Fadi El-Eter

Facebook (NASDAQ:FB) is currently trading at $46.70, with a P/E ratio of nearly a hundred, meaning that it’ll take Facebook a hundred years to pay back investors based on its current earnings, assuming, of course, the current earnings are sustained.

Reports earlier this month have suggested that teens are leaving Facebook in droves. In fact, Facebook lost 16% of American teenagers in just one quarter, Forbes suggests. 16% in one quarter! Imagine that!

Not only is Facebook losing teenagers, it is also losing adults. I am currently 35, and I have totally stopped using Facebook back in August of this year (that was nearly 4 months ago) and I don’t miss it a bit, and I’m not alone, and I’m not just saying this because I want Facebook to do bad in the stock market, it’s a fact, Facebook is losing traffic, substantial traffic every month, and there’s nothing that the Facebook management can do to stop the hemorrhage (by the way, even Facebook executives admit there is huge hemorrhage), except to pretend that it’s not affecting their quarterly results.

I don’t think investors can remain oblivious about Facebook’s traffic for long – sooner, rather than later, Facebook will be punished, and the stock will burst and most likely it’ll be reduced to a single digit stock. Who knows, maybe that’ll happen in the next quarter.

And when Facebook falls, LinkedIn will follow. Or maybe LinkedIn (trading at a P/E of nearly a 1,000) will fall first. Who knows?

I’m sure that many people will still buy FBs and LNKDs, but hey, there’s a sucker born every single minute (well, nowadays there’s a sucker born nearly every 9 seconds, since that saying was first used back in the 1800’s when the world population was only 1 billion, and now it’s 7 billion, so, the number of seconds it takes for a sucker to be born is (60 x 1)/7 = 8.5 seconds).

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

Apple has been a public company since 1980, back then the stock price was $4.00. It is currently trading around the $518 mark, which means that in 33 years, the stock went up by 12,950%, which means that if you were crazy enough to invest $100,000 in AAPL back in 1980, you would be a happy camper right now with nearly $13 million. But most likely you didn’t, and if, you were one of those 0.00001% investors who actually did that, then probably you got rid of your AAPL stocks in 1985, when they were trading for 60% less than the original $4 you paid for each share. However, you might be one of those very lucky investors who held on to the stock until now, and you might already have the $13 million, but if that’s the case, you wouldn’t be reading this blog, would you? You would probably be buying a luxury yacht or jumping from summer to summer to summer to reach a perfect tan. And guess what, it might get even better for you.

Carl Icahn, a famous and heavyweight investor, with huge shares in Apple, is asking Apple to buy back nearly 1/3 of its stocks, which means the supply will be suddenly short on demand, which means that AAPL’s stock price would shoot high in the sky – I’m talking about at least a 30% increase here. Now, the point of this post is not to discuss what will happen if Apple goes the Icahn way (that’ll be the topic of another post), but what would happen if Apple’s board goes crazy and decides to buy back all the stock, and make Apple a private company.

Well, for starters, you, as an investor, will make a huge profit, because Apple will be forced to offer a high markup over the current stock price to satisfy all investors – typically that markup is 20% to 30%.

As for Apple the company, it will start collapsing, here’s why:

There are many people buying Apple products at the moment because they have AAPL shares and they want to contribute in lifting the prices of these shares (or at least preventing them from falling). Once all of these people are stripped away from their Apple shares, then buying Apple products will be no longer a concern for them. They will start looking at other brands, Samsung, Sony, whatever… Once they do that, then Apple will start to feel the reduced cash flow, which will affect the quality of its products, which will further reduce the number of Apple adopters. Once that happens, Apple will be forced to reduce its profit margin to a point where the company will start carrying debt. Not good!

The cycle above will become vicious and more destructive with time, and the end result will be seeing Apple as a passé company, that once ruled the technology world.

So, should Apple become a private company or not?

