AAPL Floating on iCloud Ten

[guest post by TS]

You may have been living under an iRock these last few years, as the world experienced its first (2nd?) iRecession.  Perhaps you didn't know that iAAPL has been recreating the word "revolution" - using a "smart" version of that thing popularized by Nokia and Motorola, the mobile phone, to entice customers into their iStores, where a bunch of iPods and iMacs were waiting to be purchased.

Well, welcome to the future folks, where we will not only be living under the iCloud, but listening to our music from it, streaming our documents from it, recording our HD video to it, and backing up our brains to it with a wet-link.  Now, it looks like Apple couldn't secure the iCloud.com domain - that links over to www.cloudme.com, an iCloud look-alike put together by Swedish/American company xcerion.  But, don't worry--why do you think Apple has billions in it's warchest?

(oops, spoke too soon - the page now redirects to http://www.cloudme.com/en?m=1?m=1?m=1?m=1?m=1?m=1?m=1)  [NB: icloud.com no longer redirects to cloudme.com - icloud.com is now Apple's!  :-]

Do you think Apple is right? from the floor of this morning's WWDC, in San Fran:

11:07 am Lots of customers saying they want an iPad or iPhone as their only device.
11:07 am "We're living in a post-PC world."

..TS.

Will Sallie Mae Profit from For-Profit + Dodd-Frank

I don't have an answer.

It has Dodd-Frank working against it.
It also has the new For-Profit regulation changing the sector.
It has the accreditation sector and the whole education industry in flux.

SLM  Private Education Loan Primer

"In 2009-10 academic year, SLM retained its market leading position with approximately 30% market share."

Now it is eliminating the Stafford Loan portion of its portfolio. It will only have Private Student Loans and Career Training Loans now. Will their market share increase, due to the government stepping out of the way?

Jeremy Keith writes

"The French Revolution was an era of extreme political and social change. Revolutionary fervor was applied to time itself. For a brief period, the French Republic introduced a decimal time system, with each day divided into ten hours and each hour divided into one hundred minutes. It was thoroughly logical and clearly superior to the sexagesimal system. Decimal time was a failure. Nobody used it....."

What does Dodd-Frank do, anyways?
TS says it's - "To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes." (TS clearly reads too much wikipedia)

"The Dodd-Frank Cheat Sheet, developed by the editors of Bank Systems & Technology, Wall Street & Technology, Advanced Trading and Insurance & Technology, provides financial services professionals with an easy-to-read synopsis of the new law’s rules and definitions. Coming in at just under 40 pages, the Dodd-Frank Cheat Sheet provides layman’s definitions of the rules, outlines the law’s impact on technology organizations and highlights key deadlines. The Cheat Sheet isn’t a substitute for reading the entire 1,000 pages of the original legislation, but it will help financial professionals get their minds around Dodd-Frank."

"Dodd-Frank touches on virtually every part of the financial services business,” says Greg MacSweeney, Editorial Director for InformationWeek Financial Services. “The law contains new rules for derivatives clearing, mortgages, executive compensation, credit cards, proprietary trading, consumer protections and more. Technology leaders and their IT organizations will certainly be pressed to help the business comply with the law and they will be tasked with launching new technology accordingly."

The InformationWeek Financial Services Dodd-Frank Cheat Sheet is available for download, free of charge, to all subscribers at www.banktech.com/dodd-frank."

Seven critical question to ask yourself on Dodd-Frank

The sea change is too hard for me to figure out. On top of that, it is in the financial credit service sector.

What do you guys think?

Doing is Being

Went to my daughter's high school commencement ceremony today. What a Great Day! The Valedictorian mentioned this poem in her speech.

