greatest databases ever with little budget) and the history of SUN (sold sort of big iron to big stupid companys until linux kicked their asses and the companies became less stupid) that there might have been an uncomfortable situation every time this guy came into a room. The courtiers would worry each time what was going to come out of his mouth. Might he tell the truth again and point to another naked emperor? Then the courtiers probably just shut him out. Just a guess.

So what have I learned from three crap investments(VMW, MSFT, JAVA) in tech?

Nimble is good. Big and old is bad.

Who is important to the company? Has their position changed? If so then just stay away. Watch for code words/phrases such as ‘allowing him to focus’, ’spend more time with his family’, ‘the new ceo is better suited to the demands of running a public company’ et tu brute?

If you see the founders of a nimble company being pushed around by someone who has an MBA and has read the prince a few too many times then this is bad.

Bill Gates and Microsoft would be a great example. This company grew and grew under his control but once the charity work came the company faltered.

Apple would be another example with a well known story of founders and such.

VMWare looks like it is in the same boat.

This life jackets thing is a classic example of bean counters running a company. They plan on saving 25Kg which is the weight of a heavy bag or the extra weight of a single fat person. I suspect the in-flight magazines weigh nearly 25 Kg. But all companies make mistakes but the good ones come clean and just say oops and move on. But in this case an Nova Scotian NDP official was berated by the company for commenting on this stupidity. The last time I heard of Air Canada berating a political type they were berating the premier of New Brunswick for some deal he was doing with Delta Airlines because people in New Brunswick seemed sick of going to Toronto to get to the US. A sort while later Air Canada declared bankruptcy.

So if I were playing with real money I would look into seriously shorting Air Canada. This might not be a great plan as people are probably shorting most of the airlines. The real problem is that the present ownership structure of Air Canada seems complicated so I am not sure exactly who would be best shorted. Maybe if you could find out who they owe the most money to. They might be good to short if the damage could be deadly.

So my prediction is that Air Canada is potentially in more trouble then people realize and this tension recently splashed onto a local NDP player. I will look back in a while to see how this plays out and how best I could have monetized the situation. I could also look back to their last bankruptcy and see how money was made then. I am not sure if their liabilities are high enough to force a bankruptcy but what would get the big guy so wound up? It might be something simpler like his own job in jeopardy. So if their debt is not crushing what would the effect of this guy “Leaving so that he could spend more time with his family” on their stock price?

Oh and my opinion (as a pilot) on life jackets on air planes: Accidents don’t happen in a controlled planned fashion. Accidents usually happen due to a series of mistakes; each of which was not necessarily fatal on its own but all together result in people being dead. The argument that they don’t fly far over water brings to mind people 75 out of 80 people drowning in the Potomac River in 1982. I don’t know if life jackets would have helped but they couldn’t have hurt. But the key is that the Air Florida plane was probably only dozens of feet from the shore. How many people do you know who could swim from say 10 miles from shore? Or a few hundred feet in icy water? So why begin this chain of mistakes now by taking the life jackets out of the airplanes?

I have been puzzled by why my favorite company VMWare has been in near free-fall. This company has been doing everything right their products are great and that type of technology will lead the way for some years to come. I suspect they have some juicy patents and are presently market leaders. Their growth has been stellar in a market that isn’t so why. This is a lesson in not paying attention to two real fundamentals; People and people. It turns out that EDS somewhat controls VMW and I didn’t know this. EDS is a large IT player and I have always hated them. As a technology person I have never had a single iota of interest in their products. If you gave me their entire product line for free I would not even plug a single thing in to see what it does. I would pack it all up and sell it on ebay. I see EDS as products for old boring companies in the same way I see Depends as a product for old boring people. VMWare on the other hand is the future or at least it was. The leader of VMWare recently left to “spend more time with her family” or some such. Well it looks like this woman was a powerhouse that may very well have been driving the company to the heights it was reaching. But now she is gone. So a boring company that sells the IT version of geriatric diapers is now running a company that was trail blazing one potential future for both hardware and operating systems. I suspect that most people don’t think that this is going to work out so well and have have dumped VMWare for the semi digested cabbage dinner laden diaper that it might become. So my lesson here is to not only look at the fundamental technology but to figure out what critical lynch pins are making it so and keep an eye on those as well. Also to look at the personalities involved. Any egomaniacs? Two egomaniacs? So now I have a checklist. Tech fundamental, check. Finances look good, check. Personalities in check, check. Then keep checking these things as time goes by.

