February 3, 2012 | In: Opinion
Is It Really That Hard to Predict Stocks?
I had a walk downtown yesterday, and I ended up buying the Samsung Galaxy Tab 10.1. A really, really nice machine. While paying, the person on the counter told me “good choice, much better than iPad”. I knew it was a good choice, but I wasn’t expecting that someone at that store would tell me that it was better than iPad. I thought that was interesting, so I asked him, “are you currently selling a lot of iPads?”. He told me that they sold many iPads back in the holiday season, but nowadays they’re not selling that much – people are preferring Android tables over iPads. I asked him what was the reason behind that. He gave me five reasons:
- You need to have a account on iTunes in order to activate your iPad (something that you don’t have to do with Android tablets).
- iPad’s camera quality is complete trash (he told that it was lower than 1 megapixel for both the front and the rear cameras)
- iPads are more expensive than Androids, yet they offer comparable (or even lower quality)
- Most apps on iPad are paid apps.
- The screen’s quality is not that good.
So, a simple and short visit to my local electronics store (it’s a big chain) revealed that iPads are not selling as before, which means that Apple as a company, is not going to have blow-out results as it did last quarter. Of course, the downward trend in sales will need to catch-up worldwide (especially in Asia) before it really affects Apple – so the effects might be minimal on AAPL this quarter, but most likely the third quarter will be classified as “fell below analysts’ expectations”.
And then I left, and while walking home I passed by a movie theater, which is by the far the most important movie theater in my city. I started a conversation with the guy at the counter: “what’s new”, “what are the good movies”, etc… And then I asked him, compared to last year this time, do you think that the number of people attending movies has increased or not. He told me that the number is definitely decreasing, so I asked him why. He told me take a look at the posters on the wall there, do you see any good movies? I looked and he was right, their “best” movie was called The Artist, and that’s saying something when it comes to the (low) quality of available movies. I then asked him, aren’t you guys expecting any good movies in the next month or so? He shrugged his head in despair and he told me that there are no good movies at all in 2012 – nothing, zero, zilch!
I then thought to myself, what are the companies that are directly affected by the movie theater business? Well, the first company on top of my head was IMAX (which I believe to be currently overvalued). IMAX (the stock) will most likely be slaughtered at the end of this quarter when they will release their earnings…
As you can see, it’s not hard at all to predict stocks, you’re not even predicting at this point, you are actually getting information equivalent to insider information, and the best thing that it’s fully legal.
We stock traders are really, really lazy people, we don’t want to do any field research and we expect to make money all the time on our stocks by using some (rather naive) educated guesses. So, do you still think it’s hard to predict stocks? If you still do, then you probably need a good walk, downtown!
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