Tag Archives: Patent law

The time to short Apple, as in $AAPL, is nigh

11/29/2012 Portland, Oregon – Pop in your mints…

Here at The Mint, we don’t generally comment on individual stocks.  In general, we see equity prices as subject to monetary policy whims and HFT (High Frequency Trading) bots.  As such, it is rare that the perceived fundamentals of a stock match its bid in the markets at any given time, no matter how perfect the market’s knowledge may be.

Add to this the fact the Corporations are, at their base, socialist enterprises, and you too, fellow taxpayer, will begin to see equities in a whole new light.

That said, sometimes things come to us so clearly and are of such significance that we can ignore the fact that we are talking about an equity and simply study the phenomenon which it represents.  In the case of Apple, the brainchild of Steve Jobs that has given the world the IIe, the Macintosh, and the Ipod-phone-pad craze, among other things, the phenomenon we are witnessing demands a response.

In summary, we believe that about the time that Santa Claus makes his annual jaunt around the world, dropping Apples I-whatevers in the stockings of children, both young and old, of well heeled parents all over the world, it will be time for wise investors to short Apple, big time.

Why such a bold call?  Other than a hunch, confirmed by a recent analysis we were fortunate to read, we will attempt to articulate our reasoning for this prediction as follows:

1.  Reliance on patents as a business plan is equivalent to capitulation in the technological sector.  A short time ago, we wrote briefly regarding the lawsuits which Apple has launched against Samsung and others who have dared to “imitate” its mobile technology:

Apple’s use of Patent Law indicative of an inferior product offering

Relying on litigation either for revenues or to protect revenue streams is a losing strategy.  It not only hurts your competitors, but the public in general.  Since innovation got Apple to where it was, why not continue?  It shouldn’t be difficult with the largest cash hoard in corporate history at their disposal.

We once “got in” on an IPO for a company called “Caldera Systems,” and hung on for dear life, waiting for them to profit from the rising tide of Linux Operating Systems.  We then watched helplessly as their strategy degenerated from trying to profit from open source software to changing their name via an acquisition to SCO Group and initiating a lawsuit against IBM which boiled down to a few lines of code that SCO claimed was theirs.

As far as a business strategy, pursuing Intellectual Property claims is last ditch effort to save face.

2.  Steve Jobs is gone.  Mr. Jobs was a rare creative genius as well as the gravitational center of Apple.  Without him, Apple was bound to turn into the technological equivalent of the break up of the Roman Empire, or any Empire for that matter, with brutal wars for territory and resources, no matter how abundant they may be, which will eventually leave the Empire a shadow of its former self.

3.  Fund Manager window dressing.  Apple stock has minted a 44% return year to date at the time of this writing.  It has also become a big part of the Nasdaq and S&P 500.  As a consequence, many institutional investors have large direct or indirect stakes in Apple which has a juicy return that is begging to be booked before year end.  Sell.

4.  The moronic Fiscal Cliff.  This is crushing business confidence and by extension, the US Consumer.  The combination of the unprecedented uncertainty surrounding legislation with wide ranging economic consequences, such as Obamacare and the Dodd-Frank act, coupled with the debt ceiling, spending sequester, and sun setting tax provisions has utterly paralyzed American businesses as some 1,000 in Washington bicker over numbers they do not understand.  Washington will get a deal done and it will be bad for all involved.  Unless the payroll tax holiday gets extended, the US consumer is toast.

This is why we think Apple is ripe for the picking.  However, we learned long ago to ignore our gut feeling until it is confirmed.
Enter Chris Vermeulen.  In a recent post over at the Market Oracle, Mr. Vermeulen defines the terms for the upcoming demise of Apple’s stock price in terms of the psychology of market swings.  For specifics on the phenomenon at hand and a possible short signal (which, as near as we can tell, will be when $AAPL touches $640 in late December), we refer you to his insightful article:

Apple, How Market Booms Turn to Busts, Trading from New Paradigm to Despair

In our humble assessment, which should be taken with the same grain of salt which all free advice must be taken, we believe that Mr. Vermeulen has put into numbers and graphs what we have felt, generally, ever since we purchased our first Android:  Apple’s days as king of the mobile computing realm are numbered.  People will not pay for things that they can have for free, and, as the commercials from Designer Imposters long ago reminded us.