I am dumping Sun from my portfolio not only because it is a total dog but also because of what they are doing with MySQL. MySQL is a product that was poised to take on Oracle. It used the open source model and it was going gangbusters until Sun bought it. Sun made the usual takeover promises that they would not change a thing but now they are moving toward closing the parts of the source code. For you less technically minded this is breaking what makes products like MySQL great. This is missing the whole point of the product. This shows that Sun is still thinking like a giant company that it isn’t anymore. I had thought that they were going to be new and nimble but I now suspect that they are going to continue with their long tail slide into the dustbin of history.

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As an addition based on a comment that I received. MySQL is not going completely closed source that is the problem, it is that tiny pieces of it are. This is a tiny change. But it is a change in the wrong direction. MySQL is a great database with huge support from the Linux world along with others. But in the world of Open Source people can be fanatical about the source code being open. The moment you close even one part of the code the open source people will scream and run for other solutions. And there are other free open source databases lurking in the shadows ready to take MySQL’s place.

The key to the success of MySQL is not just that it works well but that it the linux community has adopted it wholesale. It is distributed along with most of the major distributions of linux and linux is what most of the real net is driven by. But many of the Linux distributions are black and white about opens source. If the source isn’t open then they won’t distribute it. This won’t happen overnight and it won’t even happen soon. But with the slightest hint of closed source and many in the linux world will start looking for alternatives to MySQL where they normally would not be looking at all. This would result in MySQL fading away and SUN having squandered 1 billion dollars.

Companies that buy successful things for 1 billion dollars and then change that which makes them successful by making them “better” are companies that get tossed off my portfolio.

This would be like buying a Chrysler right after they invented the minivan and removing the 3rd row of seating and putting in more trunk space. You could validly argue that people had been demanding more trunk space and this was just delivering to a proven market. Your competitors would love it and promptly make minivans that do have 3 rows of seating and kick your ass.

Over the past week I have finished making the switch from PC to Apple. I think that I have an interesting perspective because over the last 20 years I have nearly elusively used microsoft for my desktop operating system and for many of those years I used Microsoft as my server system.

For the most part the only other operating system that I have extensively used would be the Linux operating system but not as my desktop. My programming has usually been a combination of windows application programming mixed with server side programming. Microsoft served me well providing me with many tools that were the best available and during a period from about 1997 - 2003 were nearly all that I used for the server and desktop. Off and on from 96-01 I also used the Java programming language. But then I discovered the .net environment and from that moment on I was hooked. Many of the hard won coding victories that I had added to my library were mostly to be found in the world of .net with more being added all the time. My programming went quickly and smoothly in Microsoft’s .net programming environment. But then as time went by I started to find that Microsoft was not trying to help me program but was telling me how to program. Also I found myself using fewer and fewer microsoft tools and more and more opensource. Now I am not an opensource evangelist. The tools were just better. MySQL replaced Microsoft’s SQL server. Next PHP replaced .net along with eclipse replacing visual studio. Then linux replaced Microsoft’s server and now all I was basically left with was XP as my desktop.

Next I noticed geeks all around me using Macs. I noticed that the various hackers were also using Macs. Then I found out that the Mac OS is based upon an OS called BSD. BSD is for hard core hackers. But here was BSD hidden underneath the glossy Mac OS. So then I discover that the Mac OS is really a hard core server waiting for me to play with it. So I check to see if all my favorite apps are available for the mac which they were and then I made my move. I get the mac all up and running dual monitors and all. No problems. It sees my usb devices the apps all install and within hours I am up and running. Then for the next few days productivity drops while I get used to the new keys and where everything is hidden. The BSD lurking underneath is completely happy with my Linux / Solaris commands and I even remember my vi commands.

I would say that productivity is way up with the exception of some key slips where I use the windows key combos. The Mac aluminum keyboard is very nice. I am used to an ergonomic keyboard so my only wish is that they made an aluminum ergonomic keyboard. But all those little things are just better. Printing is better. Startup is quicker. The apps start is less time. Things are snappier. The upgrades are better. And the basic apps like iPhoto are kick ass simple. I have been wrestling with digital photos since the late 90s and nothing touches the ease of iPhoto.

I do have a few complaints about the Mac. Not everything is easier. Dragging applications to the applications folder to install them is just not intuitive. I get it but will a 60 year old first time user of computers get that? Memory. I have my computer loaded with 4 Gigs of RAM and I would not be able to function with less. Ram is cheap if you buy it separately from Apple but would most people be able to install it?  Applications. I am able to get by with the few missing apps that I need by using Darwine and VMWare Fusion but these are not for basic users. A better way to run windows apps is needed. I am fine but I would hate to have to show a basic user how to do all that.

