Thursday, October 27, 2011

Egg on my face

I'd like to claim that I've perfectly timed every market move over the past 10 years but if that were true I'd be living on a boat off the coast of Argentina instead of ordering more pellets for another winter in the North Country.

Today's European debt deal was roughly inline with all of the expectations and I think will eventually prove to be another disappointing failure.  However, that was not the reaction of the market today.  It opened up and never looked back (well, there was a little rebalancing dip at 3:50 but for the most part it was up, up and away).  So, I missed this last 5% of the move up and that's a mistake, but the risk of a downside surprise outweighed the potential upside in my opinion.

The markets continue to operate in ways that defy logic.  There was a 15% rally on the HOPE of a deal and then when we get a deal the markets keep chugging another 5%.  We'll see how it plays out over the long run.

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Quote of the day:

"Ignoring the fact that the EU Summit conclusions leave more questions than answers, it may allow us to focus once again on the fundamentals and those fundamentals are not a rosy as many would have us believe."


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I read an interesting review of India's new Aakash tablet computer that has created a bit of a stir in the tablet world given its price of $35.  To be clear, that's a subsidized price - the retail price will be more like $60.  Also, $35 in the US is a far cry from $35 in India which would probably equate to about a week's gross wages (so a comparable price in the US might be $600).  Finally, the reviews of the tablet are that it's kind of clunky but serviceable.  Here's the issue, India is going to put millions of these tablets in the hands of kids who might have never had indoor plumbing or a landline.  These kids might use the tablet to watch Big Brother, a Bollywood music video or learn how to code at www.codeacademy.com.
 
Just to have some fun playing with numbers, I wondered what it would cost us to do the same thing here in the US.  First we'd have to build a tablet for around $100.  That would be a challenge but since many low budget brands already sell 7" tablets for $80-$100 retail running android I think that is reasonable.  There are 42 million school age kids in the US --- 42 million*$100= $4.2 billion.  It's sad that $4.2 billion seems like a laughably small number in today's budget environment.  We spend about $300 million a day in Afghanistan.  Do you think we'd get a better return on our investment by spending the next 2 weeks in Afghanistan or giving 42 million kids a leg up on their global competition?
 
Cheers!

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