Doing is Being

Ray Bradbury

Doing is being.
To have done’s not enough.
To stuff yourself with doing — that’s the game.
To name yourself each hour by what’s done,
To tabulate your time at sunset’s gun
And find yourself in acts
You could not know before the facts
You wooed from secret self, which much needs wooing,
So doing brings it out,
Kills doubt by simply jumping, rushing, running
Forth to be
The new-discovered me.
To not do is to die,
Or lie about and lie about the things
You just might do some day.
Away with that!
Tomorrow empty stays
If no man plays it into being
With his motioned way of seeing.
Let your body lead your mind –
Blood the guide dog to the blind;
So then practice and rehearse
To find heart-soul’s universe,
Knowing that by moving/seeing
Proves for all time: Doing’s being!

Politically Agnostic

Gainful Employment Ruling Favorable

The website www.thestreet.com has a good summary and follow-up of the latest favorable ruling on the for-profit school sector.

"Education regulations proposed last summer cover everything from restricting incentive-based recruiting practices, the need for new job-training courses, taking action against schools which fail to advertise honestly, to requiring schools to notify students of graduation and job placement rates. Institutions would also be required to limit student enrollment to those who have high school diplomas or can readily demonstrate their readiness for university-level education. Schools must also comply with what is called the 90:10 rule in fiscal 2012, a rule stipulating that no more than 90% of a for-profit education provider's revenue may be generated from the DOE's federal student aid program."

"The DOE expects 18% of for-profit school programs to fail its compliance regulations, with 5% losing eligibility for federal funding under the finalized new law."

Businessweek.com  puts [it] in plain English:

If a school fails all three measures, it must inform potential students. 
If a school fails three times within four years, it loses access to federal student aid for at least three years. 
Under the new rule, the soonest that a delinquent program would lose eligibility for federal student aid is 2015" 

Enthusiast
www.thestreet.com continues:

"Analysts at Credit Suisse said the final gainful employment regulations eased more than expected, but the firm maintained that significant earnings risks in 2012 and 2013 persist. Piper Jaffray analysts said the final ruling was less threatening than originally expected, and generally positive for stocks in the sector.

The firm tapped Bridgepoint Education(BPI_) and Grand Canyon(LOPE_) as its top sector stock picks.

Motley Fool website has an audio podcast about the for-profit sector, starting at the 3:14 minute mark.
Hot Stocks in a Cool Market - June 2, 2011


Detractors
The New York Attorney General issued a subpoena for Bridgepoint Education, on May 19th. They are reviewing consumer protection, securities and finance laws. However, I don't think there are any charges pending. Other state AG have joined the fray.

www.thestreet.com continues:

"Sen. Tom Harkin, a Democrat from Iowa who has been a vocal critic of the for-profit education sector, said "the Department of Education's gainful employment rule is a modest and important first step to protect students and taxpayers from subprime academic programs that have a demonstrated track record of failure."

Senator Tom Harkin Statements
Statement by Senator Tom Harkin On the Targeting of Veterans and Active-Duty Members of the Military By For-Profit Colleges and Universities.

Conclusion
In Senator Harkin's latest statement(May 19th,2011) on the floor, I heard something very interesting. I heard him say that we should focus our attention on the accrediting system. Accreditation is not done by the Federal Government and a need for more regulation and enforcement is required. Sound like he has shifted his attention and that could be the next target.

While I usually stay politically agnostic, I have notice two instances where the political cliche of "companies are not planning because of uncertainty over taxes and regulations" has not held. Companies have to plan for the future. True, they fear/hate uncertainty, but they must plan for growth or lose market share. There is a disconnect between political realities and business realities. Maybe that perception could be exploited.

All Eyes on Groupon IPO

[Guest post by TS]

The news hit the global wires Thursday afternoon, spreading faster than rumors through Dido's Carthage: Groupon to file IPO.

So many questions go whizzing through my mind: when will they price? whats the symbol? how shall I play this one? can I get pre-IPO shares? what does this mean for this new so-called tech bubble?

Whoa! hold on there, pardner. Slow down.  Don't get your britches in a bunch!  You have some time, so let's consider this.