So in summary. I am still producing applications for windows using VMWare fusion and Visual studio but now I port my C++ applications over to mac. My web application programming has improved as I am now working in an environment that more closely resembles the servers that the web applications will end up on.

So joyfully I have sidestepped the disaster known as Vista. But where will this lead. Some people are predicting that Apple will end up with huge percentages of the PC market share. Others predict that Microsoft will pump out a new OS and regain and losses they have to Apple. I suspect that the truth is that Apple will gain some good market share (around 15 to an absolute max of 20%) and then stop. They will stop both because Apple’s are just so damn expensive and also because hardware will get better so new machines will be able to drag the deadweight that is vista around a bit better. Linux is not a player in the desktop world and probably should stick to servers. The primary breakthrough that I see in the Apple market share will be IT people who make the swtich and then drag a small share of their company along. But the accountants will generally fight Apple corporate penetration as they would eat money.

So the real mac commercial should not show the dope smoking artist vs the bloated sack of crap but two businessmen. One with a pc and one with a mac. The Mac guy should then do things that are useful to the business world and do them faster. The Mac guy can then get into his Porsche and the PC guy can get into his Ford.

I think this comes down to what people use their device for. For typing text primarily for emails the various blackberry RIM devices win hands down.  Most people that I know who have a RIM device only use it for the two features of email and as a very oddly shaped phone; nothing else. I have only met one person who used the web feature which I suspect is the only other feature that a few people use on their blackberrys.

But the iPhone seems to be missing the keyboard which is simply the best way to enter text so that somewhat excludes the email responding crowd. But the key feature of the iPhone other than a repository of cool is its web browser. The screen is as big as is possible on a reasonably sized pocket device. Plus the browser basically works. I create websites that are quite demanding of the web browser and they basically work on the iPhone. No other portable web device that I have experienced can display the web usably. Most phone browsers mutilate most websites and most websites are not designed to work on phones. Technologies like WAP and such are mostly complete failures. But the iPhone truly brings the power of the internet to your hands in a portable way. But this power is limited to the informational part. The social and communications part is lacking. The RIM gets some of the communications part but not the informational and misses some of the social.

So where will this lead these two companies sales? I think that any head to head comparisons are meaningless for the most part at this time. If you are one of those people who is now effectively on call 24/7 because they are so reachable via their blackberry then the iPhone while probably good for your sanity just doesn’t have the email features that you need.  So at this time RIM need not worry about losing those legions of lawyers and MBAs with their crackberry monkeys. But where iPhone will do well is by getting those people who want more out of their phones and want the wonderful data features and the various gizmo features such as GPS, camera, watching movies, and so on. These are the people who bought the razr and thought that they were getting something newer and better. iPhone will cream off some of the top executives from RIM in that they will want something cooler than their worker drones. So with all this in mind it looks like RIM will continue to grow will little loss to iPhone but iPhone will be growing its market from people who either are looking for something new and better or just want to be the coolest kid on the block.

One twist is that the iPhone is both releasing a 3G version and expanding into Europe and Canada. This will make things like market share, units shipped and so on very hard to compare year to year.

Since there is no shortage of lawyers and MBAs being churned out by universities everywhere then RIM need not worry too much about market share. iPhone does need to worry about regular customers willingness to pay for rather expensive data plans.

With all this in mind RIM is safe and AAPL might be in for a wallstreet let down with the next iPhone.

I have finally figured out who apple is. They are BMW. That is everybody either wants a BMW or has a BMW or is in denial that they want a BMW. By BMW generically mean the higher end Germanic cars such as Audi, Porsche. Basically Apple’s cost more are considered cool and tend to have extra features and be of a generally higher quality. Whereas Dell and HP are like GM and Ford with the sony Vaio series perfectly matching the Japanese car manufactures. Using this interpretation it allows me to predict the future of Apple. Like BMW apple will never take over a majority of the car market but they will hold on to the high end high profit margin of the business. The HPs and Dells will continue to grab the bulk of the market with their basic econ boxes with the occasional profit grab using premium brands like alienware in the same way that American car manufactures use cars like their Corvettes and Vipers to grab a little extra profit from the fools who buy them.
So just like cars people will look at how much they can afford and otherwise justify spending on a computer and most will end up buying a PC for their surfing and emailing. But a few who’s time is worth too much for the hassles of Vista or just have the money to buy a better machine or just want to look cool will buy an Apple.
So sooner than later Apple will have all these consumers and their growth will stop. Apple’s present growth is due to their machines being more useful and Vista dropping the ball for the PC market. The only way for this to not play out in this fashion would be if Apple were to try and enter the lower end market. This would not work as they would damage the prestige of their brand and probably lose as many customers as they would gain. As how many doctors would buy BMWs if a nearly identical looking BMW model was available at say $15,000?

