Eric Rosenfield.com

What I bought and why I bought it

Saturday June 16th 2007, 1:35 pm

Cross-posted to my livejournal

My stocks have been doing pretty well recently. Most of my buys have been in the technology sector, which is the sector I know the best as professional a Computer Programmer, a sector I follow anyway and understand. Here’s what I bought:

Apple - with the iPhone coming out, this is a no brainer and I’ve already made a 7% gain on my investment (which for three weeks of investment is pretty spectacular). The question is whether to sell it after the iPhone comes out, take my money and run, or hold onto it for the long term, counting on Apple’s stellar performance over the last decade to continue. With the iPhone being available with companies other than AT&T’s service come 2009, plus a new iPod in the offering at some point before that (I’m betting in 2008), plus my expectation that the Apple TV will turn out to be a great long-term investment for the company once Internet movie rentals get fully straightened out (Apple could kill Netflix here if it can get the movie studios to go along with it) I’m betting on Apple for the long haul.

Google - There have been some who claim that Google’s high stock price ($505 per share as of this writing) is asking for trouble, and that they can’t keep it up. (To be fair, a big reason their stock is so high priced is because they refuse to split, following the model of Berkshire-Hathaway, who’s stock is currently in the $10,000 per share range.) There are also questions that it might have paid too much for Valueclick, not to mention copyright and privacy complaints for their recent book search and google street view features. But Google is quickly becoming the largest Internet advertising broker, a position few people seem in a position to challenge, and they just keep mounting great service after great service. Google Finance, for instance, I use to do much of my stock research, and other features like Google Docs, GMail and Google Reader I use every day. At my company, we currently use the Google Maps API to display the locations of real estate properties on our real estate sites, Google Base to upload real estate properties to Internet searches, and GMail for Domains for our client’s email (allowing them to do email from their own domain names using the amazing Gmail interface). In other words, Google’s services are all over my life and work and that doesn’t seem like it’s going to decrease any time soon; in fact it looks like it’s going to increase significantly. That said, my money’s on Google; if any company is poised to be the next Microsoft in terms of growth, that’s the one.

Intel - There’s been a lot of buzz about Intel since Goldman Sachs changed its rating from hold to buy. Which was great for me, because I had already bought Intel, making me a nice bit of money. Here’s why I bought it: Intel’s main competitor in the chip market is AMD. AMD was killing Intel for years because they had low cost processors which performed much better than the equivalent from Intel (the horrible Celeron chips in particular being a disaster for the company). However, since Intel introduced its dual-core and quad-core chips, its been catching up rapidly, with high-quality, low cost processors. AMD still doesn’t have a quad-core processor, and the launch of their prototype, Barcelona is being delayed. In order to keep the pressure on AMD, Intel is slashing the price of its quad-core processors by 50% (!) over the course of the next couple months. This, I think, will cement its place in the processor market well into 2008, and probably into 2009 when it’ll start finally coming out with the massively multicore processors it’s been promising. All that, along with its new penetration into the Mac market, make Intel the horse to bet on in terms of processors.

British Petroleum (BP) - Bought this on the recommendation of a friend because they’re doing a lot of new energy stuff. I haven’t been so enamored of its performance (it has only just starting turning a profit since I bought it and the more I look at the company the more it seems like they’re still heavily invested in oil, which I don’t like. This’ll probably be the first thing I sell.

Marvel Enterprises - I actually bought this stock at the wrong time. Because of the Spider-Man movie, everyone bought the stock before the movie came out (when I did) and then sold it after the movie came out, making the stock tank. However, I still think Marvel is an excellent buy. They’ve just changed their relationship with the movie studios making it so that they can produce the movies themselves and take a much larger portion of the profits. The big horse I’m betting on here is the Iron Man movie that’s going to come out next year, starring Robert Downey Jr. and directed by Jon Favreau. Favreau is someone who really gets the Iron Man character and I believe in his ability to transfer this character (always my favorite of the Marvel stable and one whose comics I followed religiously as a kid) to the big screen. There are other projects in the pipe for Marvel, of course, including a second Hulk movie, but Iron Man is the one I’m really excited about. As for the comics, from a financial perspective comics aren’t big money-makers, and are mainly significant as properties for other media, including movies, TV and video games. That said, Marvel’s comics line has also been doing very well recently with the success of Civil War and the death of Captain America. On an aesthetic level I think Civil War was stupid, and they turned Iron Man into a villain which pissed me off. But it made money, and that’s what’s in question here.

Toyota - Toyota is now the largest auto manufacturer in the world, and is slowly transitioning their entire line to hybrids like the mega-successful Prius. With more Pruises on the road every day, I think Toyota’s going to keep going up.

Mutual Funds:
Mathews International Asian Technology Fund (MATFX) - No load, no transaction fee on Ameritrade (my online broker), heavily invested in Asian tech markets which I think are going to be the big growth markets over the coming decades.

New Alternatives Fund (NALFX) - A load fund, which cost me a pretty penny to buy, but from my research seemed like the best of the new-energy mutual funds. Heavily invested in alternative and renewable energy, over the coming decades I think these companies are going to do really well and at the same time help wean us off oil.

And lastly, in my RIA:

Vanguard Target Retirement 2040 Fund (vforx) - an index fund of index funds that automatically adjusts to become less risky as the years go by, less stocks, more mutual funds. It’ll settle into having a certain amount of ready cash by 2040 just in time for me to be able to withdraw from my Roth RIA tax free! I plan to fully fund this every year.

Edit: My friend Morgan points out:
“apple hasn’t had a stellar decade, just the last 6-7 years, and berkshire is
at 100,000 a share, not 10,000.”

Thank you, Morgan.

Edit 2: Also, Google is buying DoubleClick, not ValueClick. My bad. Thanks anonymous LJ person!


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