I think they should, mainly because they’re currently dying slowly anyway – they haven’t had any decent product for years and they have consistently missed expectation for the past several quarters. Apple post Steve Jobs is just no longer Apple.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

According to the World Bank, today (November 19th) is World Toilet Day. While the thought of having a World Toilet Day is funny, it is also serious. Toilets are mainly about hygiene (imagine how your life would be without one), and can make living more tolerable. Unfortunately, there are still many people in the world we live in that have no access to toilets. The health implications on these people are often severe.

To celebrate World Toilet Day, I have done a quick research so that I can list all the public companies that manufacture toilets. To my surprise, I found that nearly all the companies manufacturing toilets are private companies including Kohler. On the European stock exchange, I did find Villeroy & Boch AG (ETR:VIB3), which has a market capitalization of merely 258 million Euros (seems that there’s not a lot of money to be made in the toilet business).

Well, there you have it, and happy World Toilet Today!

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

Note: This post should have been posted on Monday (yesterday), but for some reason, I didn’t hit the Publish button.

I admit it. I waited in a line in front of a store here in Montreal to be one of the first to get my hands on the new PlayStation 4. It’s not that I’m a gamer or anything, it’s just that it was something that I wanted to have after seeing the so many videos about it. The store was going to open at 8 AM, and I arrived to the line at 7:55 AM (by the way, you get to meet quite a few insane people in those queues), in all fairness, I didn’t know whether I’ll have a PS4 or not, but surprisingly, they gave me a number, which was 42, and apparently, they had 48 PS4’s in stock, which meant that I was guaranteed to get one. (Just so you know, the store I went to was Target in Downtown Montreal).

As soon as the store opened, the line was directed to the “electronics” section, and each one was getting his PS4. I noticed 2 things:

1. No one, except for me and another person, bought games. It was the funniest thing, everyone had this red bag with the PS4 in it, but no games. I might be wrong, but I’m pretty sure that the PS4 is useless without games – unless, of course, they just want to play downloadable games (I doubt it) or they were just looking for a very expensive blu-ray player.
2. Nearly everyone (except, again, for me) was bragging how he was going to get the PS4 and then sell it immediately on ebay for $600 or more. (this explains the first point)

When I got my PS4 from the clerk I noticed that there were 5 people after me, and, when the line was done and there were no more people, the store still had one unsold PS4. I’m sure that it got sold within the next 30 minutes, but you get the point. There was one unsold PS4 on PS4’s launch date.

As soon as I got the PS4, I went back to my office, and checked ebay, and it literally had thousands of PS4’s for sale, which meant that most of these people that waited in line just wanted to make a little money out of the PS4 – they never intended to use it.

Interestingly, Sony’s stock was literally unchanged on Friday (the launch date), but on Monday (yesterday), the stock went up by 2% because of the PS4. I have a few questions here:

• Why did the stock go up? Initial sales don’t say anything about how the console will perform. In fact, you can’t really judge the console until after the holiday season.
• How much is Sony’s margin out of the PS4? Is it actually making money of the console itself or is it losing money?
• How will Microsoft’s Xbox One affect the PS4’s sales? The Xbox One will be available, by the way, on November 22nd.

For now, Sony’s investors should be happy – the question is, will Sony disappoint them come next year?

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

BBRY (previously RIMM) is currently trading at $6.25, a new low, which is down 46.50% from the $11.50 back in January 2^nd. One would think after changing the stock’s symbol, CEO, etc… something positive might happen to the stock.

Well, apparently, something positive happened back in January, when the stock flirted with the $18 level (that’s when all the suckers started buying), and then it started a gradual decline, until July 1^st, when the company released horrible results and guidance, where the stock slashed nearly $5 of its value in just one day.

You see, the problem with BBRY is not with its jinxed stock, or its inexperienced, ego-centric CEOs (past, present, and future) who think that by slashing jobs they can save the company. The problem with BBRY (for some reason, I keep thinking of Burberry when I type in the stock’s name) is that all their products, old and new, are still based on an antiquated, old OS that nobody wants to develop apps for and everyone thinks it’s complicated.