So in summary the present growth of Apple will continue for a little while but not for much longer. Microsoft will eliminate the worst of Vista and machines will continue to increase in power and compensate for Vista’s sluggishness. I will predict that Apple will make one last thrust into the high end corporate market in the same way that the bosses drive BMWs while the worker trolls drive fords then the growth will end. If I were researching this I would count the number of Apples in the executive boarding gates and when it levels out then sell of any Apple(AAPL) shares as they will be then overpriced based on the incorrect assumption of continued market share growth.

The key to oil prices is the classic of supply and demand but is supply down so much that prices should be so high. Well the demand for oil is not very flexible and thus if supply drops even a little below demand then prices can go out of whack. The best comparison is that of an airplane that is about to crash with 100 passengers. If that airplane had 100 parachutes for sale how much would they go for? Not much. But if there were only 99 parachutes I suspect that the prices would not be a bit higher but would potentially go into the stratosphere. People would pay their entire life savings for a single chute.

So my three questions for financial the financial future of oil are: Can a 100th parachute be created soon and if the pressure is high enough, as it appears to be, will a 101st chute or more be produced driving the price way down? Are their artificial pressures on the oil supply at work much like Enron with the rolling blackouts in California? And lastly if either of these first two questions turn out to be true when and how low will oil prices drop?

Lastly what impact does this have on my portfolio? I suspect that it will make it go up sharply if oil goes down.
So in summary; I don’t buy all this China and India growth crap. They source their oil from different places. I don’t really buy peak oil as that flag has been flown with every oil peak. The more that oil goes up then the faster it will fall when the 3 spare parachutes are found.

Oracle took a good hit today (~7%). This is one company that always confused me. There core database product is solid but there are other solid databases out there including MySQL. Oracle costs a fortune and most people who buy it just don’t need its power. The other day I had a table with 110 million rows in it and MySQL just wasn’t doing what I needed fast enough where I know that Oracle in the same scenario would be fine. Now I suspect that I could have tweaked MySQL into being fast enough but it does show where each is happiest. But the worst thing about Oracle is the sales people. I have met a few and they are the most arrogant dinks you have ever met. I am not alone. Over the years I have had various customers who commented on just how much of a twit this Oracle sales person or that was.  So my question has long been why does Oracle keep making any money? I have never been able to answer this question except to think that people like to buy their big databases from big companies. But now SUN has acquired MySQL so the only reason I can think of most people buying Oracle databases has gone away. Thus I would doubt the future of Oracle.

Counter-argument. Oracle sells more than databases. They sell an entire pile of products that companies need. Well my experience is that companies need databases. The other stuff is well… just other stuff.

My financial plans remain unchanged. I would not bet for or against on Oracle but with SUN in play I would pick against if I had to. But keep in mind that companies like Oracle rarely have any debt and many customers who aren’t about to change databases and thus will buy many more licenses into the distant future so Oracle has plenty of time to turn things around.

Where did AAPL come from? Only a short while ago I thought apples reeked of poo. But a few things have changed my mind:

• A few programmer friends who have switched or are switching
• Vista
• Leopard
• BSD
• Raw power of new machines
• VMWare
• They look cool
• Hard core hackers are using them.

The first is that other people with similar needs to me are happy with mac. This is pretty straight forward until you realize that some of those programmers are still programming for windows and will for the near or possibly distant future.

Next Vista blows chunks and probably always will. XP will soon not be sold and that blows. Basically after working well with windows for over a decade I just can’t do the Vista thing. XP works great but I doubt it will be able to hold out until Vista’s replacement assuming it works.

Leopard works. This is key as I found previous versions of OS X to be a bit jerky. This seems to be fixed now.

BSD. The mac OS is built on BSD. In summary it is a pretty Reader Rabbit interface on top of BSD. What, you might ask, is BSD. Well you have probably heard of Linux and probably know that it is for geeks. Well BSD is for really really hard core geeks. The take away message for BSD is that it is for hard core security and performance geeks. That is a good foundation to build an operating system on.

Power. Raw power. The newest processors coming out have power to spare while not eating batteries which have also got more power. Also some other improvements like LED back lighting translate to longer battery life. RAM is cheap as dirt as well. This all adds up to something that can compensate for some of the drawbacks of all the eye candy that apple uses. In the past it offended me that the OS would spend so much time flickering lights at a huge cost to my sanity that apple computers were out of the question. Well now a new Mac Book pro has power to spare and thus the eye candy comes will almost no real cost.

