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Ahknaten: Contrarians, Apple and Britney Spears

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At times I feel like I understand the markets, and then there are the times that I feel like I don't have a clue. Most of my virtual sector funds have beat their respective sector spiders, but there are days that I just can't understand what's going on.

Earlier this week, a pamphlet came in the mail and it said something like this: "You can now buy ##### shares up to $ and you can expect to sell ##### above $$$$$$". That statement alone didn't bother me as the person was trying to give some explanation as to why they thought the stock was underpriced. But, I was bothered by what I saw in the fine print. It said:

"This stock profile should be viewed as a paid advertisement. In order to enhance public awareness of #####..... .... ##### paid the publisher, ##### the sum of $900000. ##### applied these funds towards costs associated with creating, printing and distributing this report and will retain and excess funds as profit".

Sad isn't it?
Does it really cost close to $1 million to print a letter and send it to folks?

At times I look at stocks and all I see are the bullish reports on how great they are. If a company dislikes the stock, they can always just decide not to have an opinion on it. Even when I look at blogs that talk about stocks, sometimes I see how folks try to outdo one another as they believe the stock is worth $10 more than the previous recommendation.

I think back to an interview I had. I had pitched a bunch of short candidates: SIRI FXEN NPSP CRM and INPC. Since that time SIRI is down -36%, FXEN is down -46%, NPSP is down -61%, INPC is down -98% and CRM is up 277%. See, I'm not right all the time, nor do I claim to be. I still don't understand CRM. It has a lot of insider selling and it has a valuation that I just don't seem to like. I still think it's a 'Short', but I sure suck at timing. My timing with SIRI was a bit off at the time. After the interview, it shot up 43%, but since that high it is down -58%. SIRI was interesting to me. The blogs and message boards lit up after the interview and I was slammed hard. Folks swore at me for disliking Apple and they posted personal stuff about me on the internet as well. I had to step back and wonder - why bother? If I hated/liked something, why should I even bother to give an opinion? I think that might happen with some firms as well with their research - they can't justify the cost of analyzing a small company, they don't want to bash a company they might have relations with, they don't want the negative press and the awkward cocktail receptions. In other-words, why bother?

I may have been one of the few people who actually voiced a negative opinion about Apple, and I had all sorts of people dislike that opinion. That's cool and I'm cool with that, but it reminded me of the experience I had with SIRI. If you like a stock, people will pat you on the back and say nice things, but if you hate a stock then you might not be liked as much. It makes me wonder, how many people out there have biased stock opinions and how many out there make $900000 for writing a pro stock advisory letter?

So, perhaps I'm right or perhaps I'm wrong about Apple. I don't know. Some pointed out to me that Apple had beat earnings. Well it did, but did you notice something else? One of my concerns was that they might not be able to continue with their strong earnings growth and surprises. Sure enough, they beat by 15 cents, but in the previous quarters they had beat by 20, 23, and 36 cents. Does 15 cents sound like 'great' news compared to the past? Or, do you have any thoughts about the insider selling? If I'm reading it correctly, one insider just sold $130 MILLION!? If you like the stock, doesn't that concern you?

So perhaps I'm a bit critical of things, but in this world I think most are afraid to voice a "contrarian" view to the masses. I don't understand GOOG and it has been going up. I don't understand AAPL and it has been going up.

Perhaps, the stock market is like the drama in the "real world", and timing Britney Spear's comeback is as hard as timing a price correction for GOOG or AAPL?