The other problem is that the change came in too little, too late (well, even if it was big, and it wasn’t, it was just too late). BlackBerry has already lost the majority of its heavy weight clients back in 2010-2011. At that time, they could have leveraged those clients to initiate a change, a real one. But alas, that ship has sailed.

To conclude, let me ask you this question, would you buy a BlackBerry phone at the moment if you needed a new phone? And if yes, what would be the reasons?

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

While doing a small research for this post on the oldest company in the world (that still exists), I noticed that the majority of the world’s oldest companies are Japanese. There are quite a few Swiss, Austrian, and German companies, but the absolute majority are Japanese.

This means 2 things: 1) that Japanese work ethics are the best in the world, and 2) that the Japanese are resilient people that can wither the effects of a recession (or many recessions), a natural disaster, or wars.

This also means that the majority of people living on this planet don’t have the long term vision that the Japanese have, most of us look after our children and that’s about it. We don’t care what’ll happen to our business, to our money, to our vision, to our countries, 100 years after we die. We just care about the present. All this “we think about the future” slogans that we see all over the place are fake. Rare are those who care about the future, and if there are people on this planet who are most likely to care about the future, it’ll be the Japanese.

I’m sure that if the majority did care about the future, then we world would be a cleaner, less corrupt place. Unfortunately, few do.

Kudos to the Japanese for being the only people about this planet who genuinely care about the future in a form other than worrying about global warming and using recyclable plastic bags.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

At the time of writing this post, Amazon is trading at a P/E (Price to Earnings ratio) of exactly 1,261.18, which means it’ll take Amazon 1,261 years and 2 months to pay back investors according to the market valuation and the current earnings. So, why this very high valuation? Do investors think that Amazon can have the same luck of a Japanese hot spring hotel? Or is it some kind of a scam to lure small investors to buy Amazon stocks and then burst the bubble? While these two are both a possibility, I think the main reason that investors value Amazon that high is because they trust its business model and because Amazon’s customers trust it.

Try buying something, anything, from Amazon, and tell Amazon that the product that you bought is defective, or that it didn’t live up to your expectations, and what do you get? A full refund (or, if you want, a replacement)! They’ll even send you a shipment authorization so that you can ship the product back for free. They don’t charge you with a 10% to 20% restocking fee (like Sony and others do), they don’t try to argue with you and blame your for the dysfunction, they don’t try to lecture you on why you bought the product if you didn’t need it or if you weren’t sure it was exactly what you wanted. They will just return the product, and in 99.99% of the cases without asking any question. That’s what makes them so powerful, because they are loved and trusted by their customers, because customers know that whatever product they’ll purchase from Amazon, Amazon will definitely stand behind that product (when even the company making that product refuses to stand behind it).

But, can that love translate into such a high P/E in the stock price? I don’t think so, I think Amazon is hugely overvalued, and any change in the customer sentiment towards Amazon can have disastrous effects on the stock price (I’m talking about AMZN trading at 1% of its current price if that happens for an extended period of time). But, for now, I think Amazon is fully aware that their overvaluation is linked to the level of support they provide. Let’s hope that whoever takes over after Bezos keeps this in mind.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

As we all know, if you place a stock order and it’s not yet filled, then you can just click on the Cancel button (there must be a Cancel button somewhere on your order details), and the order will be canceled. Once the order is canceled, your money is released and you can immediately use it for other transactions.

Now – what if the order is filled? Will you still be able to cancel it?

In 99% of the cases, the answer is “no”, you can’t cancel an already filled order simply because the transaction actually happened – and you are already the owner of some stocks, or you have disposed of some stocks.

But, there is this 1% that may or may not work for you. Some brokers, if they have a glitch with their system where the order takes a long time to be filled and cannot be cancelled during that time, are more lenient towards cancelling an already filled order. All you need to do is to call them and tell them that you bought (or sold) the stocks, but since the transaction took a very long time the purchase or the sale are no longer in your favor. Now, the person talking to you will tell you that they have a policy of not cancelling orders because of glitches, because (and this is always true), people won’t call if the order is more to their favor because of the glitch. Again, the broker may refuse (and it’s definitely his right) to cancel an already filled order, but if you beg a bit (without yelling, of course), you might get it cancelled. I once got one cancelled myself. Note that the broker will bare the loss if he cancels an already filled order.