VMWare. One of my favorite undervalued companies. They are making the big bucks from the high end server people but they also sell a $79 product for apple people that will allow you to run windows. Now if you set this up correctly you can use an apple with the apple OS and still run those super critical windows apps that you might not be able to live without. A good example in the business world is Outlook. There is no real equivalent to many of the features and plugins that you will commonly find in a larger corporation. Thus using a mac would potentially cut you off from your work. But VMWare seamlessly integrates your windows apps so well you might not even remember that they are windows apps.

There is no denying that when you pay the bucks for an AAPL you get some sex appeal. (Both you and the laptop). Apple has always had the artist’s market and they want cool.

But lastly for me (a smaller market segment but a potentially very influential one) I am seeing the really hard core hackers all using apples. By hackers I mean those people who make computers do things that would frighten you and impress people like me. Why are they using apples and not windows machines. Well for nearly all of the above but the BSD part is very important to them. But people like hackers and people like me are the ones who influence buying for really big companies.

Where is this going? Well in the next while I will be doing this experiment on myself. I will switch all my development to a Mac environment. This will be costly but interesting. If the experiment fails my kids will get the coolest laptop in school. If it works I will probably never buy another windows based machine.

So what does this all mean financially? Well in short is means that AAPL will be a good buy over the next few years. Microsoft could be building the best operating system in the world but they won’t have it ready until 2010 or better which is eons in the computer world. What apple has now appears to be damn good. If they can sell me then they will sell more and more. This translates to Microsoft selling less and less far sooner than I ever thought they would. Microsoft is not the sort of company that can shrink well. Like many companies before it a small shrinkage caused near death. The stock stops going up and they start to bleed employees who were expecting stock awards. The remaining employees start various civil wars and it just gets worse. Lastly with a falling stock acquisitions that might save it will slip away. Apple on the other hand might not be able to take success. They have played the underdog while simultaneously being a bunch of arrogant bastards. Success might cause problems with AAPL too but for a while the stock should sing.

So my plan is to buy an apple and see how it goes. If it works then AAPL will get a big long term buy probably at the expense of MSFT. If not then MSFT will be held and AAPL ignored. I will report the results of this experiment.

Lesson learned. Basically when there is a market slide as is going on now with fundamentals going south then it is time to bail. But don’t buy into a low. Buy into a recovery. Maybe you miss out on some early profits but at least you don’t buy into a freefall.  This was a good lesson to learn for free.

So when to buy? Personally I think that a run is ready. So not now. With any luck soon but I suspect that some quasi healthy quarterly reports need to come out that shows who the survivors from this banking disaster will be.

2 Days ago I heard a rumour about UBS solvency but I didn’t really believe it. What I do believe is that rumours like that trigger bank runs. Thus when I hear rumours like that floating around I probably should have sold all banking stuff. The big Canadian banks have a zero percent chance of a run but if say Citi or someone has a run then I would lose well over 5-10% on my Canadian banks not to mention the Citi freefall. Plus even after recent banking losses the money could then be reploughed back into Canadian banks for a nice ride back up.

After one month the Euros have been dumped. Purchaced Jan28 for 148.39 and sold for 152.15. A 2.5% profit. I planned on holding out until 155 but I think the Euro people will push it down sooner than later.

Then bought $700,000 each of CM and RY as I think they are underpriced due to the general hatred of all things banking.  People will soon start looking for banks they can put money in. Also assuming that they have cleared the last of their skeletons out they will start announcing good news to drive up their shares.

Today will almost certainly see my Euro hedge sold.  If the Euro goes up today then pain will be too much for European manufacturers to bear. They will make their central bank do something, anything. Thus it will drop.

So around noon I will probably dump. Let’s see how this goes.

There are a few reasons not to dump though. The US might keep their dollar in freefall as that will eliminate a huge amount of debt. A single percentage in dollar fall knocks another percent off the debt. That is way easier than actually paying. Also it makes life easier for American manufacturers and exporters. Lastly the American economy is in a panic and thus probably will drop the fed again resulting in a relative rise in the Euro and thus justify my hedge. This being a Canadian thing all that happens to the American dollar sort of happens to the Canadian. If the USD drops then the CDN dollar usually drops for a variety of reasons along with it relative to the Euro.

There are two reasons for still proceeding with this sale. There is  profit to be taken and banks like RY demand to have more shares purchaced.