What I have learned today [2015/5/8]

1. IMF's Special Drawing Rights is an international reserve asset to supplement its member countries official reserves.

2. Manicurists are being underpaid  and abused. Time to get manicures where they treat the workers fairly.

3. Liver produces 75% of the blood cholesterol. Well, not all about the diet..

4. 73% of break-ins are by kicking the door.

5. A medium apple has 95 calories and a medium banana has 105 calories. Two of my favorite fruits :D

 

*From Snapshot Sergengeti

Apple's $10,000 watch....

Apple now has a $10,000 watch that is identical to the normal watch but is gold plated.

The article states that this may be the first attempt for Apple to become a luxury good. Here are my

thoughts.

First, Apple is already a luxury good. You can get better performance and price from competitors.

Second, Apple probably created the $10,000 watches to make the normal Apple watch look extremely cheap ($549).
Firms often create these super expensive luxurious products to make their other products, a bargain.
That is why often you see diamond plated phones and other types of weird luxuries.  Yup, after seeing $10,000 price tag, $549 is cheap.

Third, it is possible that Apple is trying to price discriminate its customers. Everyone loves Apple because it is a life style, a choice. The rich, the poor all love apple. So Apple realized that a quick way to price discriminate would be to create this super expensive watch (traditionally watches are luxury goods) and then who is willing to pay. Apple will gather the information of those who buy $10,000 watches and sell even more luxurious goods, including gold plated MacBooks, diamond earphones....

Oh,  quick psychology research note. $549 (Apple Watch) and $1299 (MacBook) end in 9 to attenuate the sticker shock ($550 vs. $549) since we care most about the left digits (left digit effect), 54 is much better than 55.

In contrast, luxury goods tend to have '0" as the end digit to distinguish itself from bargains, therefore the $10,000.

In sum, Apple watches are expensive but since Apple is a life style and Apple is superb at marketing, Apple stock will do well.

Update:
Bloomberg discusses who is going to buy the watches...Yes, the rich Chinese will buy them...but I doubt it will catch on as a luxury...unless Apple decides to upgrade the watches for free every year :p

Super Light MacBook

Apple presented the new super light MacBook today.

And it is beautiful, elegant and expensive...wow $1,299?

Also, it looks like it will malfunction if it is slightly dropped. Or even crash if someone pounds the table hard.

I have never been a big apple fan and I think it makes more sense to buy two laptops few years apart.

Also, if you want something so light then just use a tablet with a keyboard like Surface...

My prediction....Apple stock will still do well. Because Apple is not a brand anymore but a life style.

Apple Car!

Apple is supposedly working on an Apple car.

Well...this does not seem to be promising for three reasons.

First, the auto industry is quite competitive and have low profitability. Even with the recent increase in profitability, cars are inherently low profit. Also, it is hard to make people buy multiple cars and upgrade them every two years....

Second, remember apple maps fails? Yup, expect more trials and errors in making Apple cars. Yes, there will be Apple cars catching fire just like the Teslas.

Third, the younger generation are driving less and do not necessarily believe in car ownerships. This is one of the reasons, the famous hedge fund manager, Jeff Gundlach is bearish about car companies in the long term. So I am not sure why Apple wants to enter this declining industry and how it plans to revitalize it.



So why is Apple trying to make an Apple car?

Well, Apple is an innovative company and is trying out new things. Also, bringing new talents and perspective is likely to be a big plus for Apple in developing new strategies and products. A more sinister reason is that Tim Cook is trying to make his own mark on Apple. This may be a pet project. Or this may be a very clever strategy to mislead its competitors....

With $178 billion in cash, I would like  Apple to focus more on building stronger phones that don't shatter and have longer battery. I have seen too many shattered screens and people messaging me that their phone is dying and won't be able to respond.