• First, as many have pointed out, it could be months before the actual IPO.  Looking at Linkedin's filings, five months elapsed between first filing and actual release to the secondary markets.
• Second, you have a lot of research to do before you need to make a decision: news sources, the SEC's filing archive of Groupon's filings (source material!), asking your friends about their Groupon experiences, etc.
• Third, can you even get shares, and if so, what is your personal risk profile and will it allow you to pursue shares?

Let me briefly address part 1 of the third bullet: do not seek pre-IPO shares, unless you like holding on for 180 days post-IPO due to the lock-up period. Brokers who provide pre-IPO shares to investors don't like it when the shares are sold instantly--doing so will likely deep-six your chances of getting future pre-IPO allotments. Instead, hold out for the first of the secondary market shares that trade on the day (morning) of the IPO. If you catch the secondary market at the sound of the starter pistol, your shares should be as inexpensive as any post-IPO shares can possibly be.

The second bullet point is very important: do your research.  Does this company have growing power?  Will the market reward them for a job well done (GOOG, anyone?) or will the shares plummet soon upon arrival? Is the company profitable, or look like they could be?  These, and many others, are questions you should be comfortable with discussing before plunking down cash on the barrelhead.

..TS.

Twitter Syndicated Data Streams

I have talked about algorithmic trading using twitter before but in the context of who the larger players in this field were.

What if you wanted to try it on your own?
Here is a poor man's algorithmic trading with twitter data site. Put in a keyword, and you get one page of twitter search hits. At least that will give you an idea of what people think.

Or use www.topsy.com.
-------------------
[Edit:] Topsy has a great developers page that has app and its own api page

Check out the http://countingtweets.com site which "show the number of times that links on a site have been twittered"

-------------------
Computer API approach
But a more systematic approach would be to use an existing api. The twitter data stream does not give 100% full access. It only provides 1% of the real-time stream data, but that's probably enough for a cross-section survey.
I'm sure there are more but here are the first three I found.

• the original twitter api feed written in several languages, here is a library of open source code
• the klout api syndicated twitter feed -  Klout http://klout.com is a company which generates reputation scores for individuals & business.
• the gnip syndicated twitter feed - With gnip.com you can incorporate facebook, myspace, vimoe, flicker, google buzz, delicious and more.

Here is a twitter development page.
There is a twitter fan page which will tell you everything you ever wanted to know about twitter.

Time Span vs Attention Span

We have so much information to process our minds have developed short-cuts to live by. When we come across a familiar situation, we analyze it quickly and don't require any extra thought to come up with a solution. The more times we run across an experience the faster we process it. Only in coming into a unique experience or surroundings do we give it our full attention and develop a novel approach.

I want to propose a mental experiment. Write down your basic trading rules/assumptions onto a piece of paper. For instance, I am a swing trader. My rules begin with the following:

1) 1 day to 3 month swing trading

2) ....

3) ....

4) ....
etc.

The experiment is to Think Differently

Wikepedia writes - "Opposite Day, also known as Opposites Day, is May 25th of every year. It is a word game where speech is modified so that meaning is inverted. Once Opposite Day is declared, statements mean the opposite of what they usually mean."  Think of this as "Opposite Day". For each item think of an antithesis of the written statement. It's opposite or divergent view.

1) 1 day to 3 month swing trading
[antithesis]
2) ....
[antithesis]
3) ....
[antithesis]
4) ....
[antithesis]
etc.

So for number #1 - We all want to buy low and sell high. The trading range is a time period which can very in infinite ways and steps. The random walk of a stock can consolidate, capitulate or even be in a parabolic bubble. Why am I using a "Time Span"?  Why shouldn't it be an "Attention Span"? Excitement & attention is what makes a stock rise (or fall). The low to the high peak range is achieved when something generates positive (negative) attention to a stock. Can sentiment be identified, codified and measured from external sources?

• press releases
  
• news
  
• earnings, analyst reports and filings
  
• articles, politics
• branding
  
• controversy
• social media hype
• your neighbor, peers, broker recommendation
• Bubbles flourish in periods of “new era” thinking 
• many more reasons

A longer range period is achieved when attention is given to an entire sector.

Go to Item number #2 - Repeat