By the way, cancelling orders (even if they are unfilled) frequently (or thinking about cancelling orders) is not a healthy sign and it demonstrates that you’re not a good investor and that you are plagued with fear. A good investor makes the order without even looking back. Just my 2 cents here.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

I have 2 lines of credit – one with Bank A and the other with Bank B. At one point back in 2008, both had the same interest rate of 6.5%. At that time, I wasn’t using any of them.

In 2010, I started my own business and I needed all the money I can get to fund it, so I withdrew the whole amount from both, and started with paying only the minimum payments.

At one point in 2012, I started paying more than the minimum payment on one of them, while I stuck with only paying the minimum payment on the other. A few months later, I received a letter from the bank that I was making more payments to that they are raising my interest rate (the letter said that we reviewed your account and your interest rate will be something like 10.5% – I did negotiate this to a lower amount though). The bank convinced me that the other bank will raise the interest rate as well, so it’s only a matter of time. That was in mid-2012. So I thought that in a month or so the other bank will raise it, but they did not. Fast forward to now (November of 2013), and that other bank (where I just pay the minimum payments) hasn’t raised the interest on my line of credit.

So, what do we learn from this? Well, we learn that the number one reason for a bank to increase your interest rate on your line of credit (and probably every other credit product) is if you make faster/larger payments. I can think of a couple of explanations of why the bank punishes you for this:

1. The bank thinks that he’s going to lose that monthly interest that you pay every month sooner than expected.
2. The bank thinks that you have more money than you initially had, and now can afford paying more interest.

So, whenever a bank raises the interest your line of credit, ask yourself: “What have I done wrong?” It might be that you just overpaid them or paid them quicker than you should! (Yes – it seems that you’re not supposed to do that.)

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

I rarely use LinkedIn, but every time I visit my account, I see that at least one new recruiter has added me to his/her network. I don’t add them back because I have my own business now and I am no longer interested in working for anyone else other than myself. Today, I just did a quick research on LinkedIn and I came to a conclusion that nearly every other LinkedIn member is a recruiter.

I then remembered what a friend of mine told me a year ago, that recruiters make a huge amount of money from doing very little work. Let me explain: My friend is currently working for a large multinational (a three letter company that starts with I and ends with M) as a project manager, he found his job through a recruitment agency (actually they found him), and here’s how it goes (pay wise):

• The recruitment agency pays my friend $92/hour.

• I[x]M (change [x] to the correct letter) pays the recruitment agency $120/hour. (that’s a $28 profit every hour for the recruitment agency for essentially just getting my friend the job).

• I[x]M clients pay I[x]M $165/hour for my friend’s work.

As you can see, the recruitment agency increased the overall cost to the end client by 17% (thus massively contributing to inflation in business costs), which demonstrates that recruitment agencies are just needless parasites making a decent living off the current broken business system where companies prefer to hire mercenaries than actual full-time employees. No wonder that employee loyalty is as at an all time low at the moment (remember the good old days when people used to work for 30-40 years for the same company?)

These parasites thrive in social networks – especially LinkedIn – where they can meet people of great talent who can be suckered into working for less than what they’re worth so that these parasites can even make a better living. The rude part is that these parasites often regard themselves as admirable and successful men and women and ultimately create a cult of suckers followers who believe in them! Words like leadership (well, we have to thank them for this one, at least the word “Leader” is no longer synonymous with a mad dictator), pragmatism, agility, etc… are frequently utilized by these parasites. Not to mention, of course, the occasional blogs here and there lecturing other people on how to become parasites and the advantages of becoming one – of course, these blogs are usually written in a patronizing tone that impresses the cult even more, and even attracts more followers. It’s a mad, mad world we live in, and, with the current growth rate of parasites, I’m no longer sure it’s even sustainable.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.