“You can patent a mix of chemicals, but you can’t patent a smell.”

Two words:  Short Apple

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for November 29 2012

Copper Price per Lb: $3.52
Oil Price per Barrel:  $86.62
Corn Price per Bushel:  $7.60
10 Yr US Treasury Bond:  1.62%
Gold Price Per Ounce:  $1,719 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.9%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  12,985
M1 Monetary Base:  $2,329,700,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,303,600,000,000

Full Disclosure and friendly warning:  We do not own any shares of $AAPL, nor do we plan on shorting them with our own money, as stock market speculation is a great way to lose a ton of dough if one doesn’t know what they are doing!  Furthermore, we are hardly qualified to give specific stock or portfolio advice to persons we do not know or do know but do not have intimate knowledge of their finances and tax situation.  If you choose to do so as a result of reading this article, you do it completely at your own risk or reward.

Apple’s use of Patent Law indicative of an inferior product offering

9/26/2012 Portland, Oregon – Pop in your mints…

The global smart phone industry is still reeling from the implications of the ruling in favor of Apple in a high stakes legal battle with rival Samsung in the mobile technology space.

To be clear, Apple has every right to make use of the remedies available to them under international patent law.  As the law is written, there can be no mistake that the pioneering iPhone and iOS operating system has been shamelessly mimicked in a desperate attempt to replicate its success and help satiate the insatiable human need for easy to use technology at an affordable price on a platform friendly to developers.

Yes, the villains at Samsung are being punished for listening to the market and copying and improving upon Apple’s design, making it faster, bigger, more affordable, and accessible to developers.

For this their punishment should be all the more severe.

So should the punishment for every organic farmer who dares to “copy” a seed which has been “patented” by Monsanto, or anyone who puts their hands to work to cultivate or, dare we say, improve upon something that has been made before them.

The point is that patent law, while serving the important function of protecting innovations as they come to market, is counterproductive on a societal level when they are enforced to keep copy cat products, which meet a need that the original product does not.  In the example of the iPhone, offering a similar product at a more accessible price with an easier to use interface.

In fact, we see that in nearly every example of a company or individual invoking patent protections to protect its products, the law ends up causing a greater loss to society as they are forced to choose between what is now seen as an inferior or prohibitively expensive product or go without until the patent holder sees fit, from the crystal cage of their legal monopoly, to grant the populace an upgrade or a price break.

Apple, in this sense, has admitted defeat in the mobile realm, as the iPhone 5 proves once again that, after establishing the baseline for mobile technology through sheer genius, they are forced to lean on patent laws to maintain what should have been a clear competitive advantage.

The sales figures speak for themselves:  Samsung shipped twice as many smartphones as Apple sold last quarter.

In the case against Samsung, we see that the authorities are more interested in product pride than allowing free actors in the market to supply a consumer need that the iPhone does not, par for the course in a system where Crony Capitalism daily stifles what may be life-changing innovations.

Thank goodness the human genome wasn’t patented!  Where would we apply for the right to reproduce?

Full disclosure:  We own devices with both android and iOS operating systems.  For those who have never tried a droid, let’s just say that it makes operating in the iOS and the Apple ecosystem feel like being shackled with a pair of handcuffs.  For those who have never tried the iOS, let’s just say it makes the droid feel clunky and unstable.  Were it possible to mesh the iOS with the freedom of the android ecosystem, mobile nirvana would be achieved.  Thanks to patent law enforcement, it never will be.

Stay tuned to your devices and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for September 26, 2012

Copper Price per Lb: $3.70
Oil Price per Barrel:  $90.25
Corn Price per Bushel:  $7.43
10 Yr US Treasury Bond:  1.63%
Gold Price Per Ounce:  $1,743 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  8.1%
Inflation Rate (CPI):  0.6%
Dow Jones Industrial Average:  13,455
M1 Monetary Base:  $2,279,800,000,000
M2 Monetary Base:  $10,150